Deere & Company (DE) 21 Nov 242024 Q4 Earnings call transcript

Good morning, and welcome to the Deere & Company Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Josh Beal, Director of Investor Relations. And thank you, sir.

You may begin.

Hello. for on you call. thank and joining today's us Welcome,

President John call and Chief Joining Australia; Turf Josh Reed, Americas the Investor Precision are Production Financial Agriculture May, of division, Cory Rohleder, Jepsen, me on in Josh today Chairman Ag & Officer; Chief Officer; Communications. Manager, Worldwide Executive

questions. a for at talking your Deere's take on markets and note fiscal our respond johndeere.com/earnings. about After Please our quarter we'll earnings, we'll be website our are complement Today, outlook slides fourth closer look current XXXX. that, at morning. accessed time available then call the that spend They to to can this

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

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

comparable johndeere.com/earnings including Quarterly in Earnings Events. concerning reconciliations is at posted and and GAAP information included Additional under on our website measures, measures, these release the to

now will turn Rohleder. call Josh to the I over

included XX.X% execution solid holidays operating challenging in with early Full operations. better-than-expected margins an organization that year and happy XX.X%, market our the amidst year for us margins changing to proactive a reflecting Deere fourth throughout John joining environment. a finished equipment quarter morning rapidly everyone came Good today. and at

Our levels volumes of billion improvements continued operating indicative equipment in the over mid-cycle to we've shipment business below operations return from reinvestment generate to had is made and ability structural cash the just shareholders. in significant cash $X.X enabling flow

contraction Looking continued of to levels. ag trough turf globally in demand ahead ag result to we at or XXXX, markets equipment and below expect

X to as net equipment Additionally, while end construction in and expected sales forestry the to XX% continued results to and for year markets billion. fiscal uncertainty $XX.X is purchases. XX% demand begins Slide healthy be operations equipment billion, down were were down offset $XX.X with by market are for down revenues sales XXXX.Net

diluted or per share. Net $X.X & income was Company Deere billion $XX.XX attributable to

we'll review X, compared fourth fourth quarter the Next, Net diluted fourth the X. are attributable down for were revenues billion sales and net $XX.X down XX% sales to per ag due shipment to with sales to $X.XX quarter production $X.X precision primarily billion equipment share. on $X.X Company Slide income were or billion. results to our to Net our decreased lower Deere & $X.XXX and to segments while XX% Diving Net XX% Slide billion, last operations down results, business individual of our were quarter into year, on starting volumes. business.

and production for The by sales partially the was decrease expectations. in translation X Currency segment. Price which about negative shipment in operating costs. million, operating to profit margin a mix, resulting the by was Operating profit quarter line was was year-over-year in lower offset XX.X% with was realization lower in flat, primarily point. $XXX due volumes

at shutdown days several comps quarter facilities. due under As production to year-over-year the in with PPA a tougher factory for reminder, we extended fourth planned anticipate associated

this positive ag to by fourth the was approximately lower points. offset Net in the was approximately quarter, volumes, on X.X turf due Price primarily X.X X. quarter although Currency by also price realization and were to partially Turning XX%, positive shipment $X.XXX down small in billion was sales Slide by totaling realization. point.

profit to due XX.X% by in lower partially lower operating with warranty quarter, special $XXX and nonrecurring the declined items. items volumes These shipment offset For resulting decrease The expenses. and realization year-over-year price was margin. million along operating primarily were a to mix,

outlook. X year ag Slide turf fiscal details and our XXXX industry

inventory of growing the rates, season. to sales pharma interest and liquidity U.S. used heading further industry Canada amid elevated in expect levels fundamentals, XX% and large into demand We equipment as high decline approximately short-term concerns farm ag moderates year's weak next

small and XX%. and low around is elevated costs. profitability in single-family are demand demand year segment the interest livestock home down estimated remains and to of high amid and tractor U.S. in The spending be by hay and restrained the turf strong ag as another utility For Canada, further and protein is continues enhanced prices Dairy rates. offset by sales markets as input feed improvement This stagnant compact home turf industry

be sales XXXX. demand to combines South of low down to we anticipate include industry and equipment with expected for persist. and flat unfavorable yields depressed these fundamentals Within Lingering to stabilized headwinds in interest XX%. at issues, reduced industry coupled high weather, deteriorate. costs. levels input throughout Confluence of Farm between and keep from but the commodity roughly elevated XXXX the headwinds to be tractors as Europe, projected In rates, industry persistently regional is X% prices are region America, continued

yields drought expansion, has this acreage Looking crop are Coupled soybean has decreasing demand. equipment abate. as costs forward continued Input with into sentiment improved, additional while to translate decline although overall XXXX, to expected yet prices concerns with to also are improving

against Brazilian real. dollar of costs farmers are are while to denominated recent dollars, offers many further Additionally, commodity in in the the appreciation tailwinds quoted typically U.S. profitability real prices as input

unmet some America, ag the prices government industry. favorable Across experiencing to currency rates. the offset is actions recovery South interest as commodity in yields tailwinds however, strong rest of begin elevated low are by the stabilize and Argentina,

Finally, provide tailwinds. are Asia to in and fundamentals as slightly projected foundational demand be adoption down technology moderate industry in improving ag sales India

X. our and to on The Ag geographic currency of negative operating production to forecast translation. reflecting Segment XX% be XXXX. assumes realization of for year mix segment sales Slide X.X strong down fiscal We in approximately product roughly XX% point XX%, margin between tough Moving positive net and Precision price forecast the is headwinds. X in execution forecast fiscal anticipate full amid year and point

small our segment. provides X forecast for and Slide ag the turf

year X.X includes 'XX projected net operating fiscal XX%. price positive point translation. This of down XX%. X.X around The XX% segment's of is expect be about We between currency realization positive to sales to margin well as point be and as

$XXX down on to & partially and slightly positive in XX% the now for Shifting than profit Forestry decreased to offset to Both year-over-year XX.X% Construction XX. to due resulting shipment the production margin. nonrecurring mix billion by $X.XXX price point. realization translation quarter volumes. quarter lower Net were lower volumes X.X a by sales proceeds and Operating from operating were special Slide costs less shipment items. million, Lower sales in were and currency

Construction the Canada in around to end equipment outlook. and Canada and be earthmoving Forestry XXXX are XXXX U.S. in U.S. our XX%, expected outlines down industry is in for and XX down markets and are be expected U.S. to sales oil in the housing Industry compact X%. Slide & while and equipment construction demand construction expected compact than multifamily equipment. CapEx Modest and spending more gas. starts equipment housing infrastructure be further spending muted across construction growth single-family in offset nonresidential to slowdowns both developments, investments still government by softening in temper will Fixed building

of be Global earthmoving expected X% Europe XX. levels pressure to recovery demand are net geographies. building be into compensates slowdowns markets levels Continuing Slide used of are C&F for XXXX. on refleeting from be our to down inventories in to and Additional as flat segment rental a challenged somewhat XXXX. start Global sales roughly fiscal forecasted elevated uncertainty XX% persists markets XX%. flat low are outlook headwinds modest equipment other XXXX will low sales road historically stabilized global to further at in forestry in markets as down as around and modest with forecasted market the

price the net between higher income to currency and Deere SA&G margin to of our quarter. flat due sales guidance & XX.X% the financial fourth a average X Financial and for net expenses. higher adjustments a losses, Our a was about partially positive $XXX The projected services lower Services is attributable Company be to operating credit Switching was decline income million for and to balance, reduction Worldwide year segment's XX.X%. derivative point translation. valuation portfolio on The earned mainly for offset XX. includes by operations realization Slide on provision in year-over-year

of sale Results assets the increased were also Banco Deere. on for by valuation held John allowance impacted negatively

be fiscal are higher partially is year financing less $XXX net to XXXX, offset spreads. the losses, favorable million. to credit year-over-year, due forecast primarily lower a Results For by income provision for expected

Additionally, affected John held the XXXX of assets on results Marco valuation for Deere. were sale allowance by

XX flow. effective cash for rate operating with Slide concludes guidance net and our tax income,

year in and the structural $X year cycles. is be fiscal billion improvements full range XXXX, previous our to For forecast income net of over $X.X expected highlighting billion,

rate tax XX%. and XX% effective an between incorporates guidance our Next,

commitment equipment implied share is $XX billion $X.X to fiscal earnings for with points operations operational 'XX management the $X.X per is guidance be to as on our to we below around flow cash cycle. from levels business our XX% emphasize proactive of of to at in It Lastly, trough excellence of value sub that drive the underscoring sales projected range billion. important to mid-cycle, expected at all customer in in focus is

key detail. line the to Q&A. thoughts now your cover concludes would we We'll share you like a But before topics our few this the into get remarks. This year? before formal on opening John, to

was The the XXXX Industrial experienced resiliency pullback model with improvements provided in Starting characterized we showcase Yes. challenges. to in an XXXX. year Smart global opportunity Thanks, our since significant this made face markets operating announcing financial scorecard. our the Josh. organization with of in we've our by structural the

XXXX the XXX XXXX, our this bps point reflecting demonstrate to at performance exceeded across nearly last we was time from continue in the of improvement cycle. the were XX%, We Notably, cycle. in better margins which

the at discipline slowed, enabled John this us has important expansion to Deere business back employee our velocity and prouder margin this by team of our record year. numbers, agility. More the tested invest demonstrated resilience the levels into the markets which our couldn't year, I be This than

face than more customers of However, with the focused help to these ever we less. emerged mission difficulties, on in our our do more

the dedicated from we Our offices dealerships, engineering field based decisions branches, lessons across in fortitude as past. learned hard the centers, remarkable on showed factories, proactive and teams made

out ensuring us help to with solve talent We maintain seek our on we furthered focus we but significant of as brought retain experience customers. This the the also the acres. not also facing necessary and of only including engaged best the customer, ambitions, actively and machines, new about skills LEAP and solutions progress connected year on acres range our many our a exciting autonomous challenges our

See year not only impacted flagship Spray, XX%. environment technologies but Our million & X have This to customers' we've herbicide we've scratch reducing technology, other nearly alone, use average covered acres as many Act developed of only begun this by Sense and operations, well an the the similar solution positively our and and surface.

day, work by Our task. solving that extends problem a every higher driven employees a purpose nearly beyond or come completing a to

the on a can the that and difference we meaningful back our making are customers At of day, fact and our confidently the the end for world. step products reflect

the clearly 'XX. continue characterized significant peak declines I'd This into the in Thanks, a a noted, throughout to following our provide you with and about the very represented past discussion year the levels you fiscal dynamic quarter like breakdown year market, net of billion over 'XX. ended by dive before year [indiscernible], income. Nevertheless, past what demand we fiscal John. in during we John, happened can as year? $X

and expected. the to, in in it's in Yes, came production -- by quarter, start geographies generally And reductions retail inventory sales at [indiscernible] came factories our of the most especially across new to and came than in off expected We equipment globe. lines, targeted which Large happy as product shipping with pulling across field back line America. Josh. best North better ag

to inventory improvements North production particularly We and inventory equipment, while costs, on at As new basis. delivering the ended and and underproduction both costs sales SA&G levels of tractors controlling field and year-over-year this R&D. combines an year extremely in managed result, low a American absolute

levels, drove we the flow to successfully inventory guide. which reduced cash third in-process relative much Additionally, outperformance our of quarter

our year. in suppliers. full significant John our decisions employees, performance the the resiliency everyone, that was which and dealers necessitated Turning and of to previously by face market challenging flexibility tough from highlighted conditions, that marked adaptability operational required

operations managed due in Despite in the favorable, the previous will all levels record many continue across for new primarily year-over-year remain introductions investments year. our that We this came costs business. these investments that to successfully muted spending. product and material the business lower a from the year forward. of costs As made we throughout to we stemmed result, of to investments freight year Maintaining cycle, of prioritize improvements Production value-creating levels disciplined committed demand R&D in to this sales, full and and we segments. we moving recognize

Overall, what actions we conditions in market execute successfully fiscal delivering closed expected resulted inventory positioning year levels. solid We XXXX. be and the XXXX decisive reducing to field effectively this a new in the took challenging while ultimately strong to business year returns are finish.

Josh. That's great color Thanks, a 'XX. on

prices our bumper commodity down, the farmer U.S., outlook ag discuss and margins fiscal have With across turf? crops partially and Let's XXXX pivot been by compressed. albeit directions offset for now

year implies what seeing guide expect segment you unpack Josh, by what XXXX. geography? challenging and for and farmers here help could in a us Our to we're

going definitely year be It's ag industry. Sure. to another across the dynamic

America. start Let's large North ag with in

We profitability. farm farm additional fundamentals globally pressure remain in to depressed XXXX, on expect putting

further costs particularly compressed XXXX. America, relatively a U.S. yields fourth harvest likely we've with record. pressure Anticipated to remain incomes stocks and with year, USDA forecasting the is global to strong from net will stocks year-over-year, production record input in farm commodity the of global past the on in rebuilding globally. South prices in Given reach this level highest flat Argentina, seen Brazil global And

livestock supported by and lower elevated, margins significantly market costs positive remain demand. and feed Dairy input Conversely,

segment the balance headwinds. ag the positive supporting on the sentiment slow and primary as significant farm have has ratios. and However, growers strong, the and slowed liquidity machinery tightened, That interest this macro as Broadly credit continue sector expansion of lagged industry gains for receipts operations. be focus demand their a have margin in headwinds, rates despite herd sheets the with across said, in land healthy remain value are debt-to-equity keeping many cash conditions greater to

the at our across on in look impact the year, primary sales important we each it's dynamics highlight As of equipment the to varying coming regions.

goal by North for large of a ag, levels inventory our reaching In key underproduce retail on to single reminder, was for a targeted achieved global underproduction large the goals ag high most products. we our XXXX American quarter, our As successfully digit. fourth

and sales, XX% mid-teens XXX-horsepower we on in For example, point year-over-year new combined reduced inventory a field year year-end levels. the of resulting inventory year-over-year. was sales at down XXXX nearly line XXX by basis to XX%, X% basis and a with in a inventory unit reduction finished year-over-year, year-end tractors, ratio The above inventory large

XX tractors been last this only [indiscernible] sales twice. to low inventory for the horsepower have In Deere ratios years, for

this by demand produce Given in on particularly front, in the to achieved, expect sales made inventory industry we've to new ratios retail America ratios reductions with to We're dears subdued combines. as line in XXXX. a tractors inventory results. encouraged demand we for program progress North inventory proactive we've and in be resulting management, early continue Despite our for both macro double XXXX, XXX-horsepower more than equipment are factors order for in above headwind equipment and the

a our combined program As were and programs America, begun. in call in through had reminder, and earnings August, North early the order partway our for last during just sprayers we early planters order

large and XXXX more declining with in what sprayers reduction concluded we production our an on saw North greater hand, sprayers. from decline a update, and industry Planters, for a significant down year-over-year XXXX sprayer in below our levels other experienced ag program closing mid-cycle. the with guide for As American setting line than

of the product closes the program January, in in similar down at of And week. expect a be sprayers. X seen when to second the we've phases we program next complete early end this will combines reduction range to line order Finally, the

Conversely, tractors is be order forecast, North that with to overall tractor in industry row tractors basis American second than the of row production in decreasing less for single-digit align guide, full with is order more the retail tractors our in XXXX XXXX. tractors for for X-wheel decline are as a underproduction the expected managed Deere than rolling demand shipments Demand XXXX middle in industry through on increased to product actually row-crop a even less crop the quarter. down line with XXXX. high to rebound crop as year-over-year reminder, demand saw levels expected following demand but drive books

through It's the in worth at we're product middle February the our order value importance Classic, High newest investment that our here we full introduced which lines. are Horsepower of to that the books currently our [indiscernible], bringing market continued quarter, fourth last noting for tractor, of and the the core the Commodity underscoring

that Cory. jump industrial of to here seen on highlight the team the redesign Canadian in in to course our this specific is farming supporting their our production which types the smart post crop conversions Josh, geography. competitive country. the broad significant of half in acre of steps in occurs the We've I'd the market western our customers. is majority the and this focused customers of Canada, over In like efforts and take the year

This product these combines for of in Canadian [indiscernible], technology is coupled XX grains, so is and C at customers productivity, small solving past Deere with operations tailor-made experiencing of profitability canola high increases primary over in are tractors been to system John few our years the and the in which center, system tend quality customers' integrated our horsepower small life. our large the toughest scale. have to and solutions significant level production be and from XRx Series operations challenges to wheat, in grains barley new introductions the Many doing the

a reliability, for value result in of out is their and dealer their they Deere get layer customers you delivering uptime exceptional system-level customers. equipment network to our ensuring in the Canadian most while And and that's investing finally, the when committed

Thanks should Corey. market. call the on for story great Clearly, update that EOPs our American that And year. thanks Josh, up continue there into with a for out, North next the the team in

Now specifically can in more us what's you Brazil? America walk South maybe through and happening

Brazil XXXX of field production in market you as the correct Of inventory targeted represented course, as slowdown work our recall, new resulting XXXX. under largest at end the we from to excess

teams a region and adjust of midst the diligently worked sales marketing over year and factory production Our to in shipping the in environment. retail last dynamic the

targeted in inventory reached categories. in field result, to in As most we've demand enabling with retail line levels have produce XXXX and a across reductions us new lines, product driven for significant most units equipment

Given our flat the slightly double-digit and significant in in some in have elevated do remain year-over-year we industry XXXX where one for combines, in XXXX, producing following where guide with retail to to XXXX in shipments in quarter. increase retails underproduction will retail represent line . The work retail the region. fourth the inventories in weaker-than-anticipated is Deere still product a sales

underproduction although with of combines in in drawdown and As result, in the of of to extent, Brazil the for half planning year lesser year. a we're first occurring a majority much another inventory XXXX, the the

Jepsen. and I margins. maintaining is wanted are to a exceptional the while express of and efficiently resourcefully strong our moment team how done operating South we rightsize American inventory to This levels proud to take work they've

tropical solutions for prospects region. on local challenges our will example specific demonstrated to Our products focus remain in the need the Brazilian center . the investments optimism region new by on our to is developing investment opened will tackle agriculture. in in continued great This region's strong, December. be R&D developing A or Indaiatuba, in which center Brazil in in our the customers focused

Josh. great, That's

there? the out What with finish let's Now are it over dynamics Europe.

ag market drove sales storm than a tough really factors prices, frustration decline region. was less policy is that saw volatile ultimately regional yields, North America. depressed normal South lower retail year a and conflicts a greater for traditionally We XXXX that for than much commodity and a with the perfect of

elevated this inventory declines receipts on atypical year equipment trend rates on field in expect to crop demand. weigh pressure of continue interest levels with We cash uncertainty, and XXXX another as

other many producer the XXXX, To illustrate largest grain this reducing significant beer of XX% yields units region. in start regions, in year. Western that growers on Similar from to levels in France, multi-decade the in this we Europe had at over inventory challenge, strain in Newfield lows, fall down the in success Harvest placing in Europe came driving

softening. declines targets However, the for and the with our and We inventory retail demand, under bands, slightly into above adjust inventory XXXX have at product sales in year. the the finished second our end those in upper due to Monheim continued midsized downward lines combines quarter which orders . in to XXXX. ongoing both region line field greater-than-expected in to the with the tractors further ratios of market necessitates tractors production remain for of targeted with in healthy we books extending Order or feel

impacted the highlight [indiscernible] reductions product world. ag to larger XXXX. first compared large strong outlook our decrementals implied to tractors additional quarter is combines large One particularly geographic like noteworthy This North row-crop to the American mix given is the point North for of American broadly rest quarter first equipment, by the comparison as sales and year-over-year in ag in experienced and the that of the are XXXX

Now margins we guide. than the 'XX, about first the be XX% we lower to year for points expect sequentially down of to to quarter line operations XXX basis the XX% XQ top and XXX equipment with full from XXXX, when think sales

cost are forecasting the material fiscal by our Additionally, and costs driven to significant equipment XXXX structural for lower expenses, teams of in production expect Overall, full costs for to favorable the see continue we all the operations year, positive primarily another to overhead reductions. example deliver. yet price volume be despite we improved again improvements

world additional costs Thanks, Josh. as as around the walk That's insight well XXXX. projecting get we're a into where for production great

new we're we give long-term to update levers concern for we inventories, on North pulling used these you. taking and next year averages. levels? into North in question what you an steps inventories. where inventory Last return next to to is a American Can and Cory us are stand America manage heading we the quarter, Now order we've but about extensively XXXX talked books significant discussed

Sure, Yes. Josh.

benefits job those heard, done just excellent inventories, seeing new team of in out our XXXX. proactively managing the we're play has and an decisions you As

is focus ratios the seeing As diligently starting crop speaking, harvesting equipment and to used now you just above to average. especially few tractors. Broadly sales fiscal new down quarters over our last row inventory the the late to levels, to and year plateau noted, primary bring used long-term heading work into we're model new

While it's too the on slowdown to are inflection early quarter. call an we the growth by in we during point encouraged used fourth that saw equipment,

second a both to model pressure As net is equipment, be to we X inventory heavier is X- look used slowed to average has trade 'XX back tractors farm looking lighter in since in This owners than long-term pre-inflationary at with and buy row-crop year, backdrop, which the 'XX will equipment pricing trade to to and the increases. market and similar in years putting for phenomenon we're used correlates come by X this distributions, typically seeing ladder along mix in income part closely and This late-model first ladder. compared equipment. of combines. year significant every When current time this X-year-old trade in on to normal compression interest the into a who rate differentials model and correspondingly, of

and on tighter today's generation hyper applications needed to As equipment, focused even on like to helping a windows harvesting of planning. these this result, precision which high-speed transition farmers we're is next transition based

by mix will of In normal vintage the this more return turn, to machine. help market distribution used a

is to inventories approach used X-pronged. reducing Our

we demand market levels First moderates. to equipment flood and new as managed ensure the we've don't foremost, inventory

have programs Second, closely each impactful we're the their a of made understand this and our as drive them. appreciated and both line. result needs supporting example their we and working customer with the greatly to dealers of engagement to financing offering new our programs, to is most which targeted engagement bottom what's by XXXX of customers the in changes with dealers One been

are used Stepping to elevating on also one only focused in committed markets, have term, delivering At our dealers near are of invest to drive not the to sales. goal, journey. to the dealers despite remain We're but pool customers. end managing softer the to value funds necessary technology further the consistently back, on our dealers in the continuing greater our fund we're Finally, contributions healthy. day, end inventories [indiscernible] our ensure focused

wanted a the I of network. on current dealer add Cory, to state our comment

progress better them Our position changes. versus a to in made work that dealers seen wouldn't to have are recognize specialized inventory we structurally to demand strongly capabilities we in our inventory execution that continue and stay We in the of today invest dealers, close they while ahead the field without cycles with previous as meaning have we've partnership the in of continue capitalized.

service enhance aligned This remains purpose our that the receive, support and customers strength of goal. level and primary our which our

Cory a great John. perspective. Thanks, and That's

in with Let's 'XX. year the story levels X we the really construction to that and shift quarters, with of a halves, was now a saw XXXX solid, and consistent in starting forestry. dynamic stable demand strong the first X

The Beal, XXXX and through the shifted ultimately pressured and how competition, as can proactively to softening we retails this underproducing Josh to segment retail will margins quarter. tougher gave fourth earthmoving you in the us in way second however, half, impact which walk what happened demand

Yes, definitely.

XXXX. and but strength ongoing and compact industry first awarded. has quarters. our in less softening . in government XXXX, work demand we robust Construction spending construction, associated year next We're still expect for is in than still with both retail infrastructure guides in II half of both further is JA the shifted trend reflected equipment noted, a XX% you and in the saw third construction earthmoving our that seeing market softening we for As and that fourth to continue

recently down [indiscernible] we which our customers X to it's overall the robust retail Our new to demand a quarter successfully equipment there's mentioned elevated backlog a decision strong fourth field. the utilization for a earthmoving stiffer these earlier in field underproduce see less the and project rates interest is and months. reiterating Despite continue bids continue inventories XXXX, of worth past pressures, of to over see down that which appetite margins. in alongside rental competition, purchases. industry, compounded driving equipment of work, albeit near-term by refleeted drove

made half the the that appropriately anticipating back additional in are to in of to demand decision Given to changes to half in sized we've to in underproduce softening levels XXXX, retail continue the we're next year first demand retail respond the inventory of XXXX. ensure

the fact, for well our impact as In this will North This be for approximately quarter. in factories first quarter moving like half American past much the margins segment of days a lines the quarterly as down profitability large material will decremental overall quarter, earth shut the have of total ag our on production in at year. the

combined road the with our overall expect for to down building, lines product steady Forestry forestry to demand being to stability Construction & in outlook flat Given we these segment. provide X%, Global

This competitive to continue investments summarize in we're customer demand team about than here, environment this as to ag margin the just proactive, production, good to business. as reduction we efforts opportunities. testament our of value is differentiated in the have accretive concentrate we important cycles note business alongside better improvements This a the the past. in drive our . structural under being with our lessons feel to well previous even our that learning It's Maybe is from we're Josh. as we to C&F weathering

Yes. It's insight. great

Josh. be dynamic to appears a so market And right what now,

returns production long-term under the strong our year. should surrounding in back Given generate competition market end us uncertainty best the tougher of the to the position put and demand, in half

milestones Cory, highlights those XX means walk product Now to on of some focus for achieved technology and a through us for Josh forward? the and been progress. have few releases key like topic, over there our you going it months. the business our and quite I'd Could new what last last

our ranging most to advanced new equipment in systems advancements can we've start. testament our These tractor equipment. our technology the represented production ever most product of significant adoption date end I our powerful tech features. we're seeing seating a are record of harvesting from success on year of At 'XX releases new to 'XX technological some year available most approach. stack, to our the designed to and advanced seen top model a the Sure, of introductions

operations. bring their harvest over example, automation of level orders opted technology EOP because For to highest the of XX% for immediate this have our settings will value combined

up a this alone. experience on to XX% will In average feature fact, harvest boost we expect and our productivity customers from

brought covered be of ultimately great year this means ag managing share. down to to number acres We equipment more maintain but large John operations in over also grow not grow target the share both acres Deere of the and center, inventory levels productive, market while which would course connected equipment And the new we to Brazil. farmers. only Another that our our profitable of example the more by means

highly XXX that acres -- engaged Yes, with by that's perspective, acres more enhance established Corey. our XX%, saw farmers global in year, this growth reaching notably improve to of grow of year-over-year South and to is up past the of adoption statistic we America nearly And with and as up right, growth put as has of engaged And acres, Global XX% overall make our acres nearly continuing adoption million highly exceeded utilization. deeper broader over acres XX%. our we see XX% in this noted some trend that and of expectations. acres outpacing growth engaged up over engaged We're downturn nearly in which significant see latest while the South XX%. margins. solutions America during some total you technologies productivity engaged seek ways And also in currently growth to our is

sprayers year-over-year, we've rate year's of just Spray, reaching year few take in Technology by program. over adoption nearly units XX% as covered a Exact early this hundred with X the a example, million on field. the On Applied & order over XXXX acres For Model 'XX See John increased in mentioned, in XX%

upgrades, and See both for & For across Spray have ultimate we option XXXX, X,XXX over and orders premium precision retrofit currently new taken factory units. installed

a acres Spray to XXXX of the in covered number in technology result, & increase by see a the See expect season. significant we As

typically, that technology their know money have you is save When get We a we possible. want invest to see effort you or value. Exactly. they requires you in programs, work operations, field it your as have customer see but is to to a revolutionary solution the their and customers recognize technology this our as going crop in customers, quickly equipment we know that for that time that care transform their in to also their

by the our that in model business to environment. . the a Our than technology to crucial goal different is to ever more value. current experience impact & See leveraging enable Spray is which unlock customers macro more of

bit it been pricing about upfront only right latest adoption on quite some and Cory, this to a our of is There's to approach, when this strategy sense. to model, is thing of Jepsen. the that. for it's that compared model discussion our levels makes Maybe pay-per-use of one but if our reality traditional using add The go-to-market offerings. seeing we're higher

the any pricing our traditional our In vital connectivity model take which technology, needed year foundational investment. of precision Precision their customers scaling pieces installed over to fraction to X,XXX year technology Essentials Ag that of kits. access kits journey. to the And model from includes kit, onboard being stage example the solutions. vintage recently precision emphasizes new that ways all license of with cost technology compute of solutions and run first This a customers recurring commitment meet on also alone, these to importance technology precision of tech an allows a of the changed adopt every example, operations. providing our enable other at guidance, of average to upfront their sold equipment to onetime X we highlights XXXX. the regardless are our the . We at size of finding cost It a customers For

through-cycle value proof investment our differentiated the continuous to our innovation It's many demonstrating and in is points great all. significant for how Thanks driving business see so customers.

the share? up for Josh like thoughts we you'd open questions. do Now you to any line before Jepsen, have final

XXXX who utmost that per over structural by upon the shareholders possibly EPS, level yet surpassed performance the the face determination. this levels, performed and able and important earnings share more via $XX even business our And year billion that we history And the performance made marking the buybacks. best proof we've both a that while business the company also we mid-cycle It's but $X.X be with product highest maintaining not return forward. build in throughout John's and of improvement dividends cash result, investment were is peaks. employees, will in in share second of business level our the point only echoing would going another resiliency, I and the historical . This still challenges of in significant earlier. comments R&D is of in all to noteworthy it resiliency start marked the and in year, in from and new our great. to significant resiliency Yes, including shareholders at strong performance, across and fact do capital as spending. to delivered returned a over historical

we opportunities As even forward, encouraged drive we customer levels by believe the look opportunities that we're of and profitability. will of significant productivity pipeline ahead, greater

rollout continued end or is of sure the of only the incremental heart solutions, our differentiated iron if succeed breadth our technology dollar increasing most on succeed. our there's our unlocks the While focus precision day, making because we the that value is at of way high-quality each customers

As previous better look can we're cycles. that levels perform confident we function ever we than XXXX, ahead and step as to excited at

we've operations. the previous deliver in this in of to proud trough us be more what have can sub-XX% every well for and challenges XXXX year simply, we to peak decisions year will accomplished we never focused achieve better they today. more our in proactive did at but our on customers Said we're expect renewed we positioned tomorrow Our equipment discipline, face. We to focus mid-cycle did year, than higher to our satisfied. come XXXX what structurally work the margins will ensure work a hard during day than of of achieve customers solving anticipate We're XXXX. another be margins

Josh. Thanks,

up to the from questions open let's our line Now investors.

the consideration of we procedure. you that and portion operator please to question. hope will others the to Operator? to X In The call. we If call, on We're are more yourself rejoin begin questions, participate on additional of you . now have ready to the allow of the Q&A polling instruct the limit you ask queue.

Oppenheimer. question [Operator Instructions] first Owen with And Kristen is from our

cleaner some expectations and puts in the wondering I'm of for from Lots bit in around cadence in of . bridge productivity what the terms What little you're XXXX? takes raw are materials the a on of if headwinds production could QX, get we the half? over, a color carrying of and costs first margin the that just are commentary, particularly the but

Good take to [indiscernible] you, shot a see I'll and jump Yes. in. Chris.

at margin, there's a we things few as XXXX. look think you as that think I about play here

year. guides seeing of you First reduction in kind just that XX% individual at and volume expectations full margins. continued and notably, volume I would would operations that as weighing for the down is equipment And continued it's foremost, market think in on be total be the we're the that certainly, of look around the the declines level

costs X mentioned, we well. we to positive be Jepsen pricing As across favorable segments. expect And all mentioned production Josh as

obviously, seeing year we're favorable lift. of a year that, cost next in this price So into will as the made terms carry in and over we've providing well, addition to decisions cost [indiscernible] reducing

so margin strong. mentioned, it's you relative And history, to as expectations overall, very

bit mix-driven a I really large higher business about as America XX%. ag the we large think maybe you impact than that's down probably in about being little decrementals, normal around business. as a lastly think ag think on the North

the that given Our that decrementals comp will outsized this lines sales reduction we profitable reduction did weigh will the on our still of to but be and XXXX less product one next the regions our most underproduction sort of year. in than most year, and profitable

Our next Sachs. question Goldman with Revich is from Jerry

inventory just much put can levels magnitude to able funds to And year, months if don't to year-to-year I'm wondering bit the expand model on dealers, could there's the the a just funds if how I those and from deploy in year get rebates mind, pool flesh us? you down. you're just you the that know move on of for order of incentives quite last trade-ins the it given to share and out Can help that you can you for the direction? use equipment? pool late around program the you

Yes. Jerry.

those . We've for support of seen flat market for talking record work pull over drove targeted funds fourth started balance. some about think you pricing associated saw that of decline That's And in we a year level really for quarter being dealers are are there you put next the entering the equipment that and really funds. sales We're XXXX, net maybe contemplated and the some couple about in quarter. context work pool we've to balances pricing design, the shore year large by that, using the XXXX with that's of that's balance by help in As you X% That as used for used program. put of XXXX saw we structure as where years, deployed funds. the seen XXXX downturn. help about a that of reductions first we out used fund in by our pool X%. and we design. best strong because was in this actually talk dealers to towards the the think guide incentives the of price segment pricing as what That's about increases demand in inventory ag and well. It [indiscernible] downturn, those as range our And year stability specific in forms to provides course when the the really additional play to that list up it's price we in that's again, fund if pool we've inclusive for X% really and the and how drive the past and see help the

expecting the is focus and work incentive that rate a really driven fund in a higher in bit little put are plans rate We incentive on pool by area. to higher XXXX, continuing to

the So can we'll that that. towards, price. we're continue positive And reduction with that we supporting and again, to in driving again, to do continue use do

perspective, of retail The North ag Beal finish the a is we only good whether in from funds large had we add, a it's America Josh. I'd where South an Jerry, I Josh just laid unused, on perspective year top or mean, inventory ended to on pool thing this new the America. other from out

We retail the also really October in a division. had Construction strong

term upper talked month incentives had we've So in October -- more little inventory down in reduction had incremental pricing, was earthmoving pretty about year. negative the really the has in for trend, us. noted in teens as half of we good a the and a in we back which XQ. in been We inventory the brought but a market,

how So in like we think right as places, or new positioned we're incentives used, step whether overall, impact I seeing for the and it's into that we're deploying between 'XX.

question next Kyle is Our from with Citigroup. Menges

retail unpack if like in I half construction? you baking in was assumed a demand any ag of is just sounds year in the improvement back if I love could guidance markets and just end would it weighted. hoping little kind full some bit. hear It that's in of to these

think, Kyle, more related It's year-over-year I to, comps. so,

look & was in down down down think first You X% half ag XX% And and half the just and segments, large year-over-year first forestry and our ag back construction at compared about was XXXX, I'll XX%. by and in XXXX, of In XX%. look the year-over-year, down it In half it 'XX. at Forestry the half. half, large of similarly, Construction back to year

then year. the move look year that's segments, in out greater where going progressively in we better about of talked XXXX, for declines play half comparing comps and year-over-year back both to for And half through you comps will XXXX. year underproduction to get significant of at the those the in as as first the we expect first we particularly how the construction year-over-year the forestry would half when of So you're

ISI. David from is question next Evercore Our Raso with

in going to ones, if I'm you X mind. don't slide quick

of last piggybacking little off a the comment. sort Just

right? earnings the of around first $X down quarter, midpoints, is sales XX%. only down about that are about the But sales over rest XX%. XX%, implied It's just down using down earnings, year X%, EPS of the So

you just to Are have sense I'm pin curious, a a how third the ceasing cadence. by to how trying we growth not back it. year to you're later in the the Just of quarter? But quarterly interpreting is year-over-year underproduction we

trouble, And just answer. you I'll the platform your give then not thoughts second, in to you to curious get

framework-wise, are compare impact it the about of Human appointment administration Health how about how time, how new the and business. just With think maybe you obviously, about Services, in, impact their immigration of how and coming to last are question to the the thinking could farmers the you new tariffs of thinking just that Secretary

Yes. the compared look equipment the mean, Josh margin that's basis full ops. fourth expectations below Josh down And first for questions. QX, particularly to guide as one year. the to XX% XXX XX% to Thanks, mentioned, as to the with about the sequentially, the David. I if at quarter, year Yes. first XXX for you on Starting quarter. the for points as be think going and Thanks mentioned, we Jepsen

and of the full that for of decline think will and in actually given of end in top particularly line be certainly, So construction again that the be margins, at it noting underproduction. year QX, forestry top range construction quarter, will to for see decrementals and if forestry, sequential which the decline you're the more the you and about first higher than implied like again, going guide

move the of little then if a of bit as And XXXX. back kind half and the to year, those your to -- get throughout look particularly up QX course QX, as you question, you of flattish, get the comps at you year-over-year not better, in XXXX

in how operations our the obviously, I impacts and terms On it new customers, as that it our impacts how certainly our it thinking we're about how impacts suppliers of well. mean, administration,

that engaging, of think be But we're enacted at too I certainly, exactly will and go early terms monitor and on stakeholder what X we the we those in to means groups. impact point know policy that as forward. will this what

design -- this I'd And And we in employees the most efforts Ag it in to our sell other world. in the rely being than their in the countries. different result of John the and, May, different is exporter hard products they're manufactured Division is by really manufacturing all advanced to well. heavily located of of Deere John that in We and facilities Yes. Turf technology the on and U.S. the our of all frankly, equipment add to skilled result in positioned greater U.S. highly We're that, thing like the build net exporting way. high XX products assembled a other XX,XXX leadership quality, U.S. results U.S. skilled and XX% by a the we're are XX here in highly the states. that across employees, of in U.S. assembled are a employees as And

And well. able positioned very, team at very this I'm been and really to U.S. feel proud we nearly So building product of for our the years accomplish. what they're XXX in We've

Our Castillo next question Morgan with Angel from Stanley.

I just construction, a of quarter particularly on bit the like price where here. there's noted up underproduction little It broadening wanted maybe you bigger bit some to a in in the first seems the more dynamic, a follow little of softness.

it think sounds like I broader as than and about talked bit fleets being that. factor, we a had now little a rental

with of us seeing bit half? the can first about second how think of being in the a of for give And price of yes, guide the mind, just that drives versus So maybe the color then, half that year more year that of on kind maybe just the trends you're rental. outside in construction color you to little what positive the in and/or

the mean I the mentioned, in dynamic Angel. share we've as yes, for question, And environment as and certainly, between we we've as I construction we're a price at that it's Thanks look competitive. Yes. ahead. is the and price going forestry talked, balance think maintaining

at there's of XX% well. the remind think really business terms That's road price, been that price of as the elements which Construction if the you I of Forestry more about other XX% stable, to thing business year. you, that that get includes there a of is and and building, too, up opportunity business, And the you nothing different as our to mean, In cadence that significance of of lot layout as well. and makes there look the I'd

the dynamic. helpful, certainly, so And adds which is that into mix, but it's

Wertheimer question from Our Research. with next Melius Rob is

them kind be you including you work? many already I'm topics, the of get of where to about equipment. seeing levels still. don't know people and that up the the early used for who kind Any wave how to used and that don't a I be midyear can Do based dealer because of point about some bow if the commentary of on I you great used your know balances year. on inventory at we higher-priced, trade-ins of to Thanks work would what, around higher-valued nibbling production further that. trading throughout talk equipment. progress be anything say would if curious you can so sticking any more the expect seems commentary if down you're

North we've question. over think of the that the think progress be Yes, here used mean not I going work in levels we're about few to you something we where good I next quarters. Rob, It's going thanks inventory about America, you to overnight. sits turn And for feel a made. lot as the on it's

I think equipment. fourth the stabilized a a we feel think into as about drives standpoint cadence on good mind, about of level we used That saw the quarter retail in is QX that Keep quarter. coming the pipeline. in big us you for quarterly new trade-ins from

the we've we be maintain And to the feel of mitigate seen able in and kind so to good quarter, increase about.

Sequentially, little opportunity buying, working QX But about the a over typically an course quarter. next the be QX a think continue to the we'll again are drive us next couple for in opportunity this in over we that levels to production quarters. bit as lower good that tax first provides down. really of year-end quarter provides of

good. the We've but seen Cory. we is profitability plateau even we concern, market have than seen in Obviously, inflection year, was levels said as not seen quarter. in call the point, We price fourth the the a retail likely this harvest been but to more this saw we've better-than-expected yields. strong we Rob, activity we're been Pricing has had though has used ready -- out we expected. Yes, closed

and demand, underproduced effects on new what we use. do saw We that side, we the -- continue the up also it's but the in we showing in of

rightsize to you take the on the value seeing bottom of seeing people people the they people the out these products back The back market We're a rightsize expand dealers marketplace -- machines The of taking we're in come tractor, are and trades high-speed the used model, needed, horsepower those further as market. tactical come focus is late crop line as are the the able into for down them. tighter needed we're into crops if high and late-model into value row market. windows, go high-speed planning to plant being row

for more have [indiscernible] question. time one

is Our Truist Jamie last with question Securities. from Cook

probably have thought. Just on little back [indiscernible]. worse A than would to the decrementals I

my pricing positive a follow-up. will just region. that But is question with like XX%, can is, to America And so And for in degree operations be know year. positive what I XXXX. pricing? you down of I be North you know XX% the said said mid-cycle then pricing for equipment

Just to exit relative ag for means your mid-cycle are and we where be to large the is on obviously, that going what thoughts 'XX. as year

Jamie, well. thanks as to for positive the expect taking And in question. maintain price again, North production Yes, we America. costs

do More that will talked do cost than positive. that? muted we price over we've the were new like by XX%. levels tractors the XXX-horsepower We we course about with be I X% year. seen. to above, reiterate price how realization. mean field inventory So the the ratios Inventory it And starts about. we of to above in Again sales XXX-horsepower the kind and units of XX% reduced talked

at low towards increased very, some that tight towards maintain very of of going pool incentives is I us X%. mentioned, level as that contemplated allows levels, again, price. level funds. year So we've to that combines going But Because next those used, increased that's

As we make given ingredients, still can net-net, we those those Cory and year. dealers and described, helping to continue But in to we'll positive deliver price trades. continue our to work support down that all the believe

price environment, thing in kind point given better a positive all negative of shape. Josh. price a see bounce there we X from and is of Brazil a that perspective. and 'XX, flatter this 'XX, is the in was see inventories think challenges other back, We reflective I Jamie, The I'd out

to favorably. that turn expect we So

So as expect I globe, the we would of PPA the you across think price walk region in world. in positive every

of great We Thanks for great call concludes everybody's our Thanksgiving in U.S., Have the a a for today. holiday. I day. appreciate all. have those hope That us time. And you

thank As you we participation are today. Again, your for concluded.

at disconnect may this You time.