Deere & Company · NYSE:DE
Deere & — Q3 2019 Earnings Presentation
28 slides from Deere &'s earnings presentation, Aug 16, 2019
Slide 1: 3Q 2019 Earnings Call
3Q 2019 Earnings Call 16 August 2019 1
Slide 2: 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 3: 3Q 2019 Overview
3Q 2019 Overview 3Q 2019 ($ millions except where noted) 3Q 2019 3Q 2018 vs. 3Q 2018 Net Sales & Revenues $10,036 $10,308 3% Net Sales (equipment operations) $8,969 $9,286 3% Net Income (attributable to Deere & Company) $899 $910 1% Adjusted Net Income (attributable to Deere & Company) $867* $849**
Slide 4: 3Q 2019 Overview: Equipment Operations
3Q 2019 Overview Equipment Operations 3Q 2019 vs. 3Q 2018 Net Sales 3% Price realization 3 points Currency translation 2 points 4
Slide 5: Worldwide Agriculture & Turf
Worldwide Agriculture & Turf 3Q 2019 Overview 3Q 2019 ($ millions) 3Q 2019 vs. 3Q 2018 Net Sales $5,946 6% Operating Profit* $612 24% *3Q 2019 operating profit impacted by: − Shipment volumes − Production costs − Foreign currency exchange + Price realization 5
Slide 6: Global Ending Stocks, Stocks-to-Use Ratio
Global Ending Stocks 800 40 700 35 600 30 Stocks-to-Use Ratio (%) Ending Stocks (MMT) 500 25 400 20 300 15 200 10 100 5 0 0 2000/01 2005/06 2010/11 2015/16 2019/20 Corn Soybean Wheat Global S/U Ratio Source: USDA FAS; 12 August 2019 6
Slide 7: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts $500 $400 $300 $ Billions $200 $100 $0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F Crops Livestock Government Payments USDA Aid* *USDA Aid includes both rounds of USDA Aid payment Note: USDA announced trade retaliation relief packages of $12B in 2018 and $16B in 2019.
Slide 8: Brazil & Argentina Production
Brazil & Argentina Production 400 350 300 250 MMT 200 150 100 50 0 2001/02 2003/04 2005/06 2007/08 2009/10 2011/12 2013/14 2015/16 2017/18 2019/20F 1st Crop Corn 2nd Crop Corn Soybeans Wheat Source: Deere Forecast as of 16 August 2019 8
Slide 9: Agriculture & Turf Industry Outlook
Agriculture & Turf Industry Outlook Fiscal 2019 Previous Forecast Forecast U.S. and Canada Ag ~ Flat Flat to up 5% EU 28 Ag ~ Flat ~ Flat South America Ag (tractors and combines) Flat to up 5% Flat to up 5% Asia Ag Flat to slightly down Flat to slightly down U.S. and Canada Turf and Utility Flat to
Slide 10: Worldwide Agriculture & Turf Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2019 Previous Forecast Forecast Net Sales ~ 2% ~ 2% Currency translation ~ 2% ~ 3% Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 10
Slide 11: Worldwide Construction & Forestry
Worldwide Construction & Forestry 3Q 2019 Overview 3Q 2019 ($ millions) 3Q 2019 vs. 3Q 2018 Net Sales $3,023 1% Operating Profit* $378 35% *3Q 2019 operating profit impacted by: + Wirtgen operating profit + Price realization − Sales mix 11
Slide 12: U.S. Economic Indicators
Worldwide Construction & Forestry U.S. Economic Indicators Fiscal 2019 Previous Forecast Forecast GDP Growth Housing Starts (thousands) Total Construction Investment Government Construction Investment Global Transportation Investment Crude Oil Price Source: IHS Markit, Calendar Year Estimates – July
Slide 13: Construction & Forestry Outlook
Worldwide Construction & Forestry Deere & Company Outlook Fiscal 2019 Previous Forecast* Forecast* Net Sales ~ 10% ~ 11% Currency translation ~ 2 points ~ 2 points Wirtgen ~ 4 points ~ 4 points * Includes 12 months of Wirtgen sales, vs 10 months in fiscal 2018 Source: Deere & Company forecast as of
Slide 14: Worldwide Financial Services: Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 2.0% 1.5% 1.0% 0.18% 0.5% 15 Year Average 0.0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F Source: Deere & Company forecast as of 16 August 2019 14
Slide 15: Worldwide Financial Services
Worldwide Financial Services Fiscal 2019 Previous ($ millions) 3Q 2019 Forecast Forecast Net Income (attributable to Deere & Company) $175 ~$620 ~ $600 Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 15
Slide 16: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory Fiscal 2019 Previous ($ millions) 3Q 2019* Forecast** Forecast** Agriculture & Turf $359 ~ $100 ~ $50 Construction & Forestry $700 ~ $350 ~ $300 Total (as reported) $1,059 ~ $450 ~ $250 Total (constant exchange) $1,273 ~ $550 ~ $375 * Change at 28 July 2019
Slide 17: Cost and Expenses
Cost and Expenses Equipment Operations Fiscal 2019 Previous ($ millions) 3Q 2019 Forecast Forecast COS (percent of Net Sales) 77% ~77% ~76% Research and Development 4% ~ 6% ~ 6% SA&G Expense 2% ~ 4% ~ 6% Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 17
Slide 18: Income Taxes
Income Taxes Equipment Operations Fiscal 2019 Previous 3Q 2019 Forecast Forecast Effective Tax Rate 21% 23-25% 24-26% Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 18
Slide 19: Net Operating Cash Flows
Net Operating Cash Flows Equipment Operations Fiscal 2019 Forecast* ~ $3.4 billion $5,000 $4,000 $3,000 $ Millions $2,000 $1,000 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F * Previous forecast ~$4.1 billion Note: 2010-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to
Slide 20: Deere & Company Outlook
Deere & Company Outlook Fiscal 2019 Forecast Fiscal 2019 Previous ($ billions except where noted) Forecast Forecast Net Sales (equipment operations) ~ 4% ~ 5% Price realization ~ 3 points ~ 3 points Currency translation ~ 2 points ~ 3 points Wirtgen ~ 1 point ~ 1 point Net Income (attributable to De
Slide 21: Appendix
Appendix 21
Slide 22: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans 37% net share reduction since 2004 3Q 2019: Cost of repurchases $400.0 million Share Repurchase Shares repurchased 2.6 million 40 $3.0 Millions of Shares* $2.5 YTD 2019: 30 Cost of repurchases $864.0 million $2.0 $ Billions Shares repurchased 5.6
Slide 23: The John Deere Strategy
THE JOHN DEERE STRATEGY OUR PURPOSE Committed to those linked to the land GLOBAL AGRICULTURAL jh Cone RUC TION OUTPACE 15% EQUIPMENT soLUTiONs N CONT INDUSTRY OPERATING MARGIN PREEMINENCE aT INGROWTH armi-cvel EXCEPTIONAL MANUFACTURING DISTINCTIVE EXTRAORDINARY OPERATING AND SUPPLY PRODUCT GLOBAL PE
Slide 24: Other Information
Other Information Equipment Operations Fiscal 2019 Previous ($ millions) Forecast Forecast Capital Expenditures ~ $1,100 ~ $1,150 Depreciation & Amortization ~ $1,025 ~ $1,025 Pension/OPEB Expense ~ $130 ~ $125 Pension/OPEB Contributions ~ $500* ~ $200 *Includes a potential $300 million voluntary co
Slide 25: July 2019 Retail Sales and Dealer Inventories
July 2019 Retail Sales (Rolling 3 Months) and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 1% More than the industry 2WD Tractors (40 < 100 PTO hp) 1% Single digit 2WD Tractors (100+ PTO hp) 5% In line with the industry 4WD Tractors 17% Less than th
Slide 26: July 2019 Retail Sales (Rolling 3 Months)
July 2019 Retail Sales (Rolling 3 Months) Retail Sales EU 28 Ag Deere* Tractors Low single digit Combines Low double digits Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Single digit Construction & Forestry First-in-the-Dirt Low double digits Settlements Flat * Based on inter
Slide 27: Supplemental Statement of Consolidated Income Information
Supplemental Statement of Consolidated Income Information Reconciliation of GAAP to Non-GAAP Financial Measures In addition to reporting financial results in conformity with accounting principles generally accepted in the United States (GAAP), the company also discusses non-GAAP measures that exclud
Slide 28: 4Q 2019 earnings call scheduled
Deere & Company’s 4Q 2019 earnings call is scheduled for 9:00 a.m. central time on Wednesday, 27 November 2019