Deere Reports Third Quarter Net Income of $2.978 Billion

Rhea-AI Summary

Deere & Company reported a 10% increase in net sales and higher earnings for the third quarter of 2023. Net income was $2.978 billion, or $10.20 per share, compared to $1.884 billion, or $6.16 per share, in the same quarter last year. Worldwide net sales and revenues increased 12% to $15.801 billion for the quarter and rose 24% to $45.839 billion for nine months. The company's full-year net income forecast has been increased to $9.75 billion to $10.00 billion.

Positive

• Net income increased by 58% to $2.978 billion for the third quarter of 2023.
• Worldwide net sales and revenues increased by 12% to $15.801 billion for the quarter.
• The full-year net income forecast has been increased to $9.75 billion to $10.00 billion.

Negative

• None.

• Sound execution contributes to 10% increase in net sales and higher earnings.
• Strong order books, positive industry fundamentals driving strong results.
• Full-year net income forecast increased to $9.75 billion to $10.00 billion.

MOLINE, Ill., Aug. 18, 2023 /PRNewswire/ -- Deere & Company (NYSE: DE) reported net income of $2.978 billion for the third quarter ended July 30, 2023, or $10.20 per share, compared with net income of $1.884 billion, or $6.16 per share, for the quarter ended July 31, 2022. For the first nine months of the year, net income attributable to Deere & Company was $7.797 billion, or $26.35 per share, compared with $4.885 billion, or $15.88 per share, for the same period last year.

Worldwide net sales and revenues increased 12 percent, to $15.801 billion, for the third quarter of 2023 and rose 24 percent, to $45.839 billion, for nine months. Net sales were $14.284 billion for the quarter and $41.765 billion for nine months, compared with $13.000 billion and $33.565 billion last year.

"Reflected by our strong third-quarter results, Deere continues to benefit from favorable market conditions and an operating environment showing further improvement," said John C. May, chairman and chief executive officer. "We are also being helped by stabilizing conditions in the supply chain, the sound execution of our business plans, and an improving ability to meet demand for our products and serve customers."

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2023 is forecast to be in a range of $9.75 billion to $10.00 billion.

"Deere is well on the way to another year of exceptional achievement due in large part to positive fundamentals in the farm and construction sectors and the unwavering commitment of the Deere team, including our dealers and suppliers," May said. "Fundamentals are expected to continue fueling solid demand for our equipment, supported by a strong advance-order position. At the same time, through the company's smart industrial operating model, we are delivering differentiated value to our customers, enabling them to do their jobs more profitably and sustainably."

Deere & Company		Third Quarter								Year to Date
$ in millions, except per share amounts		2023			2022			% Change		2023			2022			% Change
Net sales and revenues		$	15,801		$	14,102		12 %		$	45,839		$	37,041		24 %
Net income		$	2,978		$	1,884		58 %		$	7,797		$	4,885		60 %
Fully diluted EPS		$	10.20		$	6.16				$	26.35		$	15.88

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

Production & Precision Agriculture		Third Quarter
$ in millions		2023			2022			% Change
Net sales		$	6,806		$	6,096		12 %
Operating profit		$	1,782		$	1,293		38 %
Operating margin			26.2 %			21.2 %

Production and precision agriculture sales increased for the quarter as a result of price realization. Operating profit rose due to price realization and improved shipment volumes / sales mix. These items were partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable impact of foreign currency exchange.

Small Agriculture & Turf		Third Quarter
$ in millions		2023			2022			% Change
Net sales		$	3,739		$	3,635		3 %
Operating profit		$	732		$	552		33 %
Operating margin			19.6 %			15.2 %

Small agriculture and turf sales increased for the quarter due to price realization, partially offset by lower shipment volumes. Operating profit improved due to price realization, partially offset by higher production costs, lower shipment volumes, and increased SA&G and R&D expenses.

Construction & Forestry		Third Quarter
$ in millions		2023			2022			% Change
Net sales		$	3,739		$	3,269		14 %
Operating profit		$	716		$	514		39 %
Operating margin			19.1 %			15.7 %

Construction and forestry sales increased for the quarter due to price realization and higher shipment volumes. Operating profit rose primarily due to price realization and improved shipment volumes. These items were partially offset by increased SA&G and R&D expenses, higher production costs, and the unfavorable impact of foreign currency exchange.

Financial Services		Third Quarter
$ in millions		2023			2022			% Change
Net income		$	216		$	209		3 %

Financial services net income for the quarter increased due to income earned on a higher average portfolio, partially offset by less-favorable financing spreads.

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

 

Deere Segment Outlook for Fiscal 2023				Currency		Price
$ in millions		Net Sales		Translation		Realization
Production & Precision Ag		Up ~ 20%		0 %		+15 %
Small Ag & Turf		Up ~ 5%		-1 %		+9 %
Construction & Forestry		Up 15% to 20%		0 %		+11 %
Financial Services		Net Income		$ 630

Financial Services. Fiscal-year 2023 net income attributable to Deere & Company for the financial services operations is forecast to be $630 million. Results are expected to be lower than fiscal year 2022 due to less-favorable financing spreads, a correction of the accounting treatment for financing incentives offered to John Deere dealers (recorded in the second quarter of 2023), a higher provision for credit losses, 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.

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. Some of these risks and uncertainties could affect all lines of the company's operations generally while others could more heavily affect a particular line of business.

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, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:

• compliance with, and 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 war between Russia and Ukraine;
• adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth or possible recession, and regional or global 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 customers' changing expectations and demand for John Deere products and solutions;
• 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, unfavorable weather events, and natural disasters;
• higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for our products and solutions;
• 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, whole goods, and used equipment;
• delays or disruptions in the company's supply chain;
• 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;
• 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, 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). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material.

DEERE & COMPANY THIRD QUARTER 2023 PRESS RELEASE (In millions of dollars) Unaudited
		Three Months Ended								Nine Months Ended
		July 30			July 31			%		July 30			July 31			%
		2023			2022			Change		2023			2022			Change
Net sales and revenues:
Production & precision ag net sales		$	6,806		$	6,096		+12		$	19,826		$	14,568		+36
Small ag & turf net sales			3,739			3,635		+3			10,886			9,836		+11
Construction & forestry net sales			3,739			3,269		+14			11,053			9,161		+21
Financial services revenues			1,228			903		+36			3,375			2,637		+28
Other revenues			289			199		+45			699			839		-17
Total net sales and revenues		$	15,801		$	14,102		+12		$	45,839		$	37,041		+24
Operating profit: *
Production & precision ag		$	1,782		$	1,293		+38		$	5,160		$	2,646		+95
Small ag & turf			732			552		+33			2,028			1,443		+41
Construction & forestry			716			514		+39			2,179			1,599		+36
Financial services			286			287					565			864		-35
Total operating profit			3,516			2,646		+33			9,932			6,552		+52
Reconciling items **			98			(108)					29			(303)
Income taxes			(636)			(654)		-3			(2,164)			(1,364)		+59
Net income attributable to Deere & Company		$	2,978		$	1,884		+58		$	7,797		$	4,885		+60

*	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 interest income and expenses, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.

 

DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars and shares except per share amounts) Unaudited
		Three Months Ended						Nine Months Ended
		2023			2022			2023			2022
Net Sales and Revenues
Net sales		$	14,284		$	13,000		$	41,765		$	33,565
Finance and interest income			1,253			846			3,326			2,441
Other income			264			256			748			1,035
Total			15,801			14,102			45,839			37,041
Costs and Expenses
Cost of sales			9,624			9,511			28,288			25,124
Research and development expenses			528			481			1,571			1,336
Selling, administrative and general expenses			1,110			959			3,392			2,672
Interest expense			623			296			1,671			713
Other operating expenses			310			316			971			954
Total			12,195			11,563			35,893			30,799
Income of Consolidated Group before Income Taxes			3,606			2,539			9,946			6,242
Provision for income taxes			636			654			2,164			1,364
Income of Consolidated Group			2,970			1,885			7,782			4,878
Equity in income of unconsolidated affiliates			2						5			8
Net Income			2,972			1,885			7,787			4,886
Less: Net income (loss) attributable to noncontrolling interests			(6)			1			(10)			1
Net Income Attributable to Deere & Company		$	2,978		$	1,884		$	7,797		$	4,885
Per Share Data
Basic		$	10.24		$	6.20		$	26.48		$	15.97
Diluted			10.20			6.16			26.35			15.88
Dividends declared			1.25			1.13			3.70			3.23
Dividends paid			1.25			1.05			3.58			3.15
Average Shares Outstanding
Basic			290.8			304.1			294.4			305.8
Diluted			292.1			305.7			295.9			307.7

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited
		July 30			October 30			July 31
		2023			2022			2022
Assets
Cash and cash equivalents		$	6,576		$	4,774		$	4,359
Marketable securities			841			734			719
Trade accounts and notes receivable - net			9,297			6,410			6,696
Financing receivables - net			41,302			36,634			35,056
Financing receivables securitized - net			7,001			5,936			5,141
Other receivables			3,118			2,492			1,999
Equipment on operating leases - net			6,709			6,623			6,554
Inventories			9,350			8,495			9,121
Property and equipment - net			6,418			6,056			5,666
Goodwill			3,994			3,687			3,754
Other intangible assets - net			1,199			1,218			1,281
Retirement benefits			3,573			3,730			3,125
Deferred income taxes			1,360			824			1,110
Other assets			2,659			2,417			2,236
Total Assets		$	103,397		$	90,030		$	86,817
Liabilities and Stockholders' Equity
Liabilities
Short-term borrowings		$	17,143		$	12,592		$	14,176
Short-term securitization borrowings			6,608			5,711			4,920
Accounts payable and accrued expenses			15,340			14,822			12,986
Deferred income taxes			506			495			561
Long-term borrowings			38,112			33,596			32,132
Retirement benefits and other liabilities			2,536			2,457			2,911
Total liabilities			80,245			69,673			67,686
Redeemable noncontrolling interest			101			92			95
Stockholders' Equity
Total Deere & Company stockholders' equity			23,048			20,262			19,033
Noncontrolling interests			3			3			3
Total stockholders' equity			23,051			20,265			19,036
Total Liabilities and Stockholders' Equity		$	103,397		$	90,030		$	86,817

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars) Unaudited
		2023			2022
Cash Flows from Operating Activities
Net income		$	7,787		$	4,886
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses			(64)			62
Provision for depreciation and amortization			1,527			1,443
Impairments and other adjustments			173			81
Share-based compensation expense			112			64
Gain on remeasurement of previously held equity investment						(326)
Credit for deferred income taxes			(429)			(6)
Changes in assets and liabilities:
Receivables related to sales			(5,059)			(2,357)
Inventories			(663)			(2,526)
Accounts payable and accrued expenses			47			(15)
Accrued income taxes payable/receivable			(595)			82
Retirement benefits			(116)			(1,014)
Other			176			44
Net cash provided by operating activities			2,896			418
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)			17,592			15,774
Proceeds from sales of equipment on operating leases			1,445			1,501
Cost of receivables acquired (excluding receivables related to sales)			(20,714)			(18,578)
Acquisitions of businesses, net of cash acquired			(82)			(488)
Purchases of property and equipment			(887)			(596)
Cost of equipment on operating leases acquired			(1,968)			(1,717)
Collateral on derivatives - net			240			(193)
Other			(189)			(133)
Net cash used for investing activities			(4,563)			(4,430)
Cash Flows from Financing Activities
Increase in total short-term borrowings			5,040			4,267
Proceeds from long-term borrowings			9,972			6,281
Payments of long-term borrowings			(5,862)			(6,578)
Repurchases of common stock			(4,663)			(2,477)
Dividends paid			(1,065)			(971)
Other			(43)			(7)
Net cash provided by financing activities			3,379			515
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			125			(143)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			1,837			(3,640)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			4,941			8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	6,778		$	4,485

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY Condensed Notes to Interim Consolidated Financial Statements  (In millions of dollars) Unaudited
(1)  Special Items
2023
In the third quarter of 2023, a favorable tax ruling in Brazil allowed the company to record a $243 million reduction in the provision for income taxes and $47 million of interest income.
In the second quarter of 2023, the company corrected the accounting treatment for financing incentives offered to John Deere dealers, which impacted the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. Prior period results for Deere & Company were not restated, as the adjustment is considered immaterial to the company's financial statements.
2022
In the second quarter of 2022, the company acquired full ownership of three former Deere-Hitachi joint venture factories. The remeasurement of the previously held equity investment resulted in a non-cash gain of $326 million (pretax and after-tax).
In the second quarter of 2022, the company suspended shipments of machines and service parts to Russia. As a result, the company impaired its long-lived assets, increased reserves of certain financial assets, introduced an employee voluntary-separation program, and recorded an accrual for various contractual uncertainties.
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.
The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and nine months ended July 30, 2023 and July 31, 2022:
		Three Months															Nine Months
		PPA			SAT			CF			FS			Total			PPA			SAT			CF			FS			Total
2023 Expense:
Financing incentive – SA&G expense																										$	173		$	173
2022 Expense (benefit):
Gain on remeasurement of equity investment – Other income																							$	(326)						(326)
Total Russia/Ukraine events expense (benefit)		$	(1)					$	1		$	7		$	7		$	45		$	1			48			33			127
UAW ratification bonus – Cost of sales																		53			9			28						90
Total expense (benefit)			(1)						1			7			7			98			10			(250)			33			(109)
Period over period change		$	1					$	(1)		$	(7)		$	(7)		$	(98)		$	(10)		$	250		$	140		$	282

(2)

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 3 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 (3) SUPPLEMENTAL CONSOLIDATING DATA STATEMENTS OF INCOME For the Three Months Ended July 30, 2023 and July 31, 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		$	14,284		$	13,000														$	14,284		$	13,000
Finance and interest income			210			60		$	1,335		$	905		$	(292)		$	(119)			1,253			846	1
Other income			222			228			110			79			(68)			(51)			264			256	2, 3
Total			14,716			13,288			1,445			984			(360)			(170)			15,801			14,102
Costs and Expenses
Cost of sales			9,630			9,512									(6)			(1)			9,624			9,511	4
Research and development expenses			528			481															528			481
Selling, administrative and general expenses			913			805			199			156			(2)			(2)			1,110			959	4
Interest expense			94			109			622			223			(93)			(36)			623			296	5
Interest compensation to Financial Services			199			83									(199)			(83)							5
Other operating expenses			34			47			336			317			(60)			(48)			310			316	6, 7
Total			11,398			11,037			1,157			696			(360)			(170)			12,195			11,563
Income before Income Taxes			3,318			2,251			288			288									3,606			2,539
Provision for income taxes			564			574			72			80									636			654
Income after Income Taxes			2,754			1,677			216			208									2,970			1,885
Equity in income (loss) of unconsolidated affiliates			2			(1)						1									2
Net Income			2,756			1,676			216			209									2,972			1,885
Less: Net income (loss) attributable to noncontrolling interests			(6)			1															(6)			1
Net Income Attributable to Deere & Company		$	2,762		$	1,675		$	216		$	209								$	2,978		$	1,884

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) STATEMENTS OF INCOME For the Nine Months Ended July 30, 2023 and July 31, 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		$	41,765		$	33,565														$	41,765		$	33,565
Finance and interest income			444			131		$	3,609		$	2,580		$	(727)		$	(270)			3,326			2,441	1
Other income			639			1,028			378			271			(269)			(264)			748			1,035	2, 3
Total			42,848			34,724			3,987			2,851			(996)			(534)			45,839			37,041
Costs and Expenses
Cost of sales			28,306			25,126									(18)			(2)			28,288			25,124	4
Research and development expenses			1,571			1,336															1,571			1,336
Selling, administrative and general expenses			2,630			2,215			769			463			(7)			(6)			3,392			2,672	4
Interest expense			298			297			1,604			493			(231)			(77)			1,671			713	5
Interest compensation to Financial Services			496			189									(496)			(189)							5
Other operating expenses			172			186			1,043			1,028			(244)			(260)			971			954	6, 7
Total			33,473			29,349			3,416			1,984			(996)			(534)			35,893			30,799
Income before Income Taxes			9,375			5,375			571			867									9,946			6,242
Provision for income taxes			2,020			1,142			144			222									2,164			1,364
Income after Income Taxes			7,355			4,233			427			645									7,782			4,878
Equity in income of unconsolidated affiliates			3			4			2			4									5			8
Net Income			7,358			4,237			429			649									7,787			4,886
Less: Net income (loss) attributable to noncontrolling interests			(10)			1															(10)			1
Net Income Attributable to Deere & Company		$	7,368		$	4,236		$	429		$	649								$	7,797		$	4,885

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
		Jul 30			Oct 30			Jul 31			Jul 30			Oct 30			Jul 31			Jul 30			Oct 30			Jul 31			Jul 30			Oct 30			Jul 31
		2023			2022			2022			2023			2022			2022			2023			2022			2022			2023			2022			2022
Assets
Cash and cash equivalents		$	4,858		$	3,767		$	3,540		$	1,718		$	1,007		$	819											$	6,576		$	4,774		$	4,359
Marketable securities			3			61			2			838			673			717												841			734			719
Receivables from Financial Services			5,312			6,569			5,055											$	(5,312)		$	(6,569)		$	(5,055)										8
Trade accounts and notes receivable - net			1,589			1,273			1,342			9,991			6,434			6,738			(2,283)			(1,297)			(1,384)			9,297			6,410			6,696	9
Financing receivables - net			60			47			45			41,242			36,587			35,011												41,302			36,634			35,056
Financing receivables securitized - net									2			7,001			5,936			5,139												7,001			5,936			5,141
Other receivables			2,599			1,670			1,676			599			832			371			(80)			(10)			(48)			3,118			2,492			1,999	9
Equipment on operating leases - net												6,709			6,623			6,554												6,709			6,623			6,554
Inventories			9,350			8,495			9,121																					9,350			8,495			9,121
Property and equipment - net			6,385			6,021			5,630			33			35			36												6,418			6,056			5,666
Goodwill			3,994			3,687			3,754																					3,994			3,687			3,754
Other intangible assets - net			1,199			1,218			1,281																					1,199			1,218			1,281
Retirement benefits			3,503			3,666			3,062			71			66			65			(1)			(2)			(2)			3,573			3,730			3,125	10
Deferred income taxes			1,393			940			1,248			65			45			48			(98)			(161)			(186)			1,360			824			1,110	11
Other assets			2,083			1,794			1,727			583			626			510			(7)			(3)			(1)			2,659			2,417			2,236	9
Total Assets		$	42,328		$	39,208		$	37,485		$	68,850		$	58,864		$	56,008		$	(7,781)		$	(8,042)		$	(6,676)		$	103,397		$	90,030		$	86,817
Liabilities and Stockholders' Equity
Liabilities
Short-term borrowings		$	1,773		$	1,040		$	471		$	15,370		$	11,552		$	13,705											$	17,143		$	12,592		$	14,176
Short-term securitization borrowings									2			6,608			5,711			4,918												6,608			5,711			4,920
Payables to Equipment Operations												5,312			6,569			5,055		$	(5,312)		$	(6,569)		$	(5,055)										8
Accounts payable and accrued expenses			14,403			12,962			11,925			3,307			3,170			2,494			(2,370)			(1,310)			(1,433)			15,340			14,822			12,986	9
Deferred income taxes			420			380			436			184			276			311			(98)			(161)			(186)			506			495			561	11
Long-term borrowings			7,299			7,917			8,481			30,813			25,679			23,651												38,112			33,596			32,132
Retirement benefits and other liabilities			2,423			2,351			2,799			114			108			114			(1)			(2)			(2)			2,536			2,457			2,911	10
Total liabilities			26,318			24,650			24,114			61,708			53,065			50,248			(7,781)			(8,042)			(6,676)			80,245			69,673			67,686
Redeemable noncontrolling interest			101			92			95																					101			92			95
Stockholders' Equity
Total Deere & Company stockholders' equity			23,048			20,262			19,033			7,142			5,799			5,760			(7,142)			(5,799)			(5,760)			23,048			20,262			19,033	12
Noncontrolling interests			3			3			3																					3			3			3
Financial Services equity			(7,142)			(5,799)			(5,760)												7,142			5,799			5,760										12
Adjusted total stockholders' equity			15,909			14,466			13,276			7,142			5,799			5,760												23,051			20,265			19,036
Total Liabilities and Stockholders' Equity		$	42,328		$	39,208		$	37,485		$	68,850		$	58,864		$	56,008		$	(7,781)		$	(8,042)		$	(6,676)		$	103,397		$	90,030		$	86,817

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 Nine Months Ended July 30, 2023 and July 31, 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		$	7,358		$	4,237		$	429		$	649								$	7,787		$	4,886
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses			3						(67)			62									(64)			62
Provision for depreciation and amortization			872			806			757			790		$	(102)		$	(153)			1,527			1,443	13
Impairments and other adjustments						81			173												173			81
Share-based compensation expense															112			64			112			64	14
Gain on remeasurement of previously held equity investment						(326)																		(326)
Distributed earnings of Financial Services			31			368									(31)			(368)							15
Provision (credit) for deferred income taxes			(322)			44			(107)			(50)									(429)			(6)
Changes in assets and liabilities:
Receivables related to sales			(293)			(215)									(4,766)			(2,142)			(5,059)			(2,357)	16, 18, 19
Inventories			(534)			(2,415)									(129)			(111)			(663)			(2,526)	17
Accounts payable and accrued expenses			730			491			303			36			(986)			(542)			47			(15)	18
Accrued income taxes payable/receivable			(619)			52			24			30									(595)			82
Retirement benefits			(115)			(1,020)			(1)			6									(116)			(1,014)
Other			247			103			(15)			(108)			(56)			49			176			44	13, 14, 17
Net cash provided by operating activities			7,358			2,206			1,496			1,415			(5,958)			(3,203)			2,896			418
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)									18,440			16,927			(848)			(1,153)			17,592			15,774	16
Proceeds from sales of equipment on operating leases									1,445			1,501									1,445			1,501
Cost of receivables acquired (excluding receivables related to sales)									(21,043)			(19,069)			329			491			(20,714)			(18,578)	16
Acquisitions of businesses, net of cash acquired			(82)			(488)															(82)			(488)
Purchases of property and equipment			(885)			(595)			(2)			(1)									(887)			(596)
Cost of equipment on operating leases acquired									(2,143)			(1,868)			175			151			(1,968)			(1,717)	17
Increase in investment in Financial Services			(811)												811										20
Increase in trade and wholesale receivables									(6,270)			(3,318)			6,270			3,318							16
Collateral on derivatives – net						5			240			(198)									240			(193)
Other			(79)			(87)			(111)			(74)			1			28			(189)			(133)	19
Net cash used for investing activities			(1,857)			(1,165)			(9,444)			(6,100)			6,738			2,835			(4,563)			(4,430)
Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			(152)			58			5,192			4,209									5,040			4,267
Change in intercompany receivables/payables			1,476			70			(1,476)			(70)
Proceeds from long-term borrowings			60			137			9,912			6,144									9,972			6,281
Payments of long-term borrowings			(116)			(1,372)			(5,746)			(5,206)									(5,862)			(6,578)
Repurchases of common stock			(4,663)			(2,477)															(4,663)			(2,477)
Capital Investment from Equipment Operations									811						(811)										20
Dividends paid			(1,065)			(971)			(31)			(368)			31			368			(1,065)			(971)	15
Other			4			16			(47)			(23)									(43)			(7)
Net cash provided by (used for) financing activities			(4,456)			(4,539)			8,615			4,686			(780)			368			3,379			515
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			108			(148)			17			5									125			(143)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			1,153			(3,646)			684			6									1,837			(3,640)
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		$	4,934		$	3,554		$	1,844		$	931								$	6,778		$	4,485

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.
20	Elimination of investment from Equipment Operations to Financial Services.

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 Nine Months Ended		Operations						Precision Ag						& Turf						& Forestry
		Jul 30			Jul 31			Jul 30			Jul 31			Jul 30			Jul 31			Jul 30			Jul 31
Dollars in Millions		2023			2022			2023			2022			2023			2022			2023			2022
Net Sales		$	41,765		$	33,565		$	19,826		$	14,568		$	10,886		$	9,836		$	11,053		$	9,161
Average Identifiable Assets
With Inventories as Reported		$	21,304		$	19,283		$	9,361		$	8,223		$	4,687		$	4,330		$	7,256		$	6,730
With Inventories at Standard Cost			23,369			20,872			10,438			9,017			5,240			4,788			7,691			7,067
Operating Profit		$	9,367		$	5,688		$	5,160		$	2,646		$	2,028		$	1,443		$	2,179		$	1,599
Percent of Net Sales			22.4	%		16.9	%		26.0	%		18.2	%		18.6	%		14.7	%		19.7	%		17.5	%
Operating Return on Assets
With Inventories as Reported			44.0	%		29.5	%		55.1	%		32.2	%		43.3	%		33.3	%		30.0	%		23.8	%
With Inventories at Standard Cost			40.1	%		27.3	%		49.4	%		29.3	%		38.7	%		30.1	%		28.3	%		22.6	%
SVA Cost of Assets		$	(2,103)		$	(1,878)		$	(939)		$	(811)		$	(471)		$	(431)		$	(693)		$	(636)
SVA			7,264			3,810			4,221			1,835			1,557			1,012			1,486			963
		Financial
For the Nine Months Ended		Services
		Jul 30			Jul 31
Dollars in Millions		2023			2022
Net Income Attributable to Deere & Company		$	429		$	649
Average Equity			6,440			5,706
Return on Equity			6.7	%		11.4	%
Operating Profit		$	565		$	864
Cost of Equity			(646)			(576)
SVA			(81)			288

 

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SOURCE Deere & Company

FAQ

What was Deere & Company's net income for the third quarter of 2023?

Deere & Company's net income for the third quarter of 2023 was $2.978 billion.

What was the increase in net sales for Deere & Company in the third quarter of 2023?

Net sales increased by 12% to $15.801 billion for the third quarter of 2023.

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

Deere & Company's full-year net income forecast is $9.75 billion to $10.00 billion.