Core Insights - Deere & Company reported second-quarter fiscal 2025 earnings of $6.64 per share, exceeding the Zacks Consensus Estimate of $5.68, but reflecting a 22% decrease from the prior-year quarter due to lower shipment volumes [1] - Net sales for equipment operations were $11.17 billion, down 17.9% year over year, yet above the Zacks Consensus Estimate of $10.65 billion. Total net sales, including financial services, were $12.76 billion, down 16% year over year [2] Financial Performance - The cost of sales decreased 16.9% year over year to $7.61 billion, while total gross profit fell 20.1% to $3.55 billion. Selling, administrative, and general expenses decreased by 5.4% to $1.19 billion [3] - Total operating profit, including financial services, declined 26% year over year to $2.31 billion in the second quarter [3] Segment Performance - Production & Precision Agriculture segment sales fell 21% year over year to $5.23 billion, with operating profit decreasing 30% to $1.15 billion, surpassing the estimated revenue of $4.61 billion [4] - Small Agriculture & Turf sales decreased 6% to $2.99 billion, with operating profit rising 1% to $574 million, exceeding the estimate of $485 million [5] - Construction & Forestry sales were $2.95 billion, down 23% year over year, with operating profit decreasing 43% to $379 million, missing the estimate of $588 million [6] - Financial Services division revenues were $1.38 billion, down 1% year over year, with net income slightly declining to $161 million [7] Cash and Debt Position - Cash and cash equivalents at the end of the second quarter were $7.99 billion, up from $7.32 billion at the end of fiscal 2024. Cash flow from operating activities was $568 million in the first half of fiscal 2025, down from $944 million in the prior-year period [8] - Long-term borrowing increased to nearly $43 billion from $41 billion at the end of the previous year [8] 2025 Guidance - The company expects net income for fiscal 2025 to be between $4.75 billion and $5.50 billion. Net sales for Production & Precision Agriculture are projected to decrease by 15-20%, while Small Agriculture & Turf and Construction & Forestry sales are expected to decline by 10-15% [9] Share Price Performance - Deere's shares have increased by 28% over the past year, outperforming the industry's growth of 23.8% [10]

Financial Data and Key Metrics Changes - Net sales and revenues decreased by 16% to $12.763 billion, while net sales for equipment operations fell by 18% to $11.171 billion [16] - Net income attributable to Deere and Company was $1.804 billion, or $6.64 per diluted share [16] - Equipment operations achieved an 18.8% margin, demonstrating strong execution despite market challenges [15] Business Line Data and Key Metrics Changes - Production and Precision Ag segment saw net sales decline by 21% to $5.230 billion, with an operating profit of $1.148 billion and a 22% operating margin [17][18] - Small Ag and Turf segment's net sales decreased by 6% to $2.994 billion, with an operating profit of approximately $574 million and a 19.2% operating margin [19] - Construction and Forestry segment's net sales dropped by 23% to $2.947 billion, with an operating profit of $379 million and a 12.9% operating margin [27] Market Data and Key Metrics Changes - Large ag equipment industry sales in the U.S. and Canada are expected to decline by approximately 30% due to high interest rates and trade uncertainty [20] - Small ag and turf industry demand in the U.S. and Canada is projected to decrease by 10-15% [21] - European industry sales are expected to decrease by about 5%, while South America is forecasted to have flat sales [22][23] Company Strategy and Development Direction - The company remains committed to its Smart Industrial strategy, focusing on innovation and advanced technology integration [9][12] - A planned investment of $20 billion in U.S. operations over the next decade aims to enhance product development and manufacturing capabilities [13] - The company emphasizes maintaining customer relationships and delivering high uptime and reliability [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant global trade volatility and its impact on customer sentiment [6][16] - The outlook for fiscal year 2025 has been broadened due to a fluid tariff environment, with net income guidance now between $4.75 billion and $5.5 billion [33] - Management expressed optimism about future opportunities and the ability to drive value for customers despite current challenges [14][80] Other Important Information - The company is actively managing costs, production, inventory, and quality to navigate the uncertain market environment [9] - There is a focus on reducing used inventory levels in North America, with new inventory for tractors above 220 horsepower down over 40% year over year [62] - The company is enhancing its precision ag solutions, with significant growth in adoption and utilization of technologies like See and Spray [70][71] Q&A Session Summary Question: Can you discuss the SaaS models and the Precision Essential product line? - The company has three main SaaS offerings: precision digital technologies, sense and ag technologies, and forthcoming autonomous solutions [88][89] - The Precision Essentials product line includes foundational digital elements with a lower upfront cost and annual licensing [88] Question: What is the implied profitability for the PPA segment in the second half? - The profitability is impacted by tariff effects, mix impacts, and less favorable pricing compared to the previous year [100][101] Question: How will tariffs affect the early order program pricing for 2026? - The early order programs will maintain a similar structure, allowing for price flexibility as tariffs evolve [107][108] Question: Why are margins expected to be low in the second half of the year? - The low margins are primarily due to tariff impacts, mix changes, and less favorable pricing conditions [114]

Financial Data and Key Metrics Changes - Net sales and revenues decreased by 16% to $12.763 billion, while net sales for equipment operations fell by 18% to $11.171 billion [13] - Net income attributable to Deere and Company was $1.804 billion, or $6.64 per diluted share [13] - Equipment operations margin was 18.8%, demonstrating strong execution despite challenging market dynamics [12] Business Line Data and Key Metrics Changes - Production and Precision Ag segment net sales were down 21% to $5.230 billion, with an operating profit of $1.148 billion and a 22% operating margin [14] - Small Ag and Turf segment net sales decreased by 6% to $2.994 billion, with an operating profit of approximately $574 million and a 19.2% operating margin [15] - Construction and Forestry segment net sales declined by 23% to $2.947 billion, with an operating profit of $379 million and a 12.9% operating margin [24] Market Data and Key Metrics Changes - Large ag equipment industry sales in the U.S. and Canada are expected to decline by approximately 30% due to high interest rates and trade uncertainty [17] - Small ag and turf industry demand in the U.S. and Canada is projected to decrease by 10-15% [18] - European industry sales are expected to decrease by about 5%, while South American sales forecasts remain flat [19][20] Company Strategy and Development Direction - The company remains committed to its Smart Industrial strategy, focusing on innovation and advanced technology integration [10][12] - Plans to invest $20 billion in the U.S. over the next decade to enhance product development and manufacturing capabilities [11] - The company aims to navigate uncertain markets while maintaining investments in value-creating products and solutions [7] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of customer relationships and maintaining focus during periods of volatility [5][6] - The outlook for fiscal year 2025 has been broadened due to a fluid tariff environment, with net income guidance now between $4.75 billion and $5.5 billion [30] - Management expressed optimism about future opportunities despite current market challenges [12][68] Other Important Information - The company is actively working on mitigating tariff impacts, with an expected pre-tax tariff impact of over $500 million for fiscal year 2025 [38] - The company has seen stabilization in the North American ag market, which may provide reassurance if uncertainties abate [50] Q&A Session Questions and Answers Question: Can you discuss the SaaS models and the Precision Essential product line? - The company has three main SaaS offerings: precision digital technologies, sense and ag technologies, and forthcoming autonomous solutions [74][75] - The Precision Essentials product line includes core elements of precision agriculture, offered at a lower upfront cost with an annual license [74] Question: What is the implied profitability for the PPA segment in the second half? - The tariff impact and a mix impact from North American large ag being down are significant factors affecting profitability [82] Question: How will the early order program pricing change in 2026? - The structure of early order programs will remain similar, providing price flexibility as tariffs evolve [87] Question: Can you clarify the price-cost conversation and potential pricing strategies for 2026? - The company is reviewing list prices for 2026 to ensure they can continue to push pricing ahead of inflation [99]

Core Insights - Deere reported $11.17 billion in revenue for the quarter ended April 2025, reflecting a year-over-year decline of 17.9% and an EPS of $6.64 compared to $8.53 a year ago, exceeding the Zacks Consensus Estimate of $10.65 billion by 4.89% and delivering an EPS surprise of 16.90% [1] Revenue Performance - Equipment Operations net sales were $11.17 billion, surpassing the average estimate of $10.67 billion by six analysts, but showing a year-over-year decline of 17.9% [4] - Construction & Forestry net sales were $2.95 billion, below the average estimate of $3.05 billion, with a year-over-year decline of 23.3% [4] - Agriculture and Turf net sales totaled $8.22 billion, exceeding the average estimate of $7.62 billion, but still reflecting a year-over-year decline of 15.8% [4] - Small Ag & Turf net sales were $2.99 billion, above the average estimate of $2.77 billion, with a year-over-year change of -6% [4] - Production & Precision Ag net sales reached $5.23 billion, exceeding the average estimate of $4.85 billion, but showing a decline of 20.5% year-over-year [4] Financial Services - Financial services revenues amounted to $1.39 billion, slightly above the average estimate of $1.35 billion, with a year-over-year change of -0.7% [4] - Total financial services revenue was $1.50 billion, surpassing the average estimate of $1.46 billion, reflecting a year-over-year decline of 5.5% [4] - Finance and Interest Income from financial services was $1.38 billion, slightly above the average estimate of $1.37 billion, with a year-over-year decline of 7.8% [4] - Other Income from financial services was $121 million, exceeding the average estimate of $90.58 million, showing a year-over-year increase of 31.5% [4] Stock Performance - Shares of Deere have returned +10% over the past month, compared to the Zacks S&P 500 composite's +9% change, indicating a relatively strong performance [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance against the broader market in the near term [3]

Group 1 - Deere reported quarterly earnings of $6.64 per share, exceeding the Zacks Consensus Estimate of $5.68 per share, but down from $8.53 per share a year ago, representing an earnings surprise of 16.90% [1] - The company posted revenues of $11.17 billion for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 4.89%, compared to year-ago revenues of $13.61 billion [2] - Deere has surpassed consensus EPS estimates four times over the last four quarters and topped consensus revenue estimates three times during the same period [2] Group 2 - The stock has gained approximately 17.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 0.2% [3] - The current consensus EPS estimate for the upcoming quarter is $5.35 on revenues of $10.44 billion, and for the current fiscal year, it is $18.89 on revenues of $38.23 billion [7] - The Zacks Industry Rank for Manufacturing - Farm Equipment is currently in the bottom 36% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

2Q 2025 Earnings Call Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management's current beliefs, expectations and assumptions regarding the future of the Company's business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, changes in circumstances, and othe ...

Core Insights - Deere & Company reported a net income of $1.804 billion for Q2 2025, down 24% from $2.370 billion in Q2 2024, with earnings per share decreasing from $8.53 to $6.64 [1][3][19] - For the first half of 2025, net income was $2.673 billion, a 35% decline from $4.121 billion in the same period last year [1][19] - The company anticipates full-year net income for fiscal 2025 to be between $4.75 billion and $5.50 billion [3][12] Financial Performance - Total net sales and revenues decreased by 16% to $12.763 billion in Q2 2025, and by 22% to $21.272 billion for the first six months [2][4][19] - Net sales for Q2 2025 were $11.171 billion, down from $13.610 billion in Q2 2024, while for the first half, sales fell from $24.097 billion to $17.980 billion [2][19] - Operating profit for the total company decreased by 26% to $2.308 billion in Q2 2025, and by 41% to $3.101 billion for the first half [4][19] Segment Performance - Production & Precision Agriculture segment saw net sales drop by 21% to $5.230 billion, with operating profit down 30% to $1.148 billion [5][16] - Small Agriculture & Turf segment reported a 6% decrease in net sales to $2.994 billion, but operating profit increased by 1% to $574 million [6][16] - Construction & Forestry segment experienced a 23% decline in net sales to $2.947 billion, with operating profit falling 43% to $379 million [7][16] Market Outlook - The company expects a decline of approximately 30% in large agriculture equipment sales in the U.S. and Canada, and a 10-15% decrease in small agriculture and turf sales [10][11] - Construction equipment sales in the U.S. and Canada are projected to decrease by around 10% [11] - The outlook incorporates the effects of global import tariffs, with potential future tariff impacts not included due to uncertainty [12][14] Strategic Focus - The company emphasizes ongoing investment in advanced products and manufacturing capabilities to remain competitive [4][8] - Deere & Company aims to continue significant investments in its core U.S. market over the next decade, focusing on innovation and growth [4][8]

Financial Performance - Deere & Company reported a net income of $1.804 billion for Q2 2025, down 24% from $2.370 billion in Q2 2024, with earnings per share decreasing from $8.53 to $6.64[1][5] - Worldwide net sales and revenues decreased by 16% to $12.763 billion for Q2 2025, and by 22% to $21.272 billion for the first six months of the year[2][24] - The company forecasts full-year net income for fiscal 2025 to be in the range of $4.75 billion to $5.50 billion[3] - Production & Precision Agriculture segment net sales fell by 21% to $5.230 billion, with operating profit down 30% to $1.148 billion[6][24] - Small Agriculture & Turf segment net sales decreased by 6% to $2.994 billion, while operating profit remained stable at $574 million[9][24] - Construction & Forestry segment net sales dropped by 23% to $2.947 billion, with operating profit declining 43% to $379 million[13][24] - Financial Services net income for Q2 2025 was flat at $161 million, reflecting less favorable financing spreads[15][24] - Total net income attributable to Deere & Company for the six months ended April 27, 2025, was $2,673 million, down from $4,121 million in the same period of 2024, representing a decline of 35%[27] - Net income attributable to Deere & Company for the three months ended April 27, 2025, was $1,643 million, down 25.5% from $2,208 million in the same period of 2024[35] - Net income attributable to Deere & Company for the six months ended April 27, 2025, was $2,282 million, down 39.2% from $3,751 million in the same period of 2024[37] Sales and Revenue Trends - Net sales for the three months ended April 27, 2025, were $11,171 million, a decrease of 18% compared to $13,610 million in the same period of 2024[27] - For the six months ended April 27, 2025, net sales were $17,980 million, a decline of 25.5% from $24,097 million in the same period of 2024[37] - Total costs and expenses for the three months ended April 27, 2025, were $10,426 million, a decrease of 13.9% from $12,118 million in the same period of 2024[35] Cash Flow and Liquidity - Cash and cash equivalents increased to $7,991 million as of April 27, 2025, compared to $5,553 million as of April 28, 2024[29] - The company reported a net cash provided by operating activities of $568 million for the six months ended April 27, 2025, compared to $944 million in the same period of 2024[31] - Cash flows from operating activities totaled $1,045 million in 2025, down from $3,031 million in 2024, reflecting a significant decline[43] - Cash and cash equivalents at the end of the period increased to $6,352 million in 2025 from $3,839 million in 2024, showing a strong liquidity position[43] Investments and Future Outlook - The company plans to continue significant investments in advanced products and manufacturing capabilities over the next decade[4] - The industry outlook indicates a decline of approximately 30% in large agriculture in the U.S. and Canada, and a 10-15% decrease in small agriculture and turf[18] - The company is navigating challenges from global import tariffs and uncertain trade environments, which may impact future performance[21] Balance Sheet and Assets - Total assets as of April 27, 2025, were $106,303 million, a slight decrease from $107,320 million as of October 27, 2024[29] - Total liabilities decreased to $81,925 million as of April 27, 2025, from $84,395 million as of October 27, 2024[29] - Stockholders' equity for Deere & Company increased to $24.287 billion in April 2025, compared to $22.684 billion in April 2024, marking a growth of about 7.1%[41] Dividends and Shareholder Returns - Dividends declared for the three months ended April 27, 2025, were $1.62 per share, an increase from $1.47 per share in the same period of 2024[27] - Dividends paid increased to $843 million in 2025 from $796 million in 2024, demonstrating a commitment to returning capital to shareholders[43] Other Financial Metrics - Research and development expenses for the three months ended April 27, 2025, were $549 million, slightly down from $565 million in the same period of 2024[27] - Interest expense for the three months ended April 27, 2025, was $784 million, a decrease of 6.2% from $836 million in the same period of 2024[35] - The provision for income taxes for the three months ended April 27, 2025, was $539 million, down from $751 million in the same period of 2024[35] - The provision for credit losses increased to $174 million in 2025 from $131 million in 2024, indicating a rise in expected credit losses[43]

Core Viewpoint - Deere & Company is expected to report second-quarter fiscal 2025 results on May 15, with strong demand from product launches but challenges from elevated production expenses and low commodity prices impacting performance [1]. Group 1: Factors Influencing Q2 Performance - Low commodity prices and weak farmer spending have led to lower shipment volumes, negatively affecting the company's fiscal second-quarter performance [2]. - High production expenses, along with increased selling, administrative, and research and development costs, are anticipated to impact the company's margins [3]. - The company is reviewing its cost structure to improve margins, with favorable price realization expected to offset some of the higher material and freight costs [4]. Group 2: Segment Projections for Q2 - The Production & Precision Agriculture segment is projected to generate revenues of $4.61 billion, a year-over-year decrease of 23.9%, with operating profit expected to fall 62.5% to $619 million [5]. - The Small Agriculture & Turf segment's revenues are estimated at $2.78 billion, indicating a 12.6% decline, with operating profit expected to decrease by 15.1% to $485 million [6]. - The Construction & Forestry segment's sales are estimated at $3.29 billion, a 14.4% dip, with operating profit predicted to drop 12% to $588 million [7]. - The Financial Services segment is projected to have revenues of $1.48 billion, a 6.7% increase, with operating profit estimated at $232 million [8]. Group 3: Overall Q2 Expectations - The Zacks Consensus Estimate for Deere's earnings has decreased by 1.1% to $5.68 per share, implying a 33.4% decline from the previous year, with revenue expectations at $10.6 billion, a 21.7% year-over-year decline [9]. - The earnings surprise history shows that Deere has beaten the Zacks Consensus Estimates in the past four quarters, with an average surprise of 8.9% [10]. Group 4: Earnings Prediction Model - The current Earnings ESP for Deere is -0.03%, indicating that the model does not predict an earnings beat this time [11]. - Deere holds a Zacks Rank of 3, suggesting a hold position [12]. Group 5: Share Price Performance - Deere's shares have increased by 22.6% over the past year, outperforming the industry's growth of 18.5% [13].

Core Viewpoint - Analysts expect Deere (DE) to report a quarterly earnings of $5.68 per share, reflecting a year-over-year decline of 33.4%, with revenues projected at $10.65 billion, down 21.8% from the previous year [1] Revenue Estimates - The consensus estimate for 'Net Sales and Revenues- Equipment Operations- Net sales' is $10.67 billion, indicating a year-over-year change of -21.6% [3] - Analysts predict 'Net Sales and Revenues- Construction & forestry net sales' to reach $3.05 billion, suggesting a decline of 20.7% year over year [4] - The combined estimate for 'Net Sales and Revenues- Agriculture and Turf' is $7.62 billion, reflecting a year-over-year change of -22% [4] - 'Net Sales and Revenues- Small ag & turf net sales' is expected to be $2.77 billion, down 13.1% from the prior year [5] - The estimate for 'Net Sales and Revenues- Production & precision ag net sales' stands at $4.85 billion, indicating a decline of 26.3% year over year [5] - The overall estimate for 'Net Sales and Revenues- Net sales' is $10.62 billion, suggesting a year-over-year change of -22% [6] - 'Net Sales and Revenues- Other revenues' is projected at $212.04 million, down 7.8% from the previous year [6] Financial Services Revenue Estimates - Analysts estimate 'Net Sales and Revenues- Financial services revenues' at $1.35 billion, reflecting a year-over-year change of -3.2% [7] - The total for 'Net Sales and Revenues- Financial services- Total' is projected to be $1.46 billion, indicating an 8.3% decline year over year [7] - 'Net Sales and Revenues- Financial services- Finance and Interest Income' is expected to reach $1.37 billion, down 8.7% from the prior year [8] - 'Net Sales and Revenues- Financial services- Other Income' is forecasted at $90.58 million, suggesting a year-over-year change of -1.5% [8] - 'Net Sales and Revenues- Equipment Operations- Finance and interest income' is estimated at $110.08 million, indicating a decline of 14.7% from the previous year [9] Stock Performance - Over the past month, shares of Deere have returned +7.3%, outperforming the Zacks S&P 500 composite's +3.8% [9]