10-QPeriod: Q3 FY2022

DEERE & CO Quarterly Report for Q3 Ended Jul 31, 2022

Filed September 1, 2022For Securities:DE

Summary

Deere & Company reported strong financial performance for the third quarter and the first nine months of fiscal year 2022, demonstrating significant revenue growth and increased profitability. Net sales and revenues saw a substantial increase of 22% in the third quarter and 13% year-to-date, driven by higher shipment volumes and effective price realization across its segments, particularly in Production & Precision Ag. The company's net income attributable to Deere & Company grew by 13% in the quarter and 4% year-to-date. This performance was achieved despite ongoing supply chain pressures and inflationary cost increases, showcasing the company's ability to navigate a challenging operational environment and leverage favorable market conditions. The company also highlighted strategic acquisitions and investments aimed at enhancing its technological capabilities and market position, particularly in the area of electrification and autonomous solutions.

Financial Highlights

43 data points
Beta

Revenue

$14.10B

Net Income

$1.88B

13.4% Net Margin

EPS (Diluted)

$6.16

Total Assets

$86.82B

Cash & Equivalents

$4.49B

Free Cash Flow

$1.93B

Financial Statements
Beta
Revenue$14.10B
R&D Expenses$481.00M
SG&A Expenses$959.00M
Operating Expenses$11.56B
Operating Income$2.65B
Interest Expense$296.00M
Net Income$1.88B
EPS (Basic)$6.20
EPS (Diluted)$6.16
Shares Outstanding (Basic)304.10M
Shares Outstanding (Diluted)305.70M

Key Highlights

  • 1Net sales and revenues increased by 22% in Q3 2022 to $14.1 billion and by 13% year-to-date to $37.0 billion, reflecting strong demand and pricing power.
  • 2Net income attributable to Deere & Company rose by 13% to $1.88 billion in Q3 2022 and by 4% to $4.88 billion year-to-date.
  • 3The Production & Precision Agriculture segment showed robust growth, with net sales up 43% in Q3 and operating profit up 43%, driven by higher volumes and price realization.
  • 4Deere completed several strategic acquisitions, including a majority stake in Kreisel Electric Inc. (battery technology) and full ownership of three former joint venture factories, enhancing its technological capabilities and market control.
  • 5Despite supply chain challenges and inflationary pressures, the company maintained positive operating margins across most segments and expressed confidence in continued favorable conditions into fiscal year 2023.
  • 6The company repurchased $2.48 billion of common stock in the first nine months of 2022, indicating a commitment to returning capital to shareholders.
  • 7Financing receivables and equipment on operating leases increased by $1.3 billion in the first nine months of 2022, indicating strong financing activity supporting equipment sales.

Frequently Asked Questions

Deere's revenue growth in the third quarter was primarily driven by a significant increase in net sales and revenues by 22% to $14.1 billion. This was fueled by higher shipment volumes and effective price realization across its key segments, particularly the Production & Precision Agriculture segment which saw a 43% increase in net sales. Despite ongoing supply chain pressures, the company was able to increase output and deliver more equipment to customers.

Deere completed several strategic acquisitions, including a majority stake in Kreisel Electric Inc. for battery technology and full ownership of former joint venture factories. These acquisitions are expected to enhance Deere's technological capabilities in areas like electrification and autonomous solutions, and provide greater control over its product lines. While the full financial impact is still unfolding, these moves position Deere for future growth and innovation in the 'smart industrial' landscape.

Deere expressed confidence in continuing favorable market conditions into fiscal year 2023, citing strong underlying fundamentals and positive customer responses to early-order programs. The company anticipates higher levels of customer demand. However, key concerns include ongoing global and regional political conditions, economic and trade policies, persistent inflationary pressures, supply chain disruptions, and volatility in foreign currency exchange rates and commodity prices. The company also continues to monitor the impact of events in Russia/Ukraine.

Deere acknowledged that supply chain pressures resulted in higher costs and production inefficiencies during the third quarter. The company is actively managing these challenges through increased factory output and collaboration with suppliers. While these pressures impacted profitability, Deere achieved effective price realization which helped to offset some of the increased costs and maintain strong operating margins.