Deere & Co. (NYSE: DE) reported fiscal second-quarter 2018 results before markets opened Friday. The farm and heavy equipment maker posted diluted earnings per share loss of $3.67 on revenues of $10.72 billion. In the same period a year ago, the company reported earnings per share (EPS) of $2.50 on revenues of $8.29 billion. First-quarter results also compare to consensus estimates for EPS of $3.29 and $9.83 billion in revenues.

Adjusted to exclude favorable changes in U.S. tax law, second-quarter EPS would have been $3.14 on net income of $1.03 billion. This number is the one analysts had estimated to be higher and the miss is costing Deere in premarket trading.

Year over year, quarterly net sales in the worldwide equipment operations group rose 34%. Operating profit rose from $700 million in the year-ago quarter to $1.1 billion, including a favorable tax adjustment of $207 million.

For fiscal year 2018 Deere raised its estimate for equipment sales growth from 29% to “about” 30%, including a 1% benefit from currency exchange effects. For the third quarter, sales are expected to rise by about 35% year over year, including a 1% currency exchange benefit. Deere’s estimate of net sales growth for the year rose from a prior forecast of 25% to “about” 26%, and net income is now pegged at $2.3 billion, an increase of $200 million due to the effects of the new tax law. Excluding a tax benefit of $803 million, full-year net income is expected to be around $3.1 billion. Based on 329.2 million shares outstanding, that pencils out to about $9.42 per share.

Analysts have forecast fiscal third-quarter revenues at $8.86 billion and EPS at $2.57. For the 2018 fiscal year, sales are expected to total $33.48 billion and EPS is pegged at $9.46.

CEO Samuel R. Allen said:

Farm machinery sales in both North and South America are making solid gains and construction equipment sales are continuing to move sharply higher. During the quarter, Deere made significant progress working with its suppliers to ramp up production and ensure that products reach customers in a timely manner. At the same time, we are experiencing higher raw-material and freight costs, which are being addressed through a continued focus on structural cost reduction and future pricing actions.

Shares of Deere traded down about 1.3% at $145.00 in the premarket Friday, in a 52-week range of $112.87 to $175.26. The consensus 12-month price target was $183.75 before the report and the high target was $231.00.

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