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Press release from PR Newswire

Monsanto Company Delivers Strong Third Quarter As Seed Business Maintains Momentum Through Culmination Of Key Selling Seasons

Wednesday, June 27, 2012

Monsanto Company Delivers Strong Third Quarter As Seed Business Maintains Momentum Through Culmination Of Key Selling Seasons08:00 EDT Wednesday, June 27, 2012Company Reaffirms Fiscal Year 2012 Earnings Guidance, Projecting Up to 25 Percent Ongoing Earnings Growth and Setting Stage as Layers of Opportunity Across Business Position Company Well for Strong Growth in Fiscal Year 2013ST. LOUIS, June 27, 2012 /PRNewswire/ -- Monsanto Company (NYSE: MON) executives today said the continued momentum of its seeds and traits business through key seed selling seasons drove a strong third quarter, further highlighting a year of the company's proven delivery on important business drivers. Executives also reaffirmed Monsanto is on track to achieve its recently increased ongoing earnings growth target and is poised to see mid-teens earnings growth off that base given the strength of its core business.Third QuarterNine Months($ in millions)2012201120122011Net Sales By SegmentCorn seed and traits$1,515$1,123$5,226$4,134Soybean seed and traits6986051,6291,446Cotton seed and traits490487750666Vegetable seeds195216567628All other crops seeds and traits230216414357TOTAL Seeds and Genomics$3,128$2,647$8,586$7,231Agricultural productivity$1,091$961$2,820$2,344TOTAL Agricultural Productivity$1,091$961$2,820$2,344TOTAL Net Sales$4,219$3,608$11,406$9,575Gross Profit$2,363$1,973$6,164$5,107Operating Expenses$1,013$952$2,760$2,535Interest Expense ? Net$18$18$80$66Other Expense ? Net $3$15$46$38Net Income Attributable to Monsanto Company$937$692$2,274$1,719Diluted Earnings per Share (See note 1.)$1.74$1.28$4.21$3.17Items Affecting Comparability ? EPS ImpactRestructuring charges???0.01Income on discontinued operations??(0.01)(0.01)Nitro claims settlement??0.05?Resolution of a legacy tax matter(0.11)?(0.11)?Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 1.)$1.63$1.28$4.14$3.17Effective Tax Rate27%28%30%29% Third QuarterNine MonthsComparison as a Percent of Net Sales:2012201120122011Gross profit56%55%54%53%Selling, general and administrative expenses (SG&A)15%16%15%16%Research and development expenses (R&D)9%10%9%10%Income from continuing operations before income taxes 32%27%29%26%Net income attributable to Monsanto Company22%19%20%18% "With our most significant selling seasons wrapped up, the third quarter gives us a near complete view of our business for the fiscal year and I feel very good about where we stand," said Hugh Grant, Monsanto's chairman, president and chief executive officer. "We've achieved excellent business results this year, but more importantly we've continued to receive positive response to our products from farmers.  As I look to 2013 and beyond, I am confident as our momentum is now validated with sustained business results and I believe the opportunity ahead for our customers, our business and our owners is significant."Results of OperationsNet sales increased $611 million or 17 percent in the three-month comparison driven by unit volume growth in the company's seeds and traits business, complemented by better-than-expected sales across Monsanto's chemistry portfolio. Third quarter gross profit rose 20 percent to $2.3 billion compared to the prior year third quarter. For the first nine months, gross profit is up 21 percent. Operating expenses were up $61 million in the third quarter compared to the same period in the prior year. In the three-month comparison, SG&A expenses increased to $638 million.  R&D expenses also increased to $375 million for the quarter, reflecting incremental investment as the company continues to advance and expand its pipeline.The company's third quarter earnings per share (EPS) was $1.63 on an ongoing basis, $1.74 on an as-reported basis. EPS for the first nine months of fiscal year 2012 was $4.14 on an ongoing basis, $4.21 on an as-reported basis. (For a reconciliation of ongoing EPS, see note 1.)Cash FlowThe third quarter saw a continuation of the strong first half of the fiscal year for cash flow. For the first nine months of fiscal year 2012, cash flow from operations was a source of $853 million compared with a source of $944 million in the first nine months last year. Net cash required by investing activities for the first nine months of fiscal year 2012 was $542 million, compared to $707 million for the same period of fiscal year 2011.  Net cash required by financing activities for the first nine months of 2012 was $1 billion, compared to net cash required of $766 million for the same period of fiscal year 2011.  Free cash flow was a source of $311 million for the first nine months of fiscal year 2012, compared to a source of $237 million for the first nine months of fiscal year 2011. (For a reconciliation of free cash flow, see note 1.) Earlier this month, the company announced that its board had authorized a new share repurchase program, effective July 1, 2012, for up to $1 billion of the company's common stock over a three-year period. Monsanto's existing $1 billion share repurchase program is nearly complete.OutlookThe company confirmed 2012 earnings per share guidance in the range of $3.65 to $3.70 on an ongoing basis, with mid-teens ongoing earnings growth for fiscal year 2013 projected from the base of $3.65 to $3.70. The company expects 2012 earnings per share on an as-reported basis to be $3.73 to $3.78. (For a reconciliation of ongoing EPS, see note 1.) The company also reaffirmed its previously announced full-year free cash flow guidance for fiscal year 2012 in the range of $1.7 billion to $1.8 billion. The company expects net cash provided by operating activities to be $2.7 billion to $2.9 billion, and net cash required by investing activities to be $1 billion to $1.1 billion for fiscal year 2012. (For a reconciliation of free cash flow, see note 1.)Seeds and Genomics Segment Detail($ in millions)Net SalesGross ProfitThird QuarterNine MonthsThird QuarterNine MonthsSeeds and Genomics20122011201220112012201120122011Corn Seed and Traits$1,515$1,123$5,226$4,134$927$679$3,305$2,524Soybean Seed and Traits6986051,6291,4464633861,079953Cotton Seed and Traits490487750666385386567502Vegetable Seeds19521656762894123260361All Other Crops Seedsand Traits230216414357152132217176TOTAL Seeds and Genomics$3,128$2,647$8,586$7,231$2,021$1,706$5,428$4,516 ($ in millions)Earnings Before Interest & Taxes (EBIT)Third QuarterNine MonthsSeeds and Genomics2012201120122011EBIT (For a reconciliation of EBIT, see note 1.)$1,111$880$2,957$2,263Unusual Items Affecting EBIT: Restructuring$?$(1)$?$(15) The Seeds and Genomics segment consists of the company's global seeds and related traits business. Sales for Monsanto's Seeds and Genomics segment in the third quarter of fiscal 2012 increased 18 percent or $481 million over the prior year period supported by strong sales across its U.S. corn and soybean portfolios. For the first nine months, gross profit in the segment is up approximately 20 percent over the same period last year. In the U.S. market, continued sales momentum carried from the early spring throughout the planting season and an increase in planted acres of corn across the country helped deliver a record seed sales volume season for the company. In 2012, the company achieved continued strong adoption of its latest innovations, with its Genuity® Roundup Ready 2 Yield® soybeans projected to be on close to 30 million acres and its Genuity® reduced refuge corn family projected to be on more than 25 million acres this year in the United States. The successful U.S. season was complemented by strong performances in key international markets, including Europe and Latin America. In Latin America, strong continued performance in Brazil was driven by an increase in total acres, mix improvement and higher-than-anticipated overall sales.  In the Northern hemisphere, core business growth and expanded acres helped drive better-than-expected performance in Eastern Europe.Agricultural Productivity Segment Detail($ in millions)Net SalesGross ProfitThird QuarterNine MonthsThird QuarterNine Months20122011201220112012201120122011Agricultural Productivity$1,091$961$2,820$2,344$342$267$736$591TOTAL Agricultural Productivity$1,091$961$2,820$2,344$342$267$736$591 ($ in millions)Earnings Before Interest & Taxes (EBIT)Third QuarterNine MonthsAgricultural Productivity2012201120122011EBIT (For a reconciliation of EBIT, see note 1.)$190$95$354$222Unusual Items Affecting EBIT:Restructuring$?$?$?$4EBIT from Discontinued Operations$(3)$?$8$4Nitro Claims Settlement$?$?$(44)$? The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products. Sales in the third quarter for Monsanto's Agricultural Productivity segment increased $130 million over the same period last year due to higher-than-expected sales across the company's chemistry portfolio, including its Roundup®, lawn-and-garden and selective herbicides businesses. 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: Roundup, Genuity and Roundup Ready 2 Yield are trademarks of Monsanto Company and its wholly-owned subsidiaries. ContactMedia: Sara Miller (314-694-5824)Analysts: Bryan Hurley (314-694-8148) Monsanto Company Selected Financial Information(Dollars in millions, except per share amounts)UnauditedStatements of Consolidated Operations Three Months EndedNine Months EndedMay 31,May 31,2012201120122011Net Sales$4,219$3,608$11,406$9,575Cost of Goods Sold 1,8561,6355,2424,468Gross Profit2,3631,9736,1645,107Operating Expenses:Selling, general and administrative expenses6385911,6811,543Research and development expenses 3753601,079983Restructuring charges, net?1?9Total Operating Expenses1,0139522,7602,535Income From Operations1,3501,0213,4042,572Interest Expense3935139117Interest Income(21)(17)(59)(51)Other Expense, Net 3154638Income from Continuing Operations Before Income Taxes1,3299883,2782,468Income Tax Provision361276971714Income from Continuing Operations Including PortionAttributable to Noncontrolling Interest$968$712$2,307$1,754Discontinued Operations:Income (Loss) from Operations of Discontinued Businesses(3)?84Income Tax Provision (Benefit)(1)?31Income (Loss) on Discontinued Operations(2)?53Net Income$966$712$2,312$1,757Less: Net Income Attributable to Noncontrolling Interest29203838Net Income Attributable to Monsanto Company$937$692$2,274$1,719EBIT (see note 1)$1,301$975$3,311$2,485Basic Earnings per Share Attributable to Monsanto Company:Income from Continuing Operations$1.76$1.29$4.25$3.20Income on Discontinued Operations??0.01?Net Income Attributable to Monsanto Company$1.76$1.29$4.26$3.20Diluted Earnings per Share Attributable to Monsanto Company:Income from Continuing Operations$1.74$1.28$4.20$3.16Income on Discontinued Operations??0.010.01Net Income Attributable to Monsanto Company$1.74$1.28$4.21$3.17Weighted Average Shares Outstanding: Basic532.9535.5534.2536.9Diluted538.8541.2540.2542.9 Monsanto Company Selected Financial Information(Dollars in millions, except per share amounts)UnauditedCondensed Statements of Consolidated Financial PositionAs ofAs ofMay 31, 2012Aug. 31, 2011AssetsCurrent Assets:Cash and cash equivalents (variable interest entities restricted - 2012: $91 and 2011: $96)$1,716$2,572Short-term investments302302Trade receivables, net (variable interest entities restricted - 2012: $77 and 2011: $51)3,7272,117Miscellaneous receivables 674629Deferred tax assets659446Inventory, net2,5142,591Other current assets191152Total Current Assets9,7838,809Property, Plant and Equipment, Net4,1644,394Goodwill 3,2823,365Other Intangible Assets, Net1,1811,309Noncurrent Deferred Tax Assets595873Long-Term Receivables, Net376475Other Assets603619Total Assets$19,984$19,844Liabilities and Shareowners' EquityCurrent Liabilities:Short-term debt, including current portion of long-term debt634678Accounts payable 584839Income taxes payable440117Accrued compensation and benefits470427Accrued marketing programs7781,110Deferred revenues370373Grower production accruals10087Dividends payable?161Customer payable3194Restructuring reserves1224Miscellaneous short-term accruals863819Total Current Liabilities4,2824,729Long-Term Debt1,5381,543Postretirement Liabilities468509Long-Term Deferred Revenue259337Noncurrent Deferred Tax Liabilities304152Long-Term Portion of Environmental and Litigation Reserves167176Other Liabilities553682Total Liabilities7,5718,128Redeemable Common Stock and Capital in Excess of $.01 par value141?Monsanto Shareowners' Equity 12,07711,545Noncontrolling Interest195171Total Shareowners' Equity12,27211,716Total Liabilities and Shareowners' Equity$19,984$19,844Debt to Capital Ratio:15%16% Monsanto Company Selected Financial Information(Dollars in millions, except per share amounts)UnauditedStatements of Consolidated Cash FlowsNine Months Ended20122011Operating Activities:Net Income $2,312$1,757Adjustments to reconcile cash provided by operating activities:Items that did not require (provide) cash:Depreciation and amortization 466457Bad-debt expense(9)(6)Stock-based compensation expense10283Excess tax benefits from stock-based compensation(33)(24)Deferred income taxes195(35)Restructuring charges, net?9Equity affiliate income, net(11)(12)Net gain on sales of a business or other assets(3)(5)Other items5148Changes in assets and liabilities that provided (required) cash, net of acquisitions:Trade receivables, net(1,773)(1,759)Inventory, net(134)69Deferred revenues(35)30Accounts payable and other accrued liabilities(171)678Restructuring cash payments(11)(164)Pension contributions(57)(47)Other items(36)(135)Net Cash Provided by Operating Activities853944Cash Flows Provided (Required) by Investing Activities:Purchases of short-term investments(444)(430)Maturities of short-term investments444180Capital expenditures(376)(326)Acquisitions of businesses, net of cash acquired(113)(99)Technology and other investments(61)(51)Other investments and property disposal proceeds819Net Cash Required by Investing Activities(542)(707)Cash Flows Provided (Required) by Financing Activities:Net change in financing with less than 90-day maturities(86)(40)Short-term debt proceeds959Short-term debt reductions(21)(33)Long-term debt proceeds?300Long-term debt reductions(142)(192)Payments on other financing(2)(3)Debt issuance costs?(3)Treasury stock purchases(423)(486)Stock option exercises6945Excess tax benefits from stock-based compensation3324Tax withholding on restricted stock and restricted stock units(1)(4)Dividend payments(482)(452)Proceeds from noncontrolling interests10169Dividend payments to noncontrolling interests(76)(50)Net Cash Required by Financing Activities(1,021)(766)Cash Assumed from Initial Consolidations of Variable Interest Entities?77Effect of Exchange Rate Changes on Cash and Cash Equivalents(146)41Net Decrease in Cash and Cash Equivalents(856)(411)Cash and Cash Equivalents at Beginning of Period2,5721,485Cash and Cash Equivalents at End of Period$1,716$1,074 Monsanto 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 EndedMay 31,Nine Months EndedMay 31,2012 201120122011EBIT ? Seeds and Genomics Segment $1,111$880$2,957$2,263EBIT ? Agricultural Productivity Segment 190 95354222EBIT? Total  1,301 9753,3112,485Interest Expense, Net 18 188066Income Tax Provision(A) 346 265957700Net Income Attributable to Monsanto Company$937$692$2,274$1,719(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 Months EndedNine Months Ended2012May 31,May 31,Guidance2012201120122011Diluted Earnings per Share$3.73-$3.78$1.74$1.28$4.21$3.17Restructuring Charges, Net????0.01Income on Discontinued Operations(0.01)??(0.01)(0.01)Nitro Claims Settlement0.05??0.05?Resolution of a Legacy Tax Matter(0.12)(0.11)?(0.11)?Diluted Earnings per Share from Ongoing Business$3.65-$3.70$1.63$1.28$4.14$3.17 Reconciliation 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 Year Nine Months Ended2012May 31,Guidance20122011Net Cash Provided by Operating Activities$2,700-2,900$853$944Net Cash Required by Investing Activities (1,000)-(1,100)(542)(707)Free Cash Flow$1,700-1,800$311$237Net Cash Required by Financing ActivitiesN/A(1,021)(766)Cash Assumed from Initial Consolidations of Variable Interest EntitiesN/A?77Effect of Exchange Rate Changes on Cash and Cash EquivalentsN/A(146)41Net Decrease in Cash and Cash EquivalentsN/A(856)(411)Cash and Cash Equivalents at Beginning of PeriodN/A2,5721,485Cash and Cash Equivalents at End of PeriodN/A$1,716$1,074 SOURCE Monsanto Company