10-QPeriod: Q3 FY2021

DEERE & CO Quarterly Report for Q3 Ended Aug 1, 2021

Filed August 26, 2021For Securities:DE

Summary

Deere & Company reported strong financial results for the third quarter and first nine months of fiscal year 2021, significantly exceeding prior year performance. Net sales and revenues increased by 29% and 27% respectively for the respective periods, driven by robust demand across all major product lines, including Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry. This growth was fueled by higher shipment volumes and favorable price realization. The company also saw a substantial increase in net income, more than doubling year-over-year for the third quarter and showing a significant rise for the nine-month period. Despite persistent supply chain pressures, Deere & Company demonstrated strong operational execution. The financial services segment also performed well, with increased operating profit driven by higher average portfolio balances, improved operating lease residual values, and a lower provision for credit losses. The company's strategic focus on technology and precision agriculture continues to be a key driver of its success. Looking ahead, Deere expects continued strong industry sales across its segments, though it acknowledges ongoing supply chain challenges and broader economic uncertainties.

Financial Statements
Beta
Revenue$11.53B
R&D Expenses$394.00M
SG&A Expenses$841.00M
Operating Expenses$9.38B
Operating Income$2.24B
Interest Expense$244.00M
Net Income$1.67B
EPS (Basic)$5.36
EPS (Diluted)$5.32
Shares Outstanding (Basic)311.00M
Shares Outstanding (Diluted)313.40M

Key Highlights

  • 1Net sales and revenues surged by 29% in Q3 2021 and 27% for the first nine months of FY21 compared to the prior year, indicating strong market demand.
  • 2Net income attributable to Deere & Company more than doubled in Q3 2021, rising by 106%, and increased substantially for the first nine months by 135%, showcasing significant profitability improvements.
  • 3Operating profit across all segments (Production & Precision Agriculture, Small Agriculture & Turf, Construction & Forestry) showed substantial year-over-year growth, with Construction & Forestry experiencing a notable 126% increase in Q3 operating profit.
  • 4Financial Services segment revenue saw a modest increase of 1% in Q3 and a slight decrease of 2% for the nine-month period, but operating profit grew significantly by 20% and 69% respectively, driven by favorable financing spreads and improved lease residuals.
  • 5The company continues to invest in technology, highlighted by the acquisition of Bear Flag Robotics for autonomous tractor technology, signaling a commitment to innovation and future growth in precision agriculture.
  • 6Deere & Company's balance sheet remains strong, with total assets increasing and stockholders' equity growing by $2.8 billion in the first nine months of FY21.
  • 7The company declared a quarterly dividend of $1.05 per share, an increase of approximately 17% over the previous level, demonstrating confidence in its financial performance and commitment to returning value to shareholders.

Frequently Asked Questions

Deere & Company's revenue growth in the third quarter of 2021 was primarily driven by higher shipment volumes across all major product lines – Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry – coupled with favorable price realization. Strong demand in global agricultural and construction markets contributed significantly to these increases.

Profitability saw a substantial improvement. Net income attributable to Deere & Company more than doubled in the third quarter, increasing by 106% year-over-year, and grew by 135% for the first nine months of fiscal year 2021. This was supported by strong revenue growth, improved operating margins across segments, and effective cost management.

The company highlighted several risks and uncertainties, including the ongoing impact of COVID-19 on operations and supply chains, global economic conditions, supply of critical parts and components, trade agreements and tariffs, currency exchange rate volatility, commodity prices, geopolitical events, and potential disruptions in monetary and fiscal policies. Supply chain pressures were specifically noted as expected to persist.

Deere & Company is actively investing in technology and innovation. A key development mentioned is the recent acquisition of Bear Flag Robotics, Inc., aimed at accelerating the development of autonomous tractor technology. This acquisition underscores Deere's commitment to precision agriculture and smart industrial solutions to enhance customer productivity and profitability.