Deere & Company · NYSE:DE
Deere & — Q4 2019 Earnings Presentation
26 slides from Deere &'s earnings presentation, Nov 27, 2019
Slide 1: 4Q 2019 Earnings Call
4Q 2019 Earnings Call 27 November 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: 2019 Overview
2019 Overview Fiscal 2019 ($ millions except where noted) Fiscal 2019 vs. Fiscal 2018 Net Sales & Revenues $39,258 5% Net Sales (equipment operations) $34,886 5% Net Income (attributable to Deere & Company) $3,253 37% Adjusted Net Income (attributable to Deere & Company) $3,185* 4% Diluted EPS ($ pe
Slide 4: 4Q 2019 Overview
4Q 2019 Overview 4Q 2019 ($ millions except where noted) 4Q 2019 vs. 4Q 2018 Net Sales & Revenues $9,896 5% Net Sales (equipment operations) $8,703 4% Net Income (attributable to Deere & Company) $722 8% Adjusted Net Income (attributable to Deere & Company) $681* 9% Diluted EPS ($ per share) $2.27 A
Slide 5: 4Q 2019 Overview: Equipment Operations
4Q 2019 Overview Equipment Operations 4Q 2019 vs. 4Q 2018 Net Sales 4% Price realization 3 points Currency translation 2 points 5
Slide 6: Worldwide Agriculture & Turf 4Q 2019 Overview
Worldwide Agriculture & Turf 4Q 2019 Overview 4Q 2019 ($ millions) 4Q 2019 vs. 4Q 2018 Net Sales $5,756 3% Operating Profit* $527 7% *4Q 2019 operating profit impacted by: − Production costs − Selling, administrative and general expenses − Foreign exchange − Research and development expenses + Price
Slide 7: Global Stocks-to-Use Ratios
Global Stocks-to-Use Ratios 60% 120% 50% 100% 40% 80% Wheat Cotton Ratios Corn 30% 60% Cotton 20% 40% Soybeans 10% 20% 0% 0% 1995 1998 2001 2004 2007 2010 2013 2016 2019P Source: USDA, 8 November 2019 7
Slide 8: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts $500 $400 $300 $ Billions $200 $100 $0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020F Crops Livestock Government Payments USDA Aid* *USDA Aid includes partial MFP1 and two tranches of MFP2 Note: USDA announced a trade retaliation relief package $16B in 2019. The $16B pack
Slide 9: Agriculture & Turf Industry Outlook
Agriculture & Turf Industry Outlook Fiscal 2020 Forecast U.S. and Canada Ag Down ~5% EU 28 Ag ~ Flat South America Ag (tractors and combines) ~ Flat Asia Ag ~ Flat U.S. and Canada Turf and Utility ~ Flat Source: Deere & Company forecast as of 27 November 2019 9
Slide 10: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2020 Forecast Net Sales ~ 5-10% Currency translation ~ 1% Price realization ~ 2% Source: Deere & Company forecast as of 27 November 2019 10
Slide 11: Worldwide Construction & Forestry 4Q 2019 Overview
Worldwide Construction & Forestry 4Q 2019 Overview 4Q 2019 ($ millions) 4Q 2019 vs. 4Q 2018 Net Sales $2,947 8% Operating Profit* $261 12% *4Q 2019 operating profit impacted by: − Production costs − Selling, administrative and general expenses − Sales mix + Shipment volumes + Price realization 11
Slide 12: Worldwide Construction & Forestry Outlook
Worldwide Construction & Forestry Deere & Company Outlook Fiscal 2020 Forecast Net Sales ~ 10-15% Currency translation ~ 1 point Price Realization ~ 1 point Source: Deere & Company forecast as of 27 November 2019 12
Slide 13: Worldwide Financial Services
Worldwide Financial Services Fiscal 2020 ($ millions) 4Q 2019 Fiscal 2019 Forecast Net Income (attributable to Deere & Company) $90 $539 ~ $600 Source: Deere & Company forecast as of 27 November 2019 13
Slide 14: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory Previous ($ millions) Fiscal 2019* Forecast* Agriculture & Turf $85 ~ $100 Construction & Forestry $137 ~ $350 Total (as reported) $52 ~ $450 Total (constant exchange) $245 ~ $550 *Change at 3 November 2019 vs. 28 October 2018 Note: Before the sale of recei
Slide 15: Cost and Expenses
Cost and Expenses Equipment Operations Fiscal 2020 ($ millions) 4Q 2019 Fiscal 2019 Forecast COS (percent of Net Sales) 77% 77% ~76% Research and Development 4% 8% ~ 2% SA&G Expense 8% 3% ~ 3% Source: Deere & Company forecast as of 27 November 2019 15
Slide 16: Income Taxes
Income Taxes Equipment Operations Fiscal 2020 4Q 2019 Fiscal 2019 Forecast Effective Tax Rate 9% 20% 24-26% Source: Deere & Company forecast as of 27 November 2019 (previous forecast as of 16 August 2019) 16
Slide 17: Net Operating Cash Flows
Net Operating Cash Flows Equipment Operations Fiscal 2020 Forecast ~ $3.1 - $3.5 billion $5,000 $4,000 $3,000 $ Millions $2,000 $1,000 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F Note: 2011-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to Employee Share-Based Paymen
Slide 18: Deere & Company Outlook
Deere & Company Outlook Fiscal 2020 Forecast Fiscal 2020 ($ billions except where noted) Forecast Net Income (attributable to Deere & Company) $2.7-$3.1 Source: Deere & Company forecast as of 27 November 2019 18
Slide 19: Appendix
Appendix 19
Slide 20: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans 37% net share reduction since 2004 4Q 2019: Cost of repurchases $373.0 million Share Repurchase Shares repurchased 2.3 million 40 $3.0 Millions of Shares* $2.5 YTD 2019: 30 Cost of repurchases $1,237.0 million $2.0 $ Billions Shares repurchased 7.
Slide 21: 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 22: Other Information
Other Information Fiscal 2020 ($ millions) Fiscal 2019 Forecast Capital Expenditures $1,120 ~ $1,100 Pension/OPEB Expense $120 ~ $75 Pension/OPEB Contributions $518 ~ $525 Source: Deere & Company forecast as of 27 November 2019 22
Slide 23: October 2019 Retail Sales and Dealer Inventories
October 2019 Retail Sales (Rolling 3 Months) and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 5% More than the industry 2WD Tractors (40 < 100 PTO hp) 4% More than the industry 2WD Tractors (100+ PTO hp) 6% More than the industry 4WD Tractors 5% In
Slide 24: October 2019 Retail Sales (Rolling 3 Months)
October 2019 Retail Sales (Rolling 3 Months) Retail Sales EU 28 Ag Deere* Tractors Single digit Combines Double digits Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Single digit Construction & Forestry First-in-the-Dirt Double digits Settlements Double digits • Based on inter
Slide 25: 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 26: 1Q 2020 earnings call scheduled for 21 February 2020
Deere & Company’s 1Q 2020 earnings call is scheduled for 9:00 a.m. central time on Friday, 21 February 2020