Deere & Company · NYSE:DE
Deere & — Investor Presentation (December 2017)
33 slides from Deere &'s investor presentation, December 2017
Slide 1: Strategy Overview
Strategy Overview December 2017 1
Slide 2: Safe Harbor Statement & Disclosures
Safe Harbor Statement & Disclosures This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Deer
Slide 3: Table of Contents
Table of Contents Slide John Deere Strategy 4 Macroeconomic Tailwinds 26 Appendix 31 3
Slide 4: John Deere Strategy
John Deere Strategy 4
Slide 5: The John Deere Strategy
THE JOHN DEERE STRATEGY OUR PURPOSE Committed to those linked to the land GLOBAL AGRICULTURAL — ¢,,GLOBAL OUTPACE rd 25 RLREASEIRATIONS EQUIPMENT soLUTIONs _ CONSTRUCTION INDUSTRY OPERATING MARGIN ASSET TURNS a aaron PREEMINENCE. IN GROWTH (ar MiD-cycte! (AT MIO-CYCLED gro rough innovatior pore and
Slide 6: Our Purpose
Our Purpose We are committed to serving those linked to the land, helping to improve living standards for people everywhere. – Our business aims to consistently deliver superior value to all stakeholders. – Our purpose guides us as we continue the journey our founder began in 1837. We believe that j
Slide 7: Long-Term Macroeconomic Tailwinds – Still Intact
Long-Term Macroeconomic Tailwinds – Still Intact Population growing in size and affluence – By 2050, world population will reach ~ 9.8 billion, up from ~ 7.6 billion today – Large middle class emerging in China, India and other parts of Asia Opportunity #1: Feeding the world – Agricultural output ne
Slide 8: Our Aspirations
Our Aspirations GLOBAL AGRICULTURAL — CgnerencTION OUTPACE 12% 25 EQUIPMENT soLuTIONS §CONPIRIETO INDUSTRY OPERATING MARGIN ASSET TURNS PREEMINENCE SOLUTIONS IN GROWTH (AT MID-CYCLE) (AT MID-CYCLE) Realizing sustainable SVA growth through innovation and disciplined expansion
Slide 9: SVA Growth through Innovation and Disciplined Expansion
SVA Growth through Innovation and Disciplined Expansion Sustainable SVA* growth is delivered by: – Distinctively serving our customers, employees and investors – Extending and enhancing our solid financial and operating performance throughout the cycle Our challenge: – To attract more customers to t
Slide 10: Our Aspirations
Our Aspirations Leading the world in premium agriculture equipment and precision solutions Providing innovative construction equipment solutions with distinctive quality in key markets around the world 10
Slide 11: Our Aspirations
Our Aspirations Growing revenue at a faster rate than our competitors − Relative Growth Metric − 7 enterprise competitors − 4 primary agriculture peers − 2 primary construction peers − 1 primary turf peer − Exclude competitor segments not comparable to Deere − Objective to outgrow median − Revenue m
Slide 12: Our Aspirations
Our Aspirations 13.0% 13.1% 14.5% 13.0% Creating value for our customers and 8.4% 8.0% 10.9% managing costs effectively at every point in the business cycle 2011 2012 2013 2014 2015 2016 2017 Managing our assets efficiently in 2.3 2.2 2.2 2.1 1.9 1.9 1.8 relation to our net sales at every point in t
Slide 13: Critical Success Factors
13 Critical Success Factors Further developing the capabilities essential to reaching our goals
Slide 14: Critical Success Factors
Critical Success Factors Delivering industry-leading products and systems, creating clear economic value for customers – Customers’ demands continue to evolve, and they are relying on advanced technology to run their complex operations – Deere is in an ideal position to help customers solve problems
Slide 15: Critical Success Factors
Critical Success Factors Creating measurable customer value by seamlessly connecting machines, people, technology and insights – While product leadership is critical to the success of any integrated solutions we deliver, we believe that customers will increasingly choose the equipment provider who c
Slide 16: Critical Success Factors
Critical Success Factors Achieving profitable growth of our aftermarket business by providing distinct value to our customers throughout the product lifecycle – The aftermarket is a critical part of the business for Deere and our dealers in terms of profitability and delivering a distinctive custome
Slide 17: Foundational Success Factors
Foundational Success Factors 17
Slide 18: Foundational Success Factors
Foundational Success Factors Managing assets and operating margins to generate operating returns on assets greater than our cost of capital at all points in the business cycle 18
Slide 19: Exceptional Operating Performance - OROA
Exceptional Operating Performance - OROA Equipment Operations 21.0% OROA* in 2017 40% 2013 2011 30% 2014 2012 2010 2007 2008 2004 28% 2006 2017 2005 20% 2015 20% 2016 2009 12% OROA (SVA** Neutral) 10% 12% 2003 2002 0% 2001 -10% 80% 100% 120% % of Mid-Cycle Volume * Operating Return on Operating Asse
Slide 20: Exceptional Operating Performance – SVA
Exceptional Operating Performance – SVA Equipment Operations $1.2 billion SVA* in 2017 $4,000 Adoption of SVA Model $3,000 $2,000 $ Millions $1,000 $0 -$1,000 -$2,000 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 * Shareholder Value Added; for reconciliation to GAAP see “SVA* Reco
Slide 21: Exceptional Operating Performance – Net Cash Flow
Exceptional Operating Performance – Net Cash Flow Equipment Operations $2.4 billion Net Cash Flow in 2017 $5,000 Adoption of SVA* Model $4,000 Sale of Trade Receivables to John Deere Financial $3,000 $ Millions $2,000 $1,000 $0 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 * Share
Slide 22: Foundational Success Factors
Foundational Success Factors Establishing an efficient cost and asset structure, setting new industry standards for safety and efficiency, and meeting customers’ demand for distinctive product quality Delivering customer-focused quality that defines, characterizes and supports the John Deere brand –
Slide 23: Foundational Success Factors
Foundational Success Factors Attracting, developing and retaining the right mix of talent to meet current and projected business needs Supporting higher living standards and a sustainable environment for people everywhere through our commitment to those linked to the land 23
Slide 24: Integrated Enterprise
24 Integrated Enterprise Agricultural Equipment a Turf Equipment GLOBAL GROWTH COMPLEMENTARY BUSINESSES BUSINESSES Construction Equipment Forestry Equipment Leveraging the strengths and Intelligent Solutions Group unique capabilities of three types of Parts Services businesses through aligned, SUPPO
Slide 25: Core Values
Core Values Unwavering adherence to the values that unite and differentiate us
Slide 26: Macroeconomic Tailwinds
Macroeconomic Tailwinds PO > A NN HAMM
Slide 27: Developing Economies Growing Faster
Developing Economies Growing Faster While developed economies have always accounted for a larger share of GDP, their growth will slow significantly, relative to that of developing economies Real GDP CAGR** 1970-2010 2010-2045 $200 Developed 3.3% 1.7% $150 Developing 6.4% 4.0% $ Trillions* Total 4.0%
Slide 28: Dynamics of Food Demand
Dynamics of Food Demand Income per capita >$10.00 Services per day $3.10-$10.00 Processed Products per day $1.90-$3.10 Most hunger problems Livestock Products per day solved at this threshold ~ 13% of world’s population <$1.90 experience hunger and malnutrition Commodities per day ~ 11% of world’s p
Slide 29: Global Crop Value of Production
Global Crop Value of Production Key Crops Value of production, a good proxy for the health of agribusiness, is expected to grow Crop Value of Production CAGR 2000-2016 2016-2022 2000-2022 $800 Corn 7.7% 5.3% 7.0% $600 Soybeans 9.5% 4.2% 8.1% Wheat 3.1% 7.9% 4.4% $ Billions $400 Cotton 3.5% 4.0% 3.6%
Slide 30: Global Construction and Infrastructure Needs
Global Construction and Infrastructure Needs Infrastructure is expected to be the fastest growing segment of construction WW Construction Spending (Gross Output) CAGR 2000-2016 2016-2022 2000-2022 $12,000 Infrastructure 3.3% 4.4% 3.7% $9,000 Non-residential 2.4% 2.4% 2.4% $ Billions* Residential 1.8
Slide 31: Appendix
Appendix 31
Slide 32: SVA Reconciliation to GAAP
SVA* Reconciliation to GAAP Equipment Operations ($ millions except where noted) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Net Sales 6,479 7,663 8,830 9,640 11,082 11,926 9,701 11,169 11,077 11,703 13,349 17,673 19,401 Average Identifiable Assets With Inventories at LIFO 5,449
Slide 33: John Deere
E=3) JOHN DEERE
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