ST. LOUIS, MISSOURI - Monsanto Company (NYSE: MON) reported earnings per share growth and significant free cash generation for the first quarter of 2011, which ended Nov. 30, 2010, and today announced nine phase advances as part of its annual research and development pipeline update. The company also reaffirmed its mid-teens earnings growth and free cash flow guidance for fiscal year 2011.

"Our first quarter tracked well with our operating plan across the crops, geographies and products we expect to be drivers in 2011," said Hugh Grant, chairman, president and chief executive officer for Monsanto. "We're executing against the areas most important to our business growth, particularly our seeds-and-traits focus in Latin America and delivering on our seed strategy in the United States. Our early U.S. order books show farmers are interested in our newest products, Genuity(R) Roundup Ready 2 Yield(R) soybeans and the reduced-refuge corn family anchored by Genuity(R) SmartStax(R). And our R&D pipeline remains strong, leaving the company well-positioned for long-term growth."

Results of Operations

Net sales increased 8 percent in the quarter to $1.8 billion, with increases across all major crops in the seeds and genomics segment. Gross profit for the total company increased 11 percent, and gross profit as a percent of sales improved one percentage point to 45 percent, driven by increases in seeds and traits revenue across all major crops – particularly corn and soybeans in Latin America and cotton in Australia.

Selling, general and administrative (SG&A) expenses decreased 9 percent for the quarter due largely to the company's restructuring actions in the prior year. R&D expenses increased 13 percent as the company manages more projects in advanced pipeline phases.

The company's first quarter earnings per share (EPS) was $0.02 on an ongoing basis ($0.01 on an as-reported basis).

Cash Flow

The first quarter of fiscal 2011 was a significant source of cash. Free cash flow was $500 million in the quarter compared with a use of cash of $1.6 billion for the same period last year.

This is primarily the result of a timing shift from last year's second quarter into this year's first quarter, as the later harvest in 2009 delayed prepayments in fiscal 2010. Net cash provided by operating activities was $624 million, compared to a use of $1.4 billion in the first quarter last year. Net cash required by investing activities for the first quarter of fiscal 2011 was $124 million, compared with a use of $197 million for the year-ago quarter. Net cash required by financing activities was $340 million, compared to net cash provided of $102 million for the prior year's first quarter. The company spent $267 million in the first quarter on share repurchases, crossing a quarter of the current $1 billion, three-year authorization.


The company affirmed its guidance of free cash flow for fiscal year 2011 in the range of $800 million to $900 million, reflecting an investment of $600 to $700 million in capital expenditures.

The company expects net cash provided by operating activities to be $1.7 billion to $1.9 billion, and net cash required by investing activities to be approximately $900 million to $1 billion for fiscal year 2011.

The company confirmed full-year 2011 ongoing earnings per share (EPS) guidance is in the range of $2.72 to $2.82. Full-year 2011 EPS guidance on an as-reported basis is in the range of $2.69 to $2.79.

The Seeds and Genomics segment consists of the company's global seeds and related traits business.

Sales for Monsanto's Seeds and Genomics segment increased 13 percent in the first quarter, reflecting increases across the corn, soybean, cotton and vegetable platforms.

Corn seed and traits net sales increased 8 percent over last year's quarter. The primary driver was the company's Latin America seed business, with increased acres in Argentina and the mix benefit from increased overall trait penetration in Brazil. The company also gained a year-over-year volume increase in the United States as the U.S. order book tracks well with the company's product strategy and acreage targets.

Volume increases brought soybean seeds and trait sales up 12 percent compared to last year, and cotton sales saw growth led by an increase in planted acres in Australia. Vegetable sales were up 6 percent or $10 million.

The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.

Sales in the first quarter of fiscal 2011 for Monsanto's Agricultural Productivity segment remained flat, with sales of Roundup and other glyphosate-based herbicides tracking well with expectations following last year's strategic repositioning. Sales of Roundup and other glyphosate-based herbicides increased 3 percent, reflecting the early Latin American sales-and-application season, leading an increase in volume offset by the lower net selling price.

SOURCE: Monsanto Company