Corteva CEO: What it's like to be on the 'front-edge' of the agricultural supply chain

Jim Collins, Corteva CEO, joins Yahoo Finance to discuss the agricultural chemical company's recent earnings report, the White House response, outlook for the agricultural industry and more.

Video Transcript

ALEXIS CHRISTOFOROUS: All right, this market has turned mixed, folks. We've got the broader market slightly in the red. The Dow holding on with a gain of about 58 points right now.

Joining us is Jim Collins. He is CEO of the biotech and agriculture group Corteva. Jim, good to see you again, and thanks for being with us.

You know, a common theme of first-quarter earnings conference calls has been lower profit margins because of extra costs related to the pandemic, but you say that lower margins don't have to be the reality. How so?

JIM COLLINS: Right. Alexis and Brian, great to-- great to be with you again. Yeah, we announced our first-quarter results this past Thursday. We had revenue of about $4 billion. That was 16% growth over the same period last year. We announced earnings, operating EBITDA of about $800 million-- that was up 53% over the same period last year-- and earnings per share of about $0.59. That was 79% growth year over year.

So we're carrying fantastic momentum here through the first quarter. We really sit at the front edge of those ag supply chains of seed and crop protection. And farmers all around the world only have one way to generate income, and that's to plant a crop. So we're happy to be able to support them.

BRIAN SOZZI: Jim, just going over some of the margins in your business in the quarter, I mean, the seed business up 720 basis points year over year. That's a big quarter from a business like yours. Does that reflect farmers and the ag industry just coming to you saying, hey, listen. We're in the midst of a health crisis. We need to grow more food, and we need to grow it as quick as possible.

JIM COLLINS: Clearly we had a couple things going on this quarter. First, the weather this season really broke favorably for us. So mother nature is really in the driver's seat when it comes to when these crops grow into the ground.

Second, really strong technology, a great pipeline of brand-new products. And so we have some pricing margin-- some pricing momentum in there as well.

And then finally, I've just got an incredible team around the world that just executed really well in the quarter. Despite all the crisis and everything that's going on, they really stayed focused on, you know, that most important thing, and that's serving our customers.

So, like I said, we're at the front end of this ag supply chain, and growers know that, you know, we need grain to support the animal industry, to support food stocks around the world. And in a crisis like this, food matters.

ALEXIS CHRISTOFOROUS: Jim, I know that you were among the CEOs asked to be part of the White House's Great American Economic Revival. This was a call that President Trump made in April. Some CEOs on that list did not know they were part of that until they heard their names announced at the White House. Were you given notice ahead of time? I'm curious. And since then, have you talked to the president, or has anything happened with that group?

JIM COLLINS: Yes, I was honored to be a part of that phone call. We were made aware of it about 24 hours in advance, and it was a great forum to sit around with other CEOs that are managing companies like ours that are dealing with the crisis. So it's a great learning opportunity for me.

At the same time, great opportunity for me to share some very specifics about things that I believe the government could do to support agriculture here in the US. I've had some fantastic follow-up phone calls with Secretary Perdue at USDA, and I'm quite proud of how the USDA has responded to this crisis, especially around things like operating loans for small-- for small growers and certainly helping our ag-retailer industry.

BRIAN SOZZI: Jim, just based on your conversations with the administration, how do you think your business will change moving forward to support the after-- just the after effects of the coronavirus?

JIM COLLINS: Well, clearly we're looking forward at things like commodity prices and trying to understand what basic grain demand is going to look like. I think some of the steps that the administration has taken to assure that key processing facilities are remaining open and can be operated safely, some of the new guidelines that are out there have certainly been supportive. I think anything that the administration could do to support the ethanol industry is going to be important for grain demand, and we've made our views known there. I think as the economy begins to rebuild and we start consuming gasoline again, that situation will adjust.

And then finally, we're a global business. So we have a strong business in Latin America and certainly in Asia, but anything the administration can do to support the grain trade globally and the free movement of grains, you know, around the world, you know, that's just core for us. And so, you know, we've been very supportive of USMCA and certainly the other trade discussions that US has had with China. Holding them accountable to the phase-one agreements that they made is going to be really important.

ALEXIS CHRISTOFOROUS: All right, a discussion for another time, trade and agriculture. Jim Collins, CEO of Corteva, thanks so much for being with us.

JIM COLLINS: Great to be with you.