Monsanto Delivers Third Consecutive Year of Strong Growth on Performance of Global Portfolio; On Track for Strong Operational Growth from Core Business in FY14 *Signs definitive agreement to acquire The Climate Corporation, accelerating opportunity of Integrated Farming Systems as transformational growth platform and unlocking next incremental yield opportunity for farmers *Outlines continued strong business growth, with guidance for double-digit gross profit growth, margin expansion and mid-to-high-teens EBITDA growth in FY14 *FY14 earnings per share guidance at $5.00 to $5.20 after $0.14 of acquisition related dilution Business Wire ST. LOUIS -- October 2, 2013 Monsanto Company (NYSE: MON) today announced fiscal year 2013 results near the high end of its guidance range, the third straight year of greater than 20percent ongoing earnings growth. Executives noted the company is well-positioned for continued growth in fiscal year 2014 with the sustained performance of its core business enabling continued investment in global growth opportunities and the development of transformational new platforms. This includes today's announced agreement to acquire The Climate Corporation that will establish Monsanto as a leader in the area of data science, expanding the near- and long-term growth opportunities of its Integrated Farming Systems platform. Fourth Quarter Fiscal Year ($ in millions) 2013 2012 2013 2012 Net Sales by Segment Corn seed and traits $ 618 $ 588 $ 6,596 $ 5,814 Soybean seed and traits 87 142 1,653 1,771 Cotton seed and traits 65 29 695 779 Vegetable seeds 250 284 821 851 All other crops seeds and 165 160 575 574 traits TOTAL Seeds and Genomics $ 1,185 $ 1,203 $ 10,340 $ 9,789 Agricultural productivity $ 1,017 $ 895 $ 4,521 $ 3,715 TOTAL Agricultural $ 1,017 $ 895 $ 4,521 $ 3,715 Productivity TOTAL Net Sales $ 2,202 $ 2,098 $ 14,861 $ 13,504 Gross Profit $ 924 $ 881 $ 7,653 $ 7,045 Operating Expenses $ 1,213 $ 1,137 $ 4,083 $ 3,897 Interest Expense – Net $ 26 $ 34 $ 80 $ 114 Other Expense – Net $ 26 $ (1 ) $ 61 $ 46 Net Income (Loss) Attributable to Monsanto $ (249 ) $ (229 ) $ 2,482 $ 2,045 Company Diluted Earnings (Loss) $ (0.47 ) $ (0.42 ) $ 4.60 $ 3.79 per Share (See note 1.) Items Affecting Comparability – EPS Impact Restructuring charges, net — (0.02 ) — (0.02 ) Income on discontinued — — (0.02 ) (0.01 ) operations Nitro Claims Settlement — — — 0.05 Resolution of a Legacy Tax — — (0.02 ) (0.11 ) Matter Diluted Earnings per Share from Ongoing Business (For $ (0.47 ) $ (0.44 ) $ 4.56 $ 3.70 the definition of ongoing EPS, see note 1.) Effective Tax Rate 30 % 24 % 27 % 30 % Fourth Quarter Fiscal Year Comparison as a Percent of Net Sales: 2013 2012 2013 2012 Gross profit 42% 42% 51% 52% Selling, general and administrative expenses 35% 34% 17% 18% Research and development expenses 20% 21% 10% 11% Income (loss) from continuing operations (15)% (14)% 23% 22% before income taxes Net income (loss) attributable to Monsanto (11)% (11)% 17% 15% Company “The strength of our broad global portfolio enabled us to deliver a third consecutive year of strong business results, and by building off our proven strategy we're confident the key elements are in place to carry that momentum through to achieve strong business growth in 2014,” said Hugh Grant, chairman and chief executive officer for Monsanto. “The performance of our core business gives us the ability to invest efficiently in breakthrough agricultural innovation that, by making farming more precise, will enable continued improvement in agriculture sustainability in the face of mounting environmental challenges. As the innovation leader, we've staked out the early position to unlock the next wave of on-farm yield opportunity for farmers around the world.” Results of Operations Monsanto reported net sales of approximately $2.2 billion for the fourth quarter of fiscal year 2013, an increase over the prior year period. Net sales for the full fiscal year were approximately $14.9 billion, a 10 percent increase over fiscal year 2012. Full year net sales results were driven by the strength of the Agricultural Productivity segment and global corn seeds and traits revenue. Seeds and Genomics segment net sales were approximately $1.2 billion for the quarter. For the fiscal year, net sales for the Seeds and Genomics segment reached $10.3 billion, an approximately six percent increase over the prior year. Agricultural Productivity segment net sales were $1 billion for the quarter. Net sales for the Agricultural Productivity segment for the fiscal year increased to $4.5 billion. Monsanto reported a net loss of $249 million in the fourth quarter of fiscal year 2013, compared with a reported net loss of $229 million in the same period last year. Net income for fiscal year 2013 was approximately $2.5 billion, an increase over fiscal year 2012 net income of $2.1 billion. The company's fiscal year 2013 earnings per share (EPS) was $4.56 on an ongoing basis and $4.60 on an as-reported basis. For the fourth quarter, the company reported a loss per share of $0.47 on an ongoing basis and as-reported basis. (For a reconciliation of ongoing EPS, see page 1 and note 1.) Cash Flow For fiscal year 2013, net cash provided by operating activities was a source of $2.7 billion, compared with a source of $3.1 billion in fiscal year 2012. Net cash required by investing activities was $777 million in fiscal year 2013, compared with net cash required of $1 billion last year. Net cash required by financing activities was $1.5 billion for fiscal year 2013, compared with net cash required of $1.2 billion in fiscal year 2012. Free cash flow was a source of nearly $2 billion for fiscal year 2013, in line with fiscal year 2012. (For a reconciliation of free cash flow, see note 1.) In fiscal year 2013, the company used nearly 100 percent of its $2 billion in free cash flow to return cash to shareowners through buybacks and dividends, including the completion of the company's $1 billion share-repurchase authorization and the initiation of buybacks under a new $2 billion, three-year repurchase program announced in June. Outlook Monsanto today announced a definitive agreement to acquire The Climate Corporation for a cash purchase price of approximately $930 million. The acquisition combines Monsanto's leading R&D capabilities with The Climate Corporation's leading analytical expertise,accelerating the opportunity of Monsanto's Integrated Farming Systems platform and unlocking the next incremental yield opportunity for farmers. See today's press release and supporting information at www.monsanto.com for more information about the acquisition. In fiscal year 2014, Monsanto expects continued strong operational growth from its core business, reflected in mid-to-high teens growth in EBITDA and overall margin expansion. Monsanto expects to achieve EPS of $5.00 to $5.20 after approximately $0.14 of dilution related to The Climate Corporation acquisition. The total company gross profit is expected in the range of $8.4 to $8.7 billion in 2014, representing double-digit year-over-year growth. The biggest driver of the growth is expected to be from the Seeds and Genomics segment in which the company expects to achieve mid-teens gross-profit growth in fiscal year 2014 as it significantly expands gross-profit margins in the segment. The company projects free cash flow in the range of $600 million to $800 million for fiscal year 2014, after approximately $930 million in cash for The Climate Corporation acquisition. The company expects net cash provided by operating activities to be $2.9 billion to $3.3 billion, and net cash required by investing activities to be approximately $2.3billion to $2.5 billion for fiscal year 2014, including capital expenditures and acquisition-related costs. (For a reconciliation of free cash flow, see note 1.) Seeds and Genomics Segment Detail ($ in Net Sales Gross Profit millions) Fourth Quarter Fiscal Year Fourth Quarter Fiscal Year Seeds and 2013 2012 2013 2012 2013 2012 2013 2012 Genomics Corn Seed and $ 618 $ 588 $ 6,596 $ 5,814 $ 301 $ 284 $ 3,929 $ 3,589 Traits Soybean Seed and 87 142 1,653 1,771 37 81 948 1,160 Traits Cotton Seed and 65 29 695 779 53 18 519 585 Traits Vegetable 250 284 821 851 55 159 337 419 Seeds All Other Crops 165 160 575 574 98 89 350 306 Seeds and Traits TOTAL Seeds and $ 1,185 $ 1,203 $ 10,340 $ 9,789 $ 544 $ 631 $ 6,083 $ 6,059 Genomics ($ in millions) Earnings Before Interest & Taxes (EBIT) Fourth Quarter Fiscal Year Seeds and Genomics 2013 2012 2013 2012 EBIT (For a reconciliation of $ (568 ) $ (387 ) $ 2,412 $ 2,570 EBIT, see note 1.) The Seeds and Genomics segment consists of the company's global seeds and related traits business. For the fiscal year, Monsanto realized Seeds and Genomics segment sales of $10.3 billion, led by its global corn portfolio that achieved a 13 percent increase over the prior year. Segment sales in the fourth quarter were approximately $1.2 billion. The company expects continued growth in its Seeds and Genomics segment in fiscal year 2014, reflecting the opportunity in both the core U.S. and accelerating international businesses. The opportunity begins with the company's global corn business where it is focused on continued unit volume growth and margin expansion from its better year-over-year cost position and germplasm and trait mix upgrades globally, including rapidly expanding emerging markets like Latin America and Eastern Europe. Complementing the continued global corn opportunity in fiscal year 2014 is the expected strong soybean business growth as a result of the expanded Roundup Ready 2 Yield^® opportunity in the United States and the launch of the Intacta RR2 PRO^™ soybean product in Latin America. Agricultural Productivity Segment Detail ($ in Net Sales Gross Profit millions) Fourth Quarter Fiscal Year Fourth Quarter Fiscal Year 2013 2012 2013 2012 2013 2012 2013 2012 Agricultural $ 1,017 $ 895 $ 4,521 $ 3,715 $ 380 $ 250 $ 1,570 $ 986 Productivity TOTAL Agricultural $ 1,017 $ 895 $ 4,521 $ 3,715 $ 380 $ 250 $ 1,570 $ 986 Productivity ($ in millions) Earnings Before Interest & Taxes (EBIT) Fourth Quarter Fiscal Year Agricultural Productivity 2013 2012 2013 2012 EBIT (For a reconciliation of $ 238 $ 123 $ 1,048 $ 477 EBIT, see note 1.) Unusual Items Affecting EBIT: EBIT from Discontinued Operations $ — $ 2 $ 17 $ 10 Nitro Claims Settlement $ — $ — $ — $ (44 ) The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products. Segment sales for the quarter reached $1 billion with gross profit of $380 million. For the fiscal year, the segment delivered net sales of $4.5 billion with gross profit of approximately $1.6 billion, with year-over-year increases that reflect the overall positive market environment and Monsanto's focused business strategy. The company anticipates the Agricultural Productivity segment to continue to be a steady-to-stronger contributor to the business in fiscal year 2014. Webcast Information In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30a.m. eastern time) today. The call will focus on these results and future expectations and may include a discussion of Monsanto’s strategic initiatives, product performance 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/t5a96ear/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 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, Roundup Ready 2 Yield and Intacta RR2 PRO are trademarks of Monsanto Company and its wholly-owned subsidiaries. Monsanto Company Selected Financial Information (Dollars in millions, except per share amounts) Unaudited Statements of Consolidated Three Months Ended Aug. 31, Twelve Months Ended Aug. 31, Operations 2013 2012 2013 2012 Net Sales $ 2,202 $ 2,098 $ 14,861 $ 13,504 Cost of Goods 1,278 1,217 7,208 6,459 Sold Gross Profit 924 881 7,653 7,045 Operating Expenses: Selling, general and 778 709 2,550 2,390 administrative expenses Research and development 435 439 1,533 1,517 expenses Restructuring — (10 ) — (10 ) charges, net Total Operating 1,213 1,138 4,083 3,897 Expenses Income (Loss) (289 ) (257 ) 3,570 3,148 From Operations Interest Expense 49 52 172 191 Interest Income (23 ) (18 ) (92 ) (77 ) Other Expense 26 (1 ) 61 46 (Income), Net Income (Loss) from Continuing (341 ) (290 ) 3,429 2,988 Operations Before Income Taxes Income Tax Provision (102 ) (70 ) 915 901 (Benefit) Income (Loss) from Continuing Operations Including Portion $ (239 ) $ (220 ) $ 2,514 $ 2,087 Attributable to Noncontrolling Interest Discontinued Operations: Income from Operations of — 2 17 10 Discontinued Businesses Income Tax — 1 6 4 Provision Income on Discontinued — 1 11 6 Operations Net Income (Loss) $ (239 ) $ (219 ) $ 2,525 $ 2,093 Less: Net Income Attributable to 10 10 43 48 Noncontrolling Interest Net Income (Loss) Attributable to $ (249 ) $ (229 ) $ 2,482 $ 2,045 Monsanto Company EBIT (see note 1) $ (330 ) $ (264 ) $ 3,460 $ 3,047 Basic Earnings (Loss) per Share Attributable to Monsanto Company: Income (Loss) from Continuing $ (0.47 ) $ (0.43 ) $ 4.63 $ 3.82 Operations Income (Loss) on Discontinued — (0.01 ) 0.02 0.01 Operations Net Income (Loss) Attributable to $ (0.47 ) $ (0.44 ) $ 4.65 $ 3.83 Monsanto Company Diluted Earnings (Loss) per Share Attributable to Monsanto Company: Income (Loss) from Continuing $ (0.47 ) $ (0.42 ) $ 4.58 $ 3.78 Operations Income (Loss) on Discontinued — — 0.02 0.01 Operations Net Income (Loss) Attributable to $ (0.47 ) $ (0.42 ) $ 4.60 $ 3.79 Monsanto Company Weighted Average Shares Outstanding: Basic 531.5 533.5 533.7 534.1 Diluted 531.5 539.1 539.7 540.2 Monsanto Company Selected Financial Information (Dollars in millions, except per share amounts) Unaudited Condensed Statements of Consolidated Financial As of Aug. 31, Position 2013 2012 Assets Current Assets: Cash and cash equivalents (variable interest $ 3,668 $ 3,283 entities restricted - 2013: $140 and 2012: $120) Short-term investments 254 302 Trade receivables, net (variable interest entities 1,715 1,897 restricted - 2013: $0 and 2012: $52) Miscellaneous receivables 748 620 Deferred tax assets 579 534 Inventory, net 2,947 2,839 Other current assets 166 183 Total Current Assets 10,077 9,658 Property, Plant and Equipment, Net 4,654 4,365 Goodwill 3,520 3,435 Other Intangible Assets, Net 1,226 1,237 Noncurrent Deferred Tax Assets 454 551 Long-Term Receivables, Net 237 376 Other Assets 496 602 Total Assets $ 20,664 $ 20,224 Liabilities and Shareowners’ Equity Current Liabilities: Short-term debt, including current portion of 51 36 long-term debt Accounts payable 995 794 Income taxes payable 91 75 Accrued compensation and benefits 492 546 Accrued marketing programs 1,078 1,281 Deferred revenues 517 396 Grower production accruals 60 194 Dividends payable 228 200 Customer payable 12 14 Miscellaneous short-term accruals 812 685 Total Current Liabilities 4,336 4,221 Long-Term Debt 2,061 2,038 Postretirement Liabilities 357 543 Long-Term Deferred Revenue 138 245 Noncurrent Deferred Tax Liabilities 469 313 Long-Term Portion of Environmental and Litigation 193 213 Reserves Other Liabilities 382 615 Monsanto Shareowners’ Equity 12,559 11,833 Noncontrolling Interest 169 203 Total Shareowners’ Equity 12,728 12,036 Total Liabilities and Shareowners’ Equity $ 20,664 $ 20,224 Debt to Capital Ratio: 14 % 15 % Monsanto Company Selected Financial Information (Dollars in millions, except per share amounts) Unaudited Statements of Consolidated Cash Flows Twelve Months Ended Aug. 31, 2013 2012 Operating Activities: Net Income $ 2,525 $ 2,093 Adjustments to reconcile cash provided by operating activities: Items that did not require (provide) cash: Depreciation and amortization 615 622 Bad-debt expense 27 3 Stock-based compensation expense 100 128 Excess tax benefits from stock-based (79 ) (50 ) compensation Deferred income taxes 262 256 Restructuring charges, net — (10 ) Equity affiliate income, net (17 ) (19 ) Net gain on sales of a business or other assets (16 ) (4 ) Other items, net (77 ) 2 Changes in assets and liabilities that provided (required) cash, net of acquisitions: Trade receivables, net 222 170 Inventory, net (192 ) (427 ) Deferred revenues 50 (39 ) Accounts payable and other accrued liabilities (128 ) 439 Restructuring cash payments — (12 ) Pension contributions (75 ) (83 ) Other items, net (477 ) (18 ) Net Cash Provided by Operating Activities 2,740 3,051 Cash Flows Provided (Required) by Investing Activities: Purchases of short-term investments (716 ) (746 ) Maturities of short-term investments 764 746 Capital expenditures (741 ) (646 ) Acquisition of businesses, net of cash acquired (165 ) (322 ) Technology and other investments (88 ) (77 ) Other investments and property disposal 169 11 proceeds Net Cash Required by Investing Activities (777 ) (1,034 ) Cash Flows Provided (Required) by Financing Activities: Net change in financing with less than 90-day 104 (116 ) maturities Short-term debt proceeds 22 30 Short-term debt reductions (29 ) (42 ) Long-term debt proceeds 32 499 Long-term debt reductions (2 ) (629 ) Debt issuance costs — (5 ) Treasury stock purchases (1,095 ) (432 ) Stock option exercises 257 117 Excess tax benefits from stock-based 79 50 compensation Tax withholding on restricted stock and (10 ) (19 ) restricted stock units Dividend payments (802 ) (642 ) Proceeds from noncontrolling interest 133 101 Dividend payments to noncontrolling interests (174 ) (77 ) Net Cash Required by Financing Activities (1,485 ) (1,165 ) Effect of Exchange Rate Changes on Cash and (93 ) (141 ) Cash Equivalents Net Decrease in Cash and Cash Equivalents 385 711 Cash and Cash Equivalents at Beginning of 3,283 2,572 Period Cash and Cash Equivalents at End of Period $ 3,668 $ 3,283 Monsanto Company Selected Financial Information (Dollars in millions) Unaudited EBIT, Ongoing EPS and Free Cash Flow: The presentations of EBIT, ongoing EPS and free cash flow are not intended to replace net income (loss) attributable to Monsanto Company, cash flows, financial position or 1. comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following tables reconcile EBIT, ongoing EPS and free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP. Reconciliation of EBIT to Net Income (Loss): EBIT is defined as earnings (loss) before interest and taxes. Earnings (loss) is intended to mean net income (loss) attributable to Monsanto Company as presented in the Statements of Consolidated Operations under GAAP. The following table reconciles EBIT to the most directly comparable financial measure, which is net income (loss) attributable to Monsanto Company. Three Months Ended Aug. 31, Twelve Months Ended Aug. 31, 2013 2012 2013 2012 EBIT – Seeds and $ (568 ) $ (387 ) $ 2,412 $ 2,570 Genomics Segment EBIT – Agricultural 238 123 1,048 477 Productivity Segment EBIT– Total (330 ) (264 ) 3,460 3,047 Interest Expense, 26 34 80 114 Net Income Tax Provision (107 ) (69 ) 898 888 (Benefit)^(A) Net Income (Loss) Attributable to $ (249 ) $ (229 ) $ 2,482 $ 2,045 Monsanto Company (A) Includes the income tax provision from continuing operations, the income tax benefit (provision) on noncontrolling interest, and the income tax on discontinued operations. Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. Fiscal Year Three Months Ended Aug. Twelve Months Ended 2014 31, Aug. 31, Guidance 2013 2012 2013 2012 Diluted Earnings $5.00-$5.20 $ (0.47 ) $ (0.42 ) $ 4.60 $ 3.79 (Loss) per Share Restructuring — — (0.02 ) — (0.02 ) Charges, Net Income on Discontinued — — — (0.02 ) (0.01 ) Operations Nitro Claims — — — — 0.05 Settlement Resolution of a Legacy Tax — — — (0.02 ) (0.11 ) Matter Diluted Earnings (Loss) per $5.00-$5.20 $ (0.47 ) $ (0.44 ) $ 4.56 $ 3.70 Share from Ongoing Business 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 $ 2,900-3,300 $ 2,740 $ 3,051 Operating Activities Net Cash Required by (2,300)-(2,500) (777 ) (1,034 ) Investing Activities Free Cash Flow $ 600-800 1,963 2,017 Net Cash Required by N/A (1,485 ) (1,165 ) Financing Activities Effect of Exchange Rate Changes on Cash N/A (93 ) (141 ) and Cash Equivalents Net Increase in Cash and Cash N/A 385 711 Equivalents Cash and Cash Equivalents at N/A 3,283 2,572 Beginning of Period Cash and Cash Equivalents at N/A $ 3,668 $ 3,283 End of Period Contact: Monsanto Company Media: Sara Miller, 314-694-5824 or Analysts: Bryan Hurley, 314-694-8148
Monsanto Delivers Third Consecutive Year of Strong Growth on Performance of Global Portfolio; On Track for Strong Operational
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