Deere & Company (DE) Q4 2017 earnings summary

Executive summary

• FY17 net sales and revenues rose 12% to $29.74B; net income increased 42% to $2.16B, both fifth-highest totals in history.

• Results improved with recovering agricultural and construction markets, higher equipment shipments, favorable product mix, and cost discipline.

• Equipment operations generated $2.82B operating profit, up 50% YoY; operating cash flow was $2.2B.

Financial highlights

• Net sales were $25.89B, up 11%; total revenues were $29.74B, up 12% YoY.

• Net income attributable to Deere & Company was $2.159B; diluted EPS was $6.68 vs. $4.81 in FY16.

• Equipment operating profit increased to $2.821B from $1.880B; equipment net income was $1.707B vs. $1.058B.

• Cost of sales was 77.0% of net sales vs. 78.0% in FY16, reflecting price realization and favorable mix, partly offset by production and warranty costs.

Outlook and guidance

• FY18 net sales and revenues forecast to rise ~19%, equipment sales ~22%, and net income to reach ~$2.6B.

• FY18 equipment sales forecast up ~38% in Q1; currency translation expected to add ~3% in Q1 and ~2% for the year.

• A&T sales forecast up ~9%; C&F sales forecast up ~69%, including ~54% from Wirtgen; Financial Services net income forecast at ~$515M.

• Wirtgen forecast to add ~$3.1B to FY18 sales and, after purchase accounting and transaction costs, ~$75M operating profit and ~$25M net income.