Slide 1: 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 2: 2017 Overview
2017 Overview ($ millions except where noted) Fiscal 2017 Fiscal 2017 vs. Fiscal 2016 Net Sales & Revenues $29,738 12% Net Sales (equipment operations) $25,885 11% Net Income (attributable to Deere & Company) $2,159 42% Diluted EPS ($ per share) $6.68 39% 26
Slide 3: 4Q 2017 Overview
4Q 2017 Overview ($ millions except where noted) 4Q 2017 4Q 2017 vs. 4Q 2016 Net Sales & Revenues $8,018 23% Net Sales (equipment operations) $7,094 26% Net Income (attributable to Deere & Company) $510 79% Diluted EPS ($ per share) $1.57 74% 27
Slide 4: 4Q 2017 Overview Equipment Operations
4Q 2017 Overview Equipment Operations 4Q 2017 vs. 4Q 2016 Net Sales 26% Price realization Currency translation 1 point 2 points 28
Slide 5: Worldwide Agriculture & Turf 4Q 2017 Overview
Worldwide Agriculture & Turf 4Q 2017 Overview ($ millions) 4Q 2017 4Q 2017 vs. 4Q 2016 Net Sales $5,437 22% Operating Profit* $584 57% *4Q 2017 operating profit impacted by: + Shipment volumes + Sales mix Production costs Selling, administrative & general expenses 29
Slide 6: Global Stocks-to-Use Ratios
Global Stocks-to-Use Ratios Source: USDA, 9 November 2017 Cotton Wheat Corn Soybeans 30 0% 20% 40% 60% 80% 100% 120% 0% 10% 20% 30% 40% 50% 60% 1996 1999 2002 2005 2008 2011 2014 2017P Cotton Ratios
Slide 7: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts Source: 2001–2016: USDA, 30 August 2017 2017F–2018F: Deere & Company forecast as of 22 November 2017 31 $0 $100 $200 $300 $400 $500 2002 2004 2006 2008 2010 2012 2014 2016 2018F $ Billions Crops Livestock Government Payments
Slide 8: Economic Update EU
Economic Update EU 28 * Includes wheat, barley, corn, sunflower seed, rapeseed, soybean, sugar beet, cotton, rice Source: IHS Global Insight, November 2017 Source: EU Com, LTO, IFCN, October 2017 Deere & Company forecast as of 22 November 2017 32 $0 $30 $60 $90 $120 $150 2009 2012 2015 2018F US$ Bil
Slide 9: Economic Update Brazil
Economic Update Brazil * Includes key grains, ethanol, sugar Source: IHS Global Insight, November 2017 10.5% 7.5% Note: PSI-FINAME was key credit line for machinery acquisition 2011–2014; Moderfrota is currently the most attractive credit line Source: ABIMAQ (Brazilian Association of Machinery & Equ
Slide 10: Fiscal 2018 Forecast Agriculture & Turf Retail Sales Industry Outlook
Fiscal 2018 Forecast U.S. and Canada Ag 5-10% EU 28 Ag ~ 5% South America Ag (tractors and combines) Flat to up 5% Asia Ag ~ Flat U.S. and Canada Turf and Utility ~ Flat Agriculture & Turf Retail Sales Industry Outlook Source: Deere & Company forecast as of 22 November 2017 34
Slide 11: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2018 Forecast Net Sales ~ 9% Currency translation ~ 2 points Source: Deere & Company forecast as of 22 November 2017 35
Slide 12: Worldwide Construction & Forestry 4Q 2017 Overview
Worldwide Construction & Forestry 4Q 2017 Overview ($ millions) 4Q 2017 4Q 2017 vs. 4Q 2016 Net Sales $1,657 37% Operating Profit* $85 *4Q 2017 operating profit impacted by: + Shipment volumes + Price realization Impairment charge for international operations 36
Slide 13: Worldwide Construction & Forestry U.S. Economic Indicators
Worldwide Construction & Forestry U.S. Economic Indicators (annual percentage rate* except where noted) Fiscal 2018 Forecast GDP Growth 2.4% Housing Starts (thousands) 1,254 Total Construction Investment 1.4% Government Construction Investment 0.8% Crude Oil Price (per barrel)** $51.25 * Change from
Slide 14: Worldwide Construction & Forestry Deere & Company Outlook
Fiscal 2018 Forecast* Net Sales ~ 69% Currency translation Wirtgen ~ 1 point ~ 54 points Worldwide Construction & Forestry Deere & Company Outlook * Includes data based on the anticipated 1Q 2018 close of the Wirtgen acquisition Source: Deere & Company forecast as of 22 November 2017 38
Slide 15: Worldwide Financial Services Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 0.25% 15 Year Average Source: Deere & Company forecast as of 22 November 2017 39 0.0% 0.5% 1.0% 1.5% 2.0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F
Slide 16: Worldwide Financial Services
Worldwide Financial Services ($ millions) 4Q 2017 Fiscal 2017 Fiscal 2018 Forecast Net Income (attributable to Deere & Company) $128 $477 ~ $515 Source: Deere & Company forecast as of 22 November 2017 40
Slide 17: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory ($ millions) Fiscal 2017* Previous Forecast* Agriculture & Turf $991 ~ $575 Construction & Forestry $486 ~ $375 Total (as reported) $1,477 ~ $950 Total (constant exchange) $1,374 ~ $775 * Change at 29 October 2017 vs. 30 October 2016 Note: Before the sale o
Slide 18: Cost of Sales Equipment Operations
4Q 2017 Fiscal 2017 Previous Forecast Fiscal 2018 Forecast* COS (percent of Net Sales) 76.5% 77% ~ 77% ~ 75% Cost of Sales Equipment Operations * Includes data based on the anticipated 1Q 2018 close of the Wirtgen acquisition Source: Deere & Company forecast as of 22 November 2017 (previous forecast
Slide 19: Research & Development Expense Equipment Operations
4Q 2017 vs. 4Q 2016 Fiscal 2017 Previous Forecast Fiscal 2018 Forecast* R&D Expense 3% 2% ~ 1% ~ 18% Currency translation Acquisition-related activities 1 point Flat Flat Flat ~ Flat ~ Flat ~ 1 point ~ 9 points Research & Development Expense Equipment Operations * Includes data based on the anticipa
Slide 20: Selling, Administrative & General Expense Equipment Operations
Selling, Administrative & General Expense Equipment Operations 4Q 2017 vs. 4Q 2016* Fiscal 2017* Previous Forecast* Fiscal 2018 Forecast* SA&G Expense 15% 12% ~ 11% ~ 26% Acquisition-related activities Commissions paid to dealers Incentive compensation Currency translation Voluntary separation progr
Slide 21: Income Taxes Equipment Operations
4Q 2017 Fiscal 2017 Previous Forecast Fiscal 2018 Forecast Effective Tax Rate 27% 30% 30-32% 31-33% Income Taxes Equipment Operations Source: Deere & Company forecast as of 22 November 2017 (previous forecast as of 18 August 2017) 45
Slide 22: Net Operating Cash Flows Equipment Operations
Net Operating Cash Flows Equipment Operations Fiscal 2018 Forecast ~ $3.8 billion * Previous forecast ~ $2.9 billion ** Includes data based on the anticipated 1Q 2018 close of the Wirtgen acquisition Note: 2009-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to Employee Share-B
Slide 23: Deere & Company Outlook Fiscal 2018 Forecast
Deere & Company Outlook Fiscal 2018 Forecast ($ billions except where noted) 1Q 2018 Forecast* Fiscal 2018 Forecast* Net Sales (equipment operations) ~ 38% ~ 22% Price realization Currency translation Wirtgen ~ 2 points ~ 3 points ~ 6 points ~ 1 point ~ 2 points ~ 12 points Net Income (attributable
Slide 24: 2017 vs. 2018 Operating Profit Equipment Operations
2017 vs. 2018 Operating Profit Equipment Operations Note: in millions of dollars a Includes data based on the anticipated 1Q 2018 close of the Wirtgen acquisition b Based on guidance for net sales change year over year and operating margins by segment c Includes the estimated expenses for purchase a
Slide 25: 2017 vs. 2018 Operating Profit
2017 vs. 2018 Operating Profit Equipment Operations 375 $60 $375 27 o_o 2017 ‘StteOne_—-MBACCoste Imparment Voluntary 2017 2018 Wirtgen Bue iver opertng Separaton Adjusted projected “Net” Technology rote rogram’ Operating Operating Expenses Prot Prone ‘Note: in millions of doliars ‘Includes data bas
Slide 26: Appendix
ndix
Slide 27: Deere Use-of-Cash Priorities
Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily available short- and long-term funding mechanisms Reflects the strategic nature of our financial services operation Committed to “A” Rating Cash from Operations Fund Operating and Growth N
Slide 28: Sources and Uses of Cash Fiscal 2004-2017
Sources and Uses of Cash Fiscal 2004-2017 Equipment Operations $ Millions ~ 58% of cash from operations returned to shareholders * Other includes proceeds from maturities and sales of marketable securities and purchases of marketable securities and reconciliation for non-cash items including the eff
Slide 29: Deere Quarterly Dividends Declared 1Q 2004 – 4Q 2017
Deere Quarterly Dividends Declared 1Q 2004 – 4Q 2017 * Adjusted for 2 for 1 stock split on 26 November 2007 Dividend raised 114% since 2010 53 $0.11 $0.28 $0.60 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 2004 2005 2006 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 30: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans * All shares adjusted for two-for-one stock split effective 26 November 2007 2004–2017: Cumulative cost of repurchases $16.4 billion Shares repurchased 245.0 million Average repurchase price $66.96 December 2013 authorization of $8 billion: Amount
Slide 31: Pension and OPEB Expense
Pension and OPEB Expense ($ millions) 4Q 2017 Fiscal 2017 Previous Forecast Fiscal 2018 Forecast Pension and OPEB Expense $9 $35 ~ $30 ~ $10 Source: Deere & Company forecast as of 22 November 2017 (previous forecast as of 18 August 2017) 55
Slide 32: Other Information Equipment Operations
($ millions) Fiscal 2017 Previous Forecast Fiscal 2018 Forecast* Capital Expenditures $591 ~ $650 ~ $925 Depreciation and Amortization $839 ~ $850 ~ $1,050 Pension/OPEB Contributions $428 ~ $115 ~ $140 Other Information Equipment Operations * Includes data based on the anticipated 1Q 2018 close of t
Slide 33: Economic Update Other Selected Markets
Economic Update Other Selected Markets * Includes corn, wheat, rice, barley, sorghum, oilseeds, peanut, sugar, cotton Source: IHS Global Insight, November 2017 57 $0 $75 $150 $225 $300 2009 2012 2015 2018F US$ Billions China - Crop Value of Production* $0 $75 $150 $225 $300 2009 2012 2015 2018F US$
Slide 34: U.S. Farm Commodity Prices
Source: USDA, 9 November 2017 U.S. Farm Commodity Prices 58 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $0 $4 $8 $12 $16 $20 2004 2006 2008 2010 2012 2014 2016 Cotton - $ per Pound $ per Bushel Cotton Wheat Corn Soybeans
Slide 35: U.S. Farm Commodity Prices
($ per bushel except where noted) 2015/16 2016/17 Estimate 2017/18 Projection Previous 2017/18 Corn $3.61 $3.36 $3.20 $3.30 Soybeans $8.95 $9.50 $9.10 $9.30 Wheat $4.89 $3.89 $4.60 $4.80 Cotton ($ per pound) $0.58 $0.68 $0.60 $0.61 U.S. Farm Commodity Prices Source: Deere & Company forecast as of 22
Slide 36: U.S. Acres Harvested
(millions) 2016/17 Estimate 2017/18 Projection Corn 86.7 83.1 Soybeans 82.7 89.5 Wheat 43.9 37.6 Cotton 9.5 11.4 Source: Deere & Company forecast as of 22 November 2017 U.S. Acres Harvested 60
Slide 37: U.S. Crop Yields
(bushels per acre except where noted) 2016/17 Estimate 2017/18 Projection Corn 174.6 175.4 Soybeans 52.1 49.5 Wheat 52.7 46.3 Cotton (pounds per harvested acre) 867 900 Source: Deere & Company forecast as of 22 November 2017 U.S. Crop Yields 61
Slide 38: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts ($ billions) 2016 2017 Forecast Previous 2017 2018 Forecast Crops $189.6 $190.1 $186.7 $187.6 Livestock $162.9 $176.5 $168.2 $169.6 Government Payments $13.0 $10.0 $12.5 $11.1 Total Cash Receipts $365.4 $376.6 $367.4 $368.3 Source: 2016: USDA, 30 August 2017 2017F–2018F: Deer
Slide 39: U.S. Net Farm Cash Income
U.S. Net Farm Cash Income ($ billions) 2016 2017 Forecast Previous 2017 2018 Forecast Total Cash Receipts $365.4 $376.6 $367.4 $368.3 Other Farm-Related Income $27.9 $29.8 $34.4 $32.0 Gross Cash Income $393.3 $406.4 $401.8 $400.3 Cash Expenses ($304.1) ($309.0) ($308.3) ($310.0) Net Cash Income $89.
Slide 40: U.S. Farm Balance Sheet
U.S. Farm Balance Sheet Source: 1974–2016: USDA, 30 August 2017 2017F–2018F: Deere & Company forecast as of 22 November 2017 64 10% 15% 20% 25% 30% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018F $ Billions Farm Debt Farm Equity Debt to
Slide 41: October 2017 Retail Sales and Dealer Inventories
October 2017 Retail Sales and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 12% Single digit 2WD Tractors (40 < 100 PTO hp) 3% Less than the industry 2WD Tractors (100+ PTO hp) 38% More than the industry 4WD Tractors 16% Single digit Combines 46% Mor
Slide 42: October 2017 Retail Sales
Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Low Double digits Construction & Forestry First-in-the-Dirt Settlements Double digits Double digits October 2017 Retail Sales Retail Sales EU 28 Ag Deere* Tractors Single digit Combines Double digits * Based on internal sales repo
Slide 43: 1Q 2018 earnings call scheduled for 16 February 2018
Deere & Company’s 1Q 2018 earnings call is scheduled for 9:00 a.m. central time on Friday, 16 February 2018 67
Slide 44: 1Q 2018 earnings call scheduled for 16 February 2018
Deere & Company’s 1Q 2018 earnings call is scheduled for 9:00 a.m. central time on Friday, 16 February 2018 @ JOHN DEERE