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April 04, 2012 at 08:00 AM EDT
Record Second Quarter Reflects Strong U.S. Results, Drives Increased Full-Year Outlook for Monsanto
Company 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 Guidance

ST. 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 Quarter



Six Months

($ in millions)

2012


2011


2012


2011

Net Sales By Segment













Corn seed and traits

$

2,816


$

2,397


$

3,711


$

3,011


Soybean seed and traits


689



615



931



841


Vegetable seeds


215



229



372



412


Cotton seed and traits


66



67



260



179


All other crops seeds and traits


138



113



184



141

TOTAL Seeds and Genomics

$

3,924


$

3,421


$

5,458


$

4,584















Agricultural productivity

$

824


$

710


$

1,729


$

1,383

TOTAL Agricultural Productivity

$

824


$

710


$

1,729


$

1,383














TOTAL Net Sales

$

4,748


$

4,131


$

7,187


$

5,967














Gross Profit

$

2,705


$

2,310


$

3,801


$

3,134














Operating Expenses

$

896


$

823


$

1,747


$

1,583














Interest Expense – Net

$

27


$

20


$

62


$

48

Other Expense – Net

$

37


$

11


$

43


$

23














Net Income Attributable to Monsanto Company

$

1,211


$

1,018


$

1,337


$

1,027














Diluted Earnings per Share (See note 1.)

$

2.24


$

1.88


$

2.47


$

1.89

Items Affecting Comparability – EPS Impact













Restructuring charges








0.01


Income on discontinued operations


(0.01)



(0.01)



(0.01)



(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.)

$

2.28


$

1.87


$

2.51


$

1.89














Effective Tax Rate


31%



29%



31%



30%








Second Quarter

Six Months

Comparison as a Percent of Net Sales:

2012


2011

2012


2011


Gross profit

57%



56%


53%



53%



Selling, general and administrative expenses (SG&A)

11%



12%


15%



16%



Research and development expenses

7%



8%


10%



10%



Income from continuing operations before income taxes

37%



35%


27%



25%



Net income attributable to Monsanto Company

26%



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 Operations

Net 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 Flow

For 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.)

Outlook

The 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 Sales


Gross Profit



Second Quarter


Six Months


Second Quarter


Six Months

Seeds and Genomics


2012


2011



2012


2011


2012


2011



2012


2011

Corn Seed and Traits

$

2,816

$

2,397


$

3,711

$

3,011

$

1,847

$

1,506


$

2,378

$

1,845

Soybean Seed and Traits


689


615



931


841


443


414



616


567

Vegetable Seeds


215


229



372


412


85


125



166


238

Cotton Seed and Traits


66


67



260


179


47


42



182


116

All Other Crops Seeds and Traits


138


113



184


141


69


44



65


44

TOTAL 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 Quarter



Six Months



Seeds and Genomics

2012

2011


2012

2011



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

$

1,699

$

1,403


$

1,846

$

1,383



Unusual 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 Sales

Gross Profit



Second Quarter


Six Months

Second Quarter

Six Months



2012


2011


2012


2011


2012


2011


2012


2011

Agricultural Productivity

$

824

$

710

$

1,729

$

1,383

$

214

$

179

$

394

$

324

TOTAL Agricultural Productivity

$

824

$

710

$

1,729

$

1,383

$

214

$

179

$

394

$

324






($ in millions)

Earnings Before Interest & Taxes (EBIT)






Second Quarter



Six Months



Agricultural Productivity


2012



2011



2012



2011



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

$

82


$

62


$

164


$

127



Unusual Items Affecting EBIT:















Restructuring

$


$


$


$

4




EBIT from Discontinued Operations

$

11


$

4


$

11


$

4




Nitro 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 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: 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.



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



Feb. 29,


Feb. 28,


Feb. 29,


Feb. 28,



2012


2011


2012


2011

Net Sales

$

4,748


$

4,131


$

7,187


$

5,967

Cost of Goods Sold


2,043



1,821



3,386



2,833

Gross Profit


2,705



2,310



3,801



3,134

Operating Expenses:













Selling, general and administrative expenses


543



502



1,043



952


Research and development expenses


353



320



704



623


Restructuring charges, net




1





8

Total Operating Expenses


896



823



1,747



1,583

Income From Operations


1,809



1,487



2,054



1,551

Interest Expense


47



39



100



82

Interest Income


(20)



(19)



(38)



(34)

Other Expense, Net


37



11



43



23

Income from Continuing Operations Before Income Taxes


1,745



1,456



1,949



1,480

Income Tax Provision


540



429



610



438

Income from Continuing Operations Including Portion













Attributable to Noncontrolling Interest

$

1,205


$

1,027


$

1,339


$

1,042

Discontinued Operations:












Income from Operations of Discontinued Businesses


11



4



11



4

Income Tax Provision


4



1



4



1

Income on Discontinued Operations


7



3



7



3

Net Income

$

1,212


$

1,030


$

1,346


$

1,045

Less: Net Income Attributable to Noncontrolling Interest


1



12



9



18

Net Income Attributable to Monsanto Company

$

1,211


$

1,018


$

1,337


$

1,027














EBIT (see note 1)

$

1,781


$

1,465


$

2,010


$

1,510














Basic Earnings per Share Attributable to Monsanto Company:












Income from Continuing Operations

$

2.25


$

1.89


$

2.49


$

1.91

Income on Discontinued Operations


0.02



0.01



0.01



Net Income Attributable to Monsanto Company

$

2.27


$

1.90


$

2.50


$

1.91














Diluted Earnings per Share Attributable to Monsanto Company:












Income from Continuing Operations

$

2.23


$

1.87


$

2.46


$

1.89

Income on Discontinued Operations


0.01



0.01



0.01



Net Income Attributable to Monsanto Company

$

2.24


$

1.88


$

2.47


$

1.89














Weighted Average Shares Outstanding:













Basic


534.4



536.3



534.9



537.6


Diluted


540.5



542.4



540.9



543.7




Monsanto Company

Selected Financial Information

(Dollars in millions, except per share amounts)

Unaudited


Condensed Statements of Consolidated Financial Position

As of


As of



Feb. 29, 2012


Aug. 31, 2011

Assets






Current Assets:







Cash and cash equivalents (variable interest entities restricted - 2012: $12 and 2011: $96)

$

3,123


$

2,572


Short-term investments


302



302


Trade receivables, net (variable interest entities restricted - 2012: $176 and 2011: $51)


2,341



2,117


Miscellaneous receivables


661



629


Deferred tax assets


536



446


Inventory, net


2,862



2,591


Other current assets


199



152

Total Current Assets


10,024



8,809








Property, Plant and Equipment, Net


4,259



4,394

Goodwill


3,377



3,365

Other Intangible Assets, Net


1,277



1,309

Noncurrent Deferred Tax Assets


799



873

Long-Term Receivables, Net


372



475

Other Assets


613



619

Total Assets

$

20,721


$

19,844








Liabilities and Shareowners' Equity






Current Liabilities:







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


610



678


Accounts payable


681



839


Income taxes payable


578



117


Accrued compensation and benefits


306



427


Accrued marketing programs


1,008



1,110


Deferred revenues


847



373


Grower production accruals


229



87


Dividends payable


160



161


Customer payable


9



94


Restructuring reserves


16



24


Miscellaneous short-term accruals


749



819

Total Current Liabilities


5,193



4,729








Long-Term Debt


1,538



1,543

Postretirement Liabilities


494



509

Long-Term Deferred Revenue


292



337

Noncurrent Deferred Tax Liabilities


127



152

Long-Term Portion of Environmental and Litigation Reserves


178



176

Other Liabilities


703



682

Monsanto Shareowners' Equity


11,994



11,545

Noncontrolling Interest


202



171

Total Shareowners' Equity


12,196



11,716

Total Liabilities and Shareowners' Equity

$

20,721


$

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

Six Months Ended




Feb. 29, 2012


Feb. 28, 2011

Operating Activities:







Net Income

$

1,346


$

1,045


Adjustments to reconcile cash provided by operating activities:







Items that did not require (provide) cash:








Depreciation and amortization


311



310



Bad-debt expense


(8)



(6)



Stock-based compensation expense


72



55



Excess tax benefits from stock-based compensation


(26)



(19)



Deferred income taxes


(33)



(10)



Restructuring charges, net




8



Equity affiliate income, net


(3)



(8)



Net gain on sales of a business or other assets


(2)



(4)



Other items


65



59


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








Trade receivables, net


(265)



(612)



Inventory, net


(356)



(249)



Deferred revenues


445



656



Accounts payable and other accrued liabilities


142



472



Restructuring cash payments


(7)



(152)



Pension contributions


(33)



(44)



Other items


24



(60)

Net Cash Provided by Operating Activities


1,672



1,441









Cash Flows Provided (Required) by Investing Activities:








Purchases of short-term investments


(429)



(180)



Maturities of short-term investments


429





Capital expenditures


(239)



(217)



Acquisitions of businesses, net of cash acquired


(113)



(99)



Technology and other investments


(56)



(44)



Other investments and property disposal proceeds


6



16

Net 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 proceeds


9



45



Short-term debt reductions


(17)



(27)



Long-term debt reductions


(142)



(2)



Payments on other financing




(2)



Treasury stock purchases


(299)



(381)



Stock option exercises


52



37



Excess tax benefits from stock-based compensation


26



19



Tax withholding on restricted stock and restricted stock units


(1)



(4)



Dividend payments


(322)



(302)



Proceeds from noncontrolling interests


101



8



Dividend payments to noncontrolling interests


(71)



(47)

Net Cash Required by Financing Activities


(672)



(668)

Cash Assumed from Initial Consolidations of Variable Interest Entities




77

Effect of Exchange Rate Changes on Cash and Cash Equivalents


(47)



26

Net Increase in Cash and Cash Equivalents


551



352

Cash and Cash Equivalents at Beginning of Period


2,572



1,485

Cash and Cash Equivalents at End of Period

$

3,123


$

1,837




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. 29, 2012


Feb. 28, 2011


Feb. 29, 2012


Feb. 28, 2011

EBIT – Seeds and Genomics Segment

$

1,699


$

1,403


$

1,846


$

1,383

EBIT – Agricultural Productivity Segment


82



62



164



127

EBIT– Total


1,781



1,465



2,010



1,510

Interest Expense, Net


27



20



62



48

Income Tax Provision(A)


543



427



611



435

Net 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 Year

Three Months

Three Months

Six Months

Six Months


2012 

Ended

Ended

Ended

Ended


Guidance

Feb. 29, 2012

Feb. 28, 2011

Feb. 29, 2012

Feb. 28, 2011

Diluted Earnings per Share

$3.45-$3.50

$2.24

$1.88

$2.47

$1.89

Restructuring Charges, Net

0.01

Income on Discontinued Operations

(0.01)

(0.01)

(0.01)

(0.01)

(0.01)

Nitro Claims Settlement

0.05

0.05

0.05

Diluted Earnings per Share from Ongoing Business

$3.49-$3.54

$2.28

$1.87

$2.51

$1.89




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


Six Months Ended




2012 Guidance

Feb. 29, 2012

Feb. 28, 2011



Net Cash Provided by Operating Activities

$

2,500-2,800

$

1,672

$

1,441



Net Cash Required by Investing Activities


(900)-(1,000)


(402)


(524)



Free Cash Flow

$

1,600-1,800


1,270


917



Net Cash Required by Financing Activities


N/A


(672)


(668)



Cash Assumed from Initial Consolidations of Variable Interest Entities


N/A



77



Effect of Exchange Rate Changes on Cash and Cash Equivalents


N/A


(47)


26



Net Increase in Cash and Cash Equivalents


N/A


551


352



Cash and Cash Equivalents at Beginning of Period


N/A


2,572


1,485



Cash and Cash Equivalents at End of Period


N/A

$

3,123

$

1,837





SOURCE Monsanto Company

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