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

Company 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 2013

News provided by

Monsanto Company

Jun 27, 2012, 08:00 ET

ST. 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 Quarter

Nine Months

($ in millions)

2012

2011

2012

2011

Net Sales By Segment











Corn seed and traits

$

1,515

$

1,123

$

5,226

$

4,134

Soybean seed and traits

698

605

1,629

1,446

Cotton seed and traits

490

487

750

666

Vegetable seeds

195

216

567

628

All other crops seeds and traits

230

216

414

357

TOTAL Seeds and Genomics

$

3,128

$

2,647

$

8,586

$

7,231














Agricultural productivity

$

1,091

$

961

$

2,820

$

2,344

TOTAL Agricultural Productivity

$

1,091

$

961

$

2,820

$

2,344













TOTAL Net Sales

$

4,219

$

3,608

$

11,406

$

9,575













Gross Profit

$

2,363

$

1,973

$

6,164

$

5,107













Operating Expenses

$

1,013

$

952

$

2,760

$

2,535













Interest Expense – Net

$

18

$

18

$

80

$

66

Other Expense – Net

$

3

$

15

$

46

$

38













Net Income Attributable to Monsanto Company

$

937

$

692

$

2,274

$

1,719













Diluted Earnings per Share (See note 1.)

$

1.74

$

1.28

$

4.21

$

3.17

Items Affecting Comparability – EPS Impact











Restructuring charges

—

—

—

0.01

Income 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

$

3.17













Effective Tax Rate

27%

28%

30%

29%



Third Quarter

Nine Months

Comparison as a Percent of Net Sales:

2012

2011

2012

2011

Gross profit

56

%

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 Company

22

%

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 Operations

Net 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 Flow

The 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.

Outlook

The 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 Sales

Gross Profit


Third Quarter

Nine Months

Third Quarter

Nine Months

Seeds and Genomics

2012

2011

2012

2011

2012

2011

2012

2011

Corn Seed and Traits

$

1,515

$

1,123

$

5,226

$

4,134

$

927

$

679

$

3,305

$

2,524

Soybean Seed and Traits

698

605

1,629

1,446

463

386

1,079

953

Cotton Seed and Traits

490

487

750

666

385

386

567

502

Vegetable Seeds

195

216

567

628

94

123

260

361

All Other Crops Seeds

and Traits

230

216

414

357

152

132

217

176

TOTAL 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 Quarter

Nine Months

Seeds and Genomics

2012

2011

2012

2011

EBIT (For a reconciliation of EBIT, see note 1.)

$

1,111

$

880

$

2,957

$

2,263

Unusual 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 Sales

Gross Profit


Third Quarter

Nine Months

Third Quarter

Nine Months


2012

2011

2012

2011

2012

2011

2012

2011

Agricultural Productivity

$

1,091

$

961

$

2,820

$

2,344

$

342

$

267

$

736

$

591

TOTAL Agricultural Productivity

$

1,091

$

961

$

2,820

$

2,344

$

342

$

267

$

736

$

591

($ in millions)

Earnings Before Interest & Taxes (EBIT)




Third Quarter

Nine Months

Agricultural Productivity

2012

2011

2012

2011

EBIT (For a reconciliation of EBIT, see note 1.)

$

190

$

95

$

354

$

222

Unusual Items Affecting EBIT:













Restructuring

$

—

$

—

$

—

$

4


EBIT from Discontinued Operations

$

(3)

$

—

$

8

$

4


Nitro 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 Information

In 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 Company

Monsanto 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.

Contact

Media:

Sara Miller (314-694-5824)

Analysts:

Bryan Hurley (314-694-8148)

Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited






Statements of Consolidated Operations


Three Months Ended

Nine Months Ended



May 31,

May 31,



2012

2011

2012

2011

Net Sales

$

4,219

$

3,608

$

11,406

$

9,575

Cost of Goods Sold


1,856

1,635

5,242

4,468

Gross Profit

2,363

1,973

6,164

5,107

Operating Expenses:











Selling, general and administrative expenses

638

591

1,681

1,543

Research and development expenses


375

360

1,079

983

Restructuring charges, net

—

1

—

9

Total Operating Expenses

1,013

952

2,760

2,535

Income From Operations

1,350

1,021

3,404

2,572

Interest Expense

39

35

139

117

Interest Income

(21)

(17)

(59)

(51)

Other Expense, Net


3

15

46

38

Income from Continuing Operations Before Income Taxes

1,329

988

3,278

2,468

Income Tax Provision

361

276

971

714

Income from Continuing Operations Including Portion











Attributable to Noncontrolling Interest

$

968

$

712

$

2,307

$

1,754

Discontinued Operations:










Income (Loss) from Operations of Discontinued Businesses

(3)

—

8

4

Income Tax Provision (Benefit)

(1)

—

3

1

Income (Loss) on Discontinued Operations

(2)

—

5

3

Net Income

$

966

$

712

$

2,312

$

1,757

Less: Net Income Attributable to Noncontrolling Interest

29

20

38

38

Net Income Attributable to Monsanto Company

$

937

$

692

$

2,274

$

1,719













EBIT (see note 1)

$

1,301

$

975

$

3,311

$

2,485













Basic Earnings per Share Attributable to Monsanto Company:










Income from Continuing Operations

$

1.76

$

1.29

$

4.25

$

3.20

Income on Discontinued Operations

—

—

0.01

—

Net Income Attributable to Monsanto Company

$

1.76

$

1.29

$

4.26

$

3.20













Diluted Earnings per Share Attributable to Monsanto Company:










Income from Continuing Operations

$

1.74

$

1.28

$

4.20

$

3.16

Income on Discontinued Operations

—

—

0.01

0.01

Net Income Attributable to Monsanto Company

$

1.74

$

1.28

$

4.21

$

3.17













Weighted Average Shares Outstanding:













Basic

532.9

535.5

534.2

536.9

Diluted

538.8

541.2

540.2

542.9

Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited




Condensed Statements of Consolidated Financial Position

As of

As of


May 31, 2012

Aug. 31, 2011

Assets




Current Assets:





Cash and cash equivalents (variable interest entities restricted - 2012: $91 and 2011: $96)

$

1,716

$

2,572

Short-term investments

302

302

Trade receivables, net (variable interest entities restricted - 2012: $77 and 2011: $51)

3,727

2,117

Miscellaneous receivables


674

629

Deferred tax assets

659

446

Inventory, net

2,514

2,591

Other current assets

191

152

Total Current Assets

9,783

8,809







Property, Plant and Equipment, Net

4,164

4,394

Goodwill


3,282

3,365

Other Intangible Assets, Net

1,181

1,309

Noncurrent Deferred Tax Assets

595

873

Long-Term Receivables, Net

376

475

Other Assets

603

619

Total Assets

$

19,984

$

19,844







Liabilities and Shareowners' Equity




Current Liabilities:





Short-term debt, including current portion of long-term debt

634

678

Accounts payable


584

839

Income taxes payable

440

117

Accrued compensation and benefits

470

427

Accrued marketing programs

778

1,110

Deferred revenues

370

373

Grower production accruals

100

87

Dividends payable

—

161

Customer payable

31

94

Restructuring reserves

12

24

Miscellaneous short-term accruals

863

819

Total Current Liabilities

4,282

4,729







Long-Term Debt

1,538

1,543

Postretirement Liabilities

468

509

Long-Term Deferred Revenue

259

337

Noncurrent Deferred Tax Liabilities

304

152

Long-Term Portion of Environmental and Litigation Reserves

167

176

Other Liabilities

553

682

Total Liabilities

7,571

8,128







Redeemable Common Stock and Capital in Excess of $.01 par value

141

—







Monsanto Shareowners' Equity


12,077

11,545

Noncontrolling Interest

195

171

Total Shareowners' Equity

12,272

11,716

Total Liabilities and Shareowners' Equity

$

19,984

$

19,844







Debt to Capital Ratio:

15%

16%

Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited


Statements of Consolidated Cash Flows

Nine Months Ended



2012

2011

Operating Activities:





Net Income

$

2,312

$

1,757

Adjustments to reconcile cash provided by operating activities:





Items that did not require (provide) cash:






Depreciation and amortization


466

457


Bad-debt expense

(9)

(6)


Stock-based compensation expense

102

83


Excess tax benefits from stock-based compensation

(33)

(24)


Deferred income taxes

195

(35)


Restructuring charges, net

—

9


Equity affiliate income, net

(11)

(12)


Net gain on sales of a business or other assets

(3)

(5)


Other items

51

48

Changes in assets and liabilities that provided (required) cash, net of acquisitions:






Trade receivables, net

(1,773)

(1,759)


Inventory, net

(134)

69


Deferred revenues

(35)

30


Accounts payable and other accrued liabilities

(171)

678


Restructuring cash payments

(11)

(164)


Pension contributions

(57)

(47)


Other items

(36)

(135)

Net Cash Provided by Operating Activities

853

944








Cash Flows Provided (Required) by Investing Activities:






Purchases of short-term investments

(444)

(430)


Maturities of short-term investments

444

180


Capital expenditures

(376)

(326)


Acquisitions of businesses, net of cash acquired

(113)

(99)


Technology and other investments

(61)

(51)


Other investments and property disposal proceeds

8

19

Net 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 proceeds

9

59


Short-term debt reductions

(21)

(33)


Long-term debt proceeds

—

300


Long-term debt reductions

(142)

(192)


Payments on other financing

(2)

(3)


Debt issuance costs

—

(3)


Treasury stock purchases

(423)

(486)


Stock option exercises

69

45


Excess tax benefits from stock-based compensation

33

24


Tax withholding on restricted stock and restricted stock units

(1)

(4)


Dividend payments

(482)

(452)


Proceeds from noncontrolling interests

101

69


Dividend payments to noncontrolling interests

(76)

(50)

Net Cash Required by Financing Activities

(1,021)

(766)

Cash Assumed from Initial Consolidations of Variable Interest Entities

—

77

Effect of Exchange Rate Changes on Cash and Cash Equivalents

(146)

41

Net Decrease in Cash and Cash Equivalents

(856)

(411)

Cash and Cash Equivalents at Beginning of Period

2,572

1,485

Cash and Cash Equivalents at End of Period

$

1,716

$

1,074

Monsanto Company

Selected Financial Information

(Dollars in millions)

Unaudited


1.

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 Ended

May 31,

Nine Months Ended

May 31,

2012 

2011

2012

2011

EBIT – Seeds and Genomics Segment

$

1,111

$

880

$

2,957

$

2,263

EBIT – Agricultural Productivity Segment

 190 

95

354

222

EBIT– Total


 1,301 

975

3,311

2,485

Interest Expense, Net

 18 

18

80

66

Income Tax Provision(A)

 346 

265

957

700

Net 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 Year

Three Months Ended

Nine Months Ended

2012

May 31,

May 31,

Guidance

2012

2011

2012

2011

Diluted Earnings per Share

$3.73-$3.78

$1.74

$1.28

$4.21

$3.17

Restructuring Charges, Net

—

—

—

—

0.01

Income on Discontinued Operations

(0.01)

—

—

(0.01)

(0.01)

Nitro Claims Settlement

0.05

—

—

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 Ended

2012

May 31,

Guidance

2012

2011

Net Cash Provided by Operating Activities

$

2,700-2,900

$

853

$

944

Net Cash Required by Investing Activities


(1,000)-(1,100)

(542)

(707)

Free Cash Flow

$

1,700-1,800

$

311

$

237

Net Cash Required by Financing Activities

N/A

(1,021)

(766)

Cash Assumed from Initial Consolidations of Variable Interest Entities

N/A

—

77

Effect of Exchange Rate Changes on Cash and Cash Equivalents

N/A

(146)

41

Net Decrease in Cash and Cash Equivalents

N/A

(856)

(411)

Cash and Cash Equivalents at Beginning of Period

N/A

2,572

1,485

Cash and Cash Equivalents at End of Period

N/A

$

1,716

$

1,074

SOURCE Monsanto Company

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