Slide 1: Safe Harbor Statement & Disclosures
Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the company’s plans and projections for the future, including estimates and assumptions with respect to economic, political, technological, weather, market acce
Slide 2: 3Q 2017 Overview
3Q 2017 Overview ($ millions except where noted) 3Q 2017 3Q 2017 vs. 3Q 2016 Net Sales & Revenues $7,808 16% Net Sales (equipment operations) $6,833 17% Net Income (attributable to Deere & Company) $642 31% Diluted EPS ($ per share) $1.97 27% 25
Slide 3: 3Q 2017 Overview Equipment Operations
3Q 2017 Overview Equipment Operations 3Q 2017 vs. 3Q 2016 Net Sales 17% Price realization Currency translation 1 point Flat 26
Slide 4: Worldwide Agriculture & Turf 3Q 2017 Overview
Worldwide Agriculture & Turf 3Q 2017 Overview ($ millions) 3Q 2017 3Q 2017 vs. 3Q 2016 Net Sales $5,338 13% Operating Profit* $685 20% *3Q 2017 operating profit impacted by: + Shipment volumes + Price realization Production costs Warranty costs Selling, Administrative & General expenses 27
Slide 5: Global Grains Production and Consumption
Global Grains Production and Consumption Source: USDA FAS, August 2017 28 0 500 1,000 1,500 2,000 2,500 3,000 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18F Million Metric Tons Production Consumption
Slide 6: Global Grains Stocks-to-Use
Global Grains Stocks-to-Use 10 Year Average = 22% Source: USDA FAS, August 2017 29 10% 15% 20% 25% 30% 0 200 400 600 800 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18F Million Metric Tons Ending Stocks S/U Ratio
Slide 7: Global Grains (Less China) Stocks-to-Use
Global Grains (Less China) Stocks-to-Use 10 Year Average = 17% Source: USDA FAS, August 2017 30 10% 15% 20% 25% 30% 0 200 400 600 800 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18F Million Metric Tons Ending Stocks S/U Ratio
Slide 8: U.S. Net Cash Farm Income
U.S. Net Cash Farm Income 10 Year Average = $105.5 Source: USDA ERS, February 2017 31 $0 $25 $50 $75 $100 $125 $150 2001 2003 2005 2007 2009 2011 2013 2015 2017F $ Billions (Nominal)
Slide 9: U.S. Cropland Value
U.S. Cropland Value Source: USDA NASS, August 2017 32 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2001 2003 2005 2007 2009 2011 2013 2015 2017 $ per Acre Iowa Illinois Indiana U.S.
Slide 10: U.S. Cropland Cash Rent
U.S. Cropland Cash Rent Source: USDA NASS, August 2017 33 $0 $50 $100 $150 $200 $250 $300 2001 2003 2005 2007 2009 2011 2013 2015 2017 $ per Acre Iowa Illinois Indiana U.S.
Slide 11: Agriculture & Turf Retail Sales Industry Outlook
Agriculture & Turf Retail Sales Industry Outlook Fiscal 2017 Forecast Previous Forecast U.S. and Canada Ag ~ 5% ~ 5% EU 28 Ag Flat to down 5% Flat to down 5% South America Ag (tractors and combines) ~ 20% ~ 20% Asia Ag Flat to down slightly Flat to up slightly U.S. and Canada Turf and Utility ~ Flat
Slide 12: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2017 Forecast Previous Forecast Net Sales ~ 9% ~ 8% Currency translation ~ 1 point ~ Flat Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 35
Slide 13: Worldwide Construction & Forestry 3Q 2017 Overview
Worldwide Construction & Forestry 3Q 2017 Overview ($ millions) 3Q 2017 3Q 2017 vs. 3Q 2016 Net Sales $1,495 29% Operating Profit* $110 104% *3Q 2017 operating profit impacted by: + Shipment volumes Selling, Administrative & General expenses Sales-incentive expenses Production costs 36
Slide 14: Worldwide Construction & Forestry U.S. Economic Indicators
Worldwide Construction & Forestry U.S. Economic Indicators (annual percentage rate* except where noted) Fiscal 2017 Forecast Previous Forecast GDP Growth 2.2% 2.3% Housing Starts (thousands) 1,214 1,258 Total Construction Investment 3.0% 3.3% Government Construction Investment 1.7% 0.1% * Change fro
Slide 15: Worldwide Construction & Forestry Deere & Company Outlook
Worldwide Construction & Forestry Deere & Company Outlook Fiscal 2017 Forecast Previous Forecast Net Sales ~ 15% ~ 13% Currency translation ~ Flat ~ Flat Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 38
Slide 16: Worldwide Financial Services Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 0.27% 15 Year Average Source: Deere & Company forecast as of 18 August 2017 39 0.0% 0.5% 1.0% 1.5% 2.0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017F 10 Year Average
Slide 17: Worldwide Financial Services
Worldwide Financial Services ($ millions) 3Q 2017 Fiscal 2017 Forecast Previous Forecast Net Income (attributable to Deere & Company) $131.2 ~ $475 ~ $475 Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 40
Slide 18: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory ($ millions) 3Q 2017* Fiscal 2017 Forecast** Previous Forecast** Agriculture & Turf $589 ~ $575 ~ $225 Construction & Forestry $278 ~ $375 ~ $175 Total (as reported) $867 ~ $950 ~ $400 Total (constant exchange) $704 ~ $775 ~ $400 * Change at 30 July 2017 vs
Slide 19: Cost of Sales Equipment Operations
3Q 2017 Fiscal 2017 Forecast Previous Forecast COS (percent of Net Sales) 77.1% ~ 77% ~ 77% Cost of Sales Equipment Operations Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 42
Slide 20: Research & Development Expense Equipment Operations
3Q 2017 vs. 3Q 2016 Fiscal 2017 Forecast Previous Forecast R&D Expense 1% ~ 1% ~ 1% Research & Development Expense Equipment Operations Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 43
Slide 21: Income Taxes Equipment Operations
3Q 2017 Fiscal 2017 Forecast Previous Forecast Effective Tax Rate 27% 30-32% 32-34% Income Taxes Equipment Operations Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 45
Slide 22: Net Operating Cash Flows Equipment Operations
Net Operating Cash Flows Equipment Operations Fiscal 2017 Forecast* ~ $2.9 billion * Previous forecast ~ $3.1 billion Note: 2008-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” Source: Deere & Company forecast as of 18 August 2017 (pr
Slide 23: Deere & Company Outlook Fiscal 2017 Forecast
Deere & Company Outlook Fiscal 2017 Forecast ($ billions except where noted) 4Q 2017 Forecast Fiscal 2017 Forecast Previous Forecast Net Sales (equipment operations) ~ 24% ~ 10% ~ 9% Price realization Currency translation ~ 1 point ~ 2 points ~ 1 point ~ 1 point ~ 1 point ~ Flat Net Income (attribut
Slide 24: Deere & Company Outlook
Deere & Company Outlook Fiscal 2017 Forecast 4Q 2017 cal 2017 ($ billions except where noted) Forecast Forecast Net Sales (equipment operations) BR -2% BB ~10% Price realization Bw rpoint BP ~ r point ~ 1 point Currency translation Be 2points BP ~ r point ~ Flat Net Income (attributable to Deere & C
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Slide 26: Deere Use-of-Cash Priorities
Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily available short- and long-term funding mechanisms Reflects the strategic nature of our financial services operation Committed to “A” Rating Cash from Operations Fund Operating and Growth N
Slide 27: Sources and Uses of Cash Fiscal 2004-2016
Sources and Uses of Cash Fiscal 2004-2016 Equipment Operations $ Millions ~ 61% of cash from operations returned to shareholders * Other includes proceeds from maturities and sales of marketable securities and purchases of marketable securities and reconciliation for non-cash items including the eff
Slide 28: Deere Quarterly Dividends Declared 1Q 2004 – 3Q 2017
Deere Quarterly Dividends Declared 1Q 2004 – 3Q 2017 * Adjusted for 2 for 1 stock split on 26 November 2007 Dividend raised 114% since 2010 52 $0.11 $0.28 $0.60 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 2004 2005 2006 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 29: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans * All shares adjusted for two-for-one stock split effective 26 November 2007 2004–3Q 2017: Cumulative cost of repurchases $16.4 billion Shares repurchased 245.0 million Average repurchase price $66.96 December 2013 authorization of $8 billion: Amo
Slide 30: Pension and OPEB Expense
Pension and OPEB Expense ($ millions) 3Q 2017 Fiscal 2017 Forecast Previous Forecast Pension and OPEB Expense $12 ~ $30 ~ $35 Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 2017) 54
Slide 31: Other Information Equipment Operations
($ millions) Fiscal 2017 Forecast Previous Forecast Capital Expenditures ~ $650 ~ $650 Depreciation and Amortization ~ $850 ~ $850 Pension/OPEB Contributions ~ $115 ~ $100 Other Information Equipment Operations Source: Deere & Company forecast as of 18 August 2017 (previous forecast as of 19 May 201
Slide 32: Economic Update EU
Economic Update EU 28 * Includes wheat, barley, corn, sunflower seed, rapeseed, soybean, sugar beet, cotton, rice Source: IHS Global Insight, May 2017 Source: EU Com, LTO, IFCN, July 2017 Deere & Company forecast as of 18 August 2017 56 $0 $30 $60 $90 $120 $150 2008 2011 2014 2017F US$ Billions Crop
Slide 33: Economic Update Brazil
Economic Update Brazil * Includes key grains, ethanol, sugar Source: IHS Global Insight, May 2017 10.5% 7.5% Note: PSI-FINAME was key credit line for machinery acquisition 2011–2014; Moderfrota is currently the most attractive credit line Source: ABIMAQ (Brazilian Association of Machinery & Equipmen
Slide 34: Economic Update Other Selected Markets
Economic Update Other Selected Markets * Includes corn, wheat, rice, barley, sorghum, oilseeds, peanut, sugar, cotton Source: IHS Global Insight, May 2017 58 $0 $75 $150 $225 $300 2008 2011 2014 2017F US$ Billions China - Crop Value of Production* $0 $75 $150 $225 $300 2008 2011 2014 2017F US$ Billi
Slide 35: U.S. Farm Commodity Prices
Source: USDA, 31 July 2017 U.S. Farm Commodity Prices 59 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $0 $4 $8 $12 $16 $20 2004 2006 2008 2010 2012 2014 2016 Cotton - $ per Pound $ per Bushel Cotton Wheat Corn Soybeans
Slide 36: U.S. Farm Commodity Prices
($ per bushel except where noted) 2015/16 2016/17 Estimate 2017/18 Projection Previous 2017/18 Corn $3.61 $3.35 $3.30 $3.40 Soybeans $8.95 $9.50 $9.30 $9.30 Wheat $4.89 $3.89 $4.80 $4.25 Cotton ($ per pound) $0.61 $0.68 $0.61 $0.64 U.S. Farm Commodity Prices Source: Deere & Company forecast as of 18
Slide 37: U.S. Acres Harvested
(millions) 2016/17 Estimate 2017/18 Projection Corn 86.7 83.5 Soybeans 82.7 88.7 Wheat 43.9 38.1 Cotton 9.5 11.1 Source: Deere & Company forecast as of 18 August 2017 U.S. Acres Harvested 61
Slide 38: U.S. Crop Yields
(bushels per acre except where noted) 2016/17 Estimate 2017/18 Projection Corn 174.6 169.5 Soybeans 52.1 49.4 Wheat 52.6 45.6 Cotton (pounds per harvested acre) 867 892 Source: Deere & Company forecast as of 18 August 2017 U.S. Crop Yields 62
Slide 39: Global Stocks-to-Use Ratios
Global Stocks-to-Use Ratios Source: USDA, 10 August 2017 Cotton Wheat Corn Soybeans 63 0% 20% 40% 60% 80% 100% 120% 0% 10% 20% 30% 40% 50% 60% 1996 1999 2002 2005 2008 2011 2014 2017P Cotton Ratios
Slide 40: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts Source: 2001–2015: USDA, 7 February 2017 2016F–2017F: Deere & Company forecast as of 18 August 2017 64 $0 $100 $200 $300 $400 $500 2001 2003 2005 2007 2009 2011 2013 2015 2017F $ Billions Crops Livestock Government Payments
Slide 41: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts ($ billions) 2015 2016 Forecast 2017 Forecast Previous 2017 Crops $185.7 $187.7 $186.7 $186.7 Livestock $189.8 $168.2 $168.2 $168.2 Government Payments $10.8 $13.0 $12.5 $12.5 Total Cash Receipts $386.3 $368.9 $367.4 $367.4 Source: 2015: USDA, 7 February 2017 2016F–2017F: Dee
Slide 42: U.S. Net Farm Cash Income
U.S. Net Farm Cash Income ($ billions) 2015 2016 Forecast 2017 Forecast Previous 2017 Total Cash Receipts $386.3 $368.9 $367.4 $367.4 Other Farm-Related Income $34.3 $30.6 $34.4 $34.4 Gross Cash Income $420.6 $399.5 $401.8 $401.8 Cash Expenses ($315.9) ($307.6) ($308.3) ($308.3) Net Cash Income $104
Slide 43: U.S. Farm Balance Sheet
U.S. Farm Balance Sheet Source: 1973–2015: USDA, 7 February 2017 2016F–2017F: Deere & Company forecast as of 18 August 2017 67 10% 15% 20% 25% 30% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017F $ Billions Farm Debt Farm Equity Debt to E
Slide 44: July 2017 Retail Sales and Dealer Inventories
July 2017 Retail Sales and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 3% Double digits 2WD Tractors (40 < 100 PTO hp) 2% In line with the industry 2WD Tractors (100+ PTO hp) 23% More than the industry 4WD Tractors 11% Single digit Combines 6% Doub
Slide 45: Retail Sales U.S. and Canada, EU 28 Ag
Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Single digit Construction & Forestry First-in-the-Dirt Settlements Single digit Single digit July 2017 Retail Sales Retail Sales EU 28 Ag Deere* Tractors Single digit Combines Single digit * Based on internal sales reports 69
Slide 46: 4Q 2017 earnings call scheduled for 22 November 2017
Deere & Company’s 4Q 2017 earnings call is scheduled for 9:00 a.m. central time on Wednesday, 22 November 2017 70
Slide 47: 4Q 2017 earnings call scheduled for 22 November 2017
Deere & Company’s 4Q 2017 earnings call is scheduled for 9:00 a.m. central time on Wednesday, 22 November 2017 @ JOHN DEERE