Monstanto 2Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

More than just a seeds company

“just as we led the seeds revolution, we are driving the industry to expand the view on how we deliver yields and productivity to our grower customers.”

Expecting to double EPS over the next five years

“we are willing to back our confidence and long-term growth with a new target to at least double our ongoing EPS over the next five years.’

10-12m acres of soybeans

“while it’s early, we are very comfortable being able to target 10 million to 12 million acres in the upcoming season. That’s our biggest second year step up in soybeans.”

100m acre opportunity

“The majority of this next year’s expected step up will be in Brazil, but we will also begin commercial launch across Argentina, Paraguay and Uruguay passing another key strategic milestone in this 100 million acre opportunity.”

1B acre runway, $20 B opportunity for precision ag

“This year is a pivot point. We have some important proof points this year that increase our confidence in the ramp up to what we see as a 1 billion acre runway and a $20 billion market opportunity. As farms are increasingly digitized, precision ag can become an integrating point for information, seed, equipment and other inputs.”

Corn had a good but not great year

“I think corn had a good year not a great year. Beans picked up a lot of that slack, but if you look across the Americas we saw acreage contract and I think a big piece of our numbers reflects that contraction.”

Soy beans are having a record year

“our soybean business is having an absolutely record year driven by course of new products in soybeans and the build out of Roundup Ready to Yield, but also the portfolio advantage we have is those corn acres shifted to bean acres and we picked up on that.”

Take advantage of cheap debt to buyback stock

“Given the strength of our current balance sheet and our confidence in our growth prospects, we have decided to take advantage of the favorable debt market. By the end of FY ‘15, we intend to target the net debt to EBITDA ratio of 1.5. And one of the ways we will immediately put that structure to work is through a new 10 billion share buyback authorization, which includes our intent to use 6 billion in the near-term through an accelerated buyback program.”

seeds and traits business to drive growth

“Roundup is a great product, it’s a great cash generator, but for more than 2019 looking back it’s going to be our seeds and traits business that really drives that growth is the integration of the Climate Corp platform and how we integrate those two pieces together and that’s really going to be the central, that’s the central core of our growth story at Monsanto going forward.”

No new acres 20 years from now

“if you look forward than the next 20 years, there are no new acres. With one or two exceptions, there are no new acres and then sustainable intensification yield becomes more and more important. And the way you unlock that on a sustainable basis is providing better advice to the grower that allows him or her to get more bushels on that same footprint.”