Deere beats by $0.13, beats on revs; guides for Q1 including Wirtgen Group acquisition; guides FY18 above consensus (139.23)
- Reports Q4 (Oct) earnings of $1.57 per share, $0.13 better than the Capital IQ Consensus of $1.44; revenues rose 25.6% year/year to $7.09 bln vs the $6.91 bln Capital IQ Consensus.
- Deere's equipment operations reported operating profit of $669 million for the quarter and $2.821 billion for the full year, compared with $354 million and $1.880 billion in 2016. The improvement for the quarter was primarily driven by higher shipment volumes, a favorable product mix and price realization, partially offset by higher production costs, higher selling, administrative and general expenses and an impairment charge for international construction and forestry operations.
- Co issues guidance for Q1, sees Q1 revs of +38% YoY (including F/X and acquisition benefit -- see below) to ~$6.48 bln, may not be comparable to $5.39 bln Capital IQ Consensus Estimate.
- Co issues guidance for FY18, sees FY18 revs (including F/X and acquisition see below) of +22% YoY to ~$31.6 bln ($28.5 bln excluding impact from acquisition), may not be comparable to $27.91 bln Capital IQ Consensus Estimate.
- Guidance Details: Company equipment sales are projected to increase by about 22 percent for fiscal 2018 and by about 38 percent for the first quarter compared with the same periods of 2017. Included in the forecast is a positive foreign-currency translation effect of about 2 percent for the year and about 3 percent for the first quarter. Net sales and revenues are projected to increase about 19 percent for fiscal 2018, with net income attributable to Deere & Company of about $2.6 billion.
- The acquisition of the Wirtgen Group, expected to close in December 2017, is forecast to contribute about $3.1 billion in net sales in fiscal 2018. Wirtgen is expected to add about 12 percent to Deere's sales for the full year and about 6 percent for the first quarter in comparison with 2017. After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.