Corteva’s EBITDA Surges 14% — Bayer Pact Clears Licensing Path

Date of Call: Feb 4, 2026

Financials Results

• Operating Margin: Over 22% operating EBITDA margin, up about 215 basis points YOY for the full year

Guidance:

• 2026 operating EBITDA expected in the range of $4 billion and $4.2 billion, or approximately 7% improvement over prior year at the midpoint.
• Operating EPS expected in the range of $3.45 to $3.70 per share, an increase of 7% at the midpoint.
• Expect about 60% of sales and roughly 85% of EBITDA to be delivered in the first half of 2026.
• Expect approximately $120 million improvement in net royalty expense.
• Expect to deliver around $200 million of productivity savings, partially offset by approximately $80 million in tariffs.
• Expect currency tailwind versus 2025, with a low single-digit tailwind on net sales and approximately $75 million tailwind on operating EBITDA.
• Targeting about $500 million of share repurchases in the first half of 2026.

Business Commentary:

Financial Performance and Margin Expansion:

• Corteva reported operating EBITDA of $3.85 billion for 2025, up 14% from the prior year, with a margin expansion to over 22%.
• The growth was driven by strong demand for their technology, disciplined execution on operational efficiency, and benefits from lower input costs and productivity improvements.

Seed Business Growth and Licensing:

• Seed business delivered $340 million in net cost improvements and $90 million in royalty improvements.
• The growth was supported by organic growth in every region, share gains in corn and soybeans, and progress in soybean licensing in Brazil.

Bayer Agreement and Licensing Acceleration:

• Corteva reached a comprehensive resolution with Bayer, solidifying the use of existing technology rights and providing business certainty.
• The agreement accelerates the licensing timeline for corn technologies to as early as 2027 and allows entry into the U.S. cotton licensing market.

Crop Protection Market and Product Demand:

• Crop Protection business achieved $300 million in productivity and cost benefits, with volume growth of 5% and new products showing strong demand.
• The growth was supported by improved market conditions and a focus on differentiated technologies despite competitive pricing dynamics in some regions.

2026 Financial Outlook and Guidance:

• Corteva reiterated its preliminary operating EBITDA midpoint of $4.1 billion for 2026, expecting 7% growth.
• The guidance considers momentum in Seed Licensing, growth in Crop Protection volumes driven by new products and biologicals, and ongoing productivity benefits.

Sentiment Analysis:

Overall Tone: Positive

• CEO Chuck Magro stated 'by all accounts, 2025 was a strong year for Corteva' and 'we are reiterating our preliminary operating EBITDA midpoint of $4.1 billion, which is 7% growth versus the prior year.' CFO David Johnson noted '2025 was a record year for Corteva with strong organic growth' and 'We remain committed to returning cash to shareholders.' The tone is confident, citing strong performance, margin expansion, and positive outlook for 2026.

Q&A:

• Question from Christopher Parkinson (Wolfe Research): Could you break down Slide 27 with the Bayer litigation and its impact on the acceleration of E3 or Conkesta? Also, does that chart assume any gene editing?
  Response: The agreement provides freedom to operate and access to the licensing market, accelerating corn licensing to as early as 2027 and entering the cotton licensing market, with an expected $1 billion in licensing income over the next decade. It resolves all outstanding litigation with Bayer.

• Question from Vincent Andrews (Morgan Stanley): Is there existing licensing expense no longer paid due to the $610 million Bayer payment, and was that contemplated in original guidance? Also, will there be per acre royalties for HT4?
  Response: A portion of the $120 million net royalty benefit in 2026 is from not paying some Bayer royalties, accelerating royalty neutrality to 2026. The rest of the agreement's benefit is later. HT4 licensing will involve royalties, not royalty-free.

• Question from Joel Jackson (BMO Capital Markets): How does the new royalty chart reconcile with statements of pulling forward items to this decade?
  Response: The agreement accelerates corn licensing to 2027 and opens up cotton licensing, putting the licensing business in a much higher gear than the original plan, which only contemplated soybeans and corn later in the next decade.

• Question from Kevin McCarthy (Vertical Research Partners): Do you expect Europe to open its market to gene-edited seeds in 2026, and what is the update on multi-disease resistant corn?
  Response: Expect the EU regulatory framework to be adopted by first half of 2026, which is science-based and practical. The gene-edited fungal disease-resistant corn hybrid is expected to be commercialized within a year or two after regulatory approvals.

• Question from David Begleiter (Deutsche Bank): Can you discuss the U.S. order book for the upcoming year and how farmer pressure is manifesting?
  Response: Order books are very strong, with prepay on par with prior year and cash credit mix similar. The corn vs. soy acre mix is expected to shift slightly, but it's manageable within the provided guide.

• Question from Joshua Spector (UBS): How are you thinking about free cash flow conversion into 2026?
  Response: Absent one-time items, free cash flow would be in the 45% to 50% range, about 200-300 basis points lower as a percentage of sales due to working capital returning to normal. The $610 million Bayer payment and separation costs will impact the actual 2026 number.

• Question from Jeffrey Zekauskas (JPMorgan): Why were SG&A and R&D so high in Q4? What is the share and revenue outlook for Conkesta soybeans in Brazil for 2026?
  Response: SG&A increase due to higher variable compensation expense; R&D up as a percentage of sales throughout the year. Conkesta share expected to double or more than double in 2026, reaching mid-teens plus, with focus 100% on licensing.

• Question from Aleksey Yefremov (KeyBanc Capital Markets): What share of your CP business will be off patent versus new products in 2026?
  Response: The portfolio remains about 2/3 differentiated, with stable share. New products and biologicals are driving growth, and a new fungicide (Visa) is expected to launch latter part of 2026.

• Question from Patrick Fischer (Goldman Sachs): Where did you see market share gains or losses in Seed? Does the Bayer deal give Bayer access to Enlist in soybeans?
  Response: Gained share in North America corn and soy, mid-single-digit share gains in Brazil summer and safrinha, and in other markets like India and EMEA. The Bayer agreement did not include E3 soybeans.

• Question from Kristen Owen (Oppenheimer): Can you frame the upside and downside cases for the 2026 EBITDA guide? How does Conkesta economics show up in the bridge?
  Response: The $4.1 billion guide is up 7% and at the low end of the 2027 range. Growth is expected in both Seed and CP, with 2/3 of EBITDA increase in Seed. Conkesta transition and share gains are a significant part of the $120 million net royalty improvement.

• Question from Chengxi Jiang (Jefferies): Does the $80 million tariff estimate account for secondary effects like increased generic dumping in Brazil?
  Response: Yes, the tariff estimate for Crop Protection includes all companies and countries, including Brazil, with the biggest part being China-origin actives coming into the U.S.

• Question from Arun Viswanathan (RBC Capital Markets): Can you break down the $200 million productivity benefits between Seed and CP and discuss the ongoing opportunity?
  Response: The $200 million is split somewhat equally between Seed and CP. Beyond 2026, further optimization opportunities exist, with the 2027 framework indicating net productivity of about $700 million.

• Question from Patrick Cunningham (Citigroup): Does channel inventory in Latin America support normalized purchasing? What is the credit and liquidity situation for farmers?
  Response: Channel inventory is about normal for this time of year. Farmers are stressed due to high interest rates and suppressed commodity prices, but cash flow is tight. The barter program between crop and seed is near $1 billion to help mitigate risk.

• Question from Matthew DeYoe (BofA Securities): Beyond corn and soy, what are the priorities for expanding the Seed business? Are there plans for acquisitions?
  Response: Near-term focus is on licensing in corn, soy, and cotton, and entering the hybrid wheat market. Gene editing may open up other markets in the future. The full portfolio strategy will be detailed at the September Investor Day.

• Question from Michael Sison (Wells Fargo): What gives confidence in the CP market rebound in 2026? What is the Brazil pricing pressure trend?
  Response: Expect modest global CP market growth with volume gains and some pricing pressures, but underlying demand is strong. In Brazil, pricing pressures continue due to ample supply, but differentiated products command higher margins.

• Question from Edlain Rodriguez (Mizuho Securities): Can competitive pricing pressure seen in Brazil and Asia occur in North America or Europe?
  Response: No market is immune to generics, but Brazil's situation is unique due to import policies and channel dynamics. China's potential export controls could be constructive. Overall, 2026 should see slow growth globally, with headwinds mainly in Brazil.

Contradiction Point 1

Timeline for Royalty Neutrality

Contradiction on when the company will reach royalty neutrality.

Does the $610 million payment eliminate existing licensing expenses and align with original guidance? Will the HT4 license from Bayer include per-acre royalties? - Vincent Andrews (Morgan Stanley, Research Division)

2025Q4: The $610 million payment... accelerates path to royalty neutrality by 2 years. - [David Johnson](CFO)

What are the estimated dissynergies from the separation, and what are the post-separation share buyback plans? - Joel Jackson (BMO Capital Markets Equity Research)

2025Q3: The initial dissynergy estimates are $80–$100 million; teams are working to minimize this. Details will be provided in February. - [David Johnson](CFO)

Contradiction Point 2

2026 Royalty Benefit Magnitude

Contradiction on the size of the net royalty benefit for 2026.

Does the $610 million payment eliminate existing licensing expenses and align with original guidance, and will the HT4 license from Bayer include per-acre royalties? - Vincent Andrews (Morgan Stanley, Research Division)

2025Q4: The $610 million payment... contributing to a $120 million net royalty benefit in 2026. - [David Johnson](CFO)

What are the estimated dissynergies from the separation and the plans for share buybacks post-separation? - Joel Jackson (BMO Capital Markets Equity Research)

2025Q3: Initial dissynergy estimates are $80–$100 million; teams are working to minimize this. - [David Johnson](CFO)

Contradiction Point 3

Conkesta Brazil Share Growth Trajectory

Contradiction on the projected timeline for Conkesta to double its market share in Brazil.

What caused the elevated SG&A and R&D expenses in Q4, and what is the current status of Conkesta soybeans in Brazil, including revenues, market share, and 2026 projections? - Jeffrey Zekauskas (JPMorgan Chase & Co, Research Division)

2025Q4: For 2026, the company expects to double or more than double [Conkesta's] share... transitioning to 100% licensing. - [Judd O’Connor](EVP of Seed Business Unit)

What was the market share performance in northern hemisphere crops (corn, soy, cotton, canola) and the update on Conkesta's growth in Latin America? - Patrick Fischer (Goldman Sachs Group, Inc., Research Division)

2025Q3: [Conkesta] market share is currently 8–10%; expected to cross double digits in 2026 and reach ~1/3 of the market by 2030. - [Judd O’Connor](EVP of Seed Business Unit)

Contradiction Point 4

Order Book Strength and Pricing Outlook in Latin America

Inconsistent assessment of pricing pressures and market conditions in Brazil.

Does the current channel inventory in Latin America support normalized purchasing, and what is the status of farmer credit and liquidity? - Patrick Cunningham (Citigroup)

2025Q4: Order books are very strong... pricing pressures will continue in Latin America due to ample supply. - [Robert King](CFO)

What is the velocity of Seed order books in Brazil for the back half and the reason for the revised Seed pricing expectations (now low single digits vs. prior low-to-mid-single digits)? - Kristen Owen (Oppenheimer)

2025Q2: In Brazil, order books are exceptionally strong: ~90% of summer crop orders and ~40% of safrinha orders are already in hand. Pricing is competitive but expected to be low single digits, with mid-single-digit acreage growth anticipated. - [Judd O’Connor](EVP, Seed Business Unit)

Contradiction Point 5

Crop Protection Market Outlook and Pricing Dynamics

Contradiction on the health of the CP market and near-term pricing trends.

What factors support confidence in a CP market rebound by 2026? Is Brazil's pricing pressure stabilizing, worsening, or improving? - Michael Sison (Wells Fargo Securities)

2025Q4: Order books in the Northern Hemisphere are strong. ... underlying demand remains healthy. - [Robert King](EVP, Crop Protection Business Unit)

How are Chinese and Indian generic drug prices impacting CP pricing, and will conditions worsen or stabilize in the second half? - David Begleiter (Deutsche Bank)

2025Q2: CP pricing is expected to decline low to mid-single digits in Brazil during the second half due to competitive dynamics. - [Robert King](EVP, Crop Protection Business Unit)