Jun 25, 2008
ST. LOUIS, June 25 /PRNewswire-FirstCall/ --
Third Third Nine Nine ($ in millions) Quarter Quarter Months Months 2008 2007 2008 2007 Net Sales by Segment Corn seed and traits $975 $891 $3,189 $2,443 Soybean seed and traits 447 325 1,064 868 Cotton seed and traits 279 212 361 260 Vegetable and fruit seed 185 170 521 444 All other crops seeds and traits 161 114 293 207 TOTAL Seeds and Genomics $2,047 $1,712 $5,428 $4,222 Roundup and other glyphosate-based herbicides $1,168 $757 $3,158 $1,936 All other agricultural productivity products 373 373 880 832 TOTAL Agricultural Productivity $1,541 $1,130 $4,038 $2,768 TOTAL Net Sales $3,588 $2,842 $9,466 $6,990 Gross Profit $1,969 $1,503 $5,253 $3,633 Operating Expenses $875 $684 $2,292 $1,860 Interest (Income) Expense - Net $(3) $1 $(6) $7 Other (Income) Expense - Net $(5) $12 $(189) $32 Net Income $811 $570 $2,196 $1,203 Diluted Earnings per Share (See note 1.) $1.45 $1.03 $3.93 $2.17 Items Affecting Comparability - EPS Impact (Income) Loss on Discontinued Operations -- $(0.01) -- $0.01 Solutia Claim Settlement (after tax) -- -- $(0.23) -- Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 1.) $1.45 $1.02 $3.70 $2.18 Effective Tax Rate 26% 29% 30% 30% Third Third Nine Nine Comparison as a Percent of Net Sales: Quarter Quarter Months Months 2008 2007 2008 2007 Gross profit 55% 53% 55% 52% Selling, general and administrative expenses (SG&A) 17% 17% 17% 19% Research and development expenses (excluding acquired in-process R&D) 7% 7% 7% 8% Income before income taxes and minority interest 31% 28% 33% 25% Net income 23% 20% 23% 17%
Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
"Backed by continued growing demand for our products, the first nine months of our fiscal year has been remarkable and we're now increasing our full-year guidance. This strong growth sets up a solid foundation for our business and to reach our target of more than doubling gross profit in 2012. Because we're both discovering and delivering innovative tools that can help increase productivity on farm, we offer an attractive solution to the farmer and their mission of meeting our world's growing food, feed and fuel needs. While others are asking should it be food OR feed OR fuel, we believe the answer is AND, and we have the solutions in hand to be a significant part of that answer."
Monsanto reported record net sales of $3.6 billion for the third quarter of fiscal year 2008, which were 26 percent higher than sales in the same period in fiscal year 2007. Results in the quarter reflected increased revenues from the company's Roundup agricultural herbicides globally, increased soybean seed and traits revenues in the United States, increased corn seed and trait revenues in the United States, higher corn seed revenues in Europe-Africa, and higher cotton seed and trait revenue in the United States.
Net sales in the company's first nine months of fiscal year 2008 resulted in year-to-date sales of $9.5 billion, which were 35 percent higher compared with sales in the same period last year. Key contributors to the company's growth included increased sales of Roundup and other glyphosate-based herbicides globally, higher worldwide corn seed and traits revenues as well as increased soybean seed and traits revenues and cotton seed and traits revenues in the United States.
Monsanto's net income for the third quarter of fiscal year 2008 was $811 million or 42 percent higher than net income in the same period last year. For the first nine months of fiscal year 2008, net income was 83 percent higher than net income in the same period last year.
Earnings per share (EPS) for the third quarter of fiscal year 2008 were $1.45 both on an as-reported basis and an ongoing basis. EPS for the first nine months of fiscal year 2008 were $3.93 on an as-reported basis, and $3.70 on an ongoing basis. EPS results for the first three quarters were affected favorably by $0.23 per share after tax from the settlement of Monsanto's claims in conjunction with Solutia's emergence from bankruptcy. (For a reconciliation of ongoing EPS, see page 1.)
For the first nine months of fiscal year 2008, net cash provided by operating activities was $1.3 billion, compared with $89 million in the same period in 2007. Net cash required by investing activities was $650 million for the first nine months of 2008, compared with net cash required of $410 million for the same period last year. As a result, free cash flow was a source of $675 million for the first nine months of fiscal year 2008, compared with a use of $321 million in the same period in fiscal year 2007. (For a reconciliation of free cash flow, see note 1.) Improved earnings, higher collections from accounts receivable and customer prepayments and the settlement of the Solutia-related claim contributed to the increase in free cash flow in the first nine months of 2008. Net cash provided by financing activities was $93 million for the first nine months of 2008, compared with net cash required of $204 million for the same period last year.
Monsanto's fourth quarter is largely influenced by its global cotton business and U.S. Roundup agricultural herbicides business. The company historically records a loss in the fourth quarter.
Monsanto now expects that its full-year 2008 EPS will be approximately $3.63 on a reported basis and approximately $3.40 on an ongoing basis. (For a reconciliation of ongoing EPS, see page 1). Monsanto's full-year 2008 EPS guidance on a reported basis does not include an estimate for the in-process, research and development charge associated with the company's fourth quarter acquisitions.
The company now expects that its free cash flow for fiscal year 2008 will be $550 million. The company expects net cash provided by operating activities to be in the range of $2.6 billion, and net cash required by investing activities to be approximately $2.05 billion for fiscal year 2008. (For a reconciliation of free cash flow, see note 1.) This revised free cash flow guidance reflects the recently-completed acquisition of De Ruiter Seeds as well as the recently-announced acquisition of Marmot, S.A., which operates Semillas Cristiani Burkard (SCB), a privately-held seed company headquartered in Guatemala City, Guatemala.
Preliminary Trait Acreage Report
As part of today's announcement, Monsanto also published a preliminary report on the company's biotech trait acreage for fiscal year 2008. This report is available on Monsanto's web site at http://www.monsanto.com/.
Seeds and Genomics Segment Detail ($ in millions) Net Sales Gross Profit Third Third Nine Nine Third Third Nine Nine Seeds and Quarter Quarter Months Months Quarter Quarter Months Months Genomics 2008 2007 2008 2007 2008 2007 2008 2007 Corn seed and traits $975 $891 $3,189 $2,443 $565 $530 $2,023 $1,543 Soybean seed and traits 447 325 1,064 868 269 203 649 581 Cotton seed and traits 279 212 361 260 195 179 252 222 Vegetable and fruit seed 185 170 521 444 93 72 270 210 All other crops seeds and traits 161 114 293 207 97 62 154 99 TOTAL Seeds and Genomics $2,047 $1,712 $5,428 $4,222 $1,219 $1,046 $3,348 $2,655 ($ in millions) Earnings Before Interest & Taxes (EBIT) Third Third Nine Nine Seeds and Genomics Quarter Quarter Months Months 2008 2007 2008 2007 EBIT (For a reconciliation of EBIT, see note 1.) $586 $557 $1,643 $1,302 Unusual Items Affecting EBIT Income (Loss) on discontinued operation None $8 None $(5)
The Seeds and Genomics segment consists of the company's global seeds and related traits business, and genetic technology platforms.
Sales for Monsanto's Seeds and Genomics segment were $2 billion for the third quarter of fiscal year 2008, or 20 percent higher than sales in the same period last year.
During the third quarter of fiscal year 2008, the company realized increased soybean seed and traits revenues in the United States, increased corn seed and trait revenues in the United States, higher corn seed revenues in Europe-Africa and increased U.S. cotton seed and trait revenues. Monsanto expects that strong customer demand for its branded corn seed products contributed to a seventh consecutive year of market share gains in the U.S. corn seed market. In the United States, Monsanto's DEKALB brand could realize 2 to 3 percentage points in share growth and 1 to 2 percentage points in its American Seeds Inc. brands, pending final returns. In Argentina, Monsanto's brand increased 5 percentage points while its brands held share flat in Brazil, as the company had anticipated.
Sales for the segment were also higher for the first nine months of the 2008 fiscal year compared with sales in the same period last year. Sales for the first nine months were $5.4 billion, or 29 percent higher than sales in fiscal year 2007. Key contributors to the company's growth through the first nine months included higher worldwide corn seed and traits revenues, increased soybean seed and traits revenues in the United States as well as higher U.S. cotton seed and traits revenue.
Agricultural Productivity Segment Detail ($ in millions) Net Sales Gross Profit Third Third Nine Nine Third Third Nine Nine Agricultural Quarter Quarter Months Months Quarter Quarter Months Months Productivity 2008 2007 2008 2007 2008 2007 2008 2007 Roundup and other glyphosate- based herbicides $1,168 $757 $3,158 $1,936 $594 $286 $1,559 $635 All other agricultural productivity products 373 373 880 832 156 171 346 343 TOTAL Agricultural Productivity $1,541 $1,130 $4,038 $2,768 $750 $457 $1,905 $978 ($ in millions) Earnings Before Interest & Taxes (EBIT) Third Third Nine Nine Agricultural Productivity Quarter Quarter Months Months 2008 2007 2008 2007 EBIT (For a reconciliation of EBIT, see note 1.) $502 $242 $1,488 $423 Unusual Items Affecting EBIT Solutia Claim Settlement None None $210 None
The Agricultural Productivity segment consists primarily of crop protection products, the lawn-and-garden herbicide business, and the company's animal agricultural business.
Sales for Monsanto's Agricultural Productivity segment were $1.5 billion for the third quarter of fiscal year 2008, or 36 percent higher compared with sales in the same period last year. Results in the quarter benefited from increased average net selling prices for the company's Roundup agricultural herbicides globally.
Sales for the segment were higher for the first three quarters of the 2008 fiscal year compared with sales in the same period last year. Segment sales through the first nine months were $4 billion or 46 percent higher than sales in the same period in fiscal year 2007. Results through the first three quarters benefited from higher average net selling prices of Roundup and other glyphosate-based herbicides globally.
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. The call may also 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 http://www.monsanto.com/investors/. 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. For more information on Monsanto, see http://www.monsanto.com/.
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; 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 reports on Forms 10-Q and 10-K. 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: DEKALB and Roundup 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.
Monsanto Company Selected Financial Information (Dollars in millions, except per share amounts) Unaudited Statements of Consolidated Operations Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended May 31, 2008 May 31, 2007 May 31, 2008 May 31, 2007 Net Sales $3,588 $2,842 $9,466 $6,990 Cost of Goods Sold 1,619 1,339 4,213 3,357 Gross Profit 1,969 1,503 5,253 3,633 Operating Expenses: Selling, General and Administrative Expenses 622 487 1,617 1,299 Research and Development Expenses 251 190 672 554 Acquired In-Process Research and Development 2 7 3 7 Total Operating Expenses 875 684 2,292 1,860 Income From Operations 1,094 819 2,961 1,773 Interest Expense 31 29 99 96 Interest Income (34) (28) (105) (89) Solutia-Related Expenses (Income) - 4 (187) 23 Other (Income) Expense - Net (5) 8 (2) 9 Income Before Income Taxes and Minority Interest 1,102 806 3,156 1,734 Income Tax Provision 285 231 947 521 Minority Interest Expense 6 10 13 7 Income From Continuing Operations $811 $565 $2,196 $1,206 Discontinued Operations: Income (Loss) from Operations of Discontinued Businesses - 8 - (5) Income Tax Expense (Benefit) - 3 - (2) Income (Loss) on Discontinued Operations - 5 - (3) Net Income $811 $570 $2,196 $1,203 EBIT (see note 1) $1,088 $799 $3,131 $1,725 Basic Earnings (Loss) per Share Income from Continuing Operations $1.48 $1.04 $4.01 $2.22 Income (Loss) on Discontinued Operations - $0.01 - $(0.01) Net Income $1.48 $1.05 $4.01 $2.21 Diluted Earnings (Loss) per Share Income from Continuing Operations $1.45 $1.02 $3.93 $2.18 Income (Loss) on Discontinued Operations - $0.01 - $(0.01) Net Income $1.45 $1.03 $3.93 $2.17 Weighted Average Shares Outstanding: Basic 549.0 544.4 547.6 543.7 Diluted 560.0 555.2 558.9 554.4 Monsanto Company Selected Financial Information (Dollars in millions) Unaudited Condensed Statements of Consolidated Financial Position As of As of May 31, 2008 Aug. 31, 2007 Assets Current Assets: Cash and Cash Equivalents $1,714 $866 Trade Receivables - Net of Allowances of $253 and $217, Respectively 3,258 1,499 Miscellaneous Receivables 468 407 Deferred Tax Assets 340 449 Inventories 2,206 1,719 Other Current Assets 141 144 Total Current Assets 8,127 5,084 Property, Plant and Equipment - Net of Accumulated Depreciation of $3,625 and $3,260, Respectively 2,962 2,656 Goodwill 2,769 2,625 Other Intangible Assets - Net 1,375 1,415 Noncurrent Deferred Tax Assets 816 730 Long-Term Receivables - Net of Allowances of $172 and $131, Respectively 653 79 Other Assets 590 394 Total Assets $17,292 $12,983 Liabilities and Shareowners' Equity Current Liabilities: Short-Term Debt, Including Current Portion of Long-Term Debt $10 $270 Accounts Payable 788 649 Income Taxes Payable 134 150 Accrued Compensation and Benefits 368 349 Accrued Marketing Programs 720 517 Deferred Revenues 369 260 Grower Production Accruals 120 86 Dividends Payable - 96 Miscellaneous Short-Term Accruals 779 698 Total Current Liabilities 3,288 3,075 Long-Term Debt 1,703 1,150 Postretirement Liabilities 505 542 Long-Term Portion of Environmental and Related Litigation Reserve 150 135 Long-Term Deferred Revenue 588 - Other Liabilities 847 578 Shareowners' Equity 10,211 7,503 Total Liabilities and Shareowners' Equity $17,292 $12,983 Debt to Capital Ratio: 14% 16% Monsanto Company Selected Financial Information (Dollars in millions) Unaudited Statements of Consolidated Cash Flows Nine Months Nine Months Ended Ended May 31, 2008 May 31, 2007 Operating Activities: Net Income $2,196 $1,203 Adjustments to Reconcile Cash Provided by Operations: Items That Did Not Require (Provide) Cash: Depreciation and Amortization Expense 423 386 Bad-Debt Expense 52 29 Receipt of Securities from Solutia Settlement (38) - Stock-Based Compensation Expense 64 54 Excess Tax Benefits from Stock-Based Compensation (161) (49) Deferred Income Taxes 126 (10) Equity Affiliate Expense - Net 2 30 Acquired In-Process Research and Development 3 7 Other Items (10) (1) Changes in Assets and Liabilities That Provided (Required) Cash, Net of Acquisitions: Trade Receivables (1,490) (1,969) Inventories (387) 91 Deferred Revenues (1) (45) Accounts Payable and Other Accrued Liabilities 746 466 Net Investment Hedge Settlement (97) (4) Other Items (103) (99) Net Cash Provided by Operating Activities 1,325 89 Cash Flows Provided (Required) by Investing Activities: Maturities of Short-Term Investments 59 22 Capital Expenditures (530) (297) Acquisitions of Businesses, Net of Cash Acquired (113) (125) Purchases of Long-Term Equity Securities (78) - Technology and Other Investments (39) (35) Other Investments and Property Disposal Proceeds 51 25 Net Cash Required by Investing Activities (650) (410) Cash Flows Provided (Required) by Financing Activities: Net Change in Financing With Less Than 90-Day Maturities (28) 265 Short-Term Debt Reductions (9) (8) Long-Term Debt Proceeds 548 4 Long-Term Debt Reductions (238) (277) Payments on Other Financing (3) (4) Debt Issuance Costs (5) - Treasury Stock Purchases (145) (101) Stock Option Exercises 100 59 Excess Tax Benefits From Stock-Based Compensation 161 49 Dividend Payments (288) (191) Net Cash Provided (Required) by Financing Activities 93 (204) Effect of Exchange Rate Changes on Cash and Cash Equivalents 80 59 Net Increase (Decrease) in Cash and Cash Equivalents 848 (466) Cash and Cash Equivalents at Beginning of Period 866 1,460 Cash and Cash Equivalents at End of Period $1,714 $994 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), 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) 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). Three Months Ended Nine Months Ended May 31, May 31, 2008 2007 2008 2007 EBIT - Seeds and Genomics Segment $586 $557 $1,643 $1,302 EBIT - Agricultural Productivity Segment 502 242 1,488 423 EBIT- Total 1,088 799 3,131 1,725 Interest (Income) Expense - Net (3) 1 (6) 7 Income Tax Provision(A) 280 228 941 515 Net Income $811 $570 $2,196 $1,203 (A) Includes the income tax provision on minority interest income. Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. The reconciliation of EPS to Ongoing EPS for the third quarter and nine months ended May 31, 2008 and May 31, 2007, is included on page 1 of this release. 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 2008 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 Nine Months Ended 2008 May 31, Guidance 2008 2007 Net Cash Provided by Operating Activities $2,600 $1,325 $89 Net Cash Required by Investing Activities (2,050) (650) (410) Free Cash Flow $550 675 (321) Net Cash Provided (Required) by Financing Activities N/A 93 (204) Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A 80 59 Net Increase in Cash and Cash Equivalents N/A 848 (466) Cash and Cash Equivalents at Beginning of Period N/A 866 1,460 Cash and Cash Equivalents at End of Period N/A $1,714 $994
SOURCE: Monsanto Company
CONTACT: Media, Lee Quarles, +1-314-694-2330, or Analysts, Scarlett Lee
Foster, +1-314-694-8148, both of Monsanto Company
Web site: http://www.monsanto.com/
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