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: 2018 Overview
2018 Overview ($ millions except where noted) Fiscal 2018 Fiscal 2018 vs. Fiscal 2017 Net Sales & Revenues $37,358 26% Net Sales (equipment operations) $33,351 29% Net Income (attributable to Deere & Company) $2,368 10% Adjusted Net Income (attributable to Deere & Company) $3,073* 42% Diluted EPS ($
Slide 3: 4Q 2018 Overview
($ millions except where noted) 4Q 2018 4Q 2018 vs. 4Q 2017 Net Sales & Revenues $9,416 17% Net Sales (equipment operations) $8,343 18% Net Income (attributable to Deere & Company) $785 54% Adjusted Net Income (attributable to Deere & Company) $748* 47% Diluted EPS ($ per share) $2.42 54% Adjusted D
Slide 4: 4Q 2018 Overview Equipment Operations
4Q 2018 Overview Equipment Operations 4Q 2018 vs. 4Q 2017 Net Sales 18% Price realization Currency translation Wirtgen 2 points 3 points 11 points 30
Slide 5: Worldwide Agriculture & Turf 4Q 2018 Overview
Worldwide Agriculture & Turf 4Q 2018 Overview ($ millions) 4Q 2018 4Q 2018 vs. 4Q 2017 Net Sales $5,605 3% Operating Profit* $567 5% *4Q 2018 operating profit impacted by: Production costs Foreign currency exchange Research & development costs + Shipment volumes + Price realization 31
Slide 6: U.S. Principal Crop Cash Receipts
U.S. Principal Crop Cash Receipts *USDA Aid includes only the ~$4.7B crop aid payment Note: USDA authorized a one-time $12B aid package to assist farmers from the trade dispute impact. The first tranche of $6B has been authorized with $4.7B to be distributed to farmers via direct payment. Source: De
Slide 7: Global Stocks-to-Use Ratios
Global Stocks-to-Use Ratios Source: USDA, 8 November 2018 Cotton Wheat Corn Soybeans 33 0% 20% 40% 60% 80% 100% 120% 0% 10% 20% 30% 40% 50% 60% 1994 1997 2000 2003 2006 2009 2012 2015 2018P Cotton Ratios
Slide 8: Precision Ag & Crop Care
Precision Ag & Crop Care John Lagemann Senior Vice President, Ag & Turf Sales and Marketing 34
Slide 9: Evolution of Agriculture in Brazil and Deere
Evolution of Agriculture in Brazil and Deere Source: CONAB, Safras – Series Historicas, Deere & Company forecast DE acquires 20% of SLC combine manufacturer DE acquires 100% of SLC Bank Operations launched DE begins tractor assembly at combine plant Inauguration of Montenegro tractor factory 37 62 3
Slide 10: Agriculture & Turf Industry Outlook Fiscal 2019 Forecast
Fiscal 2019 Forecast U.S. and Canada Ag Flat to up 5% EU 28 Ag ~ Flat South America Ag (tractors and combines) Flat to up 5% Asia Ag Flat to slightly down U.S. and Canada Turf and Utility Flat to up 5% Agriculture & Turf Industry Outlook Source: Deere & Company forecast as of 21 November 2018 36
Slide 11: Worldwide Agriculture & Turf Deere & Company Outlook
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal 2019 Forecast Net Sales ~ 3% Currency translation ~ 2% Source: Deere & Company forecast as of 21 November 2018 37
Slide 12: Worldwide Construction & Forestry 4Q 2018 Overview
($ millions) 4Q 2018 4Q 2018 vs. 4Q 2017 Net Sales $2,738 65% Operating Profit* $295 243% Worldwide Construction & Forestry 4Q 2018 Overview *4Q 2018 operating profit impacted by: + Wirtgen + Shipment volumes + International operations impairment last year + Price realization + Warranty expenses Pro
Slide 13: Worldwide Construction & Forestry U.S. Economic Indicators
Fiscal 2019 Forecast GDP Growth Housing Starts (thousands) Total Construction Investment Government Construction Investment Global Transportation Investment Crude Oil Price Worldwide Construction & Forestry U.S. Economic Indicators Source: IHS Markit, Calendar Year Estimates – October 2018 39
Slide 14: Worldwide Construction & Forestry Deere & Company Outlook
Fiscal 2019 Forecast* Net Sales ~ 15% Currency translation Wirtgen ~ 2 points ~ 5 points Worldwide Construction & Forestry Deere & Company Outlook * Includes 12 months of Wirtgen sales, vs 10 months in fiscal 2018 Source: Deere & Company forecast as of 21 November 2018 40
Slide 15: Worldwide Financial Services Credit Loss History
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 0.17% 15 Year Average Source: Deere & Company forecast as of 21 November 2018 41 0.0% 0.5% 1.0% 1.5% 2.0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F
Slide 16: Worldwide Financial Services
Worldwide Financial Services ($ millions) 4Q 2018 Fiscal 2018 Fiscal 2019 Forecast Net Income (attributable to Deere & Company) $261 $942 ~ $630 Adjusted Net Income (attributable to Deere & Company) $153* $601* Source: Deere & Company forecast as of 21 November 2018 * Excludes favorable tax reform r
Slide 17: Consolidated Trade Receivables & Inventory
Consolidated Trade Receivables & Inventory ($ millions) Fiscal 2018* Previous Forecast* Agriculture & Turf $963 ~ $300 Construction & Forestry $2,362 ~ $2,125 Total (as reported) $3,325 ~ $2,425 Total (constant exchange) $3,500 ~ $2,525 * Change at 28 October 2018 vs. 29 October 2017 Note: Before th
Slide 18: Cost and Expenses Equipment Operations
($ millions) 4Q 2018 Fiscal 2018 Fiscal 2019 Forecast COS (percent of Net Sales) 76% 77% ~75% Research and Development 18% 21% ~ 6% SA&G Expense 8% 15% ~ 7% Source: Deere & Company forecast as of 21 November 2018 (previous forecast as of 17 August 2018) Cost and Expenses Equipment Operations 44
Slide 19: Income Taxes Equipment Operations
4Q 2018 Fiscal 2018 Previous Forecast Fiscal 2019 Forecast Effective Tax Rate 34% 57% ~ 55% 25-27% Income Taxes Equipment Operations Source: Deere & Company forecast as of 21 November 2018 (previous forecast as of 17 August 2018) 45
Slide 20: Net Operating Cash Flows Equipment Operations
Net Operating Cash Flows Equipment Operations Fiscal 2019 Forecast ~ $4.8 billion * Includes impact of voluntary contribution to Pension/OPEB; previous forecast ~ $3.5 billion Note: 2010-2016 adjusted with the adoption of FASB ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting”
Slide 21: Deere & Company Outlook Fiscal 2019 Forecast
Source: Deere & Company forecast as of 21 November 2018 ($ billions except where noted) Fiscal 2019 Forecast Net Sales (equipment operations) ~ 7% Price realization Currency translation Wirtgen ~ 3 points ~ 2 points ~ 2 points Net Income (attributable to Deere & Company) ~ $3.6 Deere & Company Outlo
Slide 22: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans * All shares adjusted for two-for-one stock split effective 26 November 2007 2004–4Q 2018: Cumulative cost of repurchases $17.4 billion Shares repurchased 251.0 million December 2013 authorization of $8 billion: Amount remaining $2.3 billion 28 Oc
Slide 23: Share Repurchase
Share Repurchase As Part of Publicly Announced Plans 36% net share reduction since 2004 2004-40 2018: ‘Cumulative cost of repurchases ‘Shares repurchased December 2013 authorization of $8 billion: ‘Amount remaining 28 October 2018 period ended basic shares 4Q 2018 average diluted shares $17.4 billio
Slide 24: The John Deere Strategy
THE JOHN DEERE STRATEGY (OUR PURPOSE commited on siruogsaunos Magia | Sein, FouNoaTIONAL
Slide 25: Other Information Equipment Operations
($ millions) Fiscal 2018 Fiscal 2019 Forecast Capital Expenditures $893 ~ $1,150 Depreciation & Amortization $974 ~ $1,050 Pension/OPEB Expense $6 ~ $120 Pension/OPEB Contributions $1,426 ~ $200 Other Information Equipment Operations Source: Deere & Company forecast as of 21 November 2018 51
Slide 26: U.S. Farm Commodity Prices
Source: USDA, 8 November 2018 U.S. Farm Commodity Prices 52 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $0 $4 $8 $12 $16 $20 2005 2007 2009 2011 2013 2015 2017 Cotton - $ per Pound $ per Bushel Cotton Wheat Corn Soybeans
Slide 27: U.S. Farm Cash Receipts
28 U.S. Farm Cash Receipts $0 $100 $200 $300 $400 $500 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F $ Billions Crops Livestock Government Payments USDA Aid* *USDA Aid includes only the ~$4.7B crop aid payment Note: USDA authorized a one-time $12B aid package to assist farmers from the trade di
Slide 28: Economic Update EU
Economic Update EU 28 Source: EU Com, LTO, October 2018 Deere & Company forecast as of 21 November 2018 54 € 120 € 180 € 240 € 300 € 360 € 420 € 220 € 270 € 320 € 370 € 420 € 470 2009 2012 2015 2018F Beef meat and Pork meat - € per 100 kg Milk - € per MT Dairy, Beef and Pork Prices Milk Milk 10yr av
Slide 29: Economic Update Brazil
Economic Update Brazil 9.5% 7.5% Eligible Finance Rates for Agriculture Equipment Note: PSI-FINAME was key credit line for machinery acquisition 2011-2014; Moderfrota is currently the most attractive government subsidized credit line Source: ABIMAQ (Brazilian Association of Machinery & Equipment) an
Slide 30: October 2018 Retail Sales and Dealer Inventories
October 2018 Retail Sales (Rolling 3 Months) and Dealer Inventories Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 8% More than the industry 2WD Tractors (40 < 100 PTO hp) 5% More than the industry 2WD Tractors (100+ PTO hp) 2% Low single digit 4WD Tractors 3% More than
Slide 31: October 2018 Retail Sales (Rolling 3 Months)
Retail Sales U.S. and Canada Deere* Selected Turf & Utility Equipment Double digits Construction & Forestry First-in-the-Dirt Settlements Double digits Double digits October 2018 Retail Sales (Rolling 3 Months) Retail Sales EU 28 Ag Deere* Tractors Double digits Combines Double digits * Based on int
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: 1Q 2019 earnings call scheduled
Deere & Company’s 1Q 2019 earnings call is scheduled for 9:00 a.m. central time on Friday, 15 February 2019 59
Slide 34: 1Q 2019 earnings call scheduled
Deere & Company’s 1Q 2019 earnings call is scheduled for 9:00 a.m. central time on Friday, 15 February 2019 @ JOHN DEERE