Dave Anderson
Executive Vice President, Chief Financial Officer at Corteva
Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide number 6, which provides the financial results for the quarter and the year-to-date. You can see from the numbers that we continue to deliver operating EBITDA growth and margin expansion despite the mixed market conditions that Chuck outlined.
Briefly touching on the quarter. Sales and earnings were largely in line with our expectations. Organic sales were down 13% compared to prior year, with Seed pricing gains offset by volume declines in both Seed and Crop Protection. Lower Seed volumes were driven by lower expected planted area and delayed farmer purchases in Brazil and an earlier operational finish to the season in North America. Crop Protection volumes were impacted by approximately $95 million in product exits. In addition, we saw inventory destocking in both North America and Latin America and delayed farmer purchases, particularly in Brazil.
Turning to year-to-date, sales were down 1% versus prior year, with broad-based pricing gains offset by lower volume. Global pricing was up 9%, with gains in all regions and increases in both Seed and Crop Protection. Seed volume was down 5% versus prior year, largely driven by the decision to exit Russia. Crop Protection volume was down 16%, which includes a 5% impact from product exits. To put it in perspective, total exits year-to-date represent a $530 million impact to volume. Now despite the reduction in the top-line growth, strong operational performance translated into operating EBITDA of nearly $3 billion year-to-date, an increase of 5% over 2022. Pricing, favorable product mix and productivity more than offset higher costs in volume and currency headwinds, driving more than 120 basis points of margin expansion for year-to-date.
So, let's now go to Slide 7. You can see the gains in the Seed business were offset by Crop Protection market headwinds year-to-date, where total Company organic sales declined 1% compared to prior year, which again includes a 4% headwind to volume from the exits. Seed net sales were up 7% through the third quarter to more than $7.8 billion. Organic sales were up 9% on strong price execution as we continue to price for value and offset higher input costs. Global Seed price was up 14% year-to-date, with gains in every region, led by North America and EMEA. Seed volumes were down 5% versus prior year. Gains in North America, driven by increased corn acres, were offset by declines in EMEA, driven by the exit from Russia as well as lower corn planted area. In Latin America, due to expected corn planted area and delayed plannings, the exit from Russia represented a 3% headwind for the Seed segment.
Crop Protection net sales were down 10% versus prior year to approximately $5.7 billion. Organic sales were down 12%, with pricing gains more than offset by lower volume. Global Crop Protection pricing was up 4% year-to-date as the high-single-digit pricing gains from the first half of the year moderate due to increased competitive pressures. Crop Protection volumes were down 16% through the third quarter, impacted by channel destocking, a shift in timing of seasonal demand delaying farmer purchases in Latin America as well as more than $330 million headwind or 5% impact from exits. Currency headwind for the total Company was 2%, largely driven by European currencies. And finally, the Biologicals acquisitions added more than $280 million of revenue, which is reflected in portfolio and other.
With that, let's go to Slide 8 for a summary of the year-to-date operating EBITDA performance. During the first three quarters, operating EBITDA increased approximately $140 million to just under $3 billion. Year-to-date, we delivered more than $1 billion in pricing and product mix improvement. Pricing gains, coupled with improvement in net royalties, productivity and cost actions more than offset declines in volume and higher cost and currency headwinds. The roughly $460 million of net cost headwind was related to Seed commodity costs and an unfavorable yield impact, as well as Crop Protection inflation on input costs.
Crop Protection raw material costs were up 5% versus prior year as we sold through higher cost inventory. Market-driven and other costs were mitigated by approximately $190 million of improvement in net royalty expense and $240 million of productivity savings.
SG&A spend year-to-date is up less than 1% versus prior year, including nearly $90 million in SG&A from the Biologicals acquisitions. Excluding acquisitions, SG&A is down versus prior year by 3% as we maintained disciplined spending despite year-over-year inflation. Currency was a $228 million headwind, driven largely by European currencies.
Now, as Chuck noted, we're taking several large steps to optimize the Crop Protection manufacturing footprint. You can see more details on Slide 9. Although this analysis has been in process for some time, given the current global macroeconomic backdrop in the Crop Protection industry, we're taking the opportunity to accelerate these actions. We expect to record pretax restructuring and asset-related charges of $410 million to $460 million through the end of 2024, including $320 million to $340 million of noncash asset-related and impairment charges. Cash payments related to these actions are anticipated to be $90 million to $120 million, primarily related to the payment of severance and related benefits and contract terminations. And we're estimating annual run rate EBITDA improvement of approximately $100 million by 2025, which translates to a payback of a little more than two years. Of course, we'll keep you posted on the progress of this plan as we deliver a reliable and yet flexible cost competitive supply network.
Turning now to Slide 10. I want to take you through the full year guidance. We now expect net sales for the year to be in the range of $17 billion and $17.3 billion or down 2% at the midpoint, including a 3% impact from portfolio exits. This change from our August guide is driven by lower volume and pricing expectations in Brazil Seed and Crop Protection. We continue to expect over $400 million of net sales for the full year from the Biologicals acquisitions.
Operating EBITDA is now expected to be in the range of $3.25 billion to $3.45 billion, 4% growth versus prior year at the midpoint. The updated guidance is driven by lower top-line growth, partially offset by productivity and cost actions. These updates translate into an expected operating EBITDA margin of 19.5% at the midpoint of guidance, approximately 100 basis points of margin expansion over 2022, led by the strength of our Seed business performance. Operating EPS is now expected to be in the range of $2.50 to $2.70 per share, down 3% versus prior year at the midpoint. The change in guidance reflects lower operating EBITDA, partially offset by lower interest expense and lower forecasted effective tax rate and lower share count.
Free cash flow is now forecasted to be in the range of $600 million and $1 billion, with a change in guidance reflecting the lower earnings range and the forecast for higher inventory and lower payables. And as Chuck mentioned, we expect share repurchases to be approximately $750 million for the year, which includes roughly $580 million that we completed through the third quarter.
Let's now transition to the setup for 2024. Slide 12 presents the initial high-level view of our planning framework and provides key assumptions as we begin our internal planning process for 2024. Importantly, using this framework as a starting point, we expect to deliver earnings and margin growth again in 2024. After a 7% increase in U.S. corn acres in 2023, we expect to shift back to soybeans in 2024, while also expecting lower planted area for Brazil Safrinha. But the ag fundamentals remain relatively healthy, with U.S. farmer income and commodity prices above historical average. However, we expect Brazil farmer margins to remain generally tight, particularly in corn due to macro factors, including higher interest rates and lower commodity prices.
Our price per value strategy continues to be a key lever, driving organic growth. Pricing for our yield advantage technology and differentiated solutions is expected to drive low-single-digit pricing gains for the total Company in 2024. We continue to make progress on our portfolio simplification. We expect another $100 million of volume headwinds related to product exits. But despite the impact of the product exits, we expect Crop Protection volume gains in the U.S., led by new and differentiated products. Brazil volumes are expected to be muted due to ongoing expected market dynamics. Biologicals are expected to grow double-digits with both price and volume gains.
Cost and productivity will remain a focus for the organization as we drive improved margins. While we're seeing the prices of raw materials fall, the cost improvements in Seed and Crop Protection will lag spot commodity price trends, driven by the timing of inventory turns. In Seed, we expect another $100 million of improved royalties as we shift to more proprietary technology, and we expect to combine $100 million of productivity in Seed and Crop Protection. We'll continue to tightly manage our SG&A costs, with core SG&A expenses increasing less than inflation. R&D will continue to increase as we invest in innovation for the long term.
To summarize and highlight, we expect lower revenue growth in 2024 as well as in 2025 versus the level implied in our multi-year revenue targets. Despite this, we're confident in our ability to continue to deliver earnings and EBITDA margin within the range of our 2025 financial framework.
So, with that, let's go now to Slide 13 and just summarize the key takeaways. Importantly, our third quarter year-to-date operating EBITDA performance is in line with expectations, led by the strength of our Seed business. Continued cost discipline and productivity actions, coupled with significant improvement in royalty expenses, is making a difference to the bottom-line and helping to drive more than 120 basis points of margin expansion year-to-date. The current guidance range reflects updated fourth quarter outlook and, importantly, still forecasts operating EBITDA and margin growth for the year. The planning framework for 2024 that we shared today supports continued earnings growth and, as you would expect, will be followed with detailed market analysis and planning assumptions when we release full year '23 results in early February.
With that, let me turn it over to Kim.
