Deere & Company Q1 FY2026 earnings call

• Results reflect diversified portfolio strength. • All segments had higher net sales y-o-y. • Continued strengthening of order books. • Production & Precision Ag had positive currency translation but faced higher tariffs. • Small Ag & Turf saw high growth in net sales and operating margin. • Construction & Forestry had strong net sales growth and improved operating margin. • Financial Services net income increased. • Discussed industry outlooks for ag, turf, construction markets. • Investments in new equipment designs and technology like excavators and Tenna acquisition.

Production & Precision Ag: Net sales $3.163B, up 3% y-o-y; operating profit $139M, 4.4% margin. Small Ag & Turf: Net sales $2.168B, up 24% y-o-y; operating profit $196M, 9% margin. Construction & Forestry: Net sales $2.67B, up 34% y-o-y; operating profit $137M, 5.1% margin. Financial Services: Net income $244M in Q1, outlook for fiscal 2026 is $840M.

• Fiscal 2026 net income outlook $4.5B - $5B. • Effective tax rate 25% - 27%. • Cash flow from equipment operations $4.5B - $5.5B. • Production & Precision Ag net sales forecast down 5% - 10%, operating margin 11% - 13%. • Small Ag & Turf net sales expected up ~15%, operating margin 13.5% - 15%. • Construction & Forestry 2026 net sales forecast up ~15%, operating margin 9% - 11%.

• Uncertainties related to tariffs, including Supreme Court decisions on IEPA tariffs and 232 tariffs. • Challenges in global ag markets, such as subdued South American ag equipment market. • Competitive pressures in construction and forestry markets.

Q: Kristen Owen on pricing and C&S trim.

A: Josh Beal and others discussed PPA pricing, C&F pricing trim due to fast backlog build.

Q: Angel Castillo on order strength.

A: Josh Beal, etc. talked about contractor confidence, rental refleeting, broad-based construction strength.

Q: Stephen Volkmann on headwinds and C&F sales guide.

A: Josh Beal discussed mixed market and C&F sales guide reasons.

Q: David Raso on large ag order book and corn prices.

A: Josh Beal and Jepsen talked about large ag order book, replacement demand, and corn price impact.

Q: Tim Thein on price vs production costs.

A: Josh Beal discussed price/cost neutrality and tariff and cost factors.

Q: Steven Fisher on regional dynamics.

A: Josh Beal talked about regional mix impact and margin progression.

Q: Chad Dillard on tariffs and farmer relief.

A: Josh Beal and Jepsen discussed tariff uncertainties and mitigation.

Q: Kevin on large ag used inventories.

A: Josh Beal discussed used inventory destock and pool funds.

Q: Jamie Cook on large ag production and margin.

A: Josh Beal and Jepsen talked about production plans and margin factors.

Q: Tami Zakaria on new excavator marketing.

A: Ryan Campbell discussed CONEXPO launch and marketing.

Q: Sabahat Khan on trade shifts and South America.

A: Josh Beal and Jepsen talked about trade impacts and South America market.

Q: Mike Shlisky on large ag market share and tech.

A: Josh Beal and Jepsen discussed market share gains and tech adoption.

Q: Jairam Nathan on biofuels and construction competition.

A: Josh Beal talked about biofuels opportunities and construction competition.