10-QPeriod: Q1 FY2013

DEERE & CO Quarterly Report for Q1 Ended Jan 31, 2013

Filed February 28, 2013For Securities:DE

Summary

Deere & Company's first quarter fiscal year 2013 report (ending January 31, 2013) indicates a robust performance, with net income attributable to Deere & Company increasing by approximately 22% to $649.7 million, or $1.65 per diluted share, compared to $532.9 million, or $1.30 per diluted share, in the prior year's quarter. This growth was driven by a 10% increase in worldwide net sales and revenues, reaching $7.42 billion, primarily fueled by an 11% rise in equipment net sales. The agriculture and turf segment showed particularly strong growth with a 16% sales increase, while the construction and forestry segment experienced a 7% decline in sales. The company's financial services segment also contributed positively, with net income increasing year-over-year, driven by growth in the credit portfolio and improved crop insurance margins. Despite some macroeconomic uncertainties and concerns regarding global economic recovery and fiscal policies, Deere & Company's outlook for fiscal year 2013 remains positive, with projected equipment sales growth of approximately 6% and a full-year net income forecast of around $3.3 billion.

Financial Statements
Beta
Revenue$7.42B
Cost of Revenue$5.01B
Gross Profit$1.78B
R&D Expenses$356.50M
SG&A Expenses$781.50M
Operating Expenses$6.48B
Operating Income$1.03B
Interest Expense$180.10M
Net Income$650.00M
EPS (Basic)$1.67
EPS (Diluted)$1.65
Shares Outstanding (Basic)388.40M
Shares Outstanding (Diluted)393.00M

Key Highlights

  • 1Net income attributable to Deere & Company increased by 22% to $649.7 million ($1.65 per diluted share) for the first quarter of fiscal year 2013, up from $532.9 million ($1.30 per diluted share) in the prior year.
  • 2Worldwide net sales and revenues grew by 10% to $7.42 billion, driven by an 11% increase in equipment net sales.
  • 3The Agriculture and Turf segment saw significant growth with sales up 16%, while the Construction and Forestry segment experienced a sales decline of 7%.
  • 4Financial Services segment net income increased year-over-year, benefiting from portfolio growth and higher crop insurance margins.
  • 5Company provided a positive fiscal year 2013 outlook, forecasting equipment sales growth of approximately 6% and total net income of around $3.3 billion.
  • 6Cash and cash equivalents decreased by $980.1 million during the quarter, largely due to seasonal inventory buildup and changes in working capital.

Frequently Asked Questions

Revenue growth was primarily driven by an 11% increase in equipment net sales. This was largely due to higher shipment volumes and price realization across the company's segments, particularly the strong performance in the Agriculture and Turf sector, which saw a 16% sales increase.

The Agriculture and Turf segment performed very strongly, with sales up 16%. The Construction and Forestry segment experienced a sales decrease of 7%, mainly due to lower shipment volumes. The Financial Services segment showed improved net income, driven by growth in its credit portfolio and better crop insurance margins.

The company projects overall equipment sales to increase by about 6% for fiscal year 2013. They also anticipate net income attributable to Deere & Company to be approximately $3.3 billion for the full fiscal year, reflecting continued demand for farm machinery and gradual improvement in construction markets.

The company acknowledges several economic uncertainties, including government fiscal and monetary policies, the global economic recovery, sovereign debt issues, and potential capital market disruptions. These factors, along with weather volatility and commodity price fluctuations, could impact results. The company also notes the ongoing need to meet stringent emissions regulations for its products.