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Press release from PR Newswire

Record Second Quarter Reflects Strong U.S. Results, Drives Increased Full-Year Outlook for Monsanto

Wednesday, April 04, 2012

Record Second Quarter Reflects Strong U.S. Results, Drives Increased Full-Year Outlook for Monsanto08:00 EDT Wednesday, April 04, 2012Company Raises Full-Year Ongoing Earnings Per Share Guidance to $3.49 to $3.54, or $3.45 to $3.50 As-Reported, While Increasing Free Cash Flow GuidanceST. LOUIS, April 4, 2012 /PRNewswire/ -- With half the fiscal year complete, Monsanto Company (NYSE: MON) executives today said the strong performance of the seeds and traits business and the timing of an early U.S. season drove a record quarter. In reporting earnings results, executives said the cumulative strength of the business, including the best second quarter for the company's seeds and genomics segment, translated to an increase in full-year ongoing and as-reported earnings per share guidance.  The company also increased its free cash flow guidance for the full year.Second QuarterSix Months($ in millions)2012201120122011Net Sales By SegmentCorn seed and traits$2,816$2,397$3,711$3,011Soybean seed and traits689615931841Vegetable seeds215229372412Cotton seed and traits6667260179All other crops seeds and traits138113184141TOTAL Seeds and Genomics$3,924$3,421$5,458$4,584Agricultural productivity$824$710$1,729$1,383TOTAL Agricultural Productivity$824$710$1,729$1,383TOTAL Net Sales$4,748$4,131$7,187$5,967Gross Profit$2,705$2,310$3,801$3,134Operating Expenses$896$823$1,747$1,583Interest Expense ? Net$27$20$62$48Other Expense ? Net $37$11$43$23Net Income Attributable to Monsanto Company$1,211$1,018$1,337$1,027Diluted Earnings per Share (See note 1.)$2.24$1.88$2.47$1.89Items Affecting Comparability ? EPS ImpactRestructuring charges???0.01Income on discontinued operations(0.01)(0.01)(0.01)(0.01)Nitro Claims Settlement0.05?0.05?Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 1.)$2.28$1.87$2.51$1.89Effective Tax Rate31%29%31%30%Second QuarterSix MonthsComparison as a Percent of Net Sales:2012201120122011Gross profit57%56%53%53%Selling, general and administrative expenses (SG&A)11%12%15%16%Research and development expenses7%8%10%10%Income from continuing operations before income taxes 37%35%27%25%Net income attributable to Monsanto Company26%25%19%17%"Our strong U.S. selling season and growth from Latin America during the first six months have come together to set us up for a great 2012," said Hugh Grant, chairman, president and chief executive officer for Monsanto. "We've seen contributions from growth across crops and geographies, which position us well to deliver high-teens ongoing earnings growth this year. We're also pleased growers have recognized the value of our product portfolio and given us the opportunity to earn their business."Results of OperationsNet sales increased $617 million or 15 percent in the three-month comparison driven by global gains in corn and a strong selling season in the United States. Second quarter gross profit rose 17 percent to $2.7 billion compared to the prior year second quarter. For the first six months, gross profit is up 21 percent or $667 million. Operating expenses were up in the second quarter compared to the prior year, tracking with the increases the company would expect as it grows its business. In the three-month comparison, selling, general and administrative (SG&A) expenses increased to $543 million.  R&D expenses increased to $353 million for the quarter based on investments to support future growth opportunities. The company's second quarter earnings per share (EPS) was $2.28 on an ongoing basis, $2.24 on an as-reported basis. (For a reconciliation of ongoing EPS, see note 1.)Cash FlowFor the first half of fiscal year 2012, cash flow from operations was a source of nearly $1.7 billion compared to $1.4 billion over the same period last year. Net cash required by investing activities for the first half of fiscal year 2012 was $402 million, compared to $524 million for the same period of fiscal year 2011. Net cash required by financing activities for the first half of 2012 was $672 million, compared to net cash required of $668 million for the same period of fiscal year 2011.  Free cash flow was a source of nearly $1.3 billion for the first half of fiscal year 2012, compared to $917 million for the first half of fiscal year 2011. (For a reconciliation of free cash flow, see note 1.) OutlookThe company raised its full-year ongoing EPS guidance to $3.49 to $3.54 per share. Full-year 2012 EPS guidance on an as-reported basis is expected in the range of $3.45 to $3.50. (For a reconciliation of EPS, see note 1.) The company also raised full-year free cash flow guidance to $1.6 to $1.8 billion. The company expects net cash provided by operating activities to be $2.5 billion to $2.8 billion, and net cash required by investing activities to be $900 million to $1 billion for fiscal year 2012. (For a reconciliation of free cash flow, see note 1.)Seeds and Genomics Segment Detail($ in millions)Net SalesGross ProfitSecond QuarterSix MonthsSecond QuarterSix MonthsSeeds and Genomics20122011201220112012201120122011Corn Seed and Traits$2,816$2,397$3,711$3,011$1,847$1,506$2,378$1,845Soybean Seed and Traits689615931841443414616567Vegetable Seeds21522937241285125166238Cotton Seed and Traits66672601794742182116All Other Crops Seeds and Traits13811318414169446544TOTAL Seeds and Genomics$3,924$3,421$5,458$4,584$2,491$2,131$3,407$2,810($ in millions)Earnings Before Interest & Taxes (EBIT)Second QuarterSix MonthsSeeds and Genomics2012201120122011EBIT (For a reconciliation of EBIT, see note 1.)$1,699$1,403$1,846$1,383Unusual Items Affecting EBIT: Restructuring$?$(3)$?$(14)The Seeds and Genomics segment consists of the company's global seeds and related traits business. Sales in the Seeds and Genomics segment for the second quarter were $3.9 billion, representing an increase of $503 million over the same period last year and reaffirming the company's seeds and traits business as its central driver for growth in 2012. Gross profit in the second quarter was up $360 million or approximately 17 percent compared to the prior year second quarter. For the first six months, gross profit is up 21 percent over the same period last year.  Second quarter growth was led by the strength of Monsanto's corn business, with the strongest contributor being the U.S. corn business. The strong start to the U.S. season reinforces the company's confidence in its product and pricing strategy and its ability to build on the branded corn volume increase achieved in 2011. The company also saw higher corn sales in Latin America in the quarter. The soy and cotton businesses also continue to perform well year-to-date. In soybeans, second quarter seeds and traits sales were up 12 percent driven by an increased trait mix of Genuity® Roundup Ready 2 Yield® soybeans in the United States. With the strong U.S. results, sales are tracking well for the expected increase in the company's newest corn and soybean platforms in the United States.  While still early in the season, Monsanto expects acres of its Genuity® Roundup Ready 2 Yield® soybeans and Genuity® reduced refuge corn family to increase by more than 10 million acres each.  That step up is expected to allow the company to reach the projected 22 million to 24 million acre range for the Genuity® reduced refuge corn family and the 27 million to 30 million acre range for Genuity® Roundup Ready 2 Yield® soybeans in 2012.  Vegetable sales were down from the same quarter of the prior year due primarily to current market conditions in Europe. Vegetable gross profit was also down compared to the same quarter of the prior year reflecting the European market decrease, as well as an inventory write-off that will also help support the company's vegetable business growth strategy.Agricultural Productivity Segment Detail($ in millions)Net SalesGross ProfitSecond QuarterSix MonthsSecond QuarterSix Months20122011201220112012201120122011Agricultural Productivity$824$710$1,729$1,383$214$179$394$324TOTAL Agricultural Productivity$824$710$1,729$1,383$214$179$394$324($ in millions)Earnings Before Interest & Taxes (EBIT)Second QuarterSix MonthsAgricultural Productivity2012201120122011EBIT (For a reconciliation of EBIT, see note 1.)$82$62$164$127Unusual Items Affecting EBIT:Restructuring$?$?$?$4EBIT from Discontinued Operations$11$4$11$4Nitro Claims Settlement$(44)$?$(44)$?The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products. Sales in the second quarter for Monsanto's Agricultural Productivity segment increased $114 million over the same period last year due to strong volume and mix benefit.  Webcast InformationIn conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today. The call will focus on these results and future expectations and may include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business. Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's web site at www.monsanto.com and clicking on "Investor Information." Visitors may need to download Windows Media Player? prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto Web site for three weeks. About Monsanto CompanyMonsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. To learn more about our business and our commitments, please visit: www.monsanto.com.  Follow our business on Twitter® at www.twitter.com/MonsantoCo, on the company blog, Beyond the Rows® at www.monsantoblog.com, or subscribe to our News Release RSS Feed.Cautionary Statements Regarding Forward-Looking Information:Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits and the previously-announced SEC investigation; the previously reported material weakness in our internal controls over financial reporting; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's most recent Form 10-K Report to the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results. Notes to editors: Genuity and Roundup Ready 2 Yield are trademarks of Monsanto Company and its wholly-owned subsidiaries. References to Roundup herbicides in this release mean Roundup-branded herbicides, excluding lawn-and-garden herbicide products.ContactMedia:      Sara Miller  (314-694-5824)Analysts:  Bryan Hurley (314-694-8148)Monsanto CompanySelected Financial Information(Dollars in millions, except per share amounts)UnauditedStatements of Consolidated Operations Three Months EndedSix Months EndedFeb. 29,Feb. 28,Feb. 29,Feb. 28,2012201120122011Net Sales$4,748$4,131$7,187$5,967Cost of Goods Sold 2,0431,8213,3862,833Gross Profit2,7052,3103,8013,134Operating Expenses:Selling, general and administrative expenses5435021,043952Research and development expenses 353320704623Restructuring charges, net?1?8Total Operating Expenses8968231,7471,583Income From Operations1,8091,4872,0541,551Interest Expense473910082Interest Income(20)(19)(38)(34)Other Expense, Net 37114323Income from Continuing Operations Before Income Taxes1,7451,4561,9491,480Income Tax Provision540429610438Income from Continuing Operations Including PortionAttributable to Noncontrolling Interest$1,205$1,027$1,339$1,042Discontinued Operations:Income from Operations of Discontinued Businesses114114Income Tax Provision4141Income on Discontinued Operations7373Net Income$1,212$1,030$1,346$1,045Less: Net Income Attributable to Noncontrolling Interest112918Net Income Attributable to Monsanto Company$1,211$1,018$1,337$1,027EBIT (see note 1)$1,781$1,465$2,010$1,510Basic Earnings per Share Attributable to Monsanto Company:Income from Continuing Operations$2.25$1.89$2.49$1.91Income on Discontinued Operations0.020.010.01?Net Income Attributable to Monsanto Company$2.27$1.90$2.50$1.91Diluted Earnings per Share Attributable to Monsanto Company:Income from Continuing Operations$2.23$1.87$2.46$1.89Income on Discontinued Operations0.010.010.01?Net Income Attributable to Monsanto Company$2.24$1.88$2.47$1.89Weighted Average Shares Outstanding: Basic534.4536.3534.9537.6Diluted540.5542.4540.9543.7Monsanto CompanySelected Financial Information(Dollars in millions, except per share amounts)UnauditedCondensed Statements of Consolidated Financial PositionAs ofAs ofFeb. 29, 2012Aug. 31, 2011AssetsCurrent Assets:Cash and cash equivalents (variable interest entities restricted - 2012: $12 and 2011: $96)$3,123$2,572Short-term investments302302Trade receivables, net (variable interest entities restricted - 2012: $176 and 2011: $51)2,3412,117Miscellaneous receivables 661629Deferred tax assets536446Inventory, net2,8622,591Other current assets199152Total Current Assets10,0248,809Property, Plant and Equipment, Net4,2594,394Goodwill 3,3773,365Other Intangible Assets, Net1,2771,309Noncurrent Deferred Tax Assets799873Long-Term Receivables, Net372475Other Assets613619Total Assets$20,721$19,844Liabilities and Shareowners' EquityCurrent Liabilities:Short-term debt, including current portion of long-term debt610678Accounts payable 681839Income taxes payable578117Accrued compensation and benefits306427Accrued marketing programs1,0081,110Deferred revenues847373Grower production accruals22987Dividends payable160161Customer payable994Restructuring reserves1624Miscellaneous short-term accruals749819Total Current Liabilities5,1934,729Long-Term Debt1,5381,543Postretirement Liabilities494509Long-Term Deferred Revenue292337Noncurrent Deferred Tax Liabilities127152Long-Term Portion of Environmental and Litigation Reserves178176Other Liabilities703682Monsanto Shareowners' Equity 11,99411,545Noncontrolling Interest202171Total Shareowners' Equity12,19611,716Total Liabilities and Shareowners' Equity$20,721$19,844Debt to Capital Ratio:15%16%Monsanto CompanySelected Financial Information(Dollars in millions, except per share amounts)UnauditedStatements of Consolidated Cash FlowsSix Months EndedFeb. 29, 2012Feb. 28, 2011Operating Activities:Net Income $1,346$1,045Adjustments to reconcile cash provided by operating activities:Items that did not require (provide) cash:Depreciation and amortization 311310Bad-debt expense(8)(6)Stock-based compensation expense7255Excess tax benefits from stock-based compensation(26)(19)Deferred income taxes(33)(10)Restructuring charges, net?8Equity affiliate income, net(3)(8)Net gain on sales of a business or other assets(2)(4)Other items6559Changes in assets and liabilities that provided (required) cash, net of acquisitions:Trade receivables, net(265)(612)Inventory, net(356)(249)Deferred revenues445656Accounts payable and other accrued liabilities142472Restructuring cash payments(7)(152)Pension contributions(33)(44)Other items24(60)Net Cash Provided by Operating Activities1,6721,441Cash Flows Provided (Required) by Investing Activities:Purchases of short-term investments(429)(180)Maturities of short-term investments429?Capital expenditures(239)(217)Acquisitions of businesses, net of cash acquired(113)(99)Technology and other investments(56)(44)Other investments and property disposal proceeds616Net Cash Required by Investing Activities(402)(524)Cash Flows Provided (Required) by Financing Activities:Net change in financing with less than 90-day maturities(8)(12)Short-term debt proceeds945Short-term debt reductions(17)(27)Long-term debt reductions(142)(2)Payments on other financing?(2)Treasury stock purchases(299)(381)Stock option exercises5237Excess tax benefits from stock-based compensation2619Tax withholding on restricted stock and restricted stock units(1)(4)Dividend payments(322)(302)Proceeds from noncontrolling interests1018Dividend payments to noncontrolling interests(71)(47)Net Cash Required by Financing Activities(672)(668)Cash Assumed from Initial Consolidations of Variable Interest Entities?77Effect of Exchange Rate Changes on Cash and Cash Equivalents(47)26Net Increase in Cash and Cash Equivalents551352Cash and Cash Equivalents at Beginning of Period2,5721,485Cash and Cash Equivalents at End of Period$3,123$1,837Monsanto CompanySelected Financial Information(Dollars in millions)Unaudited1.EBIT, Ongoing EPS and Free Cash Flow:  The presentations of EBIT, ongoing EPS and free cash flow are not intended to replace net income (loss) attributable to Monsanto Company, cash flows, financial position or comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following tables reconcile EBIT, ongoing EPS and free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP. Reconciliation of EBIT to Net Income (Loss):  EBIT is defined as earnings (loss) before interest and taxes. Earnings (loss) is intended to mean net income (loss) attributable to Monsanto Company as presented in the Statements of Consolidated Operations under GAAP. The following table reconciles EBIT to the most directly comparable financial measure, which is net income (loss) attributable to Monsanto Company.Three Months EndedSix Months EndedFeb. 29, 2012Feb. 28, 2011Feb. 29, 2012Feb. 28, 2011EBIT ? Seeds and Genomics Segment $1,699$1,403$1,846$1,383EBIT ? Agricultural Productivity Segment8262164127EBIT? Total 1,7811,4652,0101,510Interest Expense, Net27206248Income Tax Provision(A)543427611435Net Income Attributable to Monsanto Company$1,211$1,018$1,337$1,027(A)Includes the income tax provision from continuing operations, the income tax benefit (provision) on noncontrolling interest, and the income tax on discontinued operations.Reconciliation of EPS to Ongoing EPS:  Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations.Fiscal YearThree MonthsThree MonthsSix MonthsSix Months2012 EndedEndedEndedEndedGuidanceFeb. 29, 2012Feb. 28, 2011Feb. 29, 2012Feb. 28, 2011Diluted Earnings per Share$3.45-$3.50$2.24$1.88$2.47$1.89Restructuring Charges, Net????0.01Income on Discontinued Operations(0.01)(0.01)(0.01)(0.01)(0.01)Nitro Claims Settlement0.050.05?0.05?Diluted Earnings per Share from Ongoing Business$3.49-$3.54$2.28$1.87$2.51$1.89Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operating activities and investing activities, as reflected in the Statements of Consolidated Cash Flows presented in this release. With respect to the fiscal year 2012 free cash flow guidance, Monsanto does not include any estimates or projections of Net Cash Provided (Required) by Financing Activities because in order to prepare any such estimate or projection, Monsanto would need to rely on market factors and conditions that are outside of its control.Fiscal YearSix Months Ended2012 GuidanceFeb. 29, 2012Feb. 28, 2011Net Cash Provided by Operating Activities$2,500-2,800$1,672$1,441Net Cash Required by Investing Activities (900)-(1,000)(402)(524)Free Cash Flow$1,600-1,8001,270917Net Cash Required by Financing ActivitiesN/A(672)(668)Cash Assumed from Initial Consolidations of Variable Interest EntitiesN/A?77Effect of Exchange Rate Changes on Cash and Cash EquivalentsN/A(47)26Net Increase in Cash and Cash EquivalentsN/A551352Cash and Cash Equivalents at Beginning of PeriodN/A2,5721,485Cash and Cash Equivalents at End of PeriodN/A$3,123$1,837SOURCE Monsanto Company