Monsanto (MON) Tops Q3 EPS by 6c; Adjusts FY14 EPS Outlook; Approves $10B Buyback

(Updated - June 25, 2014 8:22 AM EDT)

Monsanto Company (NYSE: MON) reported Q3 EPS of $1.62, $0.06 better than the analyst estimate of $1.56. Revenue was $4.25 billion, versus the consensus of $4.40 billion.

"Through the third quarter, we're on track for seeds and traits to drive a majority of our full year growth. That performance in a more challenging agricultural environment speaks to the breadth and customer value of our product portfolio," said Hugh Grant, chairman and chief executive officer. "Coupled with an expanding portfolio of solutions for farmers, this provides confidence to target at least doubling our ongoing earnings per share over the next five years and evolve our capital allocation priorities; including an additional $10 billion share repurchase authorization that further enhances Monsanto's ability to return value to our shareowners."

Reflecting the company's continuing momentum, strong performance and ongoing opportunity, Monsanto today outlined a new long-term target to at least double full year ongoing EPS by the end of fiscal year 2019. The new target reflects management's confidence in the growth opportunity for the core business and transformational potential in new platforms. The largest driver of the overall growth over the next five years is expected to come from the established core seeds and traits business, with an expected contribution of more than $4 billion in total incremental gross profit growth during that period. At the same time, Monsanto continues to make strong progress with new platforms, including its Climate Corporation platform, which is expected to contribute a key part to Monsanto's strategy and earnings profile during this five year growth horizon.

Given the long term outlook for the business and the favorable debt market, the company also announced its intent to adjust the capital structure to target a Net-Debt-to-EBITDA ratio of 1.5 by the end fiscal year 2015. The target is subject to seasonality of the business and management will regularly review and evaluate its capital allocation priorities and capital structure with the goal of remaining both flexible and disciplined. Monsanto plans to maintain a strong investment-grade credit rating in order to provide access to attractive financing for working capital needs and for mid- to long-term needs.

Monsanto's balance sheet and cash flow generation will afford the company the financial flexibility to pursue both organic and external growth opportunities while returning capital to shareowners. With approximately $1.1 billion remaining in the company's current share repurchase program, the company announced a new two-year $10 billion share repurchase authorization. Using cash on hand and access to debt, Monsanto intends to use approximately $6 billion in an accelerated share repurchase in the near term.

Announces new two year $10 billion share repurchase authorization, allowing for $6 billion accelerated repurchase program

Monsanto adjusted its FY14 EPS outlook from $5.00 to $5.22 up to a range of $5.10 to $5.22. The Street is at $5.25. Updated EPS guidance continues to incorporate the effects related to agricultural industry headwinds, including an estimated $0.15 to $0.20 full-year EPS effect, largely related to currency fluctuations.

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

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