Deere Reports First Quarter Net Income of $1.959 Billion

Rhea-AI Summary

Deere & Company reported a remarkable 34% net sales gain and strong earnings in Q1 2023, with net income reaching $1.959 billion or $6.55 per share, compared to $903 million or $2.92 per share in Q1 2022. Worldwide net sales increased 32% to $12.652 billion. The company raised its full-year net income forecast to $8.75 billion - $9.25 billion. Notably, Production & Precision Agriculture segment saw a 55% increase in sales. However, Financial Services net income dropped by 20% due to unfavorable financing spreads. The outlook for fiscal 2023 remains optimistic amid healthy demand for equipment.

Positive

• Net income increased 117% to $1.959 billion.
• Worldwide net sales rose 32% to $12.652 billion.
• Forecast for full-year net income increased to $8.75 billion to $9.25 billion.
• Production & Precision Agriculture sales up 55%.
• Operating profit in Production & Precision Agriculture improved 308%.

Negative

• Financial Services net income decreased 20% to $185 million.
• Lower gains on operating-lease dispositions impacted Financial Services.

• Strong execution contributes to 34% net sales gain and higher earnings.
• Market environment supported by positive fundamentals and healthy demand for farm and construction equipment.
• Full-year net income forecast increased to $8.75 billion to $9.25 billion.

MOLINE, Ill., Feb. 17, 2023 /PRNewswire/ -- Deere & Company reported net income of $1.959 billion for the first quarter ended January 29, 2023, or $6.55 per share, compared with net income of $903 million, or $2.92 per share, for the quarter ended January 30, 2022.

Worldwide net sales and revenues increased 32 percent, to $12.652 billion, in the most recent quarter. Net sales were $11.402 billion for the quarter, compared with $8.531 billion in 2022.

"Deere's first-quarter performance is a reflection of favorable market fundamentals and healthy demand for our equipment as well as solid execution on the part of our employees, dealers, and suppliers to get products to our customers," said John C. May, chairman and chief executive officer. "We are, at the same time, benefiting from an improved operating environment, which is contributing to higher levels of production." 

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2023 is forecast to be in a range of $8.75 billion to $9.25 billion.

"Deere is looking forward to another strong year on the basis of positive fundamentals, low machine inventories, and a continuation of solid execution," May said. "We are proud of our recent performance and remain fully committed to helping our customers do their jobs in a more profitable, productive, and sustainable way. We have confidence in our ability to execute on our leap ambitions and run our businesses with real purpose, real technology, and real impact."

Deere & Company		First Quarter
$ in millions, except per share amounts		2023			2022			% Change
Net sales and revenues		$	12,652		$	9,569		32 %
Net income		$	1,959		$	903		117 %
Fully diluted EPS		$	6.55		$	2.92

Results for the prior period were affected by special items. See Note 1 of the financial statements for further details.

Production & Precision Agriculture		First Quarter
$ in millions		2023			2022			% Change
Net sales		$	5,198		$	3,356		55 %
Operating profit		$	1,208		$	296		308 %
Operating margin			23.2 %			8.8 %

Production and precision agriculture sales increased for the quarter as a result of higher shipment volumes and price realization. Operating profit improved primarily due to price realization and improved shipment volume / mix, partially offset by higher production costs and increased SA&G and R&D expenses. UAW contract-ratification bonus costs affected the prior period.

 

Small Agriculture & Turf		First Quarter
$ in millions		2023			2022			% Change
Net sales		$	3,001		$	2,631		14 %
Operating profit		$	447		$	371		20 %
Operating margin			14.9 %			14.1 %

Small agriculture and turf sales increased for the quarter due to price realization and higher shipment volumes, partially offset by the negative effects of foreign currency translation. Operating profit improved primarily as a result of price realization and improved shipment volumes. These items were partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable effects of foreign currency exchange.

 

Construction & Forestry		First Quarter
$ in millions		2023			2022			% Change
Net sales		$	3,203		$	2,544		26 %
Operating profit		$	625		$	272		130 %
Operating margin			19.5 %			10.7 %

Construction and forestry sales moved higher for the quarter primarily due to higher shipment volumes and price realization, partially offset by the negative effects of foreign currency translation. Operating profit improved due to price realization and improved shipment volumes, partially offset by higher production costs. UAW contract-ratification bonus costs affected the prior period.

 

Financial Services		First Quarter
$ in millions		2023			2022			% Change
Net income		$	185		$	231		-20 %

Financial services net income for the quarter decreased mainly due to less-favorable financing spreads, higher SA&G expenses, and lower gains on operating-lease dispositions, partially offset by income earned on higher average portfolio balances.

Industry Outlook for Fiscal 2023
Agriculture & Turf
U.S. & Canada:
Large Ag			Up 5 to 10%
Small Ag & Turf			Down ~ 5%
Europe			Flat to Up 5%
South America (Tractors & Combines)			Flat to Up 5%
Asia			Down moderately
Construction & Forestry
U.S. & Canada:
Construction Equipment			Flat to Up 5%
Compact Construction Equipment			Flat to Up 5%
Global Forestry			Flat
Global Roadbuilding			Flat

 

Deere Segment Outlook for Fiscal 2023				Currency		Price
$ in millions		Net Sales		Translation		Realization
Production & Precision Ag		Up ~ 20%		0 %		+14 %
Small Ag & Turf		Flat to Up 5%		0 %		+8 %
Construction & Forestry		Up 10 to 15%		0 %		+9 %
Financial Services		Net Income		$ 820

Financial Services. Fiscal-year 2023 net income attributable to Deere & Company for the financial services operations is forecast to be $820 million. Results are expected to be lower than fiscal year 2022 due to less-favorable financing spreads, higher SA&G expenses, and lower gains on operating-lease dispositions. These factors are expected to be partially offset by income earned on a higher average portfolio. The outlook decreased from the previous forecast provided on November 23, 2022 due to further compression in financing spreads.

John Deere Capital Corporation

The following is disclosed on behalf of the company's financial services subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market.

		First Quarter
$ in millions		2023			2022			% Change
Revenue		$	821		$	643		28 %
Net income		$	147		$	190		-23 %
Ending portfolio balance		$	47,227		$	40,353		17 %

Net income for the quarter was lower than the same period in 2022 primarily due to less-favorable financing spreads, higher SA&G expenses, and lower gains on operating-lease dispositions, partially offset by income earned on higher average portfolio balances.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook," and "Deere Segment Outlook," relating to future events, expectations, and trends, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially.

Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the company expressly disclaims any obligation to update or revise its forward-looking statements. Many factors could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:

• changes in U.S. and international laws, regulations, and policies relating to trade, spending, taxing, banking, monetary, environmental (including climate change and engine emission), and farming policies;
• political, economic, and social instability of the geographies in which the company operates;
• wars and other conflicts, including the current conflict between Russia and Ukraine, and natural disasters;
• adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth or possible recession, and liquidity constraints;
• growth and sustainability of non-food uses for crops (including ethanol and biodiesel production);
• the ability to execute business strategies, including the company's Smart Industrial operating model, Leap Ambitions, and mergers and acquisitions;
• the ability to understand and meet its customers' changing expectations and demand for John Deere products;
• accurately forecasting customer demand for products and services and adequately managing inventory;
• changes to governmental communications channels (radio frequency technology);
• gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions;
• the company's ability to adapt in highly competitive markets;
• dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions;
• changes in climate patterns and unfavorable weather events;
• higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for our products;
• changes in the company's credit ratings, and failure to comply with financial covenants in credit agreements could impact access to funding;
• availability and price of raw materials, components, and whole goods;
• delays or disruptions in the company's supply chain;
• labor relations and contracts, including work stoppages and other disruptions;
• the ability to attract, develop, engage, and retain qualified personnel;
• security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the company and its products;
• loss of or challenges to intellectual property rights;
• compliance with evolving U.S. and foreign laws, including economic sanctions, data privacy, and environmental laws and regulations;
• legislation introduced or enacted that could affect the company's business model and intellectual property, such as so-called right to repair or right to modify legislation;
• investigations, claims, lawsuits, or other legal proceedings;
• events that damage the company's reputation or brand;
• world grain stocks, available farm acres, soil conditions, harvest yields, prices for commodities and livestock, input costs (e.g., fertilizer), and availability of transport for crops; and
• housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment.

Further information concerning the company and its businesses, including factors that could materially affect the company's financial results, is included in the company's other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q).

 

DEERE & COMPANY FIRST QUARTER 2023 PRESS RELEASE (In millions of dollars) Unaudited
		Three Months Ended
		January 29			January 30			%
		2023			2022			Change
Net sales and revenues:
Production & precision ag net sales		$	5,198		$	3,356		+55
Small ag & turf net sales			3,001			2,631		+14
Construction & forestry net sales			3,203			2,544		+26
Financial services revenues			1,040			870		+20
Other revenues			210			168		+25
Total net sales and revenues		$	12,652		$	9,569		+32
Operating profit: *
Production & precision ag		$	1,208		$	296		+308
Small ag & turf			447			371		+20
Construction & forestry			625			272		+130
Financial services			238			296		-20
Total operating profit			2,518			1,235		+104
Reconciling items **			(22)			(82)		-73
Income taxes			(537)			(250)		+115
Net income attributable to Deere & Company		$	1,959		$	903		+117

*	Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses.
**	Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

 

DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three Months Ended January 29, 2023 and January 30, 2022 (In millions of dollars and shares except per share amounts) Unaudited
		2023			2022
Net Sales and Revenues
Net sales		$	11,402		$	8,531
Finance and interest income			994			800
Other income			256			238
Total			12,652			9,569
Costs and Expenses
Cost of sales			7,934			6,695
Research and development expenses			495			402
Selling, administrative and general expenses			952			781
Interest expense			479			229
Other operating expenses			299			311
Total			10,159			8,418
Income of Consolidated Group before Income Taxes			2,493			1,151
Provision for income taxes			537			250
Income of Consolidated Group			1,956			901
Equity in income of unconsolidated affiliates			1			3
Net Income			1,957			904
Less: Net income (loss) attributable to noncontrolling interests			(2)			1
Net Income Attributable to Deere & Company		$	1,959		$	903
Per Share Data
Basic		$	6.58		$	2.94
Diluted		$	6.55		$	2.92
Dividends declared		$	1.20		$	1.05
Dividends paid		$	1.13		$	1.05
Average Shares Outstanding
Basic			297.6			307.4
Diluted			299.1			309.4

See Condensed Notes to Interim Consolidated Financial Statements.

 

DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited
		January 29			October 30			January 30
		2023			2022			2022
Assets
Cash and cash equivalents		$	3,976		$	4,774		$	4,472
Marketable securities			852			734			735
Trade accounts and notes receivable - net			7,609			6,410			4,855
Financing receivables - net			36,882			36,634			33,191
Financing receivables securitized - net			5,089			5,936			3,516
Other receivables			1,992			2,492			1,936
Equipment on operating leases - net			6,502			6,623			6,624
Inventories			10,056			8,495			7,935
Property and equipment - net			6,212			6,056			5,665
Goodwill			3,891			3,687			3,192
Other intangible assets - net			1,255			1,218			1,209
Retirement benefits			3,793			3,730			3,158
Deferred income taxes			914			824			923
Other assets			2,597			2,417			2,203
Total Assets		$	91,620		$	90,030		$	79,614
Liabilities and Stockholders' Equity
Liabilities
Short-term borrowings		$	14,129		$	12,592		$	10,990
Short-term securitization borrowings			4,864			5,711			3,482
Accounts payable and accrued expenses			13,108			14,822			10,651
Deferred income taxes			519			495			556
Long-term borrowings			35,071			33,596			32,838
Retirement benefits and other liabilities			2,493			2,457			3,289
Total liabilities			70,184			69,673			61,806
Redeemable noncontrolling interest			100			92
Stockholders' Equity
Total Deere & Company stockholders' equity			21,332			20,262			17,804
Noncontrolling interests			4			3			4
Total stockholders' equity			21,336			20,265			17,808
Total Liabilities and Stockholders' Equity		$	91,620		$	90,030		$	79,614

See Condensed Notes to Interim Consolidated Financial Statements.

 

DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended January 29, 2023 and January 30, 2022 (In millions of dollars) Unaudited
		2023			2022
Cash Flows from Operating Activities
Net income		$	1,957		$	904
Adjustments to reconcile net income to net cash used for operating activities:
Provision (credit) for credit losses			(130)
Provision for depreciation and amortization			494			486
Share-based compensation expense			23			18
Provision (credit) for deferred income taxes			(56)			210
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales			(1,015)			(106)
Inventories			(1,279)			(1,297)
Accounts payable and accrued expenses			(1,577)			(1,554)
Accrued income taxes payable/receivable			199			(184)
Retirement benefits			(48)			(1,010)
Other			186			(20)
Net cash used for operating activities			(1,246)			(2,553)
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)			7,198			6,435
Proceeds from sales of equipment on operating leases			497			479
Cost of receivables acquired (excluding receivables related to sales)			(6,322)			(5,603)
Acquisitions of businesses, net of cash acquired						(24)
Purchases of property and equipment			(315)			(193)
Cost of equipment on operating leases acquired			(497)			(391)
Collateral on derivatives - net			345			(13)
Other			(146)			(42)
Net cash provided by investing activities			760			648
Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			697			(1,018)
Proceeds from long-term borrowings			2,505			2,353
Payments of long-term borrowings			(1,925)			(1,940)
Proceeds from issuance of common stock			21			11
Repurchases of common stock			(1,257)			(623)
Dividends paid			(341)			(327)
Other			(39)			(33)
Net cash used for financing activities			(339)			(1,577)
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			62			(74)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash			(763)			(3,556)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			4,941			8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	4,178		$	4,569

See Condensed Notes to Interim Consolidated Financial Statements.

 

DEERE & COMPANY
Condensed Notes to Interim Consolidated Financial Statements
(In millions of dollars) Unaudited
(1)	In the first quarter of 2022, the company had a one-time payment related to the ratification of the UAW collective bargaining agreement, totaling $90 million.
			Production & Precision Ag			Small Ag & Turf			Construction & Forestry			Total
	UAW ratification bonus – Cost of sales		$	53		$	9		$	28		$	90
(2)	The calculation of basic net income per share is based on the average number of shares outstanding. The calculation of diluted net income per share recognizes any dilutive effect of share-based compensation.
(3)	The consolidated financial statements represent the consolidation of all Deere & Company's subsidiaries. The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements. In the supplemental consolidating data in Note 4 to the financial statements, the "Equipment Operations" represents the enterprise without "Financial Services", which include the company's production and precision agriculture operations, small agriculture and turf operations, and construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within "Financial Services."

 

DEERE & COMPANY (4) SUPPLEMENTAL CONSOLIDATING DATA STATEMENTS OF INCOME For the Three Months Ended January 29, 2023 and January 30, 2022 (In millions of dollars) Unaudited
		EQUIPMENT						FINANCIAL
		OPERATIONS						SERVICES						ELIMINATIONS						CONSOLIDATED
		2023			2022			2023			2022			2023			2022			2023			2022
Net Sales and Revenues
Net sales		$	11,402		$	8,531														$	11,402		$	8,531
Finance and interest income			114			34		$	1,067		$	829		$	(187)		$	(63)			994			800	1
Other income			234			217			177			87			(155)			(66)			256			238	2, 3
Total			11,750			8,782			1,244			916			(342)			(129)			12,652			9,569
Costs and Expenses
Cost of sales			7,940			6,696									(6)			(1)			7,934			6,695	4
Research and development expenses			495			402															495			402
Selling, administrative and general expenses			783			657			172			126			(3)			(2)			952			781	4
Interest expense			101			90			442			158			(64)			(19)			479			229	5
Interest compensation to Financial Services			123			44									(123)			(44)							5
Other operating expenses			53			39			392			335			(146)			(63)			299			311	6, 7
Total			9,495			7,928			1,006			619			(342)			(129)			10,159			8,418
Income before Income Taxes			2,255			854			238			297									2,493			1,151
Provision for income taxes			483			182			54			68									537			250
Income after Income Taxes			1,772			672			184			229									1,956			901
Equity in income of unconsolidated affiliates						1			1			2									1			3
Net Income			1,772			673			185			231									1,957			904
Less: Net income (loss) attributable to noncontrolling interests			(2)			1															(2)			1
Net Income Attributable to Deere & Company		$	1,774		$	672		$	185		$	231								$	1,959		$	903

1	Elimination of Financial Services' interest income earned from Equipment Operations.
2	Elimination of Equipment Operations' margin from inventory transferred to equipment on operating leases.
3	Elimination of Financial Services' income related to intercompany guarantees of investments in certain international markets and intercompany service revenue.
4	Elimination of intercompany service fees.
5	Elimination of Equipment Operations' interest expense to Financial Services.
6	Elimination of Financial Services' lease depreciation expense related to inventory transferred to equipment on operating leases.
7	Elimination of Equipment Operations' expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.

 

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEETS (In millions of dollars) Unaudited
		EQUIPMENT									FINANCIAL
		OPERATIONS									SERVICES									ELIMINATIONS									CONSOLIDATED
		Jan 29			Oct 30			Jan 30			Jan 29			Oct 30			Jan 30			Jan 29			Oct 30			Jan 30			Jan 29			Oct 30			Jan 30
		2023			2022			2022			2023			2022			2022			2023			2022			2022			2023			2022			2022
Assets
Cash and cash equivalents		$	2,665		$	3,767		$	3,596		$	1,311		$	1,007		$	876											$	3,976		$	4,774		$	4,472
Marketable securities			18			61			2			834			673			733												852			734			735
Receivables from Financial Services			5,348			6,569			5,307											$	(5,348)		$	(6,569)		$	(5,307)										8
Trade accounts and notes receivable - net			1,342			1,273			996			7,827			6,434			4,843			(1,560)			(1,297)			(984)			7,609			6,410			4,855	9
Financing receivables - net			51			47			56			36,831			36,587			33,135												36,882			36,634			33,191
Financing receivables securitized - net									9			5,089			5,936			3,507												5,089			5,936			3,516
Other receivables			1,583			1,670			1,818			489			832			153			(80)			(10)			(35)			1,992			2,492			1,936	9
Equipment on operating leases - net												6,502			6,623			6,624												6,502			6,623			6,624
Inventories			10,056			8,495			7,935																					10,056			8,495			7,935
Property and equipment - net			6,178			6,021			5,629			34			35			36												6,212			6,056			5,665
Goodwill			3,891			3,687			3,192																					3,891			3,687			3,192
Other intangible assets - net			1,255			1,218			1,209																					1,255			1,218			1,209
Retirement benefits			3,728			3,666			3,095			67			66			65			(2)			(2)			(2)			3,793			3,730			3,158	10
Deferred income taxes			1,015			940			1,095			53			45			50			(154)			(161)			(222)			914			824			923	11
Other assets			1,936			1,794			1,730			684			626			477			(23)			(3)			(4)			2,597			2,417			2,203	9
Total Assets		$	39,066		$	39,208		$	35,669		$	59,721		$	58,864		$	50,499		$	(7,167)		$	(8,042)		$	(6,554)		$	91,620		$	90,030		$	79,614
Liabilities and Stockholders' Equity
Liabilities
Short-term borrowings		$	969		$	1,040		$	1,516		$	13,160		$	11,552		$	9,474											$	14,129		$	12,592		$	10,990
Short-term securitization borrowings									8			4,864			5,711			3,474												4,864			5,711			3,482
Payables to Equipment Operations												5,348			6,569			5,307		$	(5,348)		$	(6,569)		$	(5,307)										8
Accounts payable and accrued expenses			11,819			12,962			9,704			2,952			3,170			1,970			(1,663)			(1,310)			(1,023)			13,108			14,822			10,651	9
Deferred income taxes			404			380			425			269			276			353			(154)			(161)			(222)			519			495			556	11
Long-term borrowings			8,155			7,917			8,760			26,916			25,679			24,078												35,071			33,596			32,838
Retirement benefits and other liabilities			2,384			2,351			3,182			111			108			109			(2)			(2)			(2)			2,493			2,457			3,289	10
Total liabilities			23,731			24,650			23,595			53,620			53,065			44,765			(7,167)			(8,042)			(6,554)			70,184			69,673			61,806
Redeemable noncontrolling interest			100			92																								100			92
Stockholders' Equity
Total Deere & Company stockholders' equity			21,332			20,262			17,804			6,101			5,799			5,734			(6,101)			(5,799)			(5,734)			21,332			20,262			17,804	12
Noncontrolling interests			4			3			4																					4			3			4
Financial Services equity			(6,101)			(5,799)			(5,734)												6,101			5,799			5,734										12
Adjusted total stockholders' equity			15,235			14,466			12,074			6,101			5,799			5,734												21,336			20,265			17,808
Total Liabilities and Stockholders' Equity		$	39,066		$	39,208		$	35,669		$	59,721		$	58,864		$	50,499		$	(7,167)		$	(8,042)		$	(6,554)		$	91,620		$	90,030		$	79,614

8	Elimination of receivables / payables between Equipment Operations and Financial Services.
9	Primarily reclassification of sales incentive accruals on receivables sold to Financial Services.
10	Reclassification of net pension assets / liabilities.
11	Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
12	Elimination of Financial Services' equity.

 

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENTS OF CASH FLOWS For the Three Months Ended January 29, 2023 and January 30, 2022 (In millions of dollars) Unaudited
		EQUIPMENT						FINANCIAL
		OPERATIONS						SERVICES						ELIMINATIONS						CONSOLIDATED
		2023			2022			2023			2022			2023			2022			2023			2022
Cash Flows from Operating Activities
Net income		$	1,772		$	673		$	185		$	231								$	1,957		$	904
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses			1			(2)			(131)			2									(130)
Provision for depreciation and amortization			279			257			252			266		$	(37)		$	(37)			494			486	13
Share-based compensation expense															23			18			23			18	14
Distributed earnings of Financial Services			3			42									(3)			(42)							15
Provision (credit) for deferred income taxes			(39)			223			(17)			(13)									(56)			210
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales			(23)			158									(992)			(264)			(1,015)			(106)	16, 18, 19
Inventories			(1,254)			(1,277)									(25)			(20)			(1,279)			(1,297)	17
Accounts payable and accrued expenses			(1,458)			(1,346)			145			(66)			(264)			(142)			(1,577)			(1,554)	18
Accrued income taxes payable/receivable			192			(192)			7			8									199			(184)
Retirement benefits			(49)			(1,012)			1			2									(48)			(1,010)
Other			17			(12)			163			(19)			6			11			186			(20)	13, 14, 17
Net cash provided by (used for) operating activities			(559)			(2,488)			605			411			(1,292)			(476)			(1,246)			(2,553)
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)									7,495			6,845			(297)			(410)			7,198			6,435	16
Proceeds from sales of equipment on operating leases									497			479									497			479
Cost of receivables acquired (excluding receivables related to sales)									(6,375)			(5,719)			53			116			(6,322)			(5,603)	16
Acquisitions of businesses, net of cash acquired						(24)																		(24)
Purchases of property and equipment			(315)			(193)															(315)			(193)
Cost of equipment on operating leases acquired									(531)			(419)			34			28			(497)			(391)	17
Increase in trade and wholesale receivables									(1,499)			(684)			1,499			684							16
Collateral on derivatives - net						4			345			(17)									345			(13)
Other			(9)			(22)			(137)			(36)						16			(146)			(42)	19
Net cash provided by (used for) investing activities			(324)			(235)			(205)			449			1,289			434			760			648
Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			(136)			123			833			(1,141)									697			(1,018)
Change in intercompany receivables/payables			1,469			150			(1,469)			(150)
Proceeds from long-term borrowings			1			18			2,504			2,335									2,505			2,353
Payments of long-term borrowings						(124)			(1,925)			(1,816)									(1,925)			(1,940)
Proceeds from issuance of common stock			21			11															21			11
Repurchases of common stock			(1,257)			(623)															(1,257)			(623)
Dividends paid			(341)			(327)			(3)			(42)			3			42			(341)			(327)	15
Other			(27)			(22)			(12)			(11)									(39)			(33)
Net cash used for financing activities			(270)			(794)			(72)			(825)			3			42			(339)			(1,577)
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			48			(75)			14			1									62			(74)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			(1,105)			(3,592)			342			36									(763)			(3,556)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			3,781			7,200			1,160			925									4,941			8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	2,676		$	3,608		$	1,502		$	961								$	4,178		$	4,569

13	Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.
14	Reclassification of share-based compensation expense.
15	Elimination of dividends from Financial Services to the Equipment Operations, which are included in the Equipment Operations operating activities.
16	Primarily reclassification of receivables related to the sale of equipment.
17	Reclassification of direct lease agreements with retail customers.
18	Reclassification of sales incentive accruals on receivables sold to Financial Services.
19	Elimination and reclassification of the effects of Financial Services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.

DEERE & COMPANY
OTHER FINANCIAL INFORMATION

The company evaluates its business results on the basis of accounting principles generally accepted in the United States. In addition, it uses a metric referred to as Shareholder Value Added (SVA), which management believes is an appropriate measure for the performance of its businesses. SVA is, in effect, the pretax profit left over after subtracting the cost of enterprise capital. The company is aiming for a sustained creation of SVA and is using this metric for various performance goals. Certain compensation is also determined on the basis of performance using this measure. For purposes of determining SVA, each of the equipment segments is assessed a pretax cost of assets, which on an annual basis is approximately 12 percent of the segment's average identifiable operating assets during the applicable period with inventory at standard cost. Management believes that valuing inventories at standard cost more closely approximates the current cost of inventory and the company's investment in the asset. The Financial Services segment is assessed an annual pretax cost of approximately 13 percent of the segment's average equity. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of each segment to determine the amount of SVA. 

		Equipment						Production &						Small Ag						Construction
For the Three Months Ended		Operations						Precision Ag						& Turf						& Forestry
		Jan 29			Jan 30			Jan 29			Jan 30			Jan 29			Jan 30			Jan 29			Jan 30
Dollars in millions		2023			2022			2023			2022			2023			2022			2023			2022
Net Sales		$	11,402		$	8,531		$	5,198		$	3,356		$	3,001		$	2,631		$	3,203		$	2,544
Average Identifiable Assets
With Inventories at LIFO		$	20,929		$	18,009		$	9,074		$	7,430		$	4,744		$	4,190		$	7,111		$	6,389
With Inventories at Standard Cost			22,976			19,614			10,138			8,234			5,288			4,654			7,550			6,726
Operating Profit		$	2,280		$	939		$	1,208		$	296		$	447		$	371		$	625		$	272
Percent of Net Sales			20.0	%		11.0	%		23.2	%		8.8	%		14.9	%		14.1	%		19.5	%		10.7	%
Operating Return on Assets
With Inventories at LIFO			10.9	%		5.2	%		13.3	%		4.0	%		9.4	%		8.9	%		8.8	%		4.3	%
With Inventories at Standard Cost			9.9	%		4.8	%		11.9	%		3.6	%		8.5	%		8.0	%		8.3	%		4.0	%
SVA Cost of Assets		$	(689)		$	(589)		$	(304)		$	(248)		$	(159)		$	(139)		$	(226)		$	(202)
SVA			1,591			350			904			48			288			232			399			70
		Financial
For the Three Months Ended		Services
		Jan 29			Jan 30
Dollars in millions		2023			2022
Net Income Attributable to Deere & Company		$	185		$	231
Average Equity			5,948			5,644
Return on Equity			3.1	%		4.1	%
Operating Profit		$	238		$	296
Cost of Equity			(192)			(180)
SVA			46			116

 

 

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SOURCE Deere & Company

FAQ

What were Deere & Company's Q1 2023 earnings?

Deere & Company reported Q1 2023 net income of $1.959 billion or $6.55 per share.

How much did Deere & Company's sales increase in Q1 2023?

Deere & Company's worldwide net sales increased by 32% to $12.652 billion in Q1 2023.

What is Deere & Company's full-year net income forecast for 2023?

Deere & Company's full-year net income forecast for 2023 is between $8.75 billion and $9.25 billion.

How did the Production & Precision Agriculture segment perform in Q1 2023?

The Production & Precision Agriculture segment saw a 55% increase in sales with a 308% increase in operating profit.

What caused the decline in Financial Services net income for Deere in Q1 2023?

The decline in Financial Services net income was primarily due to less-favorable financing spreads and lower gains on operating-lease dispositions.