Why did Production & Precision Agriculture profit fall so sharply?

Operating profit fell 39% to $706 million, primarily due to lower shipment volumes and higher production costs, partially offset by favorable currency effects. Management's outlook projects a large-ag industry decline of 15% to 20% in the U.S. and Canada, indicating the pressure is expected to persist for the remainder of the fiscal year.

Is Deere still expecting its full-year earnings guidance to hold?

Yes. The company maintained its fiscal 2026 net income guidance of $4.5 billion to $5.0 billion attributable to Deere & Company. It also forecasts operating cash flow for Equipment Operations of $4.5 billion to $5.5 billion, an effective tax rate of 24% to 26%, and capital expenditures of about $1.4 billion.

What is driving the strength in Small Ag & Turf and Construction & Forestry?

Both segments grew on higher shipment volumes and favorable price realization. Construction & Forestry also benefited from the Tenna LLC acquisition, which closed in February 2026 for $439 million. Management expects Small Ag & Turf sales to rise about 15% and C&F sales to rise about 20% in fiscal 2026.

Why does year-to-date net income look down more than quarterly results?

Year-to-date net income fell 9% to $2.429 billion, compared with a 2% decline in the quarter. The prior-year period included favorable special items, including discrete tax benefits of roughly $163 million in the first quarter of fiscal 2025, which inflate the comparison. The company also recorded a $272 million IEEPA tariff refund recovery in fiscal 2026 that partially offsets margin pressure.

What are the main risks investors should monitor?

Key risks include the depth of the U.S. and Canada large-ag downturn, continued margin pressure in Production & Precision Ag, tariff and trade policy uncertainty, and interest rate and currency volatility affecting Financial Services. The filing also highlights a pending FTC and state attorneys general lawsuit over alleged restrictions on farmers' self-repair capabilities, which could carry legal and reputational costs.

DE 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed May 21, 2026. Cited figures are marked; the original filing is the authoritative source.

Deere & Company reported second-quarter fiscal 2026 net income of $1.773 billion^a, or $6.55 per diluted share, down 2% from $1.804 billion ($6.64) a year earlier.

Worldwide net sales and revenues rose 5% to $13.369 billion^b, and year-to-date revenues rose 8% to $22.981 billion. Year-to-date net income fell 9% to $2.429 billion ($8.97 per share), but the prior-year period included special items, so the comparison is distorted. Quarterly results were driven by a sharp divergence across segments: Production & Precision Agriculture net sales fell 14% and operating profit fell 39% to $706 million (operating margin 15.7%, down from 22.0%), reflecting weak large-ag demand, while Small Agriculture & Turf (sales +16%, operating profit +25%) and Construction & Forestry (sales +29%, operating profit +48%) grew strongly.

Financial Services net income rose 18% to $190 million^c. Management maintained its fiscal 2026 net income guidance of $4.5 billion to $5.0 billion, which the company framed as confidence amid market volatility. The outlook calls for Production & Precision Ag net sales to fall 5% to 10% with operating margin of 11% to 13%, versus 15.4% in fiscal 2025, reflecting a U.S./Canada large-ag market expected to decline 15% to 20%.

Small Ag & Turf sales are guided up about 15% and Construction & Forestry up about 20%. Financial Services net income is forecast at about $860 million^d. The filing also notes a $272 million recovery of IEEPA tariff refunds, which was included in the prior-period results discussion, and the February 2026 acquisition of Tenna LLC for $439 million.

For investors, the key takeaway is that Deere's earnings are being carried by its smaller, more diversified segments while its core large-ag franchise remains under pressure. The maintained guidance implies a second half that is stable relative to the first half, but the margin compression in Production & Precision Ag and the expected decline in large-ag demand are the main risks to monitor.

02—Key points

Key Highlights

Q2 FY2026 net income of $1.773B ($6.55/diluted share) versus $1.804B ($6.64) a year earlier, down 2%; Q2 net sales and revenues up 5% to $13.369B.
Production & Precision Ag sales fell 14% to $4.503B and operating profit fell 39% to $706M; operating margin contracted to 15.7% from 22.0%.
Small Ag & Turf sales rose 16% to $3.485B with operating profit up 25% to $719M, driven by higher volumes and favorable price realization.
Construction & Forestry sales rose 29% to $3.790B and operating profit rose 48% to $561M, aided by higher volumes and price realization.
Fiscal 2026 net income guidance maintained at $4.5B to $5.0B; Production & Precision Ag sales outlook is down 5% to 10%, while Small Ag & Turf (up ~15%) and C&F (up ~20%) are guided higher.
Financial Services Q2 net income rose 18% to $190M on better financing spreads and derivative valuation adjustments, though the lower average portfolio partially offset gains.
Balance sheet changes include inventories up to $8.188B from $7.406B at fiscal year-end and short-term borrowings up to $15.632B from $13.796B; cash and equivalents declined to $7.905B.

03—Questions

Frequently Asked Questions

Why did Production & Precision Agriculture profit fall so sharply?
Operating profit fell 39% to $706 million, primarily due to lower shipment volumes and higher production costs, partially offset by favorable currency effects. Management's outlook projects a large-ag industry decline of 15% to 20% in the U.S. and Canada, indicating the pressure is expected to persist for the remainder of the fiscal year.
Is Deere still expecting its full-year earnings guidance to hold?
Yes. The company maintained its fiscal 2026 net income guidance of $4.5 billion to $5.0 billion attributable to Deere & Company. It also forecasts operating cash flow for Equipment Operations of $4.5 billion to $5.5 billion, an effective tax rate of 24% to 26%, and capital expenditures of about $1.4 billion.
What is driving the strength in Small Ag & Turf and Construction & Forestry?
Both segments grew on higher shipment volumes and favorable price realization. Construction & Forestry also benefited from the Tenna LLC acquisition, which closed in February 2026 for $439 million. Management expects Small Ag & Turf sales to rise about 15% and C&F sales to rise about 20% in fiscal 2026.
Why does year-to-date net income look down more than quarterly results?
Year-to-date net income fell 9% to $2.429 billion, compared with a 2% decline in the quarter. The prior-year period included favorable special items, including discrete tax benefits of roughly $163 million in the first quarter of fiscal 2025, which inflate the comparison. The company also recorded a $272 million IEEPA tariff refund recovery in fiscal 2026 that partially offsets margin pressure.
What are the main risks investors should monitor?
Key risks include the depth of the U.S. and Canada large-ag downturn, continued margin pressure in Production & Precision Ag, tariff and trade policy uncertainty, and interest rate and currency volatility affecting Financial Services. The filing also highlights a pending FTC and state attorneys general lawsuit over alleged restrictions on farmers' self-repair capabilities, which could carry legal and reputational costs.

04—Continue

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