Core Insights - Deere & Company has been recognized as one of the 2025 World's Most Ethical Companies® by Ethisphere, marking its 18th recognition in this category [1][2] - The company is one of only 12 honorees in the Industrial Manufacturing industry, highlighting its commitment to ethical business practices [1] - This recognition reflects the dedication of Deere's employees, dealers, and partners to integrity and ethical conduct in business operations [2] Company Overview - Deere & Company has a long-standing history of nearly 200 years, starting with the invention of a steel plow [3] - The company plays a significant role in producing food, fiber, fuel, and infrastructure, impacting people globally [3] - Deere drives innovation across various sectors, including agriculture, construction, forestry, turf, and power systems [3] Recognition Process - The 2025 World's Most Ethical Companies® list includes 136 honorees from 19 countries and 44 industries [4] - Applicants must provide over 240 proof points demonstrating their commitment to ethics, compliance, governance, and social impact [4] - A panel of experts conducts a thorough qualitative analysis of each application, dedicating thousands of hours to the evaluation process [4]

Core Viewpoint - Investor sentiment towards Deere & Co. has declined due to an analyst downgrade and the announcement of new tariffs on agricultural products by President Trump, which could negatively impact the company's growth prospects [1][2][4]. Company Summary - Analysts at R. W. Baird downgraded Deere's stock rating from outperform to neutral, maintaining a price target of $501 per share, indicating only an 8% upside from the stock's recent closing price [2]. - Despite optimism regarding Deere's inventory management and expected earnings growth in 2026, the analyst sees limited upside potential due to recent stock rebounds and broader uncertainties in the agricultural sector [3]. - Deere reported a significant 30% year-over-year drop in sales and a 50% decline in net income for the first quarter, reflecting a challenging business environment [6]. - The company has reiterated its net income outlook of $5 billion to $5.5 billion for 2025, which would represent a nearly 22% decrease from 2024 at the highest end of its guidance [6]. Industry Summary - President Trump's tariffs on external agricultural products, effective April 2, are intended to support the domestic agriculture industry but pose a threat to companies like Deere, which relies heavily on international sales [4][5]. - China, the largest importer of U.S. agricultural products in fiscal 2023, has announced retaliatory tariffs on various imported goods from the U.S., further complicating the market landscape for agricultural equipment manufacturers [4]. - Approximately 34% of Deere's total sales and revenue originated from outside the U.S. and Canada in 2024, making the company vulnerable to the impacts of tariffs and geopolitical tensions [5].

Core Insights - The report provides an analysis of Deere & Co.'s strategic focus and plans for the agriculture equipment market amid a challenging global macroeconomic environment [2][6] - The global agriculture equipment market is expected to experience a slight decrease in year-on-year deliveries for 2025 due to subdued demand and various market headwinds [4][5] Group 1: Market Conditions - The agriculture equipment market is facing pressure from low and fluctuating commodity prices, high input costs, and geopolitical conflicts, which are impacting farm incomes [3][5] - Equipment sales saw significant decreases in 2024 and are projected to remain soft through 2025, influenced by the relatively low average age of the in-service fleet in traditional markets [5][6] Group 2: Strategic Focus and Plans - The report outlines key strategies and priorities for Deere & Co. in 2025, focusing on sustainability through the production of electric and sustainable fuels-powered equipment [5][11] - A comprehensive outlook and demand forecast for the global agriculture equipment market is provided, highlighting key trends and challenges that will shape the industry's future [6][12] Group 3: Financial Performance and Analysis - The report includes a financial performance analysis based on the latest available results, covering revenue trends, profitability growth, and cash flow from operations [10][13] - It also assesses the company's strengths, weaknesses, opportunities, and threats (SWOT) to identify areas for potential growth and risk mitigation [11][13]

Financial Performance - Net sales and revenues for the first quarter of 2025 decreased to $8,508 million, down 30% from $12,185 million in the same period of 2024[106] - Net income attributable to Deere & Company for the first quarter of 2025 was $869 million, a decline of 50% compared to $1,751 million in the first quarter of 2024[106] - The diluted earnings per share (EPS) for the first quarter of 2025 was $3.19, down from $6.23 in the first quarter of 2024, representing a 49% decrease[106] - Total consolidated net income attributable to Deere & Company was $639 million in Q1 2025, down from $1.544 billion in Q1 2024, representing a decrease of about 58.7%[143] Segment Performance - Production and Precision Agriculture segment net sales fell by 37% to $3,067 million, with operating profit down 68% to $338 million[108] - Small Agriculture and Turf segment net sales decreased by 28% to $1,748 million, with operating profit down 62% to $124 million[111] - Construction and Forestry segment net sales dropped by 38% to $1,994 million, with operating profit declining by 89% to $65 million[113] - Net sales for the Equipment segment decreased to $6.809 billion in Q1 2025 from $10.486 billion in Q1 2024, a decline of approximately 35.5%[143] Cash Flow and Liquidity - Cash, cash equivalents, and marketable securities decreased to $7,815 million as of January 26, 2025, from $8,478 million on October 27, 2024[120] - Net cash used for operating activities was $(1,132) million for the three months ended January 26, 2025, compared to $(908) million for the same period in 2024[122] - Cash returned to shareholders was $844 million in the first three months of 2025[125] - Total cash, cash equivalents, and restricted cash at the end of the period rose to $6,907 million in 2025, up from $5,300 million in 2024, representing an increase of approximately 30%[148] Debt and Equity - The ratio of interest-bearing debt to stockholder's equity improved to 7.6 to 1 as of January 26, 2025, from 8.1 to 1 on October 27, 2024[120] - Total external borrowings decreased by $812 million in the first three months of 2025[131] Market Outlook - The company expects sales volumes to decline in 2025 due to reduced demand, influenced by high interest rates and market uncertainty[94] - The agricultural market is projected to face lower sales volumes and higher sales incentives in 2025 due to unfavorable market conditions[98] Inventory and Receivables - Trade accounts and notes receivable decreased by $395 million during the first three months of 2025, and decreased by $2,864 million compared to a year ago, attributed to lower sales[126] - Inventories increased by $651 million during the first three months of 2025, but decreased by $1,193 million compared to a year ago due to lower forecasted demand[128] - Receivables related to sales increased by $1,063 million in 2025, compared to a decrease of $(277) million in 2024, indicating a shift in sales dynamics[148] Expenses and Costs - The cost of sales to net sales ratio increased to 74.0% in the first quarter of 2025, compared to 68.7% in the first quarter of 2024[107] - Interest expense for the Equipment segment decreased to $84 million in Q1 2025 from $108 million in Q1 2024, a decline of about 22.2%[143] - The Equipment operations reported a cost of sales of $5.045 billion in Q1 2025, down from $7.207 billion in Q1 2024, a decrease of approximately 30.0%[143] Capital Expenditures and Investments - Capital expenditures in 2025 are estimated to be approximately $1,600 million[129] - Research and development expenses remained relatively stable at $526 million in Q1 2025 compared to $533 million in Q1 2024[143] Asset and Liability Management - Total assets decreased to $103.119 billion as of January 26, 2025, from $107.320 billion as of October 27, 2024, a reduction of approximately 3.7%[146] - Total liabilities decreased to $80.555 billion as of January 26, 2025, from $84.395 billion as of October 27, 2024, a decline of about 4.4%[147] Other Financial Metrics - The company reported a provision for income taxes of $27 million in Q1 2025, compared to a provision of $469 million in Q1 2024[143] - The provision for depreciation and amortization increased to $549 million in 2025 from $520 million in 2024, indicating ongoing investment in asset maintenance[148] - The company reported a decrease in retirement benefits cash flow impact to $(688) million in 2025 from $(129) million in 2024, highlighting changes in employee benefit obligations[148]

Group 1 - Deere reported Q1 earnings with no significant changes, indicating that the thesis is unfolding as expected and the environment is improving, leading to more positives than negatives [1] - The company is viewed as a high-quality stock currently undergoing a challenging period, presenting an asymmetric investment opportunity [1] Group 2 - Best Anchor Stocks has a portfolio that has demonstrated revenue growth with below-average volatility since its inception in January 2022, significantly outperforming the market [2] - The service offers a 2-week free trial, encouraging potential investors to join and explore the investment opportunities [2]

1Q 2025 Earnings Call 13 February 2025 Forward-Looking Statements This earnings call and accompanying materials may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "forecast," "guidance," "project," "target," "outlook," "prospects," "expect," "estimate," "will," "goal," "plan," "anticipate," "intend," "predict," "believe," "likely," "future," "could," "ma ...

Financial Data and Key Metrics Changes - Net sales and revenues decreased by 30% to $8.508 billion, while net sales for equipment operations fell by 35% to $6.809 billion [11] - Net income attributable to Deere & Company was $869 million, or $3.19 per diluted share, including $163 million of discrete tax benefits related to special items [11][32] - Equipment margin for the quarter was reported at 7.7% [8] Business Line Data and Key Metrics Changes - Production and Precision Ag business saw net sales decline by 37% to $3.067 billion, with an operating profit of $338 million and an 11% operating margin [12] - Small Ag and Turf segment's net sales decreased by 28% to $1.748 billion, with an operating profit of $124 million and a 7.1% operating margin [14] - Construction and Forestry segment's net sales dropped by 38% to $1.994 billion, with an operating profit of $65 million and a 3.3% operating margin [25] Market Data and Key Metrics Changes - Large Ag equipment industry sales in the US and Canada are expected to decline by approximately 30% due to higher interest rates and macro uncertainty [16] - Industry demand for small Ag and Turf in the US and Canada remains down around 10% [16] - European industry sales are projected to decline around 5%, while South American tractor and combine sales are expected to be flat [18][19] Company Strategy and Development Direction - The company aims to manage production and inventory levels proactively to navigate the downturn in demand [54] - Focus on reducing used inventory levels and returning to normal production and shipment seasonality [37] - Continued investment in technology and precision agriculture solutions to enhance customer value [66][84] Management's Comments on Operating Environment and Future Outlook - Management noted that while global agricultural fundamentals improved, demand remains constrained due to market uncertainty [9] - The outlook for fiscal 2025 remains largely unchanged, with expectations to recover first-quarter shortfalls over the remainder of the year [9][43] - Management expressed cautious optimism regarding farmer profitability due to government support and improving commodity prices [44][46] Other Important Information - The company completed the sale of 50% ownership in Banco John Deere, impacting financial services net income [31] - A voluntary contribution of $520 million was made to fund the salaried post-retirement health care plan, affecting cash flows for the full year [33] Q&A Session Summary Question: Large ag production cadence and seasonal ramp-up - Management indicated that the second quarter is expected to be the highest for sales, with year-over-year comparisons anticipated to improve in Q3 and Q4 [92][93] Question: Confidence in bottoming process for end market activity - Management acknowledged that early order programs were below industry forecasts but emphasized confidence in the visibility provided by these orders [100] Question: Precision Ag update and global expectations - Management reported strong demand for Precision Ag Essentials in Brazil, with over 1,500 orders and significant growth in engaged acres globally [111][112] Question: Farmer profitability and demand insights - Management noted improvements in ag fundamentals, with global consumption outpacing supply for grains and oilseeds for the first time in four years [127][128] Question: Deere's performance and margin outlook - Management expressed confidence in achieving mid-cycle targets, emphasizing control over inventory and production costs while maintaining R&D investments [135][138]

Core Insights - Deere & Company reported first-quarter fiscal 2025 earnings of $3.19 per share, exceeding the Zacks Consensus Estimate of $3.13, but reflecting a 49% decline from the prior-year quarter due to lower shipment volumes [1] - Net sales for equipment operations were $6.81 billion, down 35.1% year over year, missing the Zacks Consensus Estimate of $7.70 billion. Total net sales, including financial services, were $8.51 billion, down 30% from the previous year [2] Financial Performance - The cost of sales decreased by 30% year over year to $5.04 billion, while total gross profit fell 46.1% to $1.77 billion. Selling, administrative, and general expenses decreased by 8.8% to $972 million [3] - Total operating profit, including financial services, declined 64% year over year to $793 million [3] Segment Performance - Production & Precision Agriculture segment sales fell 37% year over year to $3.1 billion, with operating profit declining 68% to $338 million [4] - Small Agriculture & Turf sales decreased by 28% to $1.75 billion, with operating profit down 62% to $124 million [5] - Construction & Forestry sales were $1.99 billion, down 38% year over year, and operating profit decreased 89% to $65 million [6] - Financial Services division revenues were $1.45 billion, up 1.5% year over year, with operating income increasing to $266 million [7] Cash and Debt Position - At the end of the first quarter of fiscal 2025, cash and cash equivalents were $6.6 billion, down from $7.3 billion at the end of fiscal 2024. Cash used in operating activities was $1.13 billion, compared to an outflow of $0.91 billion in the prior-year quarter. Long-term debt increased to $43.4 billion from $43.2 billion [8] 2025 Guidance - The company expects net income for fiscal 2025 to be between $5 billion and $5.5 billion. Net sales for Production & Precision Agriculture are projected to decrease by 15-20%, Small Agriculture & Turf sales are expected to decline by 10%, and Construction & Forestry sales are projected to decrease by 10-15% [10] Share Price Performance - Deere's shares have increased by 25.7% over the past year, outperforming the industry's growth of 21.6% [11]

Core Viewpoint - Deere & Co. reported disappointing earnings and provided a subdued forecast, leading to a decline in its stock price [1][2] Financial Performance - In the fiscal first quarter ending January 26, Deere earned $3.19 per share on revenue of $8.51 billion, missing earnings estimates by $0.06 but exceeding revenue expectations by $620 million [2] - Revenue decreased by 30% year over year, indicating weak demand among farmers [2] Market Conditions - The agricultural equipment industry is cyclical, and Deere's performance is affected by fluctuating crop prices and uncertain global demand [2][4] - CEO John C. May emphasized the company's focus on optimizing inventory levels amid challenging market conditions [3] Future Outlook - Management forecasts a decline in precision agriculture sales by 15% to 20% in fiscal 2025, forestry sales down by 10% to 15%, and small equipment and turf sales down by 10% [3] - The current market environment is challenging for selling heavy equipment, as farmers typically purchase when crop prices are high [4]

Core Insights - Deere & Company experienced a significant drop in shares following disappointing first-quarter sales for fiscal 2025, which fell short of analyst expectations [1][6] Company Performance - Sales for the first quarter decreased by 30% year-over-year, totaling $8.51 billion, which is approximately $500 million below analyst consensus [2][6] - The company reported earnings of $3.19 per share for the quarter ending January 28, down from $6.23 per share a year prior, but slightly above estimates by 8 cents [2][6] Future Outlook - Deere has maintained its full-year profit forecast between $5 billion and $5.5 billion, aligning closely with the current analyst expectation of $5.27 billion [3] - The company anticipates a decline in sales across its divisions, projecting a 10% drop in its small agriculture and turf segment, and a 10% to 20% decline in production, precision agriculture, and construction and forestry divisions [4][5][6] - The sales forecast does not account for potential impacts from import tariffs and retaliatory actions from other countries, indicating a volatile market environment [5]