- First-quarter earnings per share benefits from lower tax rate
- Company reiterates full-year free cash flow and EPS guidance
Results in PDF format (52K)
|
($ in millions) |
First Quarter 2007 |
First Quarter 2006 |
|
Net Sales By Segment |
|
|
|
Corn seed and traits |
$ 360 |
$ 267 |
|
Soybean seed and traits |
170 |
173 |
|
Vegetable and fruit seed |
100 |
125 |
|
All other crops seeds and traits |
50 |
91 |
|
TOTAL Seeds and Genomics |
$ 680 |
$ 656 |
|
|
|
|
|
Roundup and other glyphosate-based herbicides |
$ 649 |
$ 549 |
|
All other agricultural productivity products |
210 |
200 |
|
TOTAL Agricultural Productivity |
$ 859 |
$ 749 |
|
|
|
|
|
TOTAL Net Sales |
$1,539 |
$1,405 |
|
|
|
|
|
Gross Profit |
$ 680 |
$ 634 |
|
|
|
|
|
Operating Expenses |
$ 566 |
$ 518 |
|
|
|
|
|
Interest Expense Net |
$ 3 |
$ 18 |
|
Other Expense Net |
$ 14 |
$ 4 |
|
|
|
|
|
Net Income |
$ 90 |
$ 59 |
|
|
|
|
|
Diluted Earnings per Share (See note 1.) |
$ 0.16 |
$ 0.11 |
|
Items Affecting Comparability EPS Impact |
|
|
|
None |
|
|
|
Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 2.) |
$ 0.16 |
$ 0.11 |
|
|
|
|
|
Effective Tax Rate |
10% |
37% |
|
|
First Quarter 2007 |
First Quarter 2006 |
|
Comparison as a Percent of Net Sales: |
|
|
|
Gross profit |
44% |
45% |
|
Selling, general and administrative expenses (SG&A) |
25% |
25% |
|
Research and development expenses |
12% |
12% |
|
Income before income taxes and minority interest |
6% |
7% |
|
Net income |
6% |
4% |
Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
We remain focused on delivering the next generation of innovation to the farm by offering our farmer customers meaningful seed and trait technologies. Our results in the first quarter are testament to this commitment and the value our products are providing farmers. Backed by the solid performance of our seeds and traits business including strong early demand for our triple-trait corn technology in the United States, we believe our business is on track for another strong year.
Market Conditions
The winter months in the Northern Hemisphere agricultural markets provide farmers with an opportunity to review their input costs for the 2007 season including new seed, trait and chemistry offerings. Strong early-season order patterns in the United States for the companys corn business are reinforcing growth trends in the companys branded seed business and adoption of trait technologies, particularly its triple-trait corn technology. Monsanto currently expects that total soybean acres under production may decrease slightly during this growing season as farmers increase the number of acres planted to corn in the United States. However, the company noted that final planted acres will be based on a number of factors leading up to planting, including commodity prices and weather.
The planting season is well under way in the Southern Hemisphere. In Australia, drought conditions have strained the productivity of cotton farmers within the country and reduced the number of acres devoted to cotton production by half. In Brazil, recent estimates suggest that total soybean production in the country could be in the range of 50 million acres.
Operations Update
The company reported net sales for the first quarter of fiscal year 2007, which were 10 percent higher than those in the first quarter of fiscal year 2006. Key drivers for the quarter were stronger adoption of the companys corn seed and trait technologies in the United States, and greater volumes of Roundup herbicides in the United States and Brazil.
For the first quarter of fiscal year 2007, Monsanto recorded net income of $90 million compared with net income of $59 million for the same period last year. Earnings per share (EPS) for the quarter, both on an as-reported and ongoing basis, were 16 cents a share. The companys first quarter results reflected a lower tax rate in the quarter primarily stemming from the conclusion of an ex-U.S. audit. Monsanto believes that the companys full-year tax rate will be in the 30 percent range.
Cash Flow
For first-quarter fiscal year 2007, net cash provided by operating activities was $600 million, compared with $773 million in the first-quarter of fiscal year 2006. Net cash required by investing activities was $67 million for the first-quarter of fiscal year 2007, compared to net cash required of $135 million for the same fiscal year 2006 quarter. As a result, free cash flow was $533 million for the first-quarter fiscal year 2007, compared with $638 million for the same quarter in fiscal year 2006. (For a reconciliation of free cash flow, see note 2.) The decrease in the quarter related primarily to changes in inventories and accrued liabilities which affected operating cash during the quarter. Net cash required by financing activities was $156 million for the first quarter of fiscal year 2007, compared with net cash required of $157 million for the same period in fiscal year 2006.
Outlook
The second and third quarters of fiscal year 2007 are expected to be the primary drivers for the companys fiscal year 2007 EPS results. These quarters reflect both the relative size of the companys U.S. business and the importance of its seeds-and-traits business to Monsantos earnings.
Monsanto now expects that its full-year 2007 EPS guidance could be toward the upper end of its previously announced range of $1.50 to $1.57, both on a reported and ongoing basis. The company continues to expect free cash flow for fiscal year 2007 to be in the range of $875 million to $950 million. The company expects net cash provided by operating activities to be in the range of $1.375 billion to $1.450 billion, and net cash required by investing activities to be approximately $500 million for fiscal year 2007. (For a reconciliation of free cash flow, see note 2.)
Seeds and Genomics Segment Detail
|
($ in millions) |
Net Sales |
Gross Profit |
||
|
Seeds and Genomics |
First Quarter 2007 |
First Quarter 2006 |
First Quarter 2007 |
First Quarter 2006 |
|
Corn seed and traits |
$360 |
$267 |
$223 |
$153 |
|
Soybean seed and traits |
170 |
173 |
122 |
114 |
|
Vegetable and fruit seed |
100 |
125 |
51 |
63 |
|
All other crops seeds and traits |
50 |
91 |
18 |
56 |
|
TOTAL Seeds and Genomics |
$680 |
$656 |
$414 |
$386 |
|
($ in millions) |
Earnings Before Interest & Taxes (EBIT) |
|
|
Seeds and Genomics |
First Quarter 2007 |
First Quarter 2006 |
|
EBIT (For a reconciliation of EBIT, see note 2.) |
$1 |
$19 |
|
Unusual Items Affecting EBIT |
None |
None |
The Seeds and Genomics segment consists of the companys global seeds and traits business, and genetic technology platforms.
Sales for Monsantos Seeds and Genomics segment were $680 million for the first quarter of fiscal year 2007, or higher than the same period last year.
Results in the quarter benefited from increased sales of the companys corn seed and traits business, which were 35 percent higher when compared with sales in the same period last year. During the quarter, Monsantos U.S. corn business realized strong early orders for the companys corn products including its higher margin triple-trait technology which offers farmers both above-the-ground and below-the-ground insect protection, as well as weed control flexibility. Monsanto reiterated that the companys DEKALB and Asgrow national corn brands could have more than 35 percent of all of its seed sold in a triple stack during the 2007 growing season.
Sales in the quarter were partially offset by lower volume of the companys cotton traits in Australia as drought conditions there halved the total cotton production area. Results in the quarter were also partially offset by lower revenues from the Seminis vegetable and fruit seed business, primarily a function of the timing of seed sales in 2007 when compared with 2006 sales.
Agricultural Productivity Segment Detail
|
($ in millions) |
Net Sales |
Gross Profit |
||
|
Agricultural Productivity |
First Quarter 2007 |
First Quarter 2006 |
First Quarter 2007 |
First Quarter 2006 |
|
Roundup and other glyphosate-based herbicides |
$649 |
$549 |
$194 |
$182 |
|
All other agricultural productivity products |
210 |
200 |
72 |
66 |
|
TOTAL Agricultural Productivity |
$859 |
$749 |
$266 |
$248 |
|
($ in millions) |
Earnings Before Interest & Taxes (EBIT) |
|
|
Agricultural Productivity |
First Quarter 2007 |
First Quarter 2006 |
|
EBIT (For a reconciliation of EBIT, see note 2.) |
$103 |
$93 |
|
Unusual Items Affecting EBIT |
None |
None |
The Agricultural Productivity segment consists primarily of crop protection products, residential lawn-and-garden herbicide products, and the companys animal agricultural businesses.
Sales for Monsantos Agricultural Productivity segment were $859 million for the first quarter of fiscal year 2007, or 15 percent higher compared with sales in the same period last year. The primary contributor to the segments growth in the quarter was stronger volumes of Roundup herbicides in the United States and Brazil.
Gross profit for the segment in the first quarter was slightly higher when compared with gross profit in the same period last year. As a percent of sales, gross profit for the segment was slightly less, as the company experienced higher raw material and energy costs for production of Roundup and other glyphosate-based herbicides.
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 www.monsanto.com.
DEKALB, Asgrow 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 Ended Nov. 30, |
|
|
2006 |
2005 |
|
|
Net Sales |
$1,539 |
$1,405 |
|
Cost of Goods Sold |
859 |
771 |
|
Gross Profit |
680 |
634 |
|
Operating Expenses: |
|
|
|
Selling, General and Administrative Expenses |
384 |
350 |
|
Research and Development Expenses |
182 |
168 |
|
Total Operating Expenses |
566 |
518 |
|
Income From Operations |
114 |
116 |
|
Interest Expense |
33 |
32 |
|
Interest Income |
(30) |
(14) |
|
Solutia-Related Expenses |
10 |
6 |
|
Other Expense (Income) Net |
4 |
(2) |
|
Income Before Income Taxes and Minority Interest |
97 |
94 |
|
Income Tax Provision |
10 |
35 |
|
Minority Interest Income |
(3) |
|
|
Net Income |
$ 90 |
$ 59 |
|
EBIT (see note 2) |
$ 104 |
$ 112 |
|
|
|
|
|
Basic Earnings per Share (see note 1) |
$ 0.17 |
$ 0.11 |
|
|
|
|
|
Diluted Earnings per Share (see note 1) |
$ 0.16 |
$ 0.11 |
|
|
|
|
|
Weighted Average Shares Outstanding (see note 1): |
|
|
|
Basic |
543.1 |
536.8 |
|
Diluted |
553.6 |
547.3 |
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
|
Condensed Statements of Consolidated Financial Position |
As of |
As of |
|
Assets |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
Cash and Cash Equivalents |
$ 1,842 |
$ 1,460 |
|
Short-Term Investments |
|
22 |
|
Trade Receivables Net of Allowances of $305 and $298, Respectively |
1,306 |
1,455 |
|
Miscellaneous Receivables |
383 |
344 |
|
Deferred Tax Assets |
395 |
390 |
|
Inventories |
1,954 |
1,688 |
|
Assets of Discontinued Operations |
6 |
6 |
|
Other Current Assets |
67 |
96 |
|
Total Current Assets |
5,953 |
5,461 |
|
|
|
|
|
Property, Plant and Equipment Net |
2,397 |
2,418 |
|
Goodwill |
1,527 |
1,522 |
|
Other Intangible Assets Net |
1,195 |
1,229 |
|
Noncurrent Deferred Tax Assets |
606 |
625 |
|
Other Assets |
462 |
473 |
|
Total Assets |
$12,140 |
$11,728 |
|
|
|
|
|
Liabilities and Shareowners Equity |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
Short-Term Debt, Including Current Portion of Long-Term Debt |
$ 42 |
$ 28 |
|
Accounts Payable |
477 |
514 |
|
Income Taxes Payable |
188 |
234 |
|
Accrued Compensation and Benefits |
178 |
295 |
|
Accrued Marketing Programs |
343 |
494 |
|
Deferred Revenues |
709 |
120 |
|
Grower Accruals |
185 |
26 |
|
Liabilities of Discontinued Operations |
2 |
2 |
|
Miscellaneous Short-Term Accruals |
557 |
566 |
|
Total Current Liabilities |
2,681 |
2,279 |
|
|
|
|
|
Long-Term Debt |
1,580 |
1,639 |
|
Postretirement Liabilities |
555 |
600 |
|
Long-Term Portion of Solutia-Related Reserve |
150 |
155 |
|
Other Liabilities |
513 |
530 |
|
Shareowners Equity |
6,661 |
6,525 |
Total Liabilities and Shareowners Equity |
$12,140 |
$11,728 |
|
|
|
|
|
Debt to Capital Ratio: |
20% |
20% |
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
|
Statements of Consolidated Cash Flows |
Three Months Ended Nov. 30, |
|
|
2006 |
2005 |
|
|
Operating Activities: |
|
|
|
Net Income |
$ 90 |
$ 59 |
|
Adjustments to Reconcile Cash Provided by Operating Activities: |
|
|
|
Items That Did Not Require (Provide) Cash: |
|
|
|
Depreciation and Amortization Expense |
128 |
133 |
|
Bad-Debt Expense |
9 |
14 |
|
Stock-Based Compensation Expense |
18 |
13 |
|
Excess Tax Benefits from Stock-Based Compensation |
(12) |
(10) |
|
Deferred Income Taxes |
(4) |
38 |
|
Equity Affiliate Expense Net |
10 |
7 |
|
Other Items |
3 |
(7) |
|
Changes in Assets and Liabilities That Provided (Required) Cash, Net of Acquisitions: |
|
|
|
Trade Receivables |
251 |
215 |
|
Inventories |
(256) |
(221) |
|
Deferred Revenues |
592 |
610 |
|
Accounts Payable and Other Accrued Liabilities |
(158) |
(127) |
|
PCB Litigation Settlement Proceeds |
5 |
5 |
|
Solutia-Related Payments |
(6) |
(9) |
|
Other Items |
(70) |
53 |
|
Net Cash Provided by Operating Activities |
600 |
773 |
|
|
|
|
|
Cash Flows Provided (Required) by Investing Activities: |
|
|
|
Purchases of Short-Term Investments |
|
(18) |
|
Maturities of Short-Term Investments |
22 |
|
|
Capital Expenditures |
(92) |
(56) |
|
Acquisitions of Businesses, Net of Cash Acquired |
|
(53) |
|
Technology and Other Investments |
(10) |
(10) |
|
Other Investments and Property Disposal Proceeds |
13 |
2 |
|
Net Cash Required by Investing Activities |
(67) |
(135) |
|
|
|
|
|
Cash Flows Provided (Required) by Financing Activities: |
|
|
|
Net Change in Financing With Less Than 90-Day Maturities |
(1) |
(122) |
|
Short-Term Debt Proceeds |
2 |
4 |
|
Short-Term Debt Reductions |
(8) |
(6) |
|
Long-Term Debt Proceeds |
3 |
3 |
|
Long-Term Debt Reductions |
(69) |
(26) |
|
Payments on Other Financing |
(2) |
(1) |
|
Treasury Stock Purchases |
(56) |
|
|
Stock Option Exercises |
17 |
27 |
|
Excess Tax Benefits From Stock-Based Compensation |
12 |
10 |
|
Dividend Payments |
(54) |
(46) |
|
Net Cash Required by Financing Activities |
(156) |
(157) |
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
5 |
|
|
Net Increase in Cash and Cash Equivalents |
382 |
481 |
|
Cash and Cash Equivalents at Beginning of Period |
1,460 |
525 |
|
Cash and Cash Equivalents at End of Period |
$1,842 |
$1,006 |
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
1. All earnings per share figures have been adjusted to reflect the companys two-for-one stock split which was paid on July 28, 2006, in the form of a 100 percent stock dividend.
2. 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 Nov. 30, |
|
|
2006 |
2005 |
|
|
EBIT Seeds and Genomics Segment |
$ 1 |
$ 19 |
EBIT Agricultural Productivity Segment |
103 |
93 |
|
EBIT Total |
104 |
112 |
|
Interest Expense Net |
3 |
18 |
|
Income Tax Provision(A) |
11 |
35 |
|
Net Income |
$ 90 |
$ 59 |
(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 three months ended Nov. 30,
2006 and 2005, 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 2007 free cash flow target, 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 2007 Target |
Three Months Ended Nov. 30, |
|
|
2006 |
2005 |
||
|
Net Cash Provided by Operating Activities |
$1,375 $1,450 |
$ 600 |
$ 773 |
|
Net Cash Required by Investing Activities |
(500) |
(67) |
(135) |
Free Cash Flow |
$ 875 $ 950 |
533 |
638 |
Net Cash Required by Financing Activities |
N/A |
(156) |
(157) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
N/A |
5 |
|
Net Increase in Cash and Cash Equivalents |
N/A |
382 |
481 |
Cash and Cash Equivalents at Beginning of Period |
N/A |
1,460 |
525 |
Cash and Cash Equivalents at End of Period |
N/A |
$1,842 |
$1,006 |
