What drove the significant increase in net sales and income for Deere & Company in the second quarter of fiscal year 2021?

The substantial increase in net sales and income was driven by strong demand across all major product lines and geographies. Higher shipment volumes, coupled with favorable price realization for equipment, significantly boosted the top line. Improved operating efficiency, a lower provision for credit losses in the financial services segment, and gains from the disposition of operating lease equipment also contributed to the robust net income growth.

What are the key performance drivers for each of Deere's operating segments?

For the Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry segments, growth was primarily fueled by higher shipment volumes, price realization, and favorable sales mix. The Financial Services segment saw improved operating profit driven by a lower provision for credit losses, better operating lease residual values, and more favorable financing spreads.

What is the company's outlook for the remainder of fiscal year 2021, considering supply chain challenges?

Deere & Company anticipates a strong full fiscal year 2021, despite acknowledging increased supply chain pressures. The company is actively working with key suppliers to secure necessary parts and components. Management expressed confidence in their 'smart industrial' operating strategy to deliver continued value and meet customer needs.

How has the adoption of ASU No. 2016-13 impacted the company's financial statements?

Deere & Company adopted ASU No. 2016-13, which changed the accounting for credit losses from an incurred loss to an expected loss methodology. This adoption resulted in a $35 million decrease in retained earnings at the beginning of fiscal year 2021. While it affected the allowance for credit losses and the presentation of certain items, the company stated it is part of its ongoing efforts to reflect expected credit losses more accurately.

DE 10-Q Quarterly Report Q2 FY2021 — Revenue, Net Income, EPS

Summary

Deere & Company reported robust financial results for the second quarter and the first six months of fiscal year 2021, demonstrating a significant rebound and strong growth compared to the prior year. Net sales and revenues saw a substantial increase of 30% for the quarter and 25% year-to-date, driven by higher shipment volumes, favorable price realization across all segments, and strong worldwide market demand for both agricultural and construction equipment. Net income attributable to Deere & Company more than doubled year-over-year, reflecting improved operational efficiency and strong top-line growth. The company's strategic focus on its 'smart industrial' operating model continues to yield positive results, enhancing profitability and customer value. Despite ongoing supply chain pressures, the company expressed optimism for a strong full fiscal year, actively working with suppliers to mitigate disruptions. The financial services segment also performed well, benefiting from lower provision for credit losses and improved financing spreads. The company's financial position remains solid, supported by healthy cash flows and access to credit markets, positioning it well to navigate current market challenges and deliver continued value to shareholders.

Financial Highlights

44 data points

Beta

Revenue

$12.06B

Net Income

$1.79B

0.1% Net Margin

EPS (Diluted)

$5.68

Total Assets

$78.98B

Cash & Equivalents

$7.18B

Free Cash Flow

$1.48B

Financial Statements

Beta

Revenue	$12.06B
R&D Expenses	$377.00M
SG&A Expenses	$838.00M
Operating Expenses	$9.75B
Operating Income	$2.44B
Interest Expense	$268.00M
Net Income	$1.79B
EPS (Basic)	$5.72
EPS (Diluted)	$5.68
Shares Outstanding (Basic)	312.80M
Shares Outstanding (Diluted)	315.20M

Key Highlights

1Net sales and revenues surged by 30% to $12.1 billion in Q2 2021 and 25% year-to-date to $21.2 billion, indicating robust demand and pricing power.
2Net income attributable to Deere & Company grew significantly, up 169% to $1.8 billion for the quarter and 155% to $3.0 billion year-to-date, demonstrating strong operational leverage.
3All operating segments (Production & Precision Ag, Small Ag & Turf, Construction & Forestry, and Financial Services) showed substantial year-over-year growth in net sales and operating profit.
4The Production & Precision Ag segment saw operating profit increase by 110% year-to-date, driven by price realization and higher shipment volumes.
5Financial Services operating profit more than doubled year-over-year, primarily due to a lower provision for credit losses and improved financing spreads.
6Deere & Company ended the period with a strong balance sheet, showing total assets of $79.0 billion and increasing stockholders' equity to $15.1 billion.
7The company maintained a healthy liquidity position with $7.2 billion in cash, cash equivalents, and restricted cash at quarter-end.

DEERE & CO Quarterly Report for Q2 Ended May 2, 2021

Summary

Financial Highlights

Key Highlights

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