10-QPeriod: Q1 FY2012

DEERE & CO Quarterly Report for Q1 Ended Jan 31, 2012

Filed March 1, 2012For Securities:DE

Summary

Deere & Company (DE) reported solid financial results for the quarter ended January 31, 2012. Net income attributable to Deere & Company increased to $532.9 million, or $1.30 per diluted share, up from $513.7 million, or $1.20 per diluted share, in the prior year's comparable period. This growth was driven by an 11% increase in worldwide net sales and revenues, reaching $6,766.5 million, primarily fueled by a strong performance in both the Agriculture and Turf, and Construction and Forestry segments. The company's outlook remains positive, with projected sales increases for both the Agriculture and Turf (15%) and Construction and Forestry (18%) segments for fiscal year 2012. Despite some global economic uncertainties, Deere & Company anticipates favorable conditions in major agricultural markets and expects improved construction equipment markets. The company maintained a stable financial position, with total assets growing to $48.6 billion and a solid equity base, demonstrating resilience and a strategic focus on capitalizing on global demand for food, shelter, and infrastructure.

Financial Highlights

43 data points
Beta

Revenue

$6.77B

22.8% Gross Margin

Net Income

$533.00M

7.9% Net Margin

EPS (Diluted)

$1.30

Total Assets

$48.58B

Cash & Equivalents

$3.39B

Free Cash Flow

-$1.50B

Financial Statements
Beta
Revenue$6.77B
Cost of Revenue$4.58B
Gross Profit$1.54B
R&D Expenses$312.50M
SG&A Expenses$709.00M
Operating Income$873.00M
Interest Expense$192.10M
Net Income$533.00M
EPS (Basic)$1.32
EPS (Diluted)$1.30
Shares Outstanding (Basic)404.00M
Shares Outstanding (Diluted)408.40M

Key Highlights

  • 1Net income attributable to Deere & Company increased by 3.7% to $532.9 million for the quarter, with diluted EPS rising to $1.30 from $1.20 year-over-year.
  • 2Worldwide net sales and revenues grew by 11% to $6,766.5 million, driven by an 11% increase in equipment operations net sales.
  • 3Agriculture and Turf segment sales increased by 8%, and Construction and Forestry segment sales surged by 22%, indicating strong demand in core markets.
  • 4The company raised its fiscal year 2012 net income forecast to approximately $3,275 million.
  • 5Inventories increased significantly by $1,499 million year-over-year, reflecting higher production and sales volumes.
  • 6Deere & Company announced a quarterly dividend increase of approximately 12%, from $0.35 to $0.46 per share.

Frequently Asked Questions

The primary driver of revenue growth was an 11% increase in worldwide net sales and revenues, reaching $6,766.5 million. This growth was largely attributed to a strong performance in the company's core segments, particularly the Agriculture and Turf (up 8%) and Construction and Forestry (up 22%) divisions, benefiting from increased shipment volumes and price realization.

The Financial Services segment reported a slight increase in net income attributable to Deere & Company, rising to $119.1 million from $118.2 million year-over-year. This was supported by growth in the credit portfolio and wind energy credit revenues, though partially offset by higher crop insurance claims and increased operating expenses. The segment's operating profit was $175 million, up from $172 million in the prior year.

Deere & Company has a positive outlook for fiscal year 2012. They forecast worldwide sales for the Agriculture and Turf segment to increase by approximately 15% and Construction and Forestry segment sales to rise by about 18%. The company anticipates net income attributable to Deere & Company to be around $3,275 million for the full fiscal year, reflecting confidence in continued market demand.

Yes, inventories increased substantially by $1,499 million year-over-year to $5,677.7 million as of January 31, 2012. This increase is primarily attributed to higher production levels to meet anticipated sales growth and a general increase in demand, reflecting the company's strategy to capitalize on market opportunities.