--> MON +1.35% 47k shares traded
Monsanto beats by $0.39, beats on revs; sees FY17 EPS at high end of range, in-line -- being acquired by Bayer (BAYRY)
- Reports Q2 (Feb) earnings of $3.19 per share, excluding non-recurring items, $0.39 better than the Capital IQ Consensus of $2.80; revenues rose 12.0% year/year to $5.07 bln vs the $4.73 bln Capital IQ Consensus. The co's performance was driven in part by strong gross profit growth from its corn and soybean businesses, the absence of the Argentine peso devaluation and benefit from the sale of its Latitude wheat fungicide business. In reporting earnings results, executives reinforce confidence about the cumulative strength of the business, updating full-year guidance to the high end of the range for both as-reported and ongoing EPS.
- Monsanto also highlights progress in its merger with Bayer (BAYRY) as both parties continue to work toward completion of the transaction by the end of calendar year 2017.
- Co issues in-line guidance for FY17, sees EPS at the high end of $4.50-4.90, excluding non-recurring items, vs. $4.76 Capital IQ Consensus. This reflects the co's increased confidence in the growth expected for the year and assumes the change in currency rates will have a relatively neutral effect on a full-year basis. From a gross profit perspective, the co continues to expect the Seed and Genomics segment gross profit to increase mid-single digits as a percent year-over-year. Within its Ag Productivity segment, gross profit is still expected to be in the range of $850 to $950 million, though now at the lower end of the range.
- For third quarter, the company expects as-reported earnings per share to be roughly flat due to the absence of Argentine-related tax matters call-out of $0.50 per share, mostly offset by the expected decline in ongoing earnings per share, from the absence of the alfalfa deal, which equaled roughly $0.34 cents of earnings last year, and the volume timing shift from third quarter to second quarter in the Europe and U.S. corn businesses.
- For the full year, the company now anticipates these earnings to translate to the high end of the range of $1.2 billion to $1.6 billion of free cash flow, reflecting operating cash flow at the high end of the range of $2.4 billion to $2.8 billion and capital expenditures of $1.2 billion for fiscal year 2017. Overall operating expenses in 2017, excluding the pending Bayer transaction-related costs and restructuring charges, are expected to increase slightly with the growth of Monsanto's business.