Monsanto (MON) Misses Q2 EPS by 9c, Offers Outlook

Monsanto (NYSE: MON) reported Q2 EPS of $3.22, $0.09 worse than the analyst estimate of $3.31. Revenue for the quarter came in at $5.02 million versus the consensus estimate of $5.34 million.

Outlook

For the full year, the company continues to expect growth to be driven by pricing for glyphosate and the continued adoption of new technologies in Seeds and Genomics, such as INTACTA RR2 PROTM soybeans, Roundup Ready 2 Xtend® soybeans and Bollgard® II XtendFlex® cotton, as well as reductions in related launch costs for these products.

The company also remains diligent in its work to complete the restructuring and cost savings initiative that it began in fiscal year 2015. Selling, general and administrative costs and research and development expenses now are expected to be down slightly year over year.

In addition, the company expects that benefits related to strategic asset sales and licensing contributions should be about 30 percent below the roughly $350 million pre-tax average annual contribution for the last three years.

Overall, with the solid start to the first half of the year and considering these factors, Monsanto continues to expect pre-tax income growth for fiscal year 2018, on a stand-alone basis.

Including the effects of the recent U.S. tax reform legislation, the company expects the as-reported effective tax rate to be in the range of 23 to 25 percent, for the full fiscal year, as the Argentina valuation allowance is expected to increase during the second half of the year. For fiscal year 2019, the company is expecting an as-reported effective tax rate in the range of 24 to 28 percent, reflecting the new lower corporate tax rate in the U.S., the loss of the U.S. domestic manufacturing deduction, and a lack of some of the discrete benefits from this year.

(A) Fiscal second quarter 2017 seeds and genomics gross profit includes a pretax restructuring charge totaling $5 million related to certain asset impairment charges, primarily in the corn business, which is included in cost of goods sold. For the six months ended Feb. 28, 2018 and Feb. 28, 2017, seeds and genomics gross profit includes a pretax restructuring charge totaling $10 million and $6 million, respectively, related to certain asset impairment charges, primarily in the soy and corn business, respectively, which is included in cost of goods sold.

(A) EBIT is defined as earnings before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level.

For earnings history and earnings-related data on Monsanto (MON) click here.

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