Monsanto Reports Strong Q3

The key third quarter – one of the company's most significant historically – is a highlight in a year that has created real momentum with the establishment of key products in the United States, accelerated adoption in Latin America and the growth of other key markets.

6/30/2011 --- Looking at the scorecard of milestones to achieve this year, Monsanto Company executives have reported that the strength of its seeds and traits business in the United States and Latin America combined with the well-received implementation of its agricultural productivity strategy drove a successful fiscal third quarter for the company. The key third quarter – one of the company's most significant historically – is a highlight in a year that has created real momentum with the establishment of key products in the United States, accelerated adoption in Latin America and the growth of other key markets. The company is well-positioned to conclude fiscal 2011 at a high-teens ongoing earnings growth target and translate that growth into greater free cash flow.

"The third quarter is always an important quarter for Monsanto, as it effectively concludes our fiscal year from an operational standpoint," said Hugh Grant, Monsanto's president and chief executive officer. "Our U.S. selling season is almost complete, and farmers in Latin America are now harvesting their crops. That gives us real data to validate the momentum we've felt. We made significant changes to our business this year, and those changes resonated with our customers. We earned their business and achieved what we set out to achieve: unit volume growth in our core crops, a successful implementation of our agricultural productivity strategy and sustained cost-discipline across our operations. That positions us well for the coming years and the mid-teens earnings growth opportunity we see for this company."

Net sales increased $628 million, or 21 percent, in the three-month comparison driven by unit volume growth in both the seeds and genomics and agricultural productivity segments. Net income attributable to Monsanto Company in the third quarter was $680 million.

Gross profit rose 41 percent in the quarter to approximately $2 billion, with margins higher due to mix and cost improvements. For the first nine months, gross profit is up 20 percent or $856 million.

Operating expenses were up $124 million in the third quarter compared to the prior year, as expected. In the three-month comparison, selling, general and administrative (SG&A) expenses were up 20 percent, tracking with the increase expected as the company realizes more investments in employee and sales incentives and new product launches. Research & Development (R&D) expenses increased as the company continues to make incremental investments in R&D to help fuel future growth.

Earnings per share (EPS) for the third quarter were $1.26 on both an as-reported basis and an ongoing basis. EPS for the first nine months of fiscal year 2011 were $3.14 on both an as-reported basis and an ongoing basis. (For a reconciliation of EPS to ongoing EPS see page 1).

The company's strong cash position continued in the third quarter. For the first nine months of the fiscal year, cash flow from operations was a source of $944 million compared with a use of $538 million in the first nine months last year. Net cash required by investing activities for the first nine months of fiscal year 2011 was $707 million, compared to $614 million for the same period of fiscal year 2010.

Net cash required by financing activities for the first nine months of 2011 was $766 million, compared to net cash required of $323 million for the same period of fiscal year 2010.

Free cash flow was a source of $237 million for the first nine months of fiscal year 2011, compared to a use of nearly $1.2 billion for the first nine months of fiscal year 2010.

The company continues to make progress on its current $1 billion, three-year share repurchase authorization, representing one of its most significant uses of cash. The company spent $105 million on repurchases in the third quarter for total repurchases to date of $487 million, nearly half the authorization.

The company raised its full-year as-reported and ongoing EPS guidance and free cash flow guidance. The company expects full-year 2011 ongoing EPS in the range of $2.84 to $2.88. Full-year 2011 EPS guidance on an as-reported basis is expected in the range of $2.82 to $2.86.