Monsanto Announces Second Quarter Financial Results within Guidance; Balanced Portfolio Drives Ability to Deliver Strong Full-Year Growth within Challenging Agriculture Environment While Investing to

• Innovation Differentiates Company and Drives Five-Year Plan To At Least Double Ongoing EPS by 2019
• Intacta RR2 PRO™ Delivers Excellent Performance In Second Year, Reaching 15 Million Acres
• Company Trending to Low End of Guidance Ranges for Full-Year EPS and Free Cash Flow

ST. LOUIS--(BUSINESS WIRE)-- With half its fiscal year complete, Monsanto Company (NYSE: MON) today highlighted continued progress on several key milestones related to its long-term growth drivers, including the strong performance of Intacta RR2 PRO™ soybeans in their second year of commercialization, advancement of pre-commercial activities for Roundup Ready 2 Xtend™ soybeans and the continued footprint expansion of its global corn business, even against a smaller acreage base, as farmers embrace the latest innovations. The company also noted its estimates for fiscal year 2015 earnings per share and free cash flow remain in the ranges of its original guidance though now trending at the lower end of the ranges given the industry-wide headwinds of declining corn acres and the strengthening of the U.S. dollar.

“The key milestones we achieved in the first half of fiscal year 2015 are a cornerstone to the long-term growth drivers needed to propel us to our target to more than double ongoing earnings per share by 2019,” said Hugh Grant, chairman and chief executive officer for Monsanto. “As we move into the second half of the year, we remain focused on our long-term growth drivers, with disciplined near-term execution and focus on our customers.”

Results of Operations

Net sales for the fiscal year 2015 second quarter decreased over the prior year’s second quarter to approximately $5.2 billion, with gross profit for the quarter also decreasing over the prior year period to $3 billion. For the first six months, net sales were approximately $8.1 billion and gross profit approximately $4.5 billion.

The second quarter results were aligned with the company’s guidance, with its performance reflecting in part the previously outlined expected shift in gross profit from the U.S. Channel® seed brand business of approximately $275 million from the second quarter to the third quarter. This was balanced against strong soybean performance in South America and the United States. In Agricultural Productivity, the decline in gross profit was primarily volume related, as the company continued to convert from non-branded to branded volumes of Roundup®, which is shifting gross profit to the second half to support key application windows for over-the-top sprays.

Selling, general and administrative (SG&A) costs were $647 million and R&D expenses were $372 million for the second quarter. Continued disciplined reductions in the base spend led to a slight decline in total operating expenses while still allowing for increased spend in the company’s Climate and biological platforms to support the long-term growth prospects for these opportunities.

The company’s second quarter earnings per share (EPS) was $2.90 on an ongoing basis and $2.92 on an as-reported basis, within the ranges outlined during the first quarter. EPS for the first six months of fiscal year 2015 was $3.36 on an ongoing basis and $3.41 on an as-reported basis. (For a reconciliation of EPS to ongoing EPS see note 1).

Cash Flow

Free cash flow was a source of $986 million for the first half of fiscal year 2015, compared to a source of approximately $290 million for the first half of fiscal year 2014. (For a reconciliation of free cash flow, see note 1). These results reflect the absence of the acquisition of The Climate Corporation and the investment in the Novozymes collaboration in the current fiscal year, as well as the expected gross profit shifts in the U.S. Channel® seed brand and Agricultural Productivity businesses. For the first half of fiscal year 2015, cash flow from operations was a source of approximately $1.5 billion, compared to $1.8 billion the same period last year. Net cash required by investing activities for the first half of fiscal year 2015 was approximately $532 million, compared to $1.6 billion for the same period of fiscal year 2014. Net cash required by financing activities for the first half of 2015 was $406 million, compared to net cash required of $147 million for the same period of fiscal year 2014.

The company remains diligent in its capital allocation approach, with the closure of $3 billion of its $6 billion accelerated buyback programs in March 2015 and the remaining $3 billion expected to close in April 2015.

Outlook

The company affirmed its previously announced EPS guidance outlined at the beginning of the fiscal year, although noted it was now trending to the low end of the range. Fiscal-year 2015 ongoing earnings per share guidance is expected to be in the low end of the range of $5.75 to $6.00. Full-year 2015 EPS guidance on an as-reported basis is expected in the low end of the range of $5.80 to $6.05 per share. (For a reconciliation of EPS, see note 1.) The EPS guidance is inclusive of what is now expected to be a $0.35 to $0.40 headwind for this fiscal year driven by the significant deterioration of several key currencies versus the U.S. dollar.

The company also is tracking to the lower end of its original free cash flow guidance of $2.0 billion to $2.2 billion, as it now estimates net cash provided by operating activities to be $3.0 billion to $3.3 billion and net cash required by investing activities to be approximately $1.0 billion to $1.1 billion. (For a reconciliation of free cash flow, see note 1.)

The Seeds and Genomics segment gross profit growth percentage for the full year is now expected to be low-to-mid-single digits, while the company’s Agricultural Productivity gross profit is still expected to be down approximately 10 percent versus the prior year due to anticipated generic glyphosate price softening and an incremental 2-to-3 percent due to deteriorating currencies.

Executives noted the company will continue to focus on disciplined operational spend as a hedge to the current macro trends, as well as to enable incremental spend to support new platform opportunities. Total operating expenses, inclusive of new platform spend, are now expected to be down in the range of 3-to-5 percent versus the prior year.

As the company looks to the second half of the year, it expects roughly 80 to 85 percent of the remaining earnings per share to fall into the third quarter, with the residual in the fourth quarter.

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

Sales for Monsanto’s Seeds and Genomics segment in the second quarter were $4.2 billion, reflecting the shift in the Channel® seed brand business and the impact of softening foreign currencies. Offsetting that is the strong contribution from the company’s soybean business as it continues the momentum from a record fiscal year 2014 and strong first quarter 2015. The company noted it reached 15 million acres of Intacta RR2 PRO™ during its second year of launch, above the company’s initial estimates of 10 million to 12 million acres and five times the penetration in its first year of introduction. The company is expanding its production of Intacta RR2 PRO™ varieties for the third year of commercialization as it targets 30 million acres in 2016 with plans to offer more than 150 varieties for Brazil alone.

Within its U.S. soybean business, the company’s shipments and order book continue to point to expected growth in its Roundup Ready 2 Yield® platform again this season across its branded and licensing businesses. The company also continues to highlight progress on pre-commercial activities for Roundup Ready 2 Xtend™ soybeans in the United States as it remains on track for more than a three million acre launch in 2016 pending necessary regulatory approvals. Roundup Ready 2 Xtend™ soybeans are expected to be available in more than 60 varieties, which is more than six times the varieties offered in the launch year of Roundup Ready 2 Yield® soybeans.

Monsanto also noted it remains on track to hold or grow its branded corn share footprint in every major market in the face of declining corn acres. Additionally, exclusive of currency headwinds, the company expects to deliver positive germplasm price mix lift for the full year. In South America, the company achieved a more than two point increase in its branded corn share in Brazil following the first season, despite significantly reduced planted acres.

Within the U.S. corn seed business, the order book highlights that the Reduced Refuge family of products is maintaining its percentage of the portfolio from the prior year, with strong conversion to the company’s dual-mode of action products like SmartStax® and VT Double PRO®. The company has also seen increased demand for its Genuity® DroughtGard® Hybrids product.

In cotton, it is now expected to reach more than a half million acres of Bollgard II® XtendFlex™ cotton this spring in the United States as part of the company’s limited commercial introduction.

The Climate Corporation has rolled out its Climate PRO™ offering for this season in the United States, featuring advanced nitrogen and field health insights to support the important management decisions farmers make throughout the season. Climate Basic™, the company’s free web and mobile app to help farmers optimize their daily decision making with field-level weather information, has also been upgraded this season with an even simpler user interface for farmers, an upgraded notifications system and added scouting functionality. The company continues to target to increase its Climate Basic™ users by 50 percent, from its fiscal year 2014 base of 30 million acres, as well as more than double its one million Climate PRO™ premium acres from fiscal year 2014.

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

Net sales for the Agricultural Productivity segment in the first half of fiscal 2015 were approximately $2.3 billion. The company continues to anticipate Agricultural Productivity segment gross profit to decline approximately 10 percent in fiscal year 2015 due to anticipated generic glyphosate price softening, and an incremental 2-to-3 percent due to deteriorating currencies.

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 these results and future expectations, product performance, and an update of projects within the company’s R&D pipeline. The call may include a discussion of strategic initiatives 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 website at www.monsanto.com/investors or http://edge.media-server.com/m/p/9dcas7uu/lan/en. 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 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 is committed to bringing a broad range of solutions to help nourish our growing world. We produce seeds for fruits, vegetables and key crops – such as corn, soybeans, and cotton – that help farmers have better harvests while using water and other important resources more efficiently. We work to find sustainable solutions for soil health, help farmers use data to improve farming practices and conserve natural resources, and provide crop protection products to minimize damage from pests and disease. Through programs and partnerships, we collaborate with farmers, researchers, nonprofit organizations, universities and others to help tackle some of the world’s biggest challenges. To learn more about Monsanto, our commitments and our more than 20,000 dedicated employees, please visit: discover.monsanto.com and monsanto.com. Follow our business on Twitter® at twitter.com/MonsantoCo, on the company blog, Beyond the Rows® at 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 the company’s manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; the recent increases in and expected higher levels of indebtedness; 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 periodic report 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.

Notes to editors: Monsanto and the Vine Design, Beyond the Rows, Roundup, Intacta RR2 PRO, Roundup Ready 2 Yield, Roundup Ready 2 Xtend, SmartStax, VT Double PRO, Genuity, DroughtGard and Bollgard II XtendFlex are trademarks of Monsanto Company and its wholly-owned subsidiaries. All other trademarks are the property of their respective owners.

Monsanto Company
Media:
Sara Miller, 314-694-5824
or
Analysts:
Laura Meyer, 314-694-8148

Source: Monsanto Company

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