Deere & Company · NYSE:DE
Deere & — Q4 2019 Earnings Presentation
27 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: Earnings Call Statement of Clarification
Earnings Call Statement of Clarification On the 4Q20 earnings call, we stated Combine Advisor was moved into base equipment for 2020, this was incorrect. ActiveYield was moved into base equipment. We have added a note on our earnings call transcript as well (see below). 3
Slide 4: 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 5: 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) $2.27 A
Slide 6: 4Q 2019 Overview: Equipment Operations
4Q 2019 Overview Equipment Operations 4Q 2019 vs. 4Q 2018 Net Sales 4% Price realization 3 points Currency translation 2 points 6
Slide 7: Worldwide Agriculture & Turf: 4Q 2019 Overview
Worldwide Agriculture & Turf 4Q 2019 Overview 4Q 2019 ($ 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 8: 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 8
Slide 9: 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 $16B pack
Slide 10: Agriculture & Turf Industry Outlook
Agriculture & Turf Industry Outlook Fiscal 2020 Forecast U.S. and Canada Ag Down ~5% EU 28 Ag ~ Flat South America Ag (tractors and combines) ~ Flat Asia Ag ~ Flat U.S. and Canada Turf and Utility ~ Flat Source: Deere & Company forecast as of 27 November 2019 10
Slide 11: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2020 Forecast Net Sales ~ 5-10% Currency translation ~ 1% Price realization ~ 2% Source: Deere & Company forecast as of 27 November 2019 11
Slide 12: Worldwide Construction & Forestry: 4Q 2019 Overview
Worldwide Construction & Forestry 4Q 2019 Overview 4Q 2019 ($ millions) 4Q 2019 vs. 4Q 2018 Net Sales $2,947 8% Operating Profit* $261 12% *4Q 2019 operating profit impacted by: − Production costs − Selling, administrative and general expenses − Sales mix + Shipment volumes + Price realization 12
Slide 13: Worldwide Construction & Forestry Outlook
Worldwide Construction & Forestry Deere & Company Outlook Fiscal 2020 Forecast Net Sales ~ 10-15% Currency translation ~ 1 point Price Realization ~ 1 point Source: Deere & Company forecast as of 27 November 2019 13
Slide 14: Worldwide Financial Services
Worldwide Financial Services Fiscal 2020 ($ millions) 4Q 2019 Fiscal 2019 Forecast Net Income (attributable to Deere & Company) $90 $539 ~ $600 Source: Deere & Company forecast as of 27 November 2019 14
Slide 15: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory Previous ($ millions) Fiscal 2019* Forecast* Agriculture & Turf $85 ~ $100 Construction & Forestry $137 ~ $350 Total (as reported) $52 ~ $450 Total (constant exchange) $245 ~ $550 *Change at 3 November 2019 vs. 28 October 2018 Note: Before the sale of recei
Slide 16: Cost and Expenses
Cost and Expenses Equipment Operations Fiscal 2020 ($ 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 16
Slide 17: 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) 17
Slide 18: 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 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F Note: 2011-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to Employee Share-Based Paymen
Slide 19: Deere & Company Outlook
Deere & Company Outlook Fiscal 2020 Forecast Fiscal 2020 ($ billions except where noted) Forecast Net Income (attributable to Deere & Company) $2.7-$3.1 Source: Deere & Company forecast as of 27 November 2019 19
Slide 20: Appendix
Appendix 20
Slide 21: 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 22: 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 23: 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 23
Slide 24: 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 25: 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 26: 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 27: 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