John Deere(US:DE)2026-02-26 14:20Financial Performance - Net sales and revenues for the first quarter of 2026 increased by 13% to $9,611 million compared to $8,508 million in 2025, driven by higher sales volumes and positive foreign currency translation effects [128]. - Net income attributable to Deere & Company decreased by 24% to $656 million in the first quarter of 2026 from $869 million in 2025, primarily due to incremental tariffs of $272 million and prior period favorable discrete tax items [128]. - The company expects net sales to increase in 2026 compared to 2025, despite a decline in large agriculture sales, with improvements anticipated in Construction & Forestry and Small Agriculture & Turf segments [117]. - Net income for the Equipment segment decreased to $411 million in 2026 from $637 million in 2025, while the Financial Services segment reported a net income of $244 million, up from $230 million [171]. - Net income attributable to Deere & Company was $412 million, down 35.5% from $639 million in the prior year [166]. Segment Performance - Production & Precision Agriculture segment net sales increased by 3% to $3,163 million in the first quarter of 2026, while operating profit decreased by 59% to $139 million [132]. - Small Agriculture & Turf segment net sales rose by 24% to $2,168 million, with operating profit increasing by 58% to $196 million, driven by higher shipment volumes and price realization [136]. - Construction & Forestry segment net sales increased by 34% to $2,670 million, with operating profit more than doubling to $137 million, supported by strong demand in the construction market [140]. Cost and Expenses - The cost of sales to net sales ratio increased to 78.5% in 2026 from 74.0% in 2025, primarily due to higher tariffs, partially offset by production efficiencies [129]. - Cost of sales increased to $6,291 million, up 24.7% from $5,045 million in the previous year [166]. - Research and development expenses were $554 million, an increase of 5.3% from $526 million in the previous year [166]. - Interest expense decreased to $93 million from $84 million, indicating a rise in financing costs [166]. - The provision for income taxes was $134 million, compared to a credit of $(13) million in the same quarter last year [166]. Cash Flow and Liquidity - Cash, cash equivalents, and marketable securities decreased to $8.196 billion as of February 1, 2026, from $9.687 billion on November 2, 2025 [146]. - Net cash used for operating activities was $(890) million in the first three months of 2026, an improvement from $(1,132) million in the same period last year [147]. - Cash flows from operating activities showed a net cash outflow of $1,343 million in 2026 compared to an outflow of $2,875 million in 2025, indicating an improvement in operational cash flow [171]. - The company’s cash, cash equivalents, and restricted cash at the end of the period stood at $7,073 million in 2026, compared to $6,907 million in 2025, indicating a stable liquidity position [171]. Assets and Liabilities - Total assets increased to $103.436 billion in February 2026, up from $105.996 billion in November 2025 and $103.119 billion in January 2025 [169]. - Total liabilities decreased to $77.079 billion in February 2026 from $79.989 billion in November 2025, while stockholders' equity rose to $26.300 billion from $25.950 billion [170]. - Inventories rose by $880 million in the first three months of 2026, primarily due to seasonal increases [152]. - Long-term borrowings decreased to $41.804 billion in February 2026 from $43.544 billion in November 2025, indicating a reduction in debt levels [170]. Financial Services - Financial Services revenue decreased by 5% to $1,488 million, primarily due to the deconsolidation of Banco John Deere S.A. and a 2% lower average balance of receivables [143]. - The provision for credit losses in the Financial Services segment decreased to $35 million in 2026 from $66 million in 2025, reflecting improved credit quality [171]. - The company distributed earnings of Financial Services amounting to $350 million in 2026, up from $162 million in 2025, highlighting a stronger performance in financial services [171]. Market and Economic Factors - Incremental import tariffs adversely affected product costs, with a direct impact of $361 million in the first quarter of 2026, excluding supplier impacts [122]. - The company is actively evaluating the potential financial impact of a recent Supreme Court decision that may provide tariff relief and recovery of previously paid amounts [123]. - The effect of exchange rate changes on cash resulted in a positive impact of $78 million in 2026, compared to a negative impact of $74 million in 2025, indicating favorable currency movements [171].