Good day, and welcome to the Corteva First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jeff Rudolph, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Corteva’s first quarter 2022 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and Dave Anderson, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, Executive Vice President, Seed Business Unit; and Robert King, Executive Vice President, Crop Protection Business Unit will be part of the Q&A session. We have prepared our presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast. During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statement. Please note, in today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings release and related schedules along with our supplemental financial summary slide deck available on our Investor Relations website. It is now my pleasure to turn the call over to Chuck.

Thanks, Jeff. And thank you for joining us on the call and webcast today. Corteva delivered a solid start to the year with double-digit sales and earnings growth in the quarter. Despite pressure from ongoing inflation and supply chain challenges, the team delivered impressive value creation. Every region delivered double-digit organic sales gains led by strong demand for advantage technologies. Further, the company continued to drive penetration of our leading pipeline with new crop protection product sales of approximately $480 million, a nearly 60% increase over prior year. This was led by products like the Enlist soybean system, which continues to gain traction in the market, given superior performance and grower confidence. And we expect to be on at least 40% of the U.S. soybean acres in 2022. We are encouraged by the current ag market backdrop and the overall financial health of the farmer. Market demand is solid, evident by the strong position of our order book and growers are investing in their crop through top technology to maximize yield. We expect these trends to continue through out the year, given current commodity prices and the fact that productivity on the farm from top tier seed genetics in yield advantage Corteva products is the best way to manage inflation. Despite robust customer demand, we continue to experience increasing global macroeconomic uncertainty. Similar to 2021, supply chain challenges due to labor shortages, logistical constraints and COVID-19 impact are leading to further inflationary trends. This is compounded by the rise of global energy prices, which is adding to the volatility of raw material availability and prices. Given that we are still early in the growing season in the Northern Hemisphere and the significance of the first half in the agricultural industry. We are maintaining our guidance at this point. In addition,…

Thanks, Chuck, and welcome everyone to the call. Let's start on Slide 6, which provides the financial results for the quarter. As Chuck said, as you can see from the numbers, we've started the year strong. 2021 organic sales increased 16% with gains in both segments and all regions. Global pricing was up 9% with notable increases in seed and crop protection. Crop protection volume growth was driven by strong early demand in North America and the strength of new products, which delivered approximately $180 million of sales growth year-over-year. We delivered more than $1 billion in operating EBITDA on the quarter of 15% increase from the same period last year. This is impressive performance given higher costs incurred in the quarter as a result of inflation. Pricing and productivity more than offset this expected impact as well as an approximate $160 million currency headwind driven by the Turkish Lira and the Euro. This improvement translated into almost 100 basis points of margin expansion year-over-year. Going to Slide 7, you can see the broad based growth with double-digit organic sales in every region. In North America, organic sales were up 15% driven by crop protection on early demand for herbicides, including Enlist. Seed volumes were down versus prior year, primarily due to seasonal timing of U.S. Pioneer brand corn deliveries, both segments delivered notable pricing gains, a testament to the demand for our technology in our ability to price for higher input costs. In Europe, Middle East and Africa, organic sales increased 12% compared to prior year driven by strong price execution. Local pricing helped to mitigate currency impacts, which was a 13% headwind in the region due again to the Turkish lira and the euro. Demand remains high for new and differentiated products, including Arylex herbicide and Inatreq fungicide…

Thank you, Dave. Now let’s move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

Thank you. [Operator Instructions] And we’ll go first to Vincent Andrews with Morgan Stanley.

Thank you and good morning, everyone. Just wondering if you can talk a bit more about the seed business and help us bridge 1Q with 2Q to kind of get to an understanding of how the first half or the overall season is going to play out. So maybe to start with the volume pushout from 1Q to 2Q because of the late season, how did that impact margins in the first quarter? And how it will impact margins in the second quarter and where do you envision that the first half settling out? And then secondly, I’m assuming you’re looking for less corn and maybe more soy at this point, depending on what happens over the next couple of weeks. But if that the case and that was baked into guidance now. And then lastly, how should we think about the corn and seed pricing in the U.S. for 1H is what we saw in the first quarter, corn up 6% and soy looked like it was probably negative. Is that what the first half is going to look like? Or it’ll be a little bit better or a little bit worse. Thanks.

Good morning, Vincent. Thanks for the question. So look, let me give you a couple opening comments and then I’ll turn it over to Tim to talk about your specifics around the split between Q1 and Q2, first half, second half. We’re sitting here today in our headquarters in Indianapolis. We’ve been here all week. It’s cool and it’s wet. Probably no surprise to many that’s been watching the weather. But certainly it’s been a slower start to this season than last year. That is impacting our results when it comes to the seed business, certainly for quarter, because of some weather delays here in North America, but also in Europe. We’ve got significant market volatility in terms of pricing and the planting decisions that farmers need to make are being impacted by the weather. So Tim will walk you through the dynamics. We did mention in the prepared remarks, we’ve got a strong – a very strong order book, and Tim can walk you through that. I just want to remind though, the group here though, that if you look at the longer-term value catalyst that we have, the Enlist seed platform is really performing very well beyond our expectations. We did say we expect 40% of the U.S. acres to be on that platform. And that will set us up nicely next year for meaningful royalty reductions in 2023. And then just the call out Bravante our new multi-channel technology, it continues to perform very well. We’ve got very good demand across the channel in that we are now selling it in North America, Latin America and Europe. And that is exceeding expectations as well. So now I’ll just turn it over to Tim to talk a little bit about the dynamics we’re seeing here in the first – we saw in the first quarter and what we expect in the second quarter and the remainder of the year. Go ahead, Tim.

All right. Thanks, Chuck and good morning, Vincent. So maybe I’ll address three points you made there. First is around just the pace of the season in the U.S. Second is pricing and I’ll touch on the seed margins and what we’re seeing there. So, obviously, as you mentioned and Chuck said, we’re out to a slower that we’d like in terms of the pace of planting across North America, really and it’s wet, cool conditions that have driven that. That was reflected in our first quarter seed sales where we saw some pioneer business that did not make it into the marketplace. Remember, how we recognize revenue is we distribute all that seed to our local sales representatives. They deliver that last mile to the farm gate when the farmer needs it. And that’s when we recognize the revenue. So it was that last mile to the farm gate that was the issue as we had challenging weather conditions at the end of March. So, what I would emphasize here is that there still is more than adequate time to get this crop planted. And the economics that farmers are seeing are still very strong. And so whether they’re going to plant corn, whether they’re going to plant soybeans, whether they’re going to plant cotton, there’s a strong incentive for them to, to get that crop in the ground. And at this point in time, we’re not seeing a switch between corn and soy in terms of farmers switching the crop they intend to plant. The other thing I’d emphasize is that farmers have a tremendous capacity to plant. And so it’s not unusual when we get into planting season for farmers to be able to plant 40% of a specific state in the matter of seven days. And…

Yes. Those are all really, really good points, Tim. And by the way, just back on that currency, you stated dollar terms. But Vincent for your benefit and everybody, it’s over 200 basis points when you do the walk. Now some of that, obviously we expected in the course of our guide for the year. But incrementally, that turned out to be significant. So regarding the equity investment, we had a loss in the quarter of mark-to-market on a – this compares to first quarter of 2021 that represented an impact of almost $30 million or as Tim said about 100 basis points. The company that where we’ve held an investment technology based and have had it for over six to seven years and IPO-ed in the third quarter of 2021. So we’re on a mark-to-market accounting now. So that’s really the background on that. Appreciate the question.

We’ll go next to Dave Begleiter with Deutsche Bank.

Thank you. Chuck and Dave, I think you guided Q2 being a little bit below consensus, referring the full year. So what’s the offset in the back half you guys coming in maybe a little bit better than we expected for you guys.

Yes. David, let me give you the backdrop on sort of our position on guidance and Dave can talk to the specifics. So look, the ag fundamentals, as we said, are very strong. And I think Corteva has had a real solid start to the year and demand, we are expecting to continue to be strong through the remainder of this year and well into 2023. The other thing we like is the execution of the overall business is now – our execution has been steady despite the supply chain challenges, the cost pressures we’ve outlined. And I think we’re making excellent progress in cost management pricing and productivity actions that we’re taking. But it is early. We’re sitting here in the early days of May, the season’s a little later than last year. And in ag you have to obviously think about the first half. So what we’re doing right now is we’re reaffirming the guidance. We’re very comfortable. We like how the season’s unfolding. And now to get to your specific question on sort of how we think about that range and what we think may or may not happen. I’ll let Dave kind of give the specifics.

Yes. I think probably the starting point is what we shared on the call, which is consistent with what we originally provided by way of the 2022 guide, which is given the – call it the slope of the cost curve over the course of 2021. What we’re seeing is that those costs ramped and particularly by the way into the second quarter of this year, we see that ramping, accelerating a bit and that’s built into our guides. So on a year-over-year basis, we see the first half revenue, like we said, high single digits growth, but EBITDA more in the range of mid single digits growth. Again, that’s consistent with the guide that we’ve provided to you – provided to you previously. And that relationship is again, just related to the comps in terms of the period over period, or year-over-year change, particularly on the cost curve that we’ve seen. Now the second half appears to be setting up pretty nicely. And that’s included in our full year guide in the range. I would say that our expectation is we’re likely to be at the high end of the revenue range. And that’s again, reflective of what we see and anticipate in terms of ongoing inflation and pricing to offset those cost impacts. And despite those inflation headwinds, we anticipate to be in that range again, that we guided to in terms of the full year EBITDA. The other thing of course we’re seeing is Brazil planted area improvement. Tim referenced that a little bit when he was talking about seed. And Tim, you may want to comment a little bit more about Brazil. But that Brazil planted area is clearly also something that’s positive for us when we look at the second half of the year. Tim, any comments you would want to add on that?

No, I think Dave you’re right. Clearly there’s strong incentive for continued growth in the soy area in Brazil, and we expect that possibly at the expense of first crop corn, but we expect that second crop corn, which is the largest market and most important market in Brazil right now to grow nicely as we go into the 2023 cycle. So very positive about what the outlook is there.

We’ll go next to Chris Parkinson with Mizuho.

Great. Thank you so much. When you take a step back on your CP business and you look at the growth of – some of the higher margin, newer products, Arylex, Rinskor, Zorvec so on and so forth. And then also the pricing you’re getting in the vast majority of your geographies. Can you just give us a little bit more perspective on how you’re – obviously you’re still facing some inflationary pressures now. But can you give us a little bit more perspective on how you’re thinking about the intermediate to long-term margin profile of that business? Thank you.

Good morning, Chris. Yes, I’ll have Robert comment on the specifics and we’re very pleased with the trajectory that we’re on, so maybe just the few high level comments. So the CP business this quarter, we saw strength basically across the board. And it’s really from customer demand really asking around the latest technology, the new products to drive productivity on the farm. So one of the best ways that farmers can help offset the inflationary pressure they’re seeing on the farm is to drive productivity. And with that, they’re going to need technology. And our pipeline, as we’ve talked about is growing quite rapidly with our new products. And so when we look at it, we think what’s happening in our business is you’re starting to see and it’s early days, but you’re starting to see the impact of our new product portfolio on our bottom line. And Robert will talk to the specifics. The other thing that I’ll just call out is later this year we will bring up our new Spinosyns capacity late this year. And so you’ll start to see the impact of that incremental capacity and of course, margin that will follow with it late this year and into 2023. So we like the setup in the portfolio for the CP business, and that’s what I think you’re starting to see in the results. Now when you think about the inflationary response and how we manage price, but I’d also say productivity in that business. I’ll turn it over to Robert.

Yes. Thanks Chuck. Just getting started overall, we do see high demand strength across the board for our technology. Supply chain held up – this quarter held up very well, actually, moving more than 18% of volume on a year-over-year basis. And that’s an unprecedented headwind. So we’re able to keep up and do a good job across the board. The new products that you mentioned there were up 60% over year-over-year basis. And we really see that that’s the value create that from our new technologies that the growers want to see. As we look into – as we continue to look forward and for the first quarter, pricing gains across the regions really reflect our ability to use price and productivity to offset higher costs. We’re confident we’ll continue to see these things as we move forward into the rest of the year and with a good start of the year.

We’ll go next to Kevin McCarthy with Vertical Research Partners.

Yes. Good morning, everyone. Last quarter you provided a helpful bridge to your 2022 annual EBITDA versus 2021. And I imagine you may not be in a position to update every item every single quarter. But nevertheless, can you provide some thoughts on three bridge items your productivity goal, your net foreign exchange as it’s tracking today, and then the cost headwinds that you foresee in both seeding crop protection for the year.

Yes. Kevin, I can give you a little bit there. I may ask you given the list that you just went through, I may ask for a little bit of a reminder of each item that you had on that. But let me talk a little bit about the bridge and the update on the bridge. I mentioned that just a little bit earlier, it’s sort of embedded in what we’ve assumed in our guide. I think the most important thing is the fact that that we see inflation continuing, and that impact is going to be particularly felt in terms of our costs. It’s going to be particularly felt on the crop protection side. So the assumption is in the guide that we’ve given you is that we expect to be at the higher end our revenue range. So that $16.7 billion closer to the $17 billion in terms of the full year outlook, it’s really based on inflation and then pricing. So, that’s really sort of fundamental. So if you looked at that EBITDA bridge, it’s really those two items that are increased on a prior guide to now update here at the end of the first quarter. Second, with regard to foreign currency, as we mentioned, we had fairly significant impact to foreign currency. If you look at the total Corteva, as you know, it was about 225 basis points of impact in the first quarter. Currency is going to abate to some degree as a percent as an impact as we go through the year. And there’s two things there. One is just, again, the comparables compared to the prior period, which get a little bit easier on the currency side. And the second thing is that we have some potential for improvement on the BRL,…

We’ll go next to PJ Juvekar with Citi.

Hi. This is Patrick Cunningham on for PJ. Good morning, everyone. So with the current run up in corn prices, what does that mean for your seed costs next year and pricing next year, given that this season’s pricing was fixed back in the fall? And also how much of your corn production is hedged for next year? Thanks.

Tim, do you want to take that?

Yes, I will. So obviously we’re worried about getting the last 85% of this season’s crop in the ground. But we are working hard on 2023. So in terms of COGS, obviously price is one of the most important factors that impact seed COGS. And so we're looking closely at that right now and there is clearly going to be a headwind on a year-over-year basis. There's no question about it. And it's not as simple as saying the commodity prices were X and now they're Y and extrapolating that because there are a number of factors, including the hedging approach that we have that have an impact on that. So we're in the process sizing that up and I would say we’re probably not prepared to share what that increase would be but we're working on that as well. And in terms of how we manage that, we're in the early stages of putting together our total plan for 2023. So the commercial organization is finalized what the mix of products are that we're going to be bringing to the market in 2023. We’re in the process of planting our seed crop for this year that will be in the market in 2023. And obviously, we're in the same situation as farmers in terms of wanting to get that in the ground. And finally, we're developing our market offer in terms of price and programs and so very way too preliminary to get into the specifics around that. Underlying, we continue to expect there to be favorable economics for our farmer customers. And so demand for premium products is going to continue to be high. We also do have a strong record of capturing value for our technology. And so we have products that growers want and we have strong execution in the field and we know that our – the levers – the key levers that we have to deal with those escalating commodity prices, clearly productivity is a big part of that. And we're constantly working to get the most efficient operations we can, but also pricing. And again, we're working on sizing that up. We're confident that as we go into 2023, we will be able to cover our cost headwinds in terms of commodity, either through productivity or pricing, and that it will be accretive to our underlying margins for seed.

We’ll go next to Joel Jackson with BMO Capital Markets.

Hi, this is Alex Chen on for Joel Jackson. Thanks for taking my question. With respect to higher crop prices and inflation, how are you seeing farmers demand change with respect to crop chemicals? Are there any particular buckets of products, demand is seeing stronger/weaker trends and maybe why? And if you can maybe elaborate on when you expect costs to fund out for crop protection. Thanks.

Hi, Alex. Good morning. We'll ask Robert King to answer that question for you.

Yes, Alex, thanks for the question. When you look at our portfolio and what we're doing, you're beginning to see the new products starting to show up in the marketplace. And that technology is again is being something that's adding value to the farm gate. So it helps our farmers be much more productive. So in terms of what would we see moving forward, we're working heavily on the robust pipeline to continue to move this forward. As Chuck mentioned earlier, our Spinosyns manufacturing is under expansion and we'll finish about 50% capacity increase there as well. So overall, we're going to continue to balance this thing moving forward with price and productivity for the rest of the year in the crop protection area. Tim, you may want to add a few things for seed.

No, I think just to build off that Robert, I mean, clearly we got a very strong preference for customers, again, the products that are going to make them money and we always have a strong mix, it's on the premium side and I think that's reinforced here. The other element that we're looking at as we go into 2023 is, what's the mix of crops that are going to be planted as well. And we would anticipate that that'll continue to shift as we go into 2023 and will be somewhat dependent upon what ultimately gets planted in 2022, but also what's produced in other parts of the world. So we're going to look heavily at that. And as you sit here today, you would say that the mix for 2023 is maybe favoring corn a little bit more than what we saw as we came into 2022.

Yes and just Alex on this backdrop. So look, we said that the fundamentals are going to be quite strong. Really, if you look at crop commodity prices, what it's telling us is that the world needs to produce more food. So we not only need – we're talking about a mix here, which is important, but we need more acreage to be put into production. And then of course, we need technology to drive productivity yield on every acre we have. And so, there seems to be a shift underway to take the top technology in terms of genetics and traits for seed. And then of course, the top technologies in CP to drive every last bushel per acre, we think that this will continue. If you look at farmer economics around the world things are quite robust. Farmers are in a good financial position. In fact, if you look at the U.S. farmers, the predictions are that this year would be a record revenue year for U.S. farmers. And I believe the second most profitable in the last decade. So there's high motivation as Tim mentioned to get that crop in the ground and then to protect and grow that crop and I think what you're going to see that, that we're very well positioned as an integrated company to catalyze it on that trend, but also to help farmers drive productivity sustainably.

Chuck, maybe just one other thing, Robert, maybe just one other thing and then sort of embedded in our responses, part of the question obviously had to do with the cost and over time inflation outlook, our expectation when you look at the leading indicators, all of those are pointing to continued inflation. So we're not counting on some kind of meaningful abatement anytime soon. And one of the things that Robert is obviously in his team is very focused on is the resiliency of our supply chain. And I have to say in any metrics that we've looked at any comparative data that we've looked at ours ranks very strong. And we're seeing that in terms of delivery, in terms of the results that we're achieving as well, particularly when you think about all the geopolitical pressure and other things are going on in the world. So that's also underlying in terms of what we're focused on.

We’ll go next to Steve Byrne with Bank of America.

Yes, would like to drill into seeds a little bit more here. You reported your corn seed price of 6% or 8% and soybean up 6%. And given your Pioneer business, you would know exactly what your customers are ordering. So my question for you would be how much of that eight and six, or maybe a zero just on North America. But how much of that would you say is like-for-like price increase versus a mix shift up the price card, are you seeing your customers change the genetics of what they're planting a little more than they have in the past? Would you expect them to perhaps do even more of that in 2023? And then one quick, when your EMEA corny pricing gains were pretty significant, can you just comment on how much of that seed business is transgenic?

Yes, Steve, thanks for the question. So in terms of mix of products, what I would say is the price level we're capturing is very similar to we would have taken to the marketplace in terms of our price card movement as we came into the year. So I guess two parts of the question in terms of North America, is there a major shift in terms of the trait mix? And I would say generally not, you have these modest shifts on a year-to-year basis in terms of our trait mix, question on genetics, absolutely farmers are always looking to plant new and better genetics. And so typically think about our turnover every year in our lineup, we have 20% to 25% of our seed lineup would be new and improved genetics. And as Chuck said, as Dave said, that productivity that farmers are striving for in their operations, largely that's going to come from those new and improved genetics. So I'd say that is clearly something we're seeing this year, but we see that every year, just because it's that pursuit of that next level of productivity. So it is a great start to the year, I think very consistent what we expected. And I wouldn't say that it was mix driven. It was really driven by the fact that we came out with a strong lineup of high performing products. And we were able to capture the value and feel very good about where we sit there, in terms of Europe specifically on the price side, very limited seed in EMEA would be transgenic, very small amount in Spain would be transgenic. So that is nearly all non-transgenic seed. And again, the same dynamic around new and improved genetics is at work there. I would tell you to some extent, Europe is a little bit impacted because the Turkish Lira and so you're getting a little bit more pricing there because we're aggressively pricing that severe devaluation that we faced in Turkey and so that's skewing the numbers in Europe a little bit there, but the same approach to capturing value for our high performing genetics is very good. And we feel good as we roll out of North America and move into the rest of the world for the rest of 2022, that we're going to continue to see that caught mid single-digit, good, strong mid single-digit growth on seed throughout the year.

We’ll go next to Michael Piken with Cleveland Research.

Hey, good morning. Just want to dig a little bit deeper on the soybean side. You mentioned that Enlist might be about 40% of the acres. I'm curious what percentage of those acres are actually going to be sprayed with Enlist herbicides. And then secondarily, if you could talk about how the transition toward Pioneer bread and Enlist genetics is going for this year and what your target is for next year? Thanks.

Yes. Great question. And let me take, so we're still really excited about the adoption of the system. And I would say as we sit here today, again, with a relatively small amount of the crop planted, we're holding to that original guide around at least 40% of the U.S. soy acres will be planted with an Enlist E3 variety. So that holds steady and why we can't update that right now is we only have so much visibility to what the 100 licensees are in the marketplace, what they're ultimately selling, and we'll have a much better understanding of what ultimately when in the ground is we get past the midyear and after the planting season. So feel good about that in terms of the adoption of the Enlist herbicide and really getting the full value of the system. We're over 80% treated with the Enlist herbicide, so really high utilization. And again, I think that goes to the value that customers are seeing. So it's three seasons really into Enlist E3 soybeans. And we can confidently say, when you look at the seed adoption, as well as utilization of the chemistry, it's become a very trusted option for growers and growers see it as a go-to option. And we don't see that slowing down. Your question around genetics and where we're headed here, I mean, this is going to be a really important season for us and we're going to be doing extensive demonstration trials of a new class of Corteva developed E3 varieties that we anticipate ramping up for 2023. So the question is – your point is when are you going to see it, I think you're going to start to see that in terms of demonstration in 2023 or 2022 in the field in anticipation of a significant move in 2023. And again, once we get through the planning season, we'll be in a better position to update that 40% number for planting of E3 seed, but feel very comfortable that, that we'll be at least at that level and again, at that high utilization on the chemistry system.

We’ll go next to Joshua Spector with UBS.

Good morning. This is Lucas Beaumont on for Josh. So I just wanted to go back to crop protection pricing a bit if we could. So I mean, yours has accelerated kind of double digits. I mean, in the market more generally, we're seeing fragmentation sort of where certain products are up, like very significantly and others more modestly in the normal kind of mid single-digit range. Can you discuss sort of the mix and pricing you're seeing across your portfolio, and then just how you think the overall CPC pricing will evolve through the rest of 2022? So I guess, just lastly like, when are you kind of expecting pricing to peak now this year, given it's already quite elevated? So, I mean, do you think it will accelerate or decelerate kind of into the fourth quarter and sort of roughly what you think your exit rate will be? Thank you.

Yes, Lucas, this is Robert. Thanks for the question. Yes, we did have a good start in Q1 and thanks for recognizing the margins. As you look at where we are, and as we're moving forward here, we're in improvement process, our new products are starting to show up. We just talked about quite a bit and this mix is helping us not only with the farm productivity, but with the value that you're seeing and it's getting pulled forward. When you begin to look at the rest of the year, we do expect to have some headwinds. And as you know, in the crop protection, our business will shift to the South into Latin America. So their mix would be a little bit different, but we've got new products coming on like the Spinosyns we talked about earlier. And we think that some of these things are going to help improve our offerings around the world and specifically into Latin America. So we're going to continue to balance inflation with cost increases of – with price and productivity to help offset those. And overall, we expect margin to hold across the year.

We’ll go next to Frank Mitsch with Fermium Research.

Hey, good morning. Looking forward to Iowa in September, for sure. And since last conference call, you guys have made the move to one single headquarter in Indianapolis, you've spoken about the new organizational structure and also mentioned that optimizing the costs – support costs and so forth. And so I was wondering if you could kind of size how we should be thinking about the productivity improvements for the company, sort of how the pace of that layers in over this year and next year?

Yes. Hi, Frank. So let me give you where we are. I'm probably not going to answer your question directly today. You need to come to Johnston, Iowa, and you'll get that answer in September, but let me just kind of frame the journey that we've been on. So look, I said this before, when I started with the organization, but overall I'm very pleased with the strategic direction of Corteva. I do believe that the company is quite uniquely positioned when you look at our products and our brand portfolio, the innovation pipeline, but more than the innovation pipeline, the science and innovation competencies and capabilities that we have in Johnston and here in Indianapolis. And then of course, Tim mentioned it today. Our customer and channel reach is truly unprecedented. So the work that we're focused on right now is really, we're going to provide a little bit more clarity in September on the strategic direction, but I'd say it's tweaking. It's really clarity around what we will focus on and what we won't focus on. We're going to try to really – with the organizational changes we've made to move to two global business units. We're really trying to drive accountability into our culture, streamlining and simplifying the product portfolio will be the next effort. So that effort is well underway right now, we're looking at the global portfolio, we're looking at where we operate around the world and we're trying to make the decisions on how do we enhance performance and drive speed of business. And so that work is progressing very nicely. And by the time, we get to the September Investor and Innovation session that we're planning, we'll be able to give you at least a view on the operational and financial journey that we believe the company will be on. And by that point, we will have made some other decisions. And then of course, the important part of September will be and the reason we're having it at Johnston is we'd like to demonstrate some of our technology. We're very proud of what we've been able to build over the last several years. And I think it's time that we sort of start sharing more of that with our stakeholders. So stay tuned.

Our last question comes from Arun Viswanathan with RBC Capital Markets.

Arun – maybe operator, you can go to the next, is there another question. We can’t hear Arun.

Okay. We'll go to our next caller from Adam Samuelson with Goldman Sachs.

Yes, thanks. Good morning, everyone. So maybe coming back to me earlier discussion on Enlist and the move of that into the higher end Pioneer, Germplasm. Can you just help us think about – so the market share for the higher end Pioneer Germplasm where it sits today? Has that been something where maybe there's been a little bit of loss of market share because it has the extend trade in it that you're no longer prioritizing and that is going to see a pretty meaningful shift next year. And just how we think about rebuilding the market share for your own Germplasm and soy, that includes the Enlist trait moving forward.

Yes. So Adam, good question. So I would say that the products that we're selling today are highly value and Pioneer's been very supportive of Enlist E3. So this isn't about all of a sudden Pioneer's going to be in the game with Enlist 3, our overall reach in the soy market with our brands is somewhere in the – call it in the mid-30s would be what our brand share is. And the majority of that would be in the Pioneer side. So clearly, we've got a strong reach in the marketplace with our owned seed brands and we've got over 100 licensees that are in the marketplace selling Enlist E3. So it's a material move and as we ramp up our proprietary genetics, it's going to have a strong impact, not just in terms of I think the performance of our products and the experience that our customers receive but it's also going to have a very positive impact on our financial performance as well. And the underlying financial health of our soybean seed business specifically and also our overall seed business. So a strong move forward as we move into 2023.

Okay. And that concludes today's call. We thank you for joining and for your interest in Corteva. We hope you have a safe and wonderful day. Thank you.

This does conclude today's conference. We thank you for your participation.