Deere & Company (NYSE:DE) Q4 2017 Earnings Conference Call Transcript

Nov 22, 2017 • 10:00 am ET

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Deere & Company (NYSE:DE) Q4 2017 Earnings Conference Call Transcript

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Operator
Operator

Welcome. Good morning and welcome to Deere & Company's Fourth Quarter Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session of today's conference.

I would now like to turn the call over to Mr. Tony Huegel, Director of IR. Thank you. You may begin.

Executive
Tony Huegel

Hello. Also on the call today are, Raj Kalathur, our CFO; and Josh Jepsen, Manager, Investor Communications. Today, we'll take a closer look at Deere's fourth quarter earnings, our markets and our initial outlook for fiscal 2018. After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at www.johndeere.com/earnings.

First, a reminder. This call is being broadcast live on the Internet and recorded for future transmission and use by Deere & Company. Any other use, recording or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call.

(Forward-Looking Cautionary Statements)

This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America, or GAAP. Additional information concerning these measures, including reconciliations to comparable GAAP measures is included in the release and posted on our Web site at www.johndeere.com/earnings under Quarterly and Events.

Josh?

Executive
Josh Jepsen

Today, John Deere announced its fourth quarter financial results and the end to another successful year. In fact, sales and earnings for 2017 were the fifth highest in company history. Our performance was helped by improving markets for farm and construction equipment and also by our ongoing success establishing a broad-based product portfolio and a flexible cost structure. As a result, Deere has remained well-positioned not only to serve its present customers, but also to make investments needed to drive growth and attract even more customers in the future.

Now, let's take a closer look at the fourth quarter in detail beginning on slide 4. Net sales and revenues were up 23% to just over $8 billion. Net income attributable to Deere & Company was $510 million. EPS was $1.57 in the quarter.

On slide 5, total worldwide equipment operations net sales were up 26% to about $7.1 billion. Price realization in the quarter was positive by 1 point. Currency translation was positive by 2 points. Turning to a review of our individual businesses. Let's start with Ag and Turf on slide 6. Net sales were up 22% in the quarter-over-quarter comparison. All regions of the world were higher in the quarter. The increase was led by the U.S. and the EU 28.

Operating profit was $584 million, up 57% versus the fourth quarter of 2016. The increase in operating profit was primarily driven by higher shipment volumes and favorable sales mix, partially offset by higher production costs and higher selling, administrative and general expenses.

Operating