Monsanto Co. 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.
"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 CEO. "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.
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.
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.
