EIDP Inc

Liquidity and Capital Resources

Information related to the company's liquidity and capital resources can be found in the company’s 2023 Annual Report, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity & Capital Resources. The discussion below provides the updates to this information for the nine months ended September 30, 2024.

The increase in debt balances from December 31, 2023 was primarily due to higher short-term debt, which was used to fund the company's working capital needs, capital spending, dividend payments and share repurchases. See further information in Note 12 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements.

The company believes its ability to generate cash from operations and access to capital markets and commercial paper markets will be adequate to meet anticipated cash requirements to fund its operations, including seasonal working capital, capital spending, dividend payments, share repurchases, pension obligations and litigation costs, net of recoveries. Corteva's strong financial position, liquidity and credit ratings will provide access as needed to capital markets and commercial paper markets to fund seasonal working capital needs. The company's liquidity needs can be met through a variety of sources, including cash provided by operating activities, commercial paper, syndicated credit lines, bilateral credit lines, long-term debt markets, bank financing and committed receivable repurchase facilities. Corteva considers the borrowing costs and lending terms when selecting the source to fund its operations and working capital needs.

The company had access to approximately $6.2 billion, $6.0 billion, $6.0 billion at September 30, 2024, December 31, 2023 and September 30, 2023, in committed and uncommitted unused credit lines, which includes the uncommitted revolving credit lines relating to the Foreign Currency Loans. These facilities provide support to meet the company’s short-term liquidity needs and for general corporate purposes, which may include funding of discretionary and non-discretionary contributions to certain benefit plans, severance payments, repayment and refinancing of debt, working capital, capital expenditures, repurchases and redemptions of securities, acquisitions and Corteva's costs and expenses, including the settlement of litigation. These facilities are provided to the company by highly rated and well capitalized global financial institutions.

In June 2024, the Revolving Credit Facilities were refinanced for purposes of extending the maturity dates for the five-year and three-year revolving credit facilities to June 2029 and June 2027, respectively, and lowering the facility amount of the five-year revolving credit facility to $2.85 billion and the three-year revolving credit facility to $1.9 billion. Borrowings under the Revolving Credit Facilities will have an interest rate equal to Adjusted Term SOFR, which is Term SOFR plus 0.10 percent, plus the applicable margin. The Revolving Credit Facilities may serve as a substitute to the company's commercial paper program, and can be used, from time to time, for general corporate purposes including, but not limited to, the funding of seasonal working capital needs. The Revolving Credit Facilities contain customary representations and warranties, affirmative and negative covenants and events of default that are typical for companies with similar credit ratings. Additionally, the Revolving Credit Facilities contain a financial covenant requiring that the ratio of total indebtedness to total capitalization for Corteva and its consolidated subsidiaries not exceed 0.60. At September 30, 2024, the company was in compliance with these covenants.

In February 2024, the company amended and restated its July 2023 (as amended in July 2023 and January 2024) 364-day revolving credit agreement (the “364-Day Revolving Credit Facility”) increasing the facility amount to $1 billion and extending the expiration date to February 2025. In February 2023, the company drew down $1 billion under the 364-Day Revolving Credit Facility, which was used for general corporate purposes, including funding seasonal working capital needs, capital spending, dividend payments, share repurchases and to partially fund the Stoller and Symborg acquisitions. See Note 3 - Business Combinations, to the interim Consolidated Financial Statements, for additional information on the Stoller and Symborg acquisitions. In May 2023, the company repaid the $1 billion loan using the proceeds from the May 2023 Debt Offering.

In May 2023, the company issued $600 million of 4.50 percent Senior Notes due in 2026 and $600 million of 4.80 percent Senior Notes due in 2033 (the “May 2023 Debt Offering”).

The company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations affecting manufacturing plants, mineral producing properties or research facilities located in the U.S. and the consolidated subsidiaries owning such plants, properties and facilities subject to certain limitations. The outstanding long-term debt also contains customary default provisions.

The company has meaningful seasonal working capital needs based in part on providing financing to its customers. Working capital is funded through multiple methods including cash, commercial paper, the Revolving Credit Facilities, the 364-Day Revolving Credit Facility, and factoring.

The company has factoring agreements with third-party financial institutions to sell its trade receivables under both recourse and non-recourse agreements in exchange for cash proceeds in an effort to reduce its receivables risk. For arrangements that include an element of recourse, the company provides a guarantee of the trade receivables in the event of customer default. Refer to Note 9 - Accounts and Notes Receivable - Net, to the interim Consolidated Financial Statements, for more information.

The company also organizes agreements with third-party financial institutions who directly provide financing for select customers of the company's Seed and Crop Protection products in each region. Terms of the third-party loans are less than a year and programs are renewed on an annual basis. In some cases, the company guarantees a portion of the extension of such credit to such customers. Refer to Note 13 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements, for more information on the company’s guarantees.

The company's cash, cash equivalents and marketable securities at September 30, 2024, December 31, 2023 and September 30, 2023 are $2.5 billion, $2.7 billion and $2.4 billion, respectively, of which $2.1 billion, $2.2 billion and $2.0 billion at September 30, 2024, December 31, 2023 and September 30, 2023, respectively, was held by subsidiaries in foreign countries, including United States territories. Cash, cash equivalents and marketable securities are concentrated subject to local restrictions with highly rated and well capitalized global financial institutions. The underlying credit worthiness and exposures to these counterparties are monitored on a regular basis in line with the company’s overall risk management procedures. Upon actual repatriation, such earnings could be subject to withholding taxes, foreign and/or U.S. state income taxes, and taxes resulting from the impact of foreign currency movements. The cash held by foreign subsidiaries is generally used to finance the subsidiaries' operational activities and future foreign investments. At September 30, 2024, management believed that sufficient liquidity is available in the U.S. with global operating cash flows, borrowing capacity from existing committed credit facilities, and access to capital markets and commercial paper markets.

Summary of Cash Flows

Cash provided by (used for) operating activities - continuing operations was $(1,871) million for the nine months ended September 30, 2024 compared to $(2,574) million for the nine months ended September 30, 2023. The change was primarily driven by favorable changes in working capital. Within accounts payable, lower payments to third-party growers resulted from lower commodity costs and production plans, supplemented by a change in inventory purchasing patterns. The favorable changes in inventories were driven by production reductions to match demand, and favorable changes in other assets and liabilities were primarily due to lower variable compensation payments compared to the prior year and favorable foreign currency derivative contract settlements. These movements were partially offset by unfavorable changes in receivables driven by slower collections, as well as in deferred revenue due to lower prepayments received combined with higher usage of prepayments.

Cash provided by (used for) operating activities - discontinued operations was $(157) million for the nine months ended September 30, 2024 compared to $(30) million for the nine months ended September 30, 2023. The cash outflows were primarily related to PFAS activities that are subject to the MOU with Chemours and DuPont associated with environmental remediation activities primarily at Chemours’ Fayetteville Works facility. In addition, the disbursement of the cash held in the Water District Settlement Fund is reflected in the nine months ended September 30, 2024.

Cash provided by (used for) investing activities was $(466) million for the nine months ended September 30, 2024 compared to $(1,773) million for the nine months ended September 30, 2023. The change was primarily due to the acquisitions of Stoller and Symborg in 2023, partially offset by higher proceeds from the net investment hedge settlement in the first quarter of 2023 as compared to the second quarter of 2024, along with higher 2024 activity in investments.

Cash provided by (used for) financing activities was $2,137 million for the nine months ended September 30, 2024 compared to $3,603 million for the nine months ended September 30, 2023. The change was primarily due to higher borrowings in 2023 to fund working capital needs, capital spending, dividend payments, share repurchases and to partially fund the Stoller and Symborg acquisitions, as well as higher payments on debt and higher repurchases of common stock in 2024.

In January 2024, the company's Board of Directors authorized a common stock dividend of $0.16 per share, payable on March 15, 2024, to the shareholders of record on March 1, 2024. In April 2024, the company's Board of Directors authorized a common stock dividend of $0.16 per share, payable on June 18, 2024, to the shareholders of record on June 4, 2024. In July 2024, the company's Board of Directors authorized a common stock dividend of $0.17 per share, which reflects an approved increase of 6.25 percent, payable on September 17, 2024, to the shareholders of record on September 3, 2024. In October 2024, the company's Board of Directors authorized a common stock dividend of $0.17 per share, payable on December 16, 2024, to the shareholders of recorded on December 2, 2024.

On September 13, 2022, Corteva, Inc. announced that its Board of Directors authorized a $2 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2022 Share Buyback Plan"). The timing, price and volume of purchases in connection with the 2022 Share Buyback Plan will be based on market conditions, relevant securities laws and other factors. In connection with the 2022 Share Buyback Plan, the company repurchased and retired 4,722,000 shares and 4,913,000 shares in the open market for a total cost (excluding excise taxes) of $250 million for both the three months ended September 30, 2024 and 2023, respectively, and 13,838,000 shares and 6,330,000 shares in the open market for a cost (excluding excise taxes) of $750 million and $330 million during the nine months ended September 30, 2024 and 2023 respectively. In addition, the company repurchased and retired 4,098,000 shares in the open market for a total cost of $250 million during the nine months ended September 30, 2023 under the $1.5 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2021 Share Buyback Plan"), which was authorized by the Corteva, Inc. Board of Directors on August 5, 2021 and completed during the first quarter of 2023.

For the full year 2024, the company expects repurchases of approximately $1 billion under the 2022 Share Buyback Plan discussed above. The total amount, timing, manner, price and volume of purchases will be based on market conditions, relevant securities laws and other market and company specific factors.

See Note 14 - Stockholders' Equity, to the interim Consolidated Financial Statements, for additional information related to the share buyback plans.

EIDP Liquidity Discussion

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 a Liquidity discussion for the differences between EIDP and Corteva, Inc. See Note 2 Related Party Transactions, to the EIDP interim Consolidated Financial Statements, for further information on the related party loan between EIDP and Corteva, Inc.

Cash provided by (used for) operating activities - continuing operations

EIDP’s cash provided by (used for) operating activities - continuing operations was $(2,977) million and $(2,585) million for the nine months ended September 30, 2024 and 2023, respectively. The change was primarily driven by higher receivables from Corteva in connection with the Master In-House Banking Agreement and the items noted on page 55, under the header "Summary of Cash Flows."

Cash provided by (used for) operating activities - discontinued operations

EIDP’s cash provided by (used for) operating activities - discontinued operations was $(157) million and $(30) million for the nine months ended September 30, 2024 and 2023, respectively. The change was primarily driven by the items noted on page 55, under the header "Summary of Cash Flows."

Cash provided by (used for) investing activities

EIDP’s cash provided by (used for) investing activities was $(466) million and $(1,773) million for the nine months ended September 30, 2024 and 2023. The change was primarily driven by the items noted on page 55, under the header "Summary of Cash Flows."

Cash provided by (used for) financing activities

EIDP’s cash provided by (used for) financing activities was $3,243 million and $3,614 million for the nine months ended September 30, 2024 and 2023. The change was primarily due to higher borrowings in 2023 to fund working capital needs, capital spending, Corteva, Inc. dividend payments and share repurchases and to partially fund the Stoller and Symborg acquisitions, partially offset by higher payments on debt, including the payments on the related party loan between EIDP and Corteva, Inc. in the first quarter of 2023.

Guarantees and Off-Balance Sheet Arrangements

For detailed information related to Guarantees, Indemnifications, and Obligations for Equity Affiliates and Others, see the company’s 2023 Annual Report, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements and Note 13 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements.