Corteva, Inc. (CTVA) Earnings Call Transcript & Summary

The next -- our next presentation is going to be Corteva. We're going to have a little brief overview then a fireside chat again. Of course, Corteva is one of the leading Ag Chem producers in the world, promising multiyear growth opportunity here, robust Seeds & Traits portfolio, track of Crop Protection pipeline. So we have Chuck Magro who's the CEO of Corteva. He has been at this conference many times in different hat. Now the Corteva hat.

You were going to call me just Chuck.

I might have. Yes. I might have. I might have. And I think Chuck can give a little bit of brief overview and then we're going to do Q&A. Please submit your questions on the app. You guys have been great for the last couple. So keep it going.

Okay. Well, thanks. And Joel, it's great to be here at the Farm to Market. This is a preeminent event. Certainly, it's also spring time. We've got lots to talk about planting. Don't worry the crop is getting in, I'll say that right away. I'll cover that in just a couple of minutes. But I thought I'd do just really quickly. I know you want to get to Q&A, talk about Corteva's first quarter. I think that, that will set the stage for how we think about the year. I'll give a quick market outlook. There's lots going on in Ag, as you all well know. And then I'll wrap up with just a few of the high level value creation process, the management team and the Board are focused on at Corteva. So Q1, a quick recap, pretty solid start to the year in our view. We had double digit revenue and EBITDA growth, which is great. And that is despite the supply chain challenges that are out there still. We expect those supply chain challenges to be with us right through to 2022 for sure and the cost inflation to continue as well. So very difficult market conditions, but our supply chain has held up very well. So we're quite pleased with that. We're seeing very good growth and demand for our leading technologies, whether it's leading germplasm in Seed technology or our new CP portfolio. And in Q1, we actually saw our new CP products up about 60% quarter 1 over quarter 1 of last year. So pretty impressive growth and strong demand from farmers around the world for these leading products. On capital deployment, we had a really good start to the first quarter with our share buyback program. And as we communicated, we expect at least $1.2 billion of return of capital to shareholders this year in the form of dividends and buybacks. So a good start to the year. As you know, the first quarter is not the most important quarter in agriculture. So we'll see how the first half unfold but so far, we really like how the year is shaping up, and we think it's going to be a very strong year. Leads me to the market. So the overall agricultural fundamentals, they're very robust. We're seeing record demand for grains and oilseeds around the world. And what we have, though, is we've got a situation where we have very constrained supply. And that's what's driving low stock-to-use ratios. And if you've been in the grocery store at all, you can see food inflation prices. The supply constraints are really driven by what I call the 3 Cs. First is climate change. We've had weather issues literally around the world, then came COVID, that disrupted the supply chains and production around the world. And now we've got conflict in Eastern Europe. And when you put all this together, you've got a very tight global supply-demand and we expect the conditions for agriculture to be tight for at least a few years as we work our way through this with improved and increased supply. So that's the situation, the way we see the global Ag fundamentals, and I know, Joel, you want to talk about that. If you look against that backdrop, then you look at some Corteva specific levers for value. We made a pretty important set of announcements in the first quarter around our operating model. So we moved away from being a matrix organization to implementing 2 global business units. We did that for several factors. One of the factors, of course, we wanted to drive simplicity in our business, speed of business and accountability. And we've also, of course, reconfigured our systems so that now we have a very good look at profit by country and profit by product. So that announcement was made in the first quarter. That's going to allow us now to have a good look at our global footprint, and we're now looking at where we should produce in which countries and which product should we produce. And then we'll be able to then rightsize our SG&A once we get through the portfolio analysis. So lots of good work happening in Corteva around operational excellence, portfolio optimization. Beyond that, and if you look at our technology pipeline, a very impressive pipeline. You can see some value coming to the market right now. So our Enlist soybean system, just tremendous growth, and I know you want to talk about that, so I'll leave that for the Q&A. Our Brevant Multichannel Seed platform going into the retail channel here in the U.S. but other markets around the world, very strong market adoption there as well. And then I mentioned our CP portfolio. And then beyond that, we have a 50% capacity of our Spinosyns insecticide technology that will enter the market later this year, and that will create 2 or 3 years of incremental earnings growth as well with that franchise. So with that, Joel, I'll leave it over to you.

Okay. Thanks, Chuck. Let's start off with some short-term things. So I've got a question from the app. So for Q2, U.S. planting is delayed. How worried are you about; one, switching to soy given timing or; two, sales getting pushed out of Q3 into -- sorry, out of Q2 into Q3?

Yes. So a quick update on planting. First of all, I'm not concerned about planting. The crop is going to get planted. It's very different than the last time we had a delayed planting, which was in 2019, where we had massive flooding in major parts of the Midwest. What we've got right now is we've had just unsettled weather. There was a significant planting progress in the last 7 or 8 days. The weather forecast we're seeing here in New York, it's nice and sunny today. And I think that we're still below the 5-year planting average. So it is a little later than average but the crop will get planted. As for the mix that will get planted, right now, we're still thinking it's going to be somewhere around 90 and 90. I think the official forecast we have is 89.5 million acres of corn and about 90 million acres of soybeans. The market, the futures, if you look at them, the market is asking for more corn planting. And so I think farmers will want to plant corn economically. There's a strong incentive to do that. And if the weather cooperates in the next few days and weeks to come, I think you're going to see approximately 90 and 90.

Okay. I mean I think Corteva would have thought when the USDA came with the respective planting is that the push to beans that, that was probably too aggressive, correct?

Yes, we've been 90 and 90 for some time and the sort of the market went there. I think we were one of the first companies actually to call that. And there were lots of reasons why we thought that. There was also talk that we would see more planted acres, so more than 180 million acres of corn and beans. But those acres are not readily available to put into production. So I think what you're going to see, and it goes back to my opening comments, is we're in a multiyear journey of increased production, and it's going to take investment in technology. So from a farmer perspective, what we're seeing farmers are prioritizing top genetics, top CP products to really drive maximization in yield and productivity on the farm. That is the best way to ease the overall global inventories for food as well as the deal with -- and try to offset as much cost inflation as we have on the farm.

Okay, in the Seed markets, what are we seeing this year, so we've had some good Seed price/mix lift increases about 5, 6, mid-single digits. How are Seed price margins faring out both at producer level, distributor level, any changes you're seeing in rebate and bundling programs?

Right. Joel, so I'll give you the view of Seed. You're right. We're -- I think pricing is up mid-single digits. And we've really got a full core press on driving productivity through our production logistics, transportation, really trying to optimize our overall offering for farmers. When you look at the market, what I'd say is because the acres didn't grow specifically in the U.S. it's always been a competitive market. It is even a more competitive market now. But when I think about it, our strategy really hasn't changed when it comes to how we think about long term pricing for Seed. Seed is a very important decision for farmers. It's one of the most important that they will make. It is purely a technology decision. And I think that is a differentiation from some other crop inputs. And what we want to do is we want to be able to bring and demonstrate that value on the farm. So our R&D engine is geared towards genetic gain on the farm every year. And we want to be able to demonstrate that to farmers so that they can drive productivity and profitability of their own operations. And then we share in that value creation so that we can keep that engine going, so we can continually drive genetic gain. If you just look at the situation right now with the supply constraints, there's nothing more important than bringing the latest technology to drive productivity on the farm.

Are you worried about Seed inventories? You've got some not the best weather in different markets, Brazil and the U.S.? Is there a concern that Seed inventories could be high this year?

I'm not concerned that Seed inventories will be high. I'm concerned that Seed inventories could be a little low. It's going to depend on what we see from a planting perspective, how late the U.S. and North America is. Similar constraints in the U.S. with weather being quite dry. So overall, we're watching Seed inventories very, very closely. And there's a strong demand right now for the top technology. So basically, Corteva is sold out from a top technology perspective. And we're -- we've got a robust planting season plan. We did secure the acres we needed around the world, and now we just have to deliver those -- that Seed and produce it. So it's too early to get overly concerned about this. But Seed inventories and forecasting for 2023, it's going to depend on a lot of constraints, including weather right now.

Okay, so second question. So you think that you'll -- people -- farmers really want to push corn as hard as they can. The question is, do you see the market responding to increase in soy demand for renewable fuels? Or is that for a different year?

Yes. So that's the challenge right now is, I guess, to be completely accurate, if you think about global crop pricing, there's a demand for almost -- an increased demand for almost everything, right? So there was this interesting dynamic between soy and corn. Obviously, the market in the short term is looking for more corn, but it's also looking for more wheat and more cotton. And so these are important crops as well in the United States, and they will obviously maintain their acreage. I think longer term, the notion of renewable or biofuels and especially when you start thinking about aviation fuel, that can be a long-term structural change. So what we are talking about right now, I think our short-term supply-demand dynamics and what the market needs. I think the question though is a very good one. There are some longer-term structural catalysts, including demand for biofuels in aviation fuel that could ultimately shift more acreage needs to soybeans around the world, but especially here in the U.S., and I would say in Brazil, Joel.

Do you think there's a good opportunity for seed margin expansion next year because if we get another 5%, 6%, 7% Seed price/mix lift increase and then the cost difference to grow the seeds to pay the farmers this year for next year sales won't be as high an increase as it was this past year? I know I blew that question. You know what I'm saying, right?

Yes. You're asking about '23 seed [indiscernible].

I am. But expansion for the reason I'm saying, but the inflationary impact is lower relatively than the Seed pricing piece. I blew the question. You got it. You got it.

Okay. So look, we need to get this crop in the ground for '22. It's way too early to be specific around '23. But, look, everyone knows that one of the major inputs to our seed and our seed pricing, therefore, is the commodity itself, the commodity prices are higher today. So in this market, if that were to hold, that would be a major consideration for how we think about seed pricing. But I want to go back to my previous comments, our overall strategy there is still to price for value. We want to make sure that there's genetic gain on the farm every year and farmers share in that value. We're going to take our share and we're going to reinvest it in crop technology and innovation, specifically around Seeds so that we can continually gain yield and productivity. Because right now, there is a deep concern and I share this concern around food security and supply/demand of food.

Okay, maybe just a little bit about Xtend and so your competitor came out today and was saying at this conference, Xtend Flex is really showing a much better yield improvement versus Enlist, 2.7 bushels per acre. How is the roll-up of Enlist doing this year? How are you on track to really hit your better germplasm in the next couple of years, are you going to reduce your royalty payments to Bayer over the next couple of years? How is that all playing out?

Yes. Thanks for the question. So we couldn't be happier with the performance of Enlist, the entire system. So this year, we expect that it will cross $1 billion of revenue for the complete system, including the herbicide offering. So we're very pleased. We just received a 7-year registration from the EPA. And from an Enlist perspective, it was one of the first molecules that went through the new framework for Endangered Species Act, and there's minimal restrictions for that product. So it is a superior technology. I think you can see it in being on the acre. So last year, we were on 35% of the U.S. soybean acres. This year, we expect to be on at least 40%. So strong demand driven by the farmer in the U.S. for the Enlist platform. I think it is a superior technology. There's now confidence for multiyear investment from a farming perspective because of the registration extension went to 7 years. And over time now, so now that this is set up, we're almost on the doorstep of value creation for Corteva because we're at this point where we're going to see continued market share improvement, but more bags are going to have the Corteva germplasm. And that will allow us to reduce our royalty payments quite significantly. And the first significant tranche of that will come in 2023, and it will ramp up throughout the decade, but we'll have very meaningful value creation that will drop to the bottom line by 2025.

And your predecessor was also looking at the idea of trying to get more of a Pioneer or Corteva germplasm into some private label offerings. And then you, in your former hat, I mean you were selling -- you guys don't like when I talk about your former hat. But okay, sorry.

You're not going to ask your product...

No, I'm not going to ask what the Chinese product Corteva is going to sell. But in your former hat, I mean, then you were selling a very successful private label Seed brand. So I guess I'm asking, what is the opportunity for Corteva now to displace Monsanto in some of these proprietary Seed offerings and make it a two-horse race.

Yes. Look, being in this business as long as I've been in it, farmers want choice. They want choice of top technology. I think the retail channel wants choice. And the way we're going to go to market is exactly that way. If you think about Brevant, for example, that is our top genetic technology going to the retail channel. So we under serve that channel as Corteva for quite some time. And for those that don't understand the market, the way it is set up in the U.S. Basically, it's 1/3, 1/3, 1/3. So 1/3 of the Seed market is through regional independents, 1/3 is through Corteva's dealership model and the Pioneer brand and 1/3 is through the retail channel. And we were really quite underserved in that 1/3 of the retail channel. Now we have a phenomenal offering. The demand for Brevant and Brevant technology is quite high. In fact, we're sold out this year. And that's just a testament, I think, of the strong demand for choice that I think retailers and farmers want from their retail suppliers. So I think we have a lot of options and opportunity as a company over time to think about private label and whose name is on the bag. But our goal right now is to ensure that we build a strong relationship at the retail level, and we bring technology that farmers can really drive yield and productivity. And we think Brevant plus Enlist will do that.

Okay. Let's talk Crop Protection. What's the current -- what's the -- so what's the crop chem's dynamic by region right now with respect to demand and inventories.

Right. So the CP market is very robust. And in fact, if you look at our Q1, one of the reasons we had such a successful Q1, and it was because of our CP business price mix and volume. And it's consistent around the world. So we're seeing strong demand for CP products basically globally which is great to see. We are also seeing strong demand for top CP technology. So -- and sustainable and green type products are -- have very high demand right now. So we think that from an inventory perspective, the channel was quite depleted after last year because last year was a robust year as well. And with the supply constraints that everyone had, the channel was quite depleted at the end of last year. Today, as we sit here, what I would say is the inventories are where they need to be for the season. So I would put that in the normal category. But I'm also quite confident that the product that the channel has, whether it's through the retail channel or what's sitting on the farm today or even in our inventory, it will be used because I think given the pricing and the volatility that we've all seen, no one in the channel really wants to hold excessive inventories. And then if you think about crop pricing and farmer margin, First of all, farmer margins are quite healthy. I think farmers are going to prioritize investment to protect the crop. And I think that means a very robust year for CP around the world.

Okay. I had a question that came up earlier in the presentation, and I'll read it to you. So do you have any concerns with the way Chlorpyrifos was canceled by the EPA under a zero food tolerance standard in place of a registration cancellation. What is being done with existing stocks of that product in the retail channel?

Yes. So I really can't talk a whole lot about that product and the situation there. What I would say is we've got a very robust program around it. It is something that we're highly focused on. I think we're going to act in the best interest of the channel and of the company. But because it's current situation, we really can't comment a whole lot on that, Joel.

Okay, fair enough. The Spinosyns, you're expanding capacity. Talk about the additional margin contribution you expect from that in '23 and beyond?

Right. So Spinosyns, it's a great franchise for us. It is a natural biological insecticide very proprietary and unique technology exclusive to Corteva. Today, that franchise, it's hovering around $900 million of revenue. So it's a very sizable piece of business for us. And we're just about to start up a 50% capacity expansion later this year. And so you're going to see us grow that product. That product has been in high demand for many years. And what we've seen is that we really don't have any more supply to meet that demand. So we embarked on our capacity expansion a couple of years ago, and that will start up this year. And so it will add to top line and bottom line earnings over the next 3 or 4 years.

And are there any markets, I mean, I guess that technology was Dow, right? As a fermented technology, I think there was some capacity constraints at Dow and then obviously, Corteva had to sell off the diamides to FMC to get the merger then. Now that [indiscernible] were there any markets with particular opportunities, it's a region, it's -- that the Spinosyns can really maybe attack that they couldn't before because it was under invested in?

Right. Yes. So the product has a pretty wide areas of use, but I think the major area that we're focusing on are the specialty high-value crops. So that seems to be a sweet spot for the Spinosyns technology. And obviously, if you think about specialty crops, fruits and vegetables, that's an area that is very high growth around the world. So you're going to see the growth basically around the world in areas where they're really focusing on specialty crops. And we probably -- we have been -- like I said, we have been constrained in that product for a very long time. It is a fermentation product, so it's going to take us -- it won't be like a synthetic chemistry where we'll be able to turn it on and have that 50% capacity all in '22. It's going to take us a couple of years to bring up that production capacity.

One of those products is Jemvelva, right?

Yes.

And now you're the CEO, have you thought about changing the name to maybe something else? Any think tanks? Sorry about that, right.

You don't like the name Jemvelva?

I don't love it. No.

You remember it.

I remember it. What does it mean again? It is a bad joke. Okay. Can we talk about some of the buckets of growth going on. I think what people say about Corteva is and it's obvious, I mean, your margins significantly lag your major peers. If you define your peers, FMC and Bayer Crop Science. So the opportunity is with the trait royalty payments rolling off and the cost oppositions you can make and Seed price/mix lift and the copper tanks pipeline and all the things you're doing to be able to get those margins to 20% and beyond and close the gap to peers. Maybe you don't think of it exactly that way. But I think that's what excites investors. Can you talk about that?

Sure. So look, lots of good work have been done, right? The margins for Corteva have increased over the last several years, a couple of hundred basis points. So good performance so far. I think when we look forward, obviously, we believe that there is significant catalyst for value creation beyond the agricultural backdrop, which is just positive, and I'll put them in a couple of buckets. So the first bucket is around operational excellence. So we're going to have a really good look at our product portfolio, as I mentioned, and refine the portfolio. So what you're most likely going to see from a Corteva perspective is we're probably not going to produce the same amount of products, the same number in the -- for the same countries. And then we're going to try to drive the overall product efficiency from an SG&A perspective to right size the company once we make our portfolio decisions. So getting the operational performance right. The other thing we're working on is there's a lot of initiative inside of the organization to look at our manufacturing footprint, where we produce our cost structure, how we can use our size and scale and leverage to drive productivity in manufacturing and in procurement. So that's a big group of effort underway right now, and we'll be able to communicate sort of more specifics about that, probably before our Investor Day in September.

Feel free to disclose some of the key points today right now. Nothing's stopping us.

Yes. And I'll just along here. Beyond that then, it's really the technology pipeline that's going to bring margin in and gross margin enhancement and then bottom line margin enhancement. And that has to do with the Enlist systems platform. We've talked about Brevant, which we've talked about. We haven't talked about Conkesta but that will ultimately add margins. So Conkesta is our soybean franchise technology that we're slowly ramping up for the Brazilian market.

Competing with Intacta.

Compete with Intacta. Very -- so far, the product data has been very strong, but it's going to take us some time because we're just getting started in that. But that will have value creation attached to it, certainly in the middle of the decade. And then our CP portfolio, which we've talked about last year, that portfolio was $1.4 billion for new products, and we expect that to grow about 20% this year alone. And then the Spinosyns franchise. So that when you add that all up, I think what you're going to see is you're going to see top line growth, you're going to see faster bottom growth and therefore, I think, margin and bottom line growth. And then beyond that, I think you're going to -- we're going to have a better conversion from EBITDA to cash over time because of the -- I think, the simplicity and focus of the portfolio. So we're very pleased with the performance. What we plan to do is we'll make some of these announcements prior to the Investor Day. But then at the Investor Day, we will lay out an operational and financial framework to think about the company so that we can articulate through the journey that we're on for the next 3 to 5 years.

I mean I remember talking to you in December, and you've been on the job for, I think, less than 2 months here. October in the job?

November 1.

So less than 2 months. And I think what had surprised you was the magnitude of unallocated costs. That fair? I think you sort of came across -- maybe Dave had seen last year in some of his early months on the job.

Yes. So this is normal through mega mergers, right? I've been through a couple of these things now. And the integration of systems is always a challenge and an opportunity in itself. But in the early days of Corteva, we put the company together and we got the basics done. And I think we did a very good job of delivering synergies and really putting the systems together. We also put a financial system across the different ERPs because we knew we needed a consolidated look at finance. So a lot of good work was done. I think the next step in our evolution, and I would call it an evolution, is we want to make sure that we're driving the right behaviors, we have the right incentive programs and the right culture. And in order to do that, there was a bucket of unallocated costs that we have now allocated to either products or countries, and we've now rewired the organizational structure so that we have people that are clearly accountable for almost every element on the P&L, starting from revenue to the cost structure to profit. And so now we have a structure. And so what we're in the process right now with working with the Board of Directors is we want to realign compensation and incentive programs so that -- and we have the financial and the reporting system now with the fidelity to do that.

Let's talk about that. So in the last 4, 5 months, you've now allocated presumably billions of dollars, unallocated costs, so now a bunch of people said, these are now your costs. What was that like? That must have been tough discussions.

Not at all. I think it's provided clarity and I think that, that's what the organization wants. And certainly, from my perspective, it's always better to have an understanding of what you own and what you don't and have a clarity on where those numbers come from. We needed confidence in those numbers, which we have today. So I think going forward, it's going to be easier to make these decisions when we look at the portfolio because we can now look at a product in a country and know if we're profitable pretty much down to the EBITDA level. And so what's coming is really the depth of quality of the conversations and soon will be the decisions that we will make around the portfolio.

So now that you allocate the cost, were there any key findings you want to share?

Stay tuned, Joel.

That was a fair question. Okay. Let's talk about digital for a little bit. I got some questions in how important -- excuse me, how do you see the importance of digital in your offering in the next few years?

Yes. So digital is another area of the organization where we're having a really good look at. We have some wonderful digital tools. And I think that the team has done a great job of putting the customer first. I think the area of opportunity that I see for Corteva is we want to make sure that the digital tools are enabling what we do for a core of the company, which is bringing Seed technology and CP technology to drive productivity and yield on the farm. So there's an effort underway right now to look at the digital tools and see how we can integrate that in a commercial offering for the farmer. So that is the work that's underway right now. And we've made some organizational changes there too. So now we have Sam Eathington who is our Chief Technology Officer. He's also now our Chief Digital Officer. So there's a nice integration between what's coming down the R&D pipeline, how those products are performing and what we need to do to unlock full potential on the farm from a digital perspective. All that's under Sam's purview now, and we're seeing benefits even today with the change. We just made these changes recently, and that's going to reorient the digital organization to be more integrated with the R&D and commercial organization and putting the farmers' needs first.

I mean if I think of like Bayer and I think of Nutrien, I think digital is a way to be able to sell more products and services as part of a bundle, not really a discrete revenue-generating platform. And I think your days at Agrium, you would have agreed that even years and years ago. Would you agree with that's how you look at it at Corteva as well?

That's how we plan to look at it. Yes.

And so I mean, I've done some work on carbon, right, where the hope is that maybe carbon could be a revenue generator for digital, right? And the problem with carbon, I've sort of seen is it's hard to monitor carbon sequestration in the soil after you've done cover crop and no-till. The precision is hard. You find out that maybe the amount of carbon you can bank in the soil is less than the academics thought. It's extremely expensive actually to do cover crop seeds and your yield really suck for the first couple of years and farmers hate when the yields aren't good. And so the ROI could take years and years for payback and so farmers aren't buying in. And I know lots of companies are doing a lot of carbon trials. Is that a problem to really push forward a carbon market in the Ag world?

Yes. So certainly, I agree with your comments on digital. Digital needs to be an integrated offering to bring full solutions to the farmer to sell digital as a service. We just don't see agriculture as the best market for that. Moving to carbon. So -- but, this is a really important, I think, future journey for agriculture if we're going to change the food system and really respond to climate change, the agricultural food system has to find a way to produce food with less carbon. So I want to start there because I think it's really important. But like you rightly called out, Joel, the science is extremely complex because we're talking about living organisms that shift and change, and when you have different practices on the farm, you might temporarily store carbon, but you never get rid of that. That carbon is still there. And if you then do something different, you can release the carbon. So I think the journey for us from a Corteva perspective is like many companies, we have pilot programs underway, and we're trying to learn with farmers. Now, my perspective has been very clear from this for many years. The value of carbon sequestration and abatement, the majority of the value needs to accrue to the farmer because they have to do the work, and they have to be stewards of their land. And so it's going to take companies like Corteva to help them with the science and the understanding and the know-how. And then it's going to take smart policy framework as well, in conjunction with this, so that we have a carbon value system where farmers feel like they're getting adequately rewarded and compensated for sequestration and abatement of carbon. So I think we're on the right path but there is a lot of work here. A lot of work to do.

Any question in the room, maybe wants to raise your hand before I keep going, the last 5 minutes? Okay, just checking. Right. And I think on the carbon, it's interesting because I can see a world where if you can convince the growers that it'll take you 5 years, but you're going to redo your soil and you're going to have the food system will pay you a premium for your crop down the road, but to get them over the hump of seeing how bad their yields are on the way to get there to me is difficult. And I think that's why some of the companies like Land O'Lakes that have been focusing on this, have switched to more of a sustainability focus than just carbon. And I don't know if Corteva has -- maybe Corteva's had that kind of thinking too. I'm not sure.

Yes. Well, yes, I think we have. So look, I think it's not -- we want lots of folks want to talk about carbon for the right reasons. But the overall sustainability needs to be around doing more with not only less carbon, but less water, less land, less crop inputs. And so we're all trying to focus on that initiative. I think the other driver that Corteva specifically is trying to work on is biodiversity. So by that phrase, we mean we have to keep investing in the latest technology to drive productivity so that there is just less land needed to produce food. And that is one of the biggest drivers, I think, of our sustainability focus as an organization. At our essence, as a company, we're a technology company. So when you think about that, where can we put the science and technology understanding we have to work, it's on productivity on the farm.

I want to go back a bit about some of the cost work that you and Dave are doing. How much is Corteva in different places is still siloed from the old Dow and DuPont. I'm asking culturally or even more than that. Is that something you have to still fight?

No, I don't think so. I think, look, after 3 years, now in our fourth year as Corteva, I think the organization is clearly focused on a Corteva set of values, on Corteva costs. I don't sense walking the halls. I can't pick up that this is legacy Dow or legacy DuPont or Pioneer, however we described it historically. And from an ownership of cost, I don't see there's silos there as well. I think where we -- our focus right now is just we needed a spotlight on those costs. We needed to understand where they were and who owns them, and we have that now as an organization. So I think if you put the right people together with ownership and accountability and you have -- you're looking at one set of data, so one source of the truth, I think the right decisions will be made for the organization, for the farmer. And we -- I can see that happening before my eyes right now. So we've only made this change in the first quarter, but I can see the depth of the conversations that are happening around the different leadership tables have improved. The right questions are being asked, and I believe the right decisions will be made in the future. So I'm really encouraged by this, sometimes it's really difficult to talk about sort of culture and your management system from a recording perspective. But what I've seen is that this is really going to help us kind of deliver the ultimate potential for the company.

I mean you announced some months ago that you would be consolidating, well, you be, I guess, not hiring anybody new or willing to, if I understood what you're saying. So maybe over time, you'd be closing Wilmington. Not putting words into your mouth, but maybe only putting new people into the other head office. Is that right? And maybe talk about that and explain, maybe clarify.

Yes. So no, if you heard that, that was wrong. Yes. So look, what -- the decision that we made for, I think, the right reasons, we moved the global headquarters to Indianapolis. The reason we did that is because Indianapolis is an operating and a technology center. And certainly, Dave and I wanted to be closer to our technology and our operating center. Wilmington is still an important corporate office. It's just not a headquarters. Now, Wilmington is also 250 people, whereas the other operations are much larger than that. But Wilmington also houses some of our key finance, legal, IT resources and skills. And for those out there that are trying to hire that skill today, it's -- they're very high demand. We have some phenomenal talent in Wilmington that we plan to keep, and people will have a rewarding careers living in Wilmington. However, the global headquarters is now in Indianapolis because we wanted to be closer to our customers and our operations. So that's the decision that we made.

Okay, 1 minute left, Chuck. What is the one thing you're most excited about at Corteva in the next 3 years?

Certainly, from my perspective, the most exciting thing for me is the -- one reason I joined the company was I really saw that technology pipeline in the full potential. And then just the last 6 or 7 months, I've been part of this organization, to see the Enlist growth and the performance of that technology. Brevant now really making an impact for farmers around the world and the new green technology that we have in that pipeline, I think we're taking our first steps to changing the food system as an organization, and I know others are doing it in the industry, but I'm pretty pleased and proud of the organization to be leaders in sustainability and agriculture.

Okay, Chuck. Thanks a lot.

Thanks.