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
1 3Q 2019 Earnings Call 16 August 2019 24
Slide 2: Safe Harbor Statement & Disclosures
2 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 ac
Slide 3: 3Q 2019 Overview
3 3Q 2019 Overview ($ millions except where noted) 3Q 2019 3Q 2018 3Q 2019 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* $849*
Slide 4: 3Q 2019 Overview Equipment Operations
4 3Q 2019 Overview Equipment Operations 3Q 2019 vs. 3Q 2018 Net Sales 3% Price realization Currency translation 3 points 2 points 27
Slide 5: Worldwide Agriculture & Turf 3Q 2019 Overview
5 Worldwide Agriculture & Turf 3Q 2019 Overview ($ millions) 3Q 2019 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 28
Slide 6: Global Stocks-to-Use Ratio and Ending Stocks
6 Source: USDA FAS; 12 August 2019 0 5 10 15 20 25 30 35 40 0 100 200 300 400 500 600 700 800 2000/01 2005/06 2010/11 2015/16 2019/20 Stocks - to - Use Ratio (%) Ending Stocks (MMT) Corn Soybean Wheat Global S/U Ratio Global Ending Stocks 29
Slide 7: U.S. Farm Cash Receipts
7 U.S. Farm Cash Receipts $0 $100 $200 $300 $400 $500 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F $ Billions 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 $16B in 2019
Slide 8: Brazil & Argentina Production
8 0 50 100 150 200 250 300 350 400 2001/02 2003/04 2005/06 2007/08 2009/10 2011/12 2013/14 2015/16 2017/18 2019/20F MMT 1st Crop Corn 2nd Crop Corn Soybeans Wheat Brazil & Argentina Production Source: Deere Forecast as of 16 August 2019 31
Slide 9: Agriculture & Turf Industry Outlook
9 Fiscal 2019 Forecast Previous Forecast U.S. and Canada Ag ~ Flat Flat to up 5% EU 28 Ag ~ Flat ~ Flat South America Ag (tractors and combines) Flat to up 5% Flat to up 5% Asia Ag Flat to slightly down Flat to slightly down U.S. and Canada Turf and Utility Flat to up 5% Flat to up 5% Agriculture &
Slide 10: Worldwide Agriculture & Turf Deere & Company Outlook
10 Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2019 Forecast Previous Forecast Net Sales ~ 2% ~ 2% Currency translation ~ 2% ~ 3% Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 33
Slide 11: Worldwide Construction & Forestry 3Q 2019 Overview
11 ($ millions) 3Q 2019 3Q 2019 vs. 3Q 2018 Net Sales $3,023 1% Operating Profit* $378 35% Worldwide Construction & Forestry 3Q 2019 Overview *3Q 2019 operating profit impacted by: + Wirtgen operating profit + Price realization − Sales mix 34
Slide 12: Worldwide Construction & Forestry U.S. Economic Indicators
12 Fiscal 2019 Forecast Previous Forecast GDP Growth Housing Starts (thousands) Total Construction Investment Government Construction Investment Global Transportation Investment Crude Oil Price Worldwide Construction & Forestry U.S. Economic Indicators Source: IHS Markit, Calendar Year Estimates – J
Slide 13: Worldwide Construction & Forestry Deere & Company Outlook
13 Fiscal 2019 Forecast* Previous Forecast* Net Sales ~ 10% ~ 11% Currency translation Wirtgen ~ 2 points ~ 4 points ~ 2 points ~ 4 points Worldwide Construction & Forestry Deere & Company Outlook * Includes 12 months of Wirtgen sales, vs 10 months in fiscal 2018 Source: Deere & Company forecast as
Slide 14: Worldwide Financial Services Credit Loss History
14 0.0% 0.5% 1.0% 1.5% 2.0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 0.18% 15 Year Average Source: Deere & Company forecast as of 16 August 2019 37
Slide 15: Worldwide Financial Services
15 Worldwide Financial Services ($ millions) 3Q 2019 Fiscal 2019 Forecast Previous Forecast Net Income (attributable to Deere & Company) $175 ~$620 ~ $600 Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 38
Slide 16: Consolidated Trade Receivables & Inventory
16 Consolidated Trade Receivables & Inventory ($ millions) 3Q 2019* Fiscal 2019 Forecast** Previous Forecast** Agriculture & Turf $359 ~ $100 ~ $50 Construction & Forestry $700 ~ $350 ~ $300 Total (as reported) $1,059 ~ $450 ~ $250 Total (constant exchange) $1,273 ~ $550 ~ $375 * Change at 28 July 2
Slide 17: Cost and Expenses Equipment Operations
17 ($ millions) 3Q 2019 Fiscal 2019 Forecast Previous 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) Cost and Expenses Equipment Operations 4
Slide 18: Income Taxes Equipment Operations
18 3Q 2019 Fiscal 2019 Forecast Previous Forecast Effective Tax Rate 21% 23-25% 24-26% Income Taxes Equipment Operations Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) 41
Slide 19: Net Operating Cash Flows Equipment Operations
19 Net Operating Cash Flows Equipment Operations Fiscal 2019 Forecast* ~ $3.4 billion $0 $1,000 $2,000 $3,000 $4,000 $5,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F $ Millions * Previous forecast ~$4.1 billion Note: 2010-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements
Slide 20: Deere & Company Outlook Fiscal 2019 Forecast
20 Source: Deere & Company forecast as of 16 August 2019 (previous forecast as of 17 May 2019) ($ billions except where noted) Fiscal 2019 Forecast Previous Forecast Net Sales (equipment operations) ~ 4% ~ 5% Price realization Currency translation Wirtgen ~ 3 points ~ 2 points ~ 1 point ~ 3 points ~
Slide 21: Appendix
21 Appendix 44
Slide 22: Share Repurchase
22 Share Repurchase As Part of Publicly Announced Plans * All shares adjusted for two-for-one stock split effective 26 November 2007 3Q 2019: Cost of repurchases $400.0 million Shares repurchased 2.6 million YTD 2019: Cost of repurchases $864.0 million Shares repurchased 5.6 million 2004–3Q 2019: Cu
Slide 23: The John Deere Strategy
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Slide 24: Other Information Equipment Operations
24 ($ millions) Fiscal 2019 Forecast Previous Forecast Capital Expenditures ~ $1,100 ~ $1,150 Depreciation & Amortization ~ $1,025 ~ $1,025 Pension/OPEB Expense ~ $130 ~ $125 Pension/OPEB Contributions ~ $500* ~ $200 Other Information Equipment Operations *Includes a potential $300 million voluntary
Slide 25: July 2019 Retail Sales and Dealer Inventories
25 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
Slide 26: July 2019 Retail Sales (Rolling 3 Months)
26 Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Single digit Construction & Forestry First-in-the-Dirt Settlements Low double digits Flat July 2019 Retail Sales (Rolling 3 Months) Retail Sales EU 28 Ag Deere* Tractors Low single digit Combines Low double digits * Based on in
Slide 27: Reconciliation of GAAP to Non-GAAP Financial Measures
27 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 ex
Slide 28: 4Q 2019 earnings call scheduled for 27 November 2019
Deere & Company’s 4Q 2019 earnings call is scheduled for 9:00 a.m. central time on Wednesday, 27 November 2019 51