Strong ag margins highlight continued value delivery amid market fluctuations. Global ag fundamentals are expected to remain weak as construction moderates. Full-year net income forecast unchanged despite challenging environment. MOLINE, Ill., Aug. 15, 2024 /PRNewswire/ -- Deere & Company reported net income of $1.734 billion for the third quarter ended July 28, 2024, or $6.29 per share, compared with net income of $2.978 billion, or $10.20 per share, for the quarter ended July 30, 2023. For the first nine months of the year, net income attributable to Deere & Company was $5.855 billion, or $21.04 per share, compared with $7.797 billion, or $26.35 per share, for the same period last year. Worldwide net sales and revenues decreased 17 percent, to $13.152 billion, for the third quarter of 2024 and decreased 11 percent, to $40.572 billion, for nine months. Net sales were $11.387 billion for the quarter and $35.484 billion for nine months, compared with $14.284 billion and $41.765 billion last year, respectively. "John Deere's third-quarter results showcase our disciplined execution in the face of challenging conditions in the global agricultural and construction sectors," said John C. May, chairman and chief executive officer. "Despite facing significant headwinds, our teams have demonstrated resiliency in adapting to market fluctuations, allowing us to remain focused on advancing our strategy and consistently providing exceptional value to our customers." Company Outlook & Summary Net income attributable to Deere & Company for fiscal 2024 is forecasted to be approximately $7.0 billion. "In response to weak market conditions, we have taken steps to reduce costs and strategically align our production with customer needs," said May. "Although these decisions were difficult, they are vital for our continued success and competitiveness. Our commitment to our customers is at the heart of everything we do, and we are confident that these proactive measures will allow us to continue investing in innovative, high-quality products and solutions that improve our customers' lives." Deere & Company Third Quarter Year to Date $ in millions, except per share amounts 2024 2023 % Change 2024 2023 % Change Net sales and revenues $ 13,152 $ 15,801 -17 % $ 40,572 $ 45,839 -11 % Net income $ 1,734 $ 2,978 -42 % $ 5,855 $ 7,797 -25 % Fully diluted EPS $ 6.29 $ 10.20 $ 21.04 $ 26.35 Results for the presented periods were affected by special items. See Note 1 of the financial statements for further details. Production & Precision Agriculture Third Quarter $ in millions 2024 2023 % Change Net sales $ 5,099 $ 6,806 -25 % Operating profit $ 1,162 $ 1,782 -35 % Operating margin 22.8 % 26.2 % Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased due to lower shipment volumes and employee-separation programs' expenses, presented as a special item below. These factors were partially offset by price realization and lower warranty expenses.   Small Agriculture & Turf Third Quarter $ in millions 2024 2023 % Change Net sales $ 3,053 $ 3,739 -18 % Operating profit $ 496 $ 732 -32 % Operating margin 16.2 % 19.6 % Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased primarily due to lower shipment volumes and higher warranty expenses, partially offset by price realization.   Construction & Forestry Third Quarter $ in millions 2024 2023 % Change Net sales $ 3,235 $ 3,739 -13 % Operating profit $ 448 $ 716 -37 % Operating margin 13.8 % 19.1 % Construction and forestry sales decreased for the quarter due to lower shipment volumes. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization.   Financial Services Third Quarter $ in millions 2024 2023 % Change Net income $ 153 $ 216 -29 % Financial services net income for the quarter decreased due to a higher provision for credit losses and less-favorable financing spreads, partially offset by income earned on higher average portfolio balances and favorable discrete tax items. Industry Outlook for Fiscal 2024 Agriculture & Turf U.S. & Canada: Large Ag Down ~ 15% Small Ag & Turf Down ~ 10% Europe Down ~ 15% South America (Tractors & Combines) Down 15 to 20% Asia Down moderately Construction & Forestry U.S. & Canada: Construction Equipment Down 5 to 10% Compact Construction Equipment Flat to Down 5% Global Forestry Down ~ 10% Global Roadbuilding Flat to Down 5%   Deere Segment Outlook for Fiscal 2024 Currency Price $ in millions Net Sales Translation Realization Production & Precision Ag Down 20% to 25% ~ Flat Up ~ 2.0% Small Ag & Turf Down 20% to 25% ~ Flat Up ~ 2.0% Construction & Forestry Down 10% to 15% ~ Flat Up ~ 0.5% Financial Services Net Income ~$  720 Financial Services. Fiscal-year 2024 net income attributable to Deere & Company for the financial services operations is forecasted to be approximately $720 million. Results are expected to be higher than fiscal year 2023 due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less-favorable financing spreads. A correction of the accounting treatment for financing incentives offered to John Deere dealers impacted 2023 financial results. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. FORWARD-LOOKING STATEMENTS Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook," "Deere Segment Outlook," and "Condensed Notes to Interim Consolidated Financial Statements" relating to future events, expectations, and trends constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of the company's operations generally while others could more heavily affect a particular line of business. Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the company expressly disclaims any obligation to update or revise its forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to: changes in and compliance with U.S., foreign and international laws, regulations, and policies relating to trade, economic sanctions, data privacy, spending, taxing, banking, monetary, environmental (including climate change and engine emissions), and farming policies; political, economic, and social instability of the geographies in which the company operates, including the ongoing war between Russia and Ukraine and the conflict in the Middle East; adverse macroeconomic conditions, including unemployment, inflation, interest rate volatility, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints; worldwide demand for food and different forms of renewable energy; the ability to execute business strategies, including the company's Smart Industrial Operating Model, Leap Ambitions, and mergers and acquisitions; the ability to understand and meet customers' changing expectations and demand for John Deere products and solutions; accurately forecasting customer demand for products and services and adequately managing inventory; the ability to integrate new technology, including automation and machine learning, and deliver precision technology and solutions to customers; changes to governmental communications channels (radio frequency technology); the ability to adapt in highly competitive markets; dealer practices and their ability to manage inventory and distribution of John Deere products and to provide support and service precision technology solutions; changes in climate patterns, unfavorable weather events, and natural disasters; governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for John Deere products and solutions; availability and price of raw materials, components, and whole goods; delays or disruptions in the company's supply chain; the company's equipment fails to perform as expected, which could result in warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations; the ability to attract, develop, engage, and retain qualified employees; the impact of workforce reductions on employee retention, morale, and institutional knowledge; security breaches, cybersecurity attacks, technology failures, and other disruptions to John Deere information technology infrastructure and products; loss of or challenges to intellectual property rights; legislation introduced or enacted that could affect the company's business model and intellectual property, such as right to repair or right to modify legislation; investigations, claims, lawsuits, or other legal proceedings; events that damage the company's reputation or brand, such as the recent social media campaign targeting the company's stance on certain social issues or the company's response thereto; the agricultural business cycle, which can be unpredictable and is affected by factors such as world grain stocks, available farm acres, acreage planted, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment. Further information concerning the company and its businesses, including factors that could materially affect the financial results, is included in the company's filings with the SEC (including, but not limited to, the factors discussed in Item 1A. "Risk Factors" of the company's most recent Annual Report on Form 10‑K and subsequent Quarterly Reports on Form 10-Q). There also may be other factors that the company cannot anticipate or that are not described herein because the company does not currently perceive them to be material.   DEERE & COMPANY THIRD QUARTER 2024 PRESS RELEASE (In millions of dollars) Unaudited Three Months Ended Nine Months Ended July 28 July 30 % July 28 July 30 % 2024 2023 Change 2024 2023 Change Net sales and revenues: Production & precision ag net sales $ 5,099 $ 6,806 -25 $ 16,529 $ 19,826 -17 Small ag & turf net sales 3,053 3,739 -18 8,663 10,886 -20 Construction & forestry net sales 3,235 3,739 -13 10,292 11,053 -7 Financial services revenues 1,489 1,228 +21 4,259 3,375 +26 Other revenues 276 289 -4 829 699 +19 Total net sales and revenues $ 13,152 $ 15,801 -17 $ 40,572 $ 45,839 -11 Operating profit: * Production & precision ag $ 1,162 $ 1,782 -35 $ 3,857 $ 5,160 -25 Small ag & turf 496 732 -32 1,393 2,028 -31 Construction & forestry 448 716 -37 1,682 2,179 -23 Financial services 191 286 -33 657 565 +16 Total operating profit 2,297 3,516 -35 7,589 9,932 -24 Reconciling items ** 62 98 -37 111 29 +283 Income taxes (625) (636) -2 (1,845) (2,164) -15 Net income attributable to Deere & Company $ 1,734 $ 2,978 -42 $ 5,855 $ 7,797 -25 * Operating profit is income from continuing operations before corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit for financial services includes the effect of interest expense and foreign exchange gains or losses. ** Reconciling items are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.   DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Nine Months Ended July 28, 2024 and July 30, 2023 (In millions of dollars and shares except per share amounts) Unaudited Three Months Ended Nine Months Ended 2024 2023 2024 2023 Net Sales and Revenues Net sales $ 11,387 $ 14,284 $ 35,484 $ 41,765 Finance and interest income 1,461 1,253 4,207 3,326 Other income 304 264 881 748 Total 13,152 15,801 40,572 45,839 Costs and Expenses Cost of sales 7,848 9,624 24,205 28,288 Research and development expenses 567 528 1,664 1,571 Selling, administrative and general expenses 1,278 1,110 3,608 3,392 Interest expense 840 623 2,478 1,671 Other operating expenses 264 310 930 971 Total 10,797 12,195 32,885 35,893 Income of Consolidated Group before Income Taxes 2,355 3,606 7,687 9,946 Provision for income taxes 625 636 1,845 2,164 Income of Consolidated Group 1,730 2,970 5,842 7,782 Equity in income of unconsolidated affiliates 1 2 4 5 Net Income 1,731 2,972 5,846 7,787 Less: Net loss attributable to noncontrolling interests (3) (6) (9) (10) Net Income Attributable to Deere & Company $ 1,734 $ 2,978 $ 5,855 $ 7,797 Per Share Data Basic $ 6.32 $ 10.24 $ 21.13 $ 26.48 Diluted 6.29 10.20 21.04 26.35 Dividends declared 1.47 1.25 4.41 3.70 Dividends paid 1.47 1.25 4.29 3.58 Average Shares Outstanding Basic 274.5 290.8 277.1 294.4 Diluted 275.6 292.1 278.2 295.9 See Condensed Notes to Interim Consolidated Financial Statements.   DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited July 28 October 29 July 30 2024 2023 2023 Assets Cash and cash equivalents $ 7,004 $ 7,458 $ 6,576 Marketable securities 1,140 946 841 Trade accounts and notes receivable – net 7,469 7,739 9,297 Financing receivables – net 43,896 43,673 41,302 Financing receivables securitized – net 8,274 7,335 7,001 Other receivables 2,270 2,623 3,118 Equipment on operating leases – net 7,118 6,917 6,709 Inventories 7,696 8,160 9,350 Property and equipment – net 7,092 6,879 6,418 Goodwill 3,960 3,900 3,994 Other intangible assets – net 1,030 1,133 1,199 Retirement benefits 3,126 3,007 3,573 Deferred income taxes 1,898 1,814 1,360 Other assets 2,903 2,503 2,659 Assets held for sale 2,965 Total Assets $ 107,841 $ 104,087 $ 103,397 Liabilities and Stockholders' Equity Liabilities Short-term borrowings $ 15,294 $ 17,939 $ 17,143 Short-term securitization borrowings 7,869 6,995 6,608 Accounts payable and accrued expenses 14,397 16,130 15,340 Deferred income taxes 481 520 506 Long-term borrowings 42,692 38,477 38,112 Retirement benefits and other liabilities 2,156 2,140 2,536 Liabilities held for sale 1,803 Total liabilities 84,692 82,201 80,245 Redeemable noncontrolling interest 84 97 101 Stockholders' Equity Total Deere & Company stockholders' equity 23,062 21,785 23,048 Noncontrolling interests 3 4 3 Total stockholders' equity 23,065 21,789 23,051 Total Liabilities and Stockholders' Equity $ 107,841 $ 104,087 $ 103,397 See Condensed Notes to Interim Consolidated Financial Statements.   DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Nine Months Ended July 28, 2024 and July 30, 2023 (In millions of dollars) Unaudited 2024 2023 Cash Flows from Operating Activities Net income $ 5,846 $ 7,787 Adjustments to reconcile net income to net cash provided by operating activities: Provision (credit) for credit losses 222 (64) Provision for depreciation and amortization 1,598 1,527 Impairments and other adjustments 53 173 Share-based compensation expense 159 112 Credit for deferred income taxes (125) (429) Changes in assets and liabilities: Receivables related to sales (2,446) (5,059) Inventories 234 (663) Accounts payable and accrued expenses (1,015) 47 Accrued income taxes payable/receivable 31 (595) Retirement benefits (246) (116) Other (172) 176 Net cash provided by operating activities 4,139 2,896 Cash Flows from Investing Activities Collections of receivables (excluding receivables related to sales) 19,143 17,592 Proceeds from maturities and sales of marketable securities 333 127 Proceeds from sales of equipment on operating leases 1,451 1,445 Cost of receivables acquired (excluding receivables related to sales) (21,113) (20,714) Purchases of marketable securities (572) (213) Purchases of property and equipment (1,043) (887) Cost of equipment on operating leases acquired (2,165) (1,968) Collateral on derivatives – net 390 240 Other (95) (185) Net cash used for investing activities (3,671) (4,563) Cash Flows from Financing Activities Net proceeds (payments) in short-term borrowings (original maturities three months or less) (992) 5,040 Proceeds from borrowings issued (original maturities greater than three months) 15,512 9,972 Payments of borrowings (original maturities greater than three months) (10,792) (5,862) Repurchases of common stock (3,227) (4,663) Dividends paid (1,202) (1,065) Other (88) (43) Net cash provided by (used for) financing activities (789) 3,379 Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash (6)