Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research in sectors with strong secular tailwinds [1] Investment Philosophy - The investor is self-educated and has been active in the investment field for 10 years, currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to provide valuable analysis and receive feedback from other investors [1] - The analysis aims to help readers focus on the key drivers of long-term equity value, promoting both analytical rigor and accessibility [1]

Group 1 - Global agricultural machinery manufacturer Deere & Co. anticipates a potential decline in sales in Brazil by a single-digit percentage in 2026 due to global uncertainties, including U.S. tariffs and high interest rates in Brazil [1][2] - The vice president of sales and marketing for Deere's Brazil unit indicated that a decline of 5% to 6% is possible, despite a more positive outlook for 2025 [2] - The company reported a global sales figure of $55 billion but does not disclose sales by country or region [3] Group 2 - High financial costs in Brazil, with interest rates reaching up to 18%, are creating challenges for clients in the agribusiness sector [3] - Political tensions, including the trial of former President Jair Bolsonaro and strained relations between U.S. President Trump and Brazilian President Lula da Silva, are contributing to uncertainties in the market [3][4] - The agribusiness industry is characterized by high and long-term investments, and uncertainties are causing discomfort for clients, leading to concerns about worsening conditions [4]

Key Takeaways Deere has raised dividends eight times in five years, more than doubling its quarterly payout.The company returned $5.6B to shareholders in 2024, 81% of equipment operations cash flow.DE expects fiscal 2025 net income of $4.75-$5.25B, down about 30% year over year.Deere & Company (DE) has emerged as a standout in the Manufacturing - Farm Equipment industry, consistently delivering dividend yields above the industry average despite mounting challenges for both the company and the broader market ...

Investors interested in Manufacturing - Farm Equipment stocks are likely familiar with Agco (AGCO) and Deere (DE) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision ...

Core Insights - Deere & Company has acquired GUSS Automation, enhancing its portfolio in autonomous agricultural technology, particularly in sprayers for orchards and vineyards [1][10] - The acquisition aims to reduce operator error, labor costs, and material waste, addressing current industry needs [1] - GUSS Automation has deployed 250 machines globally, covering 2.6 million acres and achieving 500,000 autonomous hours [1] Technology Integration - GUSS sprayers utilize GPS, LiDAR, and vehicle sensors, allowing a single operator to manage up to eight machines, thus reducing labor costs and downtime [2] - The Smart Apply Intelligent Spray Control System, acquired by Deere, optimizes spray volumes based on foliage density, potentially saving up to 50% in chemical and water usage [3][4] Strategic Direction - Deere's strategy focuses on expanding its autonomous solutions to help high-value crop growers tackle challenges like labor shortages and rising input costs [5] - The company aims to strengthen its leadership in advanced agricultural technology through these innovations [5] Competitive Landscape - Competitors like CNH Industrial and Komatsu are also enhancing their technology-driven solutions, with CNH focusing on AI and Komatsu leveraging ICT for improved productivity [6][7][8] Financial Performance - Deere's shares have increased by 12.6% this year, outperforming the industry growth of 10.8% and the S&P 500's 9.2% [9] - The forward 12-month Price/Earnings ratio for Deere is 23.23X, higher than the industry average of 21.43X and its five-year median of 15.83X [11] - The Zacks Consensus Estimate for Deere's fiscal 2025 earnings is $18.62 per share, reflecting a year-over-year decline of 27.3%, with a projected growth of 12.1% for 2026 [12]

Key Takeaways Deere shares have gained 13% YTD, outpacing its industry, sector and the S&P 500.DE's Q3 sales decreased 9% and earnings per share declined 24% year over year.Deere cut its FY25 net income outlook to $4.75-$5.25B, well below last year's $7.1B.Deere & Company (DE) shares have gained 12.8% year to date, outperforming the Zacks Manufacturing - Farm Equipment industry’s 11.5% growth. In contrast, the broader Zacks Industrial Products sector has gained 6.7% and the S&P 500 gained 9.9%.DE Stock's YT ...

Core Viewpoint - Deere & Co (NYSE:DE) is facing challenges in recovering from a significant post-earnings decline and is currently testing a historically bullish trendline amid external factors like tariffs [1] Group 1: Stock Performance - Deere's stock has struggled since mid-August, experiencing a bear gap of 6.8% after earnings, distancing itself from its record high of $533.78 reached on May 16 [1] - Currently priced at $475.39, a potential upward movement could bring the stock to $506.29, effectively reversing most of its August decline [2] Group 2: Technical Analysis - The stock is within 0.75 of the 200-day trendline's 20-day average true range (ATR), having spent over 80% of the last 10 days and two months above this level [2] - Historical data indicates that similar conditions have led to a 60% chance of the stock being higher one month later, with an average gain of 6.5% [2] Group 3: Options Market - Options traders are currently pricing in low volatility expectations for Deere, as indicated by a Schaeffer's Volatility Index (SVI) of 22%, which is in the low 9th percentile of its annual range [4]

Leadership Changes - Deere & Company has announced key leadership changes to advance its Smart Industrial Strategy, focusing on intelligent and connected machines to enhance customer economic value [1] - John May, chairman and CEO, emphasized the importance of building a purpose-driven leadership team dedicated to customer success [2] New Appointments - Cory Reed has been appointed president of Lifecycle Solutions, Supply Management, and Customer Success, overseeing global aftermarket, customer support, supply chain, precision upgrade, and business transformation initiatives [2][8] - Justin Rose will take on the role of president for the Worldwide Agriculture & Turf Division: Small Agriculture and Turf, responsible for the Europe, Africa, and Asia markets [4][7] - Deanna Kovar has been named president of the Worldwide Agriculture & Turf Division: Production and Precision Ag, covering the Americas and Australia markets, focusing on major equipment and technology solutions for production-scale agriculture [5][6]

[Item 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents the company's core financial statements, including consolidated income, comprehensive income, balance sheets, cash flows, and changes in stockholders' equity [STATEMENTS OF CONSOLIDATED INCOME](index=3&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20INCOME) This section provides a snapshot of Deere & Company's financial performance for the three and nine months ended July 27, 2025, and July 28, 2024, revealing a decline in net sales and revenues and a significant decrease in net income attributable to Deere & Company for both periods Consolidated Income Statement Highlights (Millions of Dollars, except per share amounts) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net Sales and Revenues | $12,018 | $13,152 | $33,290 | $40,572 | | Total Costs and Expenses | $10,418 | $10,797 | $28,458 | $32,885 | | Income of Consolidated Group before Income Taxes | $1,600 | $2,355 | $4,832 | $7,687 | | Provision for income taxes | $339 | $625 | $905 | $1,845 | | Net Income Attributable to Deere & Company | $1,289 | $1,734 | $3,962 | $5,855 | | Basic EPS | $4.76 | $6.32 | $14.61 | $21.13 | | Diluted EPS | $4.75 | $6.29 | $14.57 | $21.04 | | Dividends declared | $1.62 | $1.47 | $4.86 | $4.41 | [STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME](index=4&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20COMPREHENSIVE%20INCOME) This section details the comprehensive income for the three and nine months ended July 27, 2025, and July 28, 2024, highlighting the impact of other comprehensive income (loss) items, particularly a significant positive cumulative translation adjustment in 2025 compared to a negative one in 2024 Consolidated Comprehensive Income Highlights (Millions of Dollars) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net Income | $1,271 | $1,731 | $3,938 | $5,846 | | Other Comprehensive Income (Loss), Net of Income Taxes | $300 | $(197) | $605 | $(254) | | Comprehensive Income | $1,571 | $1,534 | $4,543 | $5,592 | | Comprehensive Income Attributable to Deere & Company | $1,587 | $1,537 | $4,561 | $5,600 | [CONDENSED CONSOLIDATED BALANCE SHEETS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position as of July 27, 2025, October 27, 2024, and July 28, 2024, showing a slight increase in total assets and stockholders' equity from October 2024 to July 2025, while total liabilities decreased Consolidated Balance Sheet Highlights (Millions of Dollars) | Metric | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Total Assets | $107,817 | $107,320 | $107,841 | | Total Liabilities | $82,553 | $84,395 | $84,692 | | Total Stockholders' Equity | $25,180 | $22,843 | $23,065 | [STATEMENTS OF CONSOLIDATED CASH FLOWS](index=6&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20CASH%20FLOWS) This section outlines the cash flows from operating, investing, and financing activities for the nine months ended July 27, 2025, and July 28, 2024, indicating a decrease in net cash provided by operating activities but a significant reduction in net cash used for investing activities in 2025, leading to an overall net increase in cash Consolidated Cash Flow Highlights (Nine Months Ended, Millions of Dollars) | Metric | July 27, 2025 | July 28, 2024 | | :------------------------------------------------ | :-------------- | :-------------- | | Net cash provided by operating activities | $3,464 | $4,139 | | Net cash used for investing activities | $(801) | $(3,671) | | Net cash used for financing activities | $(1,557) | $(789) | | Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | $108 | $(6) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $1,214 | $(327) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $8,847 | $7,293 | [STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY](index=8&type=section&id=STATEMENTS%20OF%20CHANGES%20IN%20CONSOLIDATED%20STOCKHOLDERS%27%20EQUITY) This section details the changes in consolidated stockholders' equity for the three and nine months ended July 27, 2025, and July 28, 2024, showing an increase in total stockholders' equity primarily driven by net income and other comprehensive income, despite share repurchases and dividends declared Changes in Consolidated Stockholders' Equity (Nine Months Ended, Millions of Dollars) | Item | July 27, 2025 | July 28, 2024 | | :----------------------------------- | :-------------- | :-------------- | | Balance October 27, 2024 / October 29, 2023 | $22,843 | $21,789 | | Net income (loss) | $3,963 | $5,856 | | Other comprehensive income (loss) | $599 | $(254) | | Repurchases of common stock | $(1,047) | $(3,257) | | Dividends declared | $(1,320) | $(1,223) | | Balance July 27, 2025 / July 28, 2024 | $25,180 | $23,065 | [CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)](index=9&type=section&id=CONDENSED%20NOTES%20TO%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides detailed explanations and supplementary information for the interim consolidated financial statements [(1) ORGANIZATION AND CONSOLIDATION](index=9&type=section&id=Note%201%20ORGANIZATION%20AND%20CONSOLIDATION) This note describes Deere & Company's business structure, operating segments (PPA, SAT, CF, FS), and fiscal year definition. It also details the company's 50% ownership interest in Banco John Deere S.A. (BJD), a variable interest entity (VIE) in Brazil, outlining the company's carrying value and maximum exposure to loss related to BJD - Deere & Company manages its business through four operating segments: Production and Precision Agriculture (PPA), Small Agriculture and Turf (SAT), Construction and Forestry (CF), and Financial Services (FS)[13](index=13&type=chunk) - The company uses a 52/53 week fiscal year, with the third quarter ending on the last Sunday of the reporting period. Fiscal year 2025 will contain **53 weeks**[14](index=14&type=chunk) Carrying Value of Assets Related to VIE (Banco John Deere S.A.) and Maximum Exposure to Loss at July 27, 2025 (Millions of Dollars) | Item | Amount | | :------------------------------------------ | :----- | | Receivables from unconsolidated affiliates – "Other receivables" | $516 | | Investments in unconsolidated affiliates – "Other assets" | $395 | | **Carrying value of assets related to VIE** | **$911** | | Guarantees | $153 | | **Maximum exposure to loss** | **$1,064** | [(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS](index=9&type=section&id=Note%202%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) This note explains that the interim financial statements are unaudited and prepared in accordance with SEC rules, highlighting the use of estimates. It also lists new accounting pronouncements adopted in 2025 and those to be adopted in future periods, none of which had or are expected to have a material effect on the consolidated financial statements, except for ongoing assessments - Interim consolidated financial statements are unaudited and prepared according to SEC rules, with certain information condensed or omitted[18](index=18&type=chunk) - Management uses estimates and assumptions in financial statements, and actual results could differ from those estimates[19](index=19&type=chunk)[20](index=20&type=chunk) - The company adopted ASU 2023-05 (Business Combinations – Joint Venture Formations) and ASU 2022-03 (Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions) in 2025, with **no material effect**[22](index=22&type=chunk) - Future accounting pronouncements to be adopted include ASU 2025-05 (Credit Losses for Accounts Receivable), ASU 2024-03 (Expense Disaggregation Disclosures), and ASU 2023-09 (Income Tax Disclosures), with assessments ongoing for their effects[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [(3) REVENUE RECOGNITION](index=12&type=section&id=Note%203%20REVENUE%20RECOGNITION) This note provides a detailed breakdown of net sales and revenues by primary geographic market, major product line, and timing of revenue recognition for the three and nine months ended July 27, 2025, and July 28, 2024. It also details deferred revenue and unsatisfied performance obligations Net Sales and Revenues by Primary Geographic Market (Three Months Ended July 27, 2025, Millions of Dollars) | Geographic Market | PPA | SAT | CF | FS | Total | | :------------------------------------ | :---- | :---- | :---- | :---- | :------ | | United States | $1,684 | $1,537 | $1,687 | $1,100 | $6,008 | | Canada | $335 | $148 | $222 | $190 | $895 | | Western Europe | $677 | $757 | $550 | $45 | $2,029 | | Central Europe and CIS | $301 | $130 | $103 | $2 | $536 | | Latin America | $1,055 | $124 | $252 | $28 | $1,459 | | Asia, Africa, Oceania, and Middle East | $332 | $393 | $313 | $53 | $1,091 | | **Total** | **$4,384** | **$3,089** | **$3,127** | **$1,418** | **$12,018** | Net Sales and Revenues by Major Product Line (Three Months Ended July 27, 2025, Millions of Dollars) | Product Line | PPA | SAT | CF | FS | Total | | :------------------- | :---- | :---- | :---- | :---- | :------ | | Production agriculture | $4,183 | | | | $4,183 | | Small agriculture | | $2,189 | | | $2,189 | | Turf | | $760 | | | $760 | | Construction | | | $1,207 | | $1,207 | | Compact construction | | | $491 | | $491 | | Roadbuilding | | | $1,013 | | $1,013 | | Forestry | | | $292 | | $292 | | Financial products | $66 | $37 | $23 | $1,418 | $1,544 | | Other | $135 | $103 | $101 | | $339 | | **Total** | **$4,384** | **$3,089** | **$3,127** | **$1,418** | **$12,018** | - Deferred revenue (contract liability) increased to **$2,100 million** at July 27, 2025, from $1,895 million at July 28, 2024[31](index=31&type=chunk) - Unsatisfied performance obligations for contracts with original duration greater than one year totaled **$1,823 million** at July 27, 2025, with estimated revenue recognition extending through 2030 and later years[32](index=32&type=chunk) [(4) OTHER COMPREHENSIVE INCOME ITEMS](index=16&type=section&id=Note%204%20OTHER%20COMPREHENSIVE%20INCOME%20ITEMS) This note details the components of accumulated other comprehensive income (loss) and the reclassifications out of other comprehensive income (loss) for the three and nine months ended July 27, 2025, and July 28, 2024, showing a significant positive shift in cumulative translation adjustment in 2025 Accumulated Other Comprehensive Income (Loss) (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :---------------------------------- | :-------------- | :--------------- | :-------------- | | Retirement benefits adjustment | $(1,291) | $(1,274) | $(974) | | Cumulative translation adjustment | $(1,681) | $(2,286) | $(2,264) | | Unrealized gain (loss) on derivatives | $(73) | $(72) | $(44) | | Unrealized gain (loss) on debt securities | $(62) | $(74) | $(86) | | **Accumulated other comprehensive income (loss)** | **$(3,107)** | **$(3,706)** | **$(3,368)** | Total Other Comprehensive Income (Loss) After Tax (Millions of Dollars) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended July | $298 | $(197) | | Nine Months Ended July | $599 | $(254) | [(5) EARNINGS PER SHARE](index=18&type=section&id=Note%205%20EARNINGS%20PER%20SHARE) This note provides a reconciliation of basic and diluted net income per share attributable to Deere & Company for the three and nine months ended July 27, 2025, and July 28, 2024, indicating a decrease in both basic and diluted EPS in 2025 compared to 2024 Earnings Per Share Data (Millions, except per share amounts) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to Deere & Company | $1,289 | $1,734 | $3,962 | $5,855 | | Basic per share | $4.76 | $6.32 | $14.61 | $21.13 | | Diluted per share | $4.75 | $6.29 | $14.57 | $21.04 | | Average Shares Outstanding (Basic) | 270.7 | 274.5 | 271.1 | 277.1 | | Total Potential Shares Outstanding (Diluted) | 271.4 | 275.6 | 271.9 | 278.2 | [(6) PENSION AND OTHER POSTRETIREMENT BENEFITS](index=19&type=section&id=Note%206%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) This note details the components of net periodic pension and other postretirement benefit (OPEB) costs for the three and nine months ended July 27, 2025, and July 28, 2024, showing a net benefit for pensions and a net cost for OPEB, with expected contributions for 2025 Net Periodic Pension and OPEB (Benefit) Cost (Millions of Dollars) | Item | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Pensions: Net benefit | $(38) | $(43) | $(135) | $(124) | | OPEB: Net cost | $3 | $6 | $11 | $19 | Contributions to Pension and OPEB Plans (Nine Months Ended July 27, 2025, Millions of Dollars) | Plan | Contributed | Expected Contributions Remainder of the Year | | :------- | :---------- | :--------------------------------------- | | Pensions | $79 | $36 | | OPEB | $638 | $22 | [(7) SEGMENT DATA](index=20&type=section&id=Note%207%20SEGMENT%20DATA) This note provides financial information by operating segment (PPA, SAT, CF, FS) for net sales and revenues, operating profit, and identifiable operating assets for the three and nine months ended July 27, 2025, and July 28, 2024, showing significant declines in sales and operating profit for equipment segments, while financial services saw increased operating profit Net Sales and Revenues by Segment (Millions of Dollars) | Segment | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | PPA net sales | $4,273 | $5,099 | -16% | $12,571 | $16,529 | -24% | | SAT net sales | $3,025 | $3,053 | -1% | $7,767 | $8,663 | -10% | | CF net sales | $3,059 | $3,235 | -5% | $8,000 | $10,292 | -22% | | FS revenues | $1,418 | $1,489 | -5% | $4,273 | $4,259 | 0% | | Other revenues | $243 | $276 | -12% | $679 | $829 | -18% | | **Total net sales and revenues** | **$12,018** | **$13,152** | **-9%** | **$33,290** | **$40,572** | **-18%** | Operating Profit by Segment (Millions of Dollars) | Segment | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | PPA | $580 | $1,162 | -50% | $2,066 | $3,857 | -46% | | SAT | $485 | $496 | -2% | $1,182 | $1,393 | -15% | | CF | $237 | $448 | -47% | $681 | $1,682 | -60% | | FS | $266 | $191 | +39% | $740 | $657 | +13% | | **Total operating profit** | **$1,568** | **$2,297** | **-32%** | **$4,669** | **$7,589** | **-38%** | Identifiable Operating Assets by Segment (Millions of Dollars) | Segment | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :---------- | :-------------- | :--------------- | :-------------- | | PPA | $8,902 | $8,696 | $8,750 | | SAT | $4,008 | $4,130 | $4,079 | | CF | $7,846 | $7,137 | $7,129 | | FS | $71,722 | $73,612 | $74,981 | | Corporate | $15,339 | $13,745 | $12,902 | | **Total assets** | **$107,817** | **$107,320** | **$107,841** | [(8) FINANCING RECEIVABLES](index=20&type=section&id=Note%208%20FINANCING%20RECEIVABLES) This note details the credit quality and aging analysis of retail customer receivables and wholesale receivables, along with changes in the allowance for credit losses. It highlights an increase in the allowance for credit losses in 2025 due to higher expected losses on agriculture and turf customer accounts - Credit quality of financing receivables is monitored based on delinquency status: past due (30+ days), non-performing (90+ days, no finance income accrual), and write-offs (generally 120+ days)[41](index=41&type=chunk) Allowance for Credit Losses and Financing Receivables (End of Period Balance, Millions of Dollars) | Item | July 27, 2025 | July 28, 2024 | | :-------------------------- | :-------------- | :-------------- | | Allowance for Credit Losses | $258 | $219 | | Financing Receivables | $52,136 | $52,389 | - The allowance for credit losses remained relatively flat in the third quarter of 2025 but increased in the first nine months of 2025, primarily due to **higher expected losses** on agriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions[45](index=45&type=chunk) - Modified financing receivables with borrowers experiencing financial difficulty increased to **$115 million** (**0.22% of portfolio**) for the nine months ended July 27, 2025, from $67 million (0.13%) in the prior year[48](index=48&type=chunk) [(9) SECURITIZATION OF FINANCING RECEIVABLES](index=26&type=section&id=Note%209%20SECURITIZATION%20OF%20FINANCING%20RECEIVABLES) This note explains the company's funding strategy through receivable securitizations, which are accounted for as secured borrowings rather than sales. It provides a breakdown of securitization program components, including securitized receivables and related borrowings - The company uses receivable securitizations as a funding strategy, transferring financing receivables into a bankruptcy-remote special purpose entity (SPE) which then issues debt to investors[51](index=51&type=chunk) - These securitization transactions are accounted for as **secured borrowings**, meaning the receivables and borrowings remain on the balance sheet and are separately reported[51](index=51&type=chunk) Components of Securitization Programs (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Financing receivables securitized (retail notes) | $7,996 | $8,770 | $8,313 | | Allowance for credit losses | $(48) | $(47) | $(39) | | Other assets (primarily restricted cash) | $175 | $187 | $178 | | **Total restricted securitized assets** | **$8,123** | **$8,910** | **$8,452** | | Short-term securitization borrowings | $7,610 | $8,431 | $7,869 | | Accrued interest on borrowings | $11 | $14 | $14 | | **Total liabilities related to restricted securitized assets** | **$7,621** | **$8,445** | **$7,883** | [(10) INVENTORIES](index=27&type=section&id=Note%2010%20INVENTORIES) This note details the valuation of inventories, with a majority valued using the LIFO method. It provides a comparison of inventory values under FIFO and LIFO methods, showing the excess of FIFO over LIFO - A majority of inventories owned by the company are valued at cost on the **"last-in, first-out" (LIFO) basis**[53](index=53&type=chunk) Inventories Valued on FIFO vs. LIFO Basis (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :-------------------------- | :-------------- | :--------------- | :-------------- | | Raw materials and supplies | $3,350 | $3,486 | $3,586 | | Work-in-process | $1,139 | $930 | $988 | | Finished goods and parts | $6,088 | $5,364 | $5,689 | | **Total FIFO value** | **$10,577** | **$9,780** | **$10,263** | | Excess of FIFO over LIFO | $2,864 | $2,687 | $2,567 | | **Inventories (LIFO value)** | **$7,713** | **$7,093** | **$7,696** | [(11) GOODWILL AND OTHER INTANGIBLE ASSETS – NET](index=27&type=section&id=Note%2011%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS%20%E2%80%93%20NET) This note presents the changes in goodwill by operating segment and the components of other intangible assets, net of accumulated amortization. It shows an increase in total goodwill due to acquisitions and translation adjustments, and provides estimated future amortization expense Changes in Goodwill by Operating Segment (Millions of Dollars) | Segment | Goodwill at October 29, 2023 | Goodwill at July 28, 2024 | Goodwill at October 27, 2024 | Goodwill at July 27, 2025 | | :---------- | :--------------------------- | :------------------------ | :------------------------- | :------------------------ | | PPA | $702 | $701 | $701 | $749 | | SAT | $363 | $365 | $365 | $371 | | CF | $2,835 | $2,894 | $2,893 | $3,089 | | **Total** | **$3,900** | **$3,960** | **$3,959** | **$4,209** | Other Intangible Assets – Net (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Total at cost | $2,012 | $1,931 | $1,920 | | Less accumulated amortization | $(1,086) | $(932) | $(890) | | **Other intangible assets – net** | **$926** | **$999** | **$1,030** | - Amortization of other intangible assets was **$31 million** for the third quarter of 2025 (down from $41 million in Q3 2024) and **$110 million** for the first nine months of 2025 (down from $124 million in the prior year)[54](index=54&type=chunk) - Estimated amortization expense for the remainder of 2025 is **$40 million**, followed by $133 million in 2026, $127 million in 2027, $90 million in 2028, $75 million in 2029, and $71 million in 2030[54](index=54&type=chunk) [(12) SHORT-TERM BORROWINGS](index=29&type=section&id=Note%2012%20SHORT-TERM%20BORROWINGS) This note provides a breakdown of short-term borrowings, including commercial paper, notes payable to banks, finance lease obligations, and long-term borrowings due within one year, showing a slight increase in total short-term borrowings at July 27, 2025, compared to October 27, 2024, but a decrease compared to July 28, 2024 Short-Term Borrowings (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Commercial paper | $5,322 | $4,008 | $5,572 | | Notes payable to banks | $694 | $377 | $418 | | Finance lease obligations due within one year | $41 | $33 | $31 | | Long-term borrowings due within one year | $8,550 | $9,115 | $9,273 | | **Short-term borrowings** | **$14,607** | **$13,533** | **$15,294** | [(13) ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=29&type=section&id=Note%2013%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) This note details the components of accounts payable and accrued expenses, which decreased at July 27, 2025, compared to prior periods, primarily due to lower employee benefits, accrued taxes, product warranties, and dealer sales discounts Accounts Payable and Accrued Expenses (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Trade payables | $2,718 | $2,698 | $2,580 | | Dividends payable | $443 | $405 | $407 | | Employee benefits | $1,356 | $1,925 | $1,802 | | Accrued taxes | $1,331 | $1,509 | $1,497 | | Product warranties | $1,273 | $1,426 | $1,513 | | Dealer sales discounts | $659 | $996 | $846 | | Extended warranty premium | $1,226 | $1,179 | $1,129 | | Derivative liabilities | $517 | $582 | $582 | | Unearned revenue (contractual liability) | $874 | $744 | $766 | | **Accounts payable and accrued expenses** | **$13,582** | **$14,543** | **$14,397** | - Accounts payable and accrued expenses decreased by **$961 million** in the first nine months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales discounts[155](index=155&type=chunk) [(14) LONG-TERM BORROWINGS](index=30&type=section&id=Note%2014%20LONG-TERM%20BORROWINGS) This note lists the company's long-term borrowings, including various U.S. dollar and Euro notes and debentures, and medium-term notes. Total long-term borrowings increased at July 27, 2025, compared to prior periods Long-Term Borrowings (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | U.S. dollar notes and debentures | $5,600 | $4,350 | $4,350 | | Euro notes | $2,174 | $2,004 | $2,007 | | Medium-term notes | $35,428 | $36,566 | $36,057 | | Other notes and finance lease obligations | $438 | $265 | $232 | | Less debt issuance costs and debt discounts | $(161) | $(156) | $(154) | | **Long-term borrowings** | **$44,429** | **$43,229** | **$42,692** | - All outstanding notes and debentures are **senior unsecured borrowings** and rank equally with each other[58](index=58&type=chunk) [(15) LEASES – LESSOR](index=30&type=section&id=Note%2015%20LEASES%20%E2%80%93%20LESSOR) This note reports lease revenues earned by the company through John Deere Financial, categorizing them into sales-type and direct financing leases, operating leases, and variable lease revenues. Total lease revenues increased for both the three and nine months ended July 27, 2025 Lease Revenues (Millions of Dollars) | Item | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales-type and direct finance lease revenues | $46 | $50 | $137 | $141 | | Operating lease revenues | $374 | $358 | $1,091 | $1,039 | | Variable lease revenues | $5 | $4 | $14 | $13 | | **Total lease revenues** | **$425** | **$412** | **$1,242** | **$1,193** | [(16) COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=Note%2016%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's commitments and contingent liabilities, including standard warranty provisions, guarantees to banks for retail financing, guarantees to a VIE, and other miscellaneous contingent liabilities. It also mentions commitments for property and equipment construction and acquisition, and restricted assets - A standard warranty is provided as assurance that the equipment will function as intended, with costs estimated based on historical claims rate experience and estimated population under warranty[60](index=60&type=chunk) Warranty Liability Reconciliation (Millions of Dollars) | Item | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Beginning of period balance | $1,297 | $1,566 | $1,426 | $1,610 | | Warranty claims paid | $(336) | $(325) | $(954) | $(959) | | New product warranty accruals | $303 | $280 | $786 | $871 | | Foreign exchange | $9 | $(8) | $15 | $(9) | | **End of period balance** | **$1,273** | **$1,513** | **$1,273** | **$1,513** | - As of July 27, 2025, the company had **$130 million** in notional value of guarantees to banks for retail financing in international markets, **$153 million** in guarantees to a VIE (Banco John Deere S.A.), and approximately **$125 million** in other miscellaneous contingent liabilities[61](index=61&type=chunk)[62](index=62&type=chunk) - Commitments of approximately **$630 million** for the construction and acquisition of property and equipment were outstanding at July 27, 2025[63](index=63&type=chunk) - The company is subject to various unresolved legal actions, including product liability, antitrust, employment, patent, and trademark matters, with accrued losses **not material** at July 27, 2025[64](index=64&type=chunk) [(17) FAIR VALUE MEASUREMENTS](index=32&type=section&id=Note%2017%20FAIR%20VALUE%20MEASUREMENTS) This note discusses the fair value measurements of financial instruments, including those that do not approximate carrying values and those measured on a recurring basis. It details the valuation methodologies used for marketable securities, derivatives, and other assets/liabilities Fair Values of Financial Instruments Not Approximating Carrying Values (Millions of Dollars) | Item | July 27, 2025 (Carrying Value / Fair Value) | October 27, 2024 (Carrying Value / Fair Value) | July 28, 2024 (Carrying Value / Fair Value) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------- | :------------------------------------------ | | Financing receivables – net | $43,930 / $44,036 | $44,309 / $44,336 | $43,896 / $43,713 | | Financing receivables securitized – net | $7,948 / $7,928 | $8,723 / $8,654 | $8,274 / $8,139 | | Receivables from unconsolidated affiliates | $515 / $522 | N/A | N/A | | Short-term securitization borrowings | $7,610 / $7,637 | $8,431 / $8,453 | $7,869 / $7,872 | | Long-term borrowings due within one year | $8,550 / $8,556 | $9,115 / $9,079 | $9,273 / $9,190 | | Long-term borrowings | $44,358 / $44,034 | $43,157 / $42,804 | $42,617 / $42,076 | - Fair value measurements for receivables were **Level 3**, while all borrowings were **Level 2**[66](index=66&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (Millions of Dollars) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Level 1: Marketable securities | $229 | $239 | $413 | | Level 2: Marketable securities | $1,116 | $915 | $715 | | Level 2: Other assets – Derivatives | $370 | $357 | $361 | | Level 2: Accounts payable and accrued expenses – Derivatives | $517 | $582 | $582 | | Level 3: Accounts payable and accrued expenses – Deferred consideration | $121 | $147 | $153 | - Valuation methodologies include market approach (matrix pricing model) for marketable securities, income approach (discounted cash flow) for derivatives and deferred consideration, and cost approach for property and equipment[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) [(18) DERIVATIVE INSTRUMENTS](index=35&type=section&id=Note%2018%20DERIVATIVE%20INSTRUMENTS) This note provides the fair values and notional amounts of derivative instruments, categorized by hedging relationships (cash flow, fair value, net investment) and those not designated as hedging instruments. It also details the impact of derivatives on the consolidated income statements and information on credit support provisions Fair Values of Derivative Instruments (Assets/Liabilities in Millions of Dollars) | Type of Hedge | July 27, 2025 (Assets / Liabilities) | October 27, 2024 (Assets / Liabilities) | July 28, 2024 (Assets / Liabilities) | | :------------------------------------------------ | :----------------------------------- | :------------------------------------ | :----------------------------------- | | Cash flow hedges: Interest rate contracts | $0 / $29 | $3 / $20 | $14 / $18 | | Fair value hedges: Interest rate contracts | $148 / $326 | $115 / $467 | $119 / $486 | | Fair value hedges: Cross-currency interest rate contracts | $101 / $0 | $31 / $0 | $16 / $0 | | Net investment hedges: Cross-currency interest rate contracts | $0 / $30 | N/A | N/A | | Not designated as hedging instruments: Interest rate contracts | $92 / $74 | $97 / $75 | $103 / $59 | | Not designated as hedging instruments: Foreign exchange contracts | $25 / $52 | $95 / $20 | $99 / $16 | | Not designated as hedging instruments: Cross-currency interest rate contracts | $4 / $6 | $16 / $0 | $10 / $3 | - In April 2025, the company entered into a cross-currency interest rate swap as a designated **net investment hedge** to reduce the foreign currency exposure from investments in foreign subsidiaries[81](index=81&type=chunk) - The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position was **$465 million** at July 27, 2025, requiring **$122 million** of cash collateral[81](index=81&type=chunk) [(19) SHARE-BASED AWARDS](index=39&type=section&id=Note%2019%20SHARE-BASED%20AWARDS) This note details the company's share-based award programs, including stock options and restricted stock units (RSUs) granted during the nine months ended July 27, 2025 - The company is authorized to grant **13.7 million shares** for equity incentive awards[84](index=84&type=chunk) - During the nine months ended July 27, 2025, **169 thousand stock options** were granted at a weighted-average exercise price of **$448.18 per share**[84](index=84&type=chunk) - At July 27, 2025, options for **1.1 million shares** were outstanding with a weighted-average exercise price of **$317.80 per share**[84](index=84&type=chunk) Restricted Stock Units (RSUs) Granted (Nine Months Ended July 27, 2025) | Type of RSU | Shares (thousands) | Grant-Date Fair Value (per share) | | :-------------------------------------------------- | :----------------- | :-------------------------------- | | Service-based | 308 | $448.68 | | Performance/service-based | 40 | $429.77 | | Market/service-based (fair value determined using a Monte Carlo model) | 40 | $591.13 | [(20) ACQUISITIONS AND DISPOSITION](index=39&type=section&id=Note%2020%20ACQUISITIONS%20AND%20DISPOSITION) This note reports on business acquisitions made in 2025 to enhance technology offerings, totaling $89 million. It also details the disposition of a 50% ownership interest in Banco John Deere S.A. (BJD) in Brazil in February 2025, resulting in its deconsolidation and a retained equity interest accounted for using the equity method - In 2025, the company acquired businesses for **$89 million** (net of cash) to advance the capabilities of existing technology offerings, with most of the purchase price allocated to goodwill and intangible assets[86](index=86&type=chunk) - In February 2025, the company completed a transaction with Banco Bradesco S.A. for Bradesco to invest and become a **50% owner of Banco John Deere S.A. (BJD)** in Brazil, resulting in BJD's deconsolidation[87](index=87&type=chunk) - The company retained a **50% equity interest** in BJD, valued at **$362 million** at the deconsolidation date, and now accounts for its investment using the equity method[88](index=88&type=chunk) Major Classes of BJD Assets and Liabilities at Deconsolidation (February 2025, Millions of Dollars) | Item | Amount | | :----------------------------------- | :----- | | Total assets | $3,007 | | Total liabilities | $1,861 | | Total intercompany payables | $781 | [(21) SPECIAL ITEMS](index=41&type=section&id=Note%2021%20SPECIAL%20ITEMS) This note summarizes special items impacting financial results for 2025 and 2024, including a non-cash impairment charge related to overseas battery operations, favorable discrete tax items, and the gain/loss from the BJD transaction in 2025. For 2024, it includes employee-separation programs and the initial reclassification of BJD as held for sale - In the third quarter of 2025, a **non-cash charge of $61 million pretax** (**$49 million after-tax**) was recorded, primarily related to the trade name and customer relationship assets of external overseas battery operations, due to slowing external demand[91](index=91&type=chunk) - In the first quarter of 2025, favorable net discrete tax items of **$110 million** (realization of foreign net operating losses) and **$53 million** (adjustment to an uncertain tax position) were recorded[92](index=92&type=chunk) - The transaction for the sale of 50% ownership in BJD in February 2025 resulted in a pretax and after-tax **gain (reversal of previous losses) of $32 million**[93](index=93&type=chunk) - In the third quarter of 2024, employee-separation programs for salaried workforce in several geographic areas resulted in total pretax expenses of **$124 million**[94](index=94&type=chunk)[95](index=95&type=chunk) - In the third quarter of 2024, the reclassification of the BJD business as held for sale resulted in a net pretax and after-tax **loss of $15 million**[96](index=96&type=chunk) Operating Profit Impact of Special Items (Millions of Dollars) | Item | Three Months Ended July 27, 2025 | Nine Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | Nine Months Ended July 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Impairment (2025) | $61 | $61 | N/A | N/A | | BJD measurement (2025) | N/A | $(32) | N/A | N/A | | Employee-separation programs (2024) | N/A | N/A | $120 | $120 | | BJD measurement (2024) | N/A | N/A | $15 | $15 | [(22) SUBSEQUENT EVENT](index=43&type=section&id=Note%2022%20SUBSEQUENT%20EVENT) This note reports a subsequent event where a quarterly dividend of $1.62 per share was declared on August 27, 2025, payable on November 10, 2025 - On August 27, 2025, a quarterly dividend of **$1.62 per share** was declared at the Board of Directors meeting, payable on November 10, 2025, to stockholders of record on September 30, 2025[100](index=100&type=chunk) [Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=44&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, condition, and operational results, including key trends and outlook [OVERVIEW](index=44&type=section&id=OVERVIEW) This section provides an overview of Deere & Company as a global leader in agricultural, turf, construction, and forestry equipment, with John Deere Financial offering related financing. The company manages operations through Production and Precision Agriculture (PPA), Small Agriculture and Turf (SAT), Construction and Forestry (CF), and Financial Services (FS) segments - Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions[103](index=103&type=chunk) - John Deere Financial provides financing for John Deere equipment, parts, services, and other input costs customers need to run their operations[103](index=103&type=chunk) - Operations are managed through the Production and Precision Agriculture (PPA), Small Agriculture and Turf (SAT), Construction and Forestry (CF), and Financial Services (FS) operating segments[103](index=103&type=chunk) [TRENDS AND ECONOMIC CONDITIONS](index=44&type=section&id=TRENDS%20AND%20ECONOMIC%20CONDITIONS) This section discusses key trends and economic conditions impacting the company, including expected lower equipment sales volumes in fiscal 2025 due to reduced demand, high interest rates, trade uncertainty, and lower commodity prices. It also highlights the persistent market trend of technology integration and the impact of global trade policies and interest rates - Customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations, a persistent market trend that the company's Smart Industrial Operating Model and Leap Ambitions aim to capitalize on[104](index=104&type=chunk) - Company outlook for 2025 projects **lower agriculture and turf and construction equipment sales volumes** compared to the prior year due to reduced demand[105](index=105&type=chunk) - Demand for large agricultural equipment in the U.S. and Canada is expected to **decline** due to high interest rates, elevated used inventory levels, trade uncertainty, and lower commodity prices[106](index=106&type=chunk) - Construction industry sales for earthmoving equipment are forecasted to be **down** and compact construction equipment sales **flat to down** in the U.S. and Canada due to trade uncertainty and higher interest rates[117](index=117&type=chunk) Financial Services Outlook for 2025 | Metric | Outlook | | :--------- | :------ | | Net Income | Up | | + Prior and current period special items | Favorable | | + Selling, administrative and general expenses | Favorable | | (–) Financing spreads | Unfavorable | - Incremental import tariffs adversely affected the cost of products and components by approximately **$300 million** in the first nine months of 2025, excluding impacts on suppliers and market demand, with further increases expected[113](index=113&type=chunk) - Elevated interest rates in the U.S. and Brazil negatively impact demand for agriculture, turf, and construction products and financing spreads for financial services operations[114](index=114&type=chunk) - A lawsuit was filed by the Federal Trade Commission (FTC) and several State Attorneys General alleging monopolization and unfair competition in the market for repair services for John Deere agricultural equipment[118](index=118&type=chunk)[183](index=183&type=chunk) [CONSOLIDATED RESULTS – 2025 COMPARED WITH 2024](index=48&type=section&id=CONSOLIDATED%20RESULTS%20%E2%80%93%202025%20COMPARED%20WITH%202024) This section presents the consolidated financial results for Deere & Company, showing a decrease in net sales and revenues, net income, and diluted EPS for both the three and nine months ended July 27, 2025, compared to the prior year, primarily due to lower sales volumes, higher tariffs, and unfavorable price realization Consolidated Financial Results (Millions of Dollars, except per share amounts) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | Net sales and revenues | $12,018 | $13,152 | -9% | $33,290 | $40,572 | -18% | | Net income attributable to Deere & Company | $1,289 | $1,734 | -26% | $3,962 | $5,855 | -32% | | Diluted earnings per share | $4.75 | $6.29 | -25% | $14.57 | $21.04 | -31% | - Net sales and revenues **decreased** for both the quarter and year-to-date periods primarily due to lower sales volumes[119](index=119&type=chunk) - Net income and diluted EPS **decreased** in the third quarter primarily due to lower sales volumes, higher tariffs, and unfavorable price realization. Results for the first nine months were also affected by lower production costs and favorable discrete tax items[119](index=119&type=chunk) - The cost of sales to net sales ratio **increased** due to higher tariffs and higher overhead costs from production inefficiencies associated with lower volumes, partially offset by reduced material costs and lower employee profit-sharing incentives[120](index=120&type=chunk) - Selling, administrative and general expenses **decreased** due to lower employee profit-sharing incentives and the favorable impact from Banco John Deere S.A. (BJD) deconsolidation[120](index=120&type=chunk) - Interest expense **decreased** primarily due to lower average borrowings and lower average borrowing rates[120](index=120&type=chunk) - Provision for income taxes **decreased** for both periods as a result of lower pretax income, with the nine months ended period also impacted by favorable discrete tax adjustments[123](index=123&type=chunk) [Business Segment Results – 2025 Compared with 2024](index=50&type=section&id=Business%20Segment%20Results%20%E2%80%93%202025%20Compared%20with%202024) This section analyzes the financial performance of each operating segment: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services [Production and Precision Agriculture](index=50&type=section&id=Production%20and%20Precision%20Agriculture) The Production and Precision Agriculture (PPA) segment experienced significant declines in net sales and operating profit for both the three and nine months ended July 27, 2025. This was primarily due to lower U.S. shipment volumes, higher interest rates, global uncertainty, and elevated used inventory levels, despite some offset from increased volumes in Brazil and Europe PPA Segment Performance (Millions of Dollars) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | Net sales | $4,273 | $5,099 | -16% | $12,571 | $16,529 | -24% | | Operating profit | $580 | $1,162 | -50% | $2,066 | $3,857 | -46% | | Operating margin | 13.6% | 22.8% | -9.2 pp | 16.4% | 23.3% | -6.9 pp | | Price realization | -1% | N/A | N/A | N/A | N/A | N/A | - Production and precision agriculture sales **decreased** for the quarter as a result of lower U.S. shipment volumes driven mainly by higher interest rates, global uncertainty, and used inventory levels, partially offset by increased shipment volumes in Brazil and Europe[124](index=124&type=chunk) - Operating profit **decreased** primarily due to lower shipment volumes/sales mix and unfavorable price realization for the quarter due to incremental incentive programs deployed to address used inventory levels in North America[124](index=124&type=chunk)[125](index=125&type=chunk) [Small Agriculture and Turf](index=52&type=section&id=Small%20Agriculture%20and%20Turf) The Small Agriculture and Turf (SAT) segment saw a slight decrease in net sales for the quarter and a more significant decline for the nine-month period, with operating profit also decreasing. These declines were mainly attributed to lower shipment volumes in the U.S. due to economic uncertainties and higher interest rates, partially offset by favorable currency translation and price realization in some regions, and reduced production costs SAT Segment Performance (Millions of Dollars) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | Net sales | $3,025 | $3,053 | -1% | $7,767 | $8,663 | -10% | | Operating profit | $485 | $496 | -2% | $1,182 | $1,393 | -15% | | Operating margin | 16.0% | 16.2% | -0.2 pp | 15.2% | 16.1% | -0.9 pp | | Price realization | +1% | N/A | N/A | +1% | N/A | N/A | - Small agriculture and turf sales **decreased** for the quarter and nine months as a result of lower shipment volumes (primarily in the U.S.) driven mainly by economic uncertainties and higher interest rates[129](index=129&type=chunk)[131](index=131&type=chunk) - Operating profit **decreased** due to higher tariffs and lower shipment volumes/sales mix, partially offset by favorable factors including reductions in warranty expenses and lower production costs from lower material costs[129](index=129&type=chunk)[131](index=131&type=chunk) [Construction and Forestry](index=54&type=section&id=Construction%20and%20Forestry) The Construction and Forestry (CF) segment experienced a decrease in net sales and a substantial decline in operating profit for both the three and nine months ended July 27, 2025. This was primarily driven by unfavorable price realization due to competitive pressures and higher tariffs, along with lower shipment volumes in the U.S CF Segment Performance (Millions of Dollars) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | Net sales | $3,059 | $3,235 | -5% | $8,000 | $10,292 | -22% | | Operating profit | $237 | $448 | -47% | $681 | $1,682 | -60% | | Operating margin | 7.7% | 13.8% | -6.1 pp | 8.5% | 16.3% | -7.8 pp | | Price realization | -5% | N/A | N/A | -2% | N/A | N/A | - Construction and forestry sales **decreased** for the quarter due to unfavorable price realization in the U.S. due to incremental incentive programs deployed to address pressures from the competitive environment[134](index=134&type=chunk) - Operating profit **decreased** primarily due to unfavorable price realization and higher tariffs for the quarter, and lower shipment volumes/sales mix and unfavorable price realization for the nine months[134](index=134&type=chunk)[137](index=137&type=chunk) [Financial Services](index=56&type=section&id=Financial%20Services) The Financial Services segment reported a decrease in revenue for both periods due to a lower average portfolio balance, primarily from the deconsolidation of BJD. However, net income increased significantly for both the three and nine months ended July 27, 2025, driven by a lower provision for credit losses and favorable special items Financial Services Segment Performance (Millions of Dollars) | Metric | Three Months Ended July 27, 2025 | Three Months Ended July 28, 2024 | % Change (3M) | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | % Change (9M) | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------ | :------------------------------ | :-------------- | | Revenue (including intercompany) | $1,544 | $1,667 | -7% | $4,618 | $4,807 | -4% | | Interest expense | $720 | $812 | -11% | $2,206 | $2,354 | -6% | | Net income | $205 | $153 | +34% | $597 | $523 | +14% | - The average balance of receivables and leases financed was **6% lower** in the third quarter of 2025 and **5% lower** in the first nine months of 2025 compared with the same periods last year, primarily due to the deconsolidation of BJD[140](index=140&type=chunk) - Financial services net income for the quarter was **higher** due to a lower provision for credit losses and prior year special items. Net income for the nine-month period was **higher** due to benefits from special items and lower selling, administrative, and general expenses, partially offset by lower financing spreads and a higher provision for credit losses[141](index=141&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=56&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section refers to the critical accounting estimates discussed in the most recently filed Annual Report on Form 10-K, stating that there have been no material changes to these policies - There have been **no material changes** to the critical accounting estimates discussed in the Management's Discussion and Analysis of the most recently filed Annual Report on Form 10-K[142](index=142&type=chunk) [CAPITAL RESOURCES AND LIQUIDITY – 2025 COMPARED WITH 2024](index=56&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY%20%E2%80%93%202025%20COMPARED%20WITH%202024) This section discusses the company's capital resources and liquidity, highlighting access to global markets, various funding sources, and expected lower operating cash flows from equipment operations in 2025. It also provides key metrics related to cash, receivables, inventories, and credit lines - The company has access to global markets at a reasonable cost and expects to meet its funding needs in the short term (next 12 months) and long term (beyond 12 months)[143](index=143&type=chunk) - The company is forecasting **lower operating cash flows** from equipment operations in 2025 compared with 2024, driven by a decrease in net income adjusted for non-cash provisions[143](index=143&type=chunk) - The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolio[145](index=145&type=chunk) Key Metrics (Millions of Dollars, except ratios) | Item | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :----------------------------------- | :-------------- | :--------------- | :-------------- | | Cash, cash equivalents, and marketable securities | $9,987 | $8,478 | $8,144 | | Trade accounts and notes receivable – net | $6,103 | $5,326 | $7,469 | | Ratio to prior 12 month's net sales | 16% | 12% | 15% | | Inventories | $7,713 | $7,093 | $7,696 | | Ratio to prior 12 month's cost of sales | 29% | 23% | 23% | | Unused credit lines | $6,150 | $6,474 | $4,917 | | Financial Services: Ratio of interest-bearing debt to stockholder's equity | 8.6 to 1 | 8.1 to 1 | 8.5 to 1 | [CASH FLOWS](index=58&type=section&id=CASH%20FLOWS) This sub-section details the cash flow activities for the first nine months of 2025, showing a decrease in net cash provided by operating activities compared to 2024, but a significant reduction in net cash used for investing activities, leading to an overall net increase in cash Summary of Cash Flows (Nine Months Ended, Millions of Dollars) | Item | July 27, 2025 | July 28, 2024 | | :------------------------------------------------ | :-------------- | :-------------- | | Net cash provided by operating activities | $3,464 | $4,139 | | Net cash used for investing activities | $(801) | $(3,671) | | Net cash used for financing activities | $(1,557) | $(789) | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | $108 | $(6) | | **Net increase (decrease) in cash, cash equivalents, and restricted cash** | **$1,214** | **$(327)** | - Cash inflows from consolidated operating activities in the first nine months of 2025 were **$3,464 million**, mainly from net income adjusted for non-cash provisions, partially offset by an OPEB contribution, a decrease in accrued employee profit-sharing incentives, an increase in inventories, and an increase in receivables related to sales[151](index=151&type=chunk) - Cash outflows from investing activities were **$801 million**, primarily driven by purchases of property and equipment and growth in equipment on operating leases, partially offset by collections of receivables exceeding the cost of receivables acquired[151](index=151&type=chunk) - Cash outflows from financing activities were **$1,557 million**, as cash returned to shareholders (**$2,418 million**) was partially offset by higher external borrowings[151](index=151&type=chunk) [KEY METRICS AND BALANCE SHEET CHANGES](index=58&type=section&id=KEY%20METRICS%20AND%20BALANCE%20SHEET%20CHANGES) This sub-section discusses changes in key balance sheet items, including trade accounts and notes receivable, financing receivables and equipment on operating leases, inventories, property and equipment, accounts payable and accrued expenses, and borrowings - Trade accounts and notes receivable **increased $777 million** during the first nine months of 2025, primarily due to a seasonal increase, but **decreased $1,366 million** compared to a year ago due to lower sales volumes[152](index=152&type=chunk) - Financing receivables and equipment on operating leases **decreased $1,093 million** during the first nine months of 2025 due to lower retail customer receivables[153](index=153&type=chunk) - Inventories **increased by $620 million** during the first nine months of 2025 primarily due to a seasonal increase, and **increased by $17 million** compared to a year ago[154](index=154&type=chunk) - Property and equipment cash expenditures in the first nine months of 2025 were **$852 million**, compared with $1,043 million in the same period last year, with estimated capital expenditures in 2025 of approximately **$1,450 million**[154](index=154&type=chunk) - Accounts payable and accrued expenses **decreased by $961 million** in the first nine months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales discounts[155](index=155&type=chunk) - Total external borrowings **increased by $1,453 million** in the first nine months of 2025 and **increased $791 million** compared to a year ago, which contributed to higher cash and cash equivalents[156](index=156&type=chunk) [Lines of Credit](index=60&type=section&id=Lines%20of%20Credit) This sub-section details the company's worldwide bank lines of credit, totaling $12.2 billion at July 27, 2025, with $6.15 billion unused. It also mentions the Capital Corporation's revolving warehouse facility for securitizing retail notes - Worldwide lines of credit totaled **$12.2 billion** at July 27, 2025, with **$6.15 billion unused**[159](index=159&type=chunk) - The company has a 364-day credit facility agreement of **$5.0 billion** expiring in the second quarter of 2026, a credit facility agreement of **$3.25 billion** expiring in the second quarter of 2028, and another credit facility agreement of **$3.25 billion** expiring in the second quarter of 2030[163](index=163&type=chunk) - John Deere Capital Corporation has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes, with a total capacity or "financing limit" of **$2,500 million** and **$1,783 million** of securitization borrowings outstanding at July 27, 2025[157](index=157&type=chunk) [Debt Ratings](index=60&type=section&id=Debt%20Ratings) This sub-section provides the current senior long-term and short-term debt ratings and outlook assigned by Fitch Ratings, Moody's, and Standard & Poor's, all indicating a stable outlook Senior Long-Term and Short-Term Debt Ratings and Outlook | Rating Agency | Senior Long-Term | Short-Term | Outlook | | :-------------------------- | :--------------- | :--------- | :-------- | | Fitch Ratings | A+ | F1 | Stable | | Moody's Investors Service, Inc. | A1 | Prime-1 | Stable | | Standard & Poor's | A | A-1 | Stable | - Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, reduced access to debt capital markets, and may adversely impact liquidity[160](index=160&type=chunk) [FORWARD-LOOKING STATEMENTS](index=60&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section states that the report contains forward-looking statements subject to various factors, risks, and uncertainties that could cause actual results to differ materially. It lists numerous risk factors, including government policies, economic conditions, market competition, and legal proceedings - Certain statements in the report relating to future events, expectations, and trends constitute "forward-looking statements" and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially[161](index=161&type=chunk)[162](index=162&type=chunk) - Key risk factors include government policies and actions with respect to the global trade environment (including tariffs), the agricultural business cycle, higher interest rates and currency fluctuations, and the ability to adapt in highly competitive markets[164](index=164&type=chunk) - Other significant risks include political, economic, and social instability, worldwide demand for food and renewable energy, investigations and legal proceedings (e.g., FTC lawsuit), supply chain delays or disruptions, changes in climate patterns, availability and price of raw materials, and cybersecurity attacks[167](index=167&type=chunk) [SUPPLEMENTAL CONSOLIDATING DATA](index=63&type=section&id=SUPPLEMENTAL%20CONSOLIDATING%20DATA) This section provides additional financial data, breaking down consolidated figures into equipment operations and financial services segments [STATEMENTS OF INCOME](index=64&type=section&id=STATEMENTS%20OF%20INCOME) This section provides supplemental consolidating statements of income for equipment operations and financial services, along with eliminations, for the three and nine months ended July 27, 2025, and July 28, 2024, showing how intercompany transactions are removed to arrive at consolidated figures - Supplemental consolidating data is presented for informational purposes, distinguishing between equipment operations and financial services due to their different industries, funding requirements, and performance metrics[168](index=168&type=chunk)[169](index=169&type=chunk) Net Income Attributable to Deere & Company by Segment (Three Months Ended, Millions of Dollars) | Segment | 2025 | 2024 | | :------------------- | :----- | :----- | | Equipment Operations | $1,084 | $1,581 | | Financial Services | $205 | $153 | | **Consolidated** | **$1,289** | **$1,734** | Net Income Attributable to Deere & Company by Segment (Nine Months Ended, Millions of Dollars) | Segment | 2025 | 2024 | | :------------------- | :----- | :----- | | Equipment Operations | $3,365 | $5,332 | | Financial Services | $597 | $523 | | **Consolidated** | **$3,962** | **$5,855** | [CONDENSED BALANCE SHEETS](index=66&type=section&id=CONDENSED%20BALANCE%20SHEETS) This section presents supplemental consolidating condensed balance sheets for equipment operations and financial services, including eliminations, as of July 27, 2025, October 27, 2024, and July 28, 2024, illustrating the separate financial positions of the two business segments before consolidation Total Assets by Segment (Millions of Dollars) | Segment | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :------------------- | :-------------- | :--------------- | :-------------- | | Equipment Operations | $42,411 | $39,205 | $39,765 | | Financial Services | $71,722 | $73,612 | $74,981 | | Eliminations | $(6,316) | $(5,497) | $(6,905) | | **Consolidated Total Assets** | **$107,817** | **$107,320** | **$107,841** | Total Liabilities by Segment (Millions of Dollars) | Segment | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :------------------- | :-------------- | :--------------- | :-------------- | | Equipment Operations | $24,205 | $23,734 | $23,924 | | Financial Services | $64,664 | $66,158 | $67,673 | | Eliminations | $(6,316) | $(5,497) | $(6,905) | | **Consolidated Total Liabilities** | **$82,553** | **$84,395** | **$84,692** | Total Stockholders' Equity by Segment (Millions of Dollars) | Segment | July 27, 2025 | October 27, 2024 | July 28, 2024 | | :------------------- | :-------------- | :--------------- | :-------------- | | Equipment Operations (Adjusted) | $18,122 | $15,389 | $15,757 | | Financial Services | $7,058 | $7,454 | $7,308 | | **Consolidated Total Stockholders' Equity** | **$25,180** | **$22,843** | **$23,065** | [STATEMENTS OF CASH FLOWS](index=68&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) This section provides supplemental consolidating statements of cash flows for equipment operations and financial services, including eliminations, for the nine months ended July 27, 2025, and July 28, 2024, detailing the cash generated and used by each segment before consolidation Net Cash Provided by Operating Activities by Segment (Nine Months Ended, Millions of Dollars) | Segment | 2025 | 2024 | | :------------------- | :----- | :----- | | Equipment Operations | $3,338 | $5,702 | | Financial Services | $1,899 | $1,754 | | Eliminations | $(1,773) | $(3,317) | | **Consolidated** | **$3,464** | **$4,139** | Net Cash Used for Investing Activities by Segment (Nine Months Ended, Millions of Dollars) | Segment | 2025 | 2024 | | :------------------- | :----- | :-----

Core Insights - John Deere is experiencing weaker demand in the agricultural sector, leading to significant year-over-year decreases in net income and sales [2][3] - The company is committed to investing $20 billion in U.S. manufacturing over the next 10 years, despite current challenges [7][9] Demand and Financial Performance - The agricultural machinery company reported a significant decline in demand, with farmers reducing spending due to lower crop prices [3][5] - Deere has faced tariff costs, estimating a potential $600 million impact for fiscal 2025, with $300 million already incurred year-to-date [3] Employment and Layoffs - Following the earnings report, Deere announced 238 layoffs in Illinois and Iowa, adding to thousands of layoffs over the past year due to decreased demand [4][5] Market Position and Future Outlook - Despite challenges in North America, Deere executives noted growth in demand in Europe and South America, expressing confidence in future prospects [6] - The company emphasized positive factors from trade deals and tax policy that could benefit its operations [6] Commitment to U.S. Manufacturing - Deere has publicly refuted claims of needing to shut down U.S. manufacturing, instead highlighting its commitment to significant investments in the U.S. market [7][9] - The CEO reiterated the company's dedication to innovation and growth while remaining competitive globally [9]