01—Abstract
Summary
Summary of the 10-K filed December 12, 2024. Cited figures are marked; the original filing is the authoritative source.
Deere & Company's fiscal 2024 10-K (year ended October 27, 2024) shows a clear cyclical downturn.
Consolidated net sales and revenues fell 16% to $51.7 billiona from $61.3 billion, and net income attributable to Deere fell 30% to $7.1 billion from $10.2 billion, with diluted EPS of $25.62 versus $34.63. Equipment operations net sales dropped 19% to $44.8 billion, driven by lower shipment volumes in production and precision agriculture (PPA, down 22%), small agriculture and turf (SAT, down 22%), and construction and forestry (CF, down 12%). Operating margins compressed across segments: PPA fell to 21.7% from 26.1%, SAT to 14.8% from 17.7%, and CF to 15.5% from 18.2%.
Management cited weak farm fundamentals, high interest rates, rising grain stocks, and elevated dealer inventories. Backlogs fell sharply (PPA $5.2Bb vs. $7.9B; CF $2.2B vs. $6.4B), and management guides to lower agriculture, turf, and construction equipment sales in 2025. The financial services segment is a counterweight.
Revenue rose 23% to $6.5 billionc, and segment net income rose 12% to $696 million, though management noted that results excluding a 2023 accounting correction would have declined on higher credit-loss provisions and less favorable financing spreads. Consolidated interest expense rose 36% to $3.3 billion as borrowing costs climbed, and provisions for credit losses increased. Financing receivables rose to $53.3 billion, and past-due and non-performing ratios worsened.
Operating cash flow was $9.2 billiond, supported by inventory reductions and lower receivables, while the company returned less cash to shareholders (repurchases of $4.0 billion versus $7.2 billion in 2023). The company plans a 2025 capital expenditure budget of $1.6 billion and expects lower operating cash flow in 2025. For investors, the key points are the sharp earnings reset tied to the agricultural cycle, the rising financing-cost and credit-quality pressures in John Deere Financial, and the pending legal and regulatory exposure from the FTC investigation and the multidistrict class action over repair restrictions.
Management also disclosed a joint venture with Bradesco for its Brazilian financing unit (Banco John Deere) and a $10.0 million FCPA settlement tied to Wirtgen Thailand. Ratings remain strong (A1/A/A+), and the company continues to pay its quarterly dividend, declaring $5.88 per share for the year.
02—Key points
Key Highlights
- Net sales and revenues declined 16% to $51.7B, with equipment operations net sales down 19% to $44.8B on lower volumes across all three equipment segments.
- Net income attributable to Deere fell 30% to $7.1B; diluted EPS of $25.62 compared with $34.63 in fiscal 2023.
- Operating margins compressed: PPA 21.7% (from 26.1%), SAT 14.8% (from 17.7%), CF 15.5% (from 18.2%), driven by overhead under-absorption from lower volumes.
- Backlogs fell sharply: PPA $5.2B (from $7.9B), SAT $2.1B (from $3.3B), CF $2.2B (from $6.4B), signaling weaker near-term order intake.
- Financial services revenue rose 17% to $6.5B, but interest expense rose 36% to $3.3B and credit-loss provisions increased, pressuring financing spreads.
- Operating cash flow of $9.2B supported by inventory and receivable reductions; share repurchases fell to $4.0B from $7.2B as cash deployment was scaled back.
- Management guides to lower 2025 agriculture, turf, and construction equipment sales, with lower equipment operating cash flow expected in 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed December 12, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $51.72B$61.25B | −15.6% |
| R&D Expenses | $2.29B$2.18B | +5.2% |
| SG&A Expenses | $4.84B$4.59B | +5.3% |
| Operating Expenses | $42.51B$48.23B | −11.9% |
| Operating Income | $9.04B$12.96B | −30.2% |
| Interest Expense | $3.35B$2.45B | +36.5% |
| Net Income | $7.10B$10.17B | −30.2% |
| EPS (Basic) | $25.73$34.80 | −26.1% |
| EPS (Diluted) | $25.62$34.63 | −26.0% |
| Shares Outstanding (Basic) | 276.00M292.20M | −5.5% |
| Shares Outstanding (Diluted) | 277.10M293.60M | −5.6% |
05—Questions
Frequently Asked Questions
Why did Deere's earnings decline so significantly in fiscal 2024?
The decline was driven by lower shipment volumes across all equipment segments, which reflected weaker farm fundamentals, rising global grain stocks, lower commodity prices, elevated interest rates, and dealer inventory management. Overhead costs rose as a share of sales due to production inefficiencies at lower volumes, partially offset by price realization and lower material costs. Net income attributable to Deere fell 30% to $7.1 billion.
How is John Deere Financial performing, and what risks does it face?
Financial services revenue grew 17% and segment net income rose 12% to $696 million, helped by a larger receivables portfolio and higher financing rates. However, the segment faces rising interest expense (up 36%), a higher provision for credit losses, elevated delinquencies (non-performing ratio of 1.01% versus 0.92%), and narrower financing spreads. Management expects net income to rise in 2025 on lower provisions and prior-period special items, but also expects less favorable financing spreads.
What is the outlook for Deere's business in fiscal 2025?
Management expects agriculture and turf equipment sales to decline in 2025 due to contracting farm markets, with weak U.S. and Canadian demand, a European downturn, and flat South American demand. Construction equipment sales are projected to decline, while roadbuilding is expected to be generally flat. Capital expenditures are planned at $1.6 billion, and pension and OPEB contributions of roughly $760 million are expected, including a voluntary OPEB contribution of up to $520 million.
What legal and regulatory risks does the filing disclose?
Deere faces a consolidated multidistrict class action in the Northern District of Illinois alleging attempted monopolization of the agricultural equipment repair market, and the FTC is investigating whether the company violated laws related to equipment repair and information security practices. Management says it cannot predict the outcome and that the matters could have a material adverse effect. The company also paid approximately $10.0 million to the SEC to resolve FCPA charges tied to improper payments by its Wirtgen Thailand subsidiary.
Did Deere change its capital returns or joint ventures during the year?
Deere reduced share repurchases to $4.0 billion from $7.2 billion, and $8.9 billion remained authorized under the $18.0 billion program at year-end. Dividends paid rose to $1.6 billion, and the quarterly dividend was declared at $1.62 per share for February 2025 payment. In August 2024, Deere agreed to form a 50/50 joint venture with Banco Bradesco for its Brazilian bank, Banco John Deere, which is expected to close in the first half of 2025 and is classified as held for sale.
06—Continue