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Earnings Highlights and Review: Deere Reported a Robust Q2 Results; Topped Market Forecasts

Research Desk Line-up: Columbus McKinnon Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 8, 2017 / Thursday June 08 2017 Pro-Trader Daily publishes post-earnings coverage on Deere & Co. (NYSE: DE) following the Company's disclosure of its financial results for the second quarter fiscal 2017 (Q2 FY17) on May 19, 2017, the Moline, Illinois-based Company's worldwide net sales and net income grew 5% y-o-y and net income surged 62% y-o-y; outperforming market consensus estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

During Q2 FY17, Deere's total net sales and revenues rose to $8.29 billion from $7.88 billion recorded at the end of Q2 FY16. The Company's net sales also increased to $7.26 billion in Q2 FY17 from $7.11 billion in Q2 FY16. Meanwhile, the quarterly net sales numbers topped market expectations of $7.24 billion. The Company's quarterly sales included price realization of 2%, while foreign exchange rate did not have any material translation effect on net sales. Equipment net sales in the United States and Canada decreased 5% y-o-y; whereas, outside the US and Canada, net sales increased 14% y-o-y.

For the three months ended on April 30, 2017, the Company incurred total costs and expenses of $7.12 billion compared to $7.14 billion in the prior year's same quarter. The Company reported income of consolidated group before income taxes of $1.17 billion for Q2 FY17 versus $733.3 million in Q2 FY16.

The agricultural equipment manufacturer's net income attributable to Deere surged to $802.4 million, or $2.49 per diluted share, in Q2 FY17, from $495.4 million, or $1.56 per diluted share, in the year ago corresponding quarter. Meanwhile, Wall Street had expected the Company to report net income of $1.70 per share in the year ago same quarter.

Segment Performance

The Agriculture and Turf segment reported 1% y-o-y revenue growth during Q2 FY17, which stood at $5.79 billion. The segment's operating profit surged to $1.00 billion in Q2 FY17 from $614 million in Q2 FY16.

In Q2 FY16, Construction and Forestry segment's revenues rose 7% to $1.47 billion from $1.37 billion in the prior year's same quarter. The segment's operating profit also increased to $108 million in Q2 FY17 from $74 million of the segment's revenues in Q2 FY16.

During Q2 FY17, Financial Services segment contributed $716 million to total net sales and revenues, rising 10% from $651 million in the last year's comparable period. Meanwhile, the segment's operating profit came in flat during Q2 FY17 and stood at $160 million.

Cash Flow and Balance Sheet

In the first six months of FY17, Deere used $175.0 million as net cash in its operating activities compared to net cash used for operating activities $312.4 million in the prior year's comparable period. As of April 30, 2017, the Company had cash and cash equivalents balance of $4.53 billion compared to $4.13 billion, at the close of books on May 01, 2016. Furthermore, the Company's long-term borrowings as on April 30, 2017, was $23.25 billion compared to $24.59 billion as on May 01, 2016.

Dividend

In a separate press release on May 31, 2017, Deere's Board of Directors declared a regular quarterly dividend of $0.60 per share on common stock, payable on August 01, 2017, to stockholders of record on June 30, 2017

Outlook

In its guidance for full-year FY17, the Company expects Agriculture and Turf equipment worldwide sales to increase by about 8%. Construction & Forestry's worldwide sales for FY17 are forecasted to be up about 13%; whereas, full-year FY17 earnings forecasts were raised to $2 billion, with sales growth of 9%.

Stock Performance

At the closing bell, on Wednesday, June 07, 2017, Deere's stock rose slightly by 0.19%, ending the trading session at $125.29. A total volume of 2.14 million shares have exchanged hands. The Company's stock price soared 13.42% in the last three months, 23.69% in the past six months, and 43.50% in the previous twelve months. Moreover, the stock rallied 21.59% since the start of the year. The stock is trading at a PE ratio of 27.12 and has a dividend yield of 1.92%. The stock currently has a market cap of $39.99 billion.

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