Strong Core Business Positions Monsanto for Expanded Mid-Term Growth Opportunity; Company Delivers Winning Early Harvest Results

Wed Nov 6, 2013 12:45pm EST

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Strong Core Business Positions Monsanto for Expanded Mid-Term Growth Opportunity; Company Delivers Winning Early Harvest Results

  • Company affirms guidance and strong outlook including mid-to-high teens EBITDA growth for FY14
  • Monsanto expects continued opportunity in mid-term with expanding opportunity from core business and new layers of growth, including its next-generation Integrated Farming Systems platform
  • Initial 2013 harvest data shows Monsanto’s performance advantage continues, with yield advantages over competitors in key crops from U.S. season

Monsanto Company’s (NYSE: MON) Chief Executive Officer Hugh Grant will outline how the company’s strong core business performance, expanding growth drivers and new platform opportunities – including the recently completed acquisition of The Climate Corporation – reinforce the company’s near-term growth while building an expanded mid-term growth opportunity.

During Monsanto’s Biennial Investor Event in St. Louis, the company will affirm its fiscal year 2014 guidance reflecting continued strong business growth, with guidance for double-digit gross profit growth, margin expansion and mid-to-high teens EBITDA growth in fiscal year 2014. The company also will confirm fiscal year 2014 earnings per share guidance of $5.00 to $5.20 after $0.14 of acquisition related dilution and free cash flow in the range of $600 million to $800 million for fiscal year 2014, after approximately $930 million paid for The Climate Corporation acquisition. (For a reconciliation of free cash flow, see note 1.)

The company’s strong global business base continues as the largest element of growth over the coming years, Grant said. That core business is poised to deliver expanding margins and multi-billion-dollar platforms in key business drivers like the company’s corn and soybean businesses.

“The strength of our broad global portfolio reflects strong momentum and a proven strategy that underscores the confidence we have in our 2014 opportunity while unlocking a runway of continued growth through the mid-term,” said Grant. “It also provides an ideal foundation as we expand our growth outlook with new breakthrough platforms that will extend our opportunity and allow us to deliver more yield and productivity to farmers than ever before.”

Among the key highlights of Monsanto’s strategic mid-term opportunity:

  • The company’s global corn business is its largest crop business and one of the most significant sources of growth, reflecting Monsanto’s ability to deliver upgrades that improve the performance and value of the seed farmers plant across a variety of global geographies and through different commodity environments. The largest opportunity continues to come from Monsanto’s global corn germplasm mix upgrade, which is expected to deliver more than $1 billion in incremental revenue opportunity in the coming five years in addition to trait upgrades and volume opportunity.
  • Complementing the continued global corn performance is the expected strong soybean business growth opportunity starting with the 2014 launch of the Intacta RR2 PRO™ soybean product in Brazil. This launch puts Monsanto on the front edge of a new soybean platform that has the potential to touch more than 100 million acres across Latin America. Building on the launch of Intacta RR2 PRO™, Monsanto expects an incremental revenue growth opportunity of more than $1 billion for its global soybean business in the next five years, more than doubling the growth over the last five years.
  • With the close of Monsanto’s acquisition of The Climate Corporation, the company also will highlight Monsanto’s leadership in the area of data science, expanding on the opportunities of its Integrated Farming Systems platform as a key emerging driver that complements the company’s base business and robust R&D pipeline. With products available from its Integrated Farming Systems platform in 2014, the company expects a rapid ramp up of the platform to be a significant business contributor in the mid-term.
  • Monsanto’s R&D pipeline is also expanding, creating additional innovation that has the potential to provide incremental value for its customers and growth opportunity for shareowners. With more than 70 projects spanning crops, technologies and grower benefits, Monsanto has more platforms in its in R&D pipeline than any other company in the industry that can provide a truly integrated approach to yield and productivity.

Harvest Results Show Monsanto’s Products Continue to Outperform Competitors

The company’s significant investment in breeding and breakthrough opportunities like biotechnology has given it a sustained edge that has played out on the farm, Grant said. Initial results from the 2013 U.S. harvest show Monsanto has continued its performance advantage.

  • DEKALB® corn germplasm is on track for record level total performance and has continued its advantage relative to competitive products, reinforcing Monsanto’s long-standing yield advantage. With early results in 2013, DEKALB® is demonstrating its leading performance with year-in, year-out yield advantage in the historic 7-10 bushel per acre band delivered consistently over the last decade.
  • Monsanto’s DroughtGard Hybrids corn products have outyielded competitors drought-marketed products in the Western Dryland area by more than 5 bushels per acre.
  • In soybeans, Genuity® Roundup Ready 2 Yield® early results reinforce the platform’s industry-leading yield advantage. With another year of strong performance reflected in an early continued advantage of more than 4.5 bushels per acre, Genuity® Roundup Ready 2 Yield® is positioned as the best-performing soybean platform in the industry.
  • Monsanto also completed a successful year of testing for its Integrated Farming Systems FieldScripts® product, validating both on-farm experience with delivery and ease of use and yield performance of the commercial prescription. Performance of FieldScripts® has shown a 5-10 bushel per acre advantage for the planting prescription product set for launch in 2014.

Webcast and Materials

A live webcast of Monsanto’s investor briefing is available through Monsanto’s website at: www.monsanto.com/investors. A webcast beginning at 1 p.m. C.T. today will offer presentations from the following Monsanto executives: Hugh Grant, chairman and chief executive officer; Kerry Preete, executive vice president for global strategy; Brett Begemann, president and chief operating officer; Mike Stern, Ph.D., vice president, Americas row crops; and Mike Frank, vice president, international row crops and vegetables. A webcast beginning at 9 a.m. C.T. on Thursday, November 7 will feature presentations from Robb Fraley, Ph.D., executive vice president and chief technology officer; and Pierre Courduroux, senior vice president and chief financial officer. Company executives will discuss Monsanto’s strategic initiatives, financial targets, product performance, research and development pipeline and other matters related to the company’s business. Materials related to the event are posted on our website. These materials include the presentation agenda, briefing slides and speaker information. 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 Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world’s natural resources such as water and energy. To learn more about our business and our commitments, please visit: www.monsanto.com. Follow our business on Twitter® at www.twitter.com/MonsantoCo, on the company blog, Beyond the Rows at www.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 our manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; 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 Form 10-K 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, Genuity, DEKALB, Field Scripts, Integrated Farming Systems, DroughtGard and Roundup Ready 2 Yield are trademarks of Monsanto Company and its wholly-owned subsidiaries.

 

1.

Free Cash Flow: The presentation of free cash flow is not intended to replace cash flows and it is not a measure of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following table reconciles free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP.

 

Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operating activities and investing activities, as reflected in the Statements of Consolidated Cash Flows presented in this release. With respect to the fiscal year 2014 free cash flow guidance, 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 2014       Twelve Months Ended Aug. 31,
 

 

      Guidance       2013       2012  
Net Cash Provided by Operating Activities $ 2,900-3,300 $ 2,740       $ 3,051
Net Cash Required by Investing Activities    

(2,300)-(2,500

)

        (777 )         (1,034 )  
Free Cash Flow $ 600-800 1,963 2,017
Net Cash Required by Financing Activities N/A (1,485 ) (1,165 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents     N/A           (93 )         (141 )  
Net Increase in Cash and Cash Equivalents N/A 385 711
Cash and Cash Equivalents at Beginning of Period     N/A           3,283           2,572    
  Cash and Cash Equivalents at End of Period         N/A         $ 3,668         $ 3,283    

Monsanto Company
Sara Miller, 314-694-5824

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