Summary
Deere & Company's first quarter of fiscal year 2018 filing (ending January 27, 2018) shows a significant shift in net income compared to the prior year, largely driven by the impact of U.S. tax reform legislation. While the company reported a net loss of $535.1 million ($1.66 per share) in the current quarter, this was heavily influenced by charges related to tax reform, including a write-down of deferred tax assets and costs associated with mandatory repatriation of foreign earnings. Excluding these significant tax-related charges, the operational performance appears stronger. Operationally, the company saw substantial growth in net sales and revenues, increasing by 23% to $6.913 billion, driven by strong demand in both agricultural and construction/forestry markets. The acquisition of Wirtgen in December 2017 significantly contributed to the sales growth in the construction and forestry segment. The company forecasts continued industry sales increases for both agricultural and construction equipment in 2018, positioning Deere to capitalize on these market trends. Financial services also reported a significant increase in net income, benefiting from tax reform and a larger average portfolio.
Financial Highlights
46 data points| Revenue | $6.91B |
| Cost of Revenue | $4.70B |
| Gross Profit | $1.27B |
| R&D Expenses | $356.80M |
| SG&A Expenses | $705.00M |
| Operating Expenses | $6.40B |
| Operating Income | $636.00M |
| Interest Expense | $286.30M |
| Net Income | -$535.00M |
| EPS (Basic) | $-1.66 |
| EPS (Diluted) | $-1.66 |
| Shares Outstanding (Basic) | 322.80M |
| Shares Outstanding (Diluted) | 322.80M |
Key Highlights
- 1Net sales and revenues increased by 23% to $6.913 billion in Q1 2018 compared to Q1 2017.
- 2The acquisition of Wirtgen in December 2017 contributed significantly to the 57% increase in Construction and Forestry segment sales.
- 3The Agriculture and Turf segment sales increased by 18% due to higher shipment volumes and favorable currency translation.
- 4Net income was negatively impacted by $1.243 billion in provisional income tax expenses related to U.S. tax reform, resulting in a net loss of $535.1 million for the quarter.
- 5Financial Services segment reported a substantial increase in net income to $425.3 million, aided by tax reform benefits and a higher average portfolio.
- 6The company forecasts continued growth in equipment sales for fiscal year 2018, with Agriculture and Turf sales up 15% and Construction and Forestry sales up 80%.
- 7Consolidated cash and cash equivalents decreased significantly by $5.420 billion, primarily due to the Wirtgen acquisition and associated outflows.