Latin America Seed Growth Lifts Monsanto to Stronger-Than-Expected First Quarter as Company Guides to High End of Fiscal Year EPS Outlook

ST. LOUIS, Jan. 5, 2012 /PRNewswire/ -- Monsanto Company (NYSE: MON) delivered above-estimate results for the first quarter of its fiscal year 2012 and pointed to the high end of its previously reported earnings per share guidance for the year on the strength of its seed business.  The company also previewed a strong U.S. order book and announced 14 phase advancements across its breeding, biotechnology, and chemistry and agronomic research and development platforms, representing a record number of advancements for its annual pipeline update.

"We've seen a very strong start to the year, with real growth in Latin America and early orders in the United States that underscore our sustained momentum carrying into 2012," said Hugh Grant, chairman, president and chief executive officer for Monsanto.  "We are pleased growers have recognized the value of our products and the benefits they provide on farm.  Our pipeline progress continues to be a competitive differentiator, and that's ever more important as we put an even greater focus on delivering yield to growers."

Results of Operations

The company achieved a strong first quarter that reflected the expected structural change in its earnings pattern based on improved sales in the growing Latin America market.  Net sales increased 33 percent over the prior year's quarter to $2.4 billion, with significant gains in corn driven by the Latin America market.  Gross profit for the total company increased 33 percent to $1.1 billion, and gross profit as a percent of sales was even with the prior year at 45 percent.  

Selling, general and administrative (SG&A) expenses increased to $500 million as a result of inflation and commissions from higher sales.  R&D expenses increased to $351 million based in part on investments in breeding facilities to support international and U.S. corn.

The company's first quarter earnings per share (EPS) was $0.23 on an ongoing and as-reported basis. (For a reconciliation of ongoing EPS, see note 1.)

Cash Flow

The strong first quarter was evident in the company's free cash flow, which was $856 million compared to $500 million for the prior year first quarter.  The increase reflects growth in net income as well as an increase in customer prepayments ahead of the U.S. selling season. (For a reconciliation of free cash flow, see note 1.)

Net cash provided by operating activities was $1.1 billion, compared to $624 million in the first quarter last year. Net cash required by investing activities for the first quarter of fiscal 2012 was $254 million, compared with a use of $124 million for the year-ago quarter.  Net cash required by financing activities was $340 million, even with the prior year's first quarter.

Outlook

The company affirmed its guidance of free cash flow for fiscal year 2012 in the range of $1.3 billion to $1.5 billion, reflecting an investment of $600 to $700 million in capital expenditures.  The company expects net cash provided by operating activities to be $2.2 billion to $2.5 billion, and net cash required by investing activities to be approximately $900 million to $1 billion for fiscal year 2012. (For a reconciliation of free cash flow, see note 1.) 

The company guided to the high end of its full-year 2012 ongoing EPS mid-teens earnings growth guidance, expecting to achieve $3.39 to $3.44 of ongoing and as-reported EPS.  (For a reconciliation of EPS, see note 1.)

Seeds and Genomics Segment Detail

The Seeds and Genomics segment consists of the company's global seeds and related traits business.

Sales for Monsanto's Seeds and Genomics segment increased 32 percent in the first quarter to $1.5 billion, reflecting the strength of the Latin America business and some timing benefits from the Australian cotton business.

Corn seed and traits net sales increased 46 percent over last year's quarter to $895 million, driven by volume growth and a mix benefit that came from significant trait expansion in Brazil and Argentina.

Cotton seed and traits net sales increased 73 percent to $194 million based on a timing effect in Australia, where growers' decisions to purchase technology upfront advanced revenues to the first quarter that would traditionally have been expected following harvest based on growers' yields in the fourth quarter of this fiscal year. Higher planted hectares in Australia compared to the prior year also were a contributor.

In soybeans, seed and trait sales were up 7 percent to $242 million.  Vegetable sales were $157 million, a decrease from the prior year.

The company noted the pace of its U.S. order book is ahead of the same point in time last year and tracking well with 2012 targets.

Agricultural Productivity Segment Detail

The Agricultural Productivity segment consists of the crop protection products including Roundup^® and other herbicides, and lawn-and-garden herbicide products.

Sales in the first quarter of fiscal 2012 for Monsanto's Agricultural Productivity segment increased 34 percent or $232 million. 

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, future expectations and an update of projects within the company's R&D pipeline, including the 14 phase advancements. The call also 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/MonsantoNews, on Facebook® at www.facebook.com/MonsantoCo, 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 is a trademark 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.

Reconciliation of EPS to Ongoing EPS:  Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations.

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.

SOURCE Monsanto Company