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Deere Reports First-Quarter Loss of $535 Million, Including Effect of U.S. Tax Reform Legislation; Adjusted Net Income Totals $430 Million | KTIC Radio

Deere Reports First-Quarter Loss of $535 Million, Including Effect of U.S. Tax Reform Legislation; Adjusted Net Income Totals $430 Million

MOLINE, Ill.,  /PRNewswire/ — Deere & Company

reported a net loss of $535.1 million for the first quarter ended

January 28, 2018, or $1.66 per share, compared with net income of

$199.0 million, or $0.62 per share, for the quarter ended January 29,

2017.

Affecting first-quarter 2018 results were charges to the provision for

income taxes due to the enactment of U.S. tax reform legislation on

December 22, 2017 (tax reform). The provisional income tax expense

includes a write-down of net deferred tax assets of $715.6 million,

reflecting a reduction in the U.S. corporate tax rate from 35 percent

to 21 percent beginning on the enactment date, as well as the cost of

a mandatory deemed repatriation of previously untaxed non-U.S.

earnings of $261.6 million, partially offset by a favorable reduction

in the annual effective tax rate and other adjustments of $12.1

million. Without these adjustments, first-quarter net income would

have been $430.0 million, or $1.31 per share. (Information on non-GAAP

financial measures is included in the appendix.)

Worldwide net sales and revenues for the first quarter increased 23

percent, to $6.913 billion, compared with $5.625 billion for the same

period last year. Net sales of the equipment operations were $5.974

billion for the quarter compared with $4.698 billion a year ago.

“Deere has continued to experience strong increases in demand for its

products as conditions in key markets show further improvement,” said

Samuel R. Allen, chairman and chief executive officer. “Sales gains

for the quarter, however, were moderated by bottlenecks in the supply

chain and logistical delays in shipping products to our dealers. In

line with strengthening conditions, we have raised our sales and

adjusted-earnings forecasts for 2018 and have confidence we will be

able to fulfill the needs of our customers over the course of the

year.”

 

Summary of Operations

Net sales of the worldwide equipment operations increased 27 percent

for the quarter. Deere’s completion of the acquisition of the Wirtgen

Group (Wirtgen) in December 2017 added 5 percent to net sales for the

quarter. Sales also included a favorable currency-translation effect

of 3 percent. Equipment net sales in the United States and Canada

increased 24 percent, with Wirtgen adding 1 percent. Outside the U.S.

and Canada, net sales increased 33 percent, with Wirtgen adding 12

percent, and a favorable currency-translation effect of 5 percent.

Deere’s equipment operations reported operating profit of $419 million

for the quarter, compared with $255 million for the period in 2017.

Results for the quarter included an operating loss for Wirtgen of $92

million, attributable to the unfavorable effects of purchase

accounting and acquisition costs. Excluding the Wirtgen loss, the

improvement was primarily driven by higher shipment volumes and lower

warranty costs, partially offset by higher production costs. In

addition, the prior period included a gain on the sale of SiteOne

Landscapes Supply, Inc. (SiteOne), and incurred expenses associated

with a voluntary employee-separation program.

The company’s equipment operations reported a net loss of $964 million

for the first quarter, compared with net income of $85 million for the

same period last year. In addition to the operating factors mentioned

above, the quarter was unfavorably affected by a provisional income

tax expense and adjustments of $1.243 billion related to tax reform.

Financial services reported net income attributable to Deere & Company

of $425.3 million for the quarter compared with $114.4 million for the

same period last year. The increase was largely attributable to a

provisional income tax benefit of $278.1 million related to tax

reform. Additionally, quarterly results benefited from a higher

average portfolio and lower losses on lease residual values. Last

year’s results included expenses associated with a voluntary

employee-separation program.

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