Monsanto Misses Q4 Earnings, Revs


Agricultural products company, Monsanto Company (MON) reported a loss per share from continuing operations of 47 cents in the fourth quarter of fiscal 2013 (ended Aug 31, 2013), wider than the Zacks Consensus Estimate of a loss of 43 cents. Reported earnings were also wider than the year-ago loss from continuing operations of 44 cents.

For fiscal 2013, earnings per share from continuing operations came in at $4.56, missing the Zacks Consensus Estimate of $4.58 by two cents. Reported earnings also beat the year ago earnings of $3.70 by 23.2%.

Revenues: Fourth-quarter revenues of $2.2 billion missed the Zacks Consensus Estimate of $2.3 billion by 2.4%. However, revenues increased 5.0% year over year.

On a segment basis, revenues from the Seeds and Genomics segment decreased 1.5% in the quarter to $1.2 billion, driven by an increase in corn seeds and traits demand in the U.S. as well as international businesses.

Revenues from the Agricultural Productivity segment increased 13.6% in the quarter to $1.0 billion, driven by recovery in market environment.

Yearly revenues were recorded at $14.9 billion, compared with $13.5 billion in fiscal 2012. The result missed the Zacks Consensus Estimate of $15.0 billion.

Cost & Margins: Monsanto’s gross profit margin was almost flat year over year at 42.0% for the fiscal fourth quarter. Operating expenses were recorded at $1,213.0 million, up from $1,138.0 million recorded in the year-ago comparable period.

In the reported quarter, selling, general and administrative and research and development expenses, as a percentage of net sales, were recorded at 35.0% and 20.0%, respectively.

Balance Sheet/Cash Flow: Exiting fiscal fourth-quarter 2013, Monsanto’s cash and cash equivalents were approximately $3.7 billion, compared with $3.3 billion recorded at the end of fiscal 2012. Long-term debt was almost flat at $2.1 billion, year over year.

Cash flow from operations in fiscal 2013 was $2.7 billion compared with $3.1 billion in year-ago. Total capital spending was roughly $741.0 million against $646.0 million spent in the year ended Aug 2012.

Moreover, Monsanto announced its plans to acquire The Climate Corporation for a cash consideration of $930.0 million. Climate Corporation provides unique software and insurance products to the farmers in order to protect and improve the various farming operations. The acquisition of Climate Corporation will enhance Monsanto’s Integrated Farming Systems platform along with expanding the research and expenditure pipeline.

Outlook: Monsanto expects the acquisition of Climate Corporation to consummate in the fiscal first quarter of 2014. Along with the contribution from the acquisition, core sales are expected to contribute in the coming fiscal. Based on these factors, Monsanto now expects earnings per share in the range of $5.00 to $5.20 in fiscal 2014.

Gross profit in fiscal 2014 is expected in the range of $8.4 billion to $8.7 billion. Management expects to generate free cash flow in the range of $600.0 million to $800.0 million in fiscal 2014.

Other Stocks to Consider

Monsanto currently carries a Zacks Rank #3 (Hold). Other stocks worth a look in the chemicals industry are Limoneira Co. (LMNR), The Andersons, Inc. (ANDE) and The Scotts Miracle-Gro Co. (SMG). While Limoneira carries a Zacks Rank #1 (Strong Buy), Andersons and Scotts Miracle-Gro Company carry a Zacks Rank #2 (Buy).

Read the Full Research Report on MONRead the Full Research Report on ANDERead the Full Research Report on SMGRead the Full Research Report on LMNRZacks Investment Research
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