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Actionable news in MON: MONSANTO COMPANY,

Monsanto: 800 North Lindbergh Blvd

The following excerpt is from the company's SEC filing.

St. Louis, Missouri 63167

Release

Immediately

Contact

Media: Sara Miller (314-694-5824)

Analysts: Laura Meyer (314-694-8148)

MONSANTO DELIVERS SECOND QUARTER FINANCIAL RESULTS WITHIN GUIDANCE; PROGRESS ACROSS KEY GROWTH DRIVERS SETS UP FOUNDATION FOR STRONG GROWTH BEGINNING IN FY17

FY16 as-reported EPS guidance improves to $3.72 to $4.48; reconfirms ongoing EPS and free cash flow

Monsanto delivers on balanced capital allocation commitments in FY16 with closure of $3B ASR

With strong grower demand for new solutions, Intacta RR2 PRO

soybea ns continue to track to 35 million acres across South America in FY16; Roundup Ready 2 Xtend

varieties positioned for three million U.S. soybean acres and an expected two million U.S. acres of Bollgard II

XtendFlex

cotton in FY16

Key variables and growth drivers reinforce outlook and opportunity for a baseline mid-teens compounded annual growth rate in EPS from the mid-point of company’s FY16 outlook through FY19

Innovation continues to differentiate Monsanto and company uniquely positioned to remain the partner of choice in cutting-edge solutions

ST. LOUIS, April 6, 2016 - Monsanto Company (NYSE: MON) today announced second quarter 2016 results in line with expectations as the company continues to make progress on several key milestones related to its long-term growth drivers despite the near-term challenging agricultural environment. The company continues to execute on key initiatives within its core business

led by new global corn hybrid portfolio introductions

significant Intacta RR2 PRO

soybean adoption, launch of its new Roundup Ready 2 Xtend

varieties and continued progress within its digital agriculture platform with a series of extended partnerships. The company also remains disciplined in the optimization of its spend and targeted capital structure with the recent completion of its $3 billion accelerated share repurchase (ASR) agreements. The company noted its estimate for fiscal year 2016 as-reported EPS improved, while ongoing EPS and free cash flow remain in the ranges of its recently revised guidance.

Second Quarter

Six Months

($ in millions, except per share amounts)

Net Sales by Segment

Corn seed and traits

Soybean seed and traits

Cotton seed and traits

Vegetable seeds

All other crops seeds and traits

TOTAL Seeds and Genomics

Agricultural productivity

TOTAL Agricultural Productivity

TOTAL Net Sales

Gross Profit

Operating Expenses

Interest Expense – Net

Other Expense (Income) – Net

Net Income Attributable to Monsanto Company

Diluted Earnings per Share

Items Affecting Comparability – EPS Impact

Restructuring Charges

Income on Discontinued Operations

Environmental and Litigation Matters

Diluted Earnings per Share from Ongoing Business

(For the definition of ongoing EPS, see note 1.)

Effective Tax Rate

Comparison as a Percent of Net Sales:

Gross profit

Selling, general and administrative expenses

Research and development expenses

Income from continuing operations before income taxes

Net income attributable to Monsanto Company

“We continue to have a strong growth plan, backed by our commitment to delivering value to our customers through the industry’s most-proven integrated pipeline,” said Hugh Grant, chairman and chief executive officer. “Not only does this give us the confidence that we can deliver a baseline EPS CAGR in the mid-teens from the mid-point of our fiscal year 2016 guidance through fiscal year 2019, but it fuels our belief that we can continue to be the innovation engine for the industry and the partner of choice in leading agricultural solutions

Results of Operations

Net sales for the fiscal year 2016 second quarter decreased over the prior year’s second quarter to approximately

$4.5 billion

, with gross profit for the quarter also decreasing over the prior year period to approximately $

2.6 billion

. For the first six months of fiscal year 2016, net sales were approximately

$6.8 billion

and gross profit was approximately $

3.5 billion

Selling, general and administrative costs were $

586 million

and research and development expenses were $

340 million

for the second quarter of fiscal year 2016.

The company's fiscal year 2016 second quarter EPS was

on an as-reported basis and $

on an ongoing basis. On an as-reported basis, second quarter 2016 EPS was down 17 percent, while ongoing second quarter 2016 EPS was essentially in line with the prior year period on a currency neutral basis. The positive drivers in the quarter, namely the benefits of the company's reduced share count, Brazil corn pricing, increased Intacta RR2 PRO

soybean adoption and reduced operating expenses, were offset by glyphosate declines in the Agricultural Productivity segment, increased discounting in the United States in corn and soybeans, lower soybean volumes with the slower start to the U.S. season and expected lower acres, as well as higher corn cost of goods sold resulting from smaller production plans in the prior year.

EPS for the first six months of fiscal year 2016 was

on an ongoing basis. (For a reconciliation of EPS to ongoing EPS and currency neutral ongoing EPS growth to as-reported EPS growth see note 1).

Cash Flow

For the first half of fiscal year 2016, net cash provided by operating activities was a source of approximately $

1.4 billion

, compared to approximately $

1.5 billion

the same period last year. Net cash required by investing activities for the first half of fiscal year 2016 was $

483 million

, compared to $

532 million

for the same period of fiscal year 2015. Net cash required by financing activities for the first half of 2016 was approximately $

, compared to net cash required of $

406 million

for the same period of fiscal year 2015. Free cash flow was a source of $

906 million

for the first half of fiscal year 2016, compared to a source of $

986 million

for the first half of fiscal year 2015. (For a reconciliation of free cash flow, see note 1).

The company remains diligent in its capital allocation approach with the closure of its $3 billion ASR agreements in the second quarter of fiscal year 2016

Outlook

Monsanto updated its fiscal year 2016 as-reported EPS guidance to be in the range of $3.72 to $4.48 per share

primarily due to a change in the expected timing for the accounting of restructuring expense. The company confirmed ongoing EPS guidance in the range of $4.40 to $5.10 per share. Monsanto’s guidance incorporates the anticipated continuation of several global and industry headwinds, including the expected $0.90 to $1.00 of currency headwinds. (For a reconciliation of EPS to ongoing EPS, see note 1).

The company also reaffirmed its full-year free cash flow projections to be in the range of $1.4 billion to $1.6 billion for fiscal year 2016. The company expects net cash provided by operating activities to be $2.2 billion to $2.6 billion, and net cash required by investing activities to be approximately $800 million to $1 billion for fiscal year 2016. (For a reconciliation of free cash flow, see note 1).

The company continues to expect gross profit growth from its core Seeds and Genomics segment in fiscal year 2016 to be relatively flat with the previous year. Exclusive of currency headwinds of nearly $400 million, seeds and genomics gross profit is estimated to be up single digits, driven primarily by the expected increase in potential licensing deals in the range of more than $300 million to as much as $450 million in fiscal year 2016, increased Intacta RR2 PRO™ soybean adoption and global corn market expansion. With generic glyphosate pricing holding relatively steady, the company continues to expect the Agricultural Productivity segment gross profit to be roughly at the mid-point of the range of $900 million to $1.1 billion of gross profit in fiscal year 2016.

The company continues to expect operating expenses for fiscal year 2016, exclusive of restructuring expense and legacy environmental and litigation matters, to be down slightly versus fiscal year 2015. This expectation is inclusive of new platform spend to support the long-term growth prospects for these opportunities. Other expense, net is expected to increase year-over-year by approximately $180 million due to the Argentine Peso devaluation expense.

Moving beyond the current fiscal year, Monsanto’s outlook is for a baseline mid-teens compounded annual growth rate in its as-reported and ongoing EPS from the mid-point of its fiscal year 2016 guidance through fiscal year 2019. This is expected to be led by the company’s soybean innovation growth drivers, strength and durability of its global corn platform, continued financial discipline, assumed stability in currencies and an improved cost of goods outlook for corn and soybeans.

Seeds and Genomics Segment Detail

($ in millions)

(A) For the

six months ended

, seeds and genomics gross profit includes a pretax restructuring charge totaling

$52 million

related to certain asset impairment charges, primarily in the corn business, which is included in cost of goods sold.

Earnings Before Interest & Taxes (EBIT)

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

Unusual Items Affecting EBIT:

The Seeds and Genomics segment

consists of the global seeds and related traits business, biotechnology platforms and digital agriculture.

Net sales for Monsanto's Seeds and Genomics segment in the first half of fiscal 2016 were approximately

$5.2 billion

, with sales for the segment in the second quarter of fiscal year 2016 reaching approximately

$3.8 billion

In soybeans, Monsanto continues to build on the strong grower adoption of Intacta RR2 PRO™ soybeans in South America as the company remains on track to reach 35 million acres in fiscal year 2016. The company also has seen strong grower interest for its Roundup Ready 2 Xtend™ soybeans and is pleased with the recent announcement of the U.S. Environmental Protection Agency's open comment period regarding the in-crop use of dicamba herbicide. Monsanto still awaits the final EU approval of the stacked product, which has experienced unexpected administrative delays after receiving the European Food Safety Authority’s positive opinion last June. The company continues to be positioned to provide its new Roundup Ready 2 Xtend™...


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