News Column

Building from Expected Strong FY14 Monsanto Lifts Current Year Guidance and Announces $10 Billion Share Repurchase Authorization

June 26, 2014



ENP Newswire - 26 June 2014

Release date- 25062014 - ST. LOUIS - Monsanto Company (NYSE: MON) delivered solid results for the third quarter of fiscal year 2014 and raised its guidance to the upper end of its previously announced ranges for fiscal year 2014.

The company announced a target to at least double full year ongoing EPS by the end of fiscal year 2019 based on its core business and the transformational potential of its new platforms. With the company's updated long term outlook, Monsanto also announced a new $10 billion share repurchase authorization.

For the third quarter, Monsanto reported ongoing and as-reported EPS of $1.62. Despite greater headwinds across the industry, the company today raised its full year outlook to the upper end of its previous guidance ranges for both ongoing EPS and free cash flow, with ongoing EPS guidance of $5.10 to $5.20 and as-reported EPS guidance of $5.12 to $5.22.

'Through the third quarter, we're on track for seeds and traits to drive a majority of our full year growth. That performance in a more challenging agricultural environment speaks to the breadth and customer value of our product portfolio,' said Hugh Grant, chairman and chief executive officer. 'Coupled with an expanding portfolio of solutions for farmers, this provides confidence to target at least doubling our ongoing earnings per share over the next five years and evolve our capital allocation priorities; including an additional $10 billion share repurchase authorization that further enhances Monsanto's ability to return value to our shareowners.'

Strategic Targets

Reflecting the company's continuing momentum, strong performance and ongoing opportunity, Monsanto today outlined a new long-term target to at least double full year ongoing EPS by the end of fiscal year 2019. The new target reflects management's confidence in the growth opportunity for the core business and transformational potential in new platforms.

The largest driver of the overall growth over the next five years is expected to come from the established core seeds and traits business, with an expected contribution of more than $4 billion in total incremental gross profit growth during that period. At the same time, Monsanto continues to make strong progress with new platforms, including its Climate Corporation platform, which is expected to contribute a key part to Monsanto's strategy and earnings profile during this five year growth horizon.

Given the long term outlook for the business and the favorable debt market, the company also announced its intent to adjust the capital structure to target a Net-Debt-to-EBITDA ratio of 1.5 by the end fiscal year 2015. The target is subject to seasonality of the business and management will regularly review and evaluate its capital allocation priorities and capital structure with the goal of remaining both flexible and disciplined.

Monsanto plans to maintain a strong investment-grade credit rating in order to provide access to attractive financing for working capital needs and for mid- to long-term needs.

Monsanto's balance sheet and cash flow generation will afford the company the financial flexibility to pursue both organic and external growth opportunities while returning capital to shareowners. With approximately $1.1 billion remaining in the company's current share repurchase program, the company announced a new two-year $10 billion share repurchase authorization. Using cash on hand and access to debt, Monsanto intends to use approximately $6 billion in an accelerated share repurchase in the near term.

Results of Operations

The company achieved solid third quarter and year-to-date results that continue to reflect strong performance across the expected portfolio contributors of its business. Net sales for the quarter were $4.3 billion increasing to $13 billion for the first nine months.

Operating expenses were up $58 million in the third quarter compared to the prior year due in part to additional costs as the company invests in its precision agriculture and biologicals platforms. In the three month comparison, selling, general and administrative (SG&A) expenses remained flat as a percentage of sales. Quarterly research and development (R&D) expenses were up $35 million over the prior year period.

The company's third-quarter earnings per share (EPS) was $1.62 on an ongoing and as-reported basis, compared to an EPS of $1.66 on an ongoing basis and $1.68 on an as-reported basis in the same quarter last year. EPS for the first nine months of fiscal year 2014 was $5.43 on an ongoing and $5.45 on an as-reported basis, compared with an EPS of $5.01 on an ongoing and $5.05 on an as-reported basis in the same quarter last year.

Cash Flow

For the first nine months of fiscal year 2014, net cash provided by operating activities was a source of $371 million. Net cash required by investing activities for the first nine months of fiscal year 2014 was approximately $1.7 billion, compared to $387 million for the same period of fiscal year 2013. Net cash required by financing activities for the first nine months of fiscal year 2014 was $420 million, compared to net cash required of $739 million for the same period of fiscal year 2013.

Free cash flow was a use of $1.4 billion for the first nine months of fiscal year 2014, compared to a source of $399 million for the same period fiscal year 2013. Key investments for business growth made in fiscal year 2014 include The Climate Corporation acquisition and Novozymes BioAg Alliance.

Outlook

The company raised its full year guidance to the upper end of its previous guidance ranges, with ongoing EPS guidance of $5.10 to $5.20, positioning the company for strong growth for the full year. Full-year EPS guidance on an as-reported basis is expected in the range of $5.12 to $5.22 per share. Updated EPS guidance continues to incorporate the effects related to agricultural industry headwinds, including an estimated $0.15 to $0.20 full-year EPS effect, largely related to currency fluctuations.

The company also increased its full year free cash flow outlook to the upper end of previous guidance, at $700 million to $800 million. The free cash flow guidance is inclusive of the cash used for the company's fiscal year 2014 acquisition of The Climate Corporation and recent BioAg Alliance with Novozymes.

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 approximately $2.2 billion to $2.5 billion for fiscal year 2014, including capital expenditures and acquisition-related costs.

The Seeds and Genomics segment consists of the global seeds and related traits business, biotechnology platforms and precision agriculture.

Net sales in the Seeds and Genomics segment for the third quarter were $3.0 billion, a decrease of $14 million from the same period last year. For the first nine months, net sales for the segment are up $209 million over the same period last year. Gross profit for the segment increased $40 million to $1.9 billion in a year-over-year three month comparison and increased to $5.9 billion for the first nine months.

For the full year Monsanto continues to forecast its Seeds and Genomics segment to drive the majority of the full year gross profit growth, as the segment is on track for revenue growth and margin expansion supported by performance across the portfolio. As Monsanto expands its portfolio of solutions to farmers, the Seeds and Genomics segment remains an integral part of Monsanto's long-term growth targets, expected to drive a majority of the targeted five-year growth by contributing more than $4 billion in total incremental gross profit in that period. That outlook reflects several key platform opportunities from the fiscal year 2014 performance, including:

Monsanto continues to be on track for record performance in soybeans sales and gross profit. The company remains on track for the fastest ever ramp up of a soybean trait. With an early view on supply, Monsanto expects Intacta RR PRO soybean acreage in Latin America to increase by three-to-four times over the launch volume, reaching 10 to 12 million acres in fiscal year 2015.

The company's global corn portfolio continues to be one of the company's most important ongoing drivers, including gross profit growth and margin expansion in the full year outlook despite lower planted corn acres and global currency headwinds in fiscal 2014. The corn business is Monsanto's largest global platform and it expects to continue momentum through its growth horizon with portfolio upgrades, expanded footprint and continued trait contribution.

Monsanto continues to make strong progress across its new Climate Corporation platform. Among the highlights are expanding industry relationships, including collaborations with all the company's major retail partners, including Agrium'sCrop Production Services, GROWMARK, Helena Chemical Company, Wilbur Ellis and WinField.

Additionally, response to the company's suite of offerings has been stronger than originally projected, with more than 40 million installed acres of the Climate BasicTM tool and more than a million acres of premium services like Climate PROTM and FieldScripts expected.

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

Net sales for the Agricultural Productivity segment for the first nine months of fiscal 2014 increased $357 million over the same period last year.

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 the company's results for the third quarter and year-to-date as well as future expectations. The call may include a discussion of strategic initiatives and other matters related to the company's business.

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; expected higher levels of indebtedness and the company's ability 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 and 10-Q Reports 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.

Media Contact:

Lee Quarles

Tel: 314-694-2330

Investor Contact:

Bryan Hurley

Tel: 314-694-8148


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Source: ENP Newswire


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