Corteva Aktie

[indiscernible] Right. I think we'll get started. It is with great pleasure that not one, but 2 days in a row, I get to kick off my conference with the 2 most successful DuPont spins of all time. This is obviously my favorite. Don't tell John Kemp upstairs. This time is Corteva, ticker CTVA. Today with us, we have David Johnson, who's the CFO and future CFO of Vylor, the seed spin -- seed and technology, I suppose we should say; and Sam Eathington, who's the Chief Technology Officer, and I think they added digital into your job title as well recently. So obviously, a lot going on, and I'm looking forward to discussing that.

I've had the pleasure of knowing both David and Sam for many years, and I look forward to nerding out for the next half an hour on agriculture. Nothing gets my day started better than that. And I think when I sit down, we have some good news to share with the crowd. So I'm going to drop the prepared questions. So we are joking. I personally thank Chuck for going over to Europe right now and talking to make sure the EU has now officially announced it is, I'd say, beginning to implement the approval of gene editing. Samuel and I were just speaking. This is something we've waited for -- maybe longer for me, 10 years. It's amazing how things can take that long. I'm feeling a little older. I've wife and kids now.

But I would love to start off with that, what it means to you, what it means to Vylor. Perhaps what it opens up in terms of the Vylor thesis. Obviously, there's a lot going on and we can circle back. But I'd love to hear your initial thoughts on what I perceive it as a great announcement.

Yes. No, great. And thanks, Chris, for hosting us. Yes, it is pretty exciting. Just a couple of hours ago, the EU Parliament actually voted to accept their -- what they call their NGT. So that's their gene editing policy. And this really starts the opportunity to bring gene edited products, not only just for importation, but actually cultivation now in the European market. So think about that.

They've had a GMO ban for 30-plus years. And now they're actually getting on board with really the technology and the opportunities that gene editing unlocks. And so we still got about 2 years of grinding through the implementation phase. So there's a lot of stuff that still has to be written and how it gets done, but this is a huge step forward versus like what we were saying like 10 years ago when they basically banned gene editing also, which was a real slowdown to the technology and the opportunity.

What it really means to us is we've got a strong footprint over there in agriculture seeds. So both our Corn and our Oilseed Rape business, for example, we've got gene-edited products in corn. For example, one we talk about is our multi-disease resistant product, where we've used gene editing to enhance the disease resistance that's already in corn, but we made it really a complete package so that a grower doesn't have to choose, am I going to select a hybrid that's resistant to Southern rust or one that's resistant to gray leaf spot or something else. And each year, they're trying to make that choice. If they're wrong, then they've got to go out and manage that field differently.

And so we've been testing this concept now for about 5 or 6 years. We actually have a nice pipeline of multiple genes and concepts ready to go. And just to give you an example, last year, U.S. had a really big southern rust infestation. And farmers were spraying fields sometimes twice. If they didn't spray, sometimes they're losing up to 80 bushels of yield per acre in their corn crop. This is like in my home state in Illinois. And our disease super locust actually looked outstanding. And we had lots of trials where it was 40 to 50 bushels above the control.

So think about that being available in your seed and you don't have to worry about how to spray, when to spray, what to spray for. All that decision is really simply, you just buy the right seed upfront. We can now bring that technology in theory to Europe. right? So bringing really enhanced genetic technology to Europe in corn and oilseed rate that just we couldn't do before.

So it's a pretty exciting time for the seed industry, I'd say. It's a great move for where Vylor is going. Gene editing is going to be core to who we are. And I think if you think about the bigger picture, a lot of countries look to Europe for the regulatory standards. So this really changes the conversation what's going on in China, for example, which is still we need approval because our grain moves around the world. So we got to have import approval. So we still got some work to do. But this really helps with the conversation in a lot of countries.

I think for those who like pictures, a couple of quarters ago, we actually had a picture of a one that had our gene edits in and one that didn't. And if you look at that picture, it's pretty clear that the technology capabilities.

One of the things I just wanted to very quickly go over and understanding we're pulling a bit of an audible this morning based on the positive news flow. But could you just remind people in the audience and perhaps on this webcast today, what gene editing actually is, what it's different than GMOs in terms of the old school nomenclature. And then also, it's -- I don't want to spoil it, but you also have a very unique standing in terms of your intellectual property that has been long-standing, in some cases, multi-decades long, in some cases, within the last decade. So you're very firmly well positioned in this. And I'd love for you to share your thoughts on that as well?

Great. So yes, good call out. We tend to sometimes forget where we're at. So GMOs, so genetically modified organisms really back in the '90s was created. And this is where we took DNA from a different species and put it into a row crop. So think about corn and soybeans. This is how we got glyphosate resistance, insect resistance. We took genes from other species and moved those across into corn and soy, cotton as an example.

In gene editing, we only work with the genes and the variation that's already in that species, right? So we're not transgenic. We're not bringing in genes from other species. It's already there. So think about our corn disease, super locust, those genes are already in corn somewhere around the world, right? All we did was use this technology to find them and then quickly integrase them and move them into our germplasm. So something we could have done with plant breeding.

And this is what's really helped in the conversation in Europe is, look, you could do this with plant breeding. It's just now we can do it a lot faster, a lot cleaner, a lot better than what we could have done through traditional plant breeding procedures. So that's been really the shift and the change. Now it gets a little muddy sometimes because you could use gene editing to do GMOs and all sorts of things. But the simplest way is there's no foreign DNA. It's really -- it's within the genetics that species already has.

I would just remind people in the audience, the first GMO crop that went for cultivation was in 1997, I believe, is Roundup Ready canola. And so this is now probably perhaps one of the largest technological evolutions that we've seen in almost 30 years. So...

We will do -- the interesting thing is -- we can do stuff with gene editing. We were not successful at doing with GMOs. For example, there are no GMO disease control products in the marketplace, right? We all spend a lot of money working on yield and stress in GMOs and very little success in that technology. Yet we see in gene editing already success in disease. We see products coming through our pipeline already with yield enhancements and improvements we've never seen before. We think there's opportunities we think about insect control. There's people working on herbicide control, so -- or we control with herbicides.

So I think it's just actually going to open up the space of what genetics can solve. And then you start rolling into -- it's a cheaper cost structure, right? If we don't have to go through all the regulatory hurdles and burdens that we do today, we can actually work on additional product concepts. So there's a lot of concepts we leave behind because the return on them is just not there. So it's going to be more concepts, more crops, more geography. So it really expands our where to play as an industry.

I think, Craig, one other point I want to make, whenever you think about Corteva itself, you have to have that base germplasm. So all this technology is fantastic, but you have to have something to edit. And so when you look at something like Pioneer, which is going to be 100 years this year, it is this year, so 100 years of germplasm. So when we look at our IP and what do we think is one of the most important assets we have as Corteva, it's starting with that germplasm and then that allows or enables a lot of this technology.

And on the IP front, we branded this GenLytix as the ecosystem that we're calling it. In September, we'll update you. It's amazing just in the last 2 years how much it's expanded. But a lot of IP. We're also doing lots of license. We have a lot of collaborations. We have a lot of third-party investment opportunities. So we're taking a very broad look at the technology, including a number of things we're doing with social acceptance and really helping people feel like we're transparent and explaining what's going on and not be afraid of the technology.

So let's take a step back to let -- well, it's still integral to it. Let's take a step back to last September when you announced the spin. So David, I suppose we could focus this initially with you and Sam, obviously, feel free to chime in with anything incremental. But what was the initial thesis 12 months ago in terms of where we stand today, you're going to do a couple of CMDs in September, basically year-end. Can you just talk about what you think, especially in your new role, what the thesis is on the Seed business for those of us that have covered this as an integrated company, whether pre-DowDuPont or after as Corteva? Could you highlight a few thoughts there, perhaps integrate what gene editing means to that what I perceive as optionality? I would love to hear your thoughts on that.

Sure. And thank you for the question. I think when we think about the independent seed company or we like to call it the genetics company going forward because I think our aperture or thought process is a little bit broader than what the business is today. But for me, it's all around strategic kind of just focusing in on those growth opportunities around Gene Editing, our Licensing business, some very exciting things like hybrid wheat, all these new opportunities we have.

I look at it as more of a focus ability to have the separate company. I think there are some value unlocks that might be a little bit surprising to people. But whenever you look at Corteva today, by and large, the businesses are operating differently even within the Corteva business today. Because when you look at CP, it's essentially a global specialty chemical company with an R&D element to it. So it operates as a global functional business.

When you look at Seed business, it's a very regional business. When you look at Sam's R&D operation, it's many, many locations in every region around the world because you have to be able to develop and produce within that region. So when I talk about value unlock for Seed and CP, it's getting these organizational structures and the operations around that focus around either a global functional business or this regional business. And quite frankly, Corteva today had some costs to keep that together. So I think that's a pretty exciting element.

I think the other one is just focus on capital deployment and what we can do there. I think whenever you look at 2 separate businesses, I mean, I do believe in the CP business, there's going to be opportunities for more collaborations, more opportunities in that market that maybe as a combined Corteva business, we'd focus a little bit more on the Seed business given the returns and so on and so forth. So I think the jump balls for capital would typically go to like the Seed business. I don't think that's appropriate. I think it's better whenever it's separate.

And then for us, we don't know this yet, but as a separate seed company, I mean, could there be more independent seed companies that would be very much more interested in being part of Vylor. I think that that's an opportunity. And then just seeing how far we can go with adjacencies and what have you, whenever you think about gene editing broader than just row crops. So I think around strategic focus, capital deployment and a little bit of a value unlock are the main items I think about whenever we think about the separation.

And Sam, when we take -- once again, take a step back and we look at the initial Vylor thesis and Seed, there's also a lot. I don't want to dismiss anything that's going on the GMO side. You've been working for once again, perhaps well over a decade likely to further enhance the E3 platform. There are some things in terms of replacements for the Qrome platform, triple stacks contested on Brazil. There's -- I don't want to take away from the excitement that you likely contain there as well. So I'd love to hear your initial thesis on that opportunity as well and then perhaps you can branch off from there?

Yes. No, great. And it's easy to sometimes lose that. But if you just roll the clock back, right, as a company, we in-licensed most of our biotechnology traits. We paid a lot of royalties. We've been shifting that over time to where it's moving more to what's our own either co-developed or proprietary traits. This will bring royalties down to essentially neutral to positive this year.

And as we look forward, we're actually moving to a higher percentage of proprietary developed traits. So you mentioned we have a replacement for -- in Latin America, Conkesta is an insect control trait. That's a really, really important trait down there. We've just launched it a few years ago. We'll be a mid-teen percent already of market share on that trait. And we've already got the next-generation biotech trait ready to go that enhances durability and scope of that insect control looks fabulous. It's in the field. It's in varieties. We're testing it, et cetera, right? So that's already there.

Same thing on the corn side, right? So you mentioned we have platforms like Qrome insect control. We've got Vorceed. We're now going to a new triple. But we've got actually new genes for aboveground and belowground insect control for North American market and aboveground control for our Latin American market. And so these will now be 100% proprietary. They're kind of unique. In some cases, we got some of the genes out of actually ferns. So a lot of the history has been some sort of bacterial gene, maybe 1 or 2 RNAi genes, and we actually are going to be bringing some of the first genes from ferns out into the marketplace.

And so those give us all sorts of new things to think about, what stack combinations do we want, how do we want to out-license those traits to other companies, and how do we want to deploy them in the market? And so that base of germplasm and biotech traits, we just see it getting stronger and stronger all the way out into the middle part of the next decade. And then we get to build on hybrid wheat, biofuels, gene editing, adjacent spaces. So why we feel really good about where Vylor is going.

And just you mentioned -- well, first of all, I just want to take a step back for something once again for those that aren't aware of it. Please correct me if I'm a little bit off, but you were coming from a negative $850 million plus/minus...

Like $700 million when we spun...

When you spun, okay.

Yes. And then if you look at today, we're going to be neutral this year. We actually said we're going to be slightly positive this year. So you think about that margin journey over a fairly short period of time. That's why you see the margins of the business going up into the upper 20s. And then we also said that by mid-next decade, we expect it to be like a $1 billion opportunity for Vylor. So...

One of the things you did even prior to these announcements in terms of the biotech optionality and out-licensing was there was a litigation with Bayer, which obviously has lasted a very, very long time. It was something that most of us just read once a year on Page 210 of the 10-K, took some notes, asked him a few questions and moved on. Could you basically speak to what that -- it seems like you've done a lot of cleaning up for this thesis and for the spin. If you could take a step back and share your thoughts on that as well, it would be greatly appreciated?

So when you think about the Bayer agreement, it did a few things for us. One, it gave us a little bit more certainty about certain molecules after patent, so post-patent opportunities there. So that enabled us to do a few things. We're able to introduce some new products like the triples literally in the next 2 years versus when we thought it would be early 2030s, okay? So that was a big move up for us for that opportunity.

I think on the other side, part of that equation is reducing the net in-licensing expense. So that was one that we saw a benefit also with that agreement. And that's why we're now saying that we're going to be positive this year, Chris, which would be about $120-plus million better than last year. So a really nice increase in margin. And I think just generally speaking, it reduces the uncertainty and puts everything kind of behind us whenever it comes to our relationship with Bayer.

Yes, I think you hit it well. Just it removes some uncertainty. It gave us some clear path of what we could do with some products. It was financially a good deal for Corteva and Vylor and made sense to sort of clean up some of the paths.

In terms of just perhaps wrapping with this topic, and we can move on to a few other exciting things. When you take a step back and look at -- and I'm not asking you to preview September, if you're not. But when you take a step back and you look at the gene editing optionality in terms of you've had this pendulum, you're swinging thus far very slightly into positive territory this year. There's still some net licensee payments going on for sure. And now you have this wonderful GMO portfolio is step 1. And then kind of the step 2 in terms of really getting that pendulum into positive territory for you on the gene editing side. Could you speak to just perhaps kind of the balance of those 2 things? Are they roughly equal? Is it too early to tell? I would love to hear your thoughts in terms of just the longer-term trajectory without putting any dates on it?

In the simplest way, I'd put it this way that we're still really very much a GMO sort of value equation even well into the early part of the next decade, right, mid-decade, which means we have time to keep building all the gene editing stuff on top. From a research point of view, since we're thinking about 10 years out, we've made a much harder shift to how much is gene editing and how much is GMO. But at the product commercial space, it will be very heavy GMO and germplasm still for another 5, 8 years.

So plenty of runway on that even well without the gene editing, if we could still call it optionality perhaps. But the pathway -- the initial pathway that you've been discussing is basically GMO?

Yes.

Got it.

And the way I'd like to think about it, Chris, when you think about the near-term financials, like the next several years, 3, 4 years, whatever, a lot of that is always somewhat predetermined. We're talking about net licensing improvement. We will still have our price mix, we believe, because Sam's group will continue to have improved yields that we're able to price off of and productivity improvement. So I'd like to think the near term, that playbook, very similar to what we've seen in the last several years.

Now when you start talking about the mid-2030s, I know that's a long time for some of us, but that's when we start to see probably a real, I would say, hybrid wheat will be starting to become more material into the P&L. I would say things like biofuels, when you start thinking about the SAF requirements in Europe and some of the joint ventures we have made and what have you, we should see more of a material kind of accretion to the P&L in the mid-2030s for that. And then this continuation of the net out-licensing, we'll probably continue to see that through 2035. Then probably gene editing and what have you is kind of even beyond that. So I'd like to think of it in 3 time phases. I think the one very proven model we've had for a short period of time, we should see that as improvements year-over-year through the early 2030s.

Expectations on that, I think, 3 times in the last 18 months. So I think we...

It's a little conservative sometimes.

I'll take it. All right. So let's move on to the thesis. I mean one of the things -- one of the biggest debates, and I don't want to lead you in terms of the actual numbers, but one of the biggest debates has been the dissynergies between the 2 platforms and this belief that, "Oh, everything has to be the integrated model", which in my defense, I never was with that, even when you didn't like. So I take a step back and look at this. I don't want you to give a number, but just how confident are you in terms of just breaking out? You already indicated that there are 2 separate R&D facilities, 2 separate teams. How should we think about that from both of your perspectives?

Yes. This is one of my favorite questions, I will say, because I think a lot of people are a little skeptical about how much we said it would cost to separate and then how much dissynergies we would have because of separation. We've talked a little bit about it already. The R&D facilities are separate. There's literally no overlap in operations whatsoever. There is a little bit in commercial, but not the feet on the street. It's more the management layers and so on and so forth.

So when we think about it, we initially said we'd have a net $100 million of net EBITDA dis-synergies. And then we recently said we'd be a little bit favorable to that. And we start talking about what does that mean? The increased cost side is going to be there. We're going to have 2 boards. We have 2 executive teams. We have some more IT licensing costs, like all these sort of things will still be there, although maybe a little bit less than what we initially thought, Chris.

But really where we're making it up is on the opportunities to, again, rightsize both businesses to their operating model, like I had mentioned before. We also said during our last earnings call, right before that, we had initiated a new restructuring program to be able to handle kind of how we're going to get these work structures put together. So as we went through splitting out the 20-some thousand people and we get this work structures, we are able to save some of that money. And so we will give an updated number at our next earnings call, but I would say that we're trending pretty significantly favorable to that initial estimate.

I always find it ironic that when Corteva was created, you divested Stine and not a single sellsider wrote a note and said, "Oh my gosh, the R&D dissynergies that's in there is like what one, make any sense. So that seems like it's going on track as well. Is there anything else -- just before we kind of shift topics, is there anything else that you're -- there's obviously a lot to be excited about, but that particularly excites you about. Sam, you've obviously been behind a lot of the launches that have enabled Corteva to steal a lot of market share. But is there anything that's particularly exciting that we haven't yet discussed here today?

I mean, look, I wouldn't ignore our hybrid wheat product. It's a pretty incredible technology and where it's going. And look, I've worked on hybrid wheat multiple times in my career, and there's always been this challenge of can you get a system that's consistent that you can actually make hybrids, produce seed at the right cost, get the purity and quality that a grower needs. And that's always been the limit of the hybrid wheat system.

We spent decades solving that, and we continue to look outstanding, like we can really produce hybrids, they yield more, and we're running towards a launch here in '27. And so it will take a little time, obviously, to change the market, build the market, think about where to deploy that and use that around the world. But if you look at what 100 years of hybrid corn did, we're just about ready to unlock the same thing in wheat. And so it's pretty cool. And now you start to say, "Gosh, if hybrid wheat is the base, well, what do we get to do with gene editing and wheat and what do we get to do with seed treatments and wheat?" And who knows? Maybe we'll get back to GMOs in wheat. So it's really building a whole new pillar for a crop that's on 500-plus million acres around the world.

It's lucrative. So that was going to be my next question. You've highlighted that it's roughly $1 billion opportunity, which is fantastic. And I can tell you from spending some time with Chuck over the years. He -- when I asked a similar question, "Hey, what are people not talking about?" #1 response. So perhaps I need to write a little bit more.

One of the other things that is fascinating about the industry is -- we got back to it at the beginning of this -- beginning of this conversation, but breeding is kind of still the core. And having the base germplasm and the varieties and the hybrids matters more than what most investors believe, and I've been discussing that since 15 years ago. So one -- and perhaps it's maybe in my eyes, the first innovation in this. I'm sure there have been 20 in the last 10 years or so.

But AI has the potential potentially to shorten a lot of breeding cycles. It seems as though you have, based on your library, a tremendous, let's say, competitive boat and optionality yourself in terms of -- because you have the access to the history. But all others, I'm sure, are going to pop up and this and that and say, "Well, now we can basically try to catch them and run you down." How would you perceive that as an opportunity? Would you be perhaps willing to share a risk or 2? However you're thinking about it would be great?

So maybe to unpack that. So there's -- as you mentioned, there's a tremendous amount of knowledge that we have. I mean, we're 100 years of corn breeding history. We genotype 1 billion markers a year. So we understand the genetics on that stuff. We're running 15 million yield plots on this stuff every year. Like we characterize and understand this germplasm at the genetic level and at the phenotypic plant level, like you can't imagine, right? It's one of the world's class, biggest things out there.

And so then you get to add on, "Okay, so how do I use AI to enhance all that?" And we've been running a very large AI program in R&D. David sometimes criticizes me for how much I spend on it. But we've been pouring a lot to -- even historically, things like machine learning languages were -- have been around a long time. They're very powerful, what we can do in the plant breeding program. And now you look at the generative AI sort of stuff, it's even more interesting.

We've actually enabled teams to run whole new breeding concepts. We actually have AI agents that are plant breeders, like they are running plant breeding programs, right? And so you think about how fast they can make decisions and use all this information available to them, it's pretty cool, and we're watching what they can do and how they can do it. And then you throw on there gene editing. And I think this is something that maybe gets missed a little bit is the interplay between AI and gene editing, right?

Because all of a sudden, it's like I can use AI to, today, we can, for example, with 95% accuracy, predict the gene expression change based on the gene edits we're going to make now up from our AI agents, right? And so upfront, our geneticists and breeders are designing how they want those genes changed and what genes to work with and then how to use AI to design the actual gene edited construct. And then on the back end, you're sorting through genetic variability and complexity that you've never seen before with AI.

So we've used it really end-to-end. We're seeing some incredible uplifts in efficiencies and capabilities and what I would say, building the types of products and the product selection that we're getting. We still yield test. We still got to go out in the field and prove it actually works at yields, it looks right, it behaves right. If farmer is going to be happy with it, we don't skip that stage, right? And we still got regulatory in a lot of cases to deal with. But the front end and the power of the pipeline are just getting ramped up. When you think about that combination of your germplasm capabilities and knowledge with gene editing and with AI, it's a nice little triple plus up that's hard to replicate.

And just add one thing, too, then whenever you decide what you do want to produce, the ability to produce at scale, there's very few companies that can do that. And then we're also using AI to help us when's the best way to produce seed, where, when, so on and so forth. So I think that's a capability of Vylor going forward that a lot of people miss out. They always spend a lot of time on the gene edits or the DMO or the new hybrids or whatever, but how do you actually get to market that whole kind of piece of our business is a capability, like I said, probably only 2 companies can do in the world.

Yes. We have a complete digital twin of our seed manufacturing process.

I tried to keep you and Bayer separated today. You're upstairs, they're downstairs, a safe distance. First of all, thank you. But I want to give you the opportunity to answer one last question, and its' very simple, but I want to give you an open floor. When you think about the opportunities for Vylor, what does it look like 5 years ago, 10 years ago? I feel like you already hit a couple of highlights, but what's your vision once this was publicly announced last September?

For me, I go back to that short, medium, long term. And so whenever Chuck talks about an overall genetics company kind of thinking a little bit differently, I think that's kind of where my mind goes. So near term, maybe not a lot of difference, although pretty exciting and continuing the journey we're on. But kind of the mid-decade starting to think of a third crop like wheat, starting to think about things like SAF and all these different fuel options and what have you, I think that's super exciting and then gene editing beyond that. So to me, I think it's a pretty bright future.

Yes. I think David said it well. And look, as a plant breeder geneticist, I wish I was 20 years younger because I think when we get 5, 10, 15, 20 years out, we're going to look back up gene editing what it did to this entire plant space, animal space and say, "Oh, look what it just did?" assuming we get all the regulatory and social stuff worked out, which we're working hard on. But the opportunity that's in the genetics of species to unlock that, I mean, we've got tools we just never had before and capabilities we never had before.

I mean we're creating plant breeding genetic populations we never -- the world has never seen, right? I mean that's where we're at today and what this innovation is doing. So who knows what it's going to unlock, but it's going to be pretty amazing.

As long as you promise not to change your GICS code to like biologics or anything in health care, will be good. I'm looking forward to covering it. Thank you so much.

Thank you.

Thank you, all.

All right. Our next fireside is going to be with Corteva. We have Chuck and we have David for a fireside chat. Please submit questions on the app. We're at a very interesting time for Corteva. They're expecting to split -- are going to split up later this year. The seed company is going to be Vylor. Corteva is going to be New Corteva and happy to have the team here.

So Chuck, Dave, why don't we maybe just do a state of the union, what's going on at Corteva and looking into the breakup later this year?

Okay. Well, hi, everyone. Nice to see you all. Hopefully, you're having a good conference. Let's start with the quarter. Overall, we were very pleased with the first quarter. We saw double-digit growth and growth basically across the board when it comes to both businesses, Crop Protection and Seed. And I'd say a pretty clean growth when it comes to price volume, we also have good mix improvement, lower costs.

So overall, in almost every region of the world, we're seeing very good growth. We held our guide. I think that's important. We don't typically raise our guide in Q1, and we're feeling very comfortable at the $4.1 billion. I'd say the agricultural backdrop is still relatively mixed. Really good growth in demand when it comes to grains and oilseeds. Even for biofuels, which will be a record demand again in 2026 versus 2025 and 2025 was a record. So very good growth.

Crop prices are up a little bit, which I think is helping farmer economics. And I'd say, generally speaking, most of the farmers that we're talking to are focused on maximizing productivity and yield. I did mention in the first quarter call that our top corn hybrids, for example, were completely sold out in the spring. So farmers are looking for technology to drive yield and productivity, which is what we would expect them to do.

So I'd say the year is shaping up probably a little better than we thought. The first quarter doesn't make the year. The first half is really, really important. Our order book looks good for both seed and CP. So that is coming together pretty nicely.

Shifting gears to the separation. I'd say everything is on track for a fourth quarter separation. And we've been pretty busy, as you saw some of the announcements. We filed the initial Form 10 with the SEC, which was a lot of effort. We announced the new CEO for New Corteva come October 1. Luke Kissam joined the company on June 1, and we announced the 2 executive leadership teams.

Just this week, we announced the 2 headquarters, which I think is important for our employees to understand that. And then we announced the name of the seed business and the genetics company, and it's -- we're going to name the company Vylor. So we've been pretty active. But I'd say, so far, no showstoppers, things are looking good. The ag fundamentals are something we're keeping an eye on. And so far, the business is performing very, very well.

We'll work top next that. We'll work top down a bit. We're obviously in a very volatile environment. We've only seen crop prices start to move more recently, but encouraging. What's kind of your view on corn acres, costs in this environment?

Yes. So we actually saw the week of our earnings corn futures touched $5. And usually, there would be some bullishness in the market at $5. And of course, given the Middle East conflict that we're seeing with elevated energy pricing, we're seeing higher fertilizer and fuel pricing at the farm level.

Now our view, as I mentioned already, is that farmers have seen this market condition before. I'm not suggesting for a second that there isn't challenges because there are, but it is a sustainable market set of conditions, and they'll farm like this. And so from a planted area perspective, Joel, to answer your question, we're expecting about 95 million acres of corn in the U.S., 85 million acres of soybeans. So that's 180 million acres that get planted. That's the mix. We're seeing the right behaviors when it comes to applications for pre-emergent sprays, and I've already mentioned the need for technology in seed.

Overall, what we're watching carefully is most farmers already had their fertilizer sourced for the spring. So I don't think there was a planting decision because of higher energy prices that have shifted in North America. So we're going to probably see that the first time in LatAm. And so that's the one area that we're watching with elevated energy pricing, what happens in LatAm. And our view is that we're probably going to see 1 million or 2 million hectares of incremental soybean production, just more land going into production.

And the safrinha crop, which is considered a secondary discretionary crop, it's a corn crop, could be flat or modestly down. And that's the one area that we're watching quite carefully. And there's a little bit of time before we will know that. But overall, I'd say that the impact of sort of the higher energy is being reflected in higher fertilizer and fuel input costs.

Okay. You're probably getting very close to putting out Brazilian seed price cards. How is that going?

We are getting very close. Okay. So look, in corn, what I would say is our order book looks great, first of all. We did mention that if you expect the acres to be somewhat flat year-over-year, and our price cards will come out, but we're expecting a modest price increase in the corn technology as we price for value with our normal strategy.

In soybeans, it's really interesting, right? That's probably one of the largest opportunities that Corteva has today because we actually have a very -- if you look at our seed business around the world, we're either #1 or #2 in every major markets we operate in, in corn and soybeans. And we're building a really interesting and exciting licensing business around the world.

The soybean market in LatAm is the one that we are underrepresented and so therefore, the largest opportunity. And we're rolling out our Conkesta E3 technology. So the same technology that we had in the U.S. We're bringing that down to Latin America. And we're seeing just huge demand for that. So this year will be the year where we actually cross double-digit market penetration for the technology itself.

From a pricing perspective, I'd say we're consistent with the market. The market is probably a little less than corn. So I'd say somewhere around flat to slightly up. But we're seeing very good demand for our next generation of technology. And that's the opportunity. If you recall, what we said is we'd like to have about 1/3 of the Brazilian soybean market by the end of the decade. So that's where a lot of our growth is going to come from. We're pretty excited about that.

Can you walk through the bridge for '26. I know you held your guidance the other week. You also said things are trending a little bit better than that, but you wait until August to update -- to give a little more official numbers. But can you talk about the bridge in '26? So moving parts, what's been a little bit better, what's been a little bit worse? So far this year?

I handle that, Joel. So thank you very much for having us. When we step back and look at the pricing, we just talked about that, our initial estimates were low single-digit up in seed and low single-digit down in CP. And I think generally speaking, that's still our outlook at this point in time.

When you look at volumes, Q1 was very strong volumes. You saw that in seed, but we believe some of that is just timing. We had some Q4 volume that moved into Q1. And we always have this volume component depending on weather between March and April. April is always our largest month. So it's always a little bit difficult when you look at Q1 in isolation. That being said, CP, new products were up 20%. I think the other thing that's really important about that is we're seeing pricing to be stable, if not up a little bit in new products in CP. So I think that's just, again, reflecting the need for technology and people willing to pay for technology.

So I think the volume price more or less Joel, pretty much in line where we thought. When you start looking at things like cost, we had a very good start of the year in productivity. So I think if that's one element that could be a little bit favorable going in. However, we are looking at this Iran conflict. We mentioned that, that could be a $40 million kind of headwind in the back half of the year. We also said that there could be some upsides in things like our tariff number that we had relatively put in. And we do think currency, we showed that is favorable in Q1, probably a little bit favorable to where we were.

And then we also talked a little bit about royalties. And we said that going into the year, royalty neutral was where we expected. And right now, we think that might be a little bit favorable. So you add all that together early in the year, we feel pretty good with our guide and the midpoint being up 7%.

Yes. Fair enough. And maybe we can talk about also you signed the agreement a few months ago with Bayer. Talk about how that changed some of your plans or acceleration plans on the out-licensing?

Yes. So this is probably one of the more exciting growth platforms we have in the seed side of the house. If I just distill it to the highest level, the corn soybean addressable market for licensing in the Americas is about $4 billion. And we have a very small part of that. And as David just mentioned, this will be the first year we're sort of royalty positive, which we're very excited. It is a milestone for us. So what we think our journey is now is to create about $1 billion of net licensing revenue over the next decade in corn and soybeans only in the Americas. So really significant growth.

The agreement that we finalized with Bayer, which I think is good for both companies, really allows us to access a part of the market many years earlier than we thought we could, which is what we call the triples, which is herbicide protection and then aboveground and belowground insect protection in corn. It's about 1/3 of the U.S. corn market, very, very lucrative market. So what we -- the reason we're going to be royalty positive this year is because we're able to at least sell some of that. We have more demand than we have supply today because we now we have to create the parent seed to be able to sell to our licensees. There's about 100 licensees we're working with across the United States. But $1 billion over the next decade is sort of the bottom line for the licensing business. So it's a pretty exciting growth trajectory.

I will make one caveat. We're also launching hybrid wheat in 2027 in the United States. We're getting started on that. So if you think about that, there's been a lot of R&D effort to try to hybridize wheat. And if you recall, we hybridized corn about 100 years ago, Pioneer did that. And so I think we've cracked the code. We've got some phenomenal technology. That is another $1 billion of growth opportunity, probably not in the next decade, probably in the next 10 to 15 years as we ramp that up and we take that technology around the world. So that's sort of the growth trajectory that we've got for Vylor for the seed business now is $1 billion of out-licensing and $1 billion of wheat over the next 15 years or so.

And also this year, like you updated a bit on the CP market, talking about how with what's going on in the war conflict, you've seen maybe the price of generics, the cost of generics go up, maybe it's early days you said. Can you talk about that a little bit and seeing if that's maybe going to help lessen some generic pressures?

It's very early days. I'll just caveat it, footnote it, however else you have to describe it. 1 or 2 data points is hard to say a trend yet. But what we're finding, the March data that we referred to on the earnings call was we're seeing higher pricing because of higher energy pricing coming out of Brazil for actives. And what that's prompting is several of the active suppliers from China have increased pricing. And David referenced the impact on our P&L, most likely in the second half of the year being about $20 million on the CP side.

But at the same time, we're seeing a slowdown in some of these actives entering Brazil, which I think will have some supply-demand tightening effect, but probably not until the earliest late this year, and it could even go into 2027 because there's inventory in the channel, of course, and all of those good things. So we're not declaring victory by any stretch of the imagination right now, but the trend line seems constructive and it's something we're watching very, very carefully. And I think that, that's what the market needs. And then -- and so if you think through our assumption for CP is we -- the CP industry over the last 3 years has been challenged. I don't think that's any secret.

Last year was the first year where the industry was flat, and we declared that victory because the prior 2 years were down. We always thought that 2026 for CP for the industry would be a return to growth year, really driven by volume with negative pricing. And so if we can see some stabilization in price in LatAm, I think that sets up maybe even a further recovery in 2027 for the global CP industry.

So you would have thought '26 would be more L, but maybe there's a chance it may be -- do you call it a V, whatever we call it.

I don't know if I'm really good with the letter.

I don't know.

I just think that the trend line is slightly better than we thought, especially -- and we need to see how we get into the second half of the year. And how long does this higher energy continue because there are pros and cons to that. But the one thing it will do is it will elevate actives coming out of that part of the world. And then I think there will be a supply-demand adjustment because of that.

Think of things in the competitive landscape in '27. On the seed side, one of your competitors is starting to put out a couple of blockbusters in their terms. They've got the short stature corn Preceon, you've got your own competitive responses. You've got Vyconic soybeans, it will be small. What do you think about the competitive landscape in seeds? How does it look a bit different next year? Or does it look different at all?

Yes. Look, the seed landscape is always competitive. There's a lot of great players with tons of phenomenal technology. And there are some new technology coming in, but we'll have ours as well. So our reduced corn will be available into the market most likely 2028 is sort of our time line. We've got a natural version, and we've got a gene-edited version. So depending on which way the market takes us, we'll be ready when the market is ready for reduced corn.

I don't think it's going to be a switch where the entire U.S. market is going to switch to reduced corn. I think it's a new cropping system. And because it's a new cropping system, it's going to take a little bit of time for folks to get comfortable with. But I really like our lineup. I would say that our seed pipeline has probably never been as strong as it is today. Even well before my time, the veterans of our company would say we have got a phenomenal lineup. And so I think our whole mission is just to keep driving genetic gain.

We're placing a significant amount of capital bet on the advent of gene edited technology, which if you've heard me talk before, we fundamentally believe that, that could be more impactful, more powerful than biotechnology was 25 years ago, not to oversell it, but I don't know if we've seen the limits on what gene edited technology can do. We're seeing higher yields. I think we're able to bring more disease resistance into the genome. We think we can bring insect resistance into the genome. And we can also make healthier, more nutritious food with the manipulation of the genome.

So there's a lot to like here when it comes to gene-edited technology. We are one of the leading patent estate holders in the world. We've made an early bet and the first corn hybrid that we will bring into the market, we're very excited about this will be what we call a disease super locus -- it will be a gene edited corn hybrid that will have significant disease resistance built into the genome, and we're going to bring that into market in 2028 and put that in the hands of growers around the world.

In fact, let's talk about gene editing because is it such a way -- is it going to be in a way that we're going to change how we develop innovation, new products, revenue models? How does Vylor have to adapt? Please go do it by the way.

Okay. Good question, Joel. Look, I think the short answer is we're not sure yet. The traditional way that we price for our seed is we price for value. So we've got this massive breeding machine on the seed side of the house, we spend $1 billion a year in R&D. It's enormous. And what that gives us is it allows us to drive genetic gain on the farm every single year. And what -- the way we price for the seed is if we give a farmer 3 bushels per acre, we want to share that disproportionately to the favor of the farmer, but we price for that genetic gain.

So now you have to think about, okay, well, what happens if we were able to really crack that model where we're not getting 3, but we're getting a lot more than that. What happens if we can eliminate complete fungicide application sprays. That's worth incrementally more. We're not sure how to price for that yet. We're obviously talking to our customers. We're running some models. But I think that, that is just a win-win for us as a technology company, but more importantly, for farmers. If we can drive up profit per acre that significantly and then allow them to enter new markets. So think about biofuels.

With gene edited technology, driving -- as we talked about last night, driving the oil content, for example, up very significantly. We can have multiple sources of revenues for farmers. Yes, we'll get paid for that, but it diversifies their business, and it allows them to make more profit per acre with the modification of the genetics. I think that is huge. And that's not only a win for us and a win for farmers. I think it takes global food security to the next level, which is really why our company exists today.

Okay. Let's talk about the breakup a bit. Maybe you can give a bit about.

It's not a breakup, it's a separation.

It's a separation. Okay.

We still like each other.

Okay. Can you talk about some of the rationale for the separation?

Okay. Well, I think, this is probably old news by now when it comes to the separation, but it's a leading question.

It is.

Okay. Look, I think when we started to look at this some time ago, we were looking at the future of crop protection and where the industry most likely is going to head. And we were looking at the future of the seed technology business, and we just talked about gene editing and new technology that we're able to kind of undertake there. Both of them are very exciting futures with significant growth opportunities, but the overlap is becoming less and less today. And so -- and you've got this company that we built and the decision to create Corteva is absolutely the right decision at the right time.

And the reason I say that is if you just look at the Enlist platform, which is a proprietary herbicide technology platform, it's created enormous amount of value for farmers and for our stakeholders. But when you think about the future now and what it's going to take to be successful in the kind of the next gen of technology, those are primarily going to be more open source technology and farmers are going to need multiple modes of action. The days of having sort of one herbicide tolerant technology in a set of genetics, they're long gone now. And so you're going to have to have multiple modes of action, which means that the industry is going to have to collaborate more together. That's our thesis. And so how do you do that? And so how do you and if you think about what it takes to invent a biotech trait today, it's hundreds of millions of dollars and 15 years of development and regulatory. To develop a new active ingredients, it's almost the same amount of money and it's close to 12 years to get it developed and bringing it to the market.

So that's a lot of risk for companies to take. And we think that when we separate, there'll be more opportunities to partner like-for-like companies and derisk some of this innovation, which I think will bring costs down for us and at the farm level. And this is super important. So the reason that we're separating isn't one thing, and it certainly wasn't to create some short-term lift. We think that the path for the 2 companies fundamentally are not going to overlap as much. And it's going to actually open up other partnerships and availability in terms of working with other companies to leverage the strengths of either company.

So that was the thesis, Joel. And I think when I -- after we announced the separation, I went on the road and I went through Latin America and I went through Europe and then, of course, through the United States, and I checked with our channel partners and our farmer customers, they see this as a nonevent. They just want access to the best technology, whether it's in one company or not, they're really indifferent about. So I think that from a customer perspective, this is going to be neutral, maybe even positive. And for us to unlock value, I think there's going to be a lot of great opportunity here.

And I mean the synergies kind of low, I mean, decent. And I think there were some doubts you could hold it there, but you've been able to. Maybe talk about some of the work on that.

Yes. So I'll handle that one. So when we first announced our separation, it was -- we said we had put in a net dis-synergy number of $100 million. So -- and I think in some cases, some people were thinking as a little skeptical was pretty low. I think it's a reflection on the fact that the businesses today do operate somewhat separately, and I'll go through some of the examples.

The seed business today is very much a local regional business. And when you look at the CP business, it's fundamentally a global functional business. And so when you think about how you operate that under one umbrella as Corteva, we had a layer of management and so on and so forth to keep the glue together, to keep those businesses together.

So as we start looking at how do we take our 22,000 employees and frame and purpose-built organizations, we found opportunities to save some money that said that we don't need that glue anymore, and then we can make these organizations very specific to the needs of those individual businesses. So when you look at that, we know that the non-headcount number will be a dis-synergy. We have certain corporate costs and so on and so forth that will be more expensive.

But as we sit here today, we're about halfway through 6-plus months in. We're saying that we're actually trending a little favorable to that net $100 million number. So we feel really good about that. And probably one other thing, too, Joel. We said on timing, I think a lot of folks were a little bit skeptical again about how fast we could do this. And I said we're right on target. And the reason why we're able to do that, when you think about separations, some of the longer lead time items usually are things like systems that we already had our ERP system separate. And in some cases, there might be co-minglement around manufacturing or what have you.

Our manufacturing is 100% completely separate. And so when we're looking through the details, there's really literally a handful of agreements that we're going to need between the 2 businesses to go forward.

Thinking about the separation, a couple of things. So on the CP side, so in the Pioneer channel, you do a bit of CP. Talk about the opportunity might be to do a little more CP in the channel -- in the Pioneer channel and maybe open the door up to even more from third parties?

Yes. So the way the Pioneer agency model works, it's a direct-to-farmer model. So we have local independent business owners that are pioneer reps, and we allow them access to our seed technology and they work directly with farmers to sell seed. But a lot of these are really good business people and they sell many other things. So they will -- about 20% to 25% of them will sell crop protection. They usually don't do the order fulfillment. They usually work with a local retailer in some capacity. And the model I'm describing is an American model. It's a U.S.-based model. And of course, our crop protection would be part of that.

But we've never ever mandated even inside of Corteva that they can only do this or that with CP. We just don't feel that, that is for us to do. We want the Pioneer agents first to focus on seed. But if they want to do something else, obviously, they can sell our crop protection, we would allow that and help them, but they can sell every other crop protection as well.

So once we separate, I don't think there's a lot of change here on either side of the house necessarily initially. But I think where you're going, Joel, is that you've got to imagine that what we have in the United States is we have a relationship with about -- well, the top growers in the U.S. with about 65 million acres that grow corn and soybeans every year. And these relationships run deep. They're strong.

So the question is, okay, well, should we, as a seed company then invite others to have access to that channel. And how do -- is that good for farmers? Is that good for the Pioneer reps? Is that good for Vylor? And so those are interesting questions that are in the early days today. We'll probably have a little bit more to talk about that in September. But it is an interesting -- when you think about that channel and how powerful it could be, what could go through that channel, it has some interesting questions. But these are just, I'd say, today, musings more than anything. What we're going to really focus on right now is making sure that we're putting the best seed in the hands of growers so that they can produce really high-quality crops.

Okay. So you're separating BASF is separating Crop Science. Bayer could separate their crop science. FMC has got lots of stuff going on, maybe they'll start separating some assets from themselves as they try to shore up their balance sheet. So the world that we know it in this landscape could be a lot different in 2, 3, 4 years or it will be. How do you see that? And how do you think of, I guess, New Corteva, the CP space of pure play being an aggregator, being aggregated, like what will its role be in that new world? I know it's for Luke to answer, but he's not here.

Here. I don't want to speak for Luke. But let me tell you how to set up what we're going to give Luke. We're going to give Luke a ton of options and strength is how I would describe it. So the first thing I need to say right upfront is we plan to do nothing that will impact the separation. So our first job is to deliver 2026 the way we've committed it. And the other first job is to separate in the fourth quarter. So that's really, really important. Beyond that, though, David is going to ensure that both companies have very strong balance sheets, and we've already committed to being investment grade on both sides of the house.

So by definition, our Crop Protection business will have the financial strength, and it's got very good margins. It generates a lot of free cash flow, and it's going to have a wonderful balance sheet. So it will have the strength to grow. Now my view is that the primary mechanism for growth in CP will be through that multibillion-dollar pipeline that we've already invested in. And just to talk a little bit about the CP pipeline is in the next decade, we have 7 new active ingredients that will come into the market.

So not quite one a year, but one every year in a little bit. Plus we have an entire biologicals portfolio on top of that, those 7 actives, those 7 actives are chemical actives to bring into the market. So when I start thinking about the growth for New Corteva, I think it's going to be organically driven for the record. But if it chooses to participate in M&A because there's a consolidation event or there's portfolio of assets available, it will have the strength to do that, for sure.

Okay. And just the new world order of CP and C companies, do you have any thoughts on that?

No. I think it's all natural and healthy on what's happening across the industry. I certainly believe that my view is that the 2 halves of our company, so Corteva and Vylor are going to be very, very well positioned. I do think the industry needs to collaborate more together. I've said it many, many times, I come out of the commodity world where in the commodity world because costs are so important, the industry is just naturally built to collaborate more together. What I find a little odd in this industry is that there's more tension when it comes to sharing and collaborating in areas where it makes sense. And it's usually to derisk technology because technology is so darn expensive to bring to market.

So I'm hoping that with the adjustments that are being made that the industry will find a way to co-collaborate on big technology to allow productivity and cost to come through to farmers. That's my vision of the future.

On the Department put out a statement this week about wanting everybody to share IP and be more collaborative. Is that the way you interpret it?

Look, I think that certainly, when it comes to our seed technology, there's already a lot of commercial relationships. So as I mentioned, right now, we license our seed technology to 100 licensees in the United States. So there's lots of access to the best technology. We also spend $1 billion a year to continue that to ensure that, that technology in the seed side is the best it can be. And so it's one of these interesting things, right, is if you're going to make an investment like that, you need to be able to have a sufficient return.

But we do make the technology available to those that want to license it and want to brand it as their own. And I think that allows for us to have large companies that are innovating. We have smaller companies that are innovating and we have companies that don't have the innovation engine, but want access to the latest and greatest.

So certainly, we're supportive of all of those things. We think it is very, very important that we have a highly competitive industry, access to technology, where we don't want the industry to go, though, is where we have companies that have not invested the money into the innovation and then they try to access it inappropriately.

Have you thought about the dividend structures of the 2 separate entities?

Yes. So we -- one thing I should mention is in September, mid-September, we're going to have 2 Investor Days, one for each company. And during that period of time, we'll be giving an outlook out to 2029 with the financials. We'll also be going through and basically deciding what the capital deployment strategy will be for each company. Right now, Joel, we've really been spending our time on capital structure. Like Chuck mentioned, we expect both companies to have an investment-grade metrics for both.

I think you saw the announcement that we invested $1.5 billion essentially into our pension plan that would have remained or will remain with New Corteva. So that derisks a lot of liabilities on that side of the balance sheet. So that's really where we're spending the time. But I think the more important thing is Corteva has a very strong balance sheet today. So both companies, we expect to have strong balance sheets going forward, which I think will give them the flexibility to do whatever they want whenever it comes to capital deployment.

You talk a little more about hybrid wheat. You're rolling out -- I think there's also another competitor KWS rolling out some next year. Can you think about the hybrid wheat has been a tough nut to crack for ever. Talk about why it's been hard and now you and another player are trying to get in the market, what's going to be like?

Yes. So the challenge is, obviously, the companies that are working on this understand hybridization. But the challenge has been that the hybridization models that exist today prior to our technology have been cumbersome. And what that means is then that the cost to produce the seed is very expensive. So then once we try to get an appropriate margin and we have to price that at the farm level, a farmer is looking at the yield advantage and the price that they're paying and it doesn't work.

So it's not like we haven't been able to -- we haven't tried, but we've never been able to make the economics work at the farm level. So what's different? So we have now a proprietary production system for our hybrid wheat, and it's the first of its kind, and we have patented it. And what that's going to allow us to do is -- so the very first set of hybrids that we're producing right now is showing 10% to 15% yield improvement in wheat production. And you got to think about that for a minute, right? That's the worst it's ever going to be because it's the first hybrid coming out of the pipeline. So it's just going to get better from there with breeding. It's really powerful.

But the difference is the cost of production is lower. So we're able to charge an appropriate price at the farm level where a farmer can look at it and the economics will make sense. And so what we're hoping for is if they see a higher yield and then most importantly, a higher profit per acre, they'll invest in that seed technology because it's better for them.

And so we're going to roll this out in 2027. It's going to be a small launch. And then we're going to take this technology, I'd say, around the world, but only around the world where we can have the IP protected. So there are some parts of the world that don't protect the IP, just like corn and soybeans, we won't sell in that area. We may sell the seed when we have access to the right germplasm, but we may just license the IP to other germplasm holders in other parts of the world. And so that's the work that's underway right now. But it's a pretty exciting future for us.

And then if you think about why it's so important, so wheat is the largest row crop in the world. And it's also 20% of the calories we consume as humanity. So it can go a long way. Yes, we talk about profit and we talk about yield at the farm level, but this can move the needle when it comes to global food security because the most insecure parts of the world actually rely on wheat more than others. So this is an area where we can really move the needle, I think, with feeding people.

I have a different question. And thinking about your separation, I mean, what should like high-quality seed -- pure-play seed company top innovator. What type of multiple should that company trade at? And then what type of multiple should a high-quality CP company like New Corteva trade at, you think on the market?

Yes. So I'm not going to give you a number. Joel, that's your job.

First 2 numbers.

But let me just say this. Okay. So for Vylor, what we're going to try to articulate for you in September is a company that is going to grow the bottom line at mid-to-high single digits. It's going to have like 25% plus EBITDA margins, and it's going to convert an awful lot of its EBITDA to cash flow. You can put the multiple on that. To me, it's a pretty special business.

But at the same time, if you look about the CP business, it's a chemical -- it's a specialty chemical business that has a large part of its portfolio protected by IP and innovation. So I would take the specialty multiple and start looking up from whatever that is because it's got the IP around it. And it's got a pipeline around it, and it's going to invest about 6% to 7% of its revenue in R&D and create next-generation technology.

So the answer is more higher. But we also recognize that our jobs as officers of these companies are to execute and to deliver. You guys will decide how much it's worth. But to me, the opportunity for both is going to be very, very exciting.

Thank you, gentlemen.

Thank you.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to Corteva Agriscience Q1 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Kim Booth, VP of Investor Relations. Please go ahead.

Good morning, and welcome to Corteva's First Quarter 2026 Earnings Conference Call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Judd O'Connor, Executive Vice President, Seed Business Unit; and Robert King, Executive Vice President, Crop Protection Business Unit, will join the Q&A session. We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast.

During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements.

Please note, in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release and related schedules, along with our supplemental financial summary slide deck available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us today. Spring is always a busy and exciting time for agriculture, and this year is no exception. Planting in the Northern Hemisphere is proceeding well. The weather has cooperated for the most part, and we are well positioned with technology that is in high demand. However, farmers remain cautious and value driven. Crop mix and technology choices are increasingly strategic aligning acreage and input decisions towards crops with the best demand signals. Overall, strong crop acreage is supporting strong Seed and Crop Protection volume demand. There are some back half risks we are monitoring, and we will discuss those today, but let's start with the quarter.

Both Seed and CP delivered healthy double-digit EBITDA gains with all-in benefits on price/mix, volume, cost and currency. Year-over-year, Corteva delivered a 21% increase in Q1 EBITDA and over 200 basis points of margin expansion driven by our core portfolio, our growth platforms and focused cost execution. While some of Seed's strong North American volume performance can be attributed to timing shift, price/mix gains in every region are a clear signal that regardless of tight margins, farmers continue to plant our latest hybrids and varieties in order to increase yield per acre and their own profitability.

Volume gains in Crop Protection across all regions were driven by double-digit gains in new products and spinosyns, reflecting continued demand for our premium technologies. This performance allows us to reaffirm our full year guidance, which we announced in February. It also allows us to derisk the second half of the year slightly. David will explain more.

Factored into our guidance is the fact that farmers in the U.S. are expecting to shift planted area from corn to soybeans, resulting in a projected 3% to 4% reduction in corn acres. And if current trends hold, Enlist beans will be planted on about 65% of all U.S. soybean acres in 2026. As it approaches maturity, Enlist is the #1 selling soybean technology in the U.S.

As you know, our focus is now set on becoming the leading provider of soybean technology in Brazil, the largest soybean market on the planet. Our branded corn business already holds the #1 position in Brazil, and we are confident our licensing model for soybeans will allow us to efficiently gain share in this critical market. We're making great strides on that front, and we're expecting trait penetration to cross into double digit this year.

With regards to the Middle East conflict, although we have minimal commercial presence in the area, we're monitoring the situation closely. Given what we know today, while we're keeping an eye on any feedstock exposure to our supply base, the main impact for Corteva is currently related to increases in oil prices. However, given typical inventory cycle turns, we believe the 2026 impact is manageable within our current guidance range. David will get into the details, but we're also seeing some favorability on the tariff front from what we communicated in February.

Globally, from an overall industry perspective, we continue to see mixed fundamentals. Record demand for grains and oilseeds continues and farmers are investing in premium Seed and Crop Protection technologies to enhance and protect their yields. Overall, crop prices have increased from a year ago but margins are still tight as large global crop production and geopolitical uncertainty continues to weigh on the market, and several farmer input costs such as fertilizer and fuel have been impacted by higher oil prices.

Our latest view on the Crop Protection market for the full year assumes modest growth with low single-digit volume gains more than offsetting slightly negative pricing. For Corteva, we expect mid-single-digit volume gains more than offsetting low single-digit pricing headwinds.

So as we sit here today at the beginning of May, I'm pleased with our first quarter performance. As we all know, the first quarter doesn't dictate the full year in agriculture, but I'd say the first half is playing out a little better than expected. We're showing good progress on our growth platforms, and I believe we have the appropriate level of attention on improving our cost position through our controllable levers. Crossing the milestone of royalty neutrality into royalty positive later this year is a monumental accomplishment and a sign of what's to come. We already have over 100 independent seed company licensees for PowerCore Enlist corn and Enlist E3 soybeans. These self-help levers continue to drive value creation for the company and provide meaningful margin enhancement through the ag cycle.

Let me also give you a quick update on our separation. First, we remain on track for a separation sometime in the fourth quarter and we're trending favorably against our estimated $100 million of net dis-synergy estimate. As you will have seen a few weeks ago, we announced the new CEO for the company that will become Corteva home to our CP business. Luke Kissam is an experienced CEO with a proven track record of delivering results, and we're pleased he'll be joining the company on June 1. We also announced the 2 executive leadership teams for the new companies both which include a mix of existing and new members, but all of whom are aligned to our culture and values. As such, they share a passion for agriculture, science and innovation as well as the commitment to the teams that they will lead and the employees, customers and shareholders they will serve.

In addition, we filed our initial Form 10 with the Securities and Exchange Commission with the intention of having a public filing later in the second quarter. And last but not least, earlier this week, we announced the name of the future pure-play global advanced seed and genetics company. When we started thinking of a new name for our new company, we knew we wanted to honor the legacy of the generations of employees and farmers whose ingenuity and hard work have fed the world. It made us an undisputed leader in solving some of the world's biggest challenges, including food and energy security. We wanted to ensure that the technology that stands our company apart was reflected in the brand with a look and feel that was modern and tech forward, but still rooted in the conviction that science and innovation can change the world for the better.

I'm therefore pleased to introduce the combination of our efforts, Vylor. The name itself is derived from the word valor, again, acknowledging the generations whose work made Vylor possible. We will talk more about this at our September Investor Day event, but Vylor's success will be driven by industry-leading germplasm, biotech and gene editing capabilities as well as a world-class pipeline that includes an exciting new licensing business, proprietary hybrid wheat technology launching next year, and a next-gen biofuels development program. And with a nod towards the future, Vylor reflects our passion, our ambition and our shared determination to advance agriculture to, maybe one day, opportunities beyond row crops.

So you can see that this year is off to a busy start as we work to get this separation across the finish line while ensuring our customers continue to get the level of performance and support they have come to expect from Corteva.

Before I turn it over to David, I'd like to take a minute to honor the fact that just a few weeks ago, Pioneer turned 100, an iconic brand, if there ever was one. In 1926, Pioneer and its hybrid corn didn't just change agriculture, it changed the world. And we're about to do it again. And just like last time, we will do it with groundbreaking technologies from gene editing to hybrid wheat to safe, effective, sustainable Crop Protection products, including biologicals. It's easy to lose sight of accomplishments when we're so focused on the critical task at hand, but a milestone like this deserves to be celebrated.

Lastly, I want to take a moment to recognize our employees for staying focused on what matters most, executing for our customers, while managing a significant number of competing priorities during the quarter.

David, over to you.

Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide 6, which provides the financial results for the first quarter.

Results for the quarter were strong, led by an expected timing shift from fourth quarter, an early-season start in Seed deliveries and Crop Protection volume gains in all regions. Organic sales were up 7% compared to last year, with Seed up 9% and Crop Protection up 4%. Currency was a tailwind to the top line at 4% of sales, in line with expectations.

Seed price/mix was up 3% in the quarter, with gains in all regions as we continue to price for value. Seed volumes was up 6% compared to the prior year, volume shifts in North America from fourth quarter 2025 were expected. And we also had an early start to the North America season due to favorable weather. In addition, we saw continued growth in our Brevant retail brand.

Crop Protection price was down 2% as expected, driven by competitive market dynamics, primarily in Latin America. Crop Protection volume was up 6%, with gains in every region. Notably, new products and spinosyns delivered double-digit volume gains in the quarter.

As mentioned before, it's more meaningful to look at our business by half. Timing shifts between the first and second quarter are routine in our industry, while performance in Northern and Southern Hemisphere is more complete when looking at the 6-month period.

Operating EBITDA was up 21% over last year. Operating EBITDA margin of over 29% was up 240 basis points, driven by organic sales growth and continued cost savings from productivity.

Moving on to Slide 7 for a summary of the first quarter operating EBITDA performance. Operating EBITDA was up nearly $250 million to over $1.4 billion. Volume gains, price and mix, currency and cost benefits more than offset headwinds from higher selling expenses. Seed continues to make progress on its path to becoming a royalty positive later this year with another $30 million decrease in net royalty expense this quarter. This improvement was driven by lower royalty expense on certain in-licensed traits. Seed and Crop Protection combined to deliver roughly $70 million in productivity and input cost benefits, including lower Seed commodity costs.

In the first quarter, SG&A was up compared to prior year, driven by unfavorable currency, bad debt, higher commission from sales increases and higher compensation and functional spend. We expect first half SG&A as a percentage of sales to be relatively flat compared to the first half of 2025. Currency was roughly $60 million tailwind on EBITDA, primarily driven by the euro. Both Seed and Crop Protection had an impressive first quarter and delivered double-digit EBITDA growth and meaningful margin expansion.

Moving to Slide 8. Let me briefly reaffirm our full year 2026 guidance. We continue to expect operating EBITDA in the range of $4 billion to $4.2 billion, with margins of 22% to 23%, and operating EPS of $3.45 to $3.70, representing approximately 7% growth at the midpoint. This outlook is underpinned by broad-based organic growth, supported by continued execution on our controllable levers. While we are seeing some favorable signs from an early start to the Northern Hemisphere season, we will have a better view in a few months if we foresee any changes to our full year expectations.

With that, let's go to Slide 9 and transition to the key assumptions for the first half and second half of the year. Starting with the first half, our performance was driven by strong execution in North American Seed. Overall price/mix is expected to be roughly flat with Seed up low single digits offset by low single-digit declines in Crop Protection. We continue to keep an eye on broader ag input pricing but believe the majority of U.S. inputs have already been purchased for the season and will not be impacted by recent price increases. We are also seeing meaningful benefits from productivity and lower input costs in the first half, which is helping support margin expansion. At the same time, SG&A is expected to increase modestly versus the prior year from higher commissions and bad debt. From a currency standpoint, we're seeing a benefit in the first half, primarily driven by the euro.

Turning to the second half. We expect continued momentum driven by volume growth in Crop Protection, particularly in Latin America, with our biologicals portfolio contributing more meaningfully as it is weighted to the back half. On the Seed side, we see a stable demand environment, supported by stable corn acreage in Brazil. From a price/mix perspective, Seed is expected to improve low to mid-single digits, while Crop Protection pricing remains pressured with low single-digit declines year-over-year. Productivity will continue in the second half across both businesses. We also expect to see the net impact of tariffs and higher oil prices show up more meaningfully in the back half of the year, aligned with Crop Protection inventory turns.

As a reminder, tariffs are included in our guide and are trending slightly better than expected, while higher oil prices are driving a $40 million headwind also included in guide with active mitigation underway. And finally, currency is expected to be a tailwind in the second half as well driven by exposure to the Brazilian real.

With that, let's go to Slide 10 and summarize the key takeaways. First, we delivered a strong start to the year with first quarter performance ahead of expectations driven by continued organic growth across both Seed and Crop Protection. This reflects the strength of our portfolio and continued execution of our price for value strategy. We're seeing clear benefits from our focus on controllables with input cost savings and productivity improvements translating into meaningful margin expansion in the quarter. In addition, we made solid progress this quarter on our path to becoming royalty positive.

We also remain on track to return significant capital to shareholders, including a plan to complete approximately $500 million of share repurchases in the first half of the year. As expected, first quarter cash flow was impacted by the Bayer agreement and separation items. Absent these items, we would expect our full year free cash flow conversion to be in line with our mid-term target discussed at the 2024 Investor Day. And we are reaffirming our outlook, which reflects continued growth in sales, EBITDA and margin for the full year. This is supported by strong demand for our differentiated technology and disciplined operational execution across the business.

Finally, we remain on track with the separation, announcing many key milestones over the last several weeks. We recently filed our initial Form 10 and expect to have a public filing towards the end of the second quarter. Due to regulatory requirements, the separation is being treated as a reverse spin-off in the Form 10 and New Corteva presented as discontinued operation. We expect onetime costs to be approximately $350 million, consistent with external benchmark ranges with the majority expected to be incurred during the second half of the year. We are also seeing some favorability in our previous estimate of $100 million in net dis-synergies, with $50 million included in our 2026 guidance.

And finally, I wanted to share an important update regarding our ongoing capital structure setup. Last week, the Board approved a $1.5 billion discretionary contribution to the U.S. pension plan. This decision is a strategic part of our broader capital structure setup aimed at positioning both companies for long-term success. By taking this step, we are ensuring that each entity develops a strong investment-grade credit profile on a stand-alone basis, which is made possible by the strength of Corteva's balance sheet today.

With that, let me turn it back to Kim.

Thanks, David. Now let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A.

Operator, please provide the Q&A instructions.

[Operator Instructions] Your first question comes from the line of Chris Parkinson with Wolfe Research.

Chuck, obviously, there's a lot going on this year in terms of the world of agriculture between yourself, Syngenta, BASF. And the numbers have kind of spoken for themselves thus far. But in terms of your competitive positioning as a company within the industry, and I don't care if you want to focus on the Seed side of it, or the Crop Protection side of it, but everybody is kind of touting their portfolio and how it's best. Where do you think investors should be focusing the vast majority of their time into the second half? Where is the most optionality? What should we be the most enthusiastic about? I'd love to hear your perspective on that in terms of the trajectory of the company for the next few years.

Chris, it's a great question. And I'll give you some thoughts today. But of course, this is going to be the entire focus of the Investor Day that we have planned for September 15 in New York, and both companies will lay out actually multiyear financial and strategic plans. So that's my plug for the morning is please dial in for that.

But let me just give you some thinking. So look, I think from an overall perspective, Corteva laid out the 3-year plan. We're well on track. Some could say even we're trending slightly better than that. And if you come down to why that is, there are really two big levers that we're pulling, right? So we're using our technology, and we're developing the new technology and putting it into the hands of farmers. And let me unpack that in just a minute. And then I think we've been one of the first in our industry to really go after cost productivity. I'd say with a very set of disciplined processes internally, and that's created an awful lot of value. And the last 3-year plan we put in place, there was $1 billion of cost, and we're trending a little ahead of that.

But beyond that, then just to answer your question, look, we would stack up our technology and our pipeline on both sides of the house to anybody in the industry. In fact, I'd say in many ways we're leading. And if you just look at New Corteva or the Crop Protection business, we've talked about the size of the portfolio. And if you think through that in the next decade, we're going to have something like 7 new active ingredients plus a whole host of new biologicals. In fact, we're going to roll out our first biocontrol, which would be kind of the one of the first in the industries with the efficacy that we think we have. So there's just lots of excitement there.

And then you know we made the investment a few years ago in biologicals. And today, our CP business would be one of the leaders there. So there's a lot to like on the portfolio. The separation, I think, is going to open more doors for the Crop Protection business. But I'd say that our portfolio is extremely strong in CP.

When you look on the other side of the house, when it comes to now Vylor, so no more SpinCo, which I think is one of my favorite things of this call today, you think how we're going to grow the Seed business in the future. It's going to come down from out-licensing. And this is the first year that we're going to be royalty positive, and that's new information for this morning. And we were thinking we would be royalty neutral. But with the Bayer agreement that we signed back in February, we're seeing just very strong demand for our corn and soybean technology. And we said last quarter that, that would be about $1 billion of incremental revenue over the next decade or so. So pretty sizable growth from licensing just our bread and butter, which is corn and soybeans.

On top of that, you've got the hybrid wheat program, another $1 billion opportunity. It may be a little longer term, but $1 billion opportunity, nevertheless, with our own proprietary sterility system and we're going to take that technology globally. Beyond that then, and we'll talk -- this is where the commercial has to be for September, the gene editing and biotech capabilities that we have today especially gene editing capabilities, we feel we can go beyond corn and soybeans and potentially wheat to other row crops and even potentially beyond that. And that's the information that we're going to share in September and kind of our longer-term growth strategy. But even the core growth that we just said, if you start thinking about that what it looks like from a growth perspective, I think Vylor is a classic growth compounder when you look at its margins, its conversion to free cash flow and its top and bottom line growth.

Your next question comes from the line of Vincent Andrews with Morgan Stanley.

Chuck, in the press release, you talked about -- you kind of teased us with the idea that the S&D environment in crop chemicals is starting to improve, that was development out of China. So I'm wondering if you could speak to that. And when you think that might manifest itself in your results, it doesn't seem like you're putting anything into the back half of the year for it.

Yes, Vincent. So look, we all know where we are in the global CP industry cycle. If you think about 2025, that was the first year we were actually flat, and we were sort of celebrating that we saw a flat market because the prior 2 years, 2024 and 2023, they were pretty tough in this industry. And then in February, when we gave our annual guide, we said, hey, 2026, our view is that it will be the first year in several that we'll see the industry return to growth. But don't get excited because it's going to be modest, and we said low single digits. We're still of that view. So the macro perspective for us has not changed. We think globally, the crop protection industry will grow slightly in 2026, but it's a lot better than where it's been.

So what's driving our conviction on that? Well, there's a couple of things. We're seeing a few changes with higher energy and oil pricing around the world now that is adding cost inflation to AI production in the low production jurisdictions around the world, namely India and China. And so we are seeing price increases actually for certain AIs. The other thing, of course, we're finding is that we are seeing a slight slowdown in China exports into Brazil. And it is slight and I wouldn't say that you can say it's a trend yet because the data is pretty recent as of March, but it is certainly a good data point.

So when we add it all up, we start to think about, okay, well, what is the impact? For 2026, I'd say the impact is probably minimal, just to be very candid with you, because Brazil has their inventories, I think that they're going to need for at least most of the year. But this could be a positive sign as we get kind of late 2026 and as we enter 2027 first half. So that's kind of how we see the industry shaping up is a return to slow growth, and there's some positive signs out of China when it comes to sort of the cost of their AIs and what's coming into Brazil, that's giving us some hope.

And then, yes, there are -- and we mentioned this in February, that China put also some export controls of VAT back on, which is also causing, I think it's about an 8% price increase for certain amounts of AI. So another positive data point, Vincent.

Your next question comes from the line of Joel Jackson with BMO Capital Markets.

A couple of questions sort of together. Can you just first talk about how much of earnings from Q4 got pushed into Q1? And then I know you don't like, Chuck, to change your guidance in May for a year until the season is over for North America. But can you like -- it looks like if you look at the puts -- can you talk about the bridge for '26 and what's changed since you thought a few months ago? FX seems a bit better. You talked about royalties being a bit better, you talked about energy cost being a bit worse. Can you maybe just give us the high-level buckets of what's better and worse versus what you saw a few months ago?

Yes, Joel, I'll have David answer those questions. But you're right. Look, in agriculture, we're still planting right now. There's not much difference between what we know in February and what we know at the end of the first quarter. So we usually do not adjust guidance. We think about our business squarely first half, second half, and we will make the necessary adjustments after Q2. But I'd say that overall, there's puts and takes, David will walk you through all of those. But overall, the year is shaping up to be a little better than we expected in February.

David, over to you.

Yes. So I would say, when you look at the amount that went into the first quarter. Obviously, we had that in our original bridge. So whenever you think about kind of where we are vis-a-vis our original assumptions, we're pretty much in line for that. So obviously, Q1, a very strong start. We did say that even though we look at our businesses in halves that we do expect the first half to be up more than we had originally expected. So we had expected that both halves would be fairly flat from a year-over-year percentage increase. So around that 7% kind of a number. But right now, we expect the first half to be a little bit stronger than that.

When you look at the actual bridge items. And actually, I think, you laid them out very well, Joel. I mean, I think currency is likely to be a little bit favorable, I think when you look at where we are with our royalty journey, that's probably going to be a little favorable than our original assessment. But there are things like the Iran conflict adding to inflation and so on and so forth, mainly in the back half of the year. We've sized that up as a negative $40 million kind of number right now. Tariffs, we expect to be slightly favorable. So you add all that together, and these are pretty minor puts and takes when you think of a $4-plus billion kind of an outlook number.

So that's where we are at this point in time. Again, we'll look at these items. We'll also look at things like our interest expense, tax rates and all that sort of thing because I do feel like we're a little bit favorable, probably on the lower end on our tax rate assumptions also.

Your next question comes from the line of David Begleiter with Deutsche Bank.

Chuck, I know you mentioned input costs wouldn't impact U.S. farmers this year, but looking to next year, do we expect any impact on the farmer behavior buying decisions given what you've seen on the cost side?

Yes. David, so I think that the thing that if we start with what we've seen this year, and it's interesting if you look at the futures pricing, clearly, the market right now is actually calling for a bit more corn area to be planted. And our order book would reflect dimensions of that for sure. And as we said already in the prepared remarks, the majority of U.S. farmers already had fertilizer for the season. So we don't anticipate that what we've seen with higher energy prices today have or will impact U.S. planting decisions.

Now higher fuel pricing on the farm is certainly stressing farmers in the U.S., but I'd say around the world as well. But David had mentioned this already, we are watching this for the second half in Latin America, because if higher energy prices persist, I think it could impact not only the amount of area that's planted but also what is planted in Brazil specifically. And so we're just trying to understand what that is, right now, we're not overly concerned. Our second half forecast is around flat area, I think, for safrinha, and this is an uncertainty that we're monitoring.

So now if you fast forward, okay, well, what happens in the U.S. second half of the year, potentially into 2027. There's a lot of puts and takes that could get us to the situation. But I would say -- the one thing that we're quite confident in the United States is that you're going to see 180 million acres planted of corn and soybeans. And it's going to be determined on in terms of energy prices, fertilizer availability and cost as well as the futures pricing to determine sort of what that mix looks like.

But right now, I'd say that, that's some of the things and the dynamics that we're watching, but it's way too early for us to talk about the next U.S. season, but those are some of the things that will, I think, determine. For this year, I think we're still very comfortable with 95 million acres of corn and around 85 million acres of soybeans being planted. That would be sort of directional on what we're thinking about for this spring.

Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.

Chuck, I was wondering if you might walk us through some of the next mileposts that you're most focused on in terms of the pending separation. Nice to see the new name, Vylor, and the new management as well. It sounds like a Form-10 is coming over the next month or 2. But more interested on kind of the operational side. Maybe you can elaborate on what you're able to do, if anything, to attack the dis-synergies pre-spin versus post-spin and other sort of mileposts that you need to pass prior to the Capital Markets Day?

Kevin, yes, I'll start, and then David can add some of the details here. So the bottom line is there's been no surprises so far in the separation process. Lots of moving parts. We have literally hundreds of people that are doing two jobs right now separating and taking care of their customers, but so far, so good. We are on track for Q4, and that's still feeling very, very good. And as David mentioned, the net dis-synergies were probably trending a little bit better than the $100 million, and we've got the $50 million built into the guide.

We did have some very important milestones in Q1, so we announced Luke Kissam as the new Corteva CEO, which we're delighted that he's joining us. And then we have the two executive leadership teams now. And then we filed the initial Form 10. And as you mentioned, we have a name now for the seed and genetics company, Vylor. So we still have some headquarter decisions to make, where we're going to base our operations. So that will be in the second quarter. We'll have the public filing, I think, David, in the second quarter as well, and David can unpack that for you. And then in the second half of the year, we will announce the Board of Directors for both companies, finalize the capital structure, I believe. And then September 15, I hope will be the highlight where both companies will introduce the management team. And like I already said, the strategic and financial plans.

David, what did I miss?

No, you hit just about everything there Chuck. But I'll give, maybe, a little bit more color on the net dis-synergies. When we first initially came out, we said about $100 million. And when you look at that and break it down into two kind of major categories, there's an outside spend component of that. So think about IT costs, corporate costs, external public company costs, those sort of things. And those are trending pretty much where we expected, and that will be a dis-synergies. There's just more costs whenever you separate the businesses for some of these elements.

So then you get down to the other side of the house, which is more organizational structure, these sort of things. And a lot of the heavy lifting in the separation, I would say, other than IT in the last couple of months was really getting our org structure appropriate for both businesses. We've talked about this before where the New Corteva business is basically operated as a global functional business. And by large amount, when we look at the Seed business, it's much more of a regional business.

So we had talked about having a certain layer of management, what have you to kind of keep that together as Corteva. Well, as we've unwound that, we have now implemented a restructuring program, which we talked about, about $80 million that we took a hit in Q1, that is all in effect to get these two org structures appropriate for both businesses. So when you add that all up, that's probably where we're a little bit favorable than our original estimates as we're still working through it, as you can imagine, splitting 22,000-plus people in the two organizations, that's a lot of work, but that's really where a lot of the heavy lifting has been recently.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

The first quarter was a little bit puzzling because corn volumes were up 7% and soybeans were down, but all things being equal, soybean acres should be up this year and corn acres down, so why was corn up and soy down? And for Dave, I think you said you're going to -- there was no free cash flow slide. And I think you were -- you plan to contribute $1.5 billion to your pension plan, which comes out of cash flow from operations. So are you giving an adjusted number for free cash flow? And in the first quarter, you used, I think, $700 million more cash flow than you did last year. Can you break that up into pieces and explain it?

So we'll have Judd answer the corn, soy question. And David can handle the free cash flow. Go ahead, Judd.

Yes. Thanks, Jeff, for the question. And maybe just touch base on both of them. Obviously, North America in particular, is a first half business versus a first quarter business that March 31, April 1 date, 1 week of deliveries can make a big swing. We did have some volume of corn that came out of fourth quarter 2025, just because we didn't get as much into fourth quarter '25 as we had typically in prior years. And then on the soy volume side, we'll just have to wait and see. We don't see any -- from an order book standpoint, we're in a solid position. It's just the timing between first quarter, second quarter, and we'll know more, obviously, in terms of where we're exactly at the half.

But no red flags, crop is going in the ground well. We're a little bit ahead for both corn planting as well as soy planting. I feel like we have a very strong position from a corn share perspective. And soy acres, we believe, are going to be up and that we're going to be participating on our share of those acres. So let us get through planting, we'll be able to give you the full story.

Yes. And on free cash flow, we always said going into this year that free cash flow was going to be a little bit unusual because we would have some discrete elements regarding our capital allocation and so on and so forth, mainly setting up the two structures going forward. When you look at Q1, the $700 million, by and large, the biggest impact of that is the Bayer agreement that we paid out in Q1. And then we also said from an operational side, I think the most important side is the business itself is still right in that 40% to 50%, 45% at the midpoint conversion rate. But as we go forward, to your point, we will have elements of spend like the onetime separation costs that we outlined, the $350 million. We had the Bayer agreement, we'll have the $1.5 billion in the pension, which that is on a pretax basis. So when you look at the tax savings on that is about $290 million.

Your next question comes from the line of Duffy Fischer from Goldman Sachs.

I want to drill down on Latin America and kind of the upcoming season. So you're holding your expectation for corn acres flat. But if you look nitrogen is what's really ripped in the last couple of months, which makes soy more favorable, all else equal, relative to corn. So what's the logic in holding that?

And then two, if you move 1 million acres from corn to soy in Latin America, we know kind of the rule of thumb in North America, but what would that do to your P&L in Latin America? And then just a third one, as working capital has become, or bad debts have become a little bit of an issue in North America. How are you thinking about that for Latin America? How much working capital are you willing to put out this year, let's say, relative to last year?

Yes, Duffy, I'll take the first couple of pieces here, and then I think David can touch base on the bad debt question. First of all, from a safrinha perspective, it's a bit different in Latin America, particularly Brazil than it is in North America. North America, it's corn acre or soy acre. In Latin America, the safrinha acre goes after the soy acre and the timing of that crop. So it's a double-crop system. So when we say we're flat with safrinha, that's really -- we've continued to expand that second corn crop following soybeans, geez, for the last 8 or 10 years in a row. This year, with fertilizer prices, we're looking at it saying, we could have a flat year and not actually expand the area.

But from an acreage planted standpoint, it's a bit of a blue ocean in that we're only still with safrinha corn, second winter corn on a fraction of the soy acres. On the soy, corn shift, obviously, I think we've shared the North America number. I don't have the Latin America number, but it would be materially less than 1 million acre shift in Latin America. It would be much less than North America. David?

Yes. So when we look at kind of our -- what are we offering in Latin America regarding mainly credit terms and what have you, given interest rates and such. I think that's where we rely a little bit on our barter program, which we believe is #1 in the industry. It's growing. I think it's really good for us. When you look at the two businesses, they are a little bit different because in Seed, we still do get some prepayments of cash going into the season. And for CP, when we look at where we are going to increase credit offerings and so on and so forth. We're very, I would say, strategic customer by customer as to how we're going to go about that.

And as we sit here today, I think we've done a really good job of balancing that. We did talk about a little bit more bad debt this particular quarter. So when you look at our SG&A being up roughly $100 million in this first quarter, and we can unpack that, if you want. But about 25% of that was bad debt. As we sit here today, though, our past due as a percentage of sales is very much in line, if not a little bit favorable to where we were at this point last year. So it is something that we talk about, I would say, on a regular basis, the commercial teams, along with the treasury teams and we tried to thread the needle between balancing risk and opportunities by customer.

Your next question comes from the line of Joshua Spector with UBS.

This is Lucas Beaumont on for Josh. So I just wanted to go back to the crop chem kind of volume acceleration in the second half that you're expecting there, where you're looking for volumes to kind of move up from low single digits in the first half to high single digits as we get into the second half of the year. So could you just kind of give us a bit more detail on where you see that coming from product-wise and regionally? And just how would you compare kind of your growth there to what you're expecting for the market there in the second half?

This is Robert. I'll jump in on that one. So when we talk about second half of the year and the volume increase that we think we'll see as compared to what you saw first half or first quarter. It's primarily Latin America driven. Keep in mind that more acres are going into production again this year. As Judd talked about, safrinha could be flat, but those acres will get planted into a crop, and that still takes Crop Protection into it.

The second thing on it is we have biologicals in that area that continues to grow, and we have some key products there, Utrisha and BlueN being one that's a nitrogen generator for the plants. And keep in mind, fertilizer pricing as it is today, especially ammonia, urea pricing, this is an alternative. And so we're looking to continue to grow that, and we've seen double-digit growth this last year as well.

So between biologicals in Latin America, between -- add to it the growth that we saw in the first half or first quarter of spinosyns because we're seeing increased pest there, and then just the overall addition of demand from more land and the tropical climate of resistance continuing to grow. That's really what's driving us in the second half to get the double-digit growth for Crop Protection.

Your next question comes from the line of Kristen Owen with Oppenheimer.

A little bit different take on what's going on in the Middle East and how that influences your business. Chuck, you noted the forward curve calling for more corn acres. We've obviously had this significant shift in the global biofuels backdrop, not just here in the U.S., but Brazil, Argentina, Indonesia, really as a factor for mitigating that energy cost inflation. I'm wondering if you can talk about how you're thinking about this impact on your business, if you're seeing maybe some incremental interest in the new production system platform and winter canola, just how the biofuels backdrop is maybe changing how you're thinking about exiting '26 into 2027?

Thank you for the question. So we're very excited about sort of the momentum that's gaining literally around the world on biofuels, both traditional biofuels and I'd say next gen. It's a little too early to call it a structural change yet. But if you look what's happening, so this year, we're expecting to have another record demand year for biofuels globally. Last year was also a record, and I think that we're going to see even more demand if energy prices stay elevated globally.

So just to go around the world quickly. Brazil is moving to E32 and they're going to consume more of their domestic corn crop than they ever have, which I think structurally is going to be great for farming in Brazil and, of course, help with energy costs in that country. Southeast Asia, as you mentioned, have lofty goals to be a leader literally in next-generation aviation fuel. And if they hit their goal, that's going to drive a lot of crop demand.

And then here in the U.S. I think we're close to an E15 year-round mandate. We still need to get that across the line, but it makes a lot of strategic and economic sense and certainly would help farming. In fact, our view would be if we get to E15, it could consume up to another 15% of the U.S. corn crop. So that would be very good, I think, for U.S. farmers.

So there's a lot here to like we think that we're going to see continued growth. And then if you look at our program, and maybe I'll have Judd just speak to it a little bit. We have one of the leading biofuel crop development programs with multiple partners around the world, literally. So Judd, maybe over to you.

Yes. Thanks, Chuck. And maybe just talk near term as we're getting ready in the south of the U.S. to harvest roughly 100,000 acres of crop that went in last fall focused with Bunge and Chevron, sustainable aviation fuel. The crop looks good agronomically, yields look like they're going to be in a favorable position. Farmers are going to be profitable with it. And with that program our retention rate with the farmers that have dove in and taken on this new cropping system has been over 90%. So if a farmer tries it once they've built it into their program, and it's working very well for them. So we're excited about that. We're going to expand somewhere north of 400,000 acres next year. So material growth over the last 3 years as we've proven out the concept.

And I don't know that maybe you've seen the most recent announcement we've had with our JV, 50:50 JV with BP in Latin America, expanding mustard crops in Latin America, looking at a number of other crops as well, winter canola, sunflower. And we're just getting started with that with just a short list of employees that are standing that up. We'll have crop that starts to go in the ground in 2027 in a more material way, and we'll keep you informed on that. But very excited about our internal platform around biofuels and what the next 10 years, 5 years can look like there. So thanks for that question.

Your next question comes from the line of Ben Theurer with Barclays.

Just wanted to follow up a little bit on the separation, and you've talked about the capital structure for the two new businesses. So I just wanted to understand what are like kind of like the considerations you're putting into place as it relates to the level of capitalization or the level of leverage in between the Crop Protection versus then the new company, the Seed company, how we should think about this and then ultimately, your ability to really engage in what you've talked about like scaling the business into Seed, but also on the CP side. So just that capital split, how should we think about this? What is your current target?

Yes. So right now, publicly, we've addressed that we would like both companies to have investment-grade metrics from a credit standpoint. And I think we're in pretty good shape being able to hit those targets given how the strength of the overall Corteva balance sheet. So really, when the Board does final approval towards the actual split date, I think our major considerations are going to be, one, as we talked about where the liabilities sit, liabilities are going to stay with the company that they're in today.

So one of the elements we were able to address here and we announced today was the fact that the pension will be staying with New Corteva, and we're able to put this discretionary, I would say, $1.5 billion payment in to ensure that the funding level makes sense. So when you look beyond that, you're really just talking about cash levels and financial debt levels of the two. Both will be set up, I think, not only for investment-grade metrics, but we will also be, I think, in an opportunity to actually be on the offensive when it goes and they'll have plenty of strategic opportunities that they'll be able to execute on.

Your next question comes from the line of Laurence Alexander with Jefferies.

This is Kevin Estok on for Laurence. So just back to the spin-off. So you guys called out $100 million in dis-synergies. And just -- can you walk through what remains to be sort of absorbed post-spin? And I guess sort of related, how each company's eventual stand-alone margin profile would compare to today?

Yes. So when you look at -- I think the fortunate situation for us in going into this spin is pretty much the way that we've been segment reporting will be the way that the business will be portrayed going forward. The only other adjustments there will be how are those corporate costs allocated between the two different businesses. And then you start looking at two other elements, one being net dis-synergies and which business do they go on. And we already talked about our opportunity to reduce that as much as possible. We're working very hard on that. And then the final element is, are there any agreements with any kind of shift between the two businesses.

I think as we sit here today, there aren't any really material kind of shifts between the two businesses when it comes to operating ongoing business. It really will come down to the split of the corporate costs and where we land on that dis-synergies between the two businesses. So I think what's fortunate for us, things like the margin profile of the businesses and certain things like that are not going to change when you look at it post-split.

Your next question comes from the line of Arun Viswanathan from RBC Capital Markets.

Maybe I can just get your thoughts on the competitive environment in Seed. Your main competitor, I guess, has been potentially a little bit strapped in the last few years, but they do have some new products coming out over the next few years. Do you view that as potentially a competitive threat or that reemerges? Or maybe do you feel like the pipeline at Corteva, maybe you can just discuss some of the pipeline projects you guys have as well that would maybe offset that. I know you've talked about short stature corn in the past and wheat as well. But anything else you'd highlight?

Yes, Arun, this is Judd. Thanks for the question. And maybe just walk through kind of what our view of the world internally is for the next 5-year window and then speak a little bit about the competitive environment.

Obviously, there's a lot of good competitors in the market we're banging away with them at the farm gate each and every day. It all starts with germplasm. Our corn germplasm is as good as I've seen it in my 27, 28 years with the career -- with the company and continues to improve. The rate of genetic gain that our R&D team is bringing is tremendous and the funnel. And just in terms of the diversity of germplasm genetics, being able to fill all of our brands and licensing is fantastic.

Our Z-Series soybeans has been the best class of soybeans we had brought to the market and continues to improve. We've still got about -- well, we've settled in around 65% plus of Enlist penetration from a market perspective. Obviously, there's going to be some new competitive entrants in that space. Our germplasm is where it starts. The herbicide platform is important, but we got some other folks in the market that are catching up to where we've been with Enlist, and so we'll compete accordingly.

If you recall, when we brought Enlist into the market, we had some material market share gains, but it wasn't this flip of the switch. When Enlist came or when Dicamba exited the market until they got their most recent label back, there wasn't this big switch, right? It's a lot about germplasm and yield and will continue to be.

We've got next-gen above-ground coming in 2030, in North America, next-gen above-ground coming in 2030, in Latin America. 2030, 2031 will have above and below ground. Brand-new novel mode of action, proprietary, fully proprietary traits for Vylor. And so I feel as good as I've ever felt about our product portfolio. Our competitors aren't going to stop. Certainly, they're going to continue to work at it as well, but we've had a really good 5-year run and I see the next 5 years being very similar. We've got a lot of things going in the right direction for us.

Your final question comes from the line of Patrick Cunningham with Citi.

So your differentiation mix of patented products within CP sits at roughly 65%. What's the target percentage for this mix by the end of the decade? And what are the most meaningful patent clips we should be mindful of?

Patrick, this is Robert. Yes, good observation. We're running about 2/3, a little bit north of 2/3 today on the portfolio being differentiated and as you look at our pipeline that's coming and how we think we'll continue to evolve. Our new products are going to be pushing $2 billion in revenue this year and continuing to grow. And we like what we've got there, Arylex, Rinskor are still not at their peak and are going to continue. They'll outpace Enlist, once they get to their peak revenue. And then we got more coming, as Chuck talked about, at least 7 actives that will hit market over the next decade.

And your specific question by the end of this decade, Haviza will come out. That's going to be a blockbuster in Latin America for Asia soybean rust. And then we've got some biologicals coming as well. So we expect it will continue to grow is the short answer. How far does it go? We've got to model a few things out, obviously, but it will continue to increase slightly from where it is today as we approach the end of the decade. And that, added in with the biologicals, is going to give us a whole lot of strength as we look at that value proposition at the farm gate.

We have reached the end of the Q&A session. I will now pass the call back to Kim Booth for closing remarks.

All right. Thanks for joining the call and for your interest in Corteva. And we hope you have a safe and wonderful day.

This concludes today's call. Thank you for attending. You may now disconnect.

Welcome back, everyone. Delighted to have both the CEO and CFO, Chuck Magro and David Johnson from Corteva with us this morning. I'm going to let Chuck and David make some comments. But in general, it's a pleasure to have you here. Always plenty of going on -- plenty of things going on with Corteva, but clearly, interest and diligence has been heightened with the planned breakup of the Seed and the chemical business. But I will -- I'll hand it over to you if you want to make some opening comments, and then we can kind of get it going.

Sure. Well, first of all, Matt, the first time we've done this, right?

Yes. No, I know.

It's great to be here. Thanks for having us. Maybe I'll just make 3 high-level comments, if I could. So 2025 was a pretty strong year for Corteva. Both of our business saw top and bottom line growth. We generated a little bit better cash than we thought. And we think that 2026 will be another year of growth on top of what we delivered in 2025. So I think from our perspective, the strategies that we've employed, if you look at where the growth is coming from, it's coming from organic growth in our -- what we call our growth platform. So think about in Seed, our out-licensing strategy, which is going to be a multi-decade strategy where we think we can capture a lot of value for our shareholders with our differentiated technology. Biologicals, we'd like that business to be $1 billion in the future. It's about half that now, and it's growing significantly above the market. And then in our CP products. And hopefully, in the next year or 2, that portfolio of products could cross $2 billion of revenue.

So we've got a lot of forward momentum, I think, in some of the high-technology parts of the Corteva portfolio. And we think that 2026 will be a significant growth year on top of what we delivered in '25.

Beyond that, then, yes, we've got this little thing called the separation that we announced last October. We're going to separate into 2, I think, market-leading world-class companies. One will be focused in crop protection and one will be focused in advanced genetics or Seed technology. The tagline for today is we're on schedule to separate in the second half of 2026. We expect that to be sometime in the fourth quarter. And we communicated that we think we could do that for total dis-synergies of approximately $100 million per year at a run rate basis. $50 million is actually built into our '26 guide. and we're on budget for that as well. So nothing of significance to report yet.

In the first half of this year, we will announce headquarters, senior leadership teams, the CEO of new Corteva. And then, of course, we'll start to think through the capital structure and balance sheets and all of that. And David is here, and he can unpack all that for you.

So that's what I wanted to cover today, Matt, at a high level. '25 was strong. I think '26 will continue that journey. We're within the 2027 framework that we outlined a year ago, and the separation is on track.

Well, David, I don't know if you want to make any comments.

Just adding to Chuck, I'll maybe go through the numbers real quick to recap '25 since we did have such a, we think, a really good '25. We like to talk about it a lot, Matt. So I'll say we ended up at $3.85 billion of EBITDA last year, which was up 14% over prior year. So again, we feel really strong performance there. We'd like to say we control the controllables. So I think that was a big element of our performance last year of productivity and making sure all that hits the bottom line. When you look at our EBITDA margins, we've expanded those about 215 basis points last year. So we're now up to like 22.1%. If you really go back in history when Corteva started, it was more like 14%. So we're on that journey, and we feel like we're starting to hit that area that we feel really good about.

And then both businesses, as Chuck said, grew EBITDA last year. And I know CP grew 6% last year, which we feel is really strong and shows the power of not only that business, but the productivity, the new products, the biologicals. And then our Seed business grew 19% last year. So I think last year in total, really strong. And Chuck had mentioned the strong cash flow, $2.9 billion, and we converted over 75%-ish or so of EBITDA to free cash flow. And we deployed $1.5 billion of that in buybacks and dividends. So again, really strong '25 and '26.

As Chuck mentioned, we're expecting about 7% increase in EBITDA with both businesses growing again this year. And probably one of the more exciting things for us is we expect our net royalty position to be neutral in 2026. And if anyone has been with us for a little while, that's about 2 years before we thought it would be. If you go back 5 years or so, that number was like negative $700 million. So that journey continues, and we feel good about that. As Chuck mentioned, we did build in $50 million in net dissynergies into the number. And I know tariffs are probably something on top of mind right now. We did build in an incremental $80 million of tariff impact in the '26. We feel about 70% of that is already either in our inventory or it's outside the U.S. And then, of course, we're evaluating the residual amount of that.

Right. Having both of you up here, I'm going to cater most of the conversation to longer-term dynamics and strategy, I guess. But we are 2/3 into the quarter. Can you update a little bit as to what you're seeing in ag markets so far, especially North America as it relates to CP and Seed uptake? Start there, I guess.

Yes. So one of the things we like to talk about, obviously, to is we like to look at our business in halves. I know everyone is very focused on the quarters. But the reason why we like to talk about half is for our business, there's an element between March and April during the season in the U.S. where you have Seed deliveries are very highly dependent on weather and so on and so forth. So we can have a significant movement between March and April, which really in the bigger picture doesn't really mean anything. It's just a timing issue.

So where we look at right now, our bookings continue to be strong. I think that farmers are still prioritizing their Seed purchase, which is their most important purchase they make in the year. And when you look at the amount of technology in the Seed and the amount of prepays in Q4 is like a precursor to people wanting to get in line to make sure they can secure those seeds that they want, the highest technology. We do invest like almost $1 billion just in Seed to make sure we're delivering new technology every year.

And the one other thing I'll mention about that Seed purchase is Seed is the only crop input that actually gets better every year. So I know there's been a lot of discussions around Seed inputs and the cost and what have you. But when you look at the Seed, we expect it to perform better every year and really it's just a value capture on our side. And in CP, the pest issue still becomes an issue, weeds and so on and so forth. So I think farmers do want to protect their crop. It's really important even in these times. And at the end of the day, I would say we're well on the way and very much in line with our expectations.

Maybe we start with CP then, given what you just left off. What's the path here for the industry? Because I mean, you made some I don't know, critical but honest comments as it relates to the future competitive landscape, commoditization of certain aspects. How does this change the way -- I mean, obviously, I know how it change the way you're competing, you're splitting the company. But when you think about the path forward for Corteva pro forma, the CP company, like how does the landscape change fundamentally for you?

Sure. So look, we didn't split the company because we're worried about CP. I'll just be very clear on that. In fact, we're quite optimistic about the future of the CP industry. If you look at what's happening, Matt, demand for crop protection is still growing, and we expect it to continue to grow. And when we think about it, we are at what I would call a cyclical trough right now. It's not demand-driven. Demand has been steady and increasing. It is supply driven. And farmers are using more of the product every year because they need to because of the environmental pressures that they have growing the crop and protecting it.

So this is a situation where I think we've seen time and time again in a cyclical industry. And I think that the industry is poised for growth, to be candid with you. And what we wanted to do with the separation is allow a pure-play company, which this will be, to be able to participate in that growth in whatever capacity it chooses to do so.

Just to give you my view on the market. So differentiation of technology is absolutely critical, and it was going to get more critical in the future. And if you look at what we did over the last few years with our portfolio is we deemphasized the commodity part. In fact, we exited about 20% of our actives over the last 5 years, and we sort of doubled down on the new technology. And we've got a $9 billion pipeline in this business right now with half or a dozen actives and even more biological products that will come to the market in the next period of time. So the setup for our business is really strong.

I think from an industry perspective, it will return to growth. And what we said for 2026 is most likely the market will grow. That's our expectation. That's our call for 2026. It will be driven by volume. We're seeing strong demand essentially around the world, but there's going to be some continued headwinds, I think, in price, but volume should more than offset it. And everybody is sort of thinking about, okay, what's happening from China's perspective, right? Is China just going to commoditize this business just like it has in several other commodity chemical businesses. And my view is that there has been a time and place for generics coming from China and India, and there always will be. But I don't see a structural change happening. I think that what we're seeing is that demand is growing. And of course, the supply on the generic side is there. But really where things get exciting is on the differentiation. And there's still a premium for differentiated technology because of resistance issues in the crop.

So I think if you start to think through this, and then we mentioned on the earnings call when we did the fourth quarter, even China is starting to put early signs of export controls. There's -- they put the export tax back on. There's a little bit of consolidation happening in CP in China. And all these things, I think, are good signs for the health of the industry. So we're optimistic that we're at a point here where we expect 2026 to grow. And we see this as a cyclical trough, not a structural change.

Okay. I mean you touched a little bit on this, right? But the competition from China. So obviously, the focus is on active innovation and product differentiation. Does it make it harder as a loan CP business, if your core portfolio is increasingly under pressure to find the money to drive the innovation? Does it change the way the returns are built for this product? Because you've got a situation where synthetics take years to bring to market. Biologics are maybe fast tracking that, and I want to talk a little bit about that clearly, and we have a whole panel today on that topic specifically. But -- how does it change the return on this 10-year investment cycle in general and how you think about investing in new actives?

Yes, it's a great question. I think if you were starting up a global crop protection business today, it'd be a tough investment thesis. But we have increased the amount of investment we've put into both sides of our businesses. Since we launched as a separate company, we've taken up our percentage of revenue that's going to R&D up. And so for the Crop Protection business, we're between 6% and 6.5% of revenue. As I mentioned, it's a $9 billion pipeline today. It has actives throughout the pipeline in different stages of market readiness. And we're really excited about the future, right? And we've got a blockbuster product that hopefully will get approval this year for Brazil Asian soybean rust. It's a product -- an active called Haviza. That's going to be huge. It's going to be beneficial for Brazilian farmers, of course, great for global food security, but really good for the crop protection business. And behind that, there's many other products that we're preparing for market.

So to your question, I think for us, we've never pulled back in R&D. We've always been really a deep believer that what we can do better than anyone else is bring differentiated CP technology. And we've decided not to play in the middle. We exited our glyphosate business as an example, 3 years ago, right? Because it's been commoditized and there's lots of players, and we don't have a lot of differentiation there. So we're clearly going to play in a subset of the global CP market that is big, growing and exciting, and we can get premiums for. And we've got the R&D engine and capability and skill set globally to do that. But there are very few companies on the planet that can do what we can do.

Yes. And Matt, I would just reference, too, our results last year with our new products growing high single digits, which helped generate that EBITDA growth as we're investing in R&D. To me, that's the formula, along with Chuck, making sure that pipeline doesn't have any we'll say, like pockets or kind of issues going in any particular time. And I think the team has done a really good job with that.

One last comment, Matt. You mentioned it. It's expensive and timely to bring a new active to the market. My view is that where the industry is starting to take shape, and you can see with some of the announcements and changes across the industry, more collaboration and working together to derisk this for agriculture and for farming is mission-critical for the industry. So separating the 2 companies, this was top of mind for me to help make this decision. I think more consolidation could happen. I'm not going to count on it. But what will definitely happen is more collaboration when it comes to innovation because it is expensive and timely to bring these products to market. And if you can share that risk, you can bring a better product at a lower cost to farmers. That's critical.

Yes. I think you spoke a bit to my point, I guess, as well. So I was thinking about it as well, if you spent 6% of your sales to R&D and all of a sudden, your sales are down considerably because of pressures business, then your R&D becomes a bigger function overall. But you touched on Haviza and the company has some very nice fungicide products coming, right? Haviza, Adavelt, another one that we've been looking for. So if the CP market is flat over the next 2 years, maybe not a safe assumption, but let's just call it flat. What should Corteva's growth rate be as you layer in these new products and as sales pipeline starts to accrue a little bit more?

It sounds like a CFO question.

I knew that was coming, actually. I felt it coming this way. Yes, no, to me, like the market did not grow last year, right, but we did. So I think, again, I keep going back to the same thing around new product growth and what have you. In our guide for this year, we have 7% growth. When you put that down in between the 2 businesses growing, we said probably of the total growth in dollars, probably 1/3 of that goes to CP. So you're going to have about the same type of growth that we saw in 2026 versus -- that we saw in 2025. And if you start going into 2027, I'd say that has a slight uplift. But as you know, these products do take time over time. And then there's always -- there could be something falling off at the same time. So it is a little bit of a portfolio effect. So I would say that mid-single-digit growth in EBITDA, maybe a little bit higher than that as we get a little bit later in the decade.

Okay. All right. I appreciate that. To move to the Seed side. And I talked to Ken from Nutrien a little bit this morning on it. But what do you make of the longer-term profile of like the U.S. soybean farmer? And I mean that in so much as Brazil is obviously stepping into the market in a bigger way, supplanting a lot of like the traditional trade route for the U.S. soybean. We've seen consternation domestically as it relates to planting decisions. Our own strategist thinks that farmers probably plant more corn this year than they would normally because of fear that they're not going to have a market to sell their soybeans. Maybe that's overexaggerated, maybe that's not. There'll be new markets. We'll find different paths. But what do you see here? Because clearly, the soybean is being used as a trade tool and you have the leading soy technology in the market.

Let's start with, I think, the basics. So U.S. agriculture is still one of the market leaders in the world. My assumption for the foreseeable future is U.S. agriculture will continue to lead the world or be among the leaders. There will be 180 million acres planted of corn and soybeans. The mix will shift based on market opportunity and margins. But I don't see less planted area in the United States. It's still one of the most productive producing countries in the world, and I expect that to continue.

I also expect soybeans will end up in China. Is there a political narrative around it? Of course, there is. But China needs the product. Can they get it all from Brazil? We can debate that. But even if they could, U.S. soybeans would end up in Mexico or Europe or Egypt or where they go today, and the trade patterns would adjust. So I wouldn't count out the U.S. soybean producer whatsoever.

Now let's just look at it. I also believe that what is needed is that look what happened over the last 20 years in corn in the United States. That's the case study, right? They used to rely so much on exports. Now corn is essentially a domestic consumed crop. And so what's it going to take to get soybeans to be less reliant on export markets in the U.S. It's going to require policy and innovation. Those are the 2 pillars that were -- and Corteva is all in on the innovation, right? We need biofuel a biofuel mandate, and we need to be able to have U.S. farmers have another revenue source by investing in biofuel technology. So think about sustainable aviation, biodiesel. These are things that I think can consume a lot of oil in the United States, and we would then be less reliant on export markets.

And there's really positive momentum going from a policy perspective, and I expect that this will happen over time. And it won't just be for soybeans, but it will be for other crops as well like canola and mustard. And so there's going to be a really great opportunity, I think, here for U.S. farmers to have diversified revenue sources, be less reliant on external markets, potentially get a premium uplift, and it's a win-win for everyone. But I don't think that, that comes just because we're worried that the rest of the world won't buy U.S. soybeans. I think we're going to do both, and I think that the prospects are going to be quite positive for U.S. farming.

Okay. I appreciate that. To build on it, right, so what's next after the Enlist E3? It seems like you're partnering now with BASF. So if we think about kind of the traits, tolerance, where does this product ultimately go?

Yes. So Enlist E3 has been, by every definition, a massive success. The technology today is on 65% of soybean acres in the United States. And now we're taking that same investment thesis, and we're moving it to the world's largest soybean market, which is Brazil. And we have a very small market share there. So the significant growth in the playbook that we have used in the United States is going to be used in Brazil, and we're seeing great momentum there.

But the next technology iteration or the next-gen technology for our soybean technology will have most likely the relationship that we've built with BASF, their PPO technology built into it. It will be our HT4 next-gen technology. It's well under development right now. We expect that to be in the market, call it, early next decade. And so we've got a great long-term investment thesis around building our -- continuing to build and develop our market leadership in terms of soybeans.

And I think that the other thing that we need to think through, it's not just the trait technology, right? The reason that Enlist is a winner in the United States is, yes, we have the trait technology, but we also have the best germplasm in the world, and we've been doing this for 100 years, right? So Pioneer turns 100 in 2026. We have that kind of history, and we're the only company that has that kind of history. And if you look at our new, what we call Z-Series soybeans, we had the world record at almost 220 bushels an acre. So we know that the genetics in our soybeans are superior. And so it's the combination of the germplasm plus the trait because growers what they need, especially right now when market conditions are tough, they need every bushel they can get to pencil out their business plans.

And so I think what we've demonstrated with the Z-Series Enlist technology is that this has been really, really valuable. I was on a farm last summer and one of our larger soybean farmers who farm 15,000 acres, all he planted was our Z-Series technology. I couldn't believe it. Usually, they diversify, right? But he says, we're going all in because we've never seen performance like that.

Yes. I'd also say Pioneer sounds like a good pro forma Seed company name. I don't know.

You sound like about 10,000 employees.

I know how -- I mean, you talked a little bit about this, like you almost kind of preanswered my next question. But your #1 competitor is releasing Vyconic, right? It's probably the first credible threat you've had as it relates to Enlist and what has just been, to your point, like a blockbuster product. So how do you defend as Corteva?

Yes. So first of all, Enlist is the technology. We do license it. It's readily available. We have about 100 licensees that purchase that technology. So growers and our retail channel partners can get it from multiple places. And there's lots of competition in the industry. But yes, one of our peers are bringing in their next-gen soybeans. And that's going to give them, among other things, the 2,4-D trait resistance, which is what Enlist has today. So then if you -- the way I think about it, and it's a simple way to think about it is if they now have what we have in terms of technology trait protection, it's going to come down to the underlying genetics because that's what drives yield and who's going to win on the genetic gain.

And when we look at that, like I mentioned, the Z-Series technology, we rolled that out 2 years ago. And before that, the market leader was our A-Series, and we're seeing -- farmers are seeing 2 to 3 bushels an acre on top of the best already. So I'm sure they're going to have a great technology and a platform, and I'm not talking anything negative, but I like our chances as long as we keep investing in that pipeline and able to drive genetic gain through our breeding program. And we've been doing this for 100 years. So I like our chances.

Yes. Kind of the last maybe -- the last topic on seeds, but hybrid wheat, right? Clearly, team Corteva is very excited about it. The TAM itself is massive. So how do we size the opportunity for Corteva revenues in a world where you have a product with a pretty significant advantage and the TAM is this large. And so how does this scale over time because I know it will take time. And what are like the stage gates? What should we look at for broader adoption? When we say this market has agreed to it or et cetera? How do we gauge progress?

Yes. So we are very excited about hybrid wheat. So we're going to try to do to wheat that we did to corn 100 years ago and hybridize it. And we've got a proprietary production system that we've put a lot of IP around because, look, hybrid wheat has been sort of the holy grail. People have tried to do it for 25 years, and there are hybrid wheat systems out there, but they're not as stable and they cost a lot of money. And then when you try to price the Seed, farmers can't afford it even though they get a yield improvement. So for us, the trick is we've got a very stable system, and we're going to be able to provide them a really phenomenal product, like we are seeing 20% yields under stress environments. And that's the worst product we will have because it's the first one coming out of our pipeline, our breeding pipeline.

So you can imagine where this goes in the future. It's going to be a huge step forward for farmer profitability and global food security because wheat is the largest row crop in the planet. There's over 0.5 billion acres around the world. And it is still -- from a consumption of calories, it's 20% of humanity's calories still. So this crop is large and it's global. And we finally, I think, have got -- we've cracked the code when it comes to a hybridized production system that we can give value to farmers and price for it.

So the opportunity, the way we've sized it up, and we're going to give more definition at our Investor Day event in September. But the way we think about this is, this is a $1 billion revenue opportunity, most likely in the next decade or so because it will need the ramp. Now we are launching this in the U.S. in 2027. So American farmers will have the first technology available to them in 2027, and then we're going to rapidly move it around the world. We may sell Seed around the world, but we may just license the IP because there's a lot of germplasm pools for wheat that are public and that other companies own, and we may not want to sort of enter the Seed business, but actually just get paid technology royalty premiums. So we're making that decision based on each market around the world. So we're going to go to the market with a multi-strategy of seeds -- of selling either our branded Seed white label or generic seeds or a royalty, and it will be market dependent, Matt.

Okay. The last 10 minutes, I'll kind of move to the breakup. On the dissynergy side, right, there's some skepticism around the size. You hear people kind of say, maybe it's going to be larger, right, particularly given the R&D component to it. And how -- as one company, you sit here and you say, I have a farmer who has a problem, I can say, is it best addressed at Seed or chemical level, and I can make that call early. Is there a world where now 2 independent companies competing for a solution set to a problem creates more inefficiencies? How do you build confidence that the costs aren't higher as it relates to R&D and innovation?

So we've done a lot of work, as you can imagine, with a lot of teams as we've been going through. I think one of the reasons there might be that perception is not everyone understands how separate the businesses are already today. So I know in a lot of cases during spin, some of the larger cost elements might be like splitting operations and this sort of thing. We have absolute 0 overlap between our operations. And that's because the CP business fundamentally is a global kind of functional business. So when you think about production and all that, whether it's our production or we're in-sourcing from other people, it's a global supply chain.

Seed is very regional. We actually produce Seed around the world for local markets and so on and so forth. So there's very little cost, no cost actually on the production side of overlap. We will have the traditional kind of dis-synergies around, yes, we'll have to have 2 boards. We'll have 2 leadership teams, so on and so forth. So you will have some of that. But when you get down to really the R&D, R&D is fundamentally pretty separate today. So you have the Seed R&D is more focused in Iowa. You have the CP R&D, which is all chemical based, more or less, is more in Indiana. So they're pretty separate today.

Now there is some overlap of some knowledge bases around microbials and all these sort of things that we need to make sure that both businesses will have access to over time, which we're working through that, something that you would probably do anyhow if you were a third party and be able to share technology. So really, from that standpoint, there's very little. So I feel really strongly confident in that $100 million net dissynergy number because we did say net dissynergy because there are opportunities for us to be a little bit more efficient as we build up 2 purpose-built structures just for each business. And I think at the end of the day, it will net to that $100 million or perhaps even lower than that.

Okay. I will open it up in case anybody from the audience has a specific question. I don't want this to be -- I know everybody gets a little shy. So -- here we go. We got one. Wait the mic is coming.

I'd be curious to know kind of what your thoughts are around artificial intelligence and how it can improve your discovery and really shrink that time from discovery. You still have to go through the expensive development and regulatory process. But does the ability of basically custom designing molecules now, maybe with some forethought into safety and regulatory, how is that going to change kind of your strategy? How -- and your thought process?

Yes, it's a great question, and it's live and active right now, and we're just scratching the surface. But what we're finding is that we're deploying AI tools in the discovery process, both in the chemical, biological and even in picking selections for new traits in the Seed side. And what we're finding is that the precision is transformational to be very candid with you. We can pick an active ingredient, for example, out of our huge library of material, almost 1,000x faster now. And so what used to be -- the way I look at it as an analogy is we used to be trying to find a needle in a haystack literally with the amount of compounds we have to comb through, and it was very manually based.

Now with AI, it's like having a massive magnet that can actually just suck the needle out of the haystack. And that's what's happening. We have several of our new products that are in different stages of the pipeline that were selected with our AI tools. So it's literally game changing and the models are getting better every day. So we're really excited about this. Now we've been deploying AI tools in R&D, in the discovery part of the process for many years. And I think what we're finding right now is they're just getting better and better.

The other area that we're deploying AI, the regulatory submission paperwork, it's astronomical. Sometimes it's like literally thousands of pages. And the AI tools are helping us collect the data, draft the documents, and we're saving a lot of sort of man hours, people hours to prepare the regulatory submissions, which can take an awful long time. And we're deploying AI tools in the regulatory submission work now, and that has been a huge time saver. So I do think that the regulatory process from discovery through regulatory approval, it is -- the biology is always going to be the limiting effect. But I think AI is going to really compress the time lines for us, especially if you start thinking about mentioned with our germplasm and the size of the molecular libraries that we have, deploying the AI tools now, I think it's going to make us much more effective.

I think one other thing I'll add is maybe not in R&D, but on the production of Seed, if you can think about how many farms around the world and what have you, it takes to actually produce the Seed that we sell every year. And a lot of times, you have to think about that 3 years in advance as to what you're going to produce, what type of hybrids and all this sort of thing, when you're going to produce, what type of farmer, what's the weather like, so on and so forth. We're applying AI models on that to make it more efficient for us as we produce Seed. So when you see some of the cost savings you see in each business, one element of that is us deploying AI in those areas.

I'm happy you asked the question, yes, because we've got -- we'll have Ashish up talk on biologics, and that's going to be a topic. We have a Seed panel, obviously, we'll talk because I mean, AI has certainly been an adopter -- Seed tech has been an early adopter of AI, but it seems like iterative advancements now are just so progressive that the rate of innovation is going to be pretty astonishing. So I'm happy the question was asked and you were able to talk to it. I guess with only 2 minutes left, I mean, as you look at your role in pro forma Seed co, like what are you most looking forward to? Freeing the business up?

Yes. Look, so we've got a phenomenal franchise that we've talked about Pioneer in 100 years. It's hard to pinpoint just one thing I'm excited about with the Seed side of the business. I am going to miss the chemical side, though, as a chemical engineer, I have a first love in that. And so they're going to have a great future as well. But for me, I'd say if there's one thing I'd had to pick, Matt, it would be, look, this out-licensing strategy is new and exciting, and we started 5 years ago when we were sort of on a net basis in the hole by $700 million or $800 million, right? And then David communicated just today that this year, we will be neutral. So in 5 years, we've sort of got to neutrality. And then the future now is to be net positive. And in our fourth quarter call, we said we think that could be a $1 billion opportunity for us in the next decade.

And now that we've got freedom to operate in soybeans, we've talked about Enlist and moving the Enlist technology to Brazil, which will be a huge part of the licensing strategy. Then we have corn entering all the various large markets of corn out-licensing. We have our own canola technology. So for markets like Canada, a little bit in the U.S., Europe and Australia, where we'll be licensing our canola technology and then wheat.

So you start thinking about this. I see this -- so I see wheat as sort of the third leg to our stool and then you have the licensing business being this really, really high-margin business, complete technology where we don't actually have to sell the product and we get an incremental return on that investment that's already been made in our branded technology. That is the multiplying effect, I think, for the Seed business going forward.

Yes. We get questions around does the breakup call into any question, just the strategic merit of the merger in its own. And I think Enlist and the out-licensing program has been in and of itself, almost a defining feature that was unlocked from that.

Yes. In fact, we would not be able to separate because we wouldn't have 2 global leading platforms to be able to do this with. So I think the merger was the right call at the right time. I think our performance speaks for itself as Corteva. But this is about the future, driving value creation and innovation in both businesses. And I'm pretty excited that both will be global market leaders in their own right.

Well, we'll end it there. Chuck and David, thank you for spending the last 40 minutes with me up on stage and look forward to following you as the year progresses.

Thanks, Matt.

Thanks.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Corteva Agriscience 4Q 2025 Earnings. [Operator Instructions]

I would now like to turn the call over to Kim Booth, VP, Investor Relations. Please go ahead.

Good morning, and welcome to Corteva's Fourth Quarter 2025 Earnings Conference Call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Judd O'Connor, Executive Vice President, Seed Business Unit; and Robert King, Executive Vice President, Crop Protection business unit, will join the Q&A session.

We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast.

During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements.

Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press releases and related schedules along with our supplemental financial summary slide deck available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us. I hope your year is off to a great start. Before we get into our results, I'd like to provide a quick update on our separation and what you can expect this year. It is still early in our overall planning, but we remain on track for a second half separation, most likely sometime in the fourth quarter.

Now for some details. Over the past several months, a subset of our Board has been very busy with a global CEO search for new Corteva. We are making good progress and expect to make an announcement on that in the first half. At or around the same time, we intend to launch the official name and brand identity of SpinCo, which is very exciting for me at least and will really bring this transition to life. As we progress into the latter part of the first half, we'll be announcing the core executive leadership teams for both companies, we'll be working with the credit agencies on our capital structure submissions, and we will likely have filed the initial and first amendment of our Form 10 with the SEC.

The second half is where we'll essentially be getting the separation to the finish line. We expect to go effective on the Form 10, announce our Board appointments and receive the final approval on the capital structures of the 2 companies. We'll also be completing the separation of our IT systems.

And last but not least, we currently expect to hold our Investor Day events in mid-September.

As for net dissynergies, we are still estimating roughly $100 million, $50 million of which is built into this year's guide. We'll keep you informed on our progress on a timely basis over the coming months. So now let's move to our financial performance. Let me start by saying by all accounts, 2025 was a strong year for Corteva. Our results for the fourth quarter were in line with our expectations. With the exception of outperformance on our controllables and even stronger cash flow generation than we anticipated. We grew the top line low single digits while improving operating EBITDA, low double digits, leading to over 200 basis points of margin expansion, pushing us over the 22% mark for the first time as a public company. This is a testament to growing demand of our technology, exceptional performance of our dedicated commercial teams and combined with disciplined execution on operational efficiency in both businesses.

Our Seed business performed well again this year with organic growth in every region as well as share gains in both corn and soybeans. Seed delivered about $340 million of net cost improvements as well as $90 million in royalty improvement, reflecting our growing position in North America corn and progress in soybean licensing in Brazil. As noted last quarter, we're expecting to cross double-digit trade penetration for Conkesta this year in Brazil, the largest soybean market on the planet with over 300 basis points of margin expansion this year alone and our out-licensing business just catching its stride, I have to say it's fun to imagine what things might look like in another few years with our growth platforms, including gene editing in hybrid wheat really starting to take off.

Our Crop Protection business is also performing well delivering top and bottom line growth as well as margin expansion this year and what I'd still describe as less than ideal market conditions. As we updated you last quarter, this business already has an incredible $9 billion pipeline of differentiated technologies. But in order to remain ahead of the curve, we are in the process of ongoing asset and sourcing optimization. For the full year, our CP business generated over $300 million of productivity and cost benefits, which improves our resilience as we make our way towards what we still expect to be improving market conditions in 2026.

From an industry perspective, the overall ag fundamentals remain mixed. We're still seeing record demand for food and fuel and major crop inventories are within normal ranges despite large crops in Brazil and North America. Farmers continue to prioritize top Tier C technologies while managing tighter margins. Given the high corn area in the U.S. last year, it's logical to assume we'll see a few million acres shift back to soybeans in 2026, all of which is factored into our guide.

In the Crop Protection market, most notable is that we are expecting modest growth in 2026, something we haven't seen in a while. Although we continue to experience competitive pricing dynamics in some major markets, including Latin America and Asia Pacific, underlying farmer demand in terms of applications remains consistent with historical levels. So what does all this mean for 2026? We are reiterating our preliminary operating EBITDA midpoint of $4.1 billion, which is 7% growth versus the prior year. Included in that estimate is momentum in our Seed Licensing business, growth in Crop Protection volumes driven by new products and biologicals and productivity benefits in both businesses. It's still quite early in the year with winter still firmly in place but we feel good about how 2026 is shaping up.

Now before I turn the call over to David, I'd like to address some new developments since we last spoke in November. We recently reached a comprehensive resolution with Bayer related to our seed freedom to operate. Not only does this agreement allow SpinCo to remain focused on its forward trajectory and value creation opportunities, including continued investment in innovation, it also provides business certainty from ongoing litigation. We are pleased to have reached an agreement, which solidifies the use of existing technology rights in our own corn, canola and cotton product portfolios, including our own germplasm.

As a result of this resolution and the progress we've been making across the broader out-licensing spectrum, we now expect to achieve royalty neutrality in 2026, which is 2 years ahead of our most recent expectations. In North America, this agreement will accelerate the introduction of existing Corteva proprietary triple-stack corn technologies for licensing. We now expect to be licensing as early as 2027, an acceleration of 5 years. This resolution also facilitates the introduction of our third gen aboveground trait platform in North America corn, which will be available for branded sales and licensing by the end of the decade. This is an acceleration of 2 years.

Finally, this resolution includes a new licensing arrangement, which allows us to expand our addressable market by entering the cotton licensing market in the U.S., a space in which we do not currently participate. Leveraging our strong 2025 free cash flow, we committed to a payment of $610 million, which was largely completed last month. However, over the course of the next 10 years, we believe this agreement will generate about $1 billion of aggregate earnings upside for Corteva across our corn, cotton and canola portfolios through both out-licensing and branded sales.

In summary, we consider this resolution to be a win for our long-term strategic objectives. But more importantly, this is a win for farmers and for agriculture at large as this resolution strengthens competition and offers farmers more choices when making purchasing decisions.

Getting back to 2026, let me wrap up by saying what I say to our employees. We are one team until we're not. Based on our latest time line, we'll spend more time together than apart in 2026, and we're going to stay focused on controlling the controllables. Our intended separation is about sharpening focus, accelerating innovation and unlocking value that has been earned through performance, and we are committed to delivering results like this past year throughout this transition period.

With that, I'll turn the call over to David.

Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide 7, which provides the financial results for the fourth quarter, second half and full year. While it's more meaningful to look at our business in halves, I'll briefly touch on the quarter.

Sales and operating EBITDA for the quarter were down versus prior year, largely due to lower volume in Seed and Crop Protection, coupled with higher compensation expense. While it's worth knowing that the fourth quarter of 2024 was a record quarter for Corteva and this year was the second highest fourth quarter on record for us as a public company. Organic sales for the quarter were down 4% compared to prior year. Crop Protection saw volume and price declines of 2% and 1%, respectively. Price declines were largely due to competitive pricing dynamics in Latin America and in line with expectations. Volume declines in Crop Protection were primarily driven by a seasonal shift and timing for North America to first half 2026 along with timing of fungicide demand in Latin America.

Seed had pricing gains of 3% versus prior year, evidencing our price for value strategy with volumes declined 8%, largely due to timing shift of safrinha sales into the third quarter of 2025 and the shift of North America deliveries into the first half of 2026 as a result of freight optimization and weather across the Midwest.

Looking back at the second half, sales were up 4%, and operating EBITDA was up 16% driven by better price and mix in Seed, continued execution on controlling the controllables and volume gains in both segments. Organic sales were up 2% compared to prior year. Crop Protection saw volume growth of 1%, offset by price declines of 2%, largely driven by competitive pricing in Latin America. Seed had price, mix and volume gains of 3% and 2%, respectively, versus prior year.

Focusing on the full year. Organic sales were up 4% over last year with growth in both Seed and Crop Protection. A continuation of our price for value strategy along with increased corn acres in North America and Latin America drove Seed price/mix and volume gains of 3% and 2%.

Crop Protection price was down 2% for the year as expected, driven by competitive market dynamics, mostly in Brazil. Crop Protection volume was up 5%, but gains in nearly every region. Notably, new products have strong demand and biologicals delivered double-digit volume gains compared to prior year.

Operating EBITDA was up 14% over prior year. Operating EBITDA margins of over 22% was up about 215 basis points, driven by organic sales growth coupled with significant benefits from lower input cost and productivity.

Moving on to Slide 8 for a summary of the year. Operating EBITDA was up more than [ $470 ] million to $3.85 billion. Price and mix volume gains and cost benefits more than offset currency headwinds. Seed continues to make progress on its path to royalty neutrality with about $90 million in reduced net royalty expense. This improvement was driven by increased out-licensing income in North American corn and lower royalty expense in soybeans. We finished the year with a net royalty expense position of around $120 million.

Seed and Crop Protection combined to deliver over $650 million in net cost improvement, including lower seed commodity costs, raw material deflation and continued productivity actions. SG&A for the year was up compared to prior year driven by higher commissions and compensation expense. The increased investment in R&D aligns with our target just over 8% of sales for the full year. As expected, currency was $217 million headwind on EBITDA, driven by the Brazil real, Canadian dollar and Turkish lira. Both Seed and Crop Protection finished the year with impressive EBITDA growth and meaningful margin expansion over prior year. Together, this translated to over 22% operating EBITDA margin.

In addition, free cash flow has improved by about $1.2 billion from prior year to $2.9 billion. This is driven by our increased EBITDA, lower cash taxes and working capital discipline.

With that, let's go to Slide 9 in transition to the updated outlook for 2026 and the key metrics we are tracking. Our updated 2026 guidance reflects the continued momentum from our 2025 performance and continued confidence in delivering on productivity and cost benefits.

2026 operating EBITDA is expected to be in the range of $4 billion and $4.2 billion or approximately 7% improvement over prior year at the midpoint. This would post at the low end of the 2027 EBITDA framework we outlined in our last Investor Day. Meaningful margin expansion is expected to be driven by organic sales growth, together with benefits from improved net royalty expense and productivity actions.

Operating EPS is expected to be in the range of $3.45 to $3.70 per share, an increase of 7% at the midpoint, which reflects higher earnings growth and lower average share count, partially offset by higher net interest expense. Free cash flow in 2026 will be impacted by separation items and the Bayer agreement. Absent these, we would be in line with our long-term target we communicated at our 2024 Investor Day. We remain committed to returning cash to shareholders as we progress through the separation. We announced the first quarter dividend last week, and we are targeting about $500 million of share repurchases in the first half of 2026.

Turning to Slide 10. in the 2026 operating EBITDA bridge, growing from approximately $3.8 billion in 2025 to $4.1 billion at the midpoint. Total company pricing is expected to be slightly up with pricing gains in Seed partially offset by declines in Crop Protection. While we expect the Crop Protection market to grow, we expect prices to be down low single digits for the year. We are expecting volumes to be relatively flat in Seed as North America share gains are expected to be offset by the corn to soy planted area shift, and have a full year under our Brazil soybean shift to licensing.

Crop Protection volume is expected to be up mid-single digits, driven by demand for new products and biologicals, which are expected to outperform the rest of the portfolio. We expect approximately $120 million improvement in net royalty expense driven by the continued ramp-up of Conkesta E3 soybeans and PowerCore Enlist corn licensing. We expect to deliver around $200 million of productivity savings in 2026, partially offset by approximately $80 million in tariffs.

SG&A and R&D as a percentage of sales are expected to be relatively flat with 2025 levels. Keep in mind, this includes approximately $50 million of net dissynergies. We are expecting a currency tailwind versus 2025. This is largely driven by the Brazilian real, euro and Canadian dollar. The appreciating foreign currencies are expected to translate to a low single-digit tailwind on net sales and approximately $75 million tailwind on operating EBITDA. Together, this translates to approximately 7% operating EBITDA growth at the midpoint and about 50 basis points of margin expansion.

Regarding the timing of sales and earnings in 2026, we are expecting about 60% of sales and roughly 85% of EBITDA to be delivered in the first half of the year.

With that, let's go to Slide 11 and summarize the key takeaways for the year. 2025 was a record year for Corteva with strong organic growth across both Crop Protection and Seed. Performance was driven by volume, favorable mix and continued adoption of our differentiated technologies. In Crop Protection, demand for our novel modes of action and biologicals remain strong, while Seed benefited from our price for value strategy and solid execution across key markets. Importantly, this growth reflects underlying demand and execution.

We also delivered record free cash flow in 2025 driven primarily by higher earnings and working capital improvements. Tighter operational discipline and greater year-end cash collections improved cash conversion. As a result, we returned approximately $1.5 billion to shareholders in fiscal 2025 through a combination of dividends and share repurchases. Our capital allocation priorities remain unchanged, investing in the business, maintaining a strong balance sheet for Corteva and the future independent companies, and returning excess cash to shareholders in a disciplined manner. Looking ahead, our 2026 guidance reflects growth in sales, operating EBITDA and margins. We expect continued demand from our differentiated technology, supported by our innovation pipeline and ongoing productivity and cost actions.

With that, let me turn it back to Kim.

Thanks, David. Now let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A.

Operator, please provide the Q&A instructions.

[Operator Instructions] Your first question comes from the line of Chris Parkinson with Wolfe Research.

Chuck, could you just kind of help us break down Slide 27 a little bit more with the Bayer litigation. It seems like there are 2 or 3 key buckets of what this accelerates as it leads into the chart that you published across triples, insect resistance and cotton. I'd love to hear if it actually affects the acceleration of E3 or Conkesta in terms of the next-gen stuff.

So I'd love to hear the breakdown of that. And then also in that chart, do you assume any gene editing assumptions? Or is that purely a corollary of what was announced yesterday evening?

So let me start, and then I'm going to have Judd unpack some of the finer details. So first, we're very pleased with the agreement. And I personally view this as being extremely strategic in terms of what our overall licensing ambitions can be. And so this is a comprehensive agreement. We've been working with Bayer for quite some time. These things are very scientifically based. They're very -- there's a lot of legal precedent here for us to work through.

But I'd say what the agreement does is it provides 2 broad things. The first is we now have freedom to operate and an increased access to the licensing market, which is extremely important to us. You know our ambition when it comes to our licensing business, and it's really centered around the expectation to accelerate our corn licensing business to as early as 2027, which is years ahead of our original plans. We're also going to enter the cotton licensing market, another big opportunity for Corteva.

But I'd say more importantly, this is great for farmers and for agriculture in general because it's going to give our farmer customers simply just more choice. So now we're going to have a strong licensing portfolio for soybeans, for corn and for cotton. And if you look at it financially, the big picture, it really does set us on a path, as we said today, to deliver about $1 billion in licensing income in the next decade.

The second thing that this does, this agreement does is it resolves all the outstanding litigation with Bayer. And I think that's very helpful from a clarity and risk management perspective. So that's what this agreement is intended to do. Like I said, I'm very pleased with the agreement.

Judd, do you want to just talk about some of the finer details?

Yes. Thanks, Chuck, and thanks, Chris, for the question. And I think Chuck captured it all extremely well. And we're still needing to bring product through the R&D pipeline, but maybe let me touch on it.

One, we've got freedom to operate in canola in specific markets around the world where that's very important to us. Number two, we're going to be able to bring, as you see here, triple-stack options into the market 5 years earlier than what our previous plan was with complete freedom to operate and the ability to line up and provide additional volumes with our licensees that we've got tremendous amount of demand building with licensees today. Number three, we get to bring our next proprietary third-gen above-ground product 2 years forward into the marketplace. We also provided Bayer license for Enlist cotton. They provided us an opportunity to license their HT4, and this provides us an opportunity to license in cotton, which we had no freedom to do previously.

So comprehensively it creates a tremendous amount of opportunity for us to continue to accelerate our ambitions in this space. We've got our germplasm funnel that has continued to widen, so that we've got the -- or the germplasm that we need to be able to provide these traits. And it just puts us in a really great spot. It's a great investment for all of our constituents, whether that be farmers or whether it be investors, whether that be our licensees if we work closely with them going forward. And we're excited to be able to put the certainty and freedom to operate in the hands of our R&D team so they can start streamlining the lines that they're bringing forward as well. So thanks.

Your next question comes from the line of Vincent Andrews with Morgan Stanley.

Some more clarification on the Bayer agreement. Firstly, it sounds like there is some existing licensing expense that was going through the income statement that with the payment of the $610 million, you will no longer expend. So number one, is that true? And can you tell us how much it is? And whether you had contemplated that back in October when you gave the original guidance?

And then secondarily, you referenced HT4 having a license on that from Bayer. Can you clarify whether in future years, if you do elect to use that, whether you'll have to pay any per acre royalties today or in the future for that? Or is that all encompassed in the $610 million and you kind of have an all you can eat on that?

Okay, Vincent, this is David. I'll handle the first part of that question. Perhaps Judd can follow up with the end. So in our current guide, we have $120 million of net royalty benefit in '26. A portion of that is the fact that there were some Bayer royalties that we will not be paying now in '26 and '27, so that's what accelerated us to a net neutral position in '26, which is 2 years ahead.

The rest of the benefit of the entire overall agreement is really later past 2027 when it adds over $100 million a year. And that gets more into the freedom to operate and more on the offensive on the licensing income piece.

Your next question comes from the line of Joel Jackson.

So maybe I'd jump in here. Joel, thanks for just a little bit of time to answer Vincent's -- the second piece of Vincent's questions on access to HT4. Does that come royalty-free? No, it doesn't come royalty free. I mean we would have a royalty that's associated with that as they would with the license that we would provide reciprocally with them. So -- but it puts us in a really good position with certainty as terms of path forward and making sure that we can continue to bring our products in the marketplace. So, thanks.

I'll ask my question now. So I just want to follow up on that a bit, too. I went back to your Investor Day deck from late 2024. And if I compare your -- how you're showing you're going from a net outflow payer of royalties to becoming positive, and I look at that chart versus the chart you presented last night in your deck, it looks the same through 2030, and now you show a 2035 where it's $1 billion.

I'm just trying to reconcile that with statements that you're pulling forward things to this decade, from after next decade, you're pointing 2 years forward, 5 years forward. But it looks the same through 2030 and more incremental 2031, 2032, 2033, 2034, 2035. Can you reconcile that, please?

Joel, look, I'd have to look at the details that you're going back to the Investor Day, but it should not be the same. The acceleration that this agreement gives us is pretty powerful. When we were thinking about our original royalty journey, we were really talking about soybeans and then corn starting in late next decade. And now we're talking about corn starting now, basically in 2027, and then the introduction of cotton now.

So when you put all that together, I think that what you're going to see is that we've really put our licensing business in a much higher gear than what we could have done absence of clarity around this comprehensive agreement. So we'll have to go back and we'll look at the numbers. But the acceleration from a freedom to operate is real, and it's pulling our corn in many cases, many years ahead, and it's also opening up the door on cotton. I think the other thing is this does not contemplate wheat. So if you start thinking about that, and we've said that our hybrid wheat opportunity combined with our branded business and our licensing opportunity, it would be $1 billion of revenue.

So when you start thinking about this strategically as Corteva and then soon to be SpinCo, this provides a huge amount of value creation for our shareholders. The licensing opportunities continue to grow. And as Judd mentioned, even today, we have more demand than we have supply. So this was a matter of clearing up the access to the freedom to operate. And now that we have that, we can set our R&D and our commercial teams to meet the growing demand that we have for soybeans for cotton, for corn and soon-to-be wheat.

Your next question comes from the line of Kevin McCarthy with Vertical Research.

Maybe a 2-part question on the subject of gene editing. As we follow the regulatory developments in Europe, it seems as though there is a developing regulatory framework whereby Europe could open its market to gene-edited seeds.

So the first part would be, do you expect that to happen in 2026? And what might it mean for Corteva over the medium to long term?

Then secondly, I think one of your gene-edited products is multi-disease resistant corn. I was wondering if you could just provide an update on that product for the U.S. market and when we might expect commercialization of MDR?

Kevin, sure. So look, we're -- if you step back and you look at the global regulatory framework, we're seeing very good progress on support for gene editing around the world. In fact, most of the major producing countries now have policies firmly in place.

To your question with the EU, in December, there was an agreement with the EU framework. It still needs to be formally adopted by parliament and the council, and we are expecting that, hopefully, soon, I'd say, by the first half of this year. And we are very supportive of what we've seen so far. We think it's science-based. We think that it's going to be quite practical and it's going to allow us to bring much better crop technology to European farmers and really help, I think the EU from an overall food security and self-sufficiency perspective.

And the regulatory framework that is being proposed, I think we'll have some areas where it will actually be a simplified process, which will allow us to get, I think, products to market a lot more quickly.

Now we still need China approval. It's probably one of the last remaining significant import markets that we need approval. And we're very hopeful that we'll get that soon. If you think about gene editing, and you know you've heard me talk about this before, there's probably no more important technology right now that we can bring to market to help farmers. And if you start thinking about how thin farmers' margins are right now, this technology can go a lot way to helping farmers improve their profitability.

Now to your second question around our products. So that's right. We have a gene-edited fungal disease-resistant corn hybrid, we call it a disease super locus. And I've seen the test plots, it continues to look fantastic in our test fields. And we will be able to bring that to the market most likely within a year or 2 after receiving our overall regulatory approvals and we're pretty excited about that. We'll first bring it to the U.S. market, but then we'll quickly move that technology around the world.

Your next question comes from the line of David Begleiter with Deutsche Bank.

Chuck, can you discuss your U.S. order book for the upcoming year? And how the pressure on farmers is manifesting itself into this year's buying activities?

Sure. Well, why don't we start with Seed, and then Robert can talk about CP. Go ahead, Judd.

Yes. Thanks for the question. Our order books are very strong at this point in time. Our prepay that we've collected is on par with prior year. And our cash credit mix is very, very similar, plus or minus 1 point or 2. So we feel really good about the position we're in. I guess, translation may be what's your guess on corn acres. I'd say it's February. There's still snow on the ground and that corn versus soy mix, it's going to shift a little bit. There'd be a little bit of weight towards some more soy acres in space of corn. It's all very well manageable and within the guide that we've provided. But feel really good about the start to the year, both with our direct Pioneer as well as our Brevant retail brands.

David, it's Robert for Crop Protection, very similar story, very strong order books across the Northern Hemisphere. Europe is in full swing, and North America is moving. As we look into January, we're having a strong movement now. Keep in mind, both of these markets this last year grew a few temps, and that momentum continues as we're moving forward here. So thank you.

Your next question comes from the line of Joshua Spector with UBS.

I wanted to ask on free cash flow. Obviously, really strong performance last year. I mean how are you thinking about the conversion into 2026? Is there something one-off last year that gives back? Or is this something that you guys build on top of?

Thank you, Josh, for the question. And we obviously had a very strong end of the year with free cash flow. Some of that was, as Judd had mentioned, we did have favorable cash credit mix at the end of the year. So that was certainly a benefit. It's something that we don't count on every year. So that's probably one element year-over-year, which should be a little bit of a tailwind into '25 and the headwind into '26.

When you look at the really -- the major portion of why we were favorable is our working capital management. And where we ended this particular year was down probably 300 to 400 basis points lower than typical in our net working capital as a percentage of sales. So I would say the teams did a really good job. That's also reflected in the fact that in Seed, we had very strong sales and what have you. So our inventories are lower than typical.

So I would say going into '26, absent any type of onetime items, and I'll go into those in a little bit more detail, we would be in the range that we articulated during our Investor Day. So free cash flow, about 45% to 50%. And you might ask if that have definitely a few points lower than '25, I would say most of that is because of working capital gain back to normal. So call it another 200 or 300 basis points as a percentage of sales.

But this year, when we actually show the number, we will have a few unusual items. We will have the Bayer agreement, which will be an offset to the free cash flow number. As we get later in the year, we will be looking at separation type items. So we will be going into onetime separation cost and we'll likely also want some flexibility because we're committed to have 2 strong investment-grade balance sheet for the separated companies. So we want flexibility to make sure that we're handling that appropriately and that both companies are set up for success in the future.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

A 2-part question. First, your overall revenues in the fourth quarter were roughly flat year-over-year, down a tiny bit, but your SG&A and R&D really jumped. SG&A went from $735 million to $860 million, up about $125 million. R&D was up $50 million. What happened? Why are those numbers so unusually high? And then secondly, can you give us an idea of where you stand with Conkesta soybeans in Brazil? Where is your share? Or what are your revenues? What share do you expect for next year? What kind of revenues do you expect?

Okay. Yes. So I'll handle the first part of the question, and I'm assuming Judd will handle the second part of your question.

So on SG&A, R&D, as you can see throughout the year, we have increased our R&D. As a percentage of sales, in total we're up about 8%. And certainly, that's not really much timing on sales or fourth quarter. So you've seen that build throughout the year.

On SG&A, as we mentioned in the opening comments, we do have some additional compensation expense, variable compensation expenses sort of items that hit in Q4, also hit in other quarters, but it was probably a little bit more impactful in Q4, especially against the small revenue number.

And Judd?

Yes. And Jeff, as far as E3 Conkesta, [ CE3 ] in Latin America, and particularly in Brazil, we're going to finish the year after just getting started in this space and going through our multipliers and licensing model, somewhere in mid-single digits in 2025. We expect to double or more than double that going into 2026. We will be completely out of our vertically branded business and be 100% focused on licensing through multipliers, and we believe we're going to be in the mid-teens plus for 2026.

So a lot of momentum. We've advanced a number of new genetic platforms and feel really good about how that transition is going.

Your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets.

Could you just call on your CP business, what share of your business will be off patent versus patent and new products in '26, given that there is quite a bit of difference between growth in these 2 categories.

Aleksey, this is Robert. We will remain about flat to what we've been in the past. Keep in mind, we're about 2/3 differentiated on our overall portfolio now, getting good growth out of our new products and biologicals. But we don't have any major shifts coming off patent, like in the industry, there are some big molecules coming off, but we don't play in those markets. So we should be stable, much like you've seen this past year from a portfolio standpoint.

I would keep in mind that there's a few things coming to play, though, that are going to help us out a little bit more. And we're waiting on registration, but we hope to have [ Visa ] launch latter part of this year, which will augment that differentiated portfolio. And remember, this is a fungicide that attacks Asian soybean rust, and we're expecting big things out of that molecule as we move forward. Thank you for the question.

Your next question comes from the line of Duffy Fischer with Goldman Sachs.

With '25 in the rearview mirror, can you just go by your major crops on Seed in major geographies where you saw either market share gains or if there were any market share losses? And then just I wanted to clarify, on the deal with Bayer, they don't get access to your Enlist in soybeans, is that correct?

Yes. Thank you, Duffy. So maybe just walk around the world a bit. From a North America perspective, we were able to continue to pick up share in corn and in soy. As we go into Latin America, we picked up mid-single-digit share in summer. We picked up mid-single-digit share plus in safrinha, tremendous amount of momentum and share in that Brazilian market as well. And as you look at other markets around the world, we had some nice recovery in India in the rainy corn season market, and we saw some nice share gains in sunflower and corn in EMEA. So we had positive impacts in almost all regions around the world.

Now in terms of the Bayer agreement, E3 on soy was not part of those discussions at this point in time. Obviously, we have a number of places that we worked with Bayer across, but that was another part of it. So thanks for that question.

Your next question comes from the line of Kristen Owen with Oppenheimer.

I wanted to ask about the 2026 EBITDA guide. You're in line with the $4.1 billion that you gave us earlier last year. But it seems like maybe some moving pieces around with the pull forward of net royalties, maybe the push in volume from 4Q into 1Q. So can you help us sort of frame what the upside case and downside case look like in this bridge?

And I do actually have a follow-up on Brazil Conkesta, if I could ask quickly. Just with the economics, how we should see that show up, that doubling in market share, how we see that show up in the EBITDA bridge as well.

Okay, Kristen. So we'll have Judd answer that. David will take the guide question, but let me just give you my perspective, and I guess my philosophy. We're sitting here in February. It's appropriate, I think, given that outside and in the corn belt, we have a lot of snow. The ground is still frozen, and we are literally weeks, if not a bit more than that, away from putting a crop in the ground. So we are usually, at this point, looking at the market conditions and needing to see what happens from a crop perspective, but it is generally our philosophy not to do too much with a guide in February.

Now we can talk about the ups and downs. So go ahead, David.

Yes. Maybe it would be helpful to just kind of reiterate what we have in the guide and then we can go from there. So when we look at the $4.1 billion, it is up 7% from the midpoint. The other interesting thing is that is the beginning or the low end of our 2027 range, which would be a year early. So I think all are very positive.

I think the other couple of takeaways. One, we are going to show growth in both Seed and CP, very much like we were able to do in 2025. And 2/3 of the EBITDA increase year-over-year will accrue to the Seed business and about 1/3 of CP, again, very similar to what we've seen. So when I think about the bridge and the different elements of the bridge, right now, we have the price impact would be more or less similar to 2025. So low single-digit seed increases. We have increased royalty income. That will be partially offset by the low single-digit CP declines. So not much of a major difference from 2025.

We already talked a little bit about net royalties, but that will be a positive. We expect somewhere in the range of $120 million versus the $90 million in 2025. The volume impact in 2026, right now, we have it in as fairly flat for Seed. Again, that's mainly due to the acreage differences between corn and soy in the U.S. that shift. And then CP more or less is forecasted to have a similar benefit in '26 as we continue to see growth in new products and biologicals.

Probably the major difference between our bridge in '26 versus '25 would be on the cost improvements. And we still have $200 million built in for cost improvements in '26, then '25, we benefit pretty significantly. About half of our $665 million was really a commodity impact that we do not have included in 2026. We think that's going to be flat in 2026. So that's a major difference there. And we also have an $80 million kind of headwind in our -- in tariffs.

So those are the major elements. And then when you go to other, if you look at other between the 2, they're about the same. So when I think about it, price is fairly balanced, royalty is definitely a positive story. The volume is probably the one that you could argue one way or the other at whether or not we're being conservative or not, but it's very early in the season to be able to make that termination. And we'll keep an eye on being able to offset tariffs and include additional cost improvements. One other element we did include, and we put this in the notes is we have $50 million of dissynergies in our number in 2026, which obviously, we would not have had in '25.

Conkesta?

Yes. And maybe just a follow-up on the Conkesta question. So for 2026, overall earnings for Seed in Brazil are up significantly. The Conkesta transition and the additional share is certainly a big part of it. That also is part of that $120 million that's in the plan that David just mentioned as well.

Your next question comes from Laurence Alexander with Jefferies.

This is Carol Jiang on for Laurence Alexander. Actually, my question has been asked already. But just a follow-up on the tariff estimation. You estimate $8 million impact from incremental global tariff in 2026. Does this figure also account for the potential secondary effects such as increased dumping of generic product in non-tariff market like Brazil?

Yes. I think -- I believe the question is does this include secondary impacts like impacts from Brazil? Is that the question?

Yes, just the $80 million figure.

Yes, the estimate that we've got on the Crop Protection primarily is where the tariffs all are -- is encompassing everything we've got for the entire business. So it includes all companies, including -- all countries including Brazil.

If it's helpful, almost all of it is CP and almost all of it is China, actives coming in to the United States.

That's the biggest part.

That is, by far, the biggest part of the tariff impact.

Correct.

Your next question comes from the line of Arun Viswanathan with RBC.

Most of my questions have been answered as well, but I guess I'll just ask on the $200 million productivity benefits. You guys have obviously been very successful the last few years, bringing up your margins and executing on that productivity. Is that kind of -- maybe you could break that out between Seed and CP if that's relevant. And then is that kind of an ongoing -- how do we think about the ongoing productivity opportunity? Where are you kind of in that journey? I know there's been a lot of discussion about that in the past, but maybe you can just kind of give us some updated thoughts?

Yes, sure. No problem. So yes, the $200 million is split somewhat equally between the 2 different businesses. And the way I look at that is it is a running rate. There's opportunities every year in seed, in production and how we go and grow the seed with our farmers, how efficient we can be there. In Crop Protection, typically, your normal productivity year-over-year improvement.

I would say beyond that, though, there is further elements in crop when they look at footprint and different optimization opportunities in the future.

I think the one thing to call out is when we gave our financial framework for 2027, we said it would be about $700 million of net productivity and cost improvement, and we had almost that last year. So obviously, with David's communication today around another couple of hundred million on a gross basis. So call it -- he did outline some of the other headwinds we have. So if you call that $100 million net, and that's only in 2026, and then if you play the framework forward into 2027, we're going to far and exceed the original $700 million that we put into our financial framework. We probably overachieved a little bit in '25, but I think '26 and the pipeline that we've got for cost and productivity is still very healthy across the company, and it is more or less split between Seed and CP.

Your next question comes from the line of Patrick Cunningham with Citi.

As we look at the Latin American CP market for 2026, does the current channel inventory position support a return to more normalized purchasing patterns? Or should we anticipate continued volatility in some of the order timing? And have you seen any further impact or improvement of credit and liquidity concerns for farmers in the region?

Patrick, this is Robert. I'll take that one. As far as LatAm goes, we're expecting the year as we move into this year, crops are in the ground now. And looking at 2026, we're going to continue to see pricing pressures in LatAm. We expect volume growth to take place there, much like this year, more lands going in and the pest and resistance pressures continue to build. So we expect growth to continue to happen there. Pricing pressures, like I said, will continue. And that just has to do with there is more than enough supply in the market nowadays. And so that will eventually tighten back up and from a channel standpoint, the channels are about normal right now for this time of year, We need to let the year play out for the rest of the season to see where we land there.

From a farmer standpoint, to touch on that just a little bit. Farmers in Latin America are stressed, very high interest rates, commodity price is a little bit suppressed, but they're still making money by and large. Cash flow is tight for them. And we've been working through a lot of those things with them. Keep in mind, you will have seen that our barter program this year between crop and seed will be near $1 billion in total for revenue there. And so we're doing things to help mitigate risk and to help manage that with farmers. And we think we're in a pretty good position as we head in '26 to have another good year there in a market that is challenged.

Your next question comes from the line of Matthew DeYoe with Bank of America.

You talked openly about kind of the initial days of the announced spin that Seed would be looking to expand beyond corn and soy. And I know you have the hybrid wheat coming out next year, which is obviously exciting. And you're talking a little bit about cotton on the back of the Bayer agreement. But what -- how do you prioritize the new markets? Are there anything beyond that? Are you looking at fruits and veggies more broadly? Do you need acquisitions to get to where you think you want to be in 5, 10 years in the Seed business from a portfolio perspective?

Yes, Matt, let me give you a teaser, but I want you to join us in September when we do our Investor Day for both companies just prior to our separation. So I won't tell you the whole story. But look, I think from a Seed perspective, we have a lot of opportunity in our core businesses. And Judd just articulated a little bit here on this call. So we think there's room to grow in corn and soybeans. And with the agreement now that we have in place, the seed licensing business, I think, is going to be just a great growth platform for us going forward.

I think then we've talked about cotton. So that's another new market for us, and we've already covered gene editing. I think gene editing, the capability, if we can provide differentiated technology from our innovation in gene editing, we will consider what I would consider to be tangential or adjacent crops, but we won't go there unless we believe we can provide something that is unique and special to the market.

And right now, as we said, our short-term focus is Seed licensing in cotton and corn and in soybeans and then entering the hybrid wheat market. We're going to do that conventionally, but also with gene-edited hybrid wheat. And that market is the largest row crop market on the planet, 20% of our calories are still consumed there as humanity. And we've got lots of new technology coming in with our proprietary traits as well.

So I think we've got a lot to keep our plates full right now. But with the advent of gene editing and as we get more comfortable with the acceptance of the science around the world, which certainly looks to me like that's what's happening, it should open up other markets for us in the future.

Your next question comes from the line of Mike Sison with Wells Fargo.

Just a quick follow-up on Crop Protection. It looks like you expect the markets to rebound in '26 versus '25. Anything in particular that gives you confidence there? The double-digit volume growth you have for the year seems to be more biologics and strong demand for new products. And then just a quick follow-up on Brazil pricing pressure in Crop Protection. Is it stabilized, getting worse, getting better? Just curious on that.

Michael, this is Robert again. Let's talk about CP markets for 2026. We expect to see modest growth in the overall CP market around the world this year. It will be volume will continue to grow. There's going to be some pricing pressures against that. But by and large, we're seeing positive signs around the world. And earlier question this morning about how things looking in Northern Hemisphere on the order books, and like I said, they're strong. So the year started really well from that standpoint.

Specific to Brazil, when you think about pricing there and when do they stabilize, et cetera, a couple of things happening in Brazil. When you look at the overall market, there is ample supply of product coming in. And so that is a lot of more generics, in formulated generics, but nevertheless, a lot of supply. But when you think about the differentiated products, we're still seeing a need for that technology and farmers are demanding that. And keep in mind, for us, again, 2/3 differentiated around the world. For us, those products command about a 10% to 15% higher margin than the rest of the portfolio.

So yes, we think there continues to be some pricing pressures there from some of the big molecules. But we have a good portfolio to combat that, and we think we're in a pretty good place from a business standpoint as we head into 2026.

Your next question comes from the line of Edlain Rodriguez with Mizuho.

A quick one. This is a follow-up to the CP question. Like the competitive pricing pressure we're seeing in Brazil and in some parts of Asia, can we ever see that happening in North America or Europe again, like how well protected all these markets from the generics?

Yes, Edlain, look, let me take a stab at that one. I think, look, the businesses, the markets are just fundamentally different. They're structurally built differently the way the farmers buy their channel partners, the infrastructure that's in each of the countries or the regions are different. And we -- no market is immune to having generics, right? Generics have been part of the global CP market as long as I've been around and will always be, and they're in all the markets.

I think that what's unique is what's happening in Brazil right now. And look, Brazil is going to grow and there's more area going into production, as we've already said. But I think what we're seeing is that the channel is being a bit more responsible. It looks to us like the channel is functioning still relatively normally. There's a lot of product currently going to ground. But it is a well-supplied market because of the way that they allow their imports.

Now what we haven't talked about, I think, specific to Brazil is a lot of this product is coming from China. And it looks to us like China may be taking early steps to control some of their exports. They just repealed their export VAT. So that's going to drive up the cost to export outside -- from China into Brazil that we think is constructive for the market overall. We're starting to see M&A actually from some of the generics in China. I think that will be constructive overall.

So I think that when you start thinking about this, we are comfortable that 2026, and I'm going to talk about globally, 2026, we should see some slow growth, which is a lot better than we've seen in the last 3 years. And 2025 was better than '24, right? It was a flat market driven by volume. But as Robert said, our planning assumption today is some headwinds when it comes to pricing in Brazil. But the rest of the markets, I think, are going to be quite healthy.

I will turn the call back over to Kim Booth, VP, Investor Relations, for closing remarks.

Great. Well, thanks for joining and for your interest in Corteva. And we hope you have a safe and wonderful day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the Corteva Agriscience Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Kim Booth, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Corteva's Third Quarter 2025 Earnings Conference Call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Judd O'Connor, Executive Vice President, Seed Business Unit; and Robert King, Executive Vice President, Crop Protection business unit, will join the Q&A session.

We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast. During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, included, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements.

Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press releases and related schedules along with our supplemental financial summary slide deck available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us. Before we get into our solid third quarter results, I'd like to address our October 1 announcement on our intent to separate into 2 public companies. This proactive strategic decision is rooted in our belief that separating our Seed and Crop Protection businesses now allows both to be better positioned to achieve their maximum long-term growth potential in the future. Bringing these businesses together 6 years ago, was undoubtedly the right thing to do as demonstrated by our strong track record, including this most recent quarter. We have clearly been among the market leaders, but we have an obligation to look ahead past the short term and ensure both companies are able to pursue their distinct opportunities to the fullest extent.

So it's not that we believe things aren't going well today. They are. It's that we believe things could be even better in the future as 2 separate companies. It's really that straightforward. As we said last month, the seed genetics landscape is changing due to new technologies like gene editing and artificial intelligence, which opens new markets and opportunities for companies with scalable ag science capabilities. At the same time, rising pest and disease pressures and changing weather patterns have driven a shift from single to multiple modes of action in crop protection, including biological solutions. As a result, the market has gradually transitioned away from integrated proprietary models to more open-source licensing with collaborations now driving innovation success.

As a result, industry players are increasingly open to working together, which also allows them to share resources and reduce risk. And importantly, it allows us to get affordable top technologies into the hands of farmers. So we are looking ahead with excitement and optimism, comforted by the fact that both of these businesses are leaders in their markets today and will remain so in the future. It's early days, but the process remains on schedule for a second half 2026 separation. Our Board has initiated a global CEO search for Corteva and we will provide updates on the separation along the way, but our goal right now is to deliver a strong 2025 and 2026.

So let's now move to our current financial performance. Our results for the third quarter were largely in line with our own expectations, with the exception of outperformance on our controllables and strong early safrinha seed demand in Brazil. Operationally, we continue to execute well with double-digit operating EBITDA gains in both businesses, and we're now expecting to deliver over $600 million in controllable benefits this year, a notable improvement from our prior estimate of $530 million. In fact, this year's 9-month earnings performance is already ahead of full year 2024.

Our Seed business is performing well again this year, including $200 million of productivity and deflation benefits as well as $90 million in royalty improvement, reflecting our leading position in North America corn and progress in soybean out-licensing in Brazil. Importantly, we now expect to cross double-digit trade penetration for Conkesta next year in Brazil, the largest soybean market on the planet. Capturing price for value in most regions as well as meaningful share gains in North America is a testament to the high return on investment our technologies provide to farmers. In 2026, we will roll out several hundred new hybrids and varieties around the world, once again, helping farmers increase yield and productivity.

Finally, let me remind you that seed is the only crop input that gets better and better every year, allowing the farmer a solid return on their investment.

The Crop Protection business has also delivered solid earnings and margin growth so far this year. Led by demand for our differentiated technology, we are expecting full year EBITDA to be up high single digits this year. We continue to see volume gains and we remain committed to our strategy of focusing on differentiated and new technologies, which carry a premium in the market. Today, we're also announcing a brand name for our new next-gen insecticide active, Varpelgo, for chewing pests in fruits and vegetables, row crops and rice. Expected to launch in the early 2030s and cross $750 million in revenues at its peak, this represents the latest addition to the Corteva portfolio of trusted crop protection active ingredients inspired by nature and globally recognized for their more environmentally friendly profiles.

Included in our $9 billion Crop Protection Technology pipeline are billion-dollar product families and biologicals in all 3 chemistry indications as well as what we view to be a significant value unlock in our Seed Applied Technology business as a result of the separation.

In like seed, our Crop Protection business is generating substantial value through its focus on controllables which drove over $250 million of benefits in the first 9 months of the year. From an industry perspective, the overall ag market fundamentals remain mixed. We're still seeing record demand for food and fuel and major crop inventories are within normal ranges despite large crops in Brazil and North America.

Farmers continue to prioritize top-tier seed technologies while managing tighter margins. In the crop protection market, although we continue to experience competitive pricing dynamics in some major markets, underlying farmer demand in terms of applications remain on track with historical levels.

In other words, when farmers have crop problems, they spray with the best solution they can find. So what does all this mean for the remainder of the year? We are raising our full year operating EBITDA range to $3.8 billion to $3.9 billion, which at the midpoint translates to 14% growth versus the prior year. This update reflects growth of our new technologies, our outperformance on controllable levers, a more favorable currency impact and our latest expectations on our fourth quarter performance in Brazil.

One quick note. We look at our business by halves, not quarters. It's one reason why we don't provide quarterly guidance. Farmers plan their purchases and business by halves and weather or other uncontrollable factors often move orders, sales and shipping between quarters.

Looking at this year, the halves really do tell a story. In the first half of this year, our operating EBITDA was up 14%, while our second half is expected to be up 17%, both really strong performances. On full year EBITDA margin, we're now expecting improvement of over 160 basis points and a solid step towards our goal of 24% at the midpoint by 2027. A quick reminder. When Corteva launched in 2019, our margins were below 15%. Finally, it's also important to note that we're still expecting a free cash flow conversion rate in the range of 50% for the year as well as $1 billion in share repurchases this year.

Now let's move to the first look at how we're thinking about 2026. From a macro perspective, we're anticipating a continuation of record demand for grains, oilseeds, meat and biofuels. On-farm demand is expected to remain steady, and farmers will continue to prioritize top-tier technologies in order to maximize their yields. A farmer seed selection is particularly critical and is nondiscretionary when compared to other crop inputs. Given the high corn area in the U.S. this year, it's logical to assume we'll see a couple of million acres shift back to soybeans in 2026. With the overhang of global trade uncertainty, it would be premature to discuss how large a shift might be, but we do not consider it to be disruptive to our planning assumptions given our market-leading position on both crops now.

Global trade discussions remain dynamic. However, last week, China committed to buying 12 million metric tons of soybeans this season, followed by at least 25 million metric tons per year for the next 3 years. We will continue to monitor the situation, but this should be welcome news for U.S. farmers. Perhaps most notable is that we are now expecting low single-digit growth in the crop protection industry including high single-digit growth in biologicals. This would be a good first step in the overall return to a healthy CP market. With the exception of Latin America, where we expect competitive pressure to keep prices flat to modestly down, we see overall CP market pricing stabilizing in 2026.

Turning back to Corteva. What continues to set us apart is the strength of our portfolio, a continued focus on execution and increased investment in innovation. The introduction of hundreds of new products is expected to continue to drive solid returns for farmers and thus, a premium in the market and contribute to our volume growth. We're also expecting a continuation of sizable productivity benefits in both businesses, a defining characteristic of our margin enhancement journey.

Overall, when considering the market backdrop in 2026 as well as the growth opportunities we have in motion, we're currently anticipating full year operating EBITDA in the range of $4.1 billion which translate to mid-single-digit growth year-over-year, and we'll provide a more detailed view in early February when we issue formal guidance.

Let me wrap up by saying that we built a foundation of strength that gives us the ability to shape the next chapter of value creation on our own terms. Our intended separation is about sharpening focus, accelerating innovation and unlocking value that's been earned through performance. And we are committed to delivering results like this past quarter throughout this transition period.

And with that, let me turn it over to David.

Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide 7, which provides the financial results for the quarter and year-to-date. Sales and operating EBITDA for both the quarter and year-to-date were up versus prior year driven by continued execution on controlling the controllables and an early start to the Latin America safrinha season.

Briefly touching on the quarter, organic sales were up 11% compared to prior year with gains in both Seed and Crop Protection. Value capture remains steady overall as improved execution in seed was balanced by continued pressure in Crop Protection. Third quarter volumes were up 12%. We see gains in Latin America and EMEA, coupled with Crop Protection volume growth led by North America and Latin America. Top line growth and meaningful cost improvement translated into positive operating EBITDA in the quarter versus a loss in prior year and over 600 basis points of margin expansion compared to prior year.

Focusing on year-to-date, organic sales were up 6% over last year, again, with growth in both Seed and Crop Protection. A continuation of the price for value strategy along with increased corn acres in North America and Latin America drove seed price mix and volume gains of 3% and 4%, respectively.

Crop Protection price was down 2% year-to-date as expected, driven by competitive market dynamics, mostly in Brazil. Crop Protection volume was up 7%, but gains in nearly every region. Notably, new products and biologicals delivered double-digit volume gains compared to prior year. Operating EBITDA was up 19% over prior year, operating EBITDA margin of over 25% was up about 320 basis points driven by organic sales growth, coupled with significant benefits from lower input costs and productivity.

Moving on to Slide 8 for a summary of the year-to-date operating EBITDA performance. Operating EBITDA was up more than $550 million to just over $3.4 billion. Price and mix, volume gains and cost benefits more than offset currency headwinds. Seed continues to make progress on its path to royalty neutrality with about $90 million in reduced net royalty expense. This improvement was driven by increased out-licensing income in North American corn and lower royalty expense in soybeans. By the end of the year, we expect our net royalty expense position to be around $120 million.

Season Crop Protection combined to deliver over $500 million in productivity and cost benefits, including lower seed commodity costs, raw material deflation and continued productivity actions. Year-to-date SG&A was up compared to prior year, driven by higher commissions and compensation expense. The increased investment in R&D aligns with our target and is on track to reach 8% of sales for the full year.

As expected, currency was roughly $170 million headwind on EBITDA, driven by the Brazilian real, Turkish lira and Canadian dollar. Both Seed and Crop Protection continue to have an impressive year-to-date performance, expand on their double-digit EBITDA growth while providing meaningful margin expansion over prior year. In addition, free cash flow has improved over $917 million from the prior year. This was driven by our increased EBITDA, lower cash taxes and lower capital expenditures.

With that, let's go to Slide 9 in transition to the updated outlook for the full year. Our updated '25 guidance reflects the strength of our year-to-date performance and continued confidence in delivering the fourth quarter. As a reminder, in the second half of 2024, we delivered $425 million of EBITDA, with all of that earned in the fourth quarter when we achieved $525 million, largely due to a near record crop protection quarter. This year, that risk is reduced as a portion of those earnings have already been realized in the third quarter.

For the second half of 2025, we still expect approximately 17% growth over prior year. As Chuck mentioned, we now expect operating EBITDA in the range of $3.8 billion to $3.9 billion, representing 14% growth at the midpoint. This increase is driven by broad-based organic sales growth and incremental cost improvement benefits across both businesses. As a result, we now expect operating EBITDA margin expansion of approximately 165 basis points.

We are also raising our operating EPS guide to $3.25 to $3.35 per share, up 28% at the midpoint versus last year. This reflects stronger EBITDA performance and lower-than-expected net interest expense and foreign exchange losses.

Finally, we are reconfirming our free cash flow guidance of approximately $1.9 billion with cash conversion rate of about 50%. This improvement is primarily driven by earnings growth.

With that, let's go to Slide 10 and summarize the key takeaways. First, while we still have an important quarter of the year left to go, we delivered a strong third quarter and year-to-date performance ahead of expectations. Organic sales growth was driven by our leading corn portfolio in North America and Latin America, combined with broad-based volume growth for Crop Protection. We delivered about $500 million in cost savings from lower Seed and Crop Protection raw material costs along with productivity gains. The combination of organic sales growth in both business units, $90 million in net royalty improvement and enhancements in product mix contributed to about 320 basis point margin expansion over prior year.

In addition, free cash flow has improved over $970 million from the prior year. This was driven by our increased EBITDA, lower cash taxes and lower capital expenditures.

With that, let's go to Slide 9 in transition to the updated outlook for the full year. Our updated '25 guidance reflects the strength of our year-to-date performance and continued confidence in delivering the fourth quarter. As a reminder, in the second half of 2024, we delivered $425 million of EBITDA. With all of that earned in the fourth quarter when we achieved $525 million, largely due to a near record crop protection quarter. This year, that risk is reduced as a portion of those earnings have already been realized in the third quarter.

For the second half of 2025, we still expect approximately 17% growth over prior year. As Chuck mentioned, we now expect operating EBITDA in the range of $3.8 billion to $3.9 billion, representing 14% growth at the midpoint. This increase is driven by broad-based organic sales growth and incremental cost improvement benefits across both businesses. As a result, we now expect operating EBITDA margin expansion of approximately 165 basis points. We are also raising our operating EPS guide to $3.25 to $3.35 per share, up 28% at the midpoint versus last year. This reflects stronger EBITDA performance and lower-than-expected net interest expense and foreign exchange losses. Finally, we are reconfirming our free cash flow guidance of approximately $1.9 billion with cash conversion rate of about 50%. This improvement is primarily driven by earnings growth.

With that, let's go to Slide 10 and summarize the key takeaways. First, while we still have an important quarter of the year left to go, we delivered a strong third quarter and year-to-date performance ahead of expectations. Organic sales growth was driven by our leading corn portfolio in North America and Latin America, combined with broad-based volume growth for Crop Protection. We delivered about $500 million in cost savings from lower Seed and Crop Protection raw material costs along with productivity gains. The combination of organic sales growth in both business units net royalty improvement and enhancements in product mix contributed to about 320 basis point margin expansion over prior year.

Given our strong year-to-date performance and continued confidence in the fourth quarter, we raised our full year 2025 outlook across our key financial metrics.

And finally, we remain on track for $1 billion of share repurchases in 2025. This, along with the dividend, translates to roughly $1.5 billion of cash returned to shareholders during 2025, a testimony to the strength of our balance sheet and cash flow outlook.

With that, let me turn it back to Kim.

Thanks, David. Now let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A.

Operator, please provide the Q&A instructions.

[Operator Instructions]

Your first question comes from the line of Chris Parkinson of Wolfe Research.

Chuck, I thought you guys have a pretty interesting setup between Slides 25 and -- through 27. In terms of the why now and your preliminary remarks even on this call, what do you think is the most missed of what you've laid out? Is it the baseline CPC pipeline where you've got the new actives? Is it the balance between the plant health and biologicals? Is it the Spinosyn franchise as a percent of the insecticides, which has been pretty successful? I mean what would be the things that you would say like, "Hey, this is what the independent company actually needs to focus on and further differentiate itself from both a growth and a margin perspective on a go-forward basis?"

Chris. So look, I think we've been pretty consistent with our messaging. If you look at the last 5 years, our Crop Protection business has been among the leaders. We're up about 200 basis points. I'm rounding, I think it's about 160 basis points, a little bit more after the third quarter now. And we have one of the best and the deepest R&D pipelines out there, and we put the number out actually at our last Investor Day of $9 billion. And then we just announced today some new products, some new actives coming into the marketplace.

And if you referenced Spinosyn. So Spinosyn is a franchise product for us. It's still growing. It's a microbial and it will get close to $900 million in revenue this year. And so we like that product a lot. But we also have these newer products that are really driving the landscape, I think, for our business.

But look, I think that it's more of the same. Our strategy for Crop Protection was defined 4 years ago. And it was really simple, right? It was really to drive differentiated technology in the hands of farmers. And so we made decisions back then to reduce the more commoditized part of our portfolio. We exited some geographies. And I think the proof has been pretty evident of the results there.

As a separate independent company, so to get to your question, what we think will happen now is that there's simply going to be more doors that will open for this business. And the example that we gave even on my prepared remarks this morning is on Seed Applied Technology, which is a $0.5 billion business for Crop Protection. But we know that there will be some more seed companies that will do business with our Crop Protection -- independent Crop Protection business when they separate. The other thing I would say is that when you look at how we go to market with the different channels, we think that there'll be more retailers and co-ops around the world that will do more business.

So the strategy for Crop Protection will not change. The formula is working, and we're winning when it comes to that formula. But I think there'll simply be more opportunities. And then when it comes to margin, as I mentioned, we're already up a couple of hundred basis points, and we've already committed in terms of 2027 to have that business at 20% EBITDA margins.

And then just before we separate, there's going to be 2 Investor Days, one for each business. And I would expect at that meeting, we will give you kind of a margin trajectory post 2027 for each business, and we would expect continued growth. But don't forget, this is an innovation company, and we're also committed to keeping our R&D at that 6% to 7% of revenue because we think that, that has been a winning formula. So hopefully, that helps you.

Your next question comes from the line of Vincent Andrews of Morgan Stanley.

Maybe just sticking on Crop Protection and ahead of the separation next year. Chuck, do you think there's any further pruning of the AI portfolio that you want to do? Or is there anything you want to maybe add into it? Whether it be on a wholly owned basis or a JV basis? Or just are you comfortable with everything that you have at this point or areas that you'd want to add to or subtract from?

Yes. So good morning Vincent. We like our portfolio a lot. We've invested in it heavily. I think if you look at what's been coming into the market with our new products, Rinskor, Arylex, Reklemel, these are all new actives within the last few years or so and then the new products that we're bringing into the market in late this decade, early next decade. But look, we're always looking at partnering with other companies whether that's full M&A or collaborations or R&D relationships in terms of joint ventures because I think that more is needed in the industry. And I've said that many times that this is an industry that needs to work together because, look, we've got real issues when it comes to disease and insect resistance in terms of what we're seeing around the world, and it is getting more expensive to bring new actives into the marketplace.

So collaborations help everyone. They help each company and they actually help the farmer in terms of bringing affordable next-generation technology to the marketplace. So we would be open, but that's not because we don't like our portfolio. In fact, we think that our portfolio, as I've mentioned already this morning is quite strong.

Your next question comes from the line of Kevin McCarthy, Vertical Research.

Chuck, can you discuss how credit market conditions are evolving for growers in Latin America and what that means for Corteva in the industry? One of your peers highlighted this issue recently, and I'd love to get your perspective on it.

Yes, this is David. I'll probably take that call. So when you look at overall, and I'll say, Latin America, primarily Brazil and Argentina, we are seeing an industry that's seeing higher cost to borrow and leverage customers, and there are increased bankruptcies. I think when you look at Corteva, we're managing this risk very well, and our losses have been very minimal. So when you look at our past dues, for instance, this year versus last year, as a percent of AR, we're actually a couple of hundred basis points better than we were last year. And we've also spent a lot of time really de-risking our overall AR balance.

So when you look at our exposure to folks like the national distributors is very minimal compared to perhaps the industry. And then in addition, we're a pretty big user, and I think we have a very robust barter system, which helps us yet again reduce our exposure and about 40% of our total sales in Brazil is on the barter system. So I think when you look at the mitigation actions we've made, I think our exposure and our actual, so far, our performance has been very strong.

Yes, Kevin, maybe if I could. So I think David hit these points, but it's worth saying again, I think our go-to-market strategy, especially in Latin America, as well as how we barter to risk manage. I think those are 2 differentiating factors for Corteva that we found as part of our overall risk management framework for that part of the world.

Your next question comes from the line of Joel Jackson of BMO Capital Markets.

Maybe a 2-parter. Have you had any time or ability to get or better take on what your dis-synergy cost -- dissynergies might be? I think you projected early on, maybe a sub-hundred million dollars dissynergies. And then have you thought about what you might do into the split? Might you look at what you may do for buybacks, would you continue the current rate in the first half of the year or into the split -- next year into the split? What are you thinking about that? Or do you want to keep the balance sheet sort of, I don't know, stable is the right way to say up until the split?

Yes. So this is David. Maybe I'll handle the second question first. When you look at our expectations for cash flow this year, we said $1.9 billion. I would say, as a lot of people know that it's really that fourth quarter that's critical to see how our full year ends up. And I would say that if we end up having a typical credit mix situation in this year vis-a-vis other years, we'll likely be north of that $1.9 billion number. So again, strong cash flow, strong position.

I think whenever it comes to any capital deployment items for 2026, we'll update everyone during our February call when we go into more detail around our guide for 2026. And I think it's reasonable to expect. We'll also want to make sure that we have the proper capital structures for both businesses as we go into the split.

When you look at where we are regarding our separation, our separation management team is up and running. So we have numerous teams looking at every function. And again, looking at exactly detailed plans around what those dis-synergies might be, our initial estimates were, as you pointed out, $80 million to $100 million. And the teams are working very hard to make sure that we minimize that number. So again, we'll be providing more details in February. And again, that's only because we'll have much more detail at that point in time to share with everyone.

Yes. And then, Joel, just on the 2025 share buyback, we're committed to complete the $1 billion that we communicated earlier this year.

Next question comes from the line of David Begleiter of Deutsche Bank.

Chuck, just on biologicals, they will be a key part of the new CP story. Year-to-date, your sales are up about 7%. So why are they growing faster for you guys right now, do you think?

Yes. So David, thanks for the question. First of all, I'd say we're very pleased with the growth and the progress in biologicals. When we first entered the market and when we did the M&A, we were in that neighborhood of about $400 million of revenue. And I think this year, it's going to be closer to $600 million of revenue. So very strong growth considering the overall market backdrop in crop protection.

The other thing that we're very pleased with is that some of these products now are moving nicely around the world. And we've just launched the biologicals business in a branded way in North America, and this spring was the first year that we've done that, and we're seeing really good success, I think, for U.S. farmers trying this new technology. And then also progress with some new technology actually going into Brazil and in Europe.

So I think it takes a little bit of time to move these products around the world, and that probably is some of the reason why we've seen the growth rates the way they are. But overall, I'd say we're very pleased with our biologicals performance, what farmers are seeing on the field and how we're moving these products around the world. So we would expect to see next year continued strong, high single, low double-digit growth rates in biologicals for the foreseeable future.

Your next question comes from the line of Josh Spector of UBS.

I was wondering if you could just dial in a little bit on crop chems and pricing specifically. So you relative to your peers, it doesn't seem like you're changing your expectation on crop chem pricing in the second half. So I wanted to confirm that first.

And then second, just thinking about your comments around '26, is it too early to call that we're going to see low single-digit growth in crop chemicals? Or why do you have the confidence to be doing that now?

Okay. I'll have Robert talk about second half pricing, and then I can come back with 2026. Go ahead, Robert.

Yes, second half pricing is, as you've seen, year-to-date, where we are down low single digits. We expect we'll finish about there overall as we finish the year. But the big driver in the second half is Brazil. And actually, there's an improvement or good news story happening here because we expect Brazil to be mid-single digits in the rest of the year and that's in comparison to high single-digit loss last year. And so continuing to improve there, and we expect to continue to do that as it gets into '26.

By and large, the rest of the regions are running about flat. And so thinking about crop price into the future, we think these trends continue to move in that direction as we continue to get more and more new products into the channel, as Chuck talked about.

And then just, Josh, on your question on '26. So yes, look, it is a little early. We need to finish 2025 in Latin America. But here's how we're viewing it. I guess it's an early look on Crop Protection globally. '25 we expect to be flat, which is better than the last few years. Robert already mentioned. So LatAm, Brazil specifically, probably down mid-single digit, but that's much better than being down high single digits the year before. And then next year, as we move into 2026, we expect Brazil still to be down, but low single digits. So the trend line is improving.

Overall, though, for the Crop Protection market for 2026, we think it's going to be better than 2025, and it's really going to be driven by volume growth with pricing stabilizing everywhere around the world, perhaps except for Brazil, which we've already talked about.

So what gives us confidence? It's a really good question. And the way I think about this is, look, on-farm applications around the world are strong. We can see it. We can see the product coming out of the channel consistently around the world. And channel inventory is more or less are in healthy normal ranges. And then China. So China from a generic or commoditized product perspective, prices have been stable now for some time.

So there is stability in the crop protection industry. The area that gives us less confidence, we've already called it out, is Brazil, in Brazil pricing. Volume has been pretty healthy because there's been new acreage put into production and farmers have a need for the product, and they're using it. We just need to see the trajectory on pricing sort of stabilize and hopefully return to some sort of positive growth in the future.

So when we put it all together, I think it's -- right now, it's a reasonable assumption to say that 2026, the global crop protection industry will return to, we'll call it, low single-digit growth.

Question comes from the line of Jeff Zekauskas of JPMorgan.

Diamide pricing is falling and your insecticide pricing seems to be moving lower. I'm wondering about how do you see the effect of price pressure in chemicals like Rynaxypyr affecting your Spinosyns. And how do you see that price pressure affecting your volumes? Did Spinosyns grow this year in volume terms? And is that the area where you're most worried about price pressure next year in crop chemicals?

Yes. So maybe Robert can talk about volume and then I can come back and give you some thoughts on sort of the pricing dynamics. So go ahead, Robert.

Jeff, good question in relation to how our portfolio fits into the overall market and specifically insecticides. We've had some setbacks this year around weather in some areas and our portfolio is not immune to pricing pressures, albeit it's a premium products. And when you think about the generics, right, they set the floor. And so we do feel pricing pressures, but our volumes continue to grow. And some really good things happening in this area that I'll call your attention to and you brought up Spinosyns.

We expect Spinosyns to finish up near $900 million for a single molecule this year. That's a 5% organic growth in a market that's flat. And so we continue to see good things out of our Spinosyns. Specifically for Spinosyns versus some of the other generics is, it's a rotation partner. Resistance builds quickly in some of these areas. And so the demand for Spinosyns, we expect to continue because of that.

A few other things happened in this area that I just should bring your attention to. New products at Pyraxalt, Reklemel, these things are up a 30% combined on a year-over-year basis year-to-date. And we expect these things to continue from a growth in our insecticide portfolio, and Spinosyns will lead the way.

Yes. Jeff, just a few more comments. So I think Robert covered it well. If you think about what happens on the field, the diamides and the spinosyns are actually complementary. Farmers usually rotate them because of insect resistance issues. So we don't really think that there are competitive products. Now Robert said, our Spinosyns business is growing, and we like the trajectory. But from a pricing perspective, the floor is set by more commoditized insecticides. So we're not immune to that dynamic.

But the one interesting thing about spinosyns to just differentiate it from some others, this is a microbial. It's not chemical. So what that means is it's a living organism, and it's very difficult to replicate. In fact, if you don't have the strain, you would have to go find the strain inside of nature, and it won't have the same efficacy because we've been engineering that microbial for almost 20 years. So even though that this product family has been off patent, we've been able to command a premium into the marketplace because it's a microbial that's used in a rotational application usually for farmers around the world. So hopefully, that helps.

Question comes from the line of Laurence Alexander of Jefferies.

This is Dan Rizzo, on for Laurence. You mentioned that free cash flow is being driven by earnings growth. I was just -- going to ask how we should think about working capital and particularly as maybe a percent of sales over the long term kind of on an annual basis?

Yes, it's a good question. And when you look at so far, our performance this year, you will see that a lot of our year-over-year improvement has been driven by working capital. You'll see a little bit more increase in receivables, obviously, due to our volume and sales increases and then the little decline in inventory. Typically, in Q4, we will end up building some inventory, and we expect that to be again this year. And that's why we're in that $1.9 billion, perhaps north of that for our free cash flow.

When you look at the overall working capital as a percentage of sales, I would say that if you take probably an average over the last couple of years is a pretty typical area for us to be. Maybe if you go back further than that, it isn't. So I would say if you take the last couple of years, the working capital sales is a good indication of what our plans will be going forward.

Your next question comes from the line of Duffy Fischer of Goldman Sachs.

Question on seeds. Now that we're kind of through the season, I was hoping you could give me a view on how you did market share-wise in the northern hemisphere on the big crops: corn, soy, cotton, canola. And then I thought I heard you make a comment about Conkesta in Latin America, but I missed that. How fast is that growing? Or how big do you believe that will be next year?

Go ahead, Judd.

Yes. Thanks, Duffy. So from a market share perspective, we do feel very confident that we were able to pick up some share. At the same time, we held price mainly through mix here in corn, did that across brands and feel very good about our product performance going into '26.

On soy, we picked up even more share than we believe we did in corn. We need to finalize all this yet with acres. But directionally, we're very confident that we've had a strong year. And it's really based on germplasm and the performance of our products.

Now in terms of Conkesta, as we think about where we're at with that today in 2026 -- or 2025, 8% to 10% of the market; 2026, we're going to get we're going to get into double digits; and as we get to 2030, we could be 1/3 of the market in Brazil with E3 and Conkesta. So like the growth, like what the next few years looks like in that space.

Your next question comes from the line of Arun Viswanathan of RBC Capital Markets.

I guess just focusing on the margins. It looks like you've had very strong performance. When you started this journey, you were in the mid-teens across both businesses and then we hit the high teens and low 20s and now you're kind of mid-20s across the whole company with up to 30% in Seed. So I guess, do you see continued margin growth as you move into '26? And what will be driving that? Is it kind of across the board price volume and cost gains? Or would it be mostly driven by cost? And maybe you can also weave in if there's any royalty considerations we should take in there?

Yes. Thank you. Yes, look, we're very proud of the margin journey. It's been a company-wide effort and initiative for several years. And just to get to the point of your question, we do think that the journey will continue. In fact, we've set public targets out to 2027 of about 24% at the midpoint. So we still got some room to go.

We've been on that trajectory of, I'll say, at 100 to 150 basis points per year, and we think that's as good of approximation as we can give you. It will be across both Seed and CP. And the drivers are sort of spread. Our new products, whether it's new seed hybrid and varieties or if it's new products in Crop Protection will be a major driver. I'd say seed out-licensing as well, very high-margin opportunity in business. And as we move towards royalty neutrality and then royalty income post 2028, we think that will be a major contributor to our margins over time.

And then cost and productivity. When you think about -- when we laid out our targets for 2027 of $1 billion of EBITDA growth in 3 years, about $700 million with cost productivity and deflation, and we're trending a little better than that, and we probably will do better than the $700 million on a net basis. So I think that, that is also a major focus for the company. And one of the core competencies that I think we have as an organization is to always strive for improved cost efficiencies across the company.

Your next question comes from the line of Aleksey Yefremov of KeyBanc.

So you're showing in your CP business, 65% of the portfolio is differentiated. Could you talk about the remaining 35%? How are these products competitively positioned in this possibly more competitive world?

Yes, Aleksey, thanks for the question. The portfolio, as you know, we started in 2022, beginning to work on getting it to where we are today with about 2/3 of it differentiated. And that does drive a premium in the market, and it's higher technology that's adding value to the farmers. The balance of that is what we call not differentiated, but that doesn't mean it's commodity generic. It is still a formulated product that is normally in the price ladder, brand ladder type of setup to where it's sometimes a lower price point, not the premium product, but it still is bringing value on the farm.

So our overall scheme for our portfolio and how we shape it is we don't intend to play in the commodity generic type molecules. We want to play in that upper end because as an innovation company, that's how we fit into this overall agricultural economy. So I'll leave it there. I hope that helps a little bit.

Your next question comes from the line of Kristen Owen of Oppenheimer.

Nice dovetail into a more strategic question that I wanted to ask you. Just ahead of the split next year, I did want to talk about maybe some of the digital assets that you've compiled over the last several years, whether it's the things that you've built yourself like CARL or the ones that you've acquired and built on like the granular assets. How integrated are those platforms when we think about seed versus CP? And are there investments that you need to make in your digital infrastructure over the coming 6 to 9 months to support those stand-alone businesses?

Yes. Thanks for the question, Kristen. So yes, this is a very good focus area for us. Our digital support systems are integrated. And so we are going to have to -- and it's part of the $80 million to $100 million of dis-synergies that David has already called out, but a percentage of that will be to separate those businesses to ensure -- to separate that business to ensure that both Seed and CP have the AI and the digital support that they need because I think one of the major reasons we've been able to drive productivity and cost reduction as well as the speed of innovation and the high return on investment we have with our R&D dollars is because we've made strategic investments in this area, and we don't want to lose that capability.

So right now, inside of Corteva, that is in one group, and we'll have to separate that quite carefully. We're confident we've already done a lot of work in this area, and it is included in the $80 million to $100 million of dis-synergies, but it will be an area that we'll have to make sure that before we launch both companies, that they have the digital assets that they need to continue with their strategic journeys that they're both on.

Your next question comes from the line of Matthew DeYoe of Bank of America.

Two ones for me, I guess. First on CP. Even if we assume pretty chunky margins for price/mix, it seems like incremental margins on volumes for chems were really strong. I guess why may that -- I guess, why would that be? And then I have a feeling -- I know how you're going to answer this, Chuck. But if we look like, I don't know, call it, 15 years down the road for seeds, given the lower barriers to entry with gene editing, is it possible that the seed company business model just looks over time more similar to like a CPG company like L'Oreal or Pepsi that becomes an acquirer and marketer of smaller technology brands? And like how do you -- or how does that kind of jive with R&D and how you think about budgeting, but I'll leave it there?

Yes. Matt, so we only caught -- sorry, the second part of your question on gene editing, which I can certainly answer. Was there a CP question before that?

Yes. I was just looking at the incremental margins in -- for volumes because obviously, CP EBITDA was up a lot and price/mix was a bit of a headwind, but it seems like the volume incrementals are big?

So let me take the gene editing question, I'll have Robert deal with the incremental margin volume question. So look, looking 15 years out, for me, is very exciting when it comes to this technology. In fact, we put a slide in the appendix of our first gene-edited corn hybrid, which we call a disease super locus on Slide 29. I'd encourage you all to have a look at it. This is just scratching the surface, I think, on the full power of the technology. But we do not think that it will become a disruptive technology beyond sort of what can be done inside of the lab.

What do I mean by that? If you look at what is going to be needed to be successful, the gene editing capability, we believe, will be readily available. In fact, we license our gene editing tools to many companies around the world, and we encourage that kind of competition. It is important from an innovation perspective. I think where the differentiation will be will be on the germplasm because you need something great to edit. And so the capability to gene edit plus the germplasm, plus if you think about how we go to market around the world, we have to be able to produce seed in every region around the planet where we're going to sell. And that capability is really expensive and very difficult.

And so when you start thinking about this, where I think that this leads is that there could be great new technology that's being invented, and we really hope that there is. But then what it will lead to is probably more partnerships because of access to germplasm and then just the sheer supply chain production capability that's going to be required. But it is going to be, I think, a very powerful technology in the future. And I think it will transform how farmers actually farm and what we're able to do to help farmers. So that's the question on gene editing.

Maybe Robert, on incremental margin volume, if you can answer that.

Yes, thanks. Our journey, as Chuck stated earlier, started back in 2022 when we began to change our strategy and focusing in on profitability and overall financial health of the CP business. And we've had some great inroads there of improving the financial health of this business to where it is today. And that was on the backs of a couple of areas.

One, you touched on it of mix, price volume trade-offs and what that -- how that impacts us. And I'll draw your attention to 2 areas there that we've talked about quite extensively around our growth levers, but let me go into how that impacts margin. Our new products and our biologicals portfolios is 2 areas that typically have a 10% to 15% margin advantage over your traditional portfolio. And these are areas that are growing faster than the rest of our business. They're both in the double-digit growth year-to-date. And as Chuck talked earlier about biologicals into the future, we're excited about the continued growth there.

And then our new products that we've recently put into the market, Rinskor and Arylex are growing at a rapid rate. These 2, just to put in perspective, will be larger than Enlist. In 2027, we expect the 2 combined to be about $1 billion in revenue, and that's not their top side. So when you look at our mix of the portfolio, that will continue to help our margins because of this differentiation that we supply and that price for value that we're adding to that farmer.

The second thing around it is just the great work, the operations teams and the network optimization that has been taking place when we talk about our footprint optimization, year-to-date, we'll have delivered about $200 million in productivity for this year alone. And that work has a work plan that will carry us out past 2027, and we are on track to deliver the commitments that we gave Investor Day for the cost savings as well. So you put those 2 together and those compound to get to the bottom line of impacting that margin and continue to grow our EBITDA, and we're excited about the future of it.

Your next question comes from the line of Patrick Cunningham of Citi.

Could you provide an update on hybrid wheat or double cropping systems, whether it's progress in commercialization, expanded pilot programs or any milestones that we should be modeling over the next 1.5 years?

Yes. So as you know, we're pretty excited about our hybrid wheat technology. And the way I think about this is this could certainly be the third leg to our stool. We're already market leaders in corn and soybeans. And if you add wheat over the next decade or so, it's a pretty powerful combination. We have said that we believe this is a $1 billion revenue opportunity in the next decade.

So this is kind of the year 3 of our plant trials. I'd say all systems go for a launch in 2027. We're seeing consistently a 10% to 15% yield improvement, which will be really exciting for farmers. And don't forget that the first hybrids we put into the market will probably be the worst ones we put into the market because they're coming first into the pipeline.

So what I'd say is that there'll be, I think, small amounts of availability in 2027 ramping up. But as we get out to the next -- the middle of next decade, we think that this will have a similar margin profile as corn and soybeans for us. So pretty exciting for us, a yield improvement for farmers overall. And this is an important crop, right? It's the largest row crop in the world, and it still accounts for 20% of the calories we consume. So very important for society when it comes to food security.

Your next question comes from the line of Edlain Rodriguez of Mizuho.

Chuck, so as farmers are likely to shift some acreage from corn to soy, can you please remind us of the potential impact on Corteva? And do you feel that you're well positioned to easily offset any headwind from there?

Yes. Sure, Edlain. So the sensitivity that we've normally given is about $10 million of EBITDA for every 1 million acres that shifts from corn to soybeans. It's included in our thinking of the $4.1 billion. It's a little too early for us to say exactly how many acres are going to shift because we've got lots of time here for farmers to make that choice. But it would be logical to assume that from the 98-or-so million acres of corn, we're going to see less than that in 2026, assuming the trade routes and the export markets still stay open. So there's still some uncertainty there. But overall, what we've given you in terms of our first look when it comes to 2026 EBITDA, that's all factored in, but it's about $10 million of EBITDA for every 1 million acre shift.

Your next question comes from the line of Ben Theurer of Barclays.

Just coming back to the spin. And obviously, we've talked about the seed business and the opportunities from growing through gene editing and M&A, et cetera. But when we look at the Crop Protection business, how would you see -- with biologicals within that segment, how would you see the opportunities and the likelihood of you being as well active here on potentially M&A to add to the portfolio without just sticking to the internal pipeline?

Yes. Very good question. So this is an area where I think we have been active over the last couple of years in terms of M&A. The biologicals industry just as a whole is more fragmented, and there are smaller companies doing really great things. It could be that we would get more active from an M&A perspective and just outright acquire them or it could be either commercial or R&D collaborations because we already do a lot of that through our R&D and our commercial organization.

So all of those options are on the table. I would suspect that as the company separates, they will even be more focused on growing their biologicals portfolio because it's been such an important part of that business that I think you're going to see all of these things kind of accelerate over time, M&A and technological and commercial partnerships.

There are no further questions at this time. And with that, I will turn the call back to Kim Booth for closing remarks. Please go ahead.

Great. Thanks for joining and for your interest in Corteva, and we hope you have a safe and wonderful day.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Corteva Investor Call. [Operator Instructions] It is now my pleasure to turn the call over to Kim Booth, Vice President of Investor Relations. Kim, please go ahead.

Good morning, everyone, and welcome to our call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; David Johnson, Chief Financial Officer, will join Chuck for the Q&A session. We have prepared presentation slides to supplement our remarks, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast.

During this call, we will make forward-looking statements, which are based on our current expectations and assumptions about the future and, therefore, subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC.

We do not undertake any duty to update any forward-looking statements. During today's presentation, we'll refer to certain non-GAAP financial measures. Reconciliations of these non-GAAP measures are available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Good morning, everyone, and thanks for joining us today to discuss the next chapter in our company journey. Before we start, I would like to clarify a few things upfront. First, our 2025 full year guide remains intact. There are normal puts and takes, but overall, our year is unfolding as expected.

Second, we remain on track to deliver our 2027 financial framework. Our first look at 2026 EBITDA has us rolling up to $4.1 billion at the midpoint, consistent with expectations. And third, our announcement today is driven by our focus on delivering long-term value. We see this as beyond 2027. What I mean by this is there are no surprises leading to our separation, as we'll discuss in a minute.

Now let's get to today's announcement. Let's start with a quick look back. Since the creation of Corteva as a stand-alone public company in 2019, we have built an organization that leads the world in agriculture technology. We increased our annual operating EBITDA by an 11% CAGR and grew our EBITDA margins more than 700 basis points, a remarkable feat and a testament to our focus on technology development and controlling the controllables.

And through the first half of 2025 we've returned $7 billion in cash to shareholders. In the same time period, we delivered a TSR of about 200%.

Driven by our world-class R&D organization, we launched about 500 new products in any given year, putting critically needed technology into the hands of farmers. Our CP new products alone are expected to deliver over $0.5 billion of additional revenue within our financial framework period. We are a leader in biologicals and have other exciting new growth platforms coming online including biofuels, hybrid wheat and gene editing, which together we described at our last Investor Day as being a multibillion-dollar incremental revenue stream.

Our track record has been consistent and strong. This performance is due to many things, not the least of which is our employees who come to work every day with a passion for and deep belief in the mission of agriculture. I have always thought our people are the best in the industry. But it also reflects a series of proactive and, frankly, at times difficult actions taken over the years to strengthen our business.

We simplified our portfolio and exited certain geographies. We invested in biologicals. We cut costs. We work to optimize our manufacturing footprint, and we invested in R&D even when our margins lagged our peers. Our Board and management team have always prided themselves on being and staying ahead of the curve and we believe we're about to demonstrate this forward thinking once again.

Corteva today comprises 2 efficient, effective and focused operating models with strong records of growth and margin improvement. These 2 market-leading businesses are both farmer-centric with technology and innovation at their core. Both are focused on improving yields on farms around the world. So we begin in both cases from a position of strength.

As you will have seen this morning, we announced a plan to separate Corteva into 2 new companies, one comprising our current CP business and the other our Seed business. The decision to act now is rooted in a few core beliefs on the part of the Board and the management team. First and foremost, as a farmer-centric organization, today, we appreciate that our customers want and need choice across their input decisions, including Seed and CP. Over the mid and long term, the best way maybe I can even say the only way for this company to preserve and expand that choice and keep putting innovative, effective, sustainable solutions into the hands of farmers around the world is to give both businesses the freedom to operate without having to look out for the other.

Second, we believe that the recipe for success in the future will be different from what it is today. This includes not only the way that 2 businesses choose to innovate but how they operate within their respective value chains and also how they make themselves even more cost efficient. For example, the continued success of our SpinCo business will be predicated upon sustained investment in advanced genetics and further capitalizing on our unique route to market.

At New Corteva, success will be built upon an optimized supply chain new level of operational excellence and the ability to invest in next generation of sustainable differentiated innovation, including biologicals and other nature-based products. And third, we believe separation will give both businesses the corporate currency and balance sheets to invest in long-term organic and inorganic growth to capitalize on market opportunities, all of which will be backed by targeted investment grade credit ratings.

And of course, a separation will allow these businesses to maximize long-term value, certainly for our shareholders. but also for farmers, customers and our employees. We expect this to be a low complexity transaction and any dis-synergies it presents to be manageable and ultimately outweighed by mid- and long-term opportunities.

We did not make this decision quickly or take it lightly. But as I said earlier, we have a history of moving before the market, and we believe we are doing so again. I want to stress as strongly as I can that this is not about the business 6 years ago or even today, this is about tomorrow. Let's talk a little bit about why this is true. First, a discussion of the markets for both businesses.

Let's start with New Corteva. Our view of the Crop Protection market hasn't really changed. We all know recent conditions have been tough and this market has always been competitive, but we still believe the market will return to growth in the near future. As many of you know, our CP business has largely outperformed in the market through the recent period of intense market competition.

We've seen 5 consecutive quarters of volume gains and flat pricing in our CP new products in the first half of 2025. The market is improving. Importantly, the CP market also needs and still values effective, differentiated technology as we see in the rapidly expanding biological segment and price premiums for patented technology.

And as a result, the things we've been highlighting over the past year or 2, including our CP new products and biologicals, should allow new Corteva to continue to grow above the market and improve its margin profile in the near term. So again, while our view of the CP industry is mostly unchanged, what has changed is what we think will be needed over the next few years and beyond for it to remain a global leader.

Specifically, we firmly believe CP industry players will need to innovate and compete differently than they did just a few years ago or even today, a pure-play company will be best equipped to fulfill the mandate for this mission. Also, the technology advantage New Corteva enjoys, coupled with its laser-focused on operational excellence will continue to be a competitive strength, helping it to remain one of the premier players in the global market.

Being a pure-play Crop Protection business will give new Corteva the flexibility to further optimize its manufacturing and supply costs, develop deeper collaborations and partnerships on innovation and drive more effective channel management in ways that are simply less feasible as part of an integrated Corteva today.

Looking forward, the prospects of plant genetics are almost limitless. Perhaps it's not surprising to say that we know more about crop genetic science today than any other time in human history. The application of AI tools will give us the ability to accelerate new innovation, which when combined with advanced genetics could unlock new opportunities across numerous species.

This is why we believe that the continued success of SpinCo will be predicated upon sustained investment in advanced genetics. That is unlocking a plants genetic code to unleash previously unreachable breakthroughs to accelerate the pace of innovation. And as a pure-play crop genetics company, SpinCo could go beyond its corn and soybean core into other row crops, even expanding into other areas like fruits and vegetables.

SpinCo will also look to expand on new opportunities in wheat, cotton, rice and other products where genetics can play a transformative role. In other words, we could see SpinCo playing in a vastly expanded addressable market. All of this on top of its unrivaled direct route to market will lead SpinCo to deliver its next phase of above-market innovation-driven growth and shareholder returns.

While there are benefits to an integrated or technology systems approach like we have today with Enlist, when we look ahead 10 or 15 years after the current systems evolve into next-generation solutions, the future looks different. We believe tomorrow systems will be open or multi-source licensing agreements with multiple modes of action.

Farmers will need these systems due to rapidly growing crop resistance and environmental challenges, insects, weeds, disease and so on, presented by changing weather patterns. And as we noted earlier, farmers want choices. In other words, integration is no longer a prerequisite or a predictor of success. The facts on the ground have changed such that we believe it may actually constrain long-term value creation.

And now I'd like to spend a little time on the future of each company. Again, let's start with New Corteva. A pure play New Corteva will be a global leader in differentiated sustainable crop health solutions that help farmers protect yields. Today, it is #4 in the global CP market with one of the broadest and deepest portfolios in the industry and home to one of the largest biological businesses in the world. Biologicals continue to be the fastest-growing segment in the Crop Protection market.

And as you know, is one of our growth platforms. We anticipate $1 billion in revenue by the end of the decade, essentially doubling the size of our biologicals business. Today, New Corteva boasts a $9 billion pipeline and launches more than 150 new products every year. Its current pipeline includes new blockbuster molecules like Haviza, for which we're targeting a 2026 launch and anticipating peak revenue of more than $0.5 billion.

This is a differentiated novel fungicide that will help soybean farmers in Brazil, combat Asian soybean rust. A multibillion-dollar pest problem there. Our existing CP business has been ahead of the curve over the past 6 years, anticipating and successfully navigating shifts in trends in the market.

As a result, our EBITDA margins have increased 180 basis points since 2020, while many of our peers have seen margins decline in the same period. Looking ahead, given the realities of the regulatory landscape, life cycle management and overall competitiveness of the market, New Corteva will need to intensify its cost focus in order to accelerate performance while continuing to innovate. This calculus is more easily achieved in a stand-alone company structure.

Finally, as a stand-alone company, New Corteva could very well have the best balance sheet in the CP industry. Its capital allocation priorities and targeted investment-grade credit rating will fit a business model designed to deliver consistent growth over time and support future capital needs, including organic investment and differentiated technology and advanced sustainable solutions as well as disciplined accretive M&A focused on expanding positions in high-value markets.

For SpinCo, simply put, it's the best seed business in the world. I'd like to think of it as a red diamond of agriculture, a true rare jewel. Pioneer's century-long track record is unmatched in the industry, thanks in large part to its unique germplasm and century of breeding expertise. And SpinCo continues to expand in market positions to its full-service retail brand, Brevant, regional anchor brands and growing out-licensing business. SpinCo is and will continue to be a classic growth compounder with a direct channel that quite honestly can't be replicated.

Its performance since 2020 has been nothing short of exceptional. A 16% EBITDA CAGR and over 1,000 basis points of margin expansion. This is due not only to demand for its technology but how effective this business has been in holding down costs, cutting where it needed to cut, investing only when it was smart to invest.

So the business today already stands apart, especially given the scarcity of genetics players with global reach, and we're now taking this a step further to make it the only pure-play global company singularly focused on advanced crop genetics. This business today strives to be first or a strong second in every market it participates in. And in the most important market, it has already achieved that goal, but the strong foundation it has in corn and soybeans, it's that much easier to expand into other targeted markets in the future.

SpinCo is already a leader in gene editing, which promises to be one of the most transformative technologies our industry has ever seen, a position that should allow it to expand its offerings beyond row crops. An example of our advanced genetics capability is our new hybrid wheat technology. Corteva scientists crack the genetic code in ways no one else could. And as a result, this new offering will launch in 2027.

This hybrid wheat technology is expected to increase yields by 10% to up to 20% to start with, which will have significant impact for both farmers and the world's wheat supply. We believe that this is a multibillion-dollar revenue opportunity for SpinCo another profitable option for farmers and a meaningful step towards global food security.

SpinCo's commitment to being an industry leader in advanced genetics and capturing market share in areas like out-licensing, gene editing, hybrid wheat and biofuels will require disciplined capital allocation priorities, including targeted M&A opportunities in high-growth segments, which we expect will further maximize returns to shareholders.

Both companies will continue to be well positioned to capitalize on the growing demand for food and energy, notably grains, oilseeds and biofuels and for the top-tier technologies that help farmers maximize and protect yield, sustainability, crop health, all despite tough environmental pressures. From an organizational perspective, the employees of both companies will benefit from businesses unified by a single vision with a focused strategy and priorities, unhindered by other considerations. Decision-making and other processes should get simpler and faster, meaning both companies are able to be nimble and move more quickly.

We believe that what was true 6 years ago will not be true 6 years from today, and this company has a mandate to evolve ahead of the market, moving before it does. We strongly believe that in the long term, the value of these businesses are able to create for our shareholders as 2 stand-alone companies will be greater than the value, we would be able to create as an integrated company.

As we noted, the 2 new companies will each have tailored capital allocation strategies designed to maximize growth and value creation, supported by investment-grade credit ratings. The strong balance sheet position that Corteva prides itself on today will be passed on to both new companies. Both companies will be built for growth, and both will have distinct corporate currencies, allowing them to make long-term capital decisions, which will allow them to continue to lead the industry.

Finally, we announced this morning that upon separation, Greg Page, our current Chair, will become Chair of New Corteva, while I will become CEO of SpinCo. These moves reflect the Board's intention to ensure both companies have continuity and leadership in that each benefit from our respective experience and expertise. We will announce the remainder of the top leadership positions in the coming months.

In closing, let me summarize this discussion in the transaction at a high level. We intend the separation to qualify as a tax-free spin-off for U.S. tax purposes and are proceeding accordingly with the Form 10 registration process with the SEC. As mentioned, we are targeting capital structures that maintain investment-grade credit ratings for both companies, they are both expected to have ample discretionary cash flow to invest in organic growth, return capital to shareholders and consider strategic M&A transactions.

Legacy liabilities, including the historical DuPont pension plan and our PFAS obligations will be retained by New Corteva as part of the transaction. As it pertains to recent coverage of possible new Crop Protection product liability contingencies, I can confidently say there is nothing new here. We're expecting low separation complexity, which should minimize disruption across the organization over the coming months.

This is due in part to the investments we made over the past several years including New Corteva's ERP system. As a result, we expect the impact of dis-synergies to be manageable. Our current estimates are somewhere in the range of $80 million to $100 million. In particular, we believe any commercial dis-synergies associated with today's integrated model will be neutralized or offset by an unencumbered focus on each company's respective channel and strengthen relationships they will have with their industry partners.

We expect the separation to be completed in the second half of 2026. Finally, we believe both new companies have earned their place in the market and that the value they create will accrue to shareholders, farmers and society at large. I often say that our future will be even brighter than our past. I have never felt more strongly about that than I do today. Thank you, and I'll turn the call back over to Kim.

Thanks, Chuck. Now let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

[Operator Instructions] And our first question comes from the line of Chris Parkinson with Wolfe Research.

Awesome. Chuck, you hit on this $80 million to $100 million of potential estimated dis-synergies. Can you just break those down between how your thought process evolves on the R&D side versus what I'd characterize as more of the commercial side? And what would you say to those who say, oh, my gosh, you have to have Seed and Crop Protection chemicals together because that's in the gold standard. I mean what would you -- what would your kind of defined response be?

Chris, this is David. I think I will handle the $80 million to $100 million, and then maybe Chuck can follow up. But it's just an initial estimate? I mean we've done a lot of benchmarks, and we started doing some work. And as you can imagine, costs like corporate costs, perhaps some commercial management costs on and so forth, we baked into the $80 million to $100 million.

I will say that we are going to look to manage that number as closely as possible. As we work on [ org ] designs that are specific for each business. We will be very cognizant of making sure we're as efficient as possible and look to minimize this impact. And probably the other most important thing for at least the '26 outlook, is we have incorporated that into our outlook. So the $4.1 billion would include any of these additional costs at this point in time.

Yes. Chris, let me just take the integration question. So look, fair point, certainly, there are benefits to having an integrated model, especially when it comes to Seed and CP. But we all know that no structure or business model is perfect and there's always trade-offs, right? The 2 areas where we've invested the most time and I'd say, resourcing for our integrated model is really on technology. You said R&D today and commercially.

So if you think about technology, it's pretty interesting, right? Because if you -- the perfect example we can give you is Enlist. And by every dimension, it's been a success. It's $2 billion of revenue. But that was created, if you -- if I can take you back, that was created by 2 companies down another company, right? So it's been a while since we've had invention inside of one company to do technology integration the way it's been done.

In fact, we think that there are more opportunities because the market and the way resistance issues are just escalating exponentially around the world, we're going to need to have more collaborations and partnership more than we've ever had before and these systems are going to become what I call open source or multi-modes of action.

And let me just take you to the next generation for Corteva, right? So the next generation for soybeans is HT4. We haven't named it officially yet. And it is the combination of Corteva and others technology, and that will launch in the early 2030s. So think about that for a minute. We've already made and decided on the next technology platform that will take us out 15 years. And that is a system that because of resistance issues is multi-company and multimode of action.

So when I look at this, I don't see any downside around -- in fact, I see more upside around having more collaborations in the industry on technology as long as the science is sound. So then if you fast forward and you think through the commercial integration, this is an area where I would say for Corteva, we've been at this for 6 years. And so we've got a lot of experience on what works and what doesn't. And I'd say today, we're basically at an inflection point where most of our markets are still separate commercially, especially our large markets, for example, in the U.S., we don't have a lot of overlap in our sales force.

And if you look at the Pioneer agency model, it's actually a pretty small percentage that actually sell CP. And there's reasons for that, right? If you think about CP and Seed, just put everything on the table, these are fundamentally different businesses, they have different technologies. Their channels to market are very different. CP primarily goes through the retail distribution channel and Seed go through multichannels, but primarily direct and then look at their supply chains, right?

CP is a global supply chain where scale and size matters. And in Seed, the regional supply chains because we're talking about biology. So when we put it all together, and we've studied this very rigorously, the Board has went through a fulsome process here. When we look ahead to the future and what both of these companies need to do to be successful, we feel that there are more benefits for having 2 publicly traded companies in having an integrated model.

Your next question comes from the line of Vincent Andrews with Morgan Stanley.

Chuck, thank you for all the comments. I think you addressed a lot of the things investors have been asking about over the last week or so. One thing that you could touch on a little bit, though, is the timeline on the Spin. The second half of 2026, depending on how you want to think about it, is less than a year away or a little bit more than a year away, which is a faster timeline than a lot of spins.

So can you talk to what's going to allow you to do that and your confidence in achieving that timeline? And maybe if you have, at this moment, any idea of what the goalpost on that will be in terms of getting Form 10s out and so forth?

Yes, Vincent, this is David. I think I'll start and then maybe Chuck will follow up. But we are starting the Form 10 process right now. So we will give you an update as to when that's actually going to be probably in the early part of 2026. Probably the one reason why we have in the accelerated timeline is just all the work that has been done previously.

So when you look at typical spend, some of the longer lead time items would be things like legal anti separation, system separation and so on. Over the last 3-plus years, we've invested in a new system primarily for the CP business. So the CP business, other than biologicals is all on one ERP brand-new system. And at the point in time when we implemented that system, we also had to split the legal entities.

So a lot of those things that would typically take a long time in the separation have primarily been done. And as Chuck said, some of our channels and commercial teams are somewhat separate already today.

Our next question comes from the line of David Begleiter with Deutsche Bank.

Chuck, Seeds will be a pretty unique business from a publicly traded standpoint. How did you and your team go about looking at peers and comparable companies in trying to assess the value of a publicly traded Seed business.

David, it's a good question. And I'd say we're still at fairly early stages. But when we did look at the phrase, I used was growth compounders in the prepared remarks, I think our Seed business lines up almost perfectly, right? So if you think about this business, first of all, there is a scarcity premium for it.

It's really one of a kind when it comes to having the genetic science capability that it has with the global reach. And so that is, I think, very interesting, I think, for shareholders. If you look at how it's grown double-digit CAGR EBITDA over the last 5 years is pretty impressive. Its free cash flow generation will be very strong, so I think when we look at -- and then of course, if you look at EBITDA margins, I think when you line all of that up, this will be a business that will have quite a bit of scarcity value and perform against those metrics.

Now look, the story here, though, and I just want to reiterate because I think it's important, is when you start thinking about what happened over the last 6 years with Corteva, we have seen our multiple increase but we've been at it for 6 years. And it's taken some time because shareholders needed to see sort of how the company would perform across and through different market environments and also to see a track record of execution.

So when I look at both businesses, I know your question was centered on the Seed business but when I look at both businesses, they both have very similar characteristics when it comes to growth opportunities, and they have meaningful self-help levers, and they both have very solid innovation pipelines. I think their path to success are going to be slightly different. That's why we're talking about separation.

But the value pools that each will access, I think, are large. And so what we think will happen is, over time, we have to execute well, tell the story about what each is going to need to be successful longer term. But we do think over time, the market will come to understand that and value it.

Our next question comes from the line of Kevin McCarthy with Vertical Research Partners.

Chuck, can you comment on what intercompany agreements you might envision? I'm just thinking about whether or not you need to do anything with regard to Seed treatments, transition services agreements or other agreements that shareholders should be keeping in mind, at least any preliminary thoughts there would be helpful.

Yes. Kevin, there's a lot of work underway actually right now in that specific regard. And I think at the right point, we'll be able to give you a more fulsome lift. But the areas where I've called out that we do have some integration those make the most sense to have some sort of ongoing relationships so that we don't destroy value.

And the best examples I can give you there will most likely be in the biologicals area. So biologicals, the business itself is going to go to New Corteva. So think about the CP business. But there's a lot of really interesting research and development and technology evolvement in -- that will require both. So there will be most likely an R&D partnership of some type. And when I look at the pipeline in biologicals, it's super impressive.

We have more than a dozen new products in the pipeline that we want to make sure come to market because farmers will need access to that. And so that's one area. You called out the other one, Seed Applied Technologies. So that is a Crop Protection business. It's slightly over $0.5 billion today in revenue and the largest customer, of course, is our Seed business.

And so there'll be an arrangement there that we think we can put with a simple commercial agreement. But again, when I look at it and I look forward, I think then our CP business will actually have more opportunity to sell it to Seed Applied Technology to other seed companies, and there are hundreds of them around the world.

And so I think that this will open up doors for our Crop Protection business, but still allow our Seed business to have access to some great technology.

Our next question comes from the line of Joel Jackson with BMO Capital Markets.

[Technical Difficulty] a question, Chuck, obviously, you and the team have looked at quantitatively some of the parts, what a split could do. I mean you've laid out the different futures, the divergent future of the 2 businesses. But how do you justify the math on the new companies when -- could you not have achieved the things you wanted inside of the current bundled company as opposed to trying to create value by splitting it and taking a bit of a risk and some costs on what the new multiples on the new stand-alones might be?

Yes. So look, I think you have to remember why we're doing this. So when I look at the market today, the formula that we've had, I think, has been the right formula for the time. And over time, I think we've seen our multiple expand, and we have created value that way.

This is not about today, and it's not certainly about the last 6 years. This is about what we see coming. And when I look at the future, and you have to remember, right, our development time lines are long, right? We're in a market that we need to look out 10 years plus. That's just the research and development and the time line it takes to bring technology into the marketplace.

So this is a long-term decision that we are making. But when I look at it and if you just start looking at the parts, so if you look at New Corteva, to me, it's one of the best Crop Protection businesses out there. Today, it's #4 in the world. It has one of the largest biologicals businesses and a strong innovation pipeline. I referenced $9 billion.

And in the markets that we've just went through, which have been challenging in the Crop Protection industry, this business has outperformed. And so I think that it's going to launch with a position of strength. And then we said we're also going to ensure that it has a very strong balance sheet.

And so it will be able to do things in the marketplace and it will have its own corporate currency, if I can use that phrase, to really use that current, use the balance sheet and its free cash flow, I think, to act strategically. And that's going to take some time, but I think that there is value to unlock in that regard.

Then if you look at our Seed business, I talked already about the scarcity about how special this is. I do think this is a rare jewel in our industry for sure. And what we want to do with that business is, look, if you look at the science of biotechnology and genetic engineering today, we put that really focused on corn and soybeans.

And today, we're a market leader, and we think that tomorrow, we're going to still remain a strong competitor in those areas. And our pipeline would reflect that. But now we're trying to open up new addressable markets, and that's going to take us to require to allocate capital slightly differently.

And so this business will probably headed down a different path. So could all of this be done together, we don't think so. And then if you think about the global Crop Protection market, nothing I'm going to say here should be new to you, but the market has been competitive, and it's been well supplied. And we think that, that is going to continue. Now we still think that the market will return to growth. We've been clear with that.

But what the New Corteva business will need to do is take another level of productivity and cost efficiency. And that will be more difficult to do inside of our corporate structure today. So when we look at all the pros and cons and we weigh the balance of risk, it becomes very clear when we fast forward through the next 5 or 6 years that putting these 2 companies on their own paths for value creation will be the right path to go forward.

And there's always risk with these transactions but as David highlighted, the ERPs are already separate. The legal entities more or less are already separate. And a lot of the internal operations are already separate. So from a complexity perspective, nothing is risk free, but when we balance the risk scale, we are certain that we're making the right decision this morning.

Our next question comes from the line of Matthew DeYoe with Bank of America.

Yes. It's [indiscernible] filling in for Matt. Just wanted to ask a little bit on gene editing because that's been the trend where there have been expectations it could actually weigh on PE growth as you use that as a tool to fight diseases. And from what I recall, Corteva's response in the past couple of years has been that being an integrated company, you were best equipped to decide what are the most value for.

I guess, you and the farmers, meaning, in some cases, you will decide to fight the disease through continued R&D in -- for pesticides, in some cases, you would decide to shift that to gene editing like you do with your new seeds here. So how will this play out actually when there are 2 separate companies?

And how can the 2 companies avoid cannibalization essentially and competition where they'll both go after the same pathogens, but with 2 different types to fight them?

Well, I think what will naturally happen, whether we are together or separate, I think the best technology will win. And that's the way this industry has always -- it's always been in this industry. And so I really see no change. If you think about what we're trying to accomplish with gene editing, it's always started with if there is a problem, a disease and insect some sort of pressure that a farmer is feeling on a crop, the best solution, the most efficient solution is to attempt to design a seed that can withstand it.

And we've been very clear with our messaging that gene editing is going to open up a different level of toolkit for our scientists to try to do that with seed genetics. But when that is not possible, and there is disease-resistant issues or movement around the world from climate change, then we revert back to looking at both chemical and biological solutions. And I don't see any change here.

So when we get the freedom to operate from a gene editing perspective, I think what you'll see is SpinCo scientists will do their very best to use that technology to design the next generation of seed. But look at biotechnology. Biotechnology has been out there for 25 years to more than that, and we are still using more Crop Protection today than we ever have.

Why is that? The seeds are clearly better, but because we're racing up against mother nature. And that's what we expect will happen. So my view is that both will have to head down an R&D differentiation of technology. Both will be needed for farmers. And so this does not change that perspective. And in my view, because there'll be 2 separate companies, they may even have more collaboration and partnership opportunities because they're separate.

Our next question comes from the line of Joshua Spector with UBS.

This is Lucas Beaumont on for Josh. So I mean, one of the primary investor concerns here has really just been on the potential for the existence of hidden not currently recognized liabilities in the existing business that's going to come out as part of this process over time that's potentially driving the move.

So I mean, it looks like anything there would go to the CP business, New Corteva as that's retaining sort of the legacy business and liability structure. I guess, can you just explicitly confirm for us that there's no surprises coming here?

Yes. So this is David. So yes, definitely. So there are no surprises on the CP product liability contingencies, as Chuck earlier commented on. I think for us; it's a strong industrial logic as to why we're doing the separation. When you look at the litigation as it stands today, we expect our CP obligations will stay with CP along with the historical DuPont pension plan and our PFAS obligations.

Seed obligations will stay with Seed. So today, when you look at these obligations around the DuPont pension and PFAS, they're in Corteva today and they will remain in new Corteva in the future.

Our next question comes from the line of Duffy Fischer with Goldman Sachs.

So just a couple of questions around CP. So one, do you think this move would allow another round of consolidation in CP. Obviously, the EU blocked one round of consolidation when DowDuPont happened in the spin stuff that FMC. So does that get better?

And then two, just when you look historically, I would argue your CP business has piggybacked off of seeds pretty significantly over the last decade. You're creating a #4 company if you go back and it's a little outdated to the GE you always got in the top 3, do you see a line of sight for this business to become top 3 without consolidation and if not in kind of a business that's becoming more generic and more Chinese driven over time, how does the #4 guy compete?

Yes. So look, difficult to say on whether we'll see another wave of consolidation. And I will just be explicit. It's not really the primary driver of our separation. But if you look at the global Crop Protection industry, there's been a lot of shifts over the last 5 years, right? The market is well supplied. You referenced it.

We have low-cost producers now in China and it's a competitive market. Nothing I'm saying should be a surprise to you. When we fast forward, okay, so what do we think is necessary and needed to be successful. We're going to need global reach and scale we're going to need very low cost, so cost competitive will be even more important in the future.

But the market still values differentiation. And that is an important, I think, statement I'd like to make, but partnerships and collaborations, I think, will become mission critical. And why do I say that? I don't think -- because of the regulatory time lines and the expense to bring new actives into the market now, not all CP companies can be all things to all customers.

They're going to have to make capital decisions and make bigger bets because it's so expensive to bring new technology into the market. And so can consolidation help with that? Yes, I think it can. So to your question about our business, when I look at the last 5 years, what is our business done?

Our CP business has increased margins by almost 200 basis points. And how have they done it, right? They've taken out significant costs, and they've really moved towards more differentiation. And I think if you compare that to others in our industry, who probably has sizable margin compression. So I think the business, its formula that it has today is a success.

And going forward, if we give that business a very good balance sheet and its ability to generate solid free cash flow, I think it will determine its own future when it comes to how it wants to participate in the market but I'll say that it will have a lot of strategic opportunity.

Our next question comes from the line of Frank Mitsch with Fermium Research.

I'm curious, coming back to the legacy liability questions and putting it all on New Corteva, we just saw DuPont is planning on splitting up, forming 2 companies, and they are going to split their legacy liabilities equally according to EBITDA.

I'm curious as to why that route wasn't chosen. I mean, admittedly, Corteva's combined EBITDAs are modestly higher than DuPont's, but I'm just curious as to why the decision was not made to split the legacy liabilities between the 2 new pending entities.

Yes. So this is David. I'll answer that question. I think the short answer is because we don't really have to. If you look at our MOU and our separation agreements, there are provisions for separation. And in those provisions for separation, there are minimum EBITDA levels.

And so when you look at what those EBITDA levels are, the New Corteva EBITDA levels will be above those minimum EBITDA levels. So there's really no reason to split them. As we also feel like it's easier as one entity to manage those liabilities versus 2 entities.

Our next question comes from the line of Jeff Zekauskas with JPMorgan.

Just for purposes of clarification. So New Corteva will have no claim on the cash flows of SpinCo for the satisfaction of any of PFAS liabilities, nor will DuPont as you've structured it?

I think that would be the intention, yes. I think as Chuck mentioned and we mentioned in our opening comments, we're in a fortunate position that our balance sheet strength right now will be allocated and we'll have flexibility to make sure that both companies have an ample cash flow and strong balance sheet, investment grade to meet their future obligations.

Yes. I think that just to be simple with this is that the CP obligations that we have today will remain with New Corteva, including the historical DuPont pension and PFAS liabilities. We can do that because the size of the EBITDA and free cash flow that the company will generate meets the agreement intention and then the seed obligations that we do have will remain in Seed.

And so that's how these companies when we do separate how they'll be responsible for their respective liabilities.

Our next question comes from the line of Edlain Rodriguez with Mizuho.

I mean my recollection might be wrong. But if I remember that from your time at Agrium like you believe it made sense to have retail and wholesale business because you believe in the whole synergistic combination of the businesses. Like why is that -- why is this one so different that you don't believe that the farmers value having both businesses as a one-stop shop.

Look, you're going way back in history, and I guess I would just say, I think, going forward, when I look at the markets, the future of agriculture is going to get more high technology. I do believe that when I think through where I think both CP needs to go to be successful and where the Seed business needs to go successful, they're on -- clearly on different paths.

When you think about what CP is dealing with right now and where that will go, you're going to need to be very low cost, super-efficient world-scale production with these global supply chains that can innovate and that can innovate and partner to get the product into market. The patent lives are getting less and less so you have to go big very quickly.

All of this leads me down the path of that this business is going to just have more optionality separate, whereas with Seed, I think where we're going to take it is -- it's going to be a crop genetics company that we're going to use the science in terms of gene editing, biotechnology to really take this to the next level of seed design.

And so those paths are just distinct and different. And then when I look inside of the corporate structure that we've built, as I've said, we're running 2 essentially separate businesses today, and that has -- it's a bit cumbersome and it has some efficiencies.

And the only way to unlock that efficiency is to separate them. Your reference back -- I'll just take you back to where you referenced, what we're talking about is almost a decade ago, right? And agriculture and the agriculture markets have evolved substantially from that period of time.

So much so to the point where, yes, I do believe differently than I did a decade ago.

Our next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets.

I wanted to follow up on the commercial side. What percent of your sales force now overlap and sell both CP and Seeds in terms of headcount or dollars spent? And how would that have to be changed?

Yes. So a very small amount. It depends around the world in -- for example, in the U.S. they are essentially separate sales organizations and then, of course, we have the Pioneer channel. And then around the world, I'd say the area that we have the most integration would most likely be in some of the markets in Latin America.

And then the rest of the world is sort of somewhere in between those 2 bookends. But none of this is something that can't be done either commercially through co-selling agreements or with direct sales organizations. It's been contemplated into the dis-synergy number. So the $80 million to $100 million just by that sheer number alone when we've looked at market benchmarks is sort of on the low end of what it would take.

And so you can see that from a commercial dis-synergy perspective, there's not really a lot of incremental costs that we're going to have to undertake to properly put these businesses into the market.

And our final question comes from the line of Laurence Alexander with Jefferies.

This is Daniel Rizzo on for Lawrence. I don't know if I missed this, but with the royalty revenue stream that was going to become positive within a few years, I was wondering how that's going to be split between the 2 companies.

It will not be. The royalty is all Seed. So when we talk about our journey to royalty neutrality, which we should hit somewhere around 2028 we are only talking about our Seed royalty. And so that will not be split.

I will now hand the call back over to Kim Booth for closing remarks.

Great. Well, that will conclude today's call. We thank you for joining and for your interest in Corteva. And we hope you have a safe and wonderful day.

Thank you again for joining us today's -- on today's presentation. You may now disconnect.

Hello, and welcome to Corteva Agriscience Second Quarter 2025 Earnings Call. Please note that this call is being recorded. [Operator Instructions]

I'd now like to hand the call over to Kim Booth, Vice President, Investor Relations. You may now go ahead, please.

Good morning, and welcome to Corteva's Second Quarter and First Half 2025 Earnings Conference Call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Judd O'Connor, Executive Vice President, Seed business unit; and Robert King, Executive Vice President, Crop Protection business unit, will join the Q&A session. We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast.

During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements. Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release and related schedule, along with our supplemental financial summary slide deck, available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us. We plan to update you today on our second quarter and first half performance, share our expectations for the second half of this year and provide some early thoughts on 2026. In the second quarter, Corteva delivered top and bottom line growth and more than 200 basis points of operating EBITDA margin expansion. For both the quarter and the half, we saw net improvement in price, volume and cost versus the same period last year.

This should tell you two things. First, there is strong demand for our proprietary technology as our growth platforms continue to deliver. And second, our operational excellence initiatives are creating value. In fact, we exceeded our 2025 net cost improvement target in the first half alone, allowing us to raise our full year target to $450 million from $400 million. Seed continued its impressive performance in the first half of the year with 280 basis points of operating EBITDA margin expansion and pricing gains in most regions. The volume improvement we delivered in North America made a significant contribution to Seed's first half results.

We also feel confident that we delivered healthy branded share gains in both corn and soybeans. This is a testament to the Pioneer business model and the strength of our product portfolio. Our outperformance in North America was also visible in our first half out-licensing results, where we achieved a $70 million benefit in net royalties versus prior year, exceeding our own expectations of a $65 million net benefit for the full year.

Turning to our Crop Protection business. As the results made clear, our technology remains critical to farmer productivity. Our global operations are also becoming more efficient, which contributed to over 350 basis points of operating EBITDA margin expansion for the half. Productivity and deflation benefits as well as volume gains drove the largest improvements in Crop Protection's solid first half performance.

The volume improvement was most significant in Brazil, where we saw strong applications on additional planted area as well as expansion in our direct sales channel. Although the industry is expected to be about flattish overall for the year, our CP business continues to navigate a competitive market, and we expect low to mid-single-digit pricing headwinds in the second half of the year. However, it's worth noting that this is now our fifth consecutive quarter of CP volume gains with double-digit volume growth in the second quarter. So we are confident we have the right channel strategy, and that pricing remains a key constraint to the industry getting back to its normal low single-digit organic growth rate.

For Corteva as a whole, we remain on track for double-digit bottom line growth and meaningful margin improvement. In fact, as you saw from our announcement, as a result of our record first half performance and derisked expectations of modest growth in the second half, we are raising the midpoint of our full year operating EBITDA guidance to $3.8 billion, a $100 million improvement versus what we guided last quarter. We're also improving a favorable update on free cash flow expectations and forecasting a full year conversion rate of about 50%. David will go into more detail on all of this in a moment, including our latest views on tariffs, and how these updates fall within our 2027 financial framework.

Turning now to the market outlook. Overall, ag fundamentals remain mixed. Demand for grains and oilseeds continues to grow as farmers prioritize top tier seed and crop protection technologies to maximize their yields. However, overall crop prices and margins have moderated. The U.S. mix shift from soybeans to corn played out as expected, and corn futures reflect the fact that crop condition ratings have been running above 5-year averages. Time will tell, but the market is certainly expecting a record harvest in the U.S.

We all know that the technology keeps getting better, and farmers know how to produce more every year. But what is just as important is that global production continues to keep pace with record setting global consumption. So much so that stocks-to-use ratio for corn is expected to remain below historical averages, even considering this year's big crop. We're getting close to harvest here in North America, and opening up global markets to allow for trade of these critically needed crops would help American farmers continue to feed the world.

Regarding ag policy, we're seeing positive signals on the biofuels front. Corn ethanol in Brazil now accounts for 20% of the country's total ethanol production. And in the U.S., the EPA's 2026 renewable fuel standard proposal should spur additional demand for soybeans. On gene editing, we remain optimistic that policy proposals in the EU for this critically important technology were passed by the end of the year. We're also encouraged by the fact that the new tax bill includes several changes that provide additional support for farmers in this very important industry.

Finally, a few comments on 2026. It's still early, and we need to see how the full year plays out, but we remain constructive on our views for growth next year. And we are on a path that would keep us well within our 2027 framework, which was set last November. We feel good about what we can control, investing and executing on our growth platforms as well as delivering meaningful royalty productivity and cost benefits on a year-over-year basis. We'll also provide more detail on our views of 2026 on our third quarter earnings call in November. In the meantime, we will continue to deliver top-tier technology that gives farmers a competitive edge in achieving higher yields and greater sustainability in every acre they plant.

With that, let me turn it over to David for more detailed insights into our financial results and outlook.

Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide 6, which provides the financial results for the quarter and the half. Sales and operating EBITDA for both the quarter and the half were up versus prior year and better than our latest estimate, driven by a strong finish to North American season and continued execution on controlling the controllables.

Briefly touching on the quarter. Organic sales were up 7% compared to prior year, with gains in both Seed and Crop Protection. Pricing for quarter was up 1%, with gains in Seed partially offset by continued pressure in Crop Protection. Second quarter volumes were up 6%, with Seed gains in nearly every region and double-digit Crop Protection volume growth led by Latin America. Top line growth and meaningful cost improvement translated into operating EBITDA growth of 13% in the quarter and 215 basis points of margin expansion compared to prior year.

Focusing on the half, organic sales were up 5% over last year, again, with growth in both Seed and Crop Protection. A continuation of the price for value strategy, along with increased corn acres and market share gains in North America, drove seed price and volume gains of 3% and 2%, respectively. Crop Protection price was down 2% in the half as expected, driven by competitive market dynamics, mostly in Brazil. Crop Protection volume was up 8%, with gains in nearly every region. Notably, new products and biologicals delivered double-digit volume gains compared to prior year. Operating EBITDA was up 14% over prior year. Operating EBITDA margin of nearly 31% was up about 300 basis points, driven by organic sales growth, coupled with significant benefits from lower input cost and productivity.

Moving on to Slide 7 for a summary of the first half operating EBITDA performance. Operating EBITDA was up more than $400 million to just over $3.35 billion. Price and mix, volume gains and cost benefits more than offset currency headwinds. Seed continues to make progress on its path to royalty neutrality with about $70 million in reduced net royalty expense. This improvement was driven by increased out-licensing income in North American corn and lower royalty expense in soybeans.

Seed and Crop Protection combined to deliver more than $400 million in productivity and cost benefits, including lower seed commodity costs, raw material deflation and continued productivity action. In the first half, SG&A was up compared to prior year, driven by higher commissions, compensation expense and bad debt. This increased investment in R&D aligns with our target and is on track to reach 8% of sales for the full year. As expected, currency was a roughly $150 million headwind on EBITDA, driven by the Turkish lira and Canadian dollar. Both Seed and Crop Protection had an impressive first half performance and delivered double-digit EBITDA growth and meaningful margin expansion over prior year.

With that, let's go to Slide 8 and transition to the updated outlook for the year. Our updated 2025 guidance reflects the strength of our first half execution and continued confidence in delivering the second half. We now expect operating EBITDA in the range of $3.75 billion to $3.85 billion, representing 13% growth at the midpoint. This increase is driven by broad-based organic sales momentum and incremental cost improvement benefits.

While the majority of cost actions were realized in the first half, we anticipate continued gains in the back half. As a result, we now expect operating EBITDA margin expansion of approximately 150 basis points, reaching the upper end of our prior range. We're also raising our operating EPS guidance to $3 -- to $3.20 per share, up 21% at the midpoint versus last year. This reflects stronger EBITDA performance and lower-than-expected net interest expense.

Finally, we are increasing our free cash flow guidance to approximately $1.9 billion with a cash conversion rate of about 50%. This improvement is primarily driven by earnings growth and lower cash taxes from recent legislation. We're keeping an eye on a few items as we head into the second half. Specifically, farmer economics and liquidity, as they influence amount of prepaid deposits we receive in the fourth quarter.

Let's turn to Slide 9 to walk through the key drivers of our first half performance in the setup for the second half of the year. In the first half, we delivered strong execution across both Seed and Crop Protection. North America's Seed performance was particularly strong, supported by increased corn acreage, market share gains and favorable weather. We saw low single-digit price gains in Seed, while Crop Protection pricing was down modestly, reflecting ongoing competitive dynamics. We captured meaningful benefits from controllable levers, namely productivity actions and raw material cost savings, which more than offset SG&A increases tied to commissions, compensation and bad debt. Currency remained a headwind, primarily driven by Turkish lira and Canadian dollar.

Looking ahead to the second half, our assumptions remain consistent with what we shared in May. We expect corn acreage to increase in both Brazil and Argentina, supporting volume growth in both businesses. Volume growth in Crop Protection is expected to remain strong, particularly in new products and biologicals. On pricing, we anticipate low single-digit gains in Seed and low to mid-single-digit declines in Crop Protection. That said, the magnitude of cost and productivity benefits will moderate in the second half as we lap the deflationary impacts we saw in the second half of 2024 for Crop Protection. Finally, we expect a currency headwind from the Brazilian real due to hedge impacts.

Our first half/second half operating EBITDA split is expected to be aligned with our historical average. As a reminder, we anticipate a typical seasonal earnings pattern with a third quarter operating EBITDA loss at least as large as what we saw last year, and all second half earnings delivered in the fourth quarter. This is after dialing in an expectation that Crop Protection second half EBITDA will be down high single digits due to an exceptionally strong second half in the prior year. Overall, we still remain on track for mid-single-digit growth in the second half.

With that, let's go to Slide 10 and summarize the key takeaways. First, while we still have half of the year left to go, we delivered a strong first half, ahead of expectations. Organic sales growth was driven by our leading North America corn portfolio and broad-based volume growth for Crop Protection. We delivered over $400 million in cost savings from lower Seed and Crop Protection raw material costs, along with productivity actions. The combination of organic sales growth in both business units, $70 million in net royalty improvement and enhancements in our product mix contributed to about 300 basis point margin expansion over the prior year.

Given our strong first half performance and continued confidence in the second half, we've raised our full year 2025 outlook across all key financial metrics. And finally, we remain on track for $1 billion of share repurchases in 2025. We also announced a nearly 6% increase in the annual dividend, our fifth consecutive annual increase, consistent with our dividend growth strategy. Combined, this translates to roughly $1.5 billion of cash returned to shareholders during 2025, a testament to the strength of our balance sheet and cash flow outlook.

With that, let me turn it back to Kim.

Thanks, David. Now let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

[Operator Instructions] Your first question comes from the line of Vincent Andrews of Morgan Stanley.

Just sort of distilling the prepared comments down, it seems like there are four sort of items for the back half that really factoring into your forecast. And that you have sort of a focal point on -- one would just be the tough CP comp and the negative pricing in Brazil. And obviously, Brazil is a big part of the back half. It seems like -- and I'd like to hear more about the seed acreage expectations for the back half and how much do you think they're going to be up year-over-year. And then on a cash flow perspective, the prepays and whether they come in, and then obviously, what happens with FX. So if you put all that together, is that sort of how you're thinking about the range of outcomes in the back half and whether you're at the low end or the high end and potentially above the high end?

Yes. This is David. Yes, pretty much, I think you summed it up pretty well. I mean when we look at the year-over-year in the back half -- and I'd just remind everyone that I know you know this, but our back half typically is only 12% or 13% of our entire EBITDA for the year. So this year, we have it kind of lined up very much in line with what we've done in prior years.

When you look at the plus/minus on Crop Protection, they did have a very strong second half last year. So we're lapping that. We're also lapping some of the cost deflation we already saw in the second half of last year. And then we -- as you mentioned, the price declines. And then we also have the FX impact, which is a little bit -- 2/3 or 70% allocated to CP just given their product flows. And then regarding acreage, I don't know, Judd, if you want to pick up the acreage received?

Yes, Vincent, I think it's fair to say we're looking at mid-single-digit acreage increases for summer, which will start going into the ground here in October as well as we move into safrinha, which a big portion of those safrinha orders that will go underground in '26 will be realized here at the end of 2025 from a revenue recognition standpoint when growers take possession.

We also see a little bit of a rebound, mid-single digits. We're confident about, maybe a little more in Argentina coming off the down acres that we saw in '24 and the first part of '25. So should be in a strong position acreage-wise and planted area-wise, I should say, hectare-wise and planted area-wise in Latin America.

Next question comes from the line of Joel Jackson of BMO.

I want to talk about the free cash flow conversion or the free cash flow guidance. I mean, obviously, on a $100 million EBITDA raise, you're upping free cash flow by $300 million, the conversion is better. Talk about what's going on specifically there? And then the second question is, $100 million EBITDA increase here, Chuck, you sort of alluded [indiscernible] '26. Some of that, can we assume you may have gotten in '26, $100 million boost here? Like maybe just think about how you think about if you borrow on a board, but got a little early advance on some earnings in '26?

Okay. Yes. So we'll have David talk about...

I'll do the cash flow.

Then I can come back and give you perspectives on '26.

Right. So if we look at where we are right now with cash generation through the first half, we are $900 million ahead of last year. And we expect, as you mentioned, the free cash flow somewhere around the $1.9 billion. So the adjustment to the overall guide is really twofold. One is our earnings increase that we increased the midpoint of our guide. But also with the new tax legislation, we are expecting less cash taxes in 2025, and that represents about a 4% uplift in our overall conversion rate.

So when you end up adding those two factors together, we're now expecting about a 50% conversion rate for the year of $1.9 billion. I will remind everyone that -- and the way that looks on our balance sheet is not that we're accumulating cash on the balance sheet. It really represents itself in our -- lowering our needs for borrowing more CP. And so in the first half, you'll see that we borrowed a lot less commercial paper, resulting in lower interest expense. And that's one of the major drivers of overall first half EPS increase. Also reminded everyone that our $1.9 billion is very much dependent on our cash credit mix at the end of the year. We have dialed in a number that is very similar to past years. So as you know, we'll keep a eye on that as we progress through the fourth quarter.

Yes. And Joel, it's Chuck. So look, talking about 2026, it's a little early. I would say, right to your question, though, there's been no pull forward from '26 into '25. I'll just take everybody back to the financial framework we set last November on an EBITDA basis. We're trying to deliver a $1 billion increase over 3 years. This guide range now at -- when we moved it from [ 3.7 to 3.8 ] from a midpoint perspective, we're right within that framework. And if you look at the levers that we're pulling to create that $1 billion, they're the same things we've always talked about. They're the 3 primary growth platforms.

So you're seeing really good growth in Seed out-licensing, our biologicals business and our CP new products, they're delivering. They delivered a little bit more across the board in the first half. We feel good about the next 2 to 3 years. And then cost and productivity, which is really, I think, one of the main headlines for this first half, both the CP business and the Seed business, almost equally are pulling every productivity lever they can. We've got a multiyear program. As you know, we're looking at kind of restructuring assets in CP. And we're really looking at the production and automation of our Seed production. And you can see for the first half, $400 million. We've raised that now to $450 million for the full year.

And if you look at what we need to deliver through the 2027, it's about $700 million of the $1 billion is going to come out of this bucket. And if we're at 450, we're feeling very, very good about that. So you put it all together and I'd say I'm pretty happy with the first half performance. I think when you think about the second half, it's less relevant for us, but we need to get through LatAm, specifically Brazil. The order books are looking very, very good. I think our cost setup in Seed particularly is great for second half LatAm, and it's going to come down to CP pricing, but we're well within the framework for the next 2 years.

Our next question comes from the line of Chris Parkinson of Wolfe Research.

It seems the U.S. seed price cards are already tracking out from you in certain cases and some of your competitors, and it seems like it's indicating low single digits for both corn and soy, maybe a little bit healthier in the corn side. Could you just discuss kind of the pricing strategy into the end of the season? And also how those embed and how your expectations on a preliminary basis would embed the ramps of both Vorceed and PowerCore, just given your confidence in those launches as well?

Go ahead, Judd.

Okay. Chris. This is Judd. And just as we are launching price cards, you've probably seen some of it -- some of our brands are in the market. We certainly see some competitors in the market as well. A couple of things from a North America perspective. One, mix -- mix improvement with Vorceed and PowerCore. Number two, germplasm performance and the fact that we've continued to bring genetic gain and new hybrids into the lineup that allows us to leverage more price, and farmers are more than willing to share in that as we bring higher levels of productivity. And then there's a little bit of organic price lift in there as well. So the combination of those will get us to low single digits. Maybe about where we were in 2025, maybe a little more dependent on how the year plays out, but we feel very good about what '26 looks like from a pricing opportunity and our mix.

Yes. And maybe, Chris, just a couple of other comments. So if you look at the first half for Seed, right, EBITDA is up $250 million or 11% with 280 basis points of margin enhancement. And we're seeing market share gains in corn and soybean, which we're already #1 in both of those technologies. So you start thinking about -- just this business is firing on all cylinders.

When you add to the mix, which gets us most exciting is the growth of the out-licensing and the potential for that, right? So we've already sized that in corn and soybeans around the world, primarily in North America. Latin America's, it's a $4 billion opportunity. We're a relatively small player. We've said we would be royalty neutral by 2028. And then really exciting things happen post 2028 as we get more licensing income because we have more freedom to operate for our technology.

So I think we're on this really interesting strategic pivot when it comes to Seed, where we're not in-licensing technology as much as we're out-licensing technology. And that's sort of the long-term goal for this business.

Your next question comes from the line of Kevin McCarthy of Vertical Research Partners.

I wanted to unpack the Crop Protection volume a little bit. I appreciate the details that you provide on Slide 17. And in particular, I want to dive into fungicides, which was up 40%. Can you help us understand how much of that was market related versus your ramp of [ pickle intimate ] products? I think you're still ramping on [ Inatreq ] to some degree and a more recent launch of Adavelt would be the first part of the question. And then looking ahead to next year, you entered into a partnership recently with FMC for [ Fluindapyr ]. So maybe talk about what that might mean for Corteva and fungicides next year?

Go ahead, Rob.

Kevin, this is Rob. When you look at fungicides for the first half, yes, we had a good half. I'll take you back to 2023, where prices really started falling, we decided not to participate in some of the business there due to really low margins. And our strategy has been to take out cost and to begin to change our overall footprint and network, and that's working for us. And this is a good example of that, where we now went back into the market and add acceptable returns with our Onmira brand, and we've been able to get back in the market there in Brazil. And that's been the big uptick of fungicides for us in the first half here is our strategy is playing out, and we're in the market with good volume there.

Looking now to back half of the year and into the future, we did do a deal with our partner, FMC, or our competitor, FMC, for a brand for [ Cboe ]. It is going to be a new 3-way fungicide that we've not participated in this market before in North America corn. It gives us a premium product to be able to position with our overall portfolio if -- we have a very good 2-way in [ approach PRIMA ], but this now gives us a top tier as well. And this is exciting for us in the fact that we think we can scale this and we'll be able to get on a lot more acres to give our farmers more choices as we look forward in our overall portfolio there with fungicides. So it's exciting times as we begin to bring some of these new products to market for Crop Protection.

Next question comes from the line of Frank Mitsch of Fermium Research.

Congratulations on a very strong quarter driven partly by share gains. I was wondering if you could opine on what your expectations were for share gains in both corn and soy? And I wonder to what extent, given the fact that we are looking at a potential record harvest in corn, obviously, that's driving the price of the commodity lower? Chuck, how do you feel about what impact that may have on 2026 corn acres?

Yes. So why don't we have Judd talk about performance and the share gains, and then I'll come back and talk about the market.

Very good. Thanks for the question, Frank. And from a share gain perspective, right, we still have to get to the final numbers in terms of where we landed with acres. It does feel like the number we have out there with USDA at 95 makes sense. If you look at what our volume is versus where we believe acres are planted, we've picked up share in both corn and soy. Very, very strong performance on the soy side with not only our Z-Series beans and our Pioneer brand, but our regional anchor brand is performing very, very high. And we are providing our licensees with some of the very best germplasm and product performance in the industry on soy.

When you think about PowerCore and Vorceed, performance, again, has allowed us to continue to pick up share. And we've clearly taken a leadership position in the above and below ground protected market. And our doubles or our aboveground performance has been exceptional. So we're excited.

Maybe one other piece, our retail partners with Brevant and the initiative and strategic play that we had in terms of entering that retail space with a premium brand has had tremendous success as well, and they picked up some share here in '25. So feel good about where we're at. Chuck?

Yes. And then, Frank, on the fundamentals. So look, if you think about what's happening, right, it's another year of record demand in terms of consumption for grains and oilseeds. And we've had very good production. So production is keeping up with demand, which is good. But stocks to use around the world, especially if you look at corn, it's tight, even though the market is expecting a big crop from the U.S. and a big crop from Lat Am.

So it's pretty interesting because you've got relatively low crop pricing today, but the stocks to use are not going up. So any wobble here when it comes to either total production or even China buying behavior because right now, they're not really buying a lot of product yet. This could actually go the other way, and you could see even further strength in the ag fundamentals. And so we're watching it very carefully.

So it's a little early to call 2026. But if you look at the futures price today, it would be a flip of a coin, right? Now what the prevailing thinking is -- and we would agree with this -- is that you're probably going to see slightly less corn area and probably slightly more soybean area, but the U.S. is going to plant 180 million acres of both. So -- and I think what the determining factor will be, of course, will be economics at the time. But we also have to watch the trade discussions that are happening right now and geopolitics will play into this because we do need some trade routes to open up, particularly for soybeans, and that will weigh on farmers' planting decisions as we get through harvest and into next year. So time will tell, but that's our current thinking today, Frank.

Next question comes from the line of David Begleiter of Deutsche Bank.

Chuck, just on CP pricing. Can you talk to what you're seeing in terms of the price of Chinese and Indian generics? And overall, are you seeing CP pricing in the back half get any worse or just more stabilize here?

Yes. So why don't I have Robert talk a little bit about what he's seeing in the markets, and then I'll come back with just a few high-level comments on the CP market generally. Go ahead, Robert.

Sure, David. CP pricing, as have you seen, we think will finish the full year at low single digits. Second half, we're really focusing a lot on Brazil. I'll take you to -- before we get to that, just the first half, pricing in all regions was relatively flat, with the exception of Brazil. And so second half of our business is primarily Latin America. Brazil is a big piece. So we're watching this.

And imports are up a little bit in Brazil, but were seasonally high headed into the season. The channel is full as expected, ample supply. With the economics in the area, we're continuing to have pricing pressures with competition as well. So it's an area that we're watching. And -- but yet, as you look at the year-over-year as we approach 2026, quarter-to-quarter -- or quarter-over-quarter, the pricing improves. It is not as much of a decrease as it has been in the past, and we think it continues to get better as we move forward.

So I'm still bullish on it a little bit because I do think that pricing does continue to get better as supply tightens up and as exports out of China continue to be stable from a pricing standpoint. They are low, but they're stable. And so those are signs of movement in the right direction. Chuck, something to add?

Yes. So look, David, if you think about the CP market fundamentals overall, we all know it's a well-supplied market. But it is improving. The overall market, at least the way we're looking at it, is slowly improving. And most of the major markets, so the destocking is well behind us. We said that last quarter, I think, and we're seeing the channels -- all channels would be very healthy. And then pricing. So we're watching pricing very, very carefully. In most major markets, it has stabilized. And in some markets, pricing is starting to go up after several years of declines.

Robert called out, Brazil is probably the area where we have the most concern. It's probably the most competitive market in the world right now when it comes to CP. And we are obviously -- when we dialed our thinking into our guide, we said that the second half pricing will probably be down low to mid-single digits in Brazil.

But the early signs, so if you look at sort of the leading indicators, China generic pricing, for 4 quarters now in a row, the pricing is stable. So it's no longer going down for almost a year, which I think is great. And then production in China, so the inventory in China is actually improving as well. So there's less product that's being exported. So all of that leads me to believe that 2026 should be better than 2025. But we don't have a great insight until we get through the first -- or the second half in Lat Am. And we'll update the market as we learn more. But that's our thinking right now with the CP ag fundamentals.

Our next question comes from the line of Jeffrey Zekauskas of JPMorgan.

Two-part question. Can you talk about how tariffs have affected your supply chain, that is, with different tariff issues arising? What are you doing different in terms of sourcing and in terms of shipping? And for David, inventories really look like they're in pretty good shape, where year-over-year, they're down $600 million, and they were down sharply in the first quarter. By the end of the year, do you think your inventories will be much lower than they were last year?

Jeff, I'll take the first part of that one and talk a little bit about what we're doing from a supply network to work through these challenges. I think as you look at the overall supply chain for Corteva, recall that we've started in on this strategy a few years ago to improve our resiliency. And in doing that, we've been working on increasing our multisourcing. And as you know, this is not a fast process. With regulatory requirements, as you move a source, you have to get it registered, and it does take some time. But we're making great progress there.

And so from a tariff standpoint, we've been able to navigate the water so far. And the impact is, I'm going to call it, minimal from an overall standpoint. And that's really because our supply chain teams have been hard at work well in advance of this. I'd like to say we're that smart, but we were ahead of this before it ever started. And we're in a pretty good position from a multi-sourcing standpoint. So we don't see a big issue right now as it stands from what we know today, and I think we're in a pretty good position to manage these things as we move forward.

Jeff, regarding inventory, yes, thanks for putting out the fact that we are in a very good trajectory so far in this year. We do expect the back half of the year to add some working capital, and we've had a really good run so far in the first half of this year. But by the second half, we expect inventories to be around flat to prior year, maybe down slightly from where we were in 2024.

Your next question comes from the line of Richard Garchitorena of Wells Fargo.

Chuck, given the strong first half of the year and the [ rate of solid ] guide, I was curious your thoughts in terms of where do you think the market has really surprised you since the Investor Day and since you set the targets for this year? And then you talked about the progressing ahead of schedule on the net royalties as well as on the cost side. Any chance you could see a pull forward in terms of those targets? You mentioned $700 million in costs. Can we get there sooner than originally thought? And same question in terms of the net royalty neutrality target of 2028, can we get there ahead of time?

Yes. Good question, Richard. So look, on the net royalty, we've already pulled it forward, right? So it was end of decade, 2030, now it's 2028. We're feeling very confident around that time line. And I think that the first half performance would be reflective of that time line.

From an overall market and what has surprised us, look, I think we've all kind of been focused on the growth platforms, the way we've outlined them. And really, if you've heard me talk before, I'm a big believer in controlling our controllables, and the growth platforms are what we can control. So the new products, I think, are performing well in CP. The out-licensing, there just seems to be a lot of interest in the major markets to have another set of technology in licensor hands. So I think that, that's really good. And we're going to go as fast as we possibly can, and we've already pulled some of that, I think, forward a little bit.

When you start thinking about the other surprising area though, it is CP. When I look at this year's market being flat, our business is going to be up. And I think that is some of the hard work that Robert just described, which is on the cost and productivity front. So where I think we've probably seen the market in CPB at the low end for a little longer than we all expected. Even though I just said it is getting better, and we believe it is getting better, I think we've been able to find ways to offset that with the levers we can pull, namely on cost and productivity and then leaning into the strengths of our technology.

And so the formula is pretty boring, but it's one that has worked for us and will continue. When I look at the targets, all I'll say is that there's a wide range there, and we feel comfortable that we're well within that range today. And we'll continue to update you as we learn more through the business operations.

Your next question comes from the line of Kristen Owen of Oppenheimer.

I wanted to ask a little bit about your second half Seed assumptions. Just as we're shifting to Brazil in this half, you mentioned order books are looking healthy. Can you maybe articulate a little bit more on some of the velocity of those order books? And then specifically on your Seed assumption, it does look like the price expectations are maybe down a little bit more. I think previously, you were low to mid-single digits now or plus low single digits. So just off that easy comp, help us understand the moving pieces around Seed pricing in the back half?

Kristen, this is Judd, and thanks for the question. So yes, I mean, for the Seed business, second half is really all about Latin America. A couple of things going on there. Let me start with Argentina. We've got some product that shifted out of the first half into the second half as Argentinian growers have gotten to a just-in-time type purchase pattern. Credit has been somewhat of an issue. And with currency more stabilized, you can see the Argentinian farmer just buying closer to when they actually need it versus -- there had been a few years where they were purchasing well, well in advance where their need was because of some currency hedge.

So we feel good about area recovery. We feel good about our current position. Full transparency, our product portfolio in Argentina is not where we want it to be today. We've got -- we've made great progress, but it's going to take us another year or two to bring products through the pipeline. We feel good about what we've got coming, but we're -- the team is doing a great job of finding their way on the right acre where we can perform for farmers. But we've got a little bit of a gap we're working on.

So we move to Brazil. If you look at the summer crop, we've got right at 90% of the orders in hand. And we're sitting almost 40% of orders in hand for safrinha, which is unusually well ahead of pace for this point in time. As far ahead as we've ever been for whatever reasons, we've got -- gross [ committing ] upfront for products that they're going to plant in January. So we feel good about that.

Low single digits feels about right from a pricing perspective. It's a very, very, very competitive market. Two months ago, there was a really strong corn position with local market prices and demand. That's softened a bit, but it's still very good. So we expect mid-single-digit increases in summer acres as well as safrinha acres.

Maybe one point to add. We've seen summer acres or [ summer ] planted area declining for a number of years, the last decade or so. And it's just now that we're starting to see that planted area increase for summer crop as well. So good picture. Now we have to execute. Thanks for your question.

Your next question comes from the line of Aleksey Yefremov from KeyBanc Capital Markets.

You mentioned some upward movement [indiscernible] somewhat restricted production there. Are you seeing any interest in your products as an alternative to China generics, maybe somewhere else in the world?

Go ahead.

Aleksey, thanks for the question. When you think about China, there's a few things going on here. First, let's go back to a little bit of where we had a lot of excess production. I believe what Chuck's referring to there is we feel like production is tightening up, getting back more in balance, move in that direction. As far as the exports go, most of it is impacting Latin America right now. We are starting to see a little bit into Eastern Europe. But it's manageable and not that much different than normal. It just has a little more noise because of just the climate of the world. But primarily, it's a Latin America phenomenon. Asia has always been a big generic market, so it's nothing new there. So our focus is really on Latin America. The other regions are about normal. And we don't see any big disruptors happening in those regions.

Yes. I think the one key thing to call out is we don't go head-to-head with the generics. We don't have to. We have different customer base. And usually, the customers that we're selling to, we have a direct model. As you know, we rely on that a lot. And the customers that we're selling to want differentiated technology. What the generics do though is they provide the floor. And so if the floor is stable, that helps everybody. So it's less of a competitive issue for us and a substitution of product, but it helps to understand sort of the overall health of the market.

Your next question comes from the line of [ Matthew Deo ] of Bank of America.

Thanks. I have two. The first is like, I can guess what your answer is going to be here. But would you say you benefited at all from the absence of dicamba this year? And your thoughts on the potential return next year, given some new registrations maybe moving to the pipe? And then as we look at the margin in CP, year-over-year, it's pretty impressive, and you discussed a lot of the productivity benefits they're resonating here. So if we think about how that margin should translate to 3Q, can we keep a lot of this traction? Or are they going to be give backs here depending on, like, mix?

Okay. Well, let's start with Judd for dicamba.

Okay. Thank you, Matthew. Yes, maybe just a few comments. EPA did take an action here at the end of July. There's a 30-day comment period on a potential return of a dicamba label. And so we'll see how that goes, how restrictive the label is or not and if that will be available for growers.

Let me just put maybe a side bar coming here. We advocate for growers having all the tools that they need to be productive and manage their crop. So -- that being said, if you think about how E3 and Enlist entered the market, we were making big penetration in market share gains, while dicamba was still labeled. And so when we lost the label for dicamba, I'm sure that we -- that there was a bump there to some degree, but we still had dicamba-resistant beans that were going in the ground and just choosing different herbicide packages. So I guess we don't have any big concerns that the dicamba label returning is going to have any material impact that we're going to have to deal with.

Germplasm still matters and is a really big deal. Our performance in our germplasm on the soy side is best-in-class, best in the industry right now in North America. And I think that our -- all of our brands and licensees would agree with that. We're sitting again just north of 65% penetration with Enlist, heavy weed control season with all the rains that we had and multiple flushes of weeds. So we believe that our spray rate is still 70% or above. We'll see when the market research shakes out on that. But probably more than you wanted for the dicamba answer. But we feel like we're in a strong position. We can compete well going into '26 and beyond.

Next question comes from the line of Patrick...

Go ahead, Robert, answer the CP margin question.

So on the CP margin, let's talk a little bit about how we see us tracking to the 2027 deliverables and what that looks like. First of all, if you recall last year, we put more money on the table from a cost reduction standpoint. To deliver by 2027, we'll be in the neighborhood of $300 million. And that work is continuing. So as you build out the margins, we are continuing to get to a capital-light, lower manufacturing cost base than what we've been in the past. And we think that continues to help us with margins as we move forward into the future. As I said before, a lot of work was started there early, and we're continuing that as we look forward.

The other thing I think about when I talk about margins for this business is really our growth platforms of new products and biologicals. Keep in mind that when you think about our differentiated portfolio, we're about 2/3 -- a little over 2/3 differentiated in our portfolio. And what that means for us is in that part of our portfolio, our gross margin is somewhere about 15% above our overall average. And that gives us good uplift. And that's where our technology lies. And as Chuck talked earlier, there is a lot of demand for our technology. Farming is getting harder. And the farmers need more tools to be able to combat all the things they're seeing. There's a lot of resistance growing in weeds, pests are increasing, especially in Latin America. It's getting more intense. And there are new things showing up.

So I'll talk you through a couple of things that we're going to be launching. Haviza, soybean rust product that will be launching in Brazil. This is a major market for us. We think this is a blockbuster molecule that will peak out around 500 as peak revenue. And so we're bringing new technology over the next few years. Reklemel, another one that we just launched, but we just got permitting for it in California. And this is a nematocide that is novel from the standpoint that it is selective with the bad nematodes and keeps all the good things in the soil. So again, new technology that adds value on the farm that is helping not only our margins, but man, it's helping the farmers and their returns as they grow.

And then biologicals, this is one -- really can't talk enough about from a standpoint of where are we going in the future of ag. And today, it's about 10% of the overall market of the world. We think it will grow up to around 25%, 30% over the next decade. And keep in mind, this is a part of the -- that's growing faster and has higher margins because of just the value it puts on the farm when you begin to use this in the right way. So our portfolio makeup is advantageous to us from a margin standpoint as we progress. And then as we begin -- again, to keep taking costs out, we think we're in a really good position as we walk into second half and then on to 2027. Hope that helps.

[indiscernible] comes from the line of Patrick Cunningham of Citi.

Just on the realization of COGS benefits from Seed commodity cost deflation, how sizable has that benefit been in the first half of '25? And should that still be a sizable benefit in 2026 given the direction of grain prices?

Thanks, Patrick, it's David. Yes, I would say that we're slightly ahead in total for our net cost improvement in Seed, and some of that is definitely the commodity impact. I think we'll remind everyone that, that commodity runs through our P&L over a 2- or 3-year period, and it has to do with commodity hedges and our inventory positions and so on.

So we would say, if you step back and think about the $700 million net impact for a 3-year plan, half of that being Seed, I would say that, that lines up pretty well and give us a little bit more confidence in the plan for the next 2 or 3 years.

Our final question comes from the line of Edlain Rodriguez of Mizuho.

I mean, Chuck, you've been involved in all aspects of the crop market. So your insights here are really appreciated. So there's clearly a disconnect between crop prices and input costs, right? So how does that disconnect get corrected? Will there have to be like a correction in input prices? And related to your company, like how can see prices continue to move up in that environment?

Yes. I wouldn't say there's a huge disconnect. Look, we watch farmer margins very carefully. And today, I'd say if you just take the U.S. farmer and say, the Brazilian farmer -- they're operating in a market that they've seen many, many times before in their history, right? So we have relatively low crop prices. If they own their land, they're still quite profitable. If they're renting land, margins are quite thin. And in some cases, depending on productivity, they could be negative. And they will farm like that all day long.

Look, I'll tell you, I just spent most of the spring season traveling through Argentina, Brazil, Canada and of course, through the U.S. And every farmer that I talked to wanted more of our technology, especially when it comes to seed technology. They need the yield. When things are this tight, they really need the yield. It could be the difference between being profitable and not being profitable with a few bushels per acre.

So as long as we have the price for value, in other words, we bring genetic gain to the farm -- and that's our promise to the farmer, right? If you buy their new products, yes, they may cost you more, but you're better off financially. It's a very simple process. And so I'm actually very hopeful that we will just continue with this strategy because farmers are asking for it. In fact, I'd say farmers want us to take the returns from our seed and put it back into our R&D pipeline, and they know that, that's not free.

So I think we've got a great view here. Do we all wish that crop pricing was a little higher? Absolutely. And like I said, I've got a view today that the fundamentals of this business are actually stronger than the crop pricing. And what the market is expecting is a huge crop. And then the trade uncertainty is also weighing on the futures price. So we'll know a lot more, I think, in the next quarter or two. But with the consumption continuing to increase, I think that over time, this thing will normalize. But I haven't met one farmer that doesn't plan to increase their production and productivity over my travels this year. So hopefully, that helps.

That concludes our question-and-answer session. I'd now like to hand the call back to Kim Booth for final remarks.

Great. That's the end of our call. We thank you for joining and for your interest in Corteva. And we hope you have a safe and wonderful day.

Thank you for attending today's call. You may now disconnect. Goodbye.

Next up, we have Corteva. We have Chuck Magro, the CEO; Dave Johnson, the CFO, I think, almost a year in.

9 months.

Not getting there.

Feels like a year.

Feels like a year. It's been a fun year, though.

Yes, it's a good year.

I'd really like to start this off by saying that the thesis is, if I do say myself being on the top of the Wolfe Alpha list, the thesis has been evolving really nicely over the last 2 years. And that's not without hiccups. It's not without macro challenges, FX, you name it. But Chuck, as CEO, what are the 2 things you're the most happy with? What are 2 things you feel Corteva needs to be doing better? And then perhaps we'll launch into a longer-term discussion from there. Thank you.

Chris, good to see you. Hi, everyone. Great to be here. Yes, look, so Corteva just turned 6 last week. So pretty new company still. I'd say that the things that we've been working on has to do with strategy and then just getting really good at execution. So generally, I'm pleased with both of those. If you think about the strategic direction of the company, several years ago, we made the tough choices. We pruned the portfolio. We exited a bunch of countries that didn't make economic sense for us. And then when you look at seed, we decided we were going to be a technology seller, not a technology buyer, and we embarked on sort of that journey to royalty neutrality as we call it.

And in CP, we decided we wanted to be the leader in biologicals. So we made a couple of acquisitions. We beefed up our R&D. All of that seems to be going very well. And then execution. I'm a big believer that we have to do what we say, say what we do and continually just be boringly reliable when it comes to our performance. And we've done, I think, a very good job of that. What we missed and maybe the things that kind of caught us, obviously, the crop protection destocking caught all of us. I've said this before, I don't think I would have changed -- I wouldn't have slowed down selling. I just wouldn't have done it if we had major customers that wanted the product. But we probably could have looked around the corners a bit more, saw where this was going, pulled back our inventories and our production and got ready for the storm. And so we've put some things in place to fix that.

I'd say the thing that I'm most excited about and that is probably the new part for Corteva is just the short term, but also the medium-term growth strategy we've got. If you start thinking about what's in the pipeline from a technology perspective, we literally can change the way we farm in the next decade. And that, to me, is why we're here, and it's very exciting for me.

Just I don't want to be short term, and I don't want to that all hinge your growth strategy on what's been happening in the U.S. marketplace. But I mean, since January, there's been a lot of change between, first of all, the growth outlook based on U.S. ag policy, we can certainly get to that, but also just the shift in terms of being a little bit more positive on coarse grains, perhaps be a little bit more cautious, at least to start the year in soybeans. Just how is the first half holistically been developing for you? Have there been any surprises? Where do we stand? And perhaps we'll once again go into the longer term from there?

Yes. Do you want to hit the numbers?

I can hit the numbers. Yes. Very interested in that, Chris. So basically, when we first came out with our Q1 numbers, we did have a very strong start to the year. Our EBITDA was up about 15% year-over-year, and our full year guide was up 10%. Now in our business, though, we don't really look at quarters. It's really the half that matters, right? Because you do have timing, weather, elements and what have you between March and April. So when we first provide our guide, we said, okay, first half, we're probably going to be now up about 5% year-over-year, where when we had first put out our guide earlier in the year, we said we'd be flat. So a little bit ahead of where we thought.

As Q2 has progressed, I would say that we feel pretty good that we're transitioning or going closer between that mid-single digit to upper single digit. So I feel like the first half is going to play out pretty well for us. But we'll have to see and evaluate what, if any, that changes our full year outlook given that we still have a strong second half of the year baked in, and we'll do that after. Yes [indiscernible].

And I'd say, Chris, just the broader economy. So I've spent the last 2 months traveling through Argentina, Brazil, of course, the U.S. and Canada. And I'm actually surprised at how much optimism is on the farm. So we're seeing most of the progressive farmers are still acquiring land, investing in infrastructure. They're preparing their children to take over the farming operations. I think that they -- and the one thing that I wanted to hear, which we see in spades is they're craving that next generation of technology. They actually need it right now. Where they're focused on and where their concern areas are, obviously, in the U.S., crop pricing has been muted a bit. So that's pinching some margins. So we have to watch that.

It's not an emergency today, but it is something that we need to really think through what happens over the next 6, 9 months, maybe 12 months. And then trade. So farmers are farming right now. The crop is coming out of the ground, things are looking very good. I think the question is what happens at harvest? And will the trade situation be stable enough where they can sell the grain because they do require the export markets to be open. So that's on a lot of people's minds. We can dive into other parts of the world when you're ready. But I'd say, generally, there was more optimism than I thought.

So I want to know on tariffs after this. But since the beginning of the year, and to be clear, this is not just your question. It's how do we build from here question. But you've had some things -- I mean, the market has been rocky, but at the same time, you also had a few things fall a little bit more in your favor, and you've been positioned very, very well. And I could get into certain product things, but I'll just say U.S. ag policy even in the last week seems to be edging in the right direction. Let me know if you disagree with this, but it seems Brazil maybe have increased on acreage for the first time in half -- almost half a decade.

In a while.

It has. Argentina, you mentioned. It seems like the ag policy is edging in the right direction, perhaps a little bit slower, but FX, we could talk about interest if you want. But just how do we think -- does 2025 seem to be evolving at a time when you think this is kind of more comfortably setting up a better foundation to hit some of your '27 targets versus your expectations about 4 to 6 months. So I'll give you a little leeway on the response there.

So the answer is yes. Look, if you look at what will move the needle for Corteva, it would be, okay, so gene editing, -- we need freedom to operate, and it looks like the EU is very close. So that's another really important, I think, linchpin to get that product on farms around the world. So that's moving in the right direction. I think, like you said, Brazil and U.S. biofuels policy are both heading in the right direction. And I'm shocked at the speed at which Brazil is moving to be -- they're the second largest corn ethanol producer now in the world. They're still putting infrastructure in for that and they're very excited about the next generation of biofuels, so biodiesel and SAF.

And then you have the decisions that were made just in the last 6 or 7 days with the U.S. -- the blend mandate going up pretty substantially and you start thinking about that plus laying the discussion to have a healthy conversation around SAF and biodiesel here in this country. This is all in the right direction. This is exactly what farming should be about would be finding ways to rely a little less on export markets, consume the crop commodities inside of these core countries and then rely on the export markets for the rest, of course. So there's a lot here that we really like. And then from a technology perspective, our biofuel program had another very successful winter grow program, and we're just counting up the harvest data now, but it looks great. So we're going to take that to the next level.

I'd be remiss not to call out hybrid wheat. It's one of my favorite topics lately. But literally, we can transform that food system. It goes a long way to global food security because 20% of the calories we consume as humanity is wheat-based. And so if we can drive up yields by 10% or 15% in the early days because we're going to launch this in 2027, it's a good business for us. It will be a big business for us. We're saying it could be a peak $1 billion of revenue for us. But also, I think it goes a long way to feeding a lot more people.

On the Brazilian ag policy, Chuck, even the time you and I have known each other, which has been 1.5 decades in the last 10 years, Brazilian consumption of corn use has gone from 2% to 17%. It's not a small move. They always had ethanol, sugarcane based.

It was all cane-based, yes.

So it's a pretty fascinating topic. So when we take a step back and look at depart from ag policies, the one issue that I'm going to knock on wood before I bring it up, has been -- the one issue that has been driving some uncertainty has been tariffs.

Yes.

You've had this with China. You've had this with Europe. You had it with Mexico, seems to be alleviating if I do see myself. But how has Corteva been prepping for that? I mean you seem to be taking a pretty balanced methodical approach and just being ready for whatever curve balls are thrown at you. But could you just give us an update where we stand today, just given all the news flow that we've had over the last few weeks?

Yes. So David will give you our direct impacts. Go ahead, David.

So right now, where we are, when you take in consideration all the exemptions, which are pretty difficult to go through all. Our team is doing a really good job of preparing us for that. And then you look at the 90-day delay that was put in recently, our impact, we have estimated about $25 million to $30 million for '25. And Chris, as you know, that's all CP related. It really is not seed at this point in time. We feel like that's definitely a manageable number, certainly manageable within our range of our guide.

I think the more important part is when you look at what the CP business did with their supply chains and their footprint and everything they did years ago to prepare us for this, I think we're in a pretty good spot where we're multi-sourced on 70% of our imports and this sort of thing. And the teams are doing a really good job of trying to mitigate that $25 million to $30 million. We also will look at maybe a modest price increase. I think the industry will be looking at that if this continues. So I think we're in pretty good shape whenever it comes to managing tariffs overall. And then the other thing to just remind everyone, our 2 big franchises like Enlist and spinosyns are actually produced here in the U.S. So we're actually in a pretty good spot vis-a-vis perhaps others with our supply chain and where we manufacture.

One of the other things, and I won't imply any edge on this, but one of the things the investment community, the sell side and the buy side have loved is just the complete pendulum swing from licensee outflows. I don't want to get ahead of myself, I'll say neutralization. But you've been -- I mean, you've already swung about $650 million from peak to roughly where we are today like $850 million to $200-ish million.

That's right.

Somewhere plus or minus in there. You've done incredibly well from list. Now it seems -- the narrative seems to be shipping a little bit more towards PowerCore, Vorceed. Obviously, a lot of things that could replace [indiscernible] over time. And I know I'm missing one, Conkesta, Janet knows that's my favorite, obviously, in Brazil. But how confident are you in that neutralization time line? You already kind of expedited a little bit at your Analyst Day. How are we thinking about that for the next few years? And then also, dare I say a longer-term question, can you get that swing into the other side of it where it's actually an inflow?

We absolutely will, and we can and we will. So you've got the numbers, right? When we started this as a publicly traded company, we were like $800 million in the whole as a net expense, and we're around $200 million now. So we've clawed back about $600 million. And then we originally said we would be neutral by 2030. Now we're saying 2028. And we feel good in that bucket of time line for sure. But that's just the beginning, right? That's just sort of, I think, was always going to be step one. Where we're highly focused and where the team is now turning its attention to is this is about a $4 billion market that we really are a modest player when it comes to out-licensing revenue and it's really separated between the U.S. and Brazil. And so the real opportunity for us is to get our fair share of that $4 billion and that's going to take time.

But once we get the neutrality late this decade, we'll enter the 2030 decade with, I think, technology that is second to none. And we've already got 100 licensees for both corn and soybean technology today. And so we know who the players are. We know how to do this. And the technology is in high, high demand. In fact, we're probably supply limited, not demand limited when it comes to the out-licensing capability that we have. So I think that this is something that's got another 10 years plus to run, and we will be very disappointed if we don't get our fair share of that $4 billion market, which is still growing, by the way.

So what about the other -- I mean, obviously, it's always nice to talk about all the traits and all the kind of the payoff of a decade plus of development. You already hit on the wheat side of it, but could you also hit on some of the double cropping, the short-stature corn, some of the other kind of pieces of the base business in terms of just creating that second to none, I'd say, complex for your farmers?

Yes. So on reduced corn, very excited about the potential of the technology. For those that aren't sort of familiar with it, it will be a shorter corn. The reason that has advantages is because you had access to the canopy, it will hold up a lot in high, high winds. And the other, I think, magic to this is you'll be able to plant the crops closer together, so density. So you'll drive a lot of yield benefits on the farm because you'll be able to plant the corn crop closer together. So this is a win-win for everyone involved.

We have a dual path strategy where we have a conventional bread corn system that's reduced corn and we have a gene edited. So as soon as we get freedom to operate with gene edited, we won't skip a beat and we'll be able to, I think, to catapult anything that's out there. So that's really our philosophy, and we plan to launch in 2027. So again, this is right on the doorstep of part of our growth platform. Hybrid wheat, I talked about, could be $1 billion of revenue. The system looks phenomenal. We're -- our initial expectation is that growers will see a 10% to 20% yield improvement. And I just have to kind of tell you the significance of that. So our corn business, we were the first hybrid company in the world about 99 years ago, so we'll turn 100 years next year. That -- when it was first rolled out 100 years ago, there was no yield improvement back then. And we're already seeing a 10% to 20% yield improvement with the first hybrids coming out of our wheat system. That will be the worst it ever gets because we'll just get better with the breeding.

So this has a huge potential for growers around the world. So that is another thing that we're very excited about. And then we -- I mentioned gene editing capability. As soon as we get freedom to operate, we'll bring our first corn hybrids out about 2 years after that, and it is a multi-disease protection in the genetics. We've spent enough time with this to know that this is going to be game-changing for -- specifically for corn growers in the United States.

I always joke that thank goodness, field of dreams was filmed back in like '87 because you never would have gone James Earl Jones or any of those players on the white socks into the field and short stature corn based on the declining rows. So it's an ag joke people, relax. All right. So one of the things I'm particularly enthusiastic about, and I've been enthusiastic about this and Chuck, I know -- I think I know the answer to this, but I really want you to answer it for the audience. Gene editing has been on our radar screens for years. And every single time one of these crossed my desk for somebody who had a technology when I was at my old employer, I used to say, well, what about Corteva? And every single time, there's somebody technologies, all roads always led back to you. So the question is going to be very simple and yet complex. Why do you have the right to win there? And how insulated did say is the moment the EU gives that green light, why are you the ultimate winner?

Yes, it's a great question. So I actually think that the technology over time won't be the differentiator. Even though we are the largest state holder for gene edit outside of the country of China. So there's China and then there's Corteva and then there's everybody else. So we've built a nice IP estate for sure. But I don't think that, that's going to be the determining factor for who wins this. I think what's going to be determined is, look, gene editing is simply cutting and pasting. I know the scientists hate it when I say that. But as an engineer, that's as complex as I can get. And so you have to have something to edit. And we have 100 years of germplasm in corn that we understand better than anybody else in the world.

So I think the material that we're going to take to the next level and edit that's going to make all the difference in the world. And of course, we're in 125 countries. So we have the channels to the market. And then if you think about -- I mentioned Pioneer turning 100 next year. We have a very unique route to market, right? In the United States, we have 2,600 Pioneer agents that are independent business owners that work on the farm every day, and all they do is sell Pioneer seed. So can you imagine the power of this if you've got the latest and greatest technology, the best germplasm that is 100 years old and a channel to market that is unique. I like our odds of success when it comes to this. But I don't think the differentiation will actually be the editing itself. In fact, we're licensing the gene editing technology to anybody that wants to buy it because we don't think that, that -- we think commoditizing that to some degree is the right thing to do. The world needs this technology.

We need to see gene edited material on the planet because like you probably all know this, but there's another 2 billion people that we have to feed by 2050. So it's a 25% increase in our human population. If you look at the last 20 years, we had the same increase, right, 25%, but we have to increase land by 10%, so we can't really increase that much land in the next 2 billion people we need to feed. The only way to do that is to bring the next generation of technology, which I think will be led by gene edited capability.

I always love it when talking about the seed business. It's one of the few businesses that basic materials analysts cover where certain countries literally have to hide it in seed vaults in the Arctic circle to ensure the continuity of the human race got forbid something bad happens. So it's a pretty interesting business that I think people still, despite everybody talking about it, underappreciate. So we're going to dip down to an unpleasant topic and then get back to a positive topic to end the presentation. But the CPC market has been challenging, Chuck. And I think you've got on every single call, and it's just undeniable across the industry. I will say you're in a better position than most for sure. It seems like that's now perhaps dare I say, normalizing North America, Europe, perhaps Asia, you still have some pockets of issues, Latin America. What's your current assessment of the marketplace right here, right now?

Yes. So this will be the third year where it's been sort of uninspiring, right? And we won't sugarcoat it. It's been a tough couple of years for the industry and then, of course, for our business. I'd say 2025 is certainly looking better than '24 and 2023. And what we're seeing is healthy volume. So the channels seem to be functioning relatively normal. Yes, there will be pockets as you called out. But generally speaking, I'd say that within the kind of the realms of normality, the CP business is back to normal. Where -- what we're still facing though is low single-digit price pressure. And that's coming from a whole host of areas, including we're still seeing elevated generics. So it feels a lot better than what we saw from a price perspective in the last 2 years. But when we did give our recent earnings, we said, look, we thought that we were going to see low single-digit pricing until the first half of this year. Now we're thinking that's going to persist for the rest of the year. That's all built into the communication that we gave. There's nothing new here. But it would be nice to see the pricing turn positive eventually. And eventually, it has to.

In fact, when you go back in our history as an industry, you really don't see 3 continuous years of price declines. It's extremely unusual for our industry. But I'm not here prepared to say expect that in this quarter or this year because I think that we have to see if this is structural or cyclical. My opinion right now is that this is still purely supply-demand. And so it would not be a structural change. In fact, on-farm demand for crop protection is flat to modestly up. So growers are using the products the way they need them. And that is something that we can't forget, right? We've seen a lot of noise when it comes to the crop protection market, but the behavior on the farm has not changed. These are still core products, which they need to grow that crop and they're using it the way they should.

I think the temporary on-farm storage post COVID or during COVID and the evolution of the broker market during that same time when people are trying to clear their balance sheets, I think through people off it. I'm glad to hear it seems like it's certainly in the right direction. One quick clarification on that, Chuck. Just in terms of pricing expectations, I mean your guidance basically still implies that pricing will be slightly down in the second half. That's still the best way to think about it? No change in thought process.

No change right now.

Got it. Okay. Clear. One of the other things you've been doing behind the scenes just going -- just continuously going back to this thesis of not being complacent at all, you have 2 things that could potentially help margins outside of price and mix. One is you're being much more effective with your capacity, closing Pittsburgh have to be sure, Pittsburgh, California. And then obviously, being more optimizing your manufacturing, I'd say, holistically around that. And then also on the cost side, it seems like you're getting some benefits. I know that's a little bit tougher because you only turn inventory 2 times a year, so it's a little bit tougher. But just -- could you just give us the latest and greatest on how you're thinking about that? Is everything kind of in line with how you're thinking about it, perhaps a little bit better?

So when you step back and look at what we expected for like our net cost improvements for the year, we're about $400 million this year, which is a significant number. And a lot of that is self-help. So in CP, we've been on a little bit of a journey on footprint rationalization, kind of going through all those restructurings and what have you. We expect that to add of that $400 million, like $100 million of incremental benefit in 2025. So a pretty significant piece. And then you look at on the seed side, which is about half, again, of that $400 million for this year, it's all about efficiency and how we produce seed.

About half of the COGS is actually the underlying commodity itself, but there's a whole another half of logistics and packaging and all these sort of things that I think the teams are now starting to use actually artificial intelligence models to where they're able to go a little bit more efficient. And so I think over time, we're going to see that really benefit seed and then CP is on this continuous journey. If you step back, Chris, and look at our 3-year horizon, we had $1 billion of EBITDA improvement $700 million of it is this net cost. So we're seeing it not only in this first year, but we do expect it to continue in '26 and '27.

The other thing I wanted to hit on Crop Protection is about 3 weeks ago, a press release came out for one of your competitors, FMC with its new product [indiscernible], which is a substantial portion of its second half growth. And essentially, you'll be -- I know this isn't the right term, but redistributed in the U.S. market just given your breadth and access to the marketplace. Could you just perhaps for those unfamiliar with these types of agreements, hit on why you would, in perception-wise, help a competitor, even though we know you wouldn't do it if it wasn't helpful to Corteva, perhaps that and just how that ultimately helps your holistic offering in the marketplace?

Yes, sure. So look, this is the definition of standard in our industry. I don't know how else to say it, right? We all -- none of us -- it's a very competitive industry. We all have great products. And so if there's something out there that is new, we want to get access to it and there's licensing and cross-selling agreements across the board because that's good for farmers. When I look at the specific agreement, what I'd say is, I think it's a win-win for both companies and for farmers.

Look, for us, we're going to get an interesting new product that we'll be able to put in front of our -- specifically our corn growers and it has to do with the 3-way fungicide market, which is a good market for us. And we -- it's complementary to the rest of our product slate that we are currently selling. So I think for us, it's great. For FMC, they get access through the Pioneer network, our corn growers. So it opens up a bit of a market for them. So this is one of these definitions where I think it's good for FMC, it's good for Corteva and it's good for growers. But this is very standard. We don't usually make a lot of noise around these things because they happen very frequently, and they're usually incrementally beneficial for both companies.

With the minutes we have remaining, your capital allocation has been a big topic, I'd say, since, I guess, once again, 6 birthdays. You've guided to about 40% to 45% of cash. Two-part question. First of all, is that just -- do you think that's just the intermediate long-term run rate? We all know you've been here 9 months and you didn't want to overprocess [indiscernible] deliver, and we certainly appreciate that. At the same time, I've highlighted, and if I'm wrong on this, please call me out. But I'd like to highlight just, hey, a lot of cash turns hands between January and the end of December -- versus the end of December, whether it's the U.S. and early pay savings and Corteva cash things or the Brazilian marketplace. I tend to think that gives you a reason to have -- enable yourself some leeway there. How should we be thinking about that?

Very complicated question actually. But when you step back and you look at the 45%, we feel comfortable with that Chris. I think last year, we were at a 50% conversion. One of the reasons for that is we did have a tailwind of working capital. So we did work our inventories down, adjusting again to the CP market and that sort of thing. I think this year, we started off very well. And so I think over a 3-year period of time, 45% is good. We could, as we grow EBITDA, start to work that up slightly because you're actually mixing up because we won't need all the working capital and all that sort of thing when you have that incremental $1 billion of EBITDA. So I think that's very much a positive.

The one thing on forecasting the cash flow, to your point, for those, we do get a lot of cash very much at the very end of the year, which is this cash credit mix with farmers. So we could do a terrific job the first 10 months, and we could miss it on those last couple of months. So I think maybe we're a little conservative, but I think it's prudent to be that way to see kind of how the year unfolds. But so far, a good start to the year. And I think the teams, again, going back to self-help and what we do, are doing everything possible to be very efficient in the way we manage our working capital investment in general.

Chuck, obviously, you've done some M&A. You've done some buybacks. You have a pretty healthy authorization. I think I have a lot of confidence in Dave's ability to get to the high end of that range. So perhaps you have a couple of extra bucks in the bank. When we take a step back and we look at your share performance, some, let's say, growth opportunities, you've been verging in plant health, biologicals. How should we weigh how you -- what's in your thought process on share buybacks versus tuck-in and bolt-on M&A?

Yes. So look, I think when I look -- step back and look at the company, we got an A-rated balance sheet, and we're generating a lot of cash. We can argue on the fringes, but that's going to continue. And so we're going to have the financial horsepower, I think, to do it all. We've also raised our dividend 30% since nobody talks about the dividend. It's amazing. But on a basis, it's relatively small, and we bought back $4 billion of stock in the last 4 years or so. So that's pretty remarkable. And I think, again, when you look at the priorities for capital, we want to return capital to shareholders where it makes sense. But our overall focus is just maximum long-term value creation.

We also raised the amount we're investing in R&D because we were -- when I first joined Corteva, we were investing too little, and I wanted to accelerate the seed portfolio. So we put more money into that, and we raised it to 8% of our revenue. I think over time, that's going to prove to be the right decision. Now you're asking about inorganic growth. We're always on the lookout for ways to use the balance sheet inorganically. But it has to be the right deal that aligns with our strategy. And the areas that we kind of are looking at are -- they won't surprise you, right? So biologicals, gene editing capabilities, anything where we can acquire the next generation of capability where Sam Eathington says, well, I can develop it, but it's going to cost more. We're always looking at build versus buy, especially around our technology portfolio.

We've got a great organic machine. The last 3 or 4 years now, we've built a great inorganic M&A team. And I think that the 2 deals we have done, Symborg and Stoller, I think they've proven so far to be the right acquisitions at the right time for the right price. And we would be very excited if we can find a few more of those.

I think also our Catalyst program too, is another one where the last couple or 3 years, getting some memory around that and making small investments in multitudes of technology will pay off over time.

I have a friend, who is a portfolio manager and he always tells me, like tell Corteva to get the dividend yield up, tell them to get up. I said it's not their fault, the stock keeps going up. I think he needs 1.6% over the S&P is. So it may be a little tough draw this year, but we can get it there. Final question. Chuck, we've known each other a long time. Dave, it's been a pleasure working with you. I'm really glad you could attend today. But there's always things the sell side and less so on the buy side, of course, but when the sell side that investors miss about the story. And you've been very transparent. You had a great event last November, and I think we're particularly enthusiastic about that. But is there -- are there 1 or 2 things you think the sell side is still missing? Like why isn't XYZ sell side writing about this? Why am I not getting a question on the call about this?

Yes. Look, I think in the first few years of Corteva, like we didn't have the 15 years of performance. So people were wondering, can they generate the right numbers with sub-$4 or sub-$4.50 corn. And I think we've proven. So check, yes, look, the company is doing okay with kind of moderate crop pricing. The other thing is, look, when we first joined, we had this big gap in our margins. So over the last 6 years now, the margins are up something like 600 basis points, and there's not a lot of daylight now between us and everyone else. So check that box. So I think it was really the blocking and tackling of the company, standing it up as a publicly traded company. All that, I think the market has gotten.

I think where the market is missing right now, and we're starting to talk about it, is the growth potential beyond 2027. I know that we put 2027 financial targets out there, but there is probably a decade or longer of what I would consider to be really interesting technology growth from gene editing, biologicals, hybrid wheat, out-licensing of our general seed portfolio, all these things. And that is -- it's going to take a little bit of time for the market to say, yes, I can build that in. But some of these things are going -- usually when a science company says, we got this great product, come back and see us 10 years from now, right? Because it takes that long in our industry. We're talking about hybrid wheat. It's launching in 2027 in the United States.

I was in Canada. Farmers were saying, Chuck, why are you going to wait to bring it up to Canada? We want it now. So look, I do think that we're on the doorstep here with these new technologies in 2027, 2028, 2029. Once the market starts to get comfortable that, that time line is going to hold, I think we'll become a growth story.

Thank you very much. Always a pleasure, gentlemen. Thank you.

Thank you.