Deere & Co Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Tim Thein - Raymond James - Analyst : Maybe just some help in terms of Large Ag production cadence given the pushout that you called out for the first quarter. How do we think about that normal seasonal ramp-up that you typically see in the second quarter and third quarter? Is that -- can you maybe just help us in terms of, is that going to be more weighted to the third quarter than usual? And just as we think about segmenting the remaining quarters, this would be a PPA question. Thank you.

Question: Stephen Volkmann - Jefferies - Analyst : I'm curious. I think one of you, Josh, has mentioned that the early order program was below your industry forecast. And obviously, we saw some pretty weak numbers from AEM yesterday. And I'm just curious how you're thinking about having confidence in the bottoming process for the end market activity. Because obviously, that'll drive what you need to do on the inventory side.

Question: Jerry Revich - Goldman Sachs - Analyst : I'm wondering if you could just expand on the comments that you shared on the Precision Ag update. You gave us the progress in Brazil. Can you just talk about globally expectations for Ag Essentials and [Sins Prayer Kits] for this year, what progress was like in the quarter, and also, if you wouldn't mind, just updating us on the engaged and highly engaged acres, if you have that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 3:00PM, DE.N - Q1 2025 Deere & Co Earnings Call

Question: Rob Wertheimer - Melius Research - Analyst : My question is going to be on farmer profitability and demand. And I know that parts of this may be hard to answer, but I'm just curious as to whatever insight you can offer. Obviously, your early order programs, I guess, are a combination of your end farmer professional, big professional farmer demand, and dealers trying to balance out trade-ins and all that stuff. I suspect your biggest farmers probably still want to buy more than you're making. I don't know if you have any thoughts on how profitable those biggest first buyer customers are right now at current corn and soy and cotton prices. And I don't know if you have any thoughts on where your used profit -- your used buyers really need corn to make it easy to be before they're profitable and able to clear out some of the inventory.

Question: Jamie Cook - Truist Securities - Analyst : I guess one question. Just wanted to understand better your view on Deere's performance, margin performance, given where we are in the cycle relative to the 20% mid-cycle target. And I guess, Jepsen, just your confidence level -- obviously, I think everyone's confident 2025 is the trough -- your view on climbing out of this in 2026. And if you didn't think we were climbing out of this in 2026, do you see the need for incremental restructuring?

Question: Stephen Fisher - UBS Equities - Analyst : Josh Jepsen, I think you mentioned feeling good about the amount of reductions you've had in the used inventory during the quarter. Is there any way to help us quantify just how much used inventory is out there, how much excess you have relative to the target levels, and how long you think it would take to manage down to what the target levels would be?

Question: David Raso - Evercore ISI - Analyst : I just want to make sure I understand North American new inventory commentary. I mean, essentially, you said by calendar year-end, not your fiscal, the Large Ag field inventory was down 25% year-over-year. And then you're saying you're targeting to finish the year -- I assume that was a fiscal year comment, that the US inventory new will be unchanged year-over-year. So does that mean do we not plan to reduce any more new inventory from this point forward for the year? Or are we done reducing in North America for new?

Question: David Raso - Evercore ISI - Analyst : I was just trying to --

Question: David Raso - Evercore ISI - Analyst : Well, I just wanted to make sure that the row-crop tractor data in the first quarter -- and given the seasonality, I'm comparing this versus traditional first quarter, so I understand the seasonality to build. The row crop inventory does seem a bit high relative to history for where we are in the year. I think four-wheel drives combines, I appreciate you probably can produce at retail the rest of the year. But the row crops, is there no further reduction needed there? I just want to make sure I understand the math of the 34% on tractors. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 3:00PM, DE.N - Q1 2025 Deere & Co Earnings Call

Question: Kristen Owen - Oppenheimer & Co., Inc. - Analyst : Just given some of the positive comments that you had on Brazil, I'm wondering if you can give us a sense of what your expectations are for any sort of improved volume recovery or even price recovery? Just a little bit of a more granular look at what's happening down there.

Question: Angel Castillo - Morgan Stanley - Analyst : Just wanted to maybe revisit price question, but a little bit more broadly for PPA. You reiterated the 1% realization for that segment for this year. I was just wondering, as you think about the incentives or maybe what needs to be done to support the continued reduction of used inventories, as well as just any other kind of ongoing incentives there, can you just talk about the level of confidence that in that plus 1%? And then similarly on the construction side, you lowered that to flat this quarter or, I guess, for the full year. Can you talk about there as well, the level of confidence that actually being flat now versus perhaps some of the competitive dynamics you're seeing to kind of drive and move volume in that segment?

Question: Mircea Dobre - Baird - Analyst : Okay. All right. I'm wondering if you can maybe give us a little bit of handholding on margins. We're starting pretty slow, obviously, Q1 across all segments. How do you sort of see getting to the full year guidance? And again, this is a question that applies across the board in all three segments.

Question: Tami Zakaria - JPMorgan - Analyst : So the farmer ag package from December, how long would it take for farmers to receive bulk of the money, such that it can provide some tailwind to equipment demand? If you're able to share any past examples or anecdotes, that would be helpful. What I'm basically trying to understand is whether this could accelerate demand in the back half of 2025? Or more like early 2026 of your fiscal?