10-QPeriod: Q2 FY2024

DEERE & CO Quarterly Report for Q2 Ended Apr 28, 2024

Filed May 30, 2024For Securities:DE

Summary

Deere & Company (DE) reported a decrease in net sales and net income for the second quarter and first six months of fiscal year 2024 compared to the same periods in 2023. Net sales for the quarter fell 12% to $15.2 billion, and net income attributable to Deere & Company decreased by 17% to $2.37 billion. Diluted earnings per share were $8.53, down from $9.65 in the prior year's quarter. This decline is attributed primarily to lower sales volumes across most segments, particularly in Production & Precision Agriculture and Small Agriculture & Turf, reflecting moderated agricultural fundamentals such as lower commodity prices and elevated interest rates. Despite the revenue and profit headwinds, the company's Financial Services segment showed strong revenue growth, up 22% for the quarter, driven by higher average portfolio balances and financing rates. However, this was partially offset by a higher provision for credit losses and less favorable financing spreads. The company ended the period with a solid liquidity position, though it anticipates lower operating cash flows for the remainder of 2024. Deere continues to invest in technology and its Smart Industrial Operating Model, aiming to deliver economic value and sustainability to its customers.

Financial Highlights

39 data points
Beta

Revenue

$15.23B

Net Income

$2.37B

15.6% Net Margin

EPS (Diluted)

$8.53

Total Assets

$105.63B

Cash & Equivalents

$5.55B

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$15.23B
R&D Expenses$565.00M
SG&A Expenses$1.26B
Operating Expenses$12.12B
Interest Expense$836.00M
Net Income$2.37B
EPS (Basic)$8.56
EPS (Diluted)$8.53
Shares Outstanding (Basic)276.80M
Shares Outstanding (Diluted)277.90M

Key Highlights

  • 1Net sales decreased by 12% to $15.2 billion for the second quarter of fiscal year 2024, compared to $17.4 billion in the prior year, primarily due to lower sales volumes.
  • 2Net income attributable to Deere & Company declined 17% to $2.37 billion ($8.53 per diluted share) for the second quarter of fiscal year 2024, down from $2.86 billion ($9.65 per diluted share) in the prior year's quarter.
  • 3The Production & Precision Agriculture segment saw a 16% decrease in net sales to $6.58 billion, driven by lower shipment volumes, especially in Brazil, the U.S., and Europe, reflecting softened demand.
  • 4The Small Agriculture & Turf segment's net sales decreased by 23% to $3.19 billion, also attributed to lower shipment volumes and softened demand in key markets.
  • 5Financial Services segment revenue increased by 22% to $1.59 billion, driven by higher average portfolio balances and financing rates, although net income for the segment rose 479% to $162 million.
  • 6The company's outlook for fiscal year 2024 anticipates continued production volume declines for agricultural equipment due to shifting demand and moderating agricultural fundamentals.
  • 7Deere maintained a strong liquidity position, with cash, cash equivalents, and marketable securities totaling $6.65 billion at the end of the period, and unused credit lines of $2.79 billion.

Frequently Asked Questions

The primary reason for the decrease in net sales and income is lower sales volumes across key segments like Production & Precision Agriculture and Small Agriculture & Turf. This is driven by moderated agricultural fundamentals, including lower commodity prices, elevated interest rates, and weather volatility, which have softened demand.

The Financial Services segment performed well, with revenue increasing by 22% to $1.59 billion in the second quarter. This growth was driven by higher average portfolio balances and increased average financing rates. While the segment's net income significantly increased, the provision for credit losses was higher, and financing spreads were less favorable.

Deere expects production volumes to continue declining for agricultural equipment through the remainder of fiscal year 2024. This outlook is due to shifting demand and moderating agricultural fundamentals such as lower commodity prices, higher interest rates, and weather impacts. The company anticipates this trend will persist, impacting sales in major markets like North America, Europe, and South America.

Deere maintained a strong liquidity position, with $6.65 billion in cash, cash equivalents, and marketable securities as of April 28, 2024. The company has access to global debt markets and utilizes funds from operations, commercial paper, term debt issuances, securitization of retail notes, and bank lines of credit for its funding needs. Unused credit lines stood at $2.79 billion.