01—Abstract
Summary
Summary of the 10-Q filed August 28, 2025. Cited figures are marked; the original filing is the authoritative source.
Deere & Company's third-quarter fiscal 2025 results (quarter ended July 27, 2025) show a clear cyclical downturn in its equipment business.
Net sales and revenues fell 9% to $12,018 milliona for the quarter and 18% to $33,290 million year-to-date. Net income attributable to Deere fell 26% to $1,289 million in the quarter and 32% to $3,962 million for the nine months, with diluted EPS of $4.75 versus $6.29 a year ago. Results were pressured by lower shipment volumes in production and precision agriculture and construction and forestry, higher tariffs (about $300 million direct cost in the first nine months), and unfavorable price realization from incentive programs aimed at elevated used inventory.
Equipment operations' Q3 operating margins compressed sharply, with CF falling to 7.7% and PPA to 13.6%. Management expects fiscal 2025 agriculture, turf and construction volumes to be lower than 2024, citing high interest rates, trade uncertainty, weak commodity prices and used inventory. Balance sheet metrics remain solid: cash and marketable securities were $9,987 millionb, unused credit lines were $6,150 million, and the financial services debt-to-equity ratio was 8.6 to 1.
Credit quality is a watch item, with the allowance for credit losses rising in the first nine months on elevated agriculture and turf delinquencies. Deere continued returning capital, with $2,418 millionc paid to shareholders year-to-date, including $1,136 million in buybacks and $1,282 million in dividends. The company also faces an FTC and state attorneys general antitrust suit over right-to-repair, which management says it cannot yet assess.
Overall, the filing points to a weaker near-term earnings cycle, with a strong liquidity position and a dividend declared at $1.62d per share. Because the company's fiscal year 2025 is a 53-week year, the extra week falls in Q4, which may affect year-over-year comparisons for the full year. Investors should watch the fourth-quarter results for evidence of stabilization in equipment demand and for the outcome of the FTC litigation.
02—Key points
Key Highlights
- Net sales and revenues fell 9% to $12.0 billion in Q3 and 18% to $33.3 billion year-to-date, driven mainly by lower equipment shipment volumes.
- Q3 net income attributable to Deere was $1,289 million (diluted EPS $4.75), down 26% from $1,734 million; nine-month net income was $3,962 million, down 32%.
- Equipment operating margins compressed: PPA operating margin fell to 13.6% from 22.8%, and CF to 7.7% from 13.8%, reflecting lower volumes, tariffs (about $300 million direct cost YTD) and incentive-driven price pressure.
- Management expects fiscal 2025 agriculture, turf and construction sales volumes to be lower than 2024, with weaker U.S. and Canadian large-ag and construction demand.
- Liquidity remains strong, with $9,987 million in cash and marketable securities, $6,150 million in unused credit lines, and strong investment-grade ratings (A+/A1/A).
- Credit quality warrants monitoring: the allowance for credit losses rose in the first nine months on elevated ag and turf delinquencies, and the company is deconsolidating its Brazil financial services unit into a 50% equity-method JV with Bradesco.
- Shareholder returns continued, with $2.4 billion returned YTD (buybacks of $1.1 billion and dividends of $1.3 billion), and a quarterly dividend of $1.62 per share declared August 27, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed August 28, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $12.02B$13.15B | −8.6% |
| R&D Expenses | $556.00M$567.00M | −1.9% |
| SG&A Expenses | $1.22B$1.28B | −4.8% |
| Operating Expenses | $10.42B$10.80B | −3.5% |
| Interest Expense | $794.00M$840.00M | −5.5% |
| Net Income | $1.29B$1.73B | −25.7% |
| EPS (Basic) | $4.76$6.32 | −24.7% |
| EPS (Diluted) | $4.75$6.29 | −24.5% |
| Shares Outstanding (Basic) | 270.70M274.50M | −1.4% |
| Shares Outstanding (Diluted) | 271.40M275.60M | −1.5% |
05—Questions
Frequently Asked Questions
Why did Deere's earnings decline so sharply in the third quarter of fiscal 2025?
The decline was driven primarily by lower sales volumes, especially in U.S. production agriculture and construction. Higher tariffs, unfavorable price realization from incentive programs deployed to clear used inventory, and higher overhead costs from lower production volumes also weighed on margins. Partly offsetting these factors were lower material costs and lower employee profit-sharing expense.
What is the outlook for Deere's fiscal 2025 equipment demand?
Management expects agriculture and turf and construction equipment sales volumes for fiscal 2025 to be lower than 2024. Large ag demand in the U.S. and Canada is expected to decline due to high interest rates, used inventory, trade uncertainty and low commodity prices. Europe and South America are roughly flat to down slightly, and Asia is flat to up slightly. Construction demand in the U.S. and Canada is expected to be down for earthmoving equipment.
How are tariffs affecting Deere's business?
Incremental U.S. import tariffs cost Deere approximately $300 million directly in the first nine months of 2025, excluding effects on suppliers and demand. The company expects further cost increases from an August 2025 expansion of steel and aluminum derivative duties. Management says it is taking steps to mitigate these impacts, though it does not quantify the offset.
Is Deere's financial position still sound despite the earnings decline?
Yes. The company held $9,987 million in cash and marketable securities and had $6,150 million in unused credit lines at quarter-end, with a $12.2 billion total worldwide credit line capacity. Its credit ratings are A+ (Fitch), A1 (Moody's) and A (S&P), all with stable outlooks. Deere continued paying dividends and repurchasing shares, though the filing notes that cash flow from equipment operations is expected to be lower in 2025.
What legal risks does Deere face that investors should be aware of?
The FTC and the Attorneys General of several states have sued Deere alleging monopolization and unfair competition related to right-to-repair, seeking an injunction that would give owners and independent repair providers access to repair tools. A motion to dismiss was denied, and Deere is in preliminary resolution discussions with the FTC. A consolidated multidistrict class action on similar claims is also pending. Management says it cannot currently predict the outcome or financial impact.
06—Continue