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The agricultural machinery giant is using software, connectivity, and automation to boost farm productivity; cut down on fuel, chemical, and water use; and allow customers to meet input-efficiency and emissions goals. It upgraded its harvest automation system in 2025 to add predictive inputs, which enable farmers to measure crop variability and control ground speed. Autonomous tractors allow farmers to cover more ground during crop cycles, the company says. Meanwhile, Deere has introduced technologies like See &amp; Spray Ultimate, which deploys cameras and machine learning to target weeds.

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Based in Moline, Ill., this maker of tractors, combines, and other agricultural gear endured a tough 2024, as weather disruptions and trade tensions fueled a global downturn in farming. The slump in U.S. homebuilding, meanwhile, hurt its construction equipment division. Overall, Deere’s revenue dropped 16% year over year, to $51.7&nbsp;billion.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

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F500-2023-081-Deere

John Deere—the machinery and equipment company famous for its iconic green tractor—had one of its most profitable years ever in 2022, reaching $7 billion, up 20% from the previous year, as it took a page from the tech industry’s playbook, developing self-driving tractors, satellite-linked smart equipment, and a software-as-a-service business. 
<ul> 
 	<li>Revenues in 2022 grew 19% as the company was able to pass much of the increase in production costs on to farmers who were flush with cash after corn and soybean prices hit record highs.</li> 
 	<li>In May 2023 Deere announced a plan to connect remote farms in Brazil and the U.S. to state-of-the-art machinery via satellite.</li> 
 	<li>The tractor maker suffered a legislative setback in Colorado in April 2023 when Gov. Jared Polis signed a “right to repair” bill, enabling farmers to fix their own equipment, thus ending Deere’s monopoly on repairs of its machinery.</li> 
</ul>

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A staple of American manufacturing for nearly 200 years, Illinois-based Deere makes agricultural and construction machinery as well as diesel engines and lawn care equipment. In 2021, the company posted 24% year-over-year revenue growth. Profits jumped, too, with demand for its machinery snapping back as the global economy rebounded. Deere also smoothed its labor outlook for the near future by reaching a six-year labor agreement with the United Auto Workers union in November 2021, ending a five-week strike. After Russia’s invasion of Ukraine, Deere suspended shipments of machinery to Russia and Belarus.

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Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-88-Deere

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-319-Deere

John May is not even a full year into his tenure as only the 10th chief executive ever to lead the 183-year-old American icon. He finds himself at the helm of the $39.2 billion agricultural giant as it rolls with virus-related punches; Deere briefly suspended production of construction and forestry equipment at some facilities amid weakened demand and pivoted to manufacturing 400,000 face shields for health care workers. For 2019, the company's revenue rose 5.1% year-over-year and profits spiked by 37%, to $3.3 billion. But even before the pandemic, Deere said it expected sales to fall at least 10% in 2020.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-084-Deere

John May is seven months into his tenure as only the 10th chief executive ever to lead the 183-year-old American icon. He finds himself at the helm of the $39.2 billion agricultural giant as it rolls with virus-related punches; Deere briefly suspended production of construction and forestry equipment at some facilities amid weakened demand, and is now manufacturing 400,000 face shields for health care workers. The company's revenue rose 5.1% year-over-year and profits spiked by 37%, to $3.3 billion in 2019. But even before the pandemic, Deere said it expected sales to fall at least 10% in 2020.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Deere (commonly known as John Deere) is an agricultural giant that manufactures and sells tractors, harvesters, loaders, and other equipment used by farmers worldwide. Founded in 1837 as a maker of steel plows pulled by horses, the company has expanded into heavy machinery used for golf course maintenance, snow removal, and logging. The company introduced a self-driving tractor in 2022 and is pushing into machine learning to help increase agricultural production. As of 2024, it was among a small number of companies that have been on the Fortune 500 every year since the list’s inception in 1955.

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Deere (DE): Company Profile, Stock Price, News, Rankings

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Deere

deere

Good morning, and welcome to Deere and Company's Third 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. Josh Beale, Director of Investor Relations. Thank you. You may begin.

Hello. Welcome, and thank you for joining us on today's call. Joining me on the call today are Josh Jepsen, Chief Financial Officer Corey Reed, President, Worldwide Agriculture and Turf Division, Production and Precision Ag, Americas and Australia and Chris Seibert, Manager, Investor Communications. Today, we'll take a closer look at Deere's third quarter earnings, then spend some time talking about our end markets and our current outlook for fiscal twenty twenty five. 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 johndeere.com/earnings. First a reminder, this call is broadcast live on the Internet and recorded for future transmission and use by Deere and Company. Any other use, recording or transmission of any portion of this copyrighted broadcast without the expressed written consent of Deere is strictly prohibited. Participants in the call, including the Q and A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call.

This call includes forward looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances and other factors that are difficult to predict. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form eight ks, risk factors in the annual Form 10 ks, as updated by reports filed with the Securities and Exchange Commission. This call also may include financial measures that are not in conformance with accounting principles generally accepted in The United States Of America, GAAP. Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website @johndeere.comslashearnings under Quarterly Earnings and Events. I will now turn the call over to Chris Seibert.

Good morning and thank you for joining. John Deere's third quarter performance reflects the company's focus on disciplined execution amidst challenging market dynamics. Despite headwinds from tariffs, Deere's equipment operations delivered a 12.6% operating margin in the quarter. Global uncertainty and difficult fundamentals continue to weigh on customer sentiment in many of Deere's key end markets. However, over the course of the quarter, we also saw better than anticipated demand in several segments, reflecting pockets of optimism across the business.

After a slow start to the year, turf and compact utility tractor shipments in North America were better than expected, reflected improvement in consumer confidence and favorable weather conditions. Year over year retail sales also increased for both tractors in Europe and earthmoving and forestry equipment in North America, reversing several quarters of flat or declining sales. Amidst this backdrop, Deere's performance continues to demonstrate strong financial results. Production costs, inclusive of tariffs, remained favorable in our ag and turf businesses as a result of disciplined management, efficiency gains in our factories and favorable material costs. The actions that we have taken over the past eighteen months to manage inventories across the board have resulted in significant year over year declines across all business units and geographies, positioning the company well to respond to inflections in market demand.

And the additional incentives we have deployed are providing support to customer buying decisions in the current interest rate environment, notably North American earthmoving and the agricultural equipment market. Clearly, higher levels of global uncertainty persist. However, our order books remain solid. Select markets are showing early signs of positive inflection and importantly, we remain well positioned from both an inventory and structural cost perspective to respond when demand growth returns. We now begin with Slide three and our results for the third quarter.

Net sales and revenues were down 9% to DKK12.018 billion and net sales for the equipment operations were also down 9% to DKK10.357 billion. Net income attributable to Dier and Company was €1,289,000,000 or $4.75 per diluted share. Diving into our individual business segments, we'll start with Production and Precision Ag on Slide four. Net sales of €4,273,000,000 were down 16% compared to the third quarter last year, primarily due to lower shipment volumes and unfavorable price realization. Price realization was negative by just under one point.

This is a result of incremental pool funds we accrued during the quarter to support our dealers' efforts to aggressively address used inventory levels in North America. Currency translation was slightly positive. Operating profit was €580,000,000 with a 13.6% operating margin for the segment. The year over year decrease was primarily due to lower shipment volumes and an unfavorable sales mix. Next, we'll turn to Small Ag and Turf on Slide five.

Net sales were down 1% year over year, totaling €3,025,000,000 in the third quarter due to slightly lower shipment volumes partially offset by currency translation and price realization. Price realization was positive by about zero five point. Currency translation was also positive by roughly 1.5 points. Operating profit declined slightly year over year to €485,000,000 leading to a 16% operating margin. The decrease was primarily due to tariffs, partially offset by lower warranty expenses and lower production costs.

Slide six gives our 2025 industry outlook for ag and turf markets globally. In The U. S. And Canada, we continue to expect large ag equipment industry sales to be down approximately 30% in the fiscal year. Demand continues to be pressured by high interest rates, elevated used inventory levels in late model year machines and trade uncertainty, is partially mitigated by tight global stocks for grains and oilseeds, stable farm balance sheet supported by strong farmland values and the distribution of government funds.

For small ag and turf in The U. S. And Canada, industry demand is now projected to be down 10%. Dairy and livestock fundamentals remain strong, while capital investments in the segment remains muted due to high cost of expansion. Soft consumer confidence and elevated interest rates continue to weigh on purchase decisions in turf and compact utility tractors.

However, we saw improved sentiment and better than anticipated retail sales during the quarter, which supported our upward revision to the full year outlook. Shifting to Europe. Sentiment is trending favorably driven by strong dairy fundamentals, stabilizing interest rates and an improving arable outlook. We now expect the industry to be flat to down 5% in fiscal year twenty twenty five. In South America, we continue to project industry sales of tractors and combines to remain flat in 2025.

Positive sentiment in Brazil is supported by record crop production, improved corn and soy profitability levels and continued expansion of production rain acreage in the region. However, high interest rates, which continue to increase over the quarter and questions related to trade policy with The U. S, are causing some caution in the market. Industry sales for Asia are now expected to be flat to up 5%, driven by an improved outlook for the Indian tractor market. Moving on to our segment forecast beginning on Slide seven.

For production in Precision Ag, our net sales forecast for the full year remains down between 1520%. The forecast assumes roughly one point of positive price realization offset by one point of negative currency translation. For the segment's operating margin, our full year forecast remains between 15.517%. Slide eight covers our forecast for the Small Ag and Turf segment. With projected improvements in Europe, India and North American turf and compact utility tractors, we now expect net sales to be down about 10% this year.

This guide includes 0.5 of positive price realization as well as zero five point of positive currency translation. The segment's operating margin is now forecasted to be between twelve percent and thirteen point five percent in line with the improved sales outlook. Shifting now to Construction and Forestry on Slide nine. Net sales for the quarter were down 5% year over year to DKK 3,059,000,000.000 mainly due to unfavorable price realization. Price realization was negative, but just under five points.

Negative price in the quarter was driven by incremental incentive programs deployed in the North American earthmoving market, where competitive pricing pressure persists. Currency translation was positive by roughly 1.5 points. Operating profit of €237,000,000 was down year over year resulting in a 7.7% operating margin primarily due to unfavorable price realization and tariffs. These changes have been partially offset by a favorable product mix. Slide 10 provides an update to our 2025 Construction and Forestry industry outlook.

Industry sales for earthmoving equipment in The U. S. And Canada are still expected to be down approximately 10%, while compact construction equipment in The U. S. And Canada is now expected to be flat to down approximately 5%.

Construction markets remain stable with employment at all time highs and construction backlogs at above average levels. U. S. Government infrastructure spending remains elevated and continues to provide support to the industry. On the other hand, single family housing starts along with investment in multi family and commercial real estate markets are slowing due to higher interest rates and broader economic pressure.

Additionally, equipment replacement in the rental industry remains muted. All of these factors continue to drive caution in the market relative to capital investment. However, order activity over the course of the past quarter has trended more favorably. Global forestry markets are expected to remain flat to down 5%. The projection for the global roadbuilding market remains roughly flat.

North America is slightly lower year over year. However, growth in Europe and a slight recovery in China are contributing to keep industry levels roughly unchanged from 2024. Moving on to the Construction and Forestry segment outlook on Slide 11. 2025 net sales estimates remain down between 1015%. Net sales guidance for the year now includes flat currency translation and about two points of negative price realization, driven by the competitive pricing environment in earthmoving in North America.

The segment's operating margin is now projected to be between 8.510%, reflecting higher levels of tariff costs and lower price realization. Transitioning to our Financial Services operations on Slide 12. Worldwide Financial Services net income attributable to Deere and Company in the third quarter was $2.00 €5,000,000 Net income was higher due to lower provision for credit losses and prior year special items. For fiscal year twenty twenty five, our outlook increased to €770,000,000 Revised estimates for SA and G spending and provision for credit losses in 2025 drove the improvement from last quarter's forecast. Next, Slide 13 outlines our guidance for Dirham company net income, our effective tax rate and operating cash flow.

For fiscal year twenty twenty five, we tightened our outlook for net income from last quarter to now be between €4,750,000,000 and 5,250,000,000.00 Our forecast for net income is largely unchanged quarter over quarter. Recall, the top end of our guide from last quarter reflected a scenario where tariff rates moderated. Next, our guidance reflects an effective tax rate between 1921%. And lastly, cash flow expectations from the equipment operations remain in the range of 4,500,000,000.0 to €5,500,000,000 This concludes our formal comments. We'll now shift the discussion to address a few topics specific to the quarter.

Starting off with Diers' performance in the third quarter. Net sales declined approximately 9% year over year and we saw operating margin come in at 12.6%. Josh Beal, can you provide some additional color on what happened this quarter?

Yes, absolutely, Chris. There's definitely a lot going on in the quarter and plenty to unpack. You mentioned uncertainty in your opening comments, and I think that's probably a good place to start. Given challenging industry fundamentals and evolving global trade environment and ever changing interest rate expectations, our customers are operating in increasingly dynamic markets, which naturally drives caution as they consider capital purchases. The best way for us to function as a business during times like these is to focus on what we can control, namely execution items like production, inventory levels and cost.

Starting with production, our factories are running well across the business. We're delivering to our production plans, hitting our retail sales targets, and that's allowing us to sustain and even improve upon the significant inventory reductions that we've driven over the past couple of years. And that's true across all three of our business segments. In large ag, we're done with underproduction this year and are happy with where new inventory levels are positioned across the globe. Just to give you a sense of the work that we've done, in North America, two twenty horsepower and above tractor inventories are 45% lower year over year and combine inventories are down 25%.

Large tractor and combine inventories in Brazil are down over 50% from their peaks in late twenty twenty three. Tractor and combine inventories in Europe are down 10% to 15% over the past twelve months. These improvements aren't isolated to the large ag business. In small ag, less than 100 horsepower tractor inventory in North America is down 30% year over year, including sequentially down 15% in the past quarter. In earthmoving, our North American field inventories are between 2530% lower year over year.

In short, we feel like the hard work that we've done and the tough decisions we've made across the business over the past two years have a setup to respond as end markets inflect.

This is Corey. I want to take a second to double down on that point. We as an organization have intentionally and proactively responded to this downturn faster and more aggressively than ever before. The results of that work are apparent in the reductions that Josh just mentioned. We obviously don't have a crystal ball to know definitively when markets are However, we know that when that happens, nobody's better positioned to respond to it and to respond to the demand than us.

This is Jeffson. I agree with Corey's point. On top of that, the underproduction we've done this year in small ag and construction forestry should be a year over year tailwind to our production as we move into 2026 as we're enabling both businesses to build in line with retail demand next year. Thanks guys for that color.

And continuing with the theme of what we can control, the other big area is cost. And again, it starts with our factories. Our facilities have been running efficiently. We've taken costs out of our operations as we've adjusted to lower unit volumes this year. And as a result, when you look year over year, we're seeing favorable overhead comparisons.

On top of that, our supply management team in partnership with our supply base and our internal product design engineers continues to work diligently to drive material costs out of the business, and we're seeing that favorability again this quarter. Chris, you said this earlier, but I think it's notable to repeat that our ag and turf business remained production costs favorable in the quarter despite the impact of tariffs and inclusive of that impact.

Thanks for all your comments here. Can you please also unpack the impact on margins in the quarter?

Yes, absolutely. And there's really two significant callouts here. One is tariffs and the other is price. Starting with tariffs, that's obviously additional cost this year, which is contributing to the higher decremental margins. Tariff costs in the quarter were approximately $200,000,000 which brings us to roughly $300,000,000 in tariff expense year to date.

Based on tariff rates in effect as of today, our forecast for the pretax impact of tariffs in fiscal twenty twenty five is now adjusted to nearly $600,000,000 The primary drivers for the change from last quarter are increased tariff rates on Europe, India and steel and aluminum. The notable change this quarter was price realization. As you mentioned earlier, Chris, we saw negative price in the quarter in both Construction and Forestry and Large Ag. Let's start with Construction and Forestry. The price actions that we took in the quarter were reflective of a need to be aggressive on price in the North American earthmoving market, where competitive pressure has been tougher.

Importantly, what we saw was a favorable market response to these actions as our retail settlements were up mid single digits year over year in the third quarter. On top of that, we've seen a pickup in our order book where on a percentage basis, we're up mid teens year over year. Additionally, the continued strength in customer backlog, ongoing infrastructure spending and a potential boost from recently enacted bonus depreciation give us optimism for earthmoving retail demand as we exit 2025. Shifting to large ag, the negative price that you saw in the quarter was primarily driven by actions taken to address used inventory in North America, which remains our top priority in the region. Specifically, we added incremental pool funds to the North American channel.

It's important to note that the accrual for these programs drove pricing negative in the quarter, but that we've maintained our 2025 full year guide of approximately one point of positive price. The best way to think about that is we had room in our incentive budget to continue to support a healthy market and that we're putting those funds to work in the area of highest impact. Certainly, have more work to do to improve used inventory levels, but it's also important to note that we are seeing progress. As we've talked before, late model equipment has been a particular challenge in North America. Therefore, it's notable that over the course of the quarter, inventory levels of used model year 'twenty two and model year 'twenty three 8R tractors and combines decreased by over 10% for both product lines.

This is Corey again. The improvement that we're seeing in late model year equipment is encouraging. There's demand for these model years in the secondary market, and we're seeing that equipment move. The progress isn't limited to just tractors and combines.

Since the beginning of fiscal twenty twenty five, used deer sprayers in North America are down 20% and used deer planters are down over 30%. We're seeing the secondary market get healthier, and we remain committed to supporting our customers and our channel to continue that progress.

This is Jeffson. We should also mention the role that John Deere Financial is playing in supporting the used market. Pool funds can be deployed by our dealers to buy down rates our customers pay when they finance used equipment purchases, which is particularly valuable in a higher interest rate environment. Gender Financial's introduction of a split rate financing tool where dealers buy down the interest rate for the first two or three years of a five year note is proving to be particularly effective. The tenor of the lower rate term is a good fit for trade cycles of many customers and the cost of the rate buy down is less expensive for our dealers enabling their pool fund dollars to go further.

Thanks all for that color on the quarter. Let's shift gears a bit to looking ahead. Despite uncertainty around global grades, we're starting to see some positive trends in the ag industry, specifically outside of North America. Josh Beal, can you please elaborate a bit on why this is the case and what that means for us?

Sure, Chris. Let's do a quick walk around the world. In Europe, we continue to see robust cash flows in the dairy sector. Arable cash flow is also projected to improve as we see a recovery in yields in key markets following a challenging production season last year. Stable wheat and canola prices at supportive levels are adding confidence in the region along with stabilizing interest rates.

All of this is supportive for demand, which has driven a pickup in order activity for midsized tractors. In that segment, we've seen strong reception for Deere's recently introduced new lineup of six ms tractors, which are receiving high praise from customers and dealers alike. Moving to Asia, the improved outlook is mainly driven by India. Crop acreage has remained steady, support prices and agricultural credit are increasing and growing conditions have been favorable in the country. In South America, our projection for the year remains flat.

In Brazil, the sentiment is best described as cautious optimism. Growers are expected to be more profitable this year, driven by improved margins and strong production. High interest rates in the country, however, do somewhat temper expectations along with U. S. Tariffs, which could be particularly impactful on coffee and citrus growers.

In Argentina, grower sentiment is increasingly positive as above average yields and permanent reductions in export taxes are supportive for the industry. North America continues to be the most affected by trade dynamics, which translates to caution for equipment replacement. On a positive, global stocks to use ratios remain at low levels. Even if this year's Brazilian and U. S.

Corn crops are at the upper end of yield projections, global stocks to use would still be in line with historical averages. U. S.

Corn and soybean consumption levels are strong. However, the persistence of lower commodity prices continues to result in tighter margins for our customers. Recent ag policy legislation has been positive and potential developments in trade agreements and demand for renewable fuels could also be supportive. However, until there's more stability in the industry, we'd expect customers to continue to take a measured approach to capital investment.

This is Corey again. I'd like to add a couple of additional points on North America. First, when we talk about sentiment in the region, we need to differentiate between The U. S. And Canada. Canadian growers are benefiting from stronger prices for small grains and oilseeds, which make up over half of the crop receipts in Canada.

Weather conditions have also been favorable, driving expectations for better crop outcomes. Lastly, used equipment levels are in better shape in Canada than in The U. S. Even in The U. S, sentiment is different across the region across the various regions.

Growers in the West are doing better, and we've seen improving confidence in the Midwest with potential for strong yields in corn and soy fueling optimism. In fact, several Midwest dealers have mentioned recently seen increased quoting activity over the last thirty days. The Southeast Region is facing the most pressure where cotton economics are challenging at the moment.

Perfect. Thank you for that background here. Now with that context on fiscal year twenty twenty five and your comments around the current market environment, I'd like to shift to our model year 'twenty six early order programs in North America. Josh Beal, can you give us an update on where we are now?

Yes. Sure, Chris. Let's begin with level setting on where we are with regards to timing of the various North American early order programs. The EOP for sprayers opened in mid May and actually closes today. Planner EOP opened at the June and will close at the September.

Lastly, Combine EOP just opened at the August and will run through the December. The structure for all the EOPs was a little bit different this year as we generally shortened all the programs and introduced more flexibility for price adjustments given potential tariff changes. The announced list price increases for the active phases of all EOP products are between 24%. As a side note and as a reminder, North American tractors are on a rolling order book with roughly four to five months of visibility, providing confidence in our production plans as we close out the fiscal year. In terms of EOP progress, let's focus on sprayers, which as mentioned just closed today.

Based on the results of the EOP and expected order intake post EOP, which is based on historical activity, we project model year '26 sprayers to be down roughly 20% year over year.

Thanks, Josh. And I'd like to jump in with a little color on the sprayer EOP and what it might mean for North American products other product lines in North America. You need to first keep in mind that Sprayers are cycling on a different time line than other products. Given the timing of the model year 2024 EOP, along with the excitement for new technology in the product line, sprayer demand was actually up year over year in fiscal year 2024, while tractors and combines were down over 20% in the same year. Essentially, in 2025, sprayers are in year one of a down cycle versus year two for tractors and combines.

Additionally, as we've discussed, we currently have more uncertainty than ever in the North American ag market, which translates to the broadest range of outcomes for a following year than we've had in a long time. With EOP timing, customers are contemplating purchase decisions with a lot of unknowns for the year end. And as a result, many are preserving optionality. Depending on when they get greater clarity, customer ordering decisions for other product lines could be made under very different conditions. Because of this, I wouldn't over index on what Sprayer results might mean for other products in 2026.

Our focus and alignment with our dealers right now is on the controllables. Priority number one is jointly addressing used inventory levels. As I mentioned earlier, we've recently seen promising momentum on quoting activity. While uncertainty remains, we will continue to run our factories lean, maintain the flexibility needed to respond quickly. Our disciplined approach to managing new inventory along with our focus on used, positions us well as this cycle turns.

Thanks for that perspective, Corie. My final question is on technology. Last quarter, we talked about milestones we have reached with our Precision Ag solutions. Josh Beal, are there any recent changes or interesting facts you can share with us?

Yes, absolutely, Chris. Let's first talk about adoption. During our June investor event in Brazil, we shared regional adoption statistics for JDLink Boost, our satellite connectivity solution for areas where cell coverage is not sufficient. Approximately 70% of the acres in Brazil lack reliable cell coverage, which is why we focused on that market first. However, we've also been taking orders in The U.

S. Since January and went live this summer with availability in Canada, Australia and New Zealand. Across those four geographies, we've just crossed 1,000 units ordered. And combining that with South American demand, we've surpassed 5,000 global orders in this first year of availability. Demand for Precision Essentials, our bundle of foundational precision technologies, continues to be robust as well.

Since launching the offering last year, we've had 21,000 orders globally. Notably, adoption of Precision Essentials has been a catalyst for greater engagement in the John Operations Center. Since its launch, Precision Essentials has brought over 2,400 new customers into the John Deere Operations Center. And for those that were already in Op Center, we've seen a 35% increase in their engaged acres and a nearly 50% increase in their highly engaged acres since adopting the solution. That's contributing to overall engaged acre growth, where we've now surpassed four eighty five million acres across the globe, 30% of which are highly engaged.

This is Jeffson. That reminds me of one point to add. Earlier this year at Bauma, we showcased the John Deere Operations Center for road building, highlighting our ability to leverage investments that we've made in large and export and extend them to other segments. The road building op center adoption metrics to date are impressive. Over the course of the year, we've more than doubled active road building organizations to nearly 3,000 in the operation center. Thanks for

that add, Josh. It's really powerful to see how the adoption of DeerTek is scaling across other production systems. Transitioning to utilization, I think we should highlight the in season results of See and Spray that we've seen thus far. We've talked previously about the increased number of See and Spray units in the field this year. Beyond that unit growth, what's been particularly encouraging has been the higher levels of utilization that we're seeing this year from our 2024 cohort of machines, which are now in their second use season.

On average, twenty twenty four Sea and Spray units are running the technology on 30% more acres this year. Additionally, these same customers have added incremental Sea and Spray units to their fleet this season. This is evidence of the value that our customers are seeing in the technology.

Well said, Josh. Let me add something here related to our new precision harvesting features as well, which we introduced this year and are just starting to put to work in the field. We recently visited a large customer running the tech, and they're seeing an over 30% increase in throughput, measured in bushels per hour, with the use of harvest settings automation. Additionally, they reported more than 20% increase in machine productivity, or acres per hour, through the use of predictive ground speed automation. This is consistent with early season reports that have come in from the John Deere Operations Center, but it's always positive to hear it firsthand from a customer.

Thanks, all. Really exciting news here. Josh Jepsen, before we open the line for questions, would you like to share any final comments?

For sure, Chris. I'd like to start by expressing my appreciation to the Deere team for their tenacity and commitment to executing in the quarter. This helps all stakeholders, but specifically our dealers and customers to navigate through the current environment. The team's performance in the near term, focused on the things we can control, has prepared us well for the future. Through disciplined management of structural costs and the dedicated effort alongside our dealers to manage inventories, we've done the hard work to enable continued success going forward.

There's still a fair bit of uncertainty as we look ahead to next year. However, given reduced field inventory levels, our expectation is to build to retail demand across all our businesses will be beneficial, particularly in areas where we're seeing positive momentum as we finish 2025. In addition, we maintained our focus on the future by investing in and delivering products and solutions to our customers that are driving meaningful outcomes, reducing costs while improving productivity, yields and profitability. Delivering these outcomes in a down market enables the company to accelerate adoption and utilization of these solutions as market dynamics improve, driving further confidence in our ability to outpace historical performance going forward. We've managed downturns and trade uncertainty before.

That's part of our DNA. At the same time, we've structurally improved the business, allowing us to maintain robust levels of investment necessary for future growth. Ultimately, we remain incredibly well positioned and committed to delivering long term value for our customers and shareholders.

Thanks, Josh. Now let's open it up to analyst questions.

We're now ready to begin the Q and A portion of the call. The operator will instruct you on the polling procedure. In consideration of others and to allow more of you to participate in the call, please limit yourself to one question. If you have additional questions, we ask that you rejoin the queue.

Thank you very much. As we are beginning the question and answer session now. Our first question today is from Tammy Zakaria with JPMorgan. Your line is open.

Hey, good morning. Thank you so much for taking my questions. My first question is on your comment that you want to produce to retail demand next year. Just so I understand just so we understand, in a scenario where, let's say, retail sales are up 5% or up 10, are you expecting to be up your production to be up similarly? Or could it be up more because you're underproducing this year?

Hey, Tami, thanks for the question. First and foremost, as we mentioned in the comments, we feel really good about the progress that we've made thus far in fiscal twenty twenty five on our inventory levels in the field. And as we mentioned, that's really across all three segments. Large ag was in good shape to start the year. We've continued to bring that down.

In small ag and turf and construction and forestry, both of those businesses, we did about 10% under production this year in fiscal twenty twenty five. We've seen inventories come down. As I mentioned, small tractors in North America, less than 100 horsepower tractors, down about 30% year over year, 15% sequentially in the quarter, so really good progress. We'll do a little bit more in Q4 there, but we've made really good progress and again, about 10% under production. C and F, that was really front half loaded.

Really in the first quarter, we did it under production. So, you know, as a setup to your question, what that means, you know, for 2026, you know, large ag pretty much in retail this year. So whatever happens with retail next year, that'll be the change. Plus five, you know, in your hypothetical would be pretty similar on the large ag side. Small ag and turf and construction and forestry, they'll get some lift building in line with retail next year, again, down 10% to retail in both of those segments this year.

So there's some potential left as we build in line with retail in 2026. Thanks, Tammy.

Understood. Our Thank next question is from Angel Castillo with Morgan Stanley. Your line is now open.

Hi. Thanks for taking my question. Just wanted to expand a little bit more on the early order programs. Completely understand your comments on why we shouldn't extrapolate sprayers. But if you could maybe talk a little bit more about just what you're seeing in planters, which are maybe a little bit further along and maybe just even very early days on combines and also just the commentary you made on quoting activity.

Just to the extent that you have the ability to kind of see how those are trending and how much better that might be versus sprayers, that would be helpful.

Yes, sure. I'll start. And Corey, feel free to add in here. I mean, planters, Angel, it's it's you know, we're we're a little bit more than halfway through the program at at this point in time. I mean, I think it's fair to say, you know, given, you know, the the uncertainty in the market the past, you know, past month and a half, two months, we've been cautious ordering on the planner side.

Candidly, customers have the optionality to wait till the end of that. Typically see a ramp up towards the back part of the EOPs, especially in an environment like this. And so early days on the Planer program. And then Combine, as we mentioned, it opened on January, so very, very early. Early returns are good, but it's early in that segment.

I think don't read too much into that either as well as we need to see that play out over the next several months. Corey, any additional thoughts on what we're seeing?

No. I think you summarized it well. We expect based on where all the external policy factors are, people are going to wait and see a little bit. But we've been pleased as we've opened the combine program with some of the response that we've seen.

Yes. I think the other thing we're watching too is particularly here in the Midwest, but we see relatively large production. We think we're going to have good yields. And one thing that's true over time is more bushels will drive better outcomes for customers, which can in turn drive demand incrementally, whether that's pulling used equipment into the harvest or purchase decisions post harvest new end use. So a lot to see here and we'll learn a lot here over the next sixty days. Thanks, Angel.

Our next question now is from Steven Fisher with UBS. And your line is open.

Thanks. Good morning. So it seems like the implied pricing in PPA in Q4 is positive. And I guess it's a range depending on how you round it. But curious what the puts and takes of that inflection are in terms of passing along tariffs versus removing any discounts related to helping incentivize the used sales?

How well do you think the market can bear that higher pricing at this point?

Deere (DE) Q3 2025 Earnings Call Transcript

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