Summary of Deere & Company Q3 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales and Revenues: Increased 5% year-over-year to $12.608 billion; equipment operations net sales rose 6% to $10.999 billion.

Net Income: $1.379 billion, or $5.10 per diluted share.

Operating Margin: Equipment operations achieved a 14.4% operating margin.

Segment Performance:

Production and Precision Ag: Net sales down 6% to $3.998 billion; operating margin at 13.2%.

Small Ag and Turf: Net sales up 12% to $3.383 billion; operating margin increased to 18.4%.

Construction and Forestry: Net sales up 18% to $3.618 billion; operating margin at 12.1%.

2Strategic Updates and Business Highlights

Continued execution excellence across all business segments, maintaining cost discipline and improving inventory health.

Positive price realization contributed to revenue growth, with favorable currency translation effects.

Strong demand in construction and turf markets, supported by healthy project activity.

Increased adoption of precision agriculture technologies, with significant growth in the use of See & Spray and advanced planter technologies.

3Forward Guidance and Outlook

Production and Precision Ag: Expect net sales to decline approximately 10% for the year, with operating margin guidance narrowed to 11-12%.

Small Ag and Turf: Anticipate net sales growth of about 15% for the full year, with operating margin guidance increased to 14.5-15.5%.

Construction and Forestry: Maintain net sales growth guidance of approximately 20% for the year, with operating margin tightened to 10.5-11.5%.

Full-year net income outlook raised to $4.75 to $5 billion, with cash flow expectations improved to $5 to $5.5 billion.

4Bad News, Challenges, or Points of Concern

Agricultural Market Challenges: Declining farm profitability due to fluctuating commodity prices and high input costs, particularly affecting South America and Europe.

Tariff Expenses: Direct tariff expense expected to be approximately $1.1 billion, representing a headwind for fiscal 2027 compared to the current year.

Production Adjustments: Anticipated softer demand in key regions, leading to cautious production strategies.

Mixed Demand Trends: While North America remains stable, Europe and South America face significant challenges, impacting capital spending decisions.

5Notable Q&A Insights

Early Order Programs (EOP): Mid-single-digit growth observed, with technology adoption rates increasing significantly. Pricing strategies are focused on covering inflation.

Regional Demand Variability: U.S. farmers are cautiously optimistic due to improving commodity prices, while Brazilian farmers are adapting to high fertilizer costs.

Excavator Launch: Positive feedback on newly launched models, with expectations for broader adoption in 2027.

Inventory Management: Proactive measures have improved channel health, positioning Deere well for the recovery phase expected in 2027.

Tariff Dynamics: Changes in tariff rates are expected to impact costs moving forward, with no further refunds anticipated for the remainder of the fiscal year. Overall, Deere & Company demonstrated strong operational performance in Q3 2026, but faces challenges from agricultural market conditions and tariff expenses as it navigates through a dynamic economic landscape.