Monsanto Company Q4 2014 Results Earnings Call Transcript

Edited Transcript of Monsanto Company Q4 2014 Earnings Conference Call…

Company: Monsanto Company (MON)

Event Name: Q4 2014 Results Earnings Conference Call

Date: October 8, 2014 09:30 AM ET

Operator: Greetings and welcome to the fourth quarter 2014 Monsanto Company earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Bryan Hurley, Investor Relations Lead for Monsanto. Thank you, you may begin.

Bryan Hurley – IR

Thank you, Jessie, and good morning to everyone. Thanks for joining our fourth quarter earnings update. I am joined this morning by Hugh Grant, our Chairman and CEO; Brett Begemann, our President and Chief Operating Officer as well as Pierre Courduroux, our CFO. Also joining me from the IR team are Ashley Wissmann, Tim Boeker, and Laura Meyer.

This call is being webcast and you can access the webcast, supporting slides and the replay at monsanto.com. We have provided you today with EPS measures both on a GAAP and on an ongoing business basis where we refer to non-GAAP financial measures, we reconcile to the GAAP in the slides and in the press release, both of which are on our website.

This call will include statements concerning future events and financial results. Because these statements are based on assumptions and factors that involve risk and uncertainty, the company’s actual performance and results may vary in a material way from those expressed or implied in any forward-looking statement. A description of the factors that may cause such a variance is included in the Safe Harbor language in our most recent period report of the SEC and in today’s press release.

This morning, our focus is on the outlook for our next fiscal year where we expect to deliver continuing strong growth. While today’s call will focus on that outlook, let me set up the conversation with the couple of key points from our fiscal year ‘14 results on Slide 4.

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With year-end ongoing EPS of $5.23 and free cash flow of $959 million, our final results came in ahead of our updated guidance. Just as importantly, we said a priority in 2014 was to demonstrate Seeds and Genomics would return as the biggest driver of our growth, and with the final results, Seeds and Genomics delivered the majority of our gross profit growth, creating the right momentum as we think about what matters in 2015.

So with that, let me hand it to Hugh to take us through our updates this morning and the next step in our growth outlook.

Hugh Grant – Chairman and CEO

Thank you, Bryan, and good morning to everybody on the line.

The fourth quarter is traditionally the point where we focus on the outlook for the next 12 months. That look forward is particularly important as we set up our fiscal year ’15. And even with the more challenging commodity environment, Monsanto is set to deliver strong growth both in the near-term and over a multiyear horizon.

We closed the fiscal year ‘14 a bit above our earnings guidance demonstrating our ability to deliver growth against more headwinds and marking our fourth consecutive year of strong earnings growth. We expect that growth to continue in 2015.

Let me share the key themes in that 2015 outlook as laid out in Slide 5. First, it begins with who we are. We’re a growth company. Our opportunity is built on innovation, our value to our farmer customers as a technology provider, and we have a portfolio and product pipeline that separates us from the commodity world.

That sets up the most important theme in our outlook, 2015 as a leverage year for Monsanto, in which we’re able to commit the strong growth today and at the same time step up significant incremental investments to unlock future growth.

There are a few companies as well positioned to dedicate a level of spending to deliver truly transformational long-term platforms while maintaining tangible near-term growth. This is an either/or situation of growth or investment. We plan to do both in 2015, and that’s the key opportunity this year.

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As we deliver growth in 2015, as we stay focused in our customers, and as we continue to invest to unlock new growth, we can widen our long-term competitive position in an industry that’s particularly near-term focused right now.

There is no doubt that our 2015 growth is important, and we’re really focused on delivery. This morning, we laid out our EPS guidance of $5.75 to $6 reinforcing our confidence in our ability to deliver the double-digit to mid-teens growth that we targeted for 2015. That confidence comes directly from the strength in our core business as there is no hesitation that our seeds-and-traits engine is set to deliver strong growth that’s the pacesetter for our EPS growth this year.

So in a year where delivery matters, we’ll be clear about how that growth plays out. This year, the industry will certainly face the headwinds of a more challenging agricultural environment. We’re not immune, and our guidance factors that in, but our more balanced global business also gives us more tools to manage the puts and takes. The proof of that came in 2014 as soybean emerged as a true differentiator balancing the shifts in the global corn environment.

With macro factors that change every year and a business that has become more global, the pattern of the flow of the business through the year has been changing. That will be true again in 2015. Brett and Pierre will cover the key factors, but practically we’d expect the shift that creates a smaller Q1 and builds growth as we reach our large market seasons over the course of the year.

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