CORTEVA, INC. This report contains certain estimates and forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and may be identified by their use of words like "plans," "expects," "will," "anticipates," "believes," "intends," "projects," "estimates," "outlook," or other words of similar meaning. All statements that address expectations or projections about the future, including statements aboutCorteva's strategy for growth, product development, regulatory approval, market position, liquidity, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures, and financial results, as well as its expectations related to its separation ofCorteva from DowDuPont and the agreements related thereto, are forward-looking statements. Forward-looking statements and other estimates are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements and other estimates also involve risks and uncertainties, many of which are beyondCorteva's control. While the list of factors presented below is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect onCorteva's business, results of operations and financial condition. Some of the important factors that could causeCorteva's actual results to differ materially from those projected in any such forward-looking statements include: (i) failure to obtain or maintain the necessary regulatory approvals for some ofCorteva's products; (ii) failure to successfully develop and commercializeCorteva's pipeline; (iii) effect of the degree of public understanding and acceptance or perceived public acceptance ofCorteva's biotechnology and other agricultural products; (iv) effect of changes in agricultural and related policies of governments and international organizations; (v) effect of competition and consolidation inCorteva's industry; (vi) effect of competition from manufacturers of generic products; (vii) costs of complying with evolving regulatory requirements and the effect of actual or alleged violations of environmental laws or permit requirements; (viii) effect of climate change and unpredictable seasonal and weather factors; (ix) risks related to oil and commodity markets; (x) competitor's establishment of an intermediary platform for distribution ofCorteva's products; (xi) impact ofCorteva's dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (xii) effect of industrial espionage and other disruptions toCorteva's supply chain, information technology or network systems; (xiii) effect of volatility inCorteva's input costs; (xiv) failure to realize the anticipated benefits of the internal reorganizations taken by DowDuPont in connection with the spin-off ofCorteva and other cost savings initiatives; (xv) failure to raise capital through the capital markets or short-term borrowings on terms acceptable toCorteva ; (xvi) failure ofCorteva's customers to pay their debts toCorteva , including customer financing programs; (xvii) increases in pension and other post-employment benefit plan funding obligations; (xviii) risks related to the indemnification obligations of legacy EID liabilities in connection with the separation ofCorteva ; (xix) effect of compliance with laws and requirements and adverse judgments on litigation; (xx) risks related toCorteva's global operations; (xxi) failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions; (xxii) risks related to COVID-19; (xxiii) risks related to activist stockholders; (xxiv)Corteva's intellectual property rights or defend against intellectual property claims asserted by others; (xxv) effect of counterfeit products; (xxvi)Corteva's dependence on intellectual property cross-license agreements; (xxvii) other risks related to the separation from DowDuPont; (xxviii) risks related to the Biden executive orderPromoting Competition in the American Economy; and (xxix) risks associated with our CEO transition. Additionally, there may be other risks and uncertainties thatCorteva is unable to currently identify or thatCorteva does not currently expect to have a material impact on its business. Where, in any forward-looking statement or other estimate, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations ofCorteva's management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished.Corteva disclaims and does not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements or other estimates is included in the "Risk Factors" section ofCorteva's 2020 Annual Report, as modified by subsequent Quarterly Reports on Forms 10-Q and Current Reports on Form 8-K. 42 -------------------------------------------------------------------------------- Table of Contents Recent Developments Global Economic Conditions OnMarch 11, 2020 , theWorld Health Organization ("WHO") declared the novel coronavirus disease ("COVID-19") a pandemic. The global health crisis caused by COVID-19 and the related government actions and stay at home orders have negatively impacted economic activity and increased political instability across the globe. Since the crisis beganCorteva has engaged its global Integrated Health Services Pandemic & Infectious Disease Team to take actions and implement guidelines and protocols in response to the COVID-19 pandemic described in its 2020 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, COVID-19 Pandemic. As COVID-19 becomes more contained, a rebound in economic activity has occurred, although varying regionally depending on government policies and regulations and the rate, pace, and effectiveness of the containment efforts deployed by various national, state, and local governments, vaccination rates, and the ability of COVD-19 variants to overcome containment efforts, available vaccines, and medical treatments. These varying levels of recovery have created a misalignment of supply and demand for labor, transportation and logistic services, energy, raw materials and other inputs, which have been exasperated in certain regions by one-time events, including extreme weather events.Corteva will continue to actively monitor the situation and may take further actions altering its business operations that it determines are in the best interests of its stakeholders, or as required by federal, state, or local authorities. These alterations or modifications may impact the company's business, including the effects on its customers, employees, and prospects, or on its financial results through 2022. With the ongoing volatility in global markets, the company will continue to monitor various factors that could impact earnings and cash flows of the business, including, but not limited to the inflation of, or unavailability of raw material inputs and transportation and logistics services, currency fluctuations, expectations of future planted area (as influenced by consumer demand, ethanol markets and government policies and regulations), trade and purchasing of commodities globally and relative commodity prices. 2021 Restructuring Actions OnFebruary 1, 2021 ,Corteva approved restructuring actions designed to right-size and optimize footprint and organizational structure according to the business needs in each region with the focus on driving continued cost improvement and productivity. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately$150 million , comprised of approximately$65 million of severance and related benefit costs,$35 million of asset related charges,$10 million of asset retirement obligations and$40 million of costs related to contract terminations (contract terminations includes early lease terminations). Future cash payments related to this charge are anticipated to be approximately$75 million , primarily related to the payment of severance and related benefits, asset retirement obligations, and costs related to contract terminations. The restructuring actions associated with this charge are expected to be substantially complete in 2021. During the nine months endedSeptember 30, 2021 , the company recorded pre-tax charges of$127 million , recognized in restructuring and asset related charges - net in the company's interim Consolidated Statement of Operations, primarily related to severance and related benefit costs and asset related charges and contract termination charges. The 2021 Restructuring Actions are expected to contribute to the company's ongoing cost and productivity improvement efforts through achieving an estimated$70 million of savings on a run rate basis by 2023. See Note 5 - Restructuring and Asset Related Charges - Net, to the interim Consolidated Financial Statements for additional information. Share Buyback Plan OnAugust 5, 2021 ,Corteva, Inc. announced that its Board of Directors authorized a$1.5 billion share repurchase program to purchaseCorteva, Inc.'s common stock, par value$0.01 per share, without an expiration date ("2021 Share Buyback Plan"). The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other factors. In connection with the 2021 Share Buyback Plan, the company purchased and retired 1,167,000 shares during the three months endedSeptember 30, 2021 in the open market for a total cost of$50 million . OnJune 26, 2019 ,Corteva, Inc. announced that its Board of Directors authorized a$1 billion share repurchase program to purchaseCorteva, Inc.'s common stock, par value$0.01 per share, without an expiration date ("2019 Share Buyback Plan"). The company completed the 2019 Share Buyback Plan during the third quarter of 2021. In connection with the 2019 Share Buyback Plan, the company purchased and retired 3,408,000 shares and 15,378,000 shares during the three and nine months endedSeptember 30, 2021 , respectively, in the open market for a total cost of$150 million and$700 million , respectively. During the three and nine months endedSeptember 30, 2020 , the company purchased and retired 1,160,000 shares and 3,025,000 shares, respectively, in the open market for a total cost of$33 million and$83 million , respectively. 43
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Overview
The following is a summary of results from continuing operations for the three
months ended
•The company reported net sales of
•Cost of goods sold ("COGS") totaled $1,558 million in the third quarter of
2021, up from $1,297 million in the third quarter of 2020, primarily driven by
increased volumes and higher input costs, freight and logistics, which are
primarily market-driven, partially offset by ongoing cost and productivity
actions.
•Restructuring and asset related charges - net were $26 million in the third
quarter of 2021, a decrease from $49 million in the third quarter of 2020. The
charges for the three months ended September 30, 2021 primarily relate to $17
million related to severance and related benefit costs and asset related charges
associated with 2021 Restructuring Actions and $5 million of non-cash
accelerated prepaid royalty amortization expense related to Roundup Ready 2
Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
•The provision for income taxes on continuing operations for the three months
ended September 30, 2021 includes net tax benefits of $32 million associated
with changes in accruals for certain prior year tax positions in various
jurisdictions, including a $22 million tax benefit associated with U.S. research
and development tax credits.
•Income (loss) from continuing operations after income taxes was
•Operating EBITDA was$(51) million for the three months endedSeptember 30, 2021 , improved from a loss of$(179) million for the three months endedSeptember 30, 2020 primarily driven by volume gains, strong price execution, and lower bad debt expense which more than offset cost headwinds. The company experienced cost headwinds in the quarter including higher input costs, freight and logistics, which are primarily market-driven. The headwinds are partially offset by the company's ongoing execution on its productivity programs. Refer to page 57 for further discussion of the company's Non-GAAP financial measures.
The following is a summary of results from continuing operations for the nine
months ended
•The company reported net sales of$12,176 million , up 11 percent versus the same period last year, reflecting a 6 percent increase in volume, a 3 percent increase in price and a 2 percent favorable impact from currency.
•COGS totaled
•Restructuring and asset related charges - net were$261 million in the nine months endedSeptember 30, 2021 , a decrease from$298 million in the nine months endedSeptember 30, 2020 . The charges for the nine months endedSeptember 30, 2021 primarily relate to$127 million related to severance and related benefit costs, asset related charges, and contract termination charges associated with 2021 Restructuring Activities and$124 million of non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. •The provision for income taxes on continuing operations for the nine months endedSeptember 30, 2021 includes net tax benefits of$58 million associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a$22 million tax benefit associated withU.S. research and development tax credits.
•Income from continuing operations after income taxes was
•Operating EBITDA was$2,314 million , up from$1,851 million for the nine months endedSeptember 30, 2020 , primarily driven by continued penetration of new products, strong price execution, volume gains, favorable mix, and a favorable impact from currency, which more than offset cost headwinds. The company experienced cost headwinds, including higher input costs, freight and logistics, which are primarily market-driven. The headwinds are partially 44 -------------------------------------------------------------------------------- Table of Contents offset by the company's ongoing execution on its productivity programs. Refer to page 57 for further discussion of the company's Non-GAAP financial measures.
In addition to the financial highlights above, the following events occurred
during or subsequent to the nine months ended
•The company returned approximately$1 billion to shareholders during the nine months endedSeptember 30, 2021 under its previously announced share repurchase programs and through common stock dividends. 45
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Selected Financial Data
Three Months Ended Nine Months Ended
In millions, except per share amounts September 30 ,
2021 2020 2021 2020
Net sales $ 2,371 $ 1,863 $ 12,176 $ 11,010
Cost of goods sold $ 1,558 $ 1,297 $ 6,988 $ 6,395
Percent of net sales 66 % 70 % 57 % 58 %
Research and development expense$ 297 $ 284 $ 871 $ 837 Percent of net sales 13 % 15 % 7 % 8 % Selling, general and administrative expenses$ 672 $ 597 $ 2,403 $ 2,319 Percent of net sales 28 % 32 % 20 % 21 %
Effective tax rate on continuing operations (350.0) % 23.1 %
20.7 % 11.8 %
Income (loss) from continuing operations after income taxes $ 36$ (390)
Income (loss) from continuing operations
available to
Basic earnings (loss) per share of common stock from continuing operations$ 0.05 $ (0.52) $ 2.25 $ 0.85 Diluted earnings (loss) per share of common stock from continuing operations$ 0.05 $ (0.52)
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Table of Contents Results of OperationsNet Sales Net sales were$2,371 million and$1,863 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase, led byLatin America andNorth America , was primarily driven by a 17 percent increase in volume versus the prior period. Volume increases were driven by continued penetration of new technology and strong execution globally. Price and currency represented increases of 7 percent and 3 percent, respectively. Three Months Ended September 30, 2021 2020 Net Sales Net Sales ($ Millions) % ($ Millions) % Worldwide$ 2,371 100 %$ 1,863 100 % North America1 590 25 % 487 26 % EMEA2 390 17 % 315 17 % Latin America 1,097 46 % 805 43 % Asia Pacific 294 12 % 256 14 % Q3 2021 vs. Q3 2020 Percent Change Due To: Net Sales Change Price & Portfolio / $ In millions $ % Product Mix Volume Currency Other North America1 $ 103 21 % 9 % 11 % 1 % - % EMEA2 75 24 % 2 % 17 % 5 % - % Latin America 292 36 % 11 % 20 % 5 % - % Asia Pacific 38 15 % - % 16 % 1 % (2) % Total $ 508 27 % 7 % 17 % 3 % - % 1.RepresentsU.S. &Canada . 2.Europe,Middle East , andAfrica ("EMEA"). Net sales were$12,176 million and$11,010 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase was primarily driven by a 6 percent increase in volume versus the prior year period. Gains in both segments were primarily driven by ongoing penetration of new technology. Price and currency represented increases of 3 percent and 2 percent, respectively. Higher prices reflect ongoing execution on a price-for-value strategy globally and pricing for higher raw material and logistical costs. Nine Months Ended September 30, 2021 2020 Net Sales Net Sales ($ Millions) % ($ Millions) %
Worldwide$ 12,176 100 %$ 11,010 100 % North America1 6,175 51 % 5,818 53 % EMEA2 2,702 22 % 2,425 22 % Latin America 2,203 18 % 1,754 16 % Asia Pacific 1,096 9 % 1,013 9 % 47
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Nine Months 2021 vs. Nine Months
2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
North America1 $ 357 6 % 1 % 4 % 1 % - %
EMEA2 277 11 % 4 % 3 % 4 % - %
Latin America 449 26 % 10 % 17 % (1) % - %
Asia Pacific 83 8 % 2 % 5 % 3 % (2) %
Total $ 1,166 11 % 3 % 6 % 2 % - %
1.Represents U.S. & Canada .
2.Europe, Middle East , and Africa ("EMEA").
Cost of Goods Sold
COGS was $1,558 million (66 percent of net sales) and $1,297 million (70 percent
of net sales) for the three months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by increased volumes in both
seed and crop protection, higher input costs, freight and logistics, which are
primarily market-driven, and unfavorable currency, partially offset by ongoing
cost and productivity actions. The market driven trends are expected to continue
as global supply chains and logistics remain constrained across industries.
COGS was $6,988 million (57 percent of net sales) and $6,395 million (58 percent
of net sales) for the nine months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by higher input costs, freight
and logistics, which are primarily market-driven, increased volumes in both seed
and crop protection, and unfavorable currency, partially offset by ongoing cost
and productivity actions.
Research and Development Expense
R&D expense was $297 million (13 percent of net sales) and $284 million (15
percent of net sales) for the three months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by increases in contract labor,
variable compensation and unfavorable currency, partially offset by lower
salaries and ongoing cost and productivity actions.
R&D expense was $871 million (7 percent of net sales) and $837 million (8
percent of net sales) for the nine months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by increases in contract labor
and field supplies, increases in variable compensation, and unfavorable
currency, partially offset by lower salaries and ongoing cost and productivity
actions.
Selling, General and Administrative Expenses
SG&A expenses were $672 million (28 percent of net sales) and $597 million (32
percent of net sales) for the three months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by increases in commission
expense and variable compensation and unfavorable currency, partially offset by
lower bad debt expense and ongoing cost and productivity actions.
SG&A expenses were $2,403 million (20 percent of net sales) and $2,319 million
(21 percent of net sales) for the nine months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by increases in commission
expense and variable compensation, and unfavorable currency, partially offset by
a decrease in bad debt expense, lower functional spend and ongoing cost and
productivity actions.
Amortization of Intangibles
Intangible asset amortization was $180 million and $162 million for the three
months ended September 30, 2021 and 2020, respectively, and $543 million and
$501 million for the nine months ended September 30, 2021 and 2020,
respectively. The increase was primarily driven by amortization of the trade
name asset that was changed from indefinite lived intangible asset to definite
lived in the fourth quarter of 2020. See Note 11 - Other Intangible Assets, to
the interim Consolidated Financial Statements for additional information.
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Restructuring and Asset Related Charges - Net
Restructuring and asset related charges - net were $26 million and $49 million
for the three months ended September 30, 2021 and 2020, respectively. The
charges in the third quarter of 2021 primarily relate to severence and related
benefit costs and asset related charges associated with 2021 Restructuring
Actions and non-cash accelerated prepaid royalty amortization expense related to
Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits
under the Execute to Win Productivity Program.
The charges in the third quarter of 2020 related to non-cash accelerated prepaid
royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready
2 Xtend® herbicide tolerance traits and asset related charges under both the
Execute to Win Productivity Program and the DowDuPont Cost Synergy Program (the
"Synergy Program").
Restructuring and asset related charges - net were $261 million and $298 million
for the nine months ended September 30, 2021 and 2020, respectively. The charges
during the nine months ended September 30, 2021 primarily related to severance
and related benefit costs, asset related charges, and contract termination
charges associated with 2021 Restructuring Actions and non-cash accelerated
prepaid royalty amortization expense related to Roundup Ready 2 Yield® and
Roundup Ready 2 Xtend® herbicide tolerance traits under the Execute to Win
Productivity Program.
The charges during the nine months ended September 30, 2020 primarily related to
non-cash accelerated prepaid royalty amortization expense related to Roundup
Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits and asset
related charges and severance and related benefit costs under the Execute to Win
Productivity Program.
See Note 5 - Restructuring and Asset Related Charges, Net, to the interim Consolidated Financial Statements for additional information.
Other Income - Net Other income - net was$378 million and$30 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase was primarily due to an increase in non-operating pension and other post-employment benefit credit, driven by theDecember 2020 OPEB plan amendments as discussed in the 2020 Annual Report, a mark-to-market gain recognized relating to equity securities, and a net exchange gain during the three months endedSeptember 30, 2021 compared to a net exchange loss during the three months endedSeptember 30, 2020 . Other income - net was$1,013 million and$120 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase was primarily due to an increase in non-operating pension and other post-employment benefit credit, driven by theDecember 2020 OPEB plan amendments as discussed in the 2020 Annual Report, mark-to-market gains recognized relating to equity securities, and a decrease in net exchange losses. In addition, Other income - net for the nine months endedSeptember 30, 2020 includes a$(53) million loss on the sale of the La Porte site. The company routinely uses forward exchange contracts to offset its net exposures, by currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in other income - net and the related tax impact is recorded in (benefit from) provision for income taxes on continuing operations in the interim Consolidated Statement of Operations.
See Note 6 - Supplementary Information, to the interim Consolidated Financial Statements for additional information.
Interest Expense Interest expense was$8 million and$11 million for the three months endedSeptember 30, 2021 and 2020, respectively. The change was primarily driven by lower average short-term borrowings and lower interest rates. Interest expense was$22 million and$35 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The change was primarily driven by lower average short-term borrowings and lower interest rates, partially offset by higher average long-term borrowings. Benefit from (Provision for) Income Taxes on Continuing Operations The company's benefit from income taxes on continuing operations was$(28) million for the three months endedSeptember 30, 2021 on pre-tax income from continuing operations of$8 million , resulting in an effective tax rate of (350.0) percent. The effective tax rate was favorably impacted by$32 million of net tax benefits associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a$22 million tax benefit associated withU.S. research and development tax credits. The favorable impacts were partially offset by unfavorable geographic mix of earnings. 49 -------------------------------------------------------------------------------- Table of Contents The company's benefit from income taxes on continuing operations was$(117) million for the three months endedSeptember 30, 2020 on pre-tax loss from continuing operations of$(507) million , resulting in an effective tax rate of 23.1 percent. The effective tax rate was favorably impacted by geographic mix of earnings, the tax impact of certain net exchange gains recognized on the re-measurement of the net monetary asset positions which were not taxable in their local jurisdictions, as well as the tax impact of restructuring and asset related charges. The company's provision for income taxes on continuing operations was$434 million for the nine months endedSeptember 30, 2021 on pre-tax income from continuing operations of$2,101 million , resulting in an effective tax rate of 20.7 percent. The effective tax rate was favorably impacted by$58 million of net tax benefits associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a$22 million tax benefit associated withU.S. research and development tax credits. The favorable impacts were partially offset by unfavorable geographic mix of earnings, as well as the tax impact 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 provision for income taxes on continuing operations was$88 million for the nine months endedSeptember 30, 2020 on pre-tax income from continuing operations of$745 million , resulting in an effective tax rate of 11.8 percent. The effective tax rate was favorably impacted by geographic mix of earnings, as well as$26 million of net tax benefits associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a tax benefit of$14 million related to a return to accrual adjustment to reflect a change in estimate on the impact of a tax law enactment in a foreign jurisdiction. In addition, during the nine months endedSeptember 30, 2020 , the company recognized a tax benefit of$51 million to provision for income taxes on continuing operations related to a return to accrual adjustment associated with an elective change in accounting method for the 2019 tax year impact of The Act's foreign tax provisions. The effective tax rate was unfavorably impacted by the tax impact of certain net exchange losses recognized on the re-measurement of the net monetary asset positions which were not tax-deductible in their local jurisdictions, as well as tax charges related to the issuance of stock-based compensation. (Loss) Income from Discontinued Operations After Tax (Loss) income from discontinued operations after tax was$(4) million and($59) million for the three and nine months endedSeptember 30, 2021 , respectively, and$0 million and$1 million for the three and nine months endedSeptember 30, 2020 . The three and nine months endedSeptember 30, 2021 primarily reflects charges relating to PFAS environmental remediation activities for legacy operations at the Fayetteville Works facility and the settlement with theState of Delaware for PFAS related natural resource damage claims. Refer to Note 13 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements for additional information. EID Analysis of Operations As discussed in Note 1 - Basis of Presentation, to the EID interim Consolidated Financial Statements, EID is a subsidiary ofCorteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only and is presented to provide an Analysis of Operations, only for the differences betweenEID and Corteva, Inc. Interest Expense EID's interest expense was$19 million and$30 million for the three months endedSeptember 30, 2021 and 2020, respectively, and$61 million and$117 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The change was primarily driven by the items noted on page 49, under the header "Interest Expense," and by lower average borrowings on the related party loan betweenEID and Corteva, Inc. See Note 2 - Related Party Transactions, to the EID interim Consolidated Financial Statements for further information. (Benefit from) Provision for Income Taxes on Continuing Operations EID's benefit from income taxes on continuing operations was$(30) million for the three months endedSeptember 30, 2021 on pre-tax loss from continuing operations of$(3) million , resulting in an effective tax rate of 1,000.0 percent. EID's benefit from income taxes on continuing operations was$(122) million for the three months endedSeptember 30, 2020 on pre-tax loss from continuing operations of$(526) million , resulting in an effective tax rate of 23.2 percent. EID's provision for income taxes on continuing operations was$425 million for the nine months endedSeptember 30, 2021 on pre-tax income from continuing operations of$2,062 million , resulting in an effective tax rate of 20.6 percent. EID's provision for income taxes on continuing operations was$68 million for the nine months endedSeptember 30, 2020 on pre-tax income from continuing operations of$663 million , resulting in an effective tax rate of 10.3 percent. EID's effective tax rates for the three and nine months endedSeptember 30, 2021 and 2020 were driven by the items noted on page 49, under the header "(Benefit from) Provision for Income Taxes on Continuing Operations" and a tax benefit related to 50 -------------------------------------------------------------------------------- Table of Contents the interest expense incurred on the related party loan betweenEID and Corteva, Inc. See Note 2 - Related Party Transactions, to the EID interim Consolidated Financial Statements for further information. 51 -------------------------------------------------------------------------------- Table of Contents Corporate Outlook The company is increasing its net sales and Operating Earnings Per Share outlook for 2021. Net sales is now expected to be in the range of$15.5 billion and$15.7 billion and Operating Earnings EPS is now expected to be in the range of$2.05 and$2.15 per share for the full year 2021. Additionally, the company is affirming its previous Corporate Outlook on Operating EBITDA, which is expected to be in the range of$2.5 billion and$2.6 billion for the full year 2021.Corteva is not able to reconcile its forward-looking non-GAAP financial measures to its most comparableU.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 58 for Significant Items recorded in the three and nine months endedSeptember 30, 2021 and 2020). Recent Accounting Pronouncements See Note 2 - Recent Accounting Guidance, to the interim Consolidated Financial Statements for a description of recent accounting pronouncements. 52
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Segment Reviews The company operates in two reportable segments: Seed and Crop Protection.
Seed
The company's seed segment is a global leader in developing and supplying advanced germplasm and traits that produce optimum yield for farms around the world. The segment is a leader in many of the company's key seed markets, includingNorth America corn and soybeans,Europe corn and sunflower, as well asBrazil ,India ,South Africa andArgentina corn. The segment offers trait technologies that improve resistance to weather, disease, insects and herbicides used to control weeds, and trait technologies that enhance food and nutritional characteristics. In addition, the segment provides digital solutions that assist farmer decision-making with a view to optimize product selection and, ultimately, help maximize yield and profitability. Crop Protection The crop protection segment serves the global agricultural input industry with products that protect against weeds, insects and other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-applied technologies. The segment offers crop protection solutions that provide farmers the tools they need to improve productivity and profitability, and help keep fields free of weeds, insects and diseases. The segment is a leader in global herbicides, insecticides, nitrogen stabilizers and pasture and range management herbicides. Summarized below are comments on individual segment net sales and segment operating EBITDA for the three and nine months endedSeptember 30, 2021 compared with the same period in 2020. The company defines segment operating EBITDA as earnings (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating costs-net, foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Non-operating costs-net consists of non-operating pension and other post-employment benefit (OPEB) credits, tax indemnification adjustments and environmental remediation and legal costs associated with legacy EID businesses and sites. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, betweenCorteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense. BeginningJanuary 1, 2021 , the company excludes net unrealized gains or losses from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. See Note 18 - Segment Information, to the interim Consolidated Financial Statements for details related to significant pre-tax benefits (charges) excluded from segment operating EBITDA. All references to prices are based on local price unless otherwise specified.
A reconciliation of segment operating EBITDA to income from continuing
operations after income taxes for the three and nine months ended
Three Months Ended Nine Months Ended
Seed September 30, September 30,
In millions 2021 2020 2021 2020
Net sales $ 738 $ 523 $ 7,010 $ 6,516
Segment operating EBITDA $ (217) $ (282) $ 1,523 $ 1,255
Seed Q3 2021 vs. Q3 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
North America $ 71 73 % 38 % 33 % 2 % - %
EMEA 36 31 % 4 % 18 % 9 % - %
Latin America 88 36 % 23 % 9 % 4 % - %
Asia Pacific 20 32 % (1) % 33 % - % - %
Total $ 215 41 % 19 % 18 % 4 % - %
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Seed Q3 2021 vs. Q3 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
Corn $ 134 44 % 23 % 17 % 4 % - %
Soybeans 41 35 % 20 % 11 % 4 % - %
Other oilseeds 32 52 % 6 % 44 % 2 % - %
Other 8 19 % 8 % 9 % 2 % - %
Total $ 215 41 % 19 % 18 % 4 % - %
Nine Months 2021 vs. Nine Months
Seed 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
North America $ 192 4 % - % 3 % 1 % - %
EMEA 136 11 % 5 % 3 % 3 % - %
Latin America 174 26 % 14 % 16 % (4) % - %
Asia Pacific (8) (3) % 1 % (5) % 1 % - %
Total $ 494 8 % 3 % 4 % 1 % - %
Nine Months 2021 vs. Nine Months
Seed 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
Corn $ 281 7 % 4 % 2 % 1 % - %
Soybeans 112 8 % - % 7 % 1 % - %
Other oilseeds 132 25 % 4 % 18 % 3 % - %
Other (31) (8) % (4) % (5) % 1 % - %
Total $ 494 8 % 3 % 4 % 1 % - %
Seed
Seed net sales were $738 million in the third quarter of 2021, up 41 percent
from $523 million in the third quarter of 2020. The increase was due to a 19
percent increase in price, an 18 percent increase in volume, and a 4 percent
favorable impact from currency.
The increase in price was led by strong execution in Latin America coupled with
fewer corn replant units in North America . Higher volumes were driven by lower
corn and cotton returns in North America , coupled with higher other seed sales
in India . These volume gains were partially offset by robust early demand for
corn in Latin America and an early settlement of the canola season in Canada ,
which shifted approximately $80 million of sales into the second quarter.
Favorable currency impacts were primarily driven by the South African Rand and
the Brazilian Real.
Segment operating EBITDA was $(217) million in the third quarter of 2021, up 23
percent from $(282) million in the third quarter of 2020. Continued price
execution, higher volumes, lower royalties, and ongoing cost and productivity
actions more than offset higher costs including commodity costs and SG&A.
Seed net sales were $7,010 million for the first nine months of 2021, up 8
percent from $6,516 million for the first nine months of 2020. The increase was
due to a 4 percent increase in volume, a 3 percent increase in price and a 1
percent favorable impact from currency.
The increase in volume was driven by higher soybean and corn sales in North
America , market share gains in Brazil Safrinha, and canola growth in Canada .
Price gains were driven by strong adoption of new Seed technology and price
execution in Latin America and EMEA, with corn price up 4 percent globally.
These gains were partially offset by competitive pricing pressure in North
America soybeans, where price was down 3 percent. Favorable currency impacts
primarily from the Canadian Dollar and the Euro more than offset unfavorable
impacts from the Brazilian Real.
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Segment operating EBITDA was $1,523 million for the first nine months of 2021,
up 21 percent from $1,255 million for the first nine months of 2020. Continued
price execution, volume gains, lower royalties, ongoing cost and productivity
actions, and lower bad debt expense more than offset higher input costs and
higher freight and warehousing costs. Segment Operating EBITDA margin improved
by more than 240 basis points versus the prior-year period.
Three Months Ended Nine Months Ended
Crop Protection September 30, September 30,
In millions 2021 2020 2021 2020
Net sales $ 1,633 $ 1,340 $ 5,166 $ 4,494
Segment Operating EBITDA $ 206 $ 130 $ 897 $ 677
Crop Protection Q3 2021 vs. Q3 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
North America $ 32 8 % 2 % 6 % - % - %
EMEA 39 20 % 1 % 16 % 3 % - %
Latin America 204 36 % 5 % 26 % 5 % - %
Asia Pacific 18 9 % - % 10 % 2 % (3) %
Total $ 293 22 % 3 % 16 % 3 % - %
Crop Protection Q3 2021 vs. Q3 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
Herbicides $ 199 34 % 7 % 24 % 3 % - %
Insecticides 21 5 % - % 3 % 2 % - %
Fungicides 78 30 % 3 % 23 % 5 % (1) %
Other (5) (5) % (10) % 4 % 1 % - %
Total $ 293 22 % 3 % 16 % 3 % - %
Nine Months 2021 vs. Nine Months
Crop Protection 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
North America $ 165 11 % 3 % 7 % 1 % - %
EMEA 141 12 % 2 % 4 % 6 % - %
Latin America 275 25 % 7 % 18 % - % - %
Asia Pacific 91 13 % 2 % 9 % 5 % (3) %
Total $ 672 15 % 4 % 9 % 3 % (1) %
Nine Months 2021 vs. Nine Months
Crop Protection 2020 Percent Change Due To:
Net Sales Change Price & Portfolio /
$ In millions $ % Product Mix Volume Currency Other
Herbicides $ 422 18 % 4 % 11 % 3 % - %
Insecticides 43 4 % 3 % (1) % 2 % - %
Fungicides 197 28 % 4 % 22 % 5 % (3) %
Other 10 4 % (3) % 7 % - % - %
Total $ 672 15 % 4 % 9 % 3 % (1) %
55-------------------------------------------------------------------------------- Table of Contents Crop Protection Crop protection net sales were$1,633 million in the third quarter of 2021, up 22 percent from$1,340 million in the third quarter of 2020. The increase was due to a 16 percent increase in volume, 3 percent increase in price, and a 3 percent favorable impact from currency. Volume growth was driven by continued penetration of new products, including IsoclastTM insecticide and ArylexTM herbicide, coupled with strong customer demand and an accelerated start to the season inLatin America , which shifted an estimated$100 million in sales from the fourth quarter. Gains were partially offset by an approximate$70 million impact from the decision to phase out select low-margin products. The increase in price was driven by gains inLatin America . Favorable currency impacts were primarily from the Brazilian Real. Segment operating EBITDA was$206 million in the third quarter of 2021, up 58 percent from$130 million in the third quarter of 2020. Volume gains from new products, favorable mix, productivity actions, and continued pricing execution more than offset higher costs, including raw materials and SG&A. Crop protection net sales were$5,166 million for the first nine months of 2021, up 15 percent from$4,494 million for the first nine months of 2020. The increase was due to a 9 percent increase in volume, a 4 percent increase in price and a 3 percent favorable impact from currency, partially offset by a 1 percent unfavorable portfolio impact. Volume growth was led by continued penetration of new products, including ArylexTM herbicide and Isoclast™ insecticide. These volume gains were partially offset by an approximate$200 million impact from our decision to phase out select low-margin products. The increase in price was largely driven by gains inLatin America andNorth America , including pricing for higher raw material and logistical costs. Favorable currency impacts were primarily from the Euro. The portfolio impact was driven by prior-year divestitures inAsia Pacific .
Segment operating EBITDA was
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Non-GAAP Financial Measures The company presents certain financial measures that do not conform toU.S. GAAP and are considered non-GAAP measures. These measures include Operating EBITDA and operating earnings per share. Management uses these measures internally for planning and forecasting, including allocating resources and evaluating incentive compensation. Management believes that these non-GAAP measures best reflect the ongoing performance of the company during the periods presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the company and a more useful comparison of year over year results. These non-GAAP measures supplement the company'sU.S. GAAP disclosures and should not be viewed as an alternative toU.S. GAAP measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for these non-GAAP measures toU.S. GAAP are provided below. Operating EBITDA is defined as earnings (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating (benefits) costs - net, foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Non-operating (benefits) costs - net consists of non-operating pension and OPEB credits, tax indemnification adjustments and environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, betweenCorteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense. Operating earnings per share is defined as "Earnings per common share from continuing operations - diluted" excluding the after-tax impact of significant items, the after-tax impact of non-operating (benefits) costs - net, the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont, and the after-tax impact of net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. Although amortization of the company's intangible assets is excluded from these non-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in amortization of additional intangible assets. Net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) from changes in fair value of certain undesignated foreign currency derivative contracts. Upon settlement, which is within the same calendar year of execution of the contract, the realized gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in the relevant non-GAAP financial measures, allowing quarterly results to reflect the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair value volatility.
Reconciliation of Income (Loss) from Continuing Operations after Income Taxes to Operating EBITDA
Three Months Ended Nine Months Ended
September 30 ,September 30 , (In millions) 2021
2020 2021 2020
Income (loss) from continuing operations after income taxes (GAAP)
$ 36 $
(390)
(28) (117) 434 88 Income (loss) from continuing operations before income taxes (GAAP)
8 (507) 2,101 745
Depreciation and amortization 309 285 926 868
Interest income (19) (11) (58) (38)
Interest expense 8 11 22 35
Exchange (gains) losses - net (2) 67 47 127
Non-operating benefits - net (315) (73) (941) (237)
Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges1
(19) 3
Significant items charge (21) 49 214 351
Operating EBITDA (Non-GAAP) $ (51) $ (179) $ 2,314 $ 1,851
1.Effective January 1, 2021 , on a prospective basis, the company excludes net
unrealized gain or loss from mark-to-market activity for certain foreign
currency derivative instruments that do not qualify for hedge accounting. For
the three and nine months ended September 30, 2020 , the unrealized
mark-to-market (loss) gain was $(8) million and $19 million , respectively.
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Significant Items
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2021 2020 2021 2020
Restructuring and asset related charges - net
47 - 47 -
Loss on divestiture - - - (53)
Total pretax significant items benefit (charge) 21 (49) (214) (351)
Total tax (provision) benefit impact of significant items1
(4) 22 47 81
Tax only significant item benefit2 - - - 10
Total significant items benefit (charge), after tax
1.Unless specifically addressed above, the income tax effect on significant items was calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. 2.The tax only significant item benefits for the nine months endedSeptember 30, 2020 are primarily related to a benefit due to an elective change in accounting method that alters the 2019 impact of the business separation on The Act's foreign tax provisions and a state tax valuation allowance in theU.S. based on a change in judgment about the realizability of a deferred tax asset.
Reconciliation of Income (Loss) from Continuing Operations Attributable to
Three Months Ended Nine Months Ended
September 30 , September 30 ,
(In millions) 2021 2020 2021 2020
Income (loss) from continuing operations attributable
to
$ 34 $ (392) $ 1,659 $ 639 Less: Non-operating benefits - net, after tax 242 56 716 180 Less: Amortization of intangibles (existing as of Separation), after tax (140)
(126) (423) (377)
Less: Mark-to-market gains (losses) on certain foreign currency contracts not designated as hedges, after tax1 15
(2)
Less: Significant items benefit (charge), after tax 17 (27) (167) (260)
Operating (Loss) Earnings (Non-GAAP) $ (100) $ (295) $ 1,535 $ 1,096
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Earnings (loss) per share of common stock from
continuing operations - diluted (GAAP) $ 0.05 $ (0.52) $ 2.23 $ 0.85
Less: Non-operating benefits - net, after tax 0.33 0.08 0.96 0.24
Less: Amortization of intangibles (existing as of
Separation), after tax (0.18) (0.17) (0.57) (0.50)
Less: Mark-to-market gains on certain foreign currency contracts not designated as hedges, after tax1
0.02 -
Less: Significant items benefit (charge), after tax 0.02 (0.04) (0.22) (0.35)
Operating (Loss) Earnings Per Share (Non-GAAP) $ (0.14) $ (0.39) $ 2.06 $ 1.46
Diluted Shares Outstanding (in millions) 739.5 749.5 744.0 752.0
1.Effective January 1, 2021 , on a prospective basis, the company excludes net
unrealized gain or loss from mark-to-market activity for certain foreign
currency derivative instruments that do not qualify for hedge accounting. For
the three and nine months ended September 30, 2020 , the unrealized
mark-to-market (loss) gain was $(8) million and $19 million , respectively.
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Liquidity and Capital Resources
Information related to the company's liquidity and capital resources can be
found in the company's 2020 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, 2021 .
(In millions) September 30, 2021 December 31, 2020 September 30, 2020
Cash, cash equivalents and marketable
securities $ 2,882 $ 3,795 $ 2,920
Total debt $ 2,473 $ 1,105 $ 3,244
The company's cash, cash equivalents and marketable securities at September 30,
2021 , December 31, 2020 , and September 30, 2020 were $2,882 million , $3,795
million and $2,920 million , respectively. Total debt at September 30, 2021 ,
December 31, 2020 , and September 30, 2020 was $2,473 million , $1,105 million ,
and $3,244 million , respectively. The increase in debt balances from December
31, 2020 was primarily due to funding the company's seasonal working capital
needs and capital expenditures. 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, and pension obligations. 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 $6.4 billion at September 30, 2021 ,
December 31, 2020 , and September 30, 2020 , respectively, in committed and
uncommitted unused credit lines. In addition to the unused credit facilities,
the company has a $1 billion 2021 Repurchase Facility (as defined below). 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
nondiscretionary contributions to certain benefit plans, severance payments,
repayment and refinancing of debt, working capital, capital expenditures,
repurchases and redemptions of securities, and funding Corteva's costs and
expenses.
In March 2020 , the company drew down $500 million under the three year revolving
credit facility to finance its short term liquidity needs as a result of the
volatility and increased borrowing costs of commercial paper resulting from the
unstable market conditions caused by the COVID-19 pandemic, and repaid that
borrowing in full in June 2020 . 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.
The Revolving Credit Facilities also 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, 2021 the company was
in compliance with these covenants.
In May 2020 , EID issued $500 million of 1.70 percent Senior Notes due 2025 and
$500 million of 2.30 percent Senior Notes due 2030 (the May 2020 Debt Offering).
The proceeds of this offering are intended to be used for general corporate
purposes.
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 2021 Repurchase Facility, the
Revolving Credit Facilities, and factoring.
In February 2021 , in line with seasonal working capital requirements, the
company entered into a committed receivable repurchase agreement of up to $1.0
billion (the "2021 Repurchase Facility"), which expires in December 2021 . Under
the 2021 Repurchase Facility, Corteva may sell a portfolio of available and
eligible outstanding customer notes receivables to participating institutions
and simultaneously agree to repurchase at a future date. See further discussion
of this facility in Note 12 - Short-Term Borrowings, Long-Term Debt and
Available Credit Facilities, to the interim Consolidated Financial Statements.
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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,
2021 , December 31, 2020 , and September 30, 2020 are $2.9 billion , $3.8 billion ,
and $2.9 billion respectively, of which $2.7 billion , $3.1 billion , and $2.6
billion at September 30, 2021 , December 31, 2020 , and September 30, 2020 ,
respectively, was held by subsidiaries in foreign countries, including United
States territories. 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, 2021 , 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 used for operating activities was $819 million for the nine months ended
September 30, 2021 compared to $1,237 million for the nine months ended
September 30, 2020 . The change in cash used for operating activities was driven
by higher earnings.
Cash used for investing activities was $201 million for the nine months ended
September 30, 2021 compared to $445 million for the nine months ended September
30, 2020 . The change was primarily due to lower purchases of investments and
proceeds of marketable securities, partially offset by higher capital
expenditures. The company is affirming its expected capital expenditures of
$600-$650 million , which reflects increases in costs for materials used in
various capital expenditures and capacity expansion projects due in part to
inflation and the rising demand from the economic recovery from the lifting of
COVID-19 pandemic restrictions and government stimulus in some regions, while
the supply for certain materials have not returned to pre-pandemic levels.
Cash provided by financing activities was $365 million for the nine months ended
September 30, 2021 compared to $2,695 million for the nine months ended
September 30, 2020 . The change was primarily due to lower borrowings partially
offset by higher repurchases of Corteva common stock.
In January 2021 , the company's Board of Directors authorized a common stock
dividend of $0.13 per share, payable on March 15, 2021 , to the shareholders of
record on March 1, 2021 . In April 2021 , the company's Board of Directors
authorized a common stock dividend of $0.13 per share, payable on June 15, 2021 ,
to the shareholders of record on May 14, 2021 . In July 2021 , the company's Board
of Directors approved an increase in the common stock dividend of $0.13 per
share to $0.14 per share. In July 2021 , the company's Board of Directors
authorized a common stock dividend of $0.14 per share, payable on September 15,
2021 , to the shareholders of record on August 13, 2021 . In October 2021 , the
company's Board of Directors authorized a common stock dividend of $0.14 per
share, payable on December 15, 2021 , to the shareholders of record on November
12, 2021 .
On August 5, 2021 , the company's Board of Directors authorized a $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"). In
connection with the 2021 Share Buyback Plan, the company purchased and retired
1,167,000 shares during the three months ended September 30, 2021 in the open
market for a total cost of $50 million .
On June 26, 2019 , the company's Board of Directors authorized a $1 billion share
repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per
share, without an expiration date ("2019 Share Buyback Plan"). The company
completed the 2019 Share Buyback Plan during the third quarter of 2021. In
connection with the 2019 Share Buyback Plan, the company repurchased and retired
3,408,000 shares and 15,378,000 during the three and nine months ended September
30, 2021 , respectively, in the open market for a total cost of $150 million and
$700 million , respectively. During the three and nine months ended September 30,
2020 , the company purchased and retired 1,160,000 shares and 3,025,000 shares,
respectively, in the open market for a total cost of $33 million and $83
million , respectively.
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For the full year 2021, the company expects to repurchase at least $900 million
under the share buyback plans discussed above. The total amount, timing, 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.
EID Liquidity Discussion As discussed in Note 1 - Basis of Presentation, to the EID interim Consolidated Financial Statements, EID is a subsidiary ofCorteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only and is presented to provide a Liquidity discussion for the differences betweenEID and Corteva, Inc. Cash used for operating activities EID's cash used for operating activities was$838 million and$1,283 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The change was primarily driven by the items noted on page 60, under the header, "Summary of Cash Flow" and lower interest on related party debt. Cash provided by financing activities EID's cash provided by financing activities was$384 million for the nine months endedSeptember 30, 2021 compared to$2,741 million for the nine months endedSeptember 30, 2020 . The change was primarily driven by lower proceeds from issuance of long-term debt and higher payments on long-term debt on related party debt.
See Note 2 - Related Party Transactions, to the EID interim Consolidated
Financial Statements for further information on the related party loan between
Guarantees and Off-Balance Sheet Arrangements For detailed information related to Guarantees, Indemnifications, and Obligations for Equity Affiliates and Others, see the company's 2020 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. Contractual Obligations Information related to the company's contractual obligations atDecember 31, 2020 can be found on page 73 of the company's 2020 Annual Report. There have been no material changes to the company's contractual obligations outside the ordinary course of business from those reported in the company's 2020 Annual Report.
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