It's a pleasure for me to have Chuck Magro up here from Corteva. I've known Chuck a long time, you know, where his business card didn't say Corteva on it, but he'd been in the ag industry for at least since 2009, I think it was. Yeah Since you joined Nutrien. Was at NOVA Chemicals before that, became CEO of Agrium in 2014. As you know, Agrium joined PotashCorp and that entity, Nutrien. Chuck was also the CEO of that. Chuck is now the CEO of Corteva, and it provokes a lot of questions for me given in his prior role, he had a great deal of knowledge about the industry as a retailer, and now he's a producer of crop inputs that goes through that channel. Corteva's got a lot of really interesting things here going on. I got a lot of questions here. Perhaps it'd be helpful, Chuck, just to hear your view on 2023. Where do you in all of the various, you know, divisions that you have, where do you see the most interest and most upside for this year? Well, good to see you, Steve. It has been a while. Hi, everyone. It's nice to be here. Maybe what I'll do is I'll start quickly and just talk about 2023, 2024. I think there's also some really cool bullish trends happening that could be structural, in ag that I'd like to talk about. I'll wind up with just how Corteva sees the year financially. Look, the setup for 2023, it feels very similar to 2022. We've got low inventories for grains and oilseeds literally around the world, and there's several reasons for that. Below trend yields from a production perspective, really driven by extreme weather that we saw around the world, and geopolitics. You put these things together and what we see, is that crop pricing certainly is well above the historical averages. That's the setup. The other thing I'll say is farmers financially are relatively healthy. They have good margins, usually very strong balance sheets and strong liquidity. They're doing what we expect them to do they're investing in production and crops, yields, because that's the best way that they can offset the inflationary pressures they're seeing. We think that this setup is quite constructive for 2023. We would also say that we believe that we need trend yields to be at trend. We need yields to be at trend for at least two consecutive years. We think that 2023 is gonna be quite constructive. We should see another good year in 2024, and it could even go beyond that depending on production, crop production in 2023. We'll see. That's the kind of the short-term outlook. I think from a longer-term perspective, obviously, you look at the industry right now, given everything that we're seeing, the industry is working really hard to meet global demand for food, but it is falling short. We talked about the reasons why. Extreme weather, geopolitics, all these things are influencing food production. Beyond that, though, there seems to be a growing trend for agriculture to be used to help in the energy transition. Renewable diesel, sustainable aviation fuel, these have the potential to add, very significant demand on agricultural products. Longer term, we're actually quite bullish that we're gonna see, a very good run here in agriculture because agricultural products are gonna obviously need to be produced to feed the world, but also to be used in renewable fuels. There's a lot of opportunity, I think, in that space. From a Corteva perspective, what I'd say is last year we had, you know, double-digit revenue and earnings growth, so a very good year, I think. We made some key acquisitions, which we can talk about, and the setup for 2023 is as positive. We gave our guidance when we announced in February, and we're looking forward to a very good year in 2023. Maybe a question on seeds first. Let's drill into some seeds. You have created this brand, Brevant, and I'm just curious to kinda tap into your experience. You know that retail channel very, very well. I've been to plenty of those facilities myself and you see a lot of DEKALB and Asgrow bags in the channel and now you got your own Brevant brand. You have significant germplasm in your own Pioneer brand, but Brevant is that retail channel brand. What do you view as the receptivity of that channel to Brevant? Yeah. Great question. Brevant is our retail brand now. We launched it in 2019. Brevant's actually selling in Europe and Latin America and in the U.S., very good progress in a very short period of time. When it comes to the U.S. market, about 1/3 of, farmers purchase their seed through retailers. This is a pretty sizable piece of the market here in the U.S., and Brevant would be our go-to-market brand now. As you mentioned, I have some experience in the retail industry, since becoming the CEO of Corteva, I've met all of our retail customers, all the major ones. The biggest question that they always ask me is, "Chuck, are you gonna put your very best technology in those bags because we also have a very important brand called Pioneer, which is over 100 years old." It has the leading germplasm in it and that is certainly a very important channel for us. My answer to every time I'm asked that is absolutely. That's the key strategic difference I think Corteva is making 'cause we've tried this before as you know, Steve. We are gonna put our top technology in those Brevant bags. Farmers want a choice. Those other products you mentioned, they're very good products, but farmers want choice and retailers wanna be able to sell choice at the top tier on those shelves. What we've seen so far with Brevant is a very good growth rate. Last year, we saw market share growth in Brevant. From a performance perspective, those products are going head to head and performing very well. Today we're about mid-single digits in terms of market share of that 1/3 of the market, and we think there's no reason why we can't take Brevant to approximately 20% market share on those shelves. I think it's got a very good growth rate in front of it. Another seed question for you is after your investor event in Johnston, Iowa in September, we traveled across the Midwest, and ended up where you're now living in Central Indiana. Yeah. As we went through, we met with GDM, and they have a research farm in Illinois, and as what they described it to us is it's largely Corteva germplasm that they are helping you license your genetics to independent seed companies. Is that fair and is there an opportunity there? Yeah. Yeah. GDM's a great partner. Maybe let me step back and talk about what we did last year from a strategic perspective. So, we had a very good look at the organization, the portfolio and the strategic direction of Corteva. What we decided is that we're going to really, focus on differentiated unique technologies and we're gonna de-emphasize the commodity portfolio of Corteva. So, we're exiting about 20% of our AIs. Last year we announced we're actually exiting commodity glyphosate. Some of these big molecules which we don't have a competitive advantage in, they're commodities today. We don't wanna play in that space. The overall direction for the company is ag technology and we wanna be a top player in that area. When it comes to seed, we are licensing our germplasm to third parties and we're gonna be licensing more and more of our trait packages. So what we want to do and just to give you kind of set the situation, prior to 2022 we were spending a net outflow of about $700 million, in royalties to other technology providers. We were licensing in technology. We now have a plan to take that to neutral by the end of the decade, and that's gonna start with sort of our Enlist brand which is our top technology for soybeans here in the U.S. Gonna move that technology to Brazil so from a soybeans perspective which is an enormous market and then our corn licensing technology. We are gonna be more of a technology outseller, and that will reduce our royalties. You have to think about that $700 million, it's essentially pure EBITDA. There's not a lot of cost structure with it. This is a huge opportunity for us to differentiate our company, get better returns for our shareholders by licensing our technology to important channel partners. Let's talk a little bit about licensing Enlist. Maybe first, we view your Pioneer brand as having roughly 1/3 of the U.S. soybean market share, somewhere in that range. The demand for the Enlist soybean is far greater than 1/3 of soybeans. What is your estimate? 55% for this year? For 2023, yes. Two questions on that. It would be is that demand leading you to gain market share in the bag of soybean that has Pioneer on it? Is this a market share gain in the brand? How are you meeting the demand for the market for the trait? Yeah. maybe let me take a step back. We saw very good market share growth, in corn and soybeans in the United States last year. In fact, we reached levels that we hadn't seen as Corteva. We're in sort of new territory from a market share perspective. All of our brands did very well. Pioneer, Brevant did very well. When it comes to Enlist soybeans, E3 beans, that is clearly the superior technology in the market today, and it has we think tremendous performance for farmers. we've only we launched that product four years ago and now last year we reached 45% of all U.S. soybean acres with Enlist technology on it. Pretty remarkable in such a short period of time. This year as you rightly called out we expect kind of 55%. Significant growth of Enlist. Where do we think that will get to? What we're gonna say is sort of 60%, I mean, potentially even better than that, but 60% once it reaches its sort of full market share capacity potential. The journey for us now is to capture value from that, because in that 45% not all of the germplasm is Corteva's germplasm because it takes significant years to produce that level of seed. The journey is to reduce our royalties that we're paying by replacing those bags with Corteva germplasm, and this year we expect to reduce our royalties by approximately $100 million. That will grow to $250 million by 2025. Significant value creation as more of our own germplasm goes into those bags and the Enlist product grows. The beauty about the Enlist E3 beans is we are the only reseller of the herbicide, the Enlist herbicide. This is an area where this integrated R&D and technology offering, where we're selling the seed, and then we're the only game in town for the herbicide, we're able to create tremendous value. When we put that franchise together last year, we had sales of approximately $1.4 billion in the soybean system in the U.S. That's pretty exciting. You said just $250 million, that is your outlook for royalties for your germplasm and the Enlist and what, less royalty co-expense. That's right. It's an all-in royalty reduction by 2025 from our Enlist system moving the technology towards Corteva technology. Yep. How do you get the rest of the royalty expense down to zero by the end of the decade? Yeah. Now we talk about Brazil, it gets even more exciting. If you think about Brazil soybeans, if you think about the U.S. market, 90 million acres, approximately, a little less than that last year of soybeans. The soybean market in Brazil is 100 million acres already, and it's one of the few areas in the world that is still growing at about 4%-5% per year. You think about four to five million acres of soybeans growing. Our market share in Brazil and soybeans right now is very small. Our playbook is very simple. We're gonna take the success we saw in the United States with Enlist, and we're gonna take that same formula and move it into Brazil and grow market share with the Enlist technology. Now we call the Enlist soybean technology in Brazil, we call it Conkesta because it has the Enlist herbicide. In Brazil, you can imagine, insect protection is very important. The Conkesta technology has not only the herbicide but insect protection. That's the formula that we're gonna use, the same playbook, and we'll grow our market share in Brazil over time. Let me caution you. Value creation from Enlist in the United States will happen in the early part of this decade. We talked about 23, 24 and 25. Conkesta will be second half of the decade value creation because we're just doing the trials now. It looks very good. The feedback we're getting from our customers is exceptional, but we have to produce the level of seed and germplasm, and that's gonna take us some time to get through what they call the multiplier. The way they go to market in Brazil is a little different. But that will be another part of the royalty story will be Conkesta. Finally, corn. Corn in Brazil, but also corn in the United States, licensing germplasm, and we have several new trait packages that are just entering the market now, things like Vorceed and PowerCore, for those that follow our brands. Really excited about those trait packages as well. That will be part of the royalty reduction to what we call neutrality by the end of the decade. On this Conkesta, is that gonna be your brand? Is this gonna be sold in a, in a Pioneer bag, or is this gonna go through, you know, third parties? Just so you know, when we met with GDM, and they're huge, soybean, seed company down there, they were pretty constructive about the outlook for Conkesta. Yeah. In the U.S., it's a purely branded strategy where we want our technology in our bags, Brevant and Pioneer. Brazil's a little different. The market is so big, so diverse, and they have these, what they call multipliers, which GDM is a multiplier. They are the ones that actually produces the seed in their bags. Chances are that we'll have a different branding strategy in Brazil, where a lot of our technology will be in somebody else's branded bags. For us, that's not the big driver. The big driver is we wanna be able to get paid for the technology, and we think that there's a very nice pathway to do that. It'll probably be a different branding strategy when it comes to LatAm. Okay, maybe jump into chemicals and the tie-in with seed. Do you see your more differentiated crop chemicals as, you know, having traction on their own, or does the selling through a channel that is also valuing your seed, does that combination particularly effective? Let me start from the big picture. We absolutely think that having an integrated seed CP business, is the right strategy for Corteva. If you look at our R&D, it's fully integrated. The R&D organization starts with what problems do we need to solve for farmers? Is that solution either a seed solution, do we have to invent new technology there, or is it a crop protection solution? The Enlist example is the perfect one that I just provided, right? We produced an Enlist seed, an Enlist herbicide. We put that together. They work very well together, it creates, I think, leveraged value. I mentioned the revenue last year of $1.4 billion. We like that model. The way we go to market in the United States is a little different, right? In seed, we've talked about the different channels, Pioneer or through the retailers. In CP, we go through our retail channel partners. We find that the most efficient, we've got great relationships, and they're very well equipped to handle the chemistry. We don't have any intentions of changing that. Now, to your question, Steve, on the new products, we've had a phenomenal run with new CP products. We put eight new products into the market in a very short period of time. Last year, those products reached almost $2 billion of revenue with very high margin, and we're expecting that to grow again, those eight products to grow another 15% in 2023. Just tremendous growth. Can they stand on their own? Yes, because they are providing significant value for farmers. I'm also pretty excited to tell you that we have two new products launching, in 2023, a new fungicide and a new insecticide. They'll be kind of late this year, really hitting the P&L, I think, in 2024. Again, our eight new products going to 10, the story's been fantastic and we're really, I think our R&D organization is hitting home runs constantly now. What would you attribute to that acceleration in, you know, new active ingredient introduction out of Corteva? Is this synergy from old Dow and DuPont working together? Is it you being in Indianapolis having an effect of that? Yeah, I have nothing to do with this. like, I think you don't get success like this without years and years of focus. I do think there's a couple things. We don't start with what can we invent that's cool in the lab. We start with what are the real issues facing farmers today. It is getting harder to farm. The environmental resistance of products is huge. The regulatory environment is shifting. The other thing I'd like to say is just out of those eight new products, seven of them have some element of sustainability. They're greener chemistries, their usage rates are much less. We're actually changing the nature of the invention of products to make them more environmentally friendly, still having high efficacy, because that is key, but much kinder on the environment. I think that the formula that we've got is a strong formula. We do have a great pipeline going forward. I also would say that I think farmers need these solutions because some of the older tools are just not as effective as they have been. Maybe let's jump into biologicals as another vertical within the platform. You've made a couple of acquisitions, Stoller. Let's maybe talk about Stoller first. That it appears to me that is an entity where your opportunity is probably more geographic expansion of that, of their existing revenue base. Would you agree with that? Or is there something else that really attracted you to Stoller? Right. We, we like the biological space, and the reason we like the biological space is because we believe that, it's the fastest-growing segment of the CP industry right now. The reason for that is, of course, is regulatory pressure, farmers looking for new and different solutions. We believe that by the year 2035, biologicals will represent about 25% of the global market. It's, it's the fastest growing, and it will become very large quickly. We have a great pipeline of biological products in Corteva, but what we were missing is a platform to go to market. Stoller is that platform for us. Stoller has been a company that's been focused on biologicals for 50 years. They have a huge track record of success. Selling biologicals is a little different than selling traditional chemistry. You have to really understand plant physiology. You have to understand how the plant uses these products. Whereas crop protection sales are really, if you have an insect that needs to be managed, you just apply an insecticide. It's a little different sell. Stoller, we found when we looked around the world, had the best farmer engagement, education, and understanding of the crop, and the plant needs than any organization that we've looked at. They're also in 60 countries, so they have a very wide distribution, and they're quite strong in the core market of Brazil. We decided to acquire them. We should be closing Stoller very soon, and I'd say in the next few days, and Symborg as well. I should say that. And now where do we get value from Stoller? Couple things. Corteva's big in Brazil on a CP basis, Stoller is big. We have a lot of the same customers, but not all the customers are the same. There's gonna be a really nice synergy just to sell, Corteva products to Stoller customers and vice versa. The other thing is just we already use a lot of biologicals as seed coating on our seed applied technologies. We're gonna stop licensing those products, and we're gonna use our Stoller products now. That will take some approvals. It's not gonna be overnight, but that is a value lever for us. As you rightly called out, Steve, geographic expansion. Stoller was really building a beachhead into Europe. Obviously, with Corteva's, we have a very sizable business in Europe. We have deep R&D capabilities in Europe, we have deep regulatory abilities. We believe that we'll be able to get Stoller products into the market a lot faster than they could do on their own. That's some of the value creation that we've got from Stoller. People often ask me about the U.S. market because it's so big. In our business case, we really didn't include value from the United States. Anything we do in the U.S., we do plan to go after that, will be sort of cherry on top of the cake. Do you have the R&D capabilities to build out this biologics platform, or do you think it's more efficient for, you know, a big company like Corteva to partner and license in biologics? I think the answer will be both. There's a lot of cool things happening in the startup venture space on biologicals. They'll be able to take those product development to a certain extent, once they get into regulatory distribution capabilities, that's when they're gonna need a large company to partner. We have an active external partnership campaign, but we also have a very active R&D organization that we're building in biologicals. Let me just give you one quick example. We have over 600,000 microbials in our library. It's one of the largest microbial libraries in the world, we're going through now the assessment of all of those products. There's a lot of real exciting work that's happening in the labs today that I think eventually you'll see move through the Stoller channel over time. Might you use your own gene editing skills to take one of those 600,000 and magnify it and really turn it into a really high-performing product? Well, that's exactly why we bought Symborg. Symborg is the other acquisition. It is a nitrogen microbial. What it does is it enters the crop as a microorganism, and it's able to take the nitrogen out of the air and convert it into ammonia for the crop. It's fascinating technology, and our experience is that we have the capability to take microbials, and engineer them to be more effective. We did that with our spinosyns franchise. spinosyns is an insecticide that's been around in our portfolio for years. This year, it'll cross $1 billion of revenue, and that is a microbial that we have engineered significantly to be more effective. We think we can use the same skills that we have inside for the Symborg and for the rest of our microbial library. That is exactly our plan, is to make the microbials more effective, by engineering them. Anybody wanna get in here with a question with Chuck? Nancy? I think it was last fall in your Investor Day presentation, talking about 10-12 divestments as you shift in focus from commoditized offerings to differentiated offerings in the short term. Can you say the pace at which that will happen? 'Cause I mean, it makes sense, but it seems aggressive. That, that's right. The overall value creation framework that we laid out last year, maybe we'll start at the high level, was significant EBITDA and EBITDA margin growth. By 2025, we set a target to hit at the midpoints, $4.4 billion of EBITDA and 21%-23% EBITDA margin. The way we're gonna do that was quite simple and straightforward w e were gonna streamline the portfolio, focus on our new products, and optimize our cost structure. To your question, we then decided that we would exit 20% of our AIs in about 34 countries around the world. Always difficult decisions, but certainly necessary. Last year, we exited about a dozen countries and a handful of AIs, and we expect that the majority of the remainder will happen in 2023, with a little left to finish by 2024. The pace is quite brisk, but I think we're certainly. If you looked at our financial results from last year, we were sort of a little bit higher than we thought we would when we guided the street. That was because we were a little quicker on some of the exits and reductions than we thought we could get to in 2022, and I think we've got a very good plan for 2023. Any others? Can you talk about free cash flow? How did that- I thought I was gonna get through without it. No. Any comments on how. Yeah How that went in 2022 and your outlook for this year? Yeah. Last year's free cash flow was lower than certainly we expected, let me kind of walk you through what happened. The last two years prior to 2022, we had to pull down our inventories to meet customer demand. The supply chains, it's not just Corteva, they were a mess around the world. The way we serviced our customers, we pulled into our safety stocks, and we reduced inventory quite significantly. Last year, we started to see the supply chains improve. We knew that the CP market was gonna be robust, and it's still growing globally. By design, we built inventory in certainly in our core products, so that we would be able to restore our service levels for 2023 and 2024. That consumed cash. As we look at it today, we think we have about the right levels of inventory. What I would expect from a cash perspective, is if you take the kind of the two or three-year average, we will get back there, and I think we guided approximately $1.2 billion of free cash flow. Healthy cash flow return in 2023. When you couple that with our balance sheet, which is pristine in my opinion, we have a tremendous amount of financial firepower, to do what we've done all along. Last year, we, you know, we returned $1.4 billion of stock to shareholders, either in the form of buybacks or dividends. This year, we have Stoller and Symborg we need to pay for, but going forward, we don't see that the formula changes much. We plan to invest for growth inorganically, organically, and we'll have enough financial flexibility to have a very healthy share buyback program going forward. You had a lot of raw material cost inflation last year. We did. I think the whole industry saw inflation sort of what I would call, either high single or low double digits. The moves we made in terms of pricing, productivity, improvements, if you looked at our SG&A, last year was essentially flat. We really held the line on cost management, and our mix really helped. When we put all that together, we thought that the combination of price, mix, and cost management, offset our costs. We did see a pretty significant margin expansion in 2022. We expect similar in 2023. Maybe last one, what is your outlook for cost in 2023? Do you see the potential for deflation, whether that would force you and/or maybe your competitors to give back some of the price in crop chems? Yeah. It's, it's difficult to sit here and project deflation right now. We expect that the inflation, the rate of inflation is certainly subsiding. We are expecting the first half to still have inflationary pressure. It's subsiding in the second half. If we see deflation, Steve, certainly with most of our branded technologies, we don't price based on cost plus. We actually price our products based on value on the farm, and the value equation hasn't changed. There could be an opportunity in a deflationary environment where we would see benefits, but we wanna make sure that farmers, more than anything, are getting the full value from the products that they're purchasing from us. All right, Chuck, we are out of time. Please join me in thanking Chuck Magro for his presentation here. Thank you.