Deere & Company · NYSE:DE
Deere & — Q2 2020 Earnings Presentation
24 slides from Deere &'s earnings presentation, May 22, 2020
Slide 1: 2Q 2020 Earnings Call
2Q 2020 Earnings Call 22 May 2020
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: COVID-19 Response
COVID-19 Response EMPLOYEE DEALER CUSTOMER FINANCIAL COMMUNITY SAFETY CONNECTED FOCUS ASSISTANCE WELL-BEING SUPPORT 3 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 4: Strategic Priorities
Strategic Priorities Priorities Operational Outcomes Focused R&D – Greater emphasis on differentiation and investments – Operations more responsive to changing market conditions Agile organization with – More efficient structure to serve optimized footprint global markets 4 John Deere | 2Q20 Earning
Slide 5: 2Q 2020 Results
2Q 2020 Results ($ millions except where noted) Net Sales & Net Sales Net Income Diluted EPS (Equipment Operations) (attributable to ($ per share) Revenues Deere & Company) $11,342 $1,135 $10,273 $3.52 $9,253 $8,224 $666 $2.11 2Q 2019 2Q 2020 2Q 2019 2Q 2020 2Q 2019 2Q 2020 2Q 2019 2Q 2020 18% 20% 4
Slide 6: Worldwide Agriculture & Turf 2Q 2020 Results
Worldwide Agriculture & Turf 2Q 2020 Results $ in millions Net Sales 18% Operating Profit Comparison $7,282 $1,019 $5,968 $794 ($439) $108 ($58) $5 $74 $130 ($45) 2Q 2019 2Q 2020 2Q19 Volume/ Mix Price Currency Warranty Production SA&G/ Other 2Q20 Costs R&D 6 John Deere | 2Q20 Earnings Call | May 22
Slide 7: Regional Ag Commentary
Regional Ag Commentary NORTH AMERICA SOUTH AMERICA – Facilities largely operational – Facilities largely operational – Uncertainty weighs on farmer sentiment – Favorable farming conditions in Brazil – Market conditions vary by segment – Farmers remain cautious due to uncertainty EUROPE ASIA – Facili
Slide 8: Dealers utilizing investment in Operations Support Center
Dealers utilizing investment in Operations Support Center Significant dealer investment in service capabilities Significant increase in use of connected support technology investments from customers Connected Operation Center Service Remote Machines Engaged Acres Advisor Remote Display Access 10 yea
Slide 9: Agriculture & Turf Industry Outlook – FY20
Agriculture & Turf Industry Outlook – FY20 U.S. & CANADA AG EUROPE AG SOUTH AMERICA AG (tractors and combines) ~10% ~5%-10% ~10%-15% ASIA AG U.S. & CANADA TURF & UTILITY Moderately ~10% Source: Deere & Company forecast as of 22 May 2020 9 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 10: Worldwide Agriculture & Turf Divisional Outlook
Worldwide Agriculture & Turf Divisional Outlook NET SALES OPERATING MARGIN 8.5%-10% 10%-15% 10.6% $23,666 FY2019 FY2020 Fcst FY2019 FY2020 Fcst Source: Deere & Company forecast as of 22 May 2020 10 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 11: Worldwide Construction & Forestry 2Q 2020 Results
Worldwide Construction & Forestry 2Q 2020 Results $ in millions Net Sales 25% Operating Profit Comparison $347 $2,991 $2,256 $96 ($192) $32 ($29) ($4) $53 $6 ($82) ($35) 2Q 2019 2Q 2020 2Q19 Volume/ Price Currency Warranty Production SA&G/ Impairment Other 2Q20 Mix Costs R&D 11 John Deere | 2Q20 Ear
Slide 12: Construction & Forestry Industry Outlook
Construction & Forestry Industry Outlook NORTH AMERICAN GLOBAL FORESTRY CONSTRUCTION EQUIPMENT ~20-30% ~15-20% Source: Deere & Company forecast as of 22 May 2020 12 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 13: Worldwide Construction & Forestry Divisional Outlook
Worldwide Construction & Forestry Divisional Outlook NET SALES OPERATING MARGIN 30%-40% $11,220 10.8% 2.0%-4.0% FY2019 FY2020 Fcst FY2019 FY2020 Fcst Source: Deere & Company forecast as of 22 May 2020 13 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 14: Worldwide Financial Services Net Income - 2Q20 Results and Outlook
Worldwide Financial Services Net Income - 2Q20 Results and Outlook ACTUAL 2Q20 FY2020 FORECAST $539 $121 $490 $60 2Q19 2Q20 FY2019 FY2020 Fcst Source: Deere & Company forecast as of 22 May 2020 14 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 15: Deere & Company Outlook
Deere & Company Outlook FY20 FORECAST Net Income Effective Net Operating (attributable to Deere & Co.) Tax Rate* Cash Flow* $1.6-2.0B 22-24% $1.9-2.3B *Equipment Operations Source: Deere & Company forecast as of 22 May 2020 15 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 16: CFO Remarks
CFO Remarks Liquidity and Forecast Update FY20 Strategic Alignment Cost Actions Cash from Operations Net Income Operational Outcomes (attributable to Deere & Co.) Committed to “A” Rating – Capital allocated to $1.6 - 2.0 areas of highest differentiation Fund Operating and Growth Needs BILLION – Focu
Slide 17: Appendix
Appendix 17 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 18: Other Financial Information
Other Financial Information Equipment Operations Fiscal 2020 ($ millions) 2Q20 Forecast COS (percent of Net Sales)* 77% ~78% SA&G* 12% ~11% Research and Development* 11% ~ 7% Capital Expenditures ~ $870 Pension/OPEB Expense ~ $80 Pension/OPEB Contributions ~ $230 *As reported (including Voluntary Se
Slide 19: April 2020 Retail Sales and Dealer Inventories
April 2020 Retail Sales (Rolling 3 Months) and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) flat Low double digits 2WD Tractors (40 < 100 PTO hp) 4% In line with the industry 2WD Tractors (100+ PTO hp) 11% More than the industry 4WD Tractors 9% In l
Slide 20: April 2020 Retail Sales (Rolling 3 Months)
April 2020 Retail Sales (Rolling 3 Months) Retail Sales Europe Ag Deere* Tractors High single digit Combines Low double digits Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Double digits Construction & Forestry First-in-the-Dirt Double digits Settlements Double digits * Based
Slide 21: Deere Use-of-Cash Priorities
Deere Use-of-Cash Priorities Cash from Operations ➢ Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily Committed to “A” Rating available short- and long-term funding mechanisms ➢ Reflects the strategic nature of our financial services oper
Slide 22: John Deere
22 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 23: Deere & Company's 3Q 2020 earnings call
Deere & Company’s 3Q 2020 earnings call is scheduled for 9:00 a.m. central time on Friday, 21 August 2020. 23 John Deere | 2Q20 Earnings Call | May 22, 2020
Slide 24: @ John Deere
@ JOHN DEERE