In its earnings release, the company reported first quarter earnings of $1.31 per share, excluding non-recurring items, topping Street expectations. On the top line, revenues (equipment sales) rose 27.2% year/year to $5.97 billion, which easily fell short of expectations.
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% to 21% 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.
Deere has continued to experience strong increases in demand for its products as conditions in key markets show further improvement. Sales gains for the quarter, however, were moderated by bottlenecks in the supply chain and logistical delays in shipping products to our dealers.
Net sales of the worldwide equipment operations increased 27% for the quarter. Deere's completion of the acquisition of the Wirtgen Group (Wirtgen) in December 2017 added 5% to net sales for the quarter. Sales also included a favorable currency-translation effect of 3%. Equipment net sales in the United States and Canada increased 24%, with Wirtgen adding 1%. Outside the U.S. and Canada, net sales increased 33%, with Wirtgen adding 12%, and a favorable currency-translation effect of 5%.
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.
Looking ahead, the company issued upside guidance for the second quarter, calling for revenue (equipment sales) growth of +30-40%, which calculates to approximately $9.44-10.16 billion, which comes in above current expectations.
For the full year, the company raised revenue (equipment sales) growth expectations to +29% from +22%, which calculates to approximately $33.39 billion, which also comes in ahead of current expectations.
Company equipment sales are projected to increase by about 29% for fiscal 2018 and by 30-40% for the second quarter compared with the same periods of 2017. Of these amounts, Wirtgen is expected to add about 12% to Deere's net sales for the full year and about 16% for the second quarter. Also included in the forecast is a positive foreign-currency translation effect of about 3% for the year and about 4% for the second quarter. Net sales and revenues are projected to increase by about 25% for fiscal 2018.
Net income attributable to Deere & Company is forecast to be about $2.1 billion. The net income outlook includes an unfavorable impact of tax reform estimated at $750 million, representing the net impact of the tax provision recorded at the enactment date of tax reform, partially offset by a lower effective tax rate over the remainder of the year.