Monsanto Company's Global Business Performance Drives Increased Full-Year Earnings Outlook

Full-Year Ongoing Earnings Per Share Guidance Raised to $4.40 to $4.50, or $4.42 to $4.52 As-Reported

03 Apr, 2013, 08:00 ET from Monsanto Company

ST. LOUIS, April 3, 2013 /PRNewswire/ -- With half of its fiscal year complete, Monsanto Company (NYSE: MON) announced today that the continued strength of its growing global business delivered another strong quarter for its fiscal year 2013 and translated to a second consecutive quarterly increase in full-year ongoing and as-reported earnings per share guidance. In reporting earnings results for the second quarter and first half of the year, executives noted results were driven by contributions from across the company's business portfolio, including continued growth of its global corn business and positive performance of its agricultural productivity segment.

Second Quarter

Six Months

($ in millions)

2013

2012

2013

2012

Net Sales By Segment

Corn seed and traits

$

3,280

$

2,816

$

4,419

$

3,711

Soybean seed and traits

677

689

908

931

Vegetable seeds

199

215

355

372

Cotton seed and traits

60

66

245

260

All other crops seeds and traits

130

138

174

184

TOTAL Seeds and Genomics

$

4,346

$

3,924

$

6,101

$

5,458

Agricultural productivity

$

1,126

$

824

$

2,310

$

1,729

TOTAL Agricultural Productivity

$

1,126

$

824

$

2,310

$

1,729

TOTAL Net Sales

$

5,472

$

4,748

$

8,411

$

7,187

Gross Profit

$

3,070

$

2,705

$

4,467

$

3,801

Operating Expenses

$

958

$

896

$

1,846

$

1,747

Interest Expense – Net

$

8

$

27

$

36

$

62

Other Expense – Net

$

22

$

37

$

39

$

43

Net Income Attributable to Monsanto Company

$

1,483

$

1,211

$

1,822

$

1,337

Diluted Earnings per Share (See note 1.)

$

2.74

$

2.24

$

3.37

$

2.47

Items Affecting Comparability – EPS Impact

Income on discontinued operations

(0.01)

(0.01)

(0.02)

(0.01)

Nitro Claims Settlement

0.05

0.05

Diluted Earnings per Share from Ongoing Business (For the

definition of ongoing EPS, see note 1.)

$

2.73

$

2.28

$

3.35

$

2.51

Effective Tax Rate

29

%

31

%

28

%

31

%

 

Second Quarter

Six Months

Comparison as a Percent of Net Sales:

2013

2012

2013

2012

Gross profit

56

%

57

%

53

%

53

%

Selling, general and administrative expenses

11

%

11

%

14

%

15

%

Research and development expenses

7

%

7

%

8

%

10

%

Income from continuing operations before income taxes

38

%

37

%

30

%

27

%

Net income attributable to Monsanto Company

27

%

26

%

22

%

19

%

 

"Our commitment to serving our farmer customers around the world is at the core of everything we do," said Hugh Grant, chairman and chief executive officer for Monsanto. "By understanding their needs and finding new ways to work with them to meet growing demand, we've achieved momentum in our business and strong results across our global portfolio. Our performance underscores our expectation for a third consecutive year of strong earnings growth and reinforces our opportunities for the future as well. As we move into the second half of the year, we are thankful for the opportunity to serve our customers and continue to earn their business as a leader in this dynamic industry."

Results of Operations

The company achieved strong second quarter and first half results that reflect the continued growth of its global business. Net sales for the quarter increased $724 million or 15 percent to $5.5 billion in the three-month comparison driven in part by 16 percent sales growth from its global corn business. For the first six months, net sales increased $1.2 billion or 17 percent.

Operating expenses were up $62 million in the second quarter compared to the prior year. In the three-month comparison, selling, general and administrative (SG&A) expenses increased 10 percent to $598 million.  Quarterly research and development (R&D) expenses were up 2 percent to $360 million compared to the prior year period.

The company's second quarter earnings per share (EPS) was $2.73 on an ongoing and $2.74 on an as-reported basis, compared to an EPS of $2.28 on an ongoing and $2.24 on an as-reported basis in the same quarter last year. EPS for the first six months of fiscal year 2013 was $3.35 on an ongoing and $3.37 on an as-reported basis. (For a reconciliation of EPS to ongoing EPS see page 1).

Cash Flow

For the first half of fiscal year 2013, cash flow from operations was a source of nearly $1.9 billion compared to $1.7 billion for the same period last year.

Net cash required by investing activities for the first half of fiscal year 2013 was $301 million, compared to $402 million for the same period of fiscal year 2012. Net cash required by financing activities for the first half of 2013 was $422 million, compared to net cash required of $672 million for the same period of fiscal year 2012. 

Free cash flow was a source of nearly $1.6 billion for the first half of fiscal year 2013, compared to a source of $1.3 billion for the first half of fiscal year 2012. (For a reconciliation of free cash flow, see note 1.)

Outlook

The company raised its full year ongoing EPS guidance to $4.40 to $4.50 per share. Full year 2013 EPS guidance on an as-reported basis is expected in the range of $4.42 to $4.52 per share. (For a reconciliation of EPS, see note 1.)

The company affirmed its previously announced full year free cash flow guidance of $1.8 billion to $2 billion. The company expects net cash provided by operating activities to be $2.9 billion to $3.3 billion, and net cash required by investing activities to be $1.1 billion to $1.3 billion for fiscal year 2013. (For a reconciliation of free cash flow, see note 1.)

Seeds and Genomics Segment Detail

($ in millions)

Net Sales

Gross Profit

Second Quarter

Six Months

Second Quarter

Six Months

Seeds and Genomics

2013

2012

2013

2012

2013

2012

2013

2012

Corn Seed and Traits

$

3,280

$

2,816

$

4,419

$

3,711

$

2,083

$

1,847

$

2,769

$

2,378

Soybean Seed and Traits

677

689

908

931

395

443

513

616

Vegetable Seeds

199

215

355

372

106

85

189

166

Cotton Seed and Traits

60

66

245

260

44

47

171

182

All Other Crops Seeds and Traits

130

138

174

184

71

69

82

65

TOTAL Seeds and Genomics

$

4,346

$

3,924

$

6,101

$

5,458

$

2,699

$

2,491

$

3,724

$

3,407

 

($ in millions)

Earnings Before Interest & Taxes (EBIT)

Second Quarter

Six Months

Seeds and Genomics

2013

2012

2013

2012

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

$

1,840

$

1,699

$

2,060

$

1,846

 

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 $4.3 billion, an increase of $422 million over the same period last year.  For the first six months, sales for the segment are up $643 million over the same period last year. 

Monsanto's global corn business led the Seeds and Genomics segment performance, as it expects to hit record total corn volumes in 2013. The second quarter results were driven in part by the conclusion of a successful and record second season in Brazil where the company continued to achieve strong demand for its latest corn products. The U.S. corn business also drove the results for the quarter, with the company projecting another year of strong performance from the business driven by the positive mix improvement across its corn portfolio. The company is on track to reach the high end of its 36 million to 38 million acre target range for its Genuity® reduced refuge family. 

The current and emerging opportunities in the company's global soybean business complement the global corn business. In the United States, the company has achieved strong results year-to-date, with the positive order book and shipments positioning the company well to deliver to the high end of its 39 million to 41 million acre target range for its Genuity® Roundup Ready 2 Yield® platform. This performance comes as the company prepares to enter the next phase of innovation in its soybean platform, including the addition of both Roundup Ready 2 Xtendand Intacta RR2 PROsoybeans. The company noted that new results from its second year of Intacta RR2 PRO Ground Breakers® on-farm field trials in Brazil have demonstrated a better than 4 bushel per acre yield advantage against first-generation Roundup Ready® soybeans at more than 1,000 locations, double the number of locations from its 2012 Ground Breakers® on-farm field trials in Brazil.

Agricultural Productivity Segment Detail

 ($ in millions)

Net Sales 

Gross Profit

Second Quarter

Six Months 

Second Quarter

Six Months

2013

2012

2013

2012

2013

2012

2013

2012

Agricultural Productivity

$

1,126

$

824

$

2,310

$

1,729

$

371

$

214

$

743

$

394

TOTAL Agricultural Productivity

$

1,126

$

824

$

2,310

$

1,729

$

371

$

214

$

743

$

394

 

($ in millions)

Earnings Before Interest & Taxes (EBIT)

Second Quarter

Six Months

Agricultural Productivity

2013

2012

2013

2012

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

$

256

$

82

$

526

$

164

Unusual Items Affecting EBIT:

EBIT from Discontinued Operations

$

6

$

11

$

17

$

11

Nitro Claims Settlement

$

$

(44)

$

$

(44)

 

The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.

Net sales in the second quarter of fiscal 2013 for Monsanto's Agricultural Productivity segment increased $302 million over the same period last year, reflecting the continued benefit of a favorable marketplace environment.  The company remains focused on its established Roundup® strategy.

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 website at www.monsanto.com/investors or by visiting http://edge.media-server.com/m/p/pbzn6osi/lan/en. 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 website for three weeks. Monsanto publishes details on upcoming webcasts on this website in both the Presentation and Financial Reports section and the Calendar of Events section. Investors should look to this site as the source of information on future investor conference webcasts. The site includes a calendar of upcoming investor events, details on accessing scheduled webcasts and information from previous investor events.

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; 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: Monsanto and the Vine Design, Genuity, Roundup, Roundup Ready 2 Yield, Roundup Ready 2 Xtend, Intacta RR2 PRO and Ground Breakers are trademarks of Monsanto Company and its wholly-owned subsidiaries.

Monsanto Company 800 North Lindbergh Blvd St. Louis, Missouri 63167

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

Six Months Ended

February 28, 2013

February 29, 2012

February 28, 2013

February 29, 2012

Net Sales

$

5,472

$

4,748

$

8,411

$

7,187

Cost of Goods Sold

2,402

2,043

3,944

3,386

Gross Profit

3,070

2,705

4,467

3,801

Operating Expenses:

Selling, general and administrative expenses

598

543

1,140

1,043

Research and development expenses

360

353

706

704

Total Operating Expenses

958

896

1,846

1,747

Income From Operations

2,112

1,809

2,621

2,054

Interest Expense

35

47

86

100

Interest Income

(27)

(20)

(50)

(38)

Other Expense, Net

22

37

39

43

Income from Continuing Operations Before Income Taxes

2,082

1,745

2,546

1,949

Income Tax Provision

603

540

725

610

Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest

$

1,479

$

1,205

$

1,821

$

1,339

Discontinued Operations:

Income from Operations of Discontinued Businesses

6

11

17

11

Income Tax Provision

2

4

6

4

Income on Discontinued Operations

4

7

11

7

Net Income

$

1,483

$

1,212

$

1,832

$

1,346

Less: Net Income Attributable to Noncontrolling Interest

1

10

9

Net Income Attributable to Monsanto Company

$

1,483

$

1,211

$

1,822

$

1,337

EBIT (see note 1)

$

2,096

$

1,781

$

2,586

$

2,010

Basic Earnings per Share Attributable to Monsanto Company:

Income from Continuing Operations

$

2.77

$

2.25

$

3.39

$

2.49

Income on Discontinued Operations

0.01

0.02

0.02

0.01

Net Income Attributable to Monsanto Company

$

2.78

$

2.27

$

3.41

$

2.50

Diluted Earnings per Share Attributable to Monsanto Company:

Income from Continuing Operations

$

2.73

$

2.23

$

3.35

$

2.46

Income on Discontinued Operations

0.01

0.01

0.02

0.01

Net Income Attributable to Monsanto Company

$

2.74

$

2.24

$

3.37

$

2.47

Weighted Average Shares Outstanding:

Basic

534.8

534.4

534.8

534.9

Diluted

540.9

540.5

540.9

540.9

 

Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited

Condensed Statements of Consolidated Financial Position

As of

As of

Feb. 28, 2013

Aug. 31, 2012

Assets

Current Assets:

Cash and cash equivalents (variable interest entity restricted - 2013: $58 and 2012: $120)

$

4,443

$

3,283

Short-term investments

310

302

Trade receivables, net (variable interest entity restricted - 2013: $132 and 2012: $52)

2,219

1,897

Miscellaneous receivables

638

620

Deferred tax assets

658

534

Inventory, net

3,095

2,839

Other current assets

171

183

Total Current Assets

11,534

9,658

Property, Plant and Equipment, Net

4,400

4,365

Goodwill

3,519

3,435

Other Intangible Assets, Net

1,220

1,237

Noncurrent Deferred Tax Assets

542

551

Long-Term Receivables, Net

255

376

Other Assets

609

602

Total Assets

$

22,079

$

20,224

Liabilities and Shareowners' Equity

Current Liabilities:

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

152

36

Accounts payable

751

794

Income taxes payable

430

75

Accrued compensation and benefits

372

546

Accrued marketing programs

1,020

1,281

Deferred revenues

756

396

Grower production accruals

239

194

Dividends payable

201

200

Customer payable

7

14

Miscellaneous short-term accruals

781

685

Total Current Liabilities

4,709

4,221

Long-Term Debt

2,054

2,038

Postretirement Liabilities

526

543

Long-Term Deferred Revenue

187

245

Noncurrent Deferred Tax Liabilities

410

313

Long-Term Portion of Environmental and Litigation Reserves

217

213

Other Liabilities

518

615

Monsanto Shareowners' Equity

13,240

11,833

Noncontrolling Interest

218

203

Total Shareowners' Equity

13,458

12,036

Total Liabilities and Shareowners' Equity

$

22,079

$

20,224

Debt to Capital Ratio:

14

%

15

%

 

Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited

Statements of Consolidated Cash Flows

Six Months Ended

Feb. 28, 2013

Feb. 29, 2012

Operating Activities:

Net Income

$

1,832

$

1,346

Adjustments to reconcile cash provided by operating activities:

Items that did not require (provide) cash:

Depreciation and amortization

305

311

Bad-debt expense

10

(8)

Stock-based compensation expense

49

72

Excess tax benefits from stock-based compensation

(47)

(26)

Deferred income taxes

52

(33)

Equity affiliate income, net

(2)

(3)

Net gain on sales of a business or other assets

(14)

(2)

Other items

48

65

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

Trade receivables, net

(196)

(265)

Inventory, net

(261)

(356)

Deferred revenues

293

445

Accounts payable and other accrued liabilities

(204)

142

Restructuring cash payments

(7)

Pension contributions

(24)

(33)

Other items

16

24

Net Cash Provided by Operating Activities

1,857

1,672

Cash Flows Provided (Required) by Investing Activities:

Purchases of short-term investments

(320)

(429)

Maturities of short-term investments

312

429

Capital expenditures

(261)

(239)

Acquisitions of businesses, net of cash acquired

(79)

(113)

Technology and other investments

(48)

(56)

Other investments and property disposal proceeds

95

6

Net Cash Required by Investing Activities

(301)

(402)

Cash Flows Provided (Required) by Financing Activities:

Net change in financing with less than 90-day maturities

142

(8)

Short-term debt proceeds

1

9

Short-term debt reductions

(29)

(17)

Long-term debt proceeds

16

Long-term debt reductions

(2)

(142)

Treasury stock purchases

(327)

(299)

Stock option exercises

136

52

Excess tax benefits from stock-based compensation

47

26

Tax withholding on restricted stock and restricted stock units

(3)

(1)

Dividend payments

(402)

(322)

Dividend payments to noncontrolling interests

(1)

(71)

Proceeds from noncontrolling interests

101

Net Cash Required by Financing Activities

(422)

(672)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

26

(47)

Net Increase in Cash and Cash Equivalents

1,160

551

Cash and Cash Equivalents at Beginning of Period

3,283

2,572

Cash and Cash Equivalents at End of Period

$

4,443

$

3,123

 

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

Six Months Ended

Feb. 28, 2013

Feb. 29, 2012

Feb. 28, 2013

Feb. 29, 2012

EBIT – Seeds and Genomics Segment

$

1,840

$

1,699

$

2,060

$

1,846

EBIT – Agricultural Productivity Segment

256

82

526

164

EBIT Total

2,096

1,781

2,586

2,010

Interest Expense, Net

8

27

36

62

Income Tax Provision(A)

605

543

728

611

Net Income Attributable to Monsanto Company

$

1,483

$

1,211

$

1,822

$

1,337

 

(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

2013

Guidance

Three Months Ended

Feb. 28, 2013

Three Months Ended

Feb. 29, 2012

Six Months Ended

Feb. 28, 2013

Six Months Ended

Feb. 29, 2012

Diluted Earnings per Share

$4.42-$4.52

$

2.74

$

2.24

$

3.37

$

2.47

Income on Discontinued Operations

(0.02)

(0.01)

(0.01)

(0.02)

(0.01)

Nitro Claims Settlement

0.05

0.05

 Diluted Earnings per Share from Ongoing Business

$4.40-$4.50

$

2.73

$

2.28

$

3.35

$

2.51

 

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 2013 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

Six Months Ended

2013 Guidance

Feb. 28, 2013

Feb. 29, 2012

Net Cash Provided by Operating Activities

$

2,900-3,300

$

1,857

$

1,672

Net Cash Required by Investing Activities

(1,100)-(1,300)

(301)

(402)

Free Cash Flow

$

1,800-2,000

1,556

1,270

Net Cash Required by Financing Activities

N/A

(422)

(672)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

N/A

26

(47)

Net Increase in Cash and Cash Equivalents

N/A

1,160

551

Cash and Cash Equivalents at Beginning of Period

N/A

3,283

2,572

Cash and Cash Equivalents at End of Period

N/A

$

4,443

$

3,123

 

SOURCE Monsanto Company



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