Monsanto Company (MON)

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Monsanto (MON)

Q4 2012 Earnings Call

October 03, 2012 9:30 am ET

Executives

Bryan Hurley - Director of Investor Relations

Hugh Grant - Chairman, Chief Executive Officer and Chairman of Executive Committee

Brett D. Begemann - President and Chief Commercial Officer

Pierre Courduroux - Chief Financial Officer and Senior Vice President

Analysts

Vincent Andrews - Morgan Stanley, Research Division

Robert Koort - Goldman Sachs Group Inc., Research Division

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

P.J. Juvekar - Citigroup Inc, Research Division

David L. Begleiter - Deutsche Bank AG, Research Division

Laurence Alexander - Jefferies & Company, Inc., Research Division

Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

Donald Carson - Susquehanna Financial Group, LLLP, Research Division

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Michael Picken - Cleveland Research Company

Presentation

Operator

Greetings, and welcome to the Fourth Quarter 2012 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, Mr. Hurley. You may now begin.

Bryan Hurley

Thanks, Rob, and good morning to everyone on the line. Thanks for joining our year-end earnings conference call. I'm joined this morning by Hugh Grant, our Chairman and CEO; Pierre Courduroux, our CFO; and also Brett Begemann, our President and Chief Commercial Officer. Also joining me are Manny Cruz, Bryan Corkal and Ashley Wissmann, my colleagues in Investor Relations. This call is being webcast, and you can access the webcast and supporting slides at monsanto.com. The replay will also be available at that address.

We're providing you today with EPS measures both on a GAAP basis and on an ongoing business basis. Where we refer to non-GAAP financial measures, we reconcile to GAAP in the slides and press release, both of which are posted to 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 statements. A description of the factors that may cause such a variance is also included in the Safe Harbor language in our most recent 10-K and in today's press release.

With this call, we address the guidance and growth drivers for our 2013 fiscal year. With the fourth quarter results in hand, we generated 25% ongoing earnings per share growth for the full year. Likewise, our results for the year in the quarter track near the expectations we laid out in our third quarter update, so we've seen the growth from the areas of the business we expected in fiscal '12.

Given the focus on 2013, Hugh will start today with an overview of our strategy and how we're thinking about growth this year and for the long term. From there, we'll have Brett Begemann walk through the operational drivers that give us confidence in our growth expectations. And then Pierre will lay out the translation of that growth into our guidance and financial outlook.

So with that, let me hand it to Hugh.

Hugh Grant

Thanks very much, Bryan, and good morning to everybody on the line. We've been talking and planning for fiscal year 2013 for a while now. By any measure, fiscal 2012 was a compelling year. Today, however, we turn our focus to 2013 and what our continuing growth looks like. We'll also emphasize how that growth happens. I'll let Brett walk you through the details and the milestones of our operational plans for 2013, and my focus will be on how those growth drivers come together over time.

There's 3 areas that I'd like to emphasize. First, the foundation for this growth is the success that we've had over the past 2 years, and I'm particularly proud of what Monsanto achieved in 2012. We delivered 25% ongoing EPS growth and a record $2 billion in free cash flow. And that speaks to everything that matters to our business. It reinforces the strong fundamental environment in agriculture. Equally important, it's the proof point in our business. We have the right growth strategy in place, we're executing well, we're focused on discipline and we're capturing the momentum in our business.

That sets up my second point. Because that strategy is in full swing, 2013 becomes a logical extension of 2012, driving growth as a continuation of what we accomplished this year, and that reinforces our confidence in 2013. We've had back-to-back years of strong performance. That compounding effect means we'll build off a significantly higher base. That's shown on Slide 5, where our ongoing earnings per share guidance range of $4.18 to $4.32 reflects mid-teens ongoing earnings growth from our 2012 endpoint.

And 2013 is setting up nicely. We're carrying good momentum in the U.S., we're on the front edge of some significant acceleration in Latin America, and the latest harvest data that we will share with you today reinforces our confidence in our products. A month and a half ago, as many of you were standing with me in a field in Illinois for our Whistle Stop event, I said at that time we thought that even as overall yields would be down, the relative showing of our products would be good. Now we have the data, and that's exactly what we see. Our yield advantage is shining through even in one of the most difficult seasons on record for our growers.

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