Deere & Company · NYSE:DE
Deere & — Q1 2019 Earnings Presentation
33 slides from Deere &'s earnings presentation, Feb 15, 2019
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: 1Q 2019 Overview
1Q 2019 Overview Net Sales 16% $6,941 (equipment operations) Diluted EPS ($ per share) $1.54 Note: Wirtgen’s results were included in the Company’s consolidated financial statements beginning on the acquisition date of 1 December 2017. incorporated with the Company’s results using a 30-day lag perio
Slide 3: 1Q 2019 Overview: Equipment Operations
1Q 2019 Overview Equipment Operations 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 increased the company’s net sales res
Slide 4: Worldwide Agriculture & Turf 1Q 2019 Overview
Worldwide Agriculture 1Q 2019 Overview & Turf Operating Profit* 10% $348 *1Q 2019 operating profit impacted by: Production costs Warranty costs Product mix Research & development Price realization Shipment volumes - - - - + + costs 26 5 1Q 2019 ($ millions)1Q 2019vs. 1Q 2018 Net Sales$4,68110%
Slide 5: Global Stocks-to-Use Ratios
Global Stocks-to-Use Ratios 60% 120% 50% 100% 40% 80% 30% 60% 20% 40% 10% 20% 0% 0% 1994 1997 2000 2003 2006 2009 2012 2015 2018P Source: USDA, 8 February 2019 27 6 Cotton Ratios Wheat Corn Cotton Soybeans
Slide 6: U.S. Principal Crop Cash Receipts
U.S. Principal Crop Cash Receipts 160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Feed Crops 2012 2013 2014 2015 USDA Aid* 2016 2017F 2018F 2019F Food Grains Cotton Oil Crops *USDA Aid includes only the ~$8B crop aid payment Note: USDA authorized a one-time $12B aid package to assist far
Slide 7: Agriculture & Turf Industry Outlook
Agriculture & Turf Industry Outlook EU 28 Ag ~ Flat ~ Flat Asia Ag Flat to slightly down Flat to slightly down Source: Deere & Company forecast as of 15 February 2019 29 8 U.S. and Canada Turf and UtilityFlat to up 5%Flat to up 5% South America Ag (tractors and combines)Flat to up 5%Flat to up 5% Fi
Slide 8: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Currency translation ~ 2% ~ 2% Source: Deere & Company forecast as of 15 February 2019 30 9 Fiscal 2019Previous ForecastForecast Net Sales~ 4%~ 3%
Slide 9: Worldwide Construction & Forestry 1Q 2019 Overview
Worldwide Construction 1Q 2019 Overview & Forestry Operating Profit* 616% $229 *1Q 2019 operating profit impacted by: + + - - Price realization Wirtgen Production costs Product mix 31 10 1Q 2019 ($ millions)1Q 2019vs. 1Q 2018 Net Sales$2,26031%
Slide 10: Worldwide Construction & Forestry Economic Indicators
Worldwide U.S. Economic Construction Indicators & Forestry Housing Starts (thousands) Government Construction Investment Crude Oil Price Source: IHS Markit, Calendar Year Estimates – January 2019 32 11 Global Transportation Investment Total Construction Investment Fiscal 2019Previous ForecastForecas
Slide 11: Worldwide Construction & Forestry Deere & Company Outlook
Worldwide Construction & Forestry Deere & Company Outlook 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 15 February 2019 33 12 Fiscal 2019Previous Forecast*Forecast* N
Slide 12: JDF Mission Supporting Business
JDF Mission Supporting Business Enable growth of John Deere sales by: - Deepening customer relationships Strengthening distribution channels delivering consistent, - While sustainable earnings, managing and maximizing enterprise SVA risk, Cory Reed President, John Deere Financial 34
Slide 13: John Deere Financial Services Portfolio Composition
Portfolio Composition by Segment John Deere Financial Services Portfolio Composition by Geography Portfolio Composition by Product Note: Information above includes all Deere & Company lending activities worldwide. ~$43 billion Net Portfolio owned as of 28 October 2018 35 A&T 83% C&F 17% Installment
Slide 14: Worldwide Financial Services Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 2.0% 1.5% 1.0% 0.5% 0.0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F Source: Deere & Company forecast as of 15 February 2019 36 15 0.17% 15 Year Average
Slide 15: Worldwide Financial Services
Worldwide Financial Services Source: Deere & Company forecast as of 15 February 2019 37 16 Fiscal 2019Previous ($ millions)1Q 2019ForecastForecast Net Income (attributable to Deere & Company)$154~$630~ $630
Slide 16: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory Construction & Forestry $770 ~ $175 Total (constant exchange) $2,125 ~ $175 * Change at 27 January 2019 vs. 28 January 2018 **Change at 3 November 2019 vs. 28 October 2018 Note: Before the sale of receivables to John Deere Financial Source: Deere & Company
Slide 17: Cost and Expenses
Cost and Expenses Equipment Operations Research and Development ~ 6% 14% ~ 5% Source: Deere & Company forecast as of 15 February 2019 (previous forecast as of 21 November 2018) 39 18 SA&G Expense9%~ 7%~ 7% Fiscal 2019Previous ($ millions)1Q 2019ForecastForecast COS (percent of Net Sales)78%~75%~75%
Slide 18: Income Taxes
Income Taxes Equipment Operations Source: Deere & Company forecast as of 15 February 2019 40 19 Fiscal 2019Previous 1Q 2019ForecastForecast Effective Tax Rate30%24-26%25-27%
Slide 19: Net Operating Cash Flows
Net Operating Cash Flows Equipment Operations Fiscal 2019 Forecast* ~ $4.4 billion $5,000 $4,000 $3,000 $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 Employee S
Slide 20: Deere & Company Outlook
Deere & Company Outlook Fiscal 2019 Forecast Price realization ~ 3 points ~ 3 points Currency translation ~ 2 points ~ 2 points Wirtgen ~ 1 point ~ 2 points Source: Deere & Company forecast as of 15 February 2019 42 21 Net Income (attributable to Deere & Company)~ $3.6~ $3.6 Fiscal 2019Previous ($ b
Slide 21: Deere & Company Outlook
Deere & Company Outlook Fiscal 2019 Forecast iscal 2019 VIOUS ($ billions except where noted) Forecast Forecast Net Sales (equipment operations) t ~ 7% t ~7% Price realization t ~ 3 points ~ 3 points Currency translation ~ 2 points ~~ 2 points Wirtgen t ~ 1 point ~ 2 points Net Income (attributable
Slide 22: 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 Shares repurchased $17.5 billion 252.0 million $2.5 30 $2.0 20 $1.5 December 2013 authorization of $8 billion: Amount remaining $2.2 billion
Slide 23: The John Deere Strategy
THE JOHN DEERE STRATEGY OUR PURPOSE Committed to those linked to the land OUR ASPIRATIONS Realizing sustainable SVA growth through innovation and disciplined expansion. A GLOBAL LEADER IN CONSTRUCTION EQUIPMENT SOLUTIONS OUTPACE INDUSTR Y IN GROWTH 15% OPERATING MARGIN !AT M ID-CYCLE! 2 ASSET TURNS
Slide 24: Other Information
Other Information Equipment Operations Depreciation & Amortization ~ $1,025 ~ $1,050 Pension/OPEB Contributions ~ $200 ~ $200 Source: Deere & Company forecast as of 15 February 2019 46 25 Pension/OPEB Expense~ $120~ $120 Fiscal 2019Previous ($ millions)ForecastForecast Capital Expenditures~ $1,150~
Slide 25: U.S. Farm Commodity Prices
U.S. Farm Commodity Prices $20 $1.00 $16 $0.80 $12 $0.60 $8 $0.40 $4 $0.20 $0 $0.00 2004 2006 2008 2010 2012 2014 2016 2018 Source: USDA, 8 February 2019 47 26 Cotton - $ per Pound $ per Bushel Cotton Soybeans Wheat Corn
Slide 26: U.S. Farm Cash Receipts
U.S. Farm Cash Receipts $500 $400 $300 $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 impact, wi
Slide 27: Economic Update: EU Dairy, Beef and Pork Prices
Economic Update EU 28 Dairy, Beef and Pork Prices €470 €420 €420 €360 €370 €300 €320 €240 €270 €180 €220 €120 2010 2013 2016 2019F Milk Beef meat 10yr avg Milk 10yr avg Pork meat Beef meat Pork meat 10yr avg Source: EU Com, LTO, January 2019 Deere & Company forecast as of 15 February 2019 49 28 Beef
Slide 28: Economic Update: Brazil Crop Value of Production
Economic Brazil Update Crop Value of Production $150 $120 $90 $60 $30 $0 2009 2012 2015 2018F Includes key grains, ethanol, sugar Source: IHS Global Insight, February 2019 50 29 US$ Billions
Slide 29: January 2019 Retail Sales and Dealer Inventories
January 2019 Retail Sales (Rolling 3 Months) and Dealer Inventories 2WD Tractors 1% Single digit (40 < 100 PTO hp) 4WD Tractors 4% More than the industry Combines 19% 16% * As reported by the Association of Equipment Manufacturers ** As reported to the Association of Equipment Manufacturers *** In u
Slide 30: January 2019 Retail Sales (Rolling Months)
January 2019 Retail Sales (Rolling 3 Months) Combines High single digit Construction & Forestry First-in-the-Dirt Settlements Single Single digit digit * Based on internal sales reports 52 31 Retail Sales U.S. and CanadaDeere* Selected Turf & Utility EquipmentDouble digits Retail Sales EU 28 AgDeere
Slide 31: Reconciliation of GAAP to Non-GAAP Financial Measures
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 32: 2Q 2019 earnings call scheduled
Deere & Company’s 2Q 2019 earnings call is scheduled for 9:00 a.m. central time on Friday, 17 May 2019 54
Slide 33: 2Q 2019 earnings call scheduled
Deere & Company’s 2Q 2019 earnings call is scheduled for 9:00 a.m. central time on Friday, 17 May 2019 @ JOHN DEERE