EIDP Inc

Results of Operations

Net Sales

Net sales were $2,326 million and $2,590 million for the three months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by an 8 percent decrease in price and a 5 percent unfavorable currency impact, partially offset by a 3 percent increase in volume. Pricing losses reflect the continued competitive price environment in Crop Protection, particularly in Latin America. Crop Protection volume increased versus the prior year driven primarily by Latin America and North America demand for new products and spinosyns, partially offset by residual destocking and unfavorable weather in EMEA. The Crop Protection volume increase was partially offset by a decline in Seed volumes due to reduced corn planted area in Argentina. Unfavorable currency impacts were driven by the Turkish Lira and the Brazilian Real.

1. Represents U.S. & Canada.

2. Europe, Middle East and Africa ("EMEA").

Net sales were $12,930 million and $13,519 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by a 2 percent decrease in volume and a 2 percent unfavorable impact from currency. Volume declines were driven by reduced corn planted area in Latin America, unfavorable weather, reduced planted area and destocking impacts in EMEA and just-in-time Crop Protection purchasing behavior in North America, partially offset by growth in Latin America on demand for new products and spinosyns. While Seed pricing increased due to the continued execution on the company's price for value strategy as led by North America, this increase was completely offset by a decline in Crop Protection pricing driven by the competitive environment in Latin America.

Cost of Goods Sold ("COGS")

COGS was $1,565 million (67 percent of net sales) and $1,646 million (64 percent of net sales) for the three months ended September 30, 2024 and 2023, respectively, and $7,033 million (54 percent of net sales) and $7,554 million (56 percent of net sales) for the nine months ended September 30, 2024 and 2023, respectively. The decrease wasprimarily driven by lower volumes, ongoing cost and productivity actions, reduction of royalty expense and currency, partially offset by higher Seed commodity costs.

Research and Development Expense ("R&D")

R&D expense was $348 million (15 percent of net sales) and $335 million (13 percent of net sales) for the three months ended September 30, 2024 and 2023, respectively, and $1,037 million (8 percent of net sales) and $980 million (7 percent of net sales) for the nine months ended September 30, 2024 and 2023, respectively. The increase in R&D expense is in support of the company’s long-term investment plans and was primarily driven by an increase in salaries due to higher headcount, as well as additional spending on field, lab and facilities, and third-party research costs.

Selling, General and Administrative Expenses

SG&A expenses were $671 million (29 percent of net sales) and $670 million (26 percent of net sales) for the three months ended September 30, 2024 and 2023, respectively. The change was primarily driven by an increase in certain benefits costs, offset by favorable currency impacts.

SG&A expenses were $2,461 million (19 percent of net sales) and $2,441 million (18 percent of net sales) for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily driven by an increase in commissions, bad debt expense, litigation and the effects of the Stoller and Symborg acquisitions, partially offset by favorable currency impacts.

Amortization of Intangibles

Intangible asset amortization was $170 million and $174 million for the three months ended September 30, 2024 and 2023, respectively. As certain intangible assets became fully amortized since the end of the prior year period, amortization expense decreased in the current year period.

Intangible asset amortization was $521 million and $508 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily driven by the impact of amortization relating to the intangible assets recognized in connection with the Stoller and Symborg acquisitions, which were completed on March 1, 2023.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $32 million and $2 million for the three months ended September 30, 2024 and 2023, respectively, and $199 million and $95 million for the nine months ended September 30, 2024 and 2023, respectively. The charges in the third quarter and nine months ended September 30, 2024 were primarily related to charges associated with the Crop Protection Operations Strategy Restructuring Program consisting of severance and related benefit costs and asset related charges. The charges in the third quarter and nine months ended September 30, 2023 were primarily related to costs associated with the 2022 Restructuring Actions. The charges in the third quarter ended September 30, 2023 and the nine months ended September 30, 2024 and 2023 also include non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.

See Note 5 - Restructuring and Asset Related Charges - Net, to the interim Consolidated Financial Statements, for additional information.

Other Income (Expense) - Net

Other income (expense) - net was $(107) million and $(149) million for the three months ended September 30, 2024 and 2023, respectively. Lower other expense was primarily driven by the absence of charges related to estimated settlement reserves, partially offset by a decrease in both interest income and the gain on sale of businesses and other assets.

Other income (expense) - net was $(319) million and $(354) million for the nine months ended September 30, 2024 and 2023, respectively. Lower other expense was primarily driven by a decrease in charges related to estimated settlement reserves and the receipt of an indemnification payment negotiated with the former Stoller owners, partially offset by a decrease in interest income and higher non-operating pension and other post employment benefit costs.

See Note 6 - Supplementary Information, to the interim Consolidated Financial Statements, for additional information.

Interest Expense

Interest expense was $66 million and $58 million for the three months ended September 30, 2024 and 2023, respectively, and $173 million and $171 million for the nine months ended September 30, 2024 and 2023, respectively. The change was primarily driven by lower short-term borrowings offset by higher interest related to the senior notes issued in 2023 and for foreign currency loans and subsidiary debt effects.

Provision for (Benefit from) Income Taxes on Continuing Operations

The company’s benefit from income taxes on continuing operations was $(114) million for the three months ended September 30, 2024 on pre-tax loss from continuing operations of $(633) million, resulting in an effective tax rate of 18.0 percent. The effective tax rate was unfavorably impacted by tax impacts of certain net exchange losses recognized on the re-measurement of the net monetary asset positions which were not tax-deductible in their local jurisdictions.

The company's benefit from income taxes on continuing operations was $(129) million for the three months ended September 30, 2023 on pre-tax loss from continuing operations of $(444) million, resulting in an effective tax rate of 29.1 percent. The effective tax rate was favorably impacted by $11 million of net tax benefits associated with changes in deferred taxes, accruals for certain prior year tax positions in various jurisdictions, as well as favorable geographic mix of earnings.

The company’s provision for income taxes on continuing operations was $274 million for the nine months ended September 30, 2024 on pre-tax income from continuing operations of $1,187 million, resulting in an effective tax rate of 23.1 percent. The effective tax rate was unfavorably impacted by geographic mix of earnings, as well as withholding taxes on repatriation of cash held outside of the U.S. primarily from current year earnings. Those unfavorable impacts were partially offset by net tax benefits associated with changes in accruals for certain prior year tax positions.

The company's provision for income taxes on continuing operations was $244 million for the nine months ended September 30, 2023 on pre-tax income from continuing operations of $1,416 million, resulting in an effective tax rate of 17.2 percent. The effective tax rate was favorably impacted by $79 million of net tax benefits associated with changes in deferred taxes, accruals for certain prior year tax positions in various jurisdictions, stock-based compensation, as well as the impact of changes to deferred taxes associated with a tax currency change for a legal entity. Those favorable impacts were partially offset by the unfavorable tax impacts of certain net exchange losses recognized on the re-measurement of the net monetary asset positions which were not tax-deductible in their local jurisdictions, as well as the tax impact of repatriation.

Income (Loss) from Discontinued Operations After Tax

Income (loss) from discontinued operations after tax was $(2) million and $45 million for the three and nine months ended September 30, 2024, respectively. The result for the three months ended September 30, 2024 was primarily driven by litigation-related activity. The after-tax benefit recognized during the nine months ended September 30, 2024 was driven by charges recognized relating to the MOU with Chemours and DuPont relating to PFAS environmental remediation activities primarily at Chemours' Fayetteville Works facility and litigation-related activity, more than offset by a favorable adjustment of certain prior year tax positions for previously divested businesses and the derecognition of an indemnification liability associated with the Water District Settlement Fund contribution.

Income (loss) from discontinued operations after tax was $(3) million and $(174) million for the three and nine months ended September 30, 2023, respectively. The nine months ended September 30, 2023 primarily includes charges associated with the settlement of certain legal matters relating to PFAS that are subject to the MOU, including the Nationwide Water District Settlement.

Refer to Note 13 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements, for additional information.

EIDP Analysis of Operations

As discussed in Note 1 - Basis of Presentation, to the EIDP interim Consolidated Financial Statements, EIDP is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EIDP only and is presented to provide an Analysis of Operations, only for the differences between EIDP and Corteva, Inc.

Interest Expense

EIDP’s interest expense was $66 million and $60 million for the three months ended September 30, 2024 and 2023, respectively, and $173 million and $193 million for the nine months ended September 30, 2024 and 2023, respectively. The change was primarily driven by the items noted above, under the header "Interest Expense," partially offset by the absence of interest on the related party loan between EIDP and Corteva, Inc. during the nine months ended September 30, 2024 as it was fully repaid in the fourth quarter of 2023.

See Note 2 - Related Party Transactions, to the EIDP interim Consolidated Financial Statements, for further information.

Provision for (Benefit from) Income Taxes on Continuing Operations

EIDP’s benefit from income taxes on continuing operations was $(110) million for the three months ended September 30, 2024 on pre-tax loss from continuing operations of $(615) million, resulting in an effective tax rate of 17.9 percent. EIDP’s benefit from income taxes on continuing operations was $(129) million for the three months ended September 30, 2023 on pre-tax loss from continuing operations of $(446) million, resulting in an effective tax rate of 28.9 percent.

EIDP’s provision for income taxes on continuing operations was $283 million for the nine months ended September 30, 2024 on pre-tax income from continuing operations of $1,225 million, resulting in an effective tax rate of 23.1 percent. EIDP’s provision for income taxes on continuing operations was $239 million for the nine months ended September 30, 2023 on pre-tax income from continuing operations of $1,394 million, resulting in an effective tax rate of 17.1 percent.

EIDP’s effective tax rates for the three and nine months ended September 30, 2024 and 2023 were driven by the items noted on page 46, under the header “Provision for (Benefit from) Income Taxes on Continuing Operations”.

See Note 2 - Related Party Transactions, to the EIDP Consolidated Financial Statements for further information.

Corporate Outlook

Commodity prices are relatively steady, despite an anticipated record U.S. corn crop, and farmers continue to prioritize top-tier seed technology, while managing tighter margins. Against this backdrop, our Seed business has continued to outperform the market, likely gaining market share while improving operational efficiency. Meanwhile, the Latin America market conditions represent a headwind, including a significant reduction in corn planted area in Argentina.

While the global Crop Protection industry volumes have continued to stabilize, the pricing environment remains competitive. Third quarter gains in Operating EBITDA, including significant benefits from productivity and raw material deflation, reflect the resilience of our Crop Protection business.

As a result, for full-year 2024, the company expects net sales in the range of $17.0 billion to $17.2 billion, a decline of 1 percent at the mid-point. Operating EBITDA is expected to be in the range of $3.35 billion to $3.45 billion, growth of 1 percent at the mid-point. Operating Earnings Per Share is expected to be in the range of $2.50 to $2.60 per share, down 5 percent at the mid-point. Cash provided by operating activities - continuing operations is expected to be in the range of $2.1 billion to $2.6 billion. Free Cash Flow is expected to be in the range of $1.5 billion to $2.0 billion. Refer to further discussion of Non-GAAP metrics on page 51.

The above outlook does not contemplate any extreme weather events, operational disruptions, significant changes in customers' demand or ability to pay, or further acceleration of currency and inflation impacts resulting from macro-economic driven trends. Corteva is not able to reconcile its forward-looking non-GAAP financial measures, except for Free Cash Flow, to its most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of the company’s control, such as significant items, without unreasonable effort (refer to page 52 for significant items recorded in the three and nine months ended September 30, 2024 and 2023). However, during 2023 and 2024, the company committed to restructuring activities to optimize the Crop Protection network of manufacturing and external partners, which are expected to be substantially complete in 2026. The company expects to record approximately $345 million to $395 million net pre-tax restructuring charges during 2024 and 2025 for these activities. See Note 5 - Restructuring and Asset Related Charges - Net, to the interim Consolidated Financial Statements, for additional information.

Reconciliation of Forward-Looking Cash Provided by (Used for) Operating Activities – Continuing Operations to Free Cash Flow 1

1. This represents the reconciliation of the company’s range provided for its forward-looking non-GAAP financial measure relating to Free Cash Flow. Refer to further discussion of Non-GAAP metrics on page 51.