Deere & Company (DE) 23 Nov 222022 Q4 Earnings call transcript

Good morning, and welcome to Deere & Company's Fourth Quarter Earnings Conference Call.

Your lines have been placed on a listen-only mode until the question-and-answer session of today’s conference. I would now like to turn the call over to Mr. Brent Norwood, Director of Investor Relations. Thank you.

begin. may You

a the Chief on and are May, some we'll John Bach, quarter Deere's Hello. then earnings, Officer; call Josh and spend take Today, Communications. Executive of Officer; look Jepsen, Chairman at Manager fourth Also be time Investor today available current morning. closer Chief talking Rachel to note Please your our fiscal on to the XXXX. this outlook accessed are call complement our can at about and After website year They questions. that for markets johndeere.com/earnings. that, respond our slides we'll Financial

First, the without and on the transmission Company. or the the a transmission and express earnings Deere of are the Any recorded prohibited. likeness reminder, to comments includes and risks this Internet agree remarks be future important future broadcast recording use, subject that of as forward-looking call written in call. in part call, is consent their stored Q&A projections for any being broadcast for may the plans strictly and & other uncertainties. is of the call portion live use used media including that session, This of Participants Deere company's and by copyrighted and all concerning this

Securities in that financial could principles accounting the Exchange information most include contained GAAP. the in in reports Commission. accepted to recent periodic may cause the This not of also measures Form factors Additional and United concerning America, differ conformance that with generally filed company's results call actual materially is are X-K States with and

on Earnings turn Rachel Events. call in is to reconciliations johndeere.com/earnings I will under these to the Quarterly Additional comparable & measures, including at information release over posted and website measures, included our Bach. the now GAAP concerning

of by businesses, included continued quarter, and the driven a production higher our for equipment operations. quarter thanks Good rates with Across partially Deere increase strong reducing sales. net completed results the progress year XX% the performance XX.X% to machines. Financial inventory margin an in finished on fourth strong a was demand, our morning. John for

Looking ahead, markets into net of equipment visibility were and the fiscal from and the second for fundamentals demand healthy the providing continued The as sales $XX.X contributing fiscal forestry quarter. solid operations extended Slide in and & to order Net in continuing year to shows quarter are billion positive, $X.X income 'XX, confidence drive demand share. up up new the fiscal revenues per the were XX% or the remain benefit division's notable was Net of ag the into evidenced year Company construction year. diluted sales XXXX. books also for to billion, while our by to XXXX. full XX% order $XX.XX third half X $XX.X to Similarly, performance results books Deere attributable billion. to

$X.XX per Next, Net up to Net revenues billion, and fourth operations $XX.X were equipment diluted XX% billion. results quarter are was while Deere were sales $X.X income billion sales Company XX% on the net Slide or $XX.X & attributable up for to X. share. to

both due the by with were billion a year-over-year of take markedly precision beginning on quarter primarily XX% our Let's up was business sequentially. higher at at and to sales $X.XXX production X. closer year. and results compared ag look Net quarter Slide fourth segment, to last This production fourth rates

spend. to billion, points, costs primarily by operating and about Both challenges X clearing partially by price was the production and to The production equipment for by rates the number from deliver to and were and was also XX on Operating quarter's higher our and completed costs Overhead partially volumes as production segment. these year-over-year to machines our elevated made for inventory. mostly to completed in translation dealers about period the and inefficiencies the experience to reserves offset the shipment material was quarter realization, currency freight contributed increase was machines we partially the impacted remaining negative continue was allowing clearing progress about shipment were profit R&D customers. points. XX.X% margin a volumes completed machines Russia, the spend Despite positive production was of in Price on in whereas able profit reduce by affecting realization of Additionally, in negatively factories of operating quarter. partially higher higher $X.XX in X headwinds, in point. some to and higher inventory, assets the quarter profit due inventory. resulting for supply The Operating maintain higher us factories higher due by for SA&G higher margin more

which small negative to sales points. in points, and X. higher was more translation. was negative billion the offset $X.XXX totaling over quarter turf translation the to in Price Moving up XX%, ag nearly X on realization, shipment volumes Slide and currency than by Net quarter positive realization XX by were currency while due price fourth

XXXX currency SA&G Slide quarter, XX.X% industry production operating ag million, higher The unfavorable in and by volumes to and the profit resulting operating profit margin. X year offset partially shipment realization turf higher for a were increased improved For higher due the was mix. year-over-year expenses $XXX fiscal and price Please costs, was impacts. at outlook. and to and These turn R&D primarily

need industry by resilient aging be equipment reflecting ag up ability and supply, to to U.S. to than fleets. X% in large be Canada XX%, sales replace industry's that to continues higher the demand bolstered expect the We to

for third Our on order remain the dealers and 'XX. the extend allocation into quarter now books

to small and to turf, livestock be The flat remain X%. ag dairy industry down is and For demand estimated segment steady.

and is to economy, be as chain demand replacement equipment strong to to one industry X%. South markets, to flat of production forecasting to in products The In and prices X%, However, are are after is softening. constraints. expect America, to record sales combines outpace tractors especially small as input up extending in highs and to correlated end more supply remains Shifting XXXX turf for be down the they in by inflation. for Asia in up general supply generally compact Europe. moderated forecast grain the largest utility flat sales such region be XXXX. continue record stable stabilizes the projected Brazil, the we are moderately Meanwhile, market in profitability unit stronger the industry where region year. constraints fundamentals of the into world's to India, equipment Industry The tractor since are by XXXX. Farm tractors

and to X be up net X. fiscal in points and our sales production between positive precision ag We translation. to negative XX% year now assumes 'XX. Turning of segment currency price forecast on forecast point and XX Slide of realization approximately anticipate XX% The

segment. For small margin, forecast operating turf ag our and year for shows the our forecast full is segment's X the XX% Slide between XX%. and

We product expect segment's realization, fiscal between is for the softening the FX, in 'XX XX.X% X flat effects offset accounting points to certain X of unfavorable margin to to by guidance After year The volume due of of impact. and slight This price be guide operating decrease a be XX.X%. positive currency and to segments. projected net up implies price X%. about partially sales points includes

quarterly in price X higher Russia. was realization XX% million, XX% to for increase $X.XXX and costs offset points margin by Operating operating forestry translation. quarter realization in the shipment volumes were This and shipment results Favorable impacted margin. negative in of of in profit construction resulting quarter. remaining points. price higher a negatively nearly higher increased reserves the XX, quarter Segment and to on higher currency by by production due the offset to to net also Price billion. to the a on volumes XX more was Slide contributed than almost sales $XXX Turning partially positive realization assets both X.X points during

sales residential from forestry and ability and also the by while CapEx flat limited be America as markets our rental in industry roadbuilding are Asia both continues earthmoving demand the cover be I'll in to North equipment of independent Industry North offset X%. Now Global in moderation are in expected expected softening gas, up infrastructure Global as stronger XXXX remains programs be remain to flat. sector. Americas, Slide expected industry's and expected and overall U.S. End Europe subdue. be are America to and the markets are XX. and markets spend produce to to to forestry to on strongest begins the oil is construction to companies compact demand outlook flat steady sluggish. European Demand construction remains

sales C&F Slide XX%. on segment XX. are forecasted be outlook Our XXXX around is up net to

to of onetime have The be Our the just includes gain year of negative points over 'XX segment's been translation. assets. margin net to is XX.X%, the operating the items, margin projected positive point excluding would currency of Deere-Hitachi Note, year the X as XX.X%. such guidance operating special sales from about price fiscal remeasurement and XX.X% realization for X

Let's services operation an financial which international guarantees partially slightly in higher reflecting services earned Company Russia. offset income equipment economic in higher certain the by Financial from XX. mainly to our income due increased, operations, received transition Russia. Worldwide less quarter favorable uncertainty investments for intercompany including provision financial on on fourth was net services average to Slide to Deere & attributable a portfolio, year-over-year, financing spreads. credit The benefit markets, loss the in

higher is the primarily in operations. million. and tax $XXX all our continued for are operating XXXX, remain Slide steady grow deliver XX to Financial effective year-over-year rates on shape, to to customers. the higher continue equipment income for rate income, net forecast guidance Overall, For slightly Credit due balance lease to to a Services expected sound The with fiscal average dues loss outlines year Results in past net line earned and be our flow. in income our cash has return provisions, is good results. portfolio sheets portfolio. growth expected reflecting

full income to billion. range For fiscal of $X a year our 'XX, $X.X forecast billion year is net

offset We expect higher than volumes and price to more increased realization favorable spend.

from our to rate be between is $X between cash incorporates Next, and and operations billion. guidance lastly, effective And flow equipment XX%. XX% an $X.X billion projected tax

for to John, have you Before we Do you'd anything I'd transition thank to Q&A, today. like to you us joining add? like

Yes. Thanks, Rachel.

want to We industry-leading simply employees, groundbreaking created hurdles could then our the of resolved was year dedicated industry a unprecedented stoppage new outstripped dealers of we and several At worldwide. a at year ways. recognize XXXX started U.S. but delayed in with Fiscal as largest supply all what our suppliers. that I another First, production deliveries and work disruption were some logistics and in constrained supply. times, contract, our the factories, demand year

in in here worked shortages meet to all It we for machines and equipment our and fourth a what industry customers. of in and get best to half and saw shipped This The our efforts folks the highest our the part substantial the the plans, Our overcame delays partially needs. production team resulted tirelessly customers' to margin our the along, of and proves last year, lift teams and completed we've disruptions revenue their known particularly of and year. the operations to outpaced to proud quarter, from executed dealers clearing in production quarter retail extremely we've factory that industry, I'm got the the resilience. and sales. In

strong. channel, When confident technology for to Leap we a dealer allocation inventory. even EOP, and cutting-edge unlock yet have sales, normally but it order to ability more fiscal more the noteworthy a it's industry's the them, crop have I Industrial five XXXX months. the integrate make the books solutions and an it's months. as a only it's and are quarter. combined books for when we you orders that are begin believe more our We the we environmentally And ahead term, and Ambitions, North We on have retail filled but powerful In lot that to more across As near our lot important way. on and do in third has open will books continue open immense and jobs allocations bringing value EOP more year fields order back equipment the customers with in make customers. Smart six And work and into replenishing remained I our EOP it to not order we on businesses look our best market a That's because sites, Like opened still much ahead we our X fill the I'm are velocity And help strategy do years are was care best full our profitable our the dealer note of to August. to do for since exciting. solutions progress still of us. in productive, them they already truly sustainable and continue to beyond, in to our on world-class American

John. Thanks, Great.

let's Now we those before some into know line common of likely some there so Q&A. topics -- the dig interest, are for opening

First, each of look more I'd like some time the our for the take macro closely fundamentals and some to environment to at of segments.

precision on what that start Brent, We're of unpack there Let's to X% the us? going to and ag. for be with you driving production industry XX%. little lot a is growth. there's a terms up Can in forecasting

There's Stocks-to-use still low, region the remain a down ratios be point few exports are things very, to expected going Sure. while to I'd Rachel. like very for about grains on Black key from out, XX%. Sea

commodity in support of ease couple So this growing take seasons it's going tight the and supply help interim. the to should to prices a

a remain the come input levels the where since little customers still some crop facing. bit at profits of may While costs despite higher our down have they have summer, they're prices healthy

to chain both dealer inventory to industry has also of we historically order in that used demand the fleet and not age, the Finally, in quickly and above well new low been continues our which outpace constraints evident books fill meet average. supply. It's equipment. see and demand up to able is how due supply And

All right.

remain weather, solid, broader on tensions minds. our fundamentals weighing customers' conditions economic geopolitical may So and be but

that they encouraging fill XXXX, in Recall they're that Yes, inventory when ship, numbers them books that. a at those for almost need serve overstated quarter quarter little working they our and our velocity they machines really recognize a that's Rachel, our as build us. Remember through drive only which when customer's of and at our of fourth be the inventories into replenished. And though. those all while best delivering extending absolutely the indicator to to guidance shipments because assume that and retail an Not them still still basis to right to dealers they true, order does our are ratios are those generally allocation But really we be XX%. even production on sales those line. go order orders the away of name are third have XXX-plus retail are bit tractors down the demand. Four-wheel now, Also are XX%, all dealer horsepower customers. still on books note, remains but might right of we

pushed any inventory to XXXX. replenishment dealer So be likely will

volume data to to Additionally, XXXX But our to increased volumes that per volumes modest through our still large at like look the for point if This AEM I lower we've are out would clear period than you that machine XXXX replacement cycle. because solutions. the entire five-year XXXX customers compared to XXXX. higher are when North America ag value the our XXXX precision the ag of years rather will revenues five of average XX% replacement be the from is XX% to

a basis. have able I've I to with customer telling place wants every meeting And me they're last by dealers and order constrained to regular out been an basis. hear on few I that year, things them allocation supply still This a quote an Yes, to the on because base not Brent, often we're add here. who

we will cycle and ag produce more more we there's our confident extended demand value duration. machine. clearly, more equipment equipment. not more in than demand just And replacement I am did XXXX -- an equipment have per more this will XXXX, but in So for large

value will machine system per and more. production approach the the increase for unlocking has customer This even on them. us more Our laser-focused value

All right.

has of how segments. and our you on can end diverse more ag markets? now viewing different markets on move elaborate division any turf. to the those Josh, of most Let's we're This small

small livestock macro Sure. averages. And above There a meat drivers has bit are which helped you supply definitely segment remain products the prices remain as tight, margins further. different a with remained historical elevated. If when break down of dairy and begin result, we dairy and has ag,

levels sales tractors for dealer to has inventory -- to supply. below levels continued midsized outstrip Additionally, as below are ratios demand normal

stable of taking midsized A fiscal quarter proof resilient. SAT remained and 'XX. tractors part our has Germany is about book Mannheim, XX% good us into well the point So built here full, for of third the order in that is this

On equipment closely and more and the are housing. well tractors other utility correlated compact utility the hand, as turf general economy specifically to as to somewhat

that we've let extent. But don't can for and So forth. pre-pandemic inventory monitoring softening We seen shipments so to our inventory buffering levels to some if closely Channel there. pulls inventory intend here. especially demand some remains low, react climb turf, we to we're back

Thanks, helpful. Josh. right. That's All

Let's years driven were by to few last largely housing. demand shift now C&F. The of

is that segment how through Brent, you housing can talk So starts. that?

You bet, Rachel.

some little one in have So decline housing continued projects we hand, on a while building to have bit. softening seen non-res

and On counts be very up some show for beginning important which is the going rig been CapEx other to Wirtgen. next into oil has U.S. gas hand, is steady with XXXX, year. especially projected promise infrastructure And to

In that, players the XXXX. have rental programs significant channel addition both into to dealer-owned independent and going refleeting

all So by all, seeing housing, shift gas. demand a offset that for composition business, rental and drivers but in and of we're more oil than the infrastructure in less

demand C&F that and low I'd replenished but our other needs is to books full. as focusing are to close of business inventory, XX% be like and Brent, currently we're historically to our dealer on add retail order parts with

talk into sales likely various strong, allocation. our common but are and production We're need good dynamics late this our 'XX channel means we the recap, order replenish you All retail demand, XXXX, meeting factored what all industries to and across XXXX. possibly focused schedule? for books Brent, still more pent-up on about for on can net but inventory and To still into it's year. guidance all the market insight themes our full into our businesses,

Sure.

past our this did of stoppage supply to year, seasonality. we And the the chain had and we ramp during had we the experienced the not beginning work quarter. we the first the second of worst So normal tried as at have up quarter, more issues

half-weighted more year, catch later in the played significantly we back XXXX. up in So a resulting

production In to fact, quarter highest fourth higher we the point. XXXX. achieved rates the successive daily ended fourth the quarter we up high year in producing and in We the plan the with daily those quarter our being more keep first each quarter, throughout into of going rates

levels, key higher those at some though. remain rates revenue line while there in be will sequential Now differences

about the holiday first in there less to season. the quarter First, XX% production due days are

expect small drop about XX% for revenue to when the to quarter sequentially and turf So XXXX of ag and quarter C&F XXXX. the by in of compared first fourth

due Our days model have and to supplier maintenance, another X% will PPA year changeovers, fewer production to factories XX% some training recovery.

precision production fourth to to quarter time compared the decrease in first So quarter production of will in total, XXXX. and XX% ag the by XX%

machines also quarter. from that $XXX partially of Now in PPA keep in from inventory about completed benefited the clearing mind million fourth

that So quarter. repeat benefit won't first the in

to get likely until similar the So of we won't back level second revenue XXXX. quarter a of XQ

John. you however, lower, first something the quarter want fourth to will in the is while production be This the quarter Brent, said year-over-year reiterate sequentially, I first to compared quarter. be Yes. will higher

of in the we'll have so behind, aren't of year we than half XXXX. did in half production the We the first XXXX out first starting more

helpful. That's

would slow supply taken remains steps certainly pockets healthier not a but consider be Let's chain. at supply switch a chain. fragile. the do We we pre-pandemic to improving, gears levels pace see and base that to to to try now to risk, mitigate but We've supply the

So assume or deterioration our included in XXXX. significant in the can forecast? costs on production not our elaborate you Josh, guide improvement does

can freight of indices. coil the takes. puts to costs a as Also, relates few year. see subside in there some like it raw need hot-rolled different production premium in are the expect for next 'XX, are to As we easing, steel you Certain and materials

the hand, well. impacting cost to energy and we as not directly On increase. our increased components for That's so other suppliers, see labor but us costs will only purchase also continue

of supply the you in Additionally, it mentioned, we're pockets improvement remains seeing fragile. chain, as but

operations that assuming return productivity normal our in forecast. we're to of efficiency not our and levels So

but assumes a be we ups realization different price our offset costs fully and this in positive. year full downs, anticipate being by net and production the expect guide increase in With production to the XXXX, cost price

and other can the the that. for before we you capital of open XXXX? you Josh, Thank for talk use priorities cash line questions, briefly allocation about And in

position fund our business. put, to We're remain single rating Sure. maintain they and A with Simply unchanged. happy credit our our liquidity

as unlocking an Our in R&D our guide considers for the projects continue CapEx more we on strategic and to value upon customers. building and increase progress stack tech

We increased And Next, year in noting the years, XX%. two increased over it 'XX. that nearly X% last the it's dividend. it we've fiscal worth

an 'XX. $X share $X.X Finally, of We shares heading in year we have billion continue fourth that total fiscal of trajectory billion for repurchase. and 'XX, purchased quarter into over the for to a fiscal opportunity

all, grow in all in So Leap to Ambitions business our shareholders. a on cash great and continue to execute our we're to return position

questions have. Thanks, Josh. Brent, investors let's other see our what

are we you In limit to the the to others question. ready of you more please on Now in procedure. operator participate instruct begin portion our polling will the hope one yourself call, allow call. to of the and to consideration Q&A The of

you have we questions, you re-join ask that queue. the additional If

Instructions] [Operator of from comes Citigroup. first Tim Our Thein question

your basis, more from expect of trending? a any how full back-half a can we help the margin grow lot or of maybe just you you is year-over-year play to Maybe that? to on production benefit costs the you price -- weighted thus Obviously, excess give spread that help of the because that would will are of does terms Maybe costs. more comments any given that any through year of -- going more kind more out, on more circling give on back, a move just kind how in just kind and as expectations not quarterly there on is be comps standpoint of year, the as in there to Josh, the just for can

for Thanks Tim, Brent. is this question. the

do If bit little experienced first As the cadence see on saw a look our last quarters in we this the look we price/cost out different half probably XXXX. most to you I of challenging quarterly we a year, in than year. of back a what next year,

most we compare fourth from In fact, the got quarter perspective. being as each quarters of that the positive relative price cost through better to production got a with the

As cadence different price/cost throughout basis intend we very I much look positive to a of think there. all out you'll quarters. see to even the be We XXXX, on a more

for the in a see as price strongest probably production year half And those a some of cost performance year us earlier bit harder little easier get year. as half the the most really You'll in of just back are price the back then the compares little favorable. the the compares of in compares maybe get

just for throughout cadence So the would production overall expect price compare year the I as next even year cost. more course of to we

the our one efficiency in mentioned in factories. other and not have return forecast prepared but earlier to thing. normal Tim, we comments, a I this productivity

through in point, relates in extent stability overhead that So more as our benefit see this at first. could year. haven't see it forecast. to in stability There we need be We the 'XX. To line more some into we plans ability the to saw that supply to efficiencies we there. operate with the chain, the in But the pulled

from Fargo Our next of comes question Seth Wells Securities. Weber

the parts And do materials? by, sitting inventory that's to kind how you half? like amount? cleared you just to around the expect thinking Can in done largely you about $XXX the or first waiting should of call Josh, for mean, still I be you it, that first equivalent think an for of fourth million quarter. quarter Or be come? inventory us the that is we what's I just frame mentioned

down course We always quarter, running completed there's and since within of million the more now progress completed the first some We have our level within kind lot the I level machines partially saw inventory the That's level. that of figure partially fourth system. capital of in We've the the a completed at quarter. about system in normalized made peak. of working of that took had on $XXX really say we then second another down a I much inventory is right would the machines. X/X where quarter. over partially took of we mean

the any The more to machine. quarter that XXXX, at don't I other in in time, build assuming benefit saw repeat in completed really partially the inventory fourth is much So it's normalized now. right more not quarter going you we of first think,

say, has would I largely the from by So been the completed quarter. in large, and tailwind that fourth

is build and Josh. to is completed and disruptions Maybe not and machines have drives. this our take intent factories bring have Seth, offline because the to back that too, partially importantly, inefficiencies them our things Yes, and in of

plans because it So to is happen a intent much the create not has linearly lot in more run rework that of with to drive much our disruption as this the and does of factory.

Our next Suisse. Cook from question Jamie of comes Credit

do have question the second order question, Was -- there you quarter. guess my book full being visibility visibility then the the ag. expect of large you I difference through order was again third full about the by up there on the when the just large any production talked book you'll geography through sorry, that through within year? so to ag? And my And sort open in

forecast of be about to trying envelope imply production just second down your year. the quarter half that Given what you think marginally little math, the trying of just the cadence. could I'm based sales but the sales with first understand Does said back production just by in half, on the about a to my fourth

start on question. order I'll Jamie, thanks the the book. for

the year. noted, we're line, think, for sold that's full little for of tractor North next we As It the Mannheim, combines order a varies I X/X year. effectively Europe, combines. book out is, were XX% to kind entire I bit things for In for XX% move running America, like by product pool full XX% If about full.

those that window across quarter-to-quarter. I little differently a that inflation dynamic respect one we a bit a two That similar, FX market more have to so we can run flexibility with pretty that the than change be with about at think, both two. tends We little the and manage other Brazil So pricing. geographies. is just to little three-month a

we've And little executing than order we're for book been in there. successful strategy So a been that two North bit We've years. Europe. tighter and holding America really that

managing in a price think more region. little dynamically that I

think rolling expect America window, manage remaining on in left a for forward, six-month going that's North the I you in it and us Europe, us. order of to book front

So visibility as pretty of on the just a rest have should few the first quarter, slots we with the we get year left available. to good

As production the in of it cadence relates year. the to sort

have in to start production we a will production put of at continue As just the but us we'll quarter higher days, line those quarter better second we'll the quite in -- rates. much to 'XX noted, less first less than in That a of than happen bit a half just we the year John the little first had in half. probably noted of XX% as as the will maybe first earlier, production 'XX, had we give

when compare So half, differential big first look second I half, you see to as the not going when a to it you splits in you're think back XXXX.

Volkmann comes Jefferies. Stephen Our question from of next

respect are relative My on kind how we how increasing you're on to of think well? question reacting should rates, of is but with interest to customers both financing about what also kind as finance higher company, seeing impact to the rates your

about customer question Steve, Well, I'll first, morning. good on talk Hey, can start the Deere Financial. and John the we with

sensitive varies the customer customer a our most impact segment maybe of the segment products. rates, Historically, the more customer I on what depending to segment interest consumer-facing the talking little we're think customer for about. bit to is

rate reliant products little low a financing. tractors utility turf on I So think and be tend interest to compact more

I you'll through see XXXX. as think what progress we

there's P&L, costs or relatively large sensitivity no that XXXX rate where operations we be I a of incredible things we like that news good just shape the buy maybe there, equipment downs, sensitive When tends other more that's spend are have. are ag, to from we on sheets their that's a but incentive but portion for segments than customer sensitivity now. little customer not less interest say see discount balance in historically. may see at overall a And look small really right the think to it most the You is little

of we finance were at penetration because more customers course John acquisition. to Financial the rates XXXX, saw lower using Over that Deere cash actually

on more going to perspective, not a just run sensitivity Financial balance a there. John strong we necessarily book to a interest that that XXXX. but So From sheet funded just their position rates, they're into speaks match Deere in

cost our don't that book the will of book. a up, a so goes forum rates that cost as way and in closely our customers. degradation We you that spread funded to we because higher manage So take lot of to manage that match see interest borrowing tend those and pretty

say wouldn't impact I there. big profitability you'll So see to a

and interest You'll into see interest income higher going XXXX. expense higher

Elliott question next Stifel. Our Stanley from comes of

of about the loaded business IIJA. horizon? of think time in America? you when moneys that Can sort bit gets you this of on kind Do business period like over coming a we've construction it Obviously, that? you plus got talk roadbuilding think a road front a the be lot of little about five-year North Should continuous

definitely demand are we for are in levels seeing we Yes, of higher Wirtgen. North America

to starting benefit And into South right to I Europe America. America, 'XX. to point, So by away, go if Wirtgen bit. and of just really in we North from by kind the the mean, operating infrastructure see strongest across is a followed in different we're far now ease going starting geographies, now, the your little are

So I course that think grows probably strengthen the over the to of Wirtgen continues that market. for and year

for really strong right mix America now North is Importantly, Wirtgen.

about think is primarily manufacturing which I German based. footprint, our

American rate strong favorable So actually is the for really FX a North market.

we to activity strong really really, XXXX. bauma Maybe completed had was show, it just and add versus the Yes. bauma higher to we actually that, order Brent,

customers. are their in So buying the new and strong order new demand equipment is serve and technologies customers to

add other that. thing to one just Maybe to

we XXXX, had we've Wirtgen performance the since business. for margin that we've ended we that owned As strongest seen

So be the and the of we've synergies time. in over progress acquisition we integrated pleased that with continue the to

Tami of comes JPMorgan. question next Zakaria from Our

this margins were taking out, what can confirm those items segments just expecting one-off year, you each of in incremental kind core XXXX? of Given you're there some in your

Absolutely. a We in we're a special through year, Russia to have items still look that. When things environment Deere-Hitachi the Yes. We next in mind. onetime incrementals really on the talk morning, for of well the side, construction Good a couple it's the keep as on in. few Tami. very gain One, some can did year operating dynamic impairment. as that we deal at

our higher, components still A are are running production Labor, of going be to seeing some lot costs purchase energy. all higher. right? We

digits in in we offset to also is that getting all, mid as year. But R&D and and see year of freight. mid-single We're production more a decreases could going in raw Some next all by higher materials well. by increased little see SA&G costs the

price we're Deere. to the getting back us at Now offset enough that to put incrementals and with in line historical

margins or adjust tad even we've with of even commensurate onetime done a those just some see sort traditionally of higher. what think I items, maybe So you for incremental once you'll

take to is, on heavily also Yes, we're where this what's some more pretty model the on when dampen incremental Ambitions of that investing probably think executing business more what working And through resilient thing thinking the going bit we're and onetime customers, value in of we create the for the important headed. historically done we've there that, to some you above Josh. Tami, to -- too is add a we're side it's as But a of create items. about Leap One deliver are I that cyclicality future and transformation business. out

So embedded deliver is in on to in investment there's strategic projects here -- that.

question Matt next from Cowen. Our of comes Elkott

and Brent, that first half. less the will little a production XX% think, come mentioned John, in than you of I

guys and the subsiding from of for for you half the year? have fact follow the tailwind earnings half Given that pricing just the of cadence in the a cadence basically in production more tailwind the costs ultimately more second first does a

with that Matt, the probably cadence, see. I earnings assessment respect a you'll that's fair think to

year. takes lower the that in the year, of see of outlined that you production there sort first half the You'll earnings of back the price between production higher puts follow the ramp sort and half costs and in of cadence, just

traditional out And rates those the year. the throughout I in just production of a those apply some the of really, you So of incrementals little to think, think course sort bit. factor net I them can as you varying

bit that, and what past. of XQ, to more It's returns And think this seasonality. traditional Yes, in Josh. done a I to which out. Matt, probably a since XQ, both for see higher to where thing much while in followed typical year the you one trend that we've sales been Maybe is a had more levels it's a we've point margin this year, 'XX

our as as that add the progress on up keep to second we'll strong getting continue to XXXX. focused really, we're very in the that outstanding back-end start production and to you in XXXX, Josh's first customers. comments, loaded much saw Brent quarter, a everything be take just fourth for we're 'XX we believe machines -- execution all be away we doing you and won't with the to XXXX to to think, our just and we Maybe were and and in of is, to bottom the in delivered able into getting much quarter off line, I

from comes of Goldman question next Our Sachs. Jerry Revich

I'm I'm you production availability. subscription. on at we're Can talking dollars still full pricing Precision if I two for if wondering year point? points. on is believe XXXX high just talk of And range planned commercial about pricing could wondering acre rate the comment just digit you per Ag. I'm representative that of folks the if are plan for Blue could us River this that's wondering, you you mid- single to the folks to in seeing update that the

Autonomy market our high-level in to to of Just seeing take a have couple XX% we for I technologies years, for higher a say But in XXXX. couple & X% of that. lot been from kind after that comments in would and we're rates overall, rates existing and Precision, on See the take anywhere can dive higher last Spray the of of

we're like good have the CHXXX filling for encouraged to that. the also like or newer as further. next technologies notably, do order we've well, super that we to continue market start ExactApply book the some inroads year. Also ExactEmerge by penetrate really the Technologies of So and out continue ExactRate had, made

for into think we're next rate almost the take double year. ExactRate, going I almost XX%

Now focused more than revenue in noted, like like carry And these also technologies opportunity the as we're them on & had some you with Spray, next-gen those technologies Autonomy. very of past. See recurring we've two

of the XXXX, limited super are summer. paid production So out release model, and smarter the are a adapting acres will second that's these accepted customers. part by there. be had we a that. of encouraged which have paying the the done we've it of and that on We've But fall. course and in were up going autonomous over And customers, this we've customers over tighten learnings a running putting into The that little we're our basis. really majority business to we limited We're they new and to with then really a year fall, bit been by the encouraged model, vast the as get of the go

the underscores than lack been ever scarcity, ever, the Yes, Brent, are important especially just past, for of precision these happening is why the an rates with to add consider think that to not need greater need acute just to comment and we're when challenges do environment customers been customers and I take why strong you is that, definitely seeing in the more this current less they've of is underscores our than costs, skilled the but rising labor all for input it's our more labor.

precision problems. to customers the earlier And going and in towards and our our them very, future create billion our the technologies value. our This indicated value year, ever than solutions these a prioritize we're and years. We're that solve those benefit products, for very on. unlock of identified to going spending $XXX continue Josh to more best past we're that's create have today the is So big solutions, we that difficult have new help IAM, ag confident in to opportunity to solution more investments to through new in

performance. our a we've to pay also add point, John. dealer Maybe Great thing made for one change is I'd there

we're to that deliver wanted that's precision ag make on utilization drive delivering important really performance. to for incremental the that unlock outcomes about that So we're pay we step execution demonstrating including we really create, And Deere. shift as in that a continuing is and differentiated to from which to and addressable for the sure we're adoption and can think we we a showing think

The next of Deutsche DeBlase comes question Nicole from Bank.

on Just maybe asking one pricing. a quick

as to increase another price like have how annual that And you Or response a in With is all are carryover? guidance been to that embedding has XXXX? per normal the customer you the price embedded, pricing? guys return

-- up picking had a lot we Particularly, some from you're the little I price, to a back higher more there's mean of of respect pricing definitely both. with lot So bit half in carryover a XXXX. XXXX.

higher be going XXXX. first additional price book. you're increases little list order half there those But bit the to a in see compares were the XXXX So of for

to combination of it's both. So be going a

seen we haven't with in think I of demand, a elasticity to demand drop respect the yet. off

comments, orders of outstrip order through all of noted his the supply. we've demand we velocity paced fourth all we've quarter. as to noted, in which just on ceilings books, hasn't as And to those As in John now, our put at slowed the continues had right earlier

comes question Our of Mig from next Dobre Baird.

feature to I has this Autonomy Is option And on a product? of product. made discussion that as want buying have I'm of are for this to mass the of now to in you they -- customers bringing the do evolved here, actually go you're back tractors XXXX? curious the portion you've if to ag, get I'm how timeframe, suite, XXXX sort towards product that the business curious commercializing the your precision XR progress become can. are a mainstream terms we thinking that the the And how this and the way

question Great on Autonomy.

being now, right So out our limited basis. rolled autonomy a is on

to single year rollout of another have commercialized be we'll Autonomy. limited available every not So XXXX a where customer. it's will

point-of-sale the well changing and I model solutions. precision, which is itself our we little of monetization products type for think of mindset a really One, . is model things. type really this acre around two our our bit that with to than per historical a different of think what's technology most lends

customers. differs is learning solutions how we're getting consume base. among customers customer our And out an that what to opportunity with So roll we're the

model. their the tractor variable hybrid some. the enjoyed sleep. use They're really role is customers driving actually they've get think to of a autonomy seeing cost bit done what or aspect on a a They're because we're job overnight I they putting mode Autonomy, while hybrid

they And really the product the for of part use. that just to that so pay them allows

bit -- past. different I the what rollout Autonomy the a little and you've think is that's important than is the thing of with really in other this seen

to our most have really will roll retrofit installed first first out this factory or of field technology, We technologies as kit first. gone opposed

that I some also model revenue, of see opportunities So some terms it, these apply shift field you're retrofit the an giving going at kit opportunities but technologies. more a or onset some us of the think to next-generation of technologies, recurring we emphasis a business in these in opportunities bit little for of to both on of of

are think that, to to Yes, of I a important. add Brent, just things couple

facing of our First our agronomic with all, fall our experience of view very customers real respect with hitting the challenges and customers are value the to that reinforced this really labor, on window. labor availability

So with agronomic window having it the the downside and is effect limited to skilled impact not yield. labor, hitting then an on

the really to model to in was acceptance Also, product single this And per having it really, was needs have customers. of every fall of customer this the use that mentioned, machine evidence as that the running to the in spring. acre very it critical signed good. run up is when you So use our one customer

here want in our autonomy and about customers. thinking want And excited what this soy out, major been about you total start the thing you solution of as technically is, system. and really to and an and Autonomy, we've this of to want of value all have doing really, Ambitions, automation unlock you remember, we're years automation. productivity for think am of So last autonomy one I corn important. I to part it. the Last our Leap possible, production if when couple We I is leave you just And a for to this is And really is unlock with proving committing entire U.S.

next Our from Larry question William De Blair. Maria comes of

morning Good nice Josh. start, and

for price put the the getting bit, farmers, So continue forcing and machine, scale needed it's little and staying pencil topic you midsized more that on in but a to to out harder per industry. obviously value

can upper ‘XX us beyond break wondering they acre will think limits price, model and or quicker? your towards broader into getting maybe the a just accept handle in closer -- moving So do if per growers maybe of perhaps the towards you ultimately, what and is this I'm terms of we're need to Autonomy

the it's question. Larry, for Thanks Josh.

across have and think new is front here a base go retrofit, the opportunity and -- Brent just without productivity installed John back as and the ability the and this requiring I upgrade in mentioned technology of and improve completely we machine. us to and a

it's of on on I farm, past solution for the that whether more if value per size had you're use of allows acre particularly per than relative in paying is and So basis. think differentiated we've a also based

to acres we So for and the allows our we go to unlocking cover that's value through think component more field. technology significant the customers as a that

Capital John Our next question comes from of BMO Joyner Markets.

like your first dessert eating here. results with Feels

question. Larry's model, to you have take or leave Autonomy, and quick. have don't it? want up producers it the you be See get this this decision kind get per-acre then for of does if wanted to -- ultimately should such I and mean mean, So think it you When following just if you Spray, that on become about the subscription, I otherwise, to you have a Mig &

Yes.

-- the think I your thanks John, question. for

some I whether retrofit gives to the opportunities to you or optionality it. want think leverage not you do

scale optionality an use sizes. of conditions, field skilled technologies really with really labor that acreage is whether the whether See or opportunity Autonomy, trade-offs or I having are customers there across these critical for opportunity whether it's we're whether will is the it it's really, different optionality from think something & what having to timing, really engage and make, and it's it's we've this, And farm greater important. Spray creating customers availability, seeing and seen providing more

each talk think also I important with it's Josh, here goal technologies. to of these our about is what one

really technologies are you inputs improve Our our regardless sustainable the business. of because be good to will you're more It's profitable That's to going profitability. the where cycle. are of targeted do using and/or that And being with that when minimize take their somebody any because are going at have more term for in of customers might technology, do to is cab you're it we greatest case as outcome be good you the out John way. environmentally of to your business a Customers in we the buy by our develop for Deere customer or the the problems long technologies going goal jobs will technologies. other the these productive to Autonomy, our more given

The from next ISI. David Raso comes question of Evercore

I inventory comment was below schedule your encouraging sense made you the for give through see Obviously, the inability 'XX. percent you about to 'XX. very that's about exiting us curious dealer raise build your Can 'XX? dealer for inventory normal? your what you a of Do

David. question, the respect and know more and of around for new. question -- here. new Thanks With dealer I talk used your to I'll inventory both kind is Yes.

increase there. equipment, would horsepower tractors are are drives, ratios magnitude at the sort to Historically, year the XX%. that in post gives harvest. of XX% to on always IS high channel that's are always XX% But of need of that inventory a to bit sales. the XX% an -- low, low you going For we're Those four-wheel in pretty that High-horsepower although forward we be XXXX. the two-wheel-drive into idea Combines see seasonal. especially

a hope wrap the that, appreciate we'll with up and time you Thanksgiving. call. And everyone's all great We have

conference. today's This does you. Thank conclude

good disconnect at You Thank have day. may and time. this a you,