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Deere (DE) Q1 Earnings Top Estimates, FY24 Guidance Lowered
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Deere & Company (DE - Free Report) has reported first-quarter fiscal 2024 (ended Jan 28, 2024) earnings of $6.23 per share, beating the Zacks Consensus Estimate of $5.19. The bottom line fell 5 % from the prior-year quarter on lower shipment volumes.
Net sales of equipment operations (comprising Agriculture and Turf, Construction, and Forestry) were $10.5 billion, down 7 % from the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $10.4 billion. Total net sales (including financial services and others) were $12.2 billion, down 3.7% from the year-earlier quarter’s reading.
Operational Update
The cost of sales in the reported quarter was down 9.3% from the prior-year quarter to $7.2 billion. Total gross profit in the reported quarter improved 5.7% from the prior-year quarter’s level to $4.9 billion. Selling, administrative and general expenses rose 12% to $1.1 billion from the prior-year period.
Total operating profit (including financial services) fell 13% from the prior-year quarter to $2.2 billion in the fiscal first quarter.
The Production & Precision Agriculture segment’s sales fell 6.7% from the prior-year quarter to $4.9 billion primarily due to lower shipment volumes. The figure was higher than our model’s estimated revenues of $4.7 billion for the quarter. The operating profit in the segment fell 13.5% from the prior-year quarter to $1.04 billion. Gains from price realization were offset by higher R&D and SA&G expenses. Our estimate for the segment’s operating profit was $1.05 billion.
Small Agriculture & Turf sales were down 19.2% year over year at $2.4 billion on low volumes, somewhat offset by price realization. Our projection for the segment’s sales was $2.6 billion. Operating profit declined 27.1% year over year to $326 million. Lower sales, as well as elevated SA&G and R&D expenses, led to the decline. The figure lagged our estimate of operating profit of $341 million for the segment.
Construction & Forestry sales were $3.2 billion, flat year over year. The figure surpassed our projection of $2.9 billion. Operating profit decreased 9.4% year over year to $566 million. Gains from price realization and a favorable sales mix were offset by increased production costs, unfavorable impacts of foreign currency exchange, and lower volumes. Our estimate for the segment’s operating profit was $531 million.
Revenues in Deere’s Financial Services division were $1.4 million in the reported quarter, up 32.3% year over year. The figure came in line with our estimate of $1.4 billion. The segment’s operating income was $257 million in the quarter under review, up from $238 million in the prior-year comparable quarter. Our projection was $235 million for the quarter. Net income for Financial services improved 11.9% year over year to $207 million in the first quarter of fiscal 2024.
Financial Update
Deere reported cash and cash equivalents of around $5 billion at the end of the first quarter of fiscal 2024 compared with $7.4 billion at the end of fiscal 2023. Cash used in operating activities was $0.91 billion in the first quarter of fiscal 2024 compared with an outflow of $1.2 billion in the comparable quarter in the prior year quarter. At the end of the fiscal first quarter, the long-term borrowing was $39.9 billion, up from $38.4 billion at the end of fiscal 2023.
Guidance
Deere expects net income for fiscal 2024 between $7.50 billion and $7.75 billion, down from the prior stated $7.75-$8.25 billion . The stated range is much lower than net income attributable of $10.2 billion in fiscal 2023.
Net sales for Production & Precision Agriculture are expected to decrease 20% year over year in fiscal 2024 from the prior stated decline of 15-20%. Sales of Small Agriculture & Turf are expected to decline 10-15%. Sales of Construction & Forestry are projected to be down 5-10%, revised from a decline of 10%. The Financial Services segment’s net income is expected to be $770 million.
Price Performance
Shares of Deere have lost 4.9% in the past year compared with the industry’s 10.2% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.11 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 41.2% in the past year.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 76.7% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 32.2% in the past year.
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Deere (DE) Q1 Earnings Top Estimates, FY24 Guidance Lowered
Deere & Company (DE - Free Report) has reported first-quarter fiscal 2024 (ended Jan 28, 2024) earnings of $6.23 per share, beating the Zacks Consensus Estimate of $5.19. The bottom line fell 5 % from the prior-year quarter on lower shipment volumes.
Net sales of equipment operations (comprising Agriculture and Turf, Construction, and Forestry) were $10.5 billion, down 7 % from the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $10.4 billion. Total net sales (including financial services and others) were $12.2 billion, down 3.7% from the year-earlier quarter’s reading.
Operational Update
The cost of sales in the reported quarter was down 9.3% from the prior-year quarter to $7.2 billion. Total gross profit in the reported quarter improved 5.7% from the prior-year quarter’s level to $4.9 billion. Selling, administrative and general expenses rose 12% to $1.1 billion from the prior-year period.
Total operating profit (including financial services) fell 13% from the prior-year quarter to $2.2 billion in the fiscal first quarter.
Deere & Company Price, Consensus and EPS Surprise
Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote
Segmental Performance
The Production & Precision Agriculture segment’s sales fell 6.7% from the prior-year quarter to $4.9 billion primarily due to lower shipment volumes. The figure was higher than our model’s estimated revenues of $4.7 billion for the quarter. The operating profit in the segment fell 13.5% from the prior-year quarter to $1.04 billion. Gains from price realization were offset by higher R&D and SA&G expenses. Our estimate for the segment’s operating profit was $1.05 billion.
Small Agriculture & Turf sales were down 19.2% year over year at $2.4 billion on low volumes, somewhat offset by price realization. Our projection for the segment’s sales was $2.6 billion. Operating profit declined 27.1% year over year to $326 million. Lower sales, as well as elevated SA&G and R&D expenses, led to the decline. The figure lagged our estimate of operating profit of $341 million for the segment.
Construction & Forestry sales were $3.2 billion, flat year over year. The figure surpassed our projection of $2.9 billion. Operating profit decreased 9.4% year over year to $566 million. Gains from price realization and a favorable sales mix were offset by increased production costs, unfavorable impacts of foreign currency exchange, and lower volumes. Our estimate for the segment’s operating profit was $531 million.
Revenues in Deere’s Financial Services division were $1.4 million in the reported quarter, up 32.3% year over year. The figure came in line with our estimate of $1.4 billion. The segment’s operating income was $257 million in the quarter under review, up from $238 million in the prior-year comparable quarter. Our projection was $235 million for the quarter.
Net income for Financial services improved 11.9% year over year to $207 million in the first quarter of fiscal 2024.
Financial Update
Deere reported cash and cash equivalents of around $5 billion at the end of the first quarter of fiscal 2024 compared with $7.4 billion at the end of fiscal 2023. Cash used in operating activities was $0.91 billion in the first quarter of fiscal 2024 compared with an outflow of $1.2 billion in the comparable quarter in the prior year quarter. At the end of the fiscal first quarter, the long-term borrowing was $39.9 billion, up from $38.4 billion at the end of fiscal 2023.
Guidance
Deere expects net income for fiscal 2024 between $7.50 billion and $7.75 billion, down from the prior stated $7.75-$8.25 billion . The stated range is much lower than net income attributable of $10.2 billion in fiscal 2023.
Net sales for Production & Precision Agriculture are expected to decrease 20% year over year in fiscal 2024 from the prior stated decline of 15-20%. Sales of Small Agriculture & Turf are expected to decline 10-15%. Sales of Construction & Forestry are projected to be down 5-10%, revised from a decline of 10%. The Financial Services segment’s net income is expected to be $770 million.
Price Performance
Shares of Deere have lost 4.9% in the past year compared with the industry’s 10.2% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. (CDRE - Free Report) , AZZ Inc. (AZZ - Free Report) and Applied Industrial Technologies (AIT - Free Report) . CDRE currently sports a Zacks Rank #1 (Strong Buy), and AZZ and AIT carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.11 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 41.2% in the past year.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 76.7% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 32.2% in the past year.