Financial Data and Key Metrics Changes - For fiscal year 2025, net sales and revenues decreased by 12% to $45.7 billion, while net sales for equipment operations fell by 13% to $38.9 billion [8] - Net income attributable to Deere & Company was $5 billion, or $18.50 per diluted share [8] - In the fourth quarter, net sales and revenues increased by 11% to $12.4 billion, with net sales for equipment operations rising by 14% to $10.6 billion [8] - Net income attributable to Deere & Company for the fourth quarter decreased to $1.1 billion, or $3.93 per diluted share [8] Business Segment Data and Key Metrics Changes - Production and Precision Ag segment saw net sales of $4.74 billion, up 10% year-over-year, with an operating profit of $604 million and a 12.7% operating margin [9] - Small Ag and Turf segment reported net sales of $2.57 billion, up 7% year-over-year, but operating profit declined to $25 million due to higher costs [10] - Construction and Forestry segment's net sales increased by 27% year-over-year to $3.382 billion, with an operating profit of $348 million and a 10.3% operating margin [13] Market Data and Key Metrics Changes - Industry sales of large equipment in the U.S. and Canada are expected to decline by 15%-20% in fiscal year 2026, while small agriculture and turf demand is estimated to be flat to up 5% [10][11] - In Europe, the industry is projected to be flat to up 5%, with robust dairy sector margins and improving arable cash flows [11] - South America is expected to see flat industry sales, with Brazilian customer demand tempered by high interest rates and strong global crop yields [11] Company Strategy and Development Direction - The company aims to manage inventory carefully and avoid oversupply while focusing on used inventory reduction [37] - Deere is committed to advancing its Smart Industrial journey, emphasizing technology and innovation to enhance customer value [20][23] - The company anticipates growth in small ag and turf, as well as construction and forestry, while entering fiscal year 2026 with lean production in North American large ag [67] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilization in certain segments and geographies, despite challenges in large ag [7][8] - The company highlighted strong crop use and consumption, new trade agreements, and supportive government payments as potential growth drivers [11] - Management acknowledged the resilience of the organization in navigating a challenging market environment while maintaining strong performance levels [20][26] Other Important Information - The company expects full-year net income for fiscal year 2026 to be in the range of $4 billion to $4.75 billion, with an effective tax rate between 25%-27% [17] - Cash flow from equipment operations is projected to be between $4 billion and $5 billion [17] - The company plans to resume normal capital allocation activities in 2026 after pausing buybacks in the fourth quarter of fiscal 2025 [66] Q&A Session Summary Question: How is the company thinking about offsetting the $1.2 billion tariff headwind in 2026? - The company expects to capture back some of the incremental exposure this year and some from 2025, with a plan to continue executing activities to mitigate the impact [73][74] Question: Can you provide insights on the production plans and product mix implications for seasonality? - The company anticipates net sales in production precision ag to be close to the first quarter of 2025, but margins will be significantly lower due to a lean production plan [51]

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]