New York, New York
February 10, 2009The determined focus of
Monsanto to successfully execute its industry-leading seeds and traits strategy is the key to helping the company achieve 20 percent-plus earnings growth and generate more than $1.8 billion in free cash for fiscal 2009. It also will more than offset any anticipated decline in the company's Roundup herbicide business over the next three years and move the company closer to reaching its goal of more than doubling its fiscal 2007 gross profit by 2012. This is the message Monsanto Chief Financial Officer Terry Crews will tell investors today as part of a presentation at the Goldman Sachs 13th Annual Agricultural Biotech Forum in New York.
Crews will highlight Monsanto's plans to launch two game-changing technology platforms over the next two years, namely its Roundup Ready 2 Yield second-generation soybean trait platform and its new SmartStax trait platform, both of which are scheduled to come to market at least two years ahead of competitive offerings. As these products are coming out of Monsanto's research-and-development (R&D) pipeline, Crews also will note four of the company's future game-changers are already progressing through the pipeline. These new game-changing technologies include its second-generation higher-yielding soybeans, its nitrogen-use-efficiency corn, its first-generation drought-tolerant corn platform, which this year reached Phase 4 - the final phase before commercialization - and its second-generation drought-tolerant corn platform, which currently is in Phase 2. Crews additionally will note that technologies moving through the company's R&D pipeline have the potential to conservatively generate an incremental $5 billion in gross sales by 2020.
With the strong early reception of Roundup Ready 2 Yield soybeans this year for Monsanto's controlled commercial release in the United States on 1.5 million acres, Crews will note the company is reviewing its production plans to ensure it meets its target range of 5 million to 6 million U.S. soybean acres for the 2010 full commercial launch.
Crews also will discuss that the company's expected penetration of triple-stack corn offerings is not only expected to help it grow its branded seed businesses, increase corn seed and trait gross profits by 25 percent and improve its corn seed and trait gross margins in 2009, it also is expected to give the company the fullest potential for success for SmartStax's planned launch in 2010.
The anticipated ongoing success of the company's seeds and traits businesses will more than offset the expected decline in its Roundup herbicide business to the $1.9 billion gross profit level by 2012. "We manage our Roundup business to maximize the profit and cash flow potential of this business and reinvested those cash flows to fuel the growth of our seeds and traits business," Crews will say. He also will note that 2009 will likely be the peak of Roundup profitability, which is expected to be in the $2.4 billion to $2.5 billion gross profit range as he expects current pricing based on added value to more than offset volume declines.
Crews also will discuss that not only has Monsanto's seeds and traits strategy strongly taken hold in the United States, it also is helping the company make significant gains in key foreign markets such as Brazil and Argentina. Sales increases in these countries in 2009 have been largely driven by the successful 1.5-million-acre launch of the YieldGard Corn Borer trait technology in Brazil and the more than 2-million-acre double-trait offering of YieldGard Corn Borer and Roundup Ready Corn 2 in Argentina. With these results, the company expects to gain one to two share points in both countries in 2009 and 2010.
"Growers in these two important markets already know the value our biotech products provide and are ready to invest to lower risk and improve yields," Crews will say.
Crews also will explain in his presentation how the company effectively converts its earnings into cash flow and how it has returned value to shareowners through its uses of cash for strategic acquisitions, capital expenditures, increased dividends and share repurchases.
Crews will conclude with an outlook for 2009 and the objective to deliver on-going earnings per share in the $4.40 to $4.50 range compared to $3.64 in 2008. This includes expectations for EPS growth in the second and third quarter to both be in the 10 percent to 12 percent range.
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.
Roundup, Roundup Ready 2 Yield, SmartStax, YieldGard and Roundup Ready are trademarks of Monsanto Company and its wholly owned subsidiaries.
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
1. Ongoing EPS and Free Cash Flow: The presentations of ongoing EPS and free cash flow are not intended to replace net income (loss), cash flows, financial position or 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 ongoing EPS and free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP.
Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. The company is not able to provide a reconciliation to reported EPS guidance for fiscal year 2009 at this time, as it is still evaluating purchase accounting adjustments related to its recent $264 million acquisition of the Brazilian sugar cane business Aly Participacoes Ltda. Such adjustments are dependent upon the completion of valuations of certain intangible assets, including acquired in-process R&D which requires immediate expense recognition and is expected to be significant.
Fiscal
Year
2008
Diluted Earnings per Share $3.62
Items Affecting Comparability - EPS
Impact
Income on Discontinued Operations $(0.04)
Acquired In-Process R&D (De Ruiter) $0.29
Solutia Claim Settlement $(0.23)
Diluted Earnings per Share from Ongoing
Business $3.64
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 2009 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
2009
Guidance
Net Cash Provided by Operating
Activities $3,000
Net Cash Provided (Required) by
Investing Activities (1,200)
Free Cash Flow $1,800
Net Cash Required by Financing
Activities N/A
Effect of Exchange Rate Changes on Cash
and Cash Equivalents N/A
Net (Decrease) Increase in Cash and Cash N/A
Equivalents
Cash and Cash Equivalents at Beginning
of Period N/A
Cash and Cash Equivalents at End of
Period N/A |
