June 29, 2016
2 Certain statements contained in this release are “forward-looking statements,” such as statements concerning the company’s anticipated
financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company’s actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company’s exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public understanding and acceptance of our biotechnology and other agricultural products; the success of the company’s research and development activities; the outcomes of major lawsuits; developments related to foreign currencies and economies; the impact of exploring, responding to, entering into or consummating potential acquisitions or other transactions and proposals; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; the recent increases in and expected higher levels of indebtedness; the company’s ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters, accidents, and security breaches, including cybersecurity incidents, on the agriculture business or the company’s facilities; and other risks and factors detailed in the company’s most recent periodic report to the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.
Trademarks
Trademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation. All other trademarks are the property of their respective owners.
Fiscal Year
References to year, or to fiscal year, are on a fiscal year basis and refer to the 12-month period ending August 31. © 2016 Monsanto Company
Non-GAAP Financial Information
3 This presentation may use the non-GAAP financial measures of “free cash flow,” earnings per share (EPS) on an ongoing basis, EPS growth on an ongoing basis, EBIT and EBITDA on an ongoing basis, EBITDA on an as reported basis, gross profit on an ongoing basis, operating expenses on an ongoing basis, net income (loss) attributable to Monsanto Company on an ongoing basis, net debt, and adjusted return on capital. We define free cash flow as the total of cash flows from operating activities and investing activities. A non-GAAP EPS financial measure, which we refer to as ongoing EPS, excludes certain after-tax items that we do not consider part of ongoing operations, which are identified in the reconciliation. EBIT is defined as earnings (loss) before interest and taxes, ongoing EBITDA is defined as earnings (loss) before interest, taxes, depreciation and
amortization and excludes certain after-tax items that we do not consider part of ongoing operations, as defined in the reconciliation, and as reported EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization. Earnings (loss) is intended to mean net income (loss) attributable to Monsanto Company as presented in the Statements of Consolidated Operations under GAAP. Net debt is defined as the sum of both short-term debt and long-term debt, less cash and cash equivalents. Ongoing gross profit, ongoing operating expenses, and ongoing other expense, net, exclude certain pretax items that we do not consider part of ongoing operations, which are identified in the
reconciliations. Ongoing net income (loss) attributable to Monsanto Company is defined as net income (loss) attributable to Monsanto Company excluding the cumulative after-tax impact of certain items we do not consider part of ongoing operations.
Currency Neutral Ongoing Operating Results
We use net sales growth, gross profit growth, operating expense growth, net income growth and diluted EPS growth, all on an ongoing basis and ongoing currency neutral basis. We determine our currency neutral operating results by dividing or multiplying, as appropriate, our current period actual U.S. dollar operating results by the current period actual exchange rates (that include the impact of current period currency hedging
activities), to derive our current period local currency operating results. We then multiply or divide, as appropriate, the derived current period local currency operating results by the foreign currency exchange rates (that also include the impact of the comparable prior period currency hedging activities) used to translate the Company's financial statements in the comparable prior year period to determine what the current period U.S. dollar operating results would have been if the foreign currency exchange rates had not changed from the comparable prior year period. The currency neutral estimates for net income and ongoing earnings per share were estimated using the effective tax rate for the local jurisdictions and the currency changes
Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance, not replace net income (loss) attributable to Monsanto Company, cash flows, financial position, or comprehensive income (loss), as determined in accordance with GAAP. Furthermore, these GAAP financial measures may not be comparable to similar measures used by other companies. The non-GAAP financial measures used in this presentation are reconciled to the most directly comparable financial measures calculated and presented in accordance with GAAP.
4
Financial Results
Fiscal 2016 Third Quarter
1. Adjustments, ongoing metrics and currency neutral defined at the front of this presentation and reconciled at the end of this presentation. 2016 FISCAL 3RD QUARTER 2015 FISCAL 3RD QUARTER CHANGE
As
Reported mentsAdjust-1 Ongoing1
As
Reported Adjust-ments1 Ongoing1 Reported OngoingAs 1
Ongoing at Currency Neutral1 NET SALES $4,189M - $4,189M $4,579M - $4,579M (9%) (9%) (7%) GROSS PROFIT $2,380M 1 $2,381M $2,736M - $2,736M (13%) (13%) (11%) OPERATING EXPENSES $1,131M $(31)M $1,100M $1,092M $(75)M $1,017M 4% 8% 11% NET INCOME ATTRIBUTABLE TO MONSANTO COMPANY $717M $238M $955M $1,141M $60M $1,201M (37%) (20%) (21%) DILUTED EPS $1.63 $0.54 $2.17 $2.39 $0.12 $2.51 (32%) (14%) (14)%
5 1. Adjustments, ongoing metrics and currency neutral defined at the front of this presentation and reconciled at the end of this presentation.
Financial Results
Fiscal 2016 Third Quarter Year to Date
2016 FISCAL Q3 YTD 2015 FISCAL Q3 YTD CHANGE
As
Reported mentsAdjust-1 Ongoing1
As
Reported Adjust-ments1 Ongoing1 Reported OngoingAs 1
Ongoing at Currency Neutral1 NET SALES $10,940M - $10,940M $12,646M - $12,646M (13%) (13%) (8%) GROSS PROFIT $5,879M $53M $5,932M $7,186M - $7,186M (18%) (17%) (12%) OPERATING EXPENSES $3,239M $(314)M $2,925M $3,103M $(75)M $3,028M 4% (3%) 2% NET INCOME ATTRIBUTABLE TO MONSANTO COMPANY $1,527M $444M $1,971M $2,809M $37M $2,846M (46%) (31%) (19%) DILUTED EPS $3.40 $1.00 $4.40 $5.80 $0.07 $5.87 (41%) (25%) (12%) FREE CASH FLOW $(224)M $(789)M 72%
$2.39 $2.96 $3.70 $4.56 $5.23 $5.73 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
O NG O ING EP S 6
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016F
$564 $1,839 $2,017 $1,963 $959 $2,089 $1.3 - $1.5B P &L C A T E G O R IES
SEEDS & GENOMICS UNDER 5% vs. PRIOR YEARGROSS PROFIT DOWN JUST 1
AG PRODUCTIVITY LOWER END OF GROSS PROFIT $900M to $1.1B OPERATING
EXPENSE
DOWN SLIGHTLY VS. PRIOR YEAR, INCLUSIVE OF NEW
PLATFORM INVESTMENT2
OTHER INCOME/EXPENSE,
NET
RELATIVELY FLAT vs. PRIOR YEAR TAX RATE 32% - 34%3 ONGOING EARNINGS PER SHARE4 LOW END OF $4.40 - $5.10 S H A RE C O U N T A ND NF E NET EFFECT OF SHARE COUNT AND NET
FINANCING EXPENSE
EXPECT NET EFFECT OF $0.20 to $0.25 OF EPS BENEFIT
FY2016 FINANCIAL GUIDANCE
LOW END OF $4.40-$5.10
ONGOING EPS FY2010-FY2016F
4
Foundation Established for Future Growth
FY16 Outlook Considers Current Market Realities with Focus on
Continued Strategic Advancement and Operational Discipline
FREE CASH FLOW $M
1. Before estimated restructuring charges of $53M-$63M. 2. Before estimated restructuring charges of $269M to $284M and environmental and litigation matters of $28M offset by $4M for SEC Settlement Matters. 3. Includes Argentine-related tax matters of $219M. 4. Adjustments and metrics defined and reconciled at the end of this presentation.
(0.4)
1.1
1.1
2.6
(0.5)
-
0.5
1.0
1.5
2.0
2.5
3.0
FY13
FY14
FY15 Q3 FY16
NET DEBT / ONGOING EBITDA
$2,017 $1,963
$959
$2,089
$1,300 -
$1,500
$- $400 $800 $1,200 $1,600 $2,000 $2,400FY2012 FY2013 FY2014 FY2015
FY2016F
FR E E C A SH F LO W ($ M IL LIO N S)
FY2012 FY2013 FY2014 FY2015 FY2016F
NET CASH PROVIDED BY OPERATING $3,051M $2,740M $3,054M $3,108M $2,200-$2,600M NET CASH REQUIRED BY INVESTING ACTIVITIES ($1,034M) ($777M) ($2,095M) ($1,019M) ($900M-$1.1B) 7
Cash Generation and Deployment
Strong Cash Generation Reflects Disciplined Working Capital
and Investment Management
CAPITAL ALLOCATION TARGET
1BALANCED CAPITAL ALLOCATION
Capital Expenditures and Technology
Investments to enable expanding seed
footprint and new platforms
Share Repurchases to reduce share count
and emphasize confidence in growth
Dividends with growth that aligns with
earnings profile
TRACKING CASH GENERATION:
FREE CASH FLOW FY2012-FY2016F
FY17F: KEY DRIVERS OF ANTICIPATED RETURN TO
GROWTH IN EARNINGS PER SHARE
8
RETURN ON INNOVATION
FY16 Sets Foundation for Growth
New Technologies, Financial Discipline and Balanced Capital
Allocation Expected to Drive Future Growth
SOYBEANS: Intacta RR2 PRO and Roundup Ready 2 Xtend expansion CORN: Global germplasm refresh and footprint expansion
COMPLEMENTARY CROPS: Bollgard II XtendFlex cotton expansion LICENSING: Existing and pipeline product opportunities
FINANCIAL DISCIPLINE
RESTRUCTURING IMPLEMENTATION & COST SAVINGS INITIATIVES
FAVORABLE COMPARISONS
COGS: Corn production plan normalization and step down in Roundup
Ready 2 Xtend soybean launch costs
OTHER INCOME/EXPENSE: Argentina devaluation not expected to repeat
FY17-FY21F EPS GROWTH OUTLOOK
BALANCED CAPITAL ALLOCATION
MID-TEENS COMPOUNDED ANNUAL
GROWTH RATE IN EPS FROM FY17 to FY21
Return on innovation growth drivers
expected to expand
Focus on Financial discipline and balanced
9
Foundation of Financial Discipline
Foundation of Financial Discipline Amplifies Growth Drivers;
Leading Margins & Adjusted Return on Capital Amongst Ag Peers
ADJUSTED RETURN ON CAPITAL
1FISCAL YEARS 2013 – 2015
1. Components of calculation and related reconciliations provided in the non-GAAP financial measures reconciliations at the end of the presentation.
ONGOING EBITDA MARGINS AS A PERCENT
OF NET SALES
1FISCAL YEARS 2013 – 2015
27%
29%
32%
20% 22% 24% 26% 28% 30% 32% 34%FY13 FY14 FY15
O N G O IN G E B IT DA A S % O F NE T S A LE S
22%
23%
23%
0% 5% 10% 15% 20% 25%FY13 FY14 FY15
A DJ U ST E D RE T URN O N C A P IT A L 1
RETURN ON INDUSTRY-LEADING INNOVATION + FINANCIAL DISCIPLINE + BALANCED CAPITAL ALLOCATION
= LEADING MARGINS & ADJUSTED RETURN
NEAR TERM (FY17-FY19) LONGER TERM (2020+)
FOUNDATION OF FINANCIAL DISCIPLINE AMPLIFIES GROSS PROFIT GROWTH DRIVERS
Core Business Drives Near-Term Growth
New Platforms Provide Additional Layers of Long-Term
Growth as Integrated Solutions Strategy Implemented
10
CORN: Global germplasm refresh, footprint expansion & next-gen traits
RESTRUCTURING TRANSFORMATION
COMPLEMENTARY CROPS: Bollgard II XtendFlex cotton, vegetables
SOYBEANS: Intacta RR2 PRO & Roundup Ready 2 Xtend expansion
DIGITAL AG SOLUTIONS
BIOLOGICALS
NEXT-GEN CROP PROTECTION SOLUTIONS
BALANCED CAPITAL ALLOCATION
C
O
R
E B
U
SI
N
ESS
NEW
PLATFORMS
GR
OS
S
P
R
OF
IT
GR
O
W
T
H
DRI
VE
RS
DISCIPLINED MANAGEMENT OF CORE AG PRODUCTIVITY SEGMENT
①
②
0 10 20 30 40 50 60 70 80 90 100 2014 2015 2016F 2017F 2019F A C R E S ( IN M ILLI ON S )
Intacta RR2 PRO Soybeans
First Generation Expected to Rapidly Penetrate 100M
Acre Opportunity; 2
nd
-Generation Already in Phase 4
INTACTA RR2 PRO
:
SOUTH AMERICA
RECORD TECHNOLOGY ADOPTION RATE
TRAIT PENETRATION STARTING WITH PRODUCT LAUNCH
100M
ACRESACRE OPPORTUNITY
INTACTA RR2 PRO
2025 TARGET:~145M Acres of Trait Upgrades
75M
ACRE TARGET
Expect Intacta RR2 PRO penetration at ~45-55M acres in FY17
35
15
3
45-55
GROWTH PROFILE:
Expect rapid acceleration with new
technology penetration
•
Market opportunity of 100M acres
•
2nd-generation technology in Phase 4;
expect launch by 2019-2020
KEY MILESTONES:
•
Penetrated 35M Acres in FY16; targeting
45-55M acres in FY17
•
2016 marks third year of > 4 BU/AC yield
advantage in Brazil; similar in Argentina
•
Argentina announces interim policy
supporting mandatory testing
•
Licensed technology to DuPont
1;
technology licensed to germplasm
providers with >90% share in South
America
NEW
11
NEW
ROUNDUP READY XTEND CROP SYSTEM
12 1. USDA deregulation received. EPA approval for in-crop use of dicamba is pending. 2. Additional acre opportunity of 80-100M acres in dicamba formulations by 2025.
Roundup Ready Xtend Crop System
Upgrade of Industry’s Largest Seed Technology
Platform Underway
~40M
ACRES
Greater Flexibility, Weed Control and
Yield Potential Innovative Traits in
Leading Germplasm
2025 TARGET:
200M-250M Acres of Trait Upgrades Across Crops
2Enhanced Chemistry Options
•
Trending just above 1M acres in the U.S. in FY16;
expect EU import approval for the stack shortly
•
>70 products across all relative maturity zones; 6x the
products in Roundup Ready 2 Yield soybeans launch
•
Targeting licenses with seed companies with > 90%
U.S. soybean seed share
•
EPA registration for in-crop use of dicamba expected by
late summer to early fall
•
$5-10/acre premium vs. Roundup Ready 2 Yield
varieties; introductory $5/unit price reduction in FY16
SOURCES OF VALUE IN ROUNDUP READY XTEND CROP SYSTEM
LAUNCH PLANS IN PROGRESS
0 10 20 30 40 50 60 70 80 2016F 2017F 2019F A C R E S (IN M IL LIO N S)
ROUNDUP READY 2 XTEND SOYBEANS
:
U.S. ACREAGE PENETRATION TARGETS
~80M
ACRES ACRE OPPORTUNITY~55M
ACRE TARGET15M
ACRE TARGET DELAYED EU IMPORT APPROVAL LIMITS LAUNCH TRENDING JUST ABOVE 1M ACRESGlobal Corn Portfolio
Next Generation Hybrids, Global Share Growth and Licensing
Opportunities Drive Expected Long-Term Growth Opportunities
13
U.S.
Position: #1 Share: Mid-30’s%Brazil
Position: #1 Share: ~40%Argentina
Position: #1 Share: >50%Eastern Europe
Position: #1 Share: >20%Western Europe
Position: #2 Share: Mid-teens1
2
3
4
5
2025 TARGET:
~240M Acres Global Seed & Trait Upgrades
GLOBAL SEED & TRAIT UPGRADES
CORN LICENSING
OPPORTUNITIES
Germplasm
SmartStax PRO
Climate Advisors
Trecepta
1Next Generation
Biotech Weed
Control
NEMASTRIKE
Phase 4
Nematicide
Acceleron
Seed Applied Solutions with Enhanced DiseaseControl1
Enhanced-Corn
Inoculant
FY2016 KEY GLOBAL CORN REGIONS
MID-YEAR PERFORMANCE HIGHLIGHTS
14
2025 TARGET:
200M-250M Acres of Trait Upgrades Across Crops
2ROUNDUP READY XTEND CROP SYSTEM
KEY MILESTONES:
•
Excellent performance demonstrated
on yield and fiber quality: varieties
available across the entire cotton belt
•
Anticipate back-to-back years of
branded share gains of 3 points or
more
•
High grower demand; expect
penetration to ~3M acres in 2016
1•
EPA registration for in-crop use of
dicamba expected by late summer to
early fall
•
Priced at a $6/acre price premium;
fully discounted in FY16 as we await
the EPA label for in-crop use of
dicamba
1. USDA deregulation received. EPA approval for in-crop use of dicamba is pending. 2. Additional acre opportunity of 80-100M acres in dicamba formulations by 2025.
BOLLGARD II XTENDFLEX COTTON
TRIALS JACKSON, TN
2015
UNTREATED CONTROL UNTREATED CONTROL
ROUNDUP READY XTEND
CROP SYSTEM
AND
ROUNDUP READY PLUS
SYSTEM
Bollgard II XtendFlex Cotton
Next Generation Weed Control System for Cotton
1
The Digital Ag Platform
Near-Term Strategy and Expansion Plans Unlock Path to
Broad Acre Platform Adoption
In cab visualization Data Connectivity Climate Fieldview Drive N Advisor Field Health Script Creator Field-level weather Notifications Scouting
1. Platform includes Climate Fieldview Prime, Pro and Plus acres. 2. Representative and random sample of >3,800 Nitrogen Advisor Fields where main Nitrogen application was the mineral
fertilizer. Assumes $4/bushel corn, $.40/lb-N fertilizer costs and average yield of 168 bushels per acre. 15
Beta Testing Locations
2016 OPERATIONAL PRIORITIES
PRODUCT HIGHLIGHTS
Climate FieldView Platform Launched as Tiered Offering to
Drive Adoption, Connect Cabs and Deliver Insights
①
PAID SERVICES:
•
Now tracking to >13M
Paid Acres for FY16; Expect 25M
in FY17
②
PLATFORM ADOPTION
1
:
•
Surpassed goal of 90M Acres
Climate Fieldview Platform; tracking
to >92M acres
•
Recent farmer survey indicates Climate Fieldview Platform as the #1
digital ag brand in the industry
③
GEOGRAPHIC EXPANSION
:
•
Expanded in-field beta testing in Brazil & Canada
for 2017;first product launch expected in the next 2 years
•
FieldView Pro available on 120M acres across corn and soy
in the U.S, 50% increase vs FY15
Advisor Tools Provide New
Benefits to Farmers
Nitrogen Advisor
2:
Field Health Advisor:
NEW
•
Over 50% of US Corn
fields have
opportunities to
optimize nitrogen
application based on
2015 sample across
>3,800 fields
•
Informed scouting
•
In-season images
on average, about
every 10 days
•
Whole-farm
overview tool
NEWTransforming Our Customer Innovation, Analytics, Insights and Experiences into
A Competitive Advantage Used to Grow Our Revenue and Optimize our Cost Structure
16
Delivering Value Through Greater Efficiency
Expected to Yield Annual Savings of $500 Million by 2018
Plans expected to drive further optimization of operating leverage and COGS
RESTRUCTURING & COST SAVINGS INITIATIVES:
1. Four Strategic Commercial Hubs
•
Enables greater customer value while driving excellence and cost efficiency
2. Modernize and optimize IT and supply chain networks
3. Accelerate use of data and analytics to dramatically improve our
field testing and product development cycle
4. Global R&D Centers of Excellence
•
Unlocks synergies across platforms
•
Bolster rate of discovery and delivery
of new innovations
•
Drive ongoing productivity and operating
leverage beyond 2018
$500M
TOTAL EXPECTED
ANNUAL SAVINGS
BY FY2018
Restructuring
Expense:
~$1.1-1.2B
Between 2015-2018
Rendering of Monsanto’s future R&D Center of Excellence at its Chesterfield Village research site in St. LouisMonsanto maintains broadest,
deepest and most integrated
pipeline focused on productivity
Partner of choice for leading Ag
technologies
Global Population to Increase to 8.5 Billion
by 2030
1INNOVATIVE SOLUTIONS
17
Demand-Driven Need for Grain Sets Compelling Runway for Ag
Monsanto Uniquely Positioned to Address Key Global Challenges, Generate Significant
Value for Farmer Customers, and Return Value to Shareowners
C OR N DE M A N D (I N B ILLI O N B U S HE LS )
7.3
8.5
2015
2030
2.4
4.9
2015
2030
Middle Class Expected to Increase by 2X
to Nearly 5 Billion by 2030
2Demand Trends Remain Robust
3G
LOB
AL
M
AC
RO
TR
END
S
LIMITED RESOURCES
DEMAND FOR FOOD
Innovation leadership uniquely positions Monsanto in meeting global macro trends affecting agriculture
Climate Change
Agriculture’s role in reducing carbon in
our atmosphere
DATA SCIENCE PLANT BREEDING BIOLOGICALS CHEMISTRY BIOTECHNOLOGY INTEGRATED YIELD SOLUTIONSCARBON NEUTRAL CROP PRODUCTION IMPROVING AGRICULTURAL PRODUCTIVITY HALTING DEFORESTATION
USING WATER MORE EFFICIENTLY PROMOTING BEST PRACTICES 20
40 60
04/05 07/08 10/11 13/14 16/17 19/20 22/23
Actual Forecast Trendline
1. United Nations 2. OECD & Rubico 3. USDA historical data for Actual and trendline – WASDE June 2016; future forecast and projections represent Monsanto internal estimates
•
Roundup Ready Crop System ~350M acres
•
Roundup Ready Xtend Crop System
•
Dicamba Investment
•
NEMASTRIKE phase 4 nematicide $1B NPV
•
Acceleron Seed Applied Solutions on >75M acres
•
Roundup Ready PLUS solutions on >50M Acres
M
ONS
A
NT
O’
S
I
NNOV
A
T
ION
P
LAT
FO
RM
ADVAN
T
AG
E
S
FARM
E
R N
E
E
DS
IN
TEG
R
A
TED
Farmer Needs Define Integrated Solutions
Goal to Maximize Yields and Return Per Acre through
Technology Driven Inputs and Season-Long Advice
BREEDING
BIOTECH
BIOLOGICALS
CHEMISTRY
DATA SCIENCE
18FERTILITY
WEED
CONTROL
INSECT
CONTROL
& OTHER
DISEASE
YIELD
•
Leading Share Positions
•
Proven Product
Performance Advantage
•
Unique Germplasm
Libraries
•
Breeding 3.0
•
~400M Acre Seed & Trait Footprint
•
Multi-Generation Insect/Weed Control Traits
•
14-Gene Stack in Corn and 9-Gene Stack in
Soybeans in Development
•
Industry-leading BioAg Alliance with
Novozymes
•
Break-through RNAi technology
potential with BioDirect technology
platform
•
Industry-leading Digital Platform
•
Highest Adoption Rates
•
Leading Connectivity and Reach
through Retail and Ag Equipment
•
Plant Health & Nitrogen Advisors
Strategic Objective: Expand chemistry
portfolio through targeted, collaborative,
asset-light approach
Portfolio Highlights:
Strategic Objective: Develop & commercialize
new digital ag & biological solutions
Portfolio Highlights:
Strategic Objective: Use partnerships
and collaborations to optimize and
focus investment
Portfolio Highlights:
Strategic Objective: Develop &
commercialize next-gen. seed technologies
Portfolio Highlights:
CHEMISTRY
NEW PLATFORMS
SEEDS & GENOMICS NON-CORE
SEEDS & GENOMICS CORE
19
Strategic Portfolio Management
Maximizing Value through Strategic Management of
Industry-Leading Integrated Solutions Portfolio
Biotechnology
Chemistry
Data
Science
Plant
Breeding
Biologicals
Agreement with Forage Genetics Intl. for alfalfa
seed technologies; includes $210M upfront pmt. to Monsanto
Agreement with Remington for Sorghum JV; $145M gain
to be reflected in Q4 results
2NEW
>13M paid acre services in Climate
FieldView in FY16
~$1 Billion
opportunity nearing commercialization
1,21. Estimated non risk-adjusted net present value 2. Pending Regulatory Approvals
Climate FieldView connectivity expansion
Parallel development of future generation weed control
systems with next-gen chemistry mechanisms through Sumitomo
agreement
Intacta RR2 PRO: targeting 45-55M acres
in FY17
DuPont License - Intacta RR2 PRO
2Exit of sugarcane business
NEW NEW
NEW
15M U.S. acre target for
FY17
NEW
Recently signed several gene
editing agreements
>92M in Climate FieldView Platform
in FY16
Benefits of ‘Parallel
Development’ Innovation
include Early Prioritization,
Joint Testing and Full
Integration
Future of Weed Control
Monsanto, Sumitomo Forge New Global Crop Protection
Collaboration for Future PPO Weed Control Technology
ACCELERATED DEVELOPMENT OF NEW INTEGRATED
SYSTEM FOR PPO INHIBITOR HERBICIDE
•
Employs asset-light approach to
new technologies
•
Enables Monsanto’s future
generation multi-herbicide tolerance
trait stacked products
•
Expected to be commercially
available in the next decade
•
Controls PPO resistant weeds
1New PPO Herbicide Candidate Shows
Excellent Weed Control
CHECK
20
COMPETITIVE
STANDARD HERBICIDE NEW
Lead Trait Constructs
Demonstrate Excellent Tolerance
NON-TRAITED
NOT SPRAYED TRAITED & SPRAYED
NON-TRAITED TRAITED &
SPRAYED SPRAYED 1. Pending regulatory approval NON-TRAITED
SPRAYED June 2016 - Creve Coeur, MO
June 2016 – Jerseyville, IL Monsanto Greenhouse Test #238
21
Foundation of Financial Discipline
Foundation of Financial Discipline Amplifies Growth Drivers
;
Leading Margins & Adjusted Return on Capital Amongs
t Ag Peers
ADJUSTED RETURN ON CAPITAL
1FISCAL YEARS 2013 – 2015
1. Components of calculation and related reconciliations provided in the non-GAAP financial measures reconciliations at the end of the presentation.
ONGOING EBITDA MARGINS AS A PERCENT
OF NET SALES
1FISCAL YEARS 2013 – 2015
27%
29%
32%
20% 22% 24% 26% 28% 30% 32% 34%FY13 FY14 FY15
O N G O IN G E B IT DA A S % O F NE T S A LE S
22%
23%
23%
0% 5% 10% 15% 20% 25%FY13 FY14 FY15
A DJ U ST E D RE T URN O N C A P IT A L 1
RETURN ON INDUSTRY-LEADING INNOVATION + FINANCIAL DISCIPLINE + BALANCED CAPITAL ALLOCATION
= LEADING MARGINS & ADJUSTED RETURN
Fiscal Year Fiscal First Nine Months
$ Millions 2016 Guidance 2015 2014 2013 2012 2011 2010 2016 2015
Net Cash Provided by Operating Activities $2,200-$2,600 $3,108 $3,054 $2,740 $3,051 $2,814 $1,398 $415 $(30)
Net Cash Required by Investing Activities ($900-$1,100) $(1,019) $(2,095) $(777) $(1,034) $(975) $(834) $(639) $(759)
Free Cash Flow $1,300-$1,500 $2,089 $959 $1,963 $2,017 $1,839 $564 $(224) $(789)
Net Cash Required by Financing Activities N/A $(430) $(2,259) $(1,485) $(1,165) $(864) $(1,038) $(2,233) $(143)
Cash Assumed from Initial Consolidation
of Variable Interest Entities N/A -- -- -- -- $77 -- -- --
Effect of Exchange Rate Changes on Cash
and Cash Equivalents N/A $(325) $(1) $(93) $(141) $35 $3 $(39) $(256)
Net Increase/(Decrease) in Cash
and Cash Equivalents N/A $1,334 $(1,301) $385 $711 $1,087 $(471) $(2,496) $(1,188)
Reconciliation of Non-GAAP Financial Measures
22
RECONCILIATION OF FREE CASH FLOW
RECONCILIATION OF ONGOING EPS
1. 2016 Guidance: low-end of as-reported EPS and ongoing EPS. Note: See slide 30 for discussion of reconciling items. 2016
Guidance1
Fiscal Year Fiscal 3rd Quarter Fiscal First Nine Months
$ Per share 2015 2014 2013 2012 2011 2010 2016 2015 2016 2015
Diluted Earnings per Share $3.36-$4.14 $4.81 $5.22 $4.60 $3.79 $2.96 $1.99 $1.63 $2.39 $3.40 $5.80
Restructuring Charges, Net $0.47-$0.51 $0.70 -- -- $(0.02) -- $0.41 $0.02 -- $0.50 --
Environmental & Litigation
Matters $0.04 $0.11 $0.04 -- $0.05 -- -- $0.02 $0.05 $0.04 $0.05
SEC Settlement Matters -- $0.17 -- -- -- -- -- $0.07 -- $0.07
Resolution of Tax Matters -- -- -- $(0.02) $(0.11) -- -- -- -- -- --
Argentine-Related Tax Matters $0.48-$0.52 -- -- -- -- -- -- $0.50 -- $0.49 --
Income on Discontinued
Operations $(0.03) $(0.06) $(0.03) $(0.02) $(0.01) -- $(0.01) -- -- $(0.03) $(0.05)
Diluted EPS from Ongoing
Reconciliation of Non-GAAP Financial Measures
1. Certain columns may not add due to rounding. 2. See slide 30 for discussion of reconciling items. 3. Adjustments to ongoing net income and diluted EPS are shown net of estimated tax benefit. See non-GAAP financial information on slide 3 for specifics. 4. Percent changes are from 2015 ongoing financial results. 23
RECONCILIATION OF ONGOING CURRENCY NEUTRAL
1Attributable to Monsanto Company
FY16 Q3 YTD
% Change4 Net Sales Gross Profit Operating Expenses Net Income3 Diluted EPS3
As Reported (GAAP) (13%) (18%) 4% (46%) (41%) Adjustments to Ongoing:
Restructuring Charges2 - 1% (9%) 8% 9% (a)
Environmental & Litigation Matters2 - - - - - (b)
SEC Settlement Matters2 - - 1% (1%) (1%) (c)
Argentine-Related Tax Matters2 - - - 8% 8% (f)
Income on Discontinued Operations, Net2 - - - - - (e)
Total Adjustments to Ongoing - 1% (8%) 15% 16%
As Reported less Total Adjustments to Ongoing = Ongoing4 (13%) (17%) (3%) (31%) (25%)
Currency Impact4 6% 6% 5% 12% 13%
Reconciliation of Non-GAAP Financial Measures
24
RECONCILIATION OF ONGOING CURRENCY NEUTRAL
1Attributable to Monsanto Company
FY16 Q3
% Change4 Net Sales Gross Profit Operating Expenses Net Income3 Diluted EPS3
As Reported (GAAP) (9%) (13%) 4% (37%) (32%)
Adjustments to Ongoing:
Restructuring Charges2 - - (1%) 1% 1% (a)
Environmental & Litigation Matters2 - - 2% (1%) (1%) (b)
SEC Settlement Matters2 - - 3% (3%) (3%) (c)
Argentine-Related Tax Matters2 - - - 19% 21% (f)
Total Adjustments to Ongoing - - 4% 16% 18%
As Reported less Total Adjustments to Ongoing = Ongoing4 (9%) (13%) 8% (20%) (14%)
Currency Impact4 2% 2% 3% - -
Ongoing less Currency Impact = Ongoing at Currency Neutral4 (7%) (11%) 11% (21%) (14%)
1. Certain columns may not add due to rounding. 2. See slide 30 for discussion of reconciling items. 3. Adjustments to ongoing net income and diluted EPS are shown net of estimated tax benefit. See non-GAAP financial information on slide 3 for specifics. 4. Percent changes are from 2015 ongoing financial results.
Q3 YTD $ Millions 2016 2015 2016 2015 Gross Profit (GAAP) $2,380 $2,736 $5,879 $7,186 Restructuring Charges $1 $53 - (a) Ongoing Gross Profit $2,381 $2,736 $5,932 $7,186
Reconciliation of Non-GAAP Financial Measures
25 See slide 30 at the end of the presentation for discussion of reconciling items. (1) Income tax impact of non-GAAP adjustments is the summation of the calculation income tax (benefit) charge related to each non-GAAP non-income tax adjustment. Income tax charge is calculated using the actual tax in effect during the period for the locality of the related non-GAAP adjustment. Item
includes all non-GAAP adjustments except for Argentine-Related Tax Matters and Income on Discontinued Operations. (2) Item is a net charge against tax expense. 25
Q3 YTD
$ Millions 2016 2015 FY 16 FY 15 Operating Expenses (GAAP) $1,131 $1,092 $3,239 $3,103
Restructuring Charges $(15) - $(290) - (a)
Environmental & Litigation Matters $(16) ($40) $(28) ($40) (b)
SEC Settlement Matters - ($35) $4 ($35) (c)
Ongoing Operating Expenses $1,100 $1,017 $2,925 $3,028
Q3 YTD
$ Millions 2016 2015 2016 2015 Net Income Attributable to Monsanto Co. (GAAP) $717 $1,141 $1,527 $2,809
Restructuring Charges $16 - $343 - (a)
Environmental & Litigation Matters $16 $40 $28 $40 (b)
SEC Settlement Matters - $35 $(4) $35 (c)
Income Tax Benefit (1) $(13) $(15) $(127) $(15) (d)
Argentine-Related Tax Matters (2) $219 - $219 - (f)
Income on Discontinued Operations, Net - - $(15) $(23) (e)
Ongoing Net Income Attributable to Monsanto Co. $955 $1,201 $1,971 $2,846
RECONCILIATION OF ONGOING
OPERATING EXPENSES
RECONCILIATION OF ONGOING
GROSS PROFIT
Rolling Fiscal Year
$ Millions Quarters Four 2015 2014 2013
As Reported Net Income Attributable
to Monsanto Company $1,032 $2,314 $2,740 $2,482 Interest Expense – Net $390 $328 $146 $80
Income Tax Provision1 $513 $858 $1,066 $898
Depreciation and
Amortization $720 $716 $691 $615 As Reported EBITDA $2,655 $4,216 $4,643 $4,075
5/31/16 Fiscal Year End
$ Millions 2016 2015 20142 20132 Short-Term Debt $2,557 $615 $233 $51
Long-Term Debt $7,948 $8,429 $7,465 $2,048 Less: Cash and Cash
Equivalents $1,205 $3,701 $2,367 $3,668 Total Net Debt $9,300 $5,343 $5,331 $(1,569)
Reconciliation of Non-GAAP Financial Measures
Rolling Fiscal Year End
$ Millions Quarters Four 2015 2014 2013
As Reported Net Income Attributable to
Monsanto Company $1,032 $2,314 $2,740 $2,482 Restructuring Charges,
Net of Tax $563 $338 -- -- (a) Environmental and Litigation
Matters, Net of Tax $47 $54 $20 -- (b) SEC Settlement Matters, Net of
Tax $43 $80 -- -- (c) Argentine-Related Tax Matters $219 (f)
Resolution of Legacy Tax
Matters -- -- -- $(11) Income on Discontinued
Operations, Net of Tax $(20) $(28) $(13) $(11) (e) Ongoing Net Income $1,884 $2,758 $2,747 $2,460
Interest Expense – Net $390 $328 $146 $80 Income Tax Provision $591 $1,053 $1,088 $926 Tax Expense Related to
Noncontrolling Interest $(8) $(24) $(19) $(22) Ongoing EBIT $2,857 $4,115 $3,962 $3,444 Depreciation and Amortization $720 $716 $691 $615 Ongoing EBITDA $3,577 $4,831 $4,653 $4,059 26
RECONCILIATION OF ONGOING EBITDA
26
RECONCILIATION OF EBITDA
RECONCILIATION OF NET DEBT
1. Includes the income tax provision attributable to Monsanto. 2. Recast to reflect change in accounting for debt issuance costs, formerly included in other assets. 3. See slide 30 at the end of the presentation for discussion of reconciling items.
Rolling 2016 2016 2016 2015 $ Millions Quarters Four Q3 Q2 Q1 Q4 As Reported Net Income Attributable to Monsanto Company $1,032 $717 $1,063 $(253) $(495) Interest Expense – Net $390 $86 $86 $109 $109 Income Tax Provision1 $513 $479 $353 $(128) $(191) Depreciation and Amortization $720 $178 $183 $181 $178 As Reported EBITDA $2,655 $1,460 $1,685 $(91) $(399)
Reconciliation of Non-GAAP Financial Measures
Rolling 2016 2016 2016 2015$ Millions Quarters Four Q3 Q2 Q1 Q4
As Reported Net Income Attributable to Monsanto Company $1,032 $717 $1,063 $(253) $(495) Restructuring
Charges, Net of Tax $563 $9 $6 $210 $338 (a) Environmental and
Litigation Matters, Net of Tax
$47 $10 $4 $3 $30 (b) SEC Settlement Matters,
Net of Tax $43 -- $(2) -- $45 (c) Argentine-Related Tax Matters $219 $219 (f) Income on Discontinued Operations, Net of Tax $(20) -- $(3) $(12) $(5) (e)
Ongoing Net Income $1,884 $955 $1,068 $(52) $(87)
Interest Expense – Net $390 $86 $86 $109 $109
Income Tax Provision $591 $277 $355 $(27) $(14)
Tax Expense Related to Noncontrolling Interest $(8) $(4) $2 $1 $(7) Ongoing EBIT $2,857 $1,314 $1,511 $31 $1 Depreciation and Amortization $720 $178 $183 $181 $178 Ongoing EBITDA $3,577 $1,492 $1,694 $212 $179 27
RECONCILIATION OF ONGOING EBITDA
27
RECONCILIATION OF EBITDA
1. Includes the income tax provision attributable to Monsanto. 2. See slide 30 at the end of the presentation for discussion of reconciling items.
Fiscal Year
$ Millions 2015 2014 2013
As Reported Net Sales $15,001 $15,855 $14,861
Ongoing EBITDA as a % of
Net Sales 32% 29% 27%
Reconciliation of Non-GAAP Financial Measures
Fiscal Year$ Millions 2015 2014 2013
As Reported Net Income Attributable
to Monsanto Company $2,314 $2,740 $2,482 Restructuring Charges, Net $338 -- -- Environmental and Litigation Matters $54 $20 --
SEC Settlement Matters $80 -- --
Resolution of Legacy Tax Matters -- -- $(11) Income on Discontinued Operations $(28) $(13) $(11) Ongoing Net Income $2,758 $2,747 $2,460
Interest Expense – Net $328 $146 $80 Income Tax Provision $1,053 $1,088 $926 Tax Expense Related to Noncontrolling
Interest $(24) $(19) $(22) Ongoing EBIT $4,115 $3,962 $3,444
Depreciation and Amortization $716 $691 $615 Ongoing EBITDA $4,831 $4,653 $4,059
28
RECONCILIATION OF ONGOING EBITDA
28
RECONCILIATION OF EBITDA
Fiscal Year
$ Millions 2015 2014 2013
As Reported Net Income Attributable to
Monsanto Company $2,314 $2,740 $2,482 Interest Expense – Net $328 $146 $80
Income Tax Provision1 $858 $1,066 $898
Depreciation and
Amortization $716 $691 $615 As Reported EBITDA $4,216 $4,643 $4,075
ONGOING EBITDA AS A PERCENT OF NET SALES
1. Includes the income tax provision attributable to Monsanto 2. See slide 30 at the end of the presentation for discussion of reconciling items.
Reconciliation of Non-GAAP Financial Measures
29
RECONCILIATION OF ADJUSTED RETURN ON CAPITAL
29
Fiscal Year
$ Millions 2015 2014 2013
As Reported Net Income Attributable to
Monsanto Company $2,314 $2,740 $2,482
Adjustment for certain items, after-tax:
Restructuring Charges, Net $338 - - Environmental and Litigation Matters $54 $20 -
SEC Settlement Matters $80 - -
Resolution of Legacy Tax Matter - - $(11) Income on Discontinued Operations $(28) $(13) $(11) Ongoing Net Income $2,758 $2,747 2,460 Interest (income) Expense – Net of taxes $238 $94 59 Operating Profit After-tax (excluding certain
items) $2,996 $2,841 $2,519
Fiscal Year End
$ Millions 2015 2014 2013
Short-Term and Long-Term
Debt $9,044 $7,698 $2,099
Shareowners’ Equity $7,005 $7,914 $12,728
Cash and Cash Equivalents $(3,701) $(2,367) $(3,668)
Cash for Operations $400 $400 $400
Total Capital $12,748 $13,645 $11,559
Prior Period Capital $13,645 $11,559 $11,227
Average Capital $13,197 $12,602 $11,393
Fiscal Year
$ Millions 2015 2014 2013
Operating Profit After-tax (excluding certain items) $2,996 $2,841 $2,519
Average Capital $13,197 $12,602 $11,393
Adjusted Return on Capital 22.7% 22.5% 22.1%
1. Includes the income tax provision attributable to Monsanto 2. See slide 30 at the end of the
Reconciliation of Non-GAAP Financial Measures
30
DEFINITION OF ONGOING ADJUSTMENTS
(a) Restructuring Charges: Fiscal third quarter 2016 included a pretax restructuring charge totaling $16 million ($0.04 a share), or after-tax $9 million ($0.02 a share), of which $15 million related to certain asset impairment charges and $1 million related to various other operating charges. The nine months ended May 31, 2016 included a pretax restructuring charge totaling $343 million ($0.76 a share), or after-tax $225 million ($0.50 a share), of which $119 million related to certain asset impairment charges and $224 million related to various other operating charges. For the three months and nine months ended May 31,2016, expenses of $1 million and $53 million, respectively, are included in cost of goods sold and $15 million and $290 million, respectively, are included in restructuring charges. The fiscal year 2016 guidance represents pretax restructuring charges of $0.72 to $0.78 a share.
(b) Environmental & Litigation Matters: Fiscal third quarter 2016 and 2015 included pretax charges of $16 million ($0.03 a share), or after-tax $10 million ($0.02 a share), and $40 million ($0.08 a share), or after-tax $25 million ($0.05 a share), respectively, for legacy litigation matters, arising under indemnities from the 2000 Pharmacia Separation Agreement. The nine months ended May 31, 2016 and 2015, included pretax charges of $28 million ($0.06 a share), or after-tax $17 million ($0.04 a share), and $40 million ($0.08 a share), or after-tax $25 million ($0.05 a share), respectively, for legacy litigation matters. The pretax charges in both periods were recorded in selling, general and administrative expenses. The fiscal year 2016 guidance represents pretax environmental and litigation matters charges per share of $0.06 a share.
(c) SEC Settlement Matters: Fiscal third quarter 2015 included pretax charges of $35 million, or $0.07 a share, which is not tax deductible, in selling, general and administrative expenses in connection with the previously disclosed SEC action. The nine months ended May 31, 2016 and 2015, included pretax income of $4 million, this income had less than a $0.01 effect on diluted earnings per share, and pretax charges of $35 million, or $0.07 a share, which is not tax deductible, respectively, in selling, general and administrative expenses in connection with the previously disclosed SEC action.
(d) Income Tax Benefit: Income tax impact of GAAP adjustments is the summation of the calculation income tax (benefit) charge related to each GAAP non-income tax adjustment. Income tax charge is calculated using the actual tax in effect during the period for the locality of the related non-GAAP adjustment. Item includes all non-GAAP adjustments except for Argentine-Related Tax Matters and Income on Discontinued Operations.
(e) Income on Discontinued Operations, Net: The company reports annual earn-out payments received as a result of the 2008 divestment of the Dairy Business as discontinued operations. The nine months ended May 31, 2016 and May 31, 2015, included pretax income on discontinued operations of $24 million ($0.05 a share), or after-tax $15 million ($0.03 a share), and $37 million ($0.08 a share), or after-tax $23 million ($0.05 a share), respectively. The fiscal year 2016 guidance represents pretax income from discontinued operations per share of $0.05.
(f) Argentine-Related Tax Matters: The three and nine months ended May 31, 2016, included a net tax charge of $219 million, or $0.50 a share and $0.49 a share, respectively. Due to losses generated in Argentina in the current year as well as recent uncertainties around the Argentina business, the company evaluated the recoverability of various items on the Statement of Consolidated Financial Position related to the Argentina business and determined an allowance against certain assets was necessary, which resulted in the net charge to the Company’s tax expense.