Deere & Company · NYSE:DE
Deere & — Q1 2019 Earnings Presentation
33 slides from Deere &'s earnings presentation, Feb 15, 2019
Slide 1: 1Q 2019 Earnings Call
1Q 2019 Earnings Call 15 February 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: 1Q 2019 Overview
1Q 2019 Overview 1Q 2019 ($ millions except where noted) 1Q 2019 vs. 1Q 2018 Net Sales & Revenues $7,984 15% Net Sales (equipment operations) $6,941 16% Net Income (attributable to Deere & Company) $498 Diluted EPS ($ per share) $1.54 Note: Wirtgen’s results were included in the Company’s consolidat
Slide 4: 1Q 2019 Overview: Equipment Operations
1Q 2019 Overview Equipment Operations 1Q 2019 vs. 1Q 2018 Net Sales 16% Price realization 5 points Currency translation 3 points Wirtgen 7 points Note: Wirtgen’s results are included for the entire first-quarter period of 2019 while the prior period reflected one month. The two additional months inc
Slide 5: Worldwide Agriculture & Turf 1Q 2019 Overview
Worldwide Agriculture & Turf 1Q 2019 Overview 1Q 2019 ($ millions) 1Q 2019 vs. 1Q 2018 Net Sales $4,681 10% Operating Profit* $348 10% *1Q 2019 operating profit impacted by: − Production costs − Warranty costs − Product mix − Research & development costs + Price realization + Shipment volumes 5
Slide 6: 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% 1994 1997 2000 2003 2006 2009 2012 2015 2018P Source: USDA, 8 February 2019 6
Slide 7: U.S. Principal Crop Cash Receipts
U.S. Principal Crop Cash Receipts 160 140 120 100 $ Billions 80 60 40 20 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F Food Grains Feed Crops Cotton Oil Crops USDA Aid* *USDA Aid includes only the ~$8B crop aid payment Note: USDA authorized a one-time $12B aid package to
Slide 8: Agriculture & Turf Industry Outlook
Agriculture & Turf Industry Outlook Fiscal 2019 Previous Forecast Forecast U.S. and Canada Ag Flat to up 5% Flat to up 5% EU 28 Ag ~ Flat ~ Flat South America Ag (tractors and combines) Flat to up 5% Flat to up 5% Asia Ag Flat to slightly down Flat to slightly down U.S. and Canada Turf and Utility F
Slide 9: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2019 Previous Forecast Forecast Net Sales ~ 4% ~ 3% Currency translation ~ 2% ~ 2% Source: Deere & Company forecast as of 15 February 2019 9
Slide 10: Worldwide Construction & Forestry 1Q 2019 Overview
Worldwide Construction & Forestry 1Q 2019 Overview 1Q 2019 ($ millions) 1Q 2019 vs. 1Q 2018 Net Sales $2,260 31% Operating Profit* $229 616% *1Q 2019 operating profit impacted by: + Price realization + Wirtgen − Production costs − Product mix 10
Slide 11: Construction & Forestry U.S. Economic Indicators
Worldwide Construction & Forestry U.S. Economic Indicators Fiscal 2019 Previous Forecast Forecast GDP Growth Housing Starts (thousands) Total Construction Investment Government Construction Investment Global Transportation Investment Crude Oil Price Source: IHS Markit, Calendar Year Estimates – Janu
Slide 12: Worldwide Construction & Forestry Deere & Company Outlook
Worldwide Construction & Forestry Deere & Company Outlook Fiscal 2019 Previous Forecast* Forecast* Net Sales ~ 13% ~ 15% Currency translation ~ 2 points ~ 2 points Wirtgen ~ 4 points ~ 5 points * Includes 12 months of Wirtgen sales, vs 10 months in fiscal 2018 Source: Deere & Company forecast as of
Slide 13: JDF Mission
JDF Mission Supporting Business Enable growth of John Deere sales by: − Deepening customer relationships − Strengthening distribution channels While delivering consistent, sustainable earnings, managing risk, and maximizing enterprise SVA Cory Reed President, John Deere Financial
Slide 14: John Deere Financial Services Portfolio Composition
John Deere Financial Services Portfolio Composition by Segment Portfolio Composition by Geography Portfolio Composition by Product Operating Australia Latin Asia Lease 3% C&F America 2% 17% 17% 6% Europe 5% Revolving Canada Credit 11% 9% Wholesale/ U.S. Installment A&T Floorplan 73% and Finance 83%
Slide 15: Worldwide Financial Services Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 2.0% 1.5% 1.0% 0.17% 0.5% 15 Year Average 0.0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F Source: Deere & Company forecast as of 15 February 2019 15
Slide 16: Worldwide Financial Services
Worldwide Financial Services Fiscal 2019 Previous ($ millions) 1Q 2019 Forecast Forecast Net Income (attributable to Deere & Company) $154 ~$630 ~ $630 Source: Deere & Company forecast as of 15 February 2019 16
Slide 17: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory Fiscal 2019 ($ millions) 1Q 2019* Forecast** Agriculture & Turf $831 ~ $25 Construction & Forestry $770 ~ $175 Total (as reported) $1,601 ~ $200 Total (constant exchange) $2,125 ~ $175 * Change at 27 January 2019 vs. 28 January 2018 **Change at 3 November 2
Slide 18: Cost and Expenses
Cost and Expenses Equipment Operations Fiscal 2019 Previous ($ millions) 1Q 2019 Forecast Forecast COS (percent of Net Sales) 78% ~75% ~75% Research and Development 14% ~ 5% ~ 6% SA&G Expense 9% ~ 7% ~ 7% Source: Deere & Company forecast as of 15 February 2019 (previous forecast as of 21 November 20
Slide 19: Income Taxes
Income Taxes Equipment Operations Fiscal 2019 Previous 1Q 2019 Forecast Forecast Effective Tax Rate 30% 24-26% 25-27% Source: Deere & Company forecast as of 15 February 2019 19
Slide 20: Net Operating Cash Flows
Net Operating Cash Flows Equipment Operations Fiscal 2019 Forecast* ~ $4.4 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 ~$4.8 billion Note: 2010-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to
Slide 21: Deere & Company Outlook
Deere & Company Outlook Fiscal 2019 Forecast Fiscal 2019 Previous ($ billions except where noted) Forecast Forecast Net Sales (equipment operations) ~ 7% ~ 7% Price realization ~ 3 points ~ 3 points Currency translation ~ 2 points ~ 2 points Wirtgen ~ 1 point ~ 2 points Net Income (attributable to D
Slide 22: Appendix
Appendix 22
Slide 23: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans 36% net share reduction since 2004 Share Repurchase 2004–1Q 2019: 40 $3.0 Cumulative cost of repurchases $17.5 billion Millions of Shares* $2.5 Shares repurchased 252.0 million 30 $2.0 $ Billions 20 $1.5 December 2013 authorization of $8 billion:
Slide 24: The John Deere Strategy
THE JOHN DEERE STRATEGY OUR PURPOSE Committed to those linked to the land GLOBAL AGRICULTURAL jh Cone RUC TION OUTPACE 15% EQUIPMENT soLUTiONs N CONT INDUSTRY OPERATING MARGIN PREEMINENCE aT INGROWTH armi-cvel EXCEPTIONAL MANUFACTURING DISTINCTIVE EXTRAORDINARY OPERATING AND SUPPLY PRODUCT GLOBAL PE
Slide 25: Other Information
Other Information Equipment Operations Fiscal 2019 Previous ($ millions) Forecast Forecast Capital Expenditures ~ $1,150 ~ $1,150 Depreciation & Amortization ~ $1,025 ~ $1,050 Pension/OPEB Expense ~ $120 ~ $120 Pension/OPEB Contributions ~ $200 ~ $200 Source: Deere & Company forecast as of 15 Februa
Slide 26: U.S. Farm Commodity Prices
U.S. Farm Commodity Prices $20 $1.00 $16 $0.80 Cotton - $ per Pound $12 $0.60 $ per Bushel Cotton $8 $0.40 Soybeans Wheat $4 $0.20 Corn $0 $0.00 2004 2006 2008 2010 2012 2014 2016 2018 Source: USDA, 8 February 2019 26
Slide 27: 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 only the ~$8B crop aid payment Note: USDA authorized a one-time $12B aid package to assist farmers from the trade dispute
Slide 28: Economic Update: EU Dairy, Beef and Pork Prices
Economic Update EU 28 Dairy, Beef and Pork Prices €470 €420 Beef meat and Pork meat - € per 100 kg €420 €360 Milk - € per MT €370 €300 €320 €240 €270 €180 €220 €120 2010 2013 2016 2019F Milk Milk 10yr avg Beef meat Beef meat 10yr avg Pork meat Pork meat 10yr avg Source: EU Com, LTO, January 2019 Dee
Slide 29: Economic Update: Brazil Crop Value of Production
Economic Update Brazil Crop Value of Production $150 $120 US$ Billions $90 $60 $30 $0 2009 2012 2015 2018F Includes key grains, ethanol, sugar Source: IHS Global Insight, February 2019 29
Slide 30: January 2019 Retail Sales and Dealer Inventories
January 2019 Retail Sales (Rolling 3 Months) and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 5% In line with the industry 2WD Tractors (40 < 100 PTO hp) 1% Single digit 2WD Tractors (100+ PTO hp) 1% In line with the industry 4WD Tractors 4% More th
Slide 31: January 2019 Retail Sales (Rolling 3 Months)
January 2019 Retail Sales (Rolling 3 Months) Retail Sales EU 28 Ag Deere* Tractors Flat Combines High single digit Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Double digits Construction & Forestry First-in-the-Dirt Single digit Settlements Single digit * Based on internal s
Slide 32: 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 33: Next earnings call scheduled 17 May 2019
Deere & Company’s 2Q 2019 earnings call is scheduled for 9:00 a.m. central time on Friday, 17 May 2019