St. Louis, Missouri
March 25, 2008
Leading corn market share
positions, accelerated biotechnology trait penetration and new
value generated by Roundup and other glyphosate-based herbicides
have led Monsanto Company
to well exceed its expectations for second-quarter results and
to raise its full-year guidance for ongoing earnings per share
(EPS) and free cash flow.
The company now projects full-year ongoing EPS of $3.15 to
$3.25, an increase versus the previous ongoing guidance of $2.70
to $2.80. For the second-quarter, the company expects ongoing
EPS in the range of $1.75.
As-reported EPS is expected to be in the range of $1.98 for the
second quarter and in the range of $3.38 to $3.48 for the full
year. Both periods will be affected favorably by $0.23 per share
from the settlement of Monsanto's claims in conjunction with
Solutia's emergence from bankruptcy.
(For a reconciliation of ongoing EPS, see note 1).
The upside contribution from the company's seeds and traits
business, together with the performance of its Roundup and other
glyphosate-based herbicides business and the Solutia settlement,
has translated to a stronger operating cash position. Given the
increased level of operating cash, Monsanto (NYSE: MON) now
expects free cash flow of approximately $1.4 billion for the
fiscal year versus prior guidance of $900 million to $1 billion.
The company expects net cash provided by operating activities to
be in the range of $2.45 billion, and net cash required by
investing activities to be approximately $1.05 billion for
fiscal year 2008. (For a reconciliation of free cash flow, see
note 1.)
"As we move closer to the Northern Hemisphere planting season,
we've not only gained confidence in our 2008 opportunity, but
also in our strategic path to 2012," said Hugh Grant, chairman,
president and chief executive officer of Monsanto. "Our growth
over the next five years will be built on our seeds-and-traits
platform, and we've already exceeded a number of milestones that
put us ahead of our plan to deliver consistent, sustainable
growth."
"We are confident in our ability to deliver on our five-year
growth commitments even with shifts in planted acreage or
commodity-price movements because of the value farmers place on
our technologies and the balance of our strategic platform,"
added Terry Crews, chief financial officer of Monsanto.
The company's stronger-than-expected performance through the
first-half of the fiscal year reflects three factors, including:
- Monsanto's seeds and
traits business is ahead of plan. Based on expanded
corn-trait penetration and brand share growth, as well as
increased volume in the soybean business, Monsanto now
expects its seeds and traits business to deliver in the
range of $3.6 billion to $3.7 billion in gross profit for
fiscal year 2008, up 20 percent from gross profit in fiscal
year 2007.
- The strong demand
environment is driving Roundup performance. With demand
outpacing supply globally, Monsanto now expects its Roundup
business to deliver $1.7 billion to $1.8 billion of gross
profit in fiscal year 2008.
- Operational discipline
continues around spending. The company has held spending for
SG&A at 20 percent of sales for this fiscal year, the lower
end of its previously forecasted range, even as it has
experienced growth in sales and growth through the prior
year's acquisitions. Additionally, R&D as a percent of sales
is now expected to be approximately 9 percent of sales for
fiscal year 2008.
As a result of the expected
overall gross profit growth, Monsanto is expected to achieve its
original target of reaching a 52-to-54 percent gross margin by
2010 two years ahead of schedule.
Crews indicated that the increase in operating cash will provide
the company with increased resources to continue to use its
strong cash position to benefit shareowners. Notably, Monsanto
will continue to look for ways to invest in acquisitions that
further growth, projects that support the current business'
growth and dividend and share-repurchase programs that return
value to shareowners.
Monsanto will release its second quarter earnings results on
Wednesday, April 2, 2008, prior to market open.
Monsanto Company is a leading global provider of
technology-based solutions and agricultural products that
improve farm productivity and food quality.
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
1. Ongoing EPS and Free Cash Flow: The presentations of ongoing EPS and
free cash flow are not intended to replace 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 ongoing EPS and free cash flow to the
respective most directly comparable financial measure calculated in
accordance with GAAP.
Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated
excluding certain after-tax items which Monsanto does not consider part
of ongoing operations.
($ in millions) Second Quarter Fiscal Year
2008 Target 2008 Target
Diluted Earnings per Share $ 1.98 $3.38 -- $3.48
Items Affecting Comparability --
EPS Impact Solutia Claim Settlement $(0.23) $(0.23)
Diluted Earnings per Share from
Ongoing Business $ 1.75 $3.15 -- $3.25
Reconciliation of Free Cash Flow: Free cash flow represents the total
of cash flows from operating activities and investing activities. With
respect to the fiscal year 2008 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
2008
Target
Net Cash Provided by Operating Activities $2,450
Net Cash Required by Investing Activities (1,050)
Free Cash Flow $1,400
Net Cash Provided (Required) by
Financing Activities N/A
Effect of Exchange Rate Changes on
Cash and Cash Equivalents N/A
Net Increase in Cash and Cash Equivalents N/A
Cash and Cash Equivalents at Beginning of Period N/A
Cash and Cash Equivalents at End of Period N/A
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