01—Abstract
Summary
Summary of the 10-Q filed February 27, 2025. Cited figures are marked; the original filing is the authoritative source.
Deere & Company's first-quarter fiscal 2025 results (quarter ended January 26, 2025) show a sharp earnings decline driven by lower equipment sales volumes.
Net sales and revenues fell 30% to $8.5 billiona from $12.2 billion, and net income attributable to Deere fell 50% to $869 million from $1.75 billion, with diluted EPS of $3.19 versus $6.23. Equipment operations net sales dropped 35% to $6.8 billion, with production and precision agriculture (-37%), small agriculture and turf (-28%), and construction and forestry (-38%) all down materially. Construction and forestry operating margin compressed to 3.3% from 17.6%, and total operating profit fell 64%.
Financial services was the one bright spot, with net income up 11% to $230 millionb, though this was helped by a special valuation allowance reversal tied to the Brazil business. Cash flow and balance sheet trends were mixed. Operating cash flow was negative $1.13 billion, reflecting the seasonal payout of employee profit-sharing, higher inventories ($7.7 billion, up 27% on a LIFO-adjusted basis versus prior-year trends), and lower accrued expenses.
Cash and marketable securities totaled $7.8 billion, and unused credit lines rose to $7.8 billionc. Deere returned $844 million to shareholders in the quarter through buybacks ($441 million) and dividends ($403 million), and $520 million was contributed to a U.S. OPEB plan. Management expects lower sales volumes and lower operating cash flow from equipment operations for fiscal 2025, citing market uncertainty, high interest rates, elevated used inventories, and potential tariffs.
Key risks flagged in the filing include a new FTC and state attorneys general antitrust lawsuit (filed January 15, 2025) over right-to-repair practices, which Deere says it cannot yet estimate the impact of, along with rising credit-loss provisions in financial services from elevated delinquencies. The Banco John Deere Brazil joint venture with Bradesco was completed in February 2025, leaving Deere with a 50% equity stake that will be accounted for as an unconsolidated affiliate. The company declared a $1.62d quarterly dividend, unchanged from the prior declaration.
02—Key points
Key Highlights
- Net sales and revenues fell 30% year over year to $8,508 million, driven by lower shipment volumes across all equipment segments.
- Net income attributable to Deere & Company declined 50% to $869 million; diluted EPS was $3.19 versus $6.23 a year earlier.
- Construction and forestry operating profit fell 89% to $65 million, with operating margin dropping to 3.3% from 17.6%; production and precision agriculture operating profit fell 68%.
- Financial services net income rose 11% to $230 million, aided by a $32 million valuation allowance reversal on Banco John Deere Brazil assets held for sale.
- Operating cash flow was negative $1,132 million, and cash plus marketable securities stood at $7.8 billion; $844 million was returned to shareholders in the quarter.
- Management expects lower 2025 sales volumes and lower equipment operating cash flow, and a new FTC antitrust lawsuit over right-to-repair creates an unquantified legal risk.
- The Brazil financial services joint venture with Bradesco closed in February 2025, with Deere retaining 50% as an equity investment.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed February 27, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $8.51B$12.19B | −30.2% |
| R&D Expenses | $526.00M$533.00M | −1.3% |
| SG&A Expenses | $972.00M$1.07B | −8.8% |
| Operating Expenses | $7.61B$9.97B | −23.6% |
| Interest Expense | $829.00M$802.00M | +3.4% |
| Net Income | $869.00M$1.75B | −50.4% |
| EPS (Basic) | $3.20$6.25 | −48.8% |
| EPS (Diluted) | $3.19$6.23 | −48.8% |
| Shares Outstanding (Basic) | 271.60M279.90M | −3.0% |
| Shares Outstanding (Diluted) | 272.30M281.10M | −3.1% |
05—Questions
Frequently Asked Questions
Why did Deere's earnings fall so sharply this quarter?
The decline was driven primarily by lower shipment volumes across production and precision agriculture, small agriculture and turf, and construction and forestry, reflecting market uncertainty and high interest rates. Cost of sales rose to 74.0% of net sales from 68.7% due to overhead inefficiencies from reduced production, partly offset by lower material costs. Lower volumes were partially offset by reduced employee profit-sharing and lower foreign exchange losses.
How healthy is Deere's financial services business?
Financial services remained profitable, with net income up 11% to $230 million, but this figure was flattered by a special valuation allowance reversal tied to the Brazil business. Excluding that item, net income declined due to a higher provision for credit losses, which the company attributes to elevated delinquencies. The allowance for retail notes and leases increased, and management expects higher credit losses in 2025.
What is the biggest legal risk facing Deere?
The Federal Trade Commission and several state attorneys general filed an antitrust lawsuit in January 2025 alleging Deere monopolized repair services by restricting farmers and independent repair providers from accessing repair tools. Deere says it cannot yet estimate the potential impact on its business, and a related consolidated class action is also pending. The outcome could affect product service revenue and the company's right-to-repair practices.
Is Deere's dividend and buyback program still intact?
Yes. Deere declared a quarterly dividend of $1.62 per share in February 2025, payable in May, and repurchased $441 million of stock in the quarter, leaving $8.6 billion remaining under its $18 billion authorization. Dividends paid were $403 million. However, operating cash flow was negative this quarter, so these returns were funded partly by borrowings and balance sheet cash, which is a point investors should watch.
06—Continue