MON
#Thanks, <UNK>.
Happy new year, and good morning to everybody who's joining us today.
Our teams have continued to remain focused on our top 2 priorities, namely, delivering our business goals while working towards closure on the deal to combine with Bayer.
These business goals include advancing our pipeline, a pipeline that not only leads the industry, but serves the industry through our broad licensing strategy, and progress in our sustainability commitments, as noted in our report from just a few weeks ago.
Let's begin with an update of the status of the Bayer merger, as shown on Slide 5.
With Bayer leading the regulatory process, we continue to cooperate with regulators, and we see progress, as expected.
The antitrust approvals continue to increase, and we've now received about half of them.
In addition, the U.S. Committee on Foreign Investment, or CFIUS, has completed its review, and there are no unresolved national security concerns.
Overall, we continue to remain optimistic about our collective ability to secure the required approvals for the deal in the early part of 2018.
And even as we progress closer to the expected closure of the combination, our teams have maintained their focus on the business.
We delivered solid first quarter results with strong growth, driven by Intacta soybeans in South America and improved pricing in glyphosate.
Our commercial teams have done a great job in delivering today's products to our customers, while our technology teams continue to advance the products of tomorrow, as shown on Slide 6.
In fact, 2017 delivered a record number of pipeline advancements.
Our common products and our flagship seed brands, DEKALB, ASGROW and Deltapine, once again set yield advantages in corn, soy and cotton, while our newest platform, Climate FieldView, delivered a remarkable 17 advancements, expanded geographically and added new partners and licensees, ultimately offering more options to more farmers around the globe.
The outlook for our latest technologies remains strong in the year ahead, as the order mix and sales to date further validate the acre expectations that we laid out for Roundup Ready 2 Xtend soybeans, Bollgard II XtendFlex Cotton and Intacta soybeans.
Finally, we're pleased with regulators' continued affirmation of glyphosate safety.
In November, we received the reregistration of glyphosate in Europe for 5 years, which while less than the 15 years that the science supported, still ensures this much-needed tool remains available for growers.
More recently, in December, the EPA issued a draft human health risk assessment concluding that glyphosate is not likely to be carcinogenic to humans, which is the most favorable classification for a chemistry.
Their conclusions are consistent with all the other regulatory science reviews from the past 40 years, as well as the 2017 Ag Health Study conducted by the National Institute of Health.
Once again, IARC continues to be the lone outlier in their assessment of glyphosate, drawing conclusions contrary to the overwhelming consensus of regulatory authorities and experts around the world.
As we look to the balance of this year, we continue to expect strong adoption of our newest technologies and improved pricing for glyphosate to be tempered by challenging global corn and soybean prices even as demand for both continues to grow, as shown on Slide 7.
Beyond that, we will refrain from further specifics as we continue to anticipate closing on the combination with Bayer in the early part of 2018.
Until then, we look forward to the possibilities our combined teams have the potential to create and make broadly available for growers around the globe as shown on Slide 8.
So with that brief introduction, let me pass it to <UNK> to share our operational priorities for the rest of fiscal year '18.
<UNK>.
Thanks, <UNK>, and good morning to everyone on the line.
We've just closed out a great first quarter in South America.
Here in the U.S., we're taking orders and moving corn and soybean seed into place for planting, albeit at a slower pace than typical due to the late harvest and anticipated corn acres being lower than we originally planned.
For soybeans, as shown on Slide 9, we're off to a great start as we delivered 30% growth in global soybean gross profit year-on-year in quarter 1, coupled with impressive margin improvement.
Let's start with Intacta on Slide 10.
The adoption of this trait continues its dramatic ascent, as we're on pace to reach 60 million acres in South America, while the second generation of the technology is not far behind.
In addition, the team delivered improved prices in local currency in the first quarter as we expected, helping to recover some of the value lost to currency over the past few years.
Finally, in Argentina, the point of delivery royalty capture system was renewed for another year, and the system continues to gain integrity.
Moving to Roundup Ready 2 Xtend on Slide 11.
Despite some headlines to the contrary, the weed control yield performance and adoption of this technology has been simply outstanding.
The Roundup Ready Xtend system yield results from our trials are in, and the 2017 performance further reinforces the expected demand with a 5.7 bushel per acre yield advantage compared to the Liberty Link system.
Further, for soybean growers who were surveyed and applied Xtendimax Herbicide with VaporGrip technology this past season, 97% reported weed control satisfaction.
And finally, our branded order book mix for soybeans indicates that 80% of our demand is for Roundup Ready 2 Xtend, which bolsters our confidence in reaching an estimated 40 million acres in fiscal year 2018.
We've received 32 of the 34 state labels we were seeking for Xtendimax Herbicide with VaporGrip technology, and we remain dedicated to improving our customers' experience with the technology through grower education efforts, tools and training.
Let's move next to corn, as shown on Slide 12, where we now expect corn acres for the U.S. and the second season of Brazil to be relatively flat with the prior year, contrary to the markets and our own earlier expectations.
Our overall gross profit declined in the first quarter, mostly due to lower volumes.
A significant portion of this was in the U.S. and is expected to be recovered later in the year, as some was related to lower corn acres in Brazil as anticipated.
In our outlook for the rest of the fiscal year, we expect to continue to launch new premium price hybrids globally and drive genetic share gains based on yield advantages of our hybrids ---+ that our hybrids convey.
We also expect to expand the footprint of our newest offerings in the U.S., which includes the DEKALB Disease Shield hybrids and Trecepta corn as our next generation of aboveground insect control, which is launching in select states.
Moving to our complementary crops, as shown on Slide 13.
Cotton gross profit is essentially flat in the first quarter.
We saw truly remarkable adoption of Bollgard 3 Cotton in Australia, as virtually the entire market transitioned in 2 short seasons, and the premium from this new technology offset the declines in planted acres there.
In the U.S., we now expect more than 6 million acres of Bollgard II XtendFlex Cotton, which is expected to be coupled with continued brand share gains following the significant gains from 2016 and 2017.
Moving beyond seed technologies, the Climate FieldView platform continues to see major advancements, as outlined on Slides 14 and 15.
It continues to expand globally, with our recent announcement of our prelaunch in Germany, France and the Ukraine adding to our existing business in Brazil, Canada and the United States.
In addition, we added yet another digital imaging partner to the platform in the U.S. and 3 new partners in Brazil while we continued discussions with several other potential partners in this space.
Finally, our target for paid acres for the year remains at more than 50 million acres, more than a 40% increase over 2017.
Let's close with Ag productivity.
We realized price increases over the prior year in the first quarter, as the generic pricing for glyphosate continues to improve, and we now expect improved prices to continue for the rest of the fiscal year, consistent with our strategy.
In addition, volumes sold of Xtendimax with VaporGrip technology are expected to continue to grow with the expanding Roundup Ready 2 Xtend soybean acres.
Overall, our teams continue to remain engaged and dedicated to our 2 priorities, with an emphasis on continuing to deliver the products and services our customers need and value to effectively compete in this challenging market.
With that, I'll turn it over to <UNK> for the financial review.
<UNK>.
Thanks, <UNK>, and good morning to everyone.
In the first quarter, our teams did an excellent job converting new technology expansion, improved glyphosate pricing and asset sales gains into earnings per share growth.
For the quarter, we delivered $0.38 of as reporting earnings per share and $0.41 of ongoing earnings per share compared to, respectively, $0.07 of as reporting earnings per share and $0.21 of ongoing earnings per share in the prior year.
Our free cash flow for the quarter was $874 million, a decline versus the prior year when we delivered $1.1 billion.
This decrease in free cash flow was primarily due to increased outflows from accruals, market funding and incentive payments stemming from the growth in the business in the prior year, as well as an increase in CapEx as we ramp up our dicamba plant investments as planned.
Shifting back to earnings per share.
Despite the slow start in the U.S. season, we delivered solid earnings growth in the quarter, driven by pricing and volume growth in Intacta in South America, complemented by improved pricing in glyphosate and by the more than $85 million in gains from the sale of assets, the most significant of which was from the sale of the Precision Planting business to AGCO.
SG&A and R&D increased, mostly due to higher commissions, POD cost and bad debt expense associated with the growth in South America, as well as from inflationary increases and increased spend on R&<UNK>
Meanwhile, the tax rate decreased to a more normalized level due to the reduction in the valuation and allowance in Argentina, as well as from a favorable shift in the discrete items.
Consistent with our prior quarterly earnings call, I once again share some qualitative highlights on the outlook for the year, but will not provide specific financial guidance given the pending combination with Bayer.
The growth drivers for our business for this year are expected to be derived from continued improvement in pricing for glyphosate, plus the adoption of new technologies in seeds and genomic, specifically the nutrition and pricing from Intacta, continued penetration of Roundup Ready 2 Xtend soybeans and share gains from Bollgard II XtendFlex Cotton, as well as reductions in related launch costs and share gains from the introduction of new corn hybrids globally, particularly from the expansion of Disease Shield and the launch of Trecepta in the United States.
We anticipate completing our restructuring and cost savings initiatives, beginning fiscal year '15 as outlined on Slide 16, and expect our SG&A R&D to be down to slightly ---+ down slightly year-over-year despite the increase in the first quarter.
Meanwhile, the asset sales gains and licensing contribution from strategic portfolio management are expected to be about 30% below the roughly $350 million pretax average annual contribution we've seen for the last 3 years.
We were pleased to see the recent passage of the U.S. tax reform legislation and expect it to have a positive impact on our effective tax rate beginning in fiscal year 2019.
For the current fiscal year, we are still completing our full assessment, but our early estimates indicate that our effective tax rate should not exceed 30% and has the potential to be materially lower.
Overall, with a strong start in the first quarter, combined with the puts and takes I've just outlined for the full year, we continue to expect nice growth in our pretax income for fiscal year '18 and will remain disciplined as we monitor the evolution of U.S. corn and soybean plantings through the spring.
With that, I will now pass it to Robb to share the update on the pipeline.
Robb.
Thanks, <UNK>, and good morning to everybody on the phone.
This year, we advanced a record number of projects, spanning all platforms, and allowing us to continue to fuel innovation for the industry through our broad licensing approach.
Our pipeline is stronger than it's ever been, as evidenced by Slide 3 in our pipeline update slides.
In fact, not only is this the fifth consecutive year of more than 20 pipeline advancements, but even with the launches of the Roundup Ready Xtend crop system and products like Trecepta corn, we still expect up to $25 billion in peak revenues from the core pipeline alone, and newer platforms like Climate FieldView, digital ag and biologicals are all upsides.
Let's begin with what farmers are experiencing today, as shown on Slide 4.
DEKALB is outperforming competitive corn products for the 12th consecutive year, while Asgrow soybeans and Deltapine cotton have done the same for 8 years.
What's even more exciting is we're starting to see the first wave of seed products developed with artificial intelligence and advanced marker technologies reaching customer fields.
Over 50% of the new 2017 U.S. corn deployment class were developed with these technologies.
And in our breeding trials, we saw a 30% increase in the yield advantages of this deployment class versus our key competitor's hybrids.
Performance of these products has been excellent, and it reinforces the impact that new precision breeding technologies can have on our ability to accelerate the rate of gain across our corn row crops.
Moving to the next generations of biotech solutions for weed and insect control, the coming decade looks bright, as shown on Slide 5 and 6.
It begins with Trecepta corn, which is launching this year.
This is a product targeted for certain areas of the U.S. where aboveground caterpillar pests are particularly acute, but belowground insect pressure isn't necessarily a threat.
And coming right behind is the fourth and fifth generations of aboveground insect control for corn that just advanced.
And for those areas with rootworm challenges, SmartStax PRO corn continues to make strides within Phase 4 of our pipeline, and we have already initiated early licensing discussions with several companies.
This product is designed to offer growers a unique RNAi approach to manage insect resistance and expand control to supplement what is currently available in SmartStax.
Switching from corn to soybeans on Slide 7 and 8, the next generation soybean trait upgrades are on the horizon.
In addition to the great weed control farmers are experiencing with Roundup Ready 2 Xtend soybeans, the next generation adds glufosinate tolerance to the package.
And with the tremendous success of Intacta, it's encouraging to see both the second and third generations close behind with additional modes of action and expanded spectrum.
Equally as exciting as the new traits are the new herbicide formulations that have advanced in several phases of the pipeline.
This includes our new PPO herbicide formulation through our collaboration with Sumitomo, who developed the herbicide.
This new formulation is expected to be paired with our fifth generation of herbicide tolerance technology, also in Phase 1, and tools like these give growers new options to maintain effective weed resistance management.
Cotton, as showed on Slide 9, had numerous advancements.
Lygus and thrips control cotton, an industry-first, based on an innovative biotech solution for controlling piercing, sucking insects, advanced to Phase 4, and we expect to commercialize this technology in the next 2 to 3 years.
And to supplement the Bollgard franchise, Bollgard 4 now moves to Phase 2, which ensures the continued efficacy of the platform for growers in the United States and Australia.
We've had several advancements in seed applied solutions, as shown in Slide 10, which included 4 advancements from the BioAg Alliance with Novozymes.
In addition, NemaStrike Technology, a novel nematicide, with a fit across 125 million acres of corn, soybeans and cotton, advanced to launch.
We currently anticipate our second round of ground breaker trials this spring and remain excited about the yield advantage of the product.
Look for an update on our commercialization plans later in the second quarter.
Let's move next to Climate FieldView platform on Slide 11, which is advancing rapidly.
In fact, we had 17 advancements over the course of the year, and this underscores the difference in the pace of advancement between software and data development versus that of traditional chemistry and biology.
Two of these advancements included very promising launches for the coming season: manual fertility scripting and additional zone sources from imagery that improve our planting scripts.
One of the areas I'm most excited about is the subfield management of nitrogen, which allows growers to further optimize the rates and placements of their most expensive input.
I'm also very encouraged by the advancement of the corn disease diagnostic tool.
This tool has the potential to leverage the latest in machine learning to diagnose a corn disease using a simple cellphone camera scan of an affected leaf.
This allows a grower to take quick action to protect yield.
As we close out the annual review of our technologies, I'd like to end with an update on our advances in gene editing on Slide 12, which we are viewing as a true innovation in plant breeding.
Over the course of the last year, we inked numerous agreements in this space, which we think can accelerate our opportunity to drive genetic gain and R&D efficiency.
Gene editing is a key tool that can accelerate the delivery of breeding traits and gene stacks, reduce cost and potentially open up new markets, all while building upon the industry-leading breeding and testing capabilities that we have today.
Looking ahead on Slide 13, the combination with Bayer will allow our 2 companies to accelerate the pace of innovation through our complementary skills and shared vision.
Our R&D team is excited and energized by the new areas of scientific advancement we expect to unlock by combining with Bayer, which will allow us to bring more new products to farmers faster.
Thank you.
And with that, I'll pass it on to <UNK> for Q&A.
Maybe, <UNK>, a quick word on the market demand.
And then Robb, specifically on the progress we've made in formulations.
Thanks, <UNK>, and good morning, Don.
Good to hear from you.
As I think about Xtend, as I said in the prepared remarks, I'm really, really pleased with what we were able to accomplish last year, as you noted.
It was a very successful launch on 20-plus million acres of soybeans.
I think the news that continues to come out of that continues to make it even more favorable now that we have the summary on the yields were 5.7 bushel a yield benefit.
We got the data back from the farmers that used Xtendimax with VaporGrip technology, 97% satisfaction on weed control.
And that points to what we're seeing now in our order book, where 80% of our brand of business is Roundup Ready 2 Xtend soybeans.
So it's really clear that farmers have a lot of confidence in this product too, and it delivered what was expected.
To your point, there were some challenges last year with applications, no doubt about that.
And we've worked extensively with everyone in the industry to help farmers with additional training.
And Robb, I'll let you speak a little bit more to some of those actions, and some of the work with others in the industry.
Sure.
As <UNK> said, we're excited with this year.
I mean to have a product launch on over 25 million acres is pretty remarkable.
I think our goal now is to make sure that all farmers have a great experience going into 2018.
I think we're well-positioned.
I mean, I think the changes have been made with the EPA label, which has now been approved by 32 out of 34 states, and I think Minnesota will join that group within a few days.
It's really encouraging.
We bolstered that with very strong training programs.
But I think to the heart of your question, Don, I mean, we took the time and the effort to visit with every farmer who filed a concern with us.
And the good news in all of that evaluation was in the vast majority, over 90% of the situations we reviewed, the solution set is easily addressed with the proper use of the field boundaries and buffers and more training on appropriate formulations and use of nozzles.
We're very confident in our review of both the farmer results and in the thousands of tests that we've done on the reduced volatility Xtendimax product that the product can be used effectively and safely, and we're excited as we go into this year to ensure that farmers have that great experience.
And to <UNK>'s point, I mean, the growers are excited.
We're seeing strong demand for the product, and to touch 40 million acres in the second year is a pretty remarkable story.
Good morning, <UNK>, so good to hear from you.
Happy New Year.
As we look at Intacta, as I mentioned and we mentioned in the last call, we had a full expectation to raise our price based on the value that Intacta continued to deliver in the marketplace.
Along with that, there was some, as you mentioned, some adjustments put in place with the transition from Roundup Ready 1 to Intacta in South America, and some of those ran out.
Some of those transition payments ran out last year.
And we just went silent on those.
So they just went away, and that in turn, increased the price.
But yes, <UNK>, we continue to look at the value that the product was delivering into farmers and continued to price to that value, so there were ---+ we took all of that and then some, as we went into pricing.
On the patent front, we've been challenged multiple times in Brazil around the patents.
This is another challenge of our patent estate.
We have ---+ I remind you, we have multiple patents in place across Brazil addressing our technology down there, and we're confident that our position is strong and we'll prevail in this, but we'll continue to address it with those that are challenging us.
But at this point in time, I feel good about our position.
Probably as confident as we've ever felt.
So P.
J.
, good morning.
So regarding the investments we've made in digital ag, I mean, I think the way to think about it is something fairly similar to what we've invested over the last couple of years.
And I mean, we've done a couple of reallocation of resources and we feel this is a business that's well-funded and continuing to build a platform, as you mentioned, and that's really what we are trying to do in the U.S. and outside of the U.S. as well.
Regarding what we charge on a per acre basis, I mean, if you remember, the way we've done that, I mean, it's really variable.
And at this point in time, our focus is on building the platform, and some of our offering to the farmers is really based on the farm itself rather than the pure per acre basis.
So the average by itself, as of today, may not be as relevant as what we wanted it to be in the future.
And regarding the breakeven point of that business, we've always told that by the end of our LRP, we're expecting this business to break even, and that's still the time horizon we are shooting for.
Really, what's important in 2018 for us, as it was in 2017, is really to build this platform and expand this platform.
Thanks, <UNK>, good question.
The gains that we're seeing right now are really based on the use of the advanced marker technology, and also the machine learning.
We've developed the computer algorithms based on our decade of marker experience to predict better combinations.
And then the other piece that plays into that is all the work we've done on the breeding automation and the seed chippers.
The use of markers is so effective today that we can analyze those crosses in those kernels coming right out of the greenhouse, which allows us to dramatically expand our testing capability.
So that's what's driving the gain in the new releases.
And but to your point, we see gene editing in the future as a major component of our breeding program.
We've invested heavily this year in the technology and are fully deploying it across our breeding in both core crops and vegetables.
Good morning, Bob.
Happy New Year.
Corn is really an interesting crop when I think about it today.
Who would have ever guessed if somebody would have told us last year that we would see the kind of production we had this year that we would still be looking at potentially 90 million acres of corn in the U.S., and while acres are going to be down in South America and probably in the U.S., it's a huge crop.
It's a really important crop, and the demand around the world is still growing 1 billion bushels a year, as we seen again this year.
So it speaks to we have to stay focused on corn, driving productivity gains, as Robb is talking about with yields, et cetera, because the world's demand is going to continue to grow and we got to meet it.
We're living in a backdrop of where we've had 4 years now of that kind of production, which isn't normal.
And then you add that on to this year, where we, to your point of why is it slower, is a rough harvest in the U.S. Farmers really struggled.
They get slow start for some of the northern ones because the market was slow to develop up there.
We didn't have the heat and the growing degree days, so it's a slow harvest.
The weather was not very cooperative in the Central Corn Belt, particularly in the eastern part of the Corn Belt really slowed it down.
And that just delays farmers' decision-making process, fall applications of fertilizers.
So I feel good about where we sit right now.
Pricing, we knew it was going to be a very challenging environment going into it.
We didn't have great expectations for significant price increases.
We did increase prices on our new products as we always do, but when you use the value of less than $3.50 for corn, you don't get as much value for the increased yield, but you still get value, and we priced into that.
Many of our products were flat as we talked about, the previous hybrids that were already out there.
So I don't have great hope for significant price improvement in the marketplace this year.
But I would tell you, at this point, the competition, it's as robust as ever.
It is a tough year, so everybody is fighting for the last acre.
So we're going to see some of that continue.
But at the end of the day, here's how I think about it, Bob, I don't know what the acres are going to be.
I don't think they're going to be what we thought they were going to be in September.
It's cold and snowy outside, and farmers trying to make their final decision.
But here's what I'm really confident about, when it all shakes out and we get to August of next year, we're going to feel really good about where our share is in the U.S. corn market.
That's what I feel really good about.
We have the best products, the best market position.
We're well-positioned in competing in the marketplace.
Our share is going to do just fine.
We're going to get our proportionate share of the corn market.
<UNK>, you're right.
That was the conversation in the fields when you were there, and we've got a lot more data under our belt in this last season that's proven out well.
Robb, maybe a few words on how the trials look this year.
Yes.
I mean, I think to your point, the infield variable nitrogen advisers have been well received by growers.
It's added another dimension.
I think it's built on the same type of range of gains.
We see a subset of growers who are saving nitrogen applications.
We're seeing another set who are using that nitrogen reallocating across the field and driving yield.
And I think the other exciting news on the nutrient front is we've now ---+ we've expanded it to P&K, which will be another key tool for farmers to both optimize their inputs and optimize yields across their fields.
So we're very excited about the variable rate nitrogen and adding the P&K advisors.
Thanks for your questions, Jeff, but I think I'll see what Doc <UNK> says.
But I think the cold snap, it's too early to tell on.
Bug populations are pretty resourceful.
Yes.
I mean, when you think about it, I mean, we've got 2 classes of insects.
We've got root worms and caterpillars.
The root worms are more influenced by the moisture levels in the spring.
And caterpillars, the flights come in often from Mexico, so temperatures in the Midwest really have no impact on what the likely patterns will be.
<UNK>, I know you're closer to what's going on from Roundup pricing, so I'll let you follow-up with that second part.
Relocation of plants in China and environmental controls, <UNK>.
Yes, I think, Jeff, thanks for the question on that.
I think your overarching statement is true.
We definitely see China with a significantly higher emphasis on environmental and chemistry in general, and in particular, crop chemistry.
So plants are closing.
They're being relocated to industrial sites, et cetera, and that ---+ in those industrial sites, they're being required to put containment systems in place and treat the waste, et cetera.
And that all drives a bit of cost, and as they do that, I think that's what we're seeing reflected in the asset prices coming out of China.
And of course, as the generics come out of China, we're staying true to our strategy of pricing just over the generics coming out of China.
That's what's allowed us to continue to raise our price, so I think a big piece of it is that, and as well as some cost of goods, and we think that some of the raw materials going in from China are also adding a bit to it.
So it's beneficial for us from an overall pricing standpoint.
And quite frankly, it's good for the industry to see China taking those bold steps around the environment.
Yes.
We've been talking about it for years, but we've actually started doing it now.
So first, we're really pleased with the adoption of the tax reform legislation.
And I mean, all the work we've done shows that it should result in a positive outcome starting in 2019.
And obviously, the adoption of territorial system also has some benefits from a cash management perspective, so those are really important points.
Regarding 2018, well, it's still early, and our teams are evaluating the different components of tax reform.
Overall, as I mentioned, we're looking at an ETR, and we try to put a cap to what the ETR could be.
That shouldn't be any worse than 30%, and the variation that we could be seeing, I mean, result from ---+ we're working on the valuation of our deferred tax positions, including offering tax credits and looking at those may have some significant impact on the final rate impact of the deemed repatriation tax, and all of those are related.
And obviously, the rate reduction on the U.S. income, so we wanted to give some kind of guidance at this point in time to help you think about it.
And some of the data, you can find in our 10-K should also help you regarding the tax rate, but that's where we are overall.
As I mentioned, we try to put a cap on what the effective tax rates could be in 2018, knowing that it could be materially lower than that.
Have we given guidance regarding CapEx.
I mean, we have ---+ we've had a flow of CapEx over the last couple of years, and from a directional perspective, I think that's a good way to think about it, knowing that we are implementing the building of our plant in Luling regarding dicamba facility.
So on the BioAg Alliance products, we've advanced several of the new microbial products.
The ---+ we're particularly excited about the BioYield 2, which will become Acceleron 360 once we get the final regulatory approvals.
The key active ingredient here is an LCO molecule, a lipochito-oligosaccharide, which stimulates root growth and nutrient uptake.
And so in our testing in corn, we've seen 4 to 7 bushels per acre yield increases with the technology.
And we expect on most of the acres, it will be combined with our B-300 product.
So this will be a situation where we'll have multiple microbial products on the seed treatment for corn.
In terms of your question on Trecepta on pricing, first of all, the Trecepta product will be targeted for those extreme areas with high levels of caterpillar pressure, particularly army worm and others, typically in the Southern U.S. corn production belt.
And what's exciting is not only are we launching Trecepta this year, but based on the advancement of new insect control leads, we already have the next 2 generations of products advancing in the pipeline.
And that's going to ensure that growers in both North and South America have a continuity of products that are effective, both for caterpillar control and for resistance management.
Thank you for the question.
So we'll respect your time this morning.
In conclusion, as we close out today, it's ---+ I'm sure it's clear to all of you that the months ahead will be pivotal for Monsanto.
And as a team, we're clearly focused on driving the deal to completion and staying focused on delivering our year.
So on behalf of my team and myself, thanks for the continued support of Monsanto, and thanks again for joining us on the call this morning, and all the very best to you and your family in the New Year.
Thank you very much.
