Deere & Co Q3 2025 Earnings Call Transcript

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

Question: Tami Zakaria - JPMorgan Chase & Co - Analyst : My first question is on your comment that you want to produce to retail demand next year. Just so we understand, in a scenario where, let's say, retail sales are up 5% or up 10%, are you expecting to be up -- your production to be up similarly? Or could it be up more because you're underproducing this year? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. AUGUST 14, 2025 / 2:00PM, DE.N - Q3 2025 Deere & Co Earnings Call

Question: Angel Castillo Malpica - Morgan Stanley - Analyst : I just wanted to expand a little bit more on the early order programs. Completely understand your comments on why we shouldn't extrapolate Sprayers, but if you could maybe talk a little bit more about just what you're seeing in planters, which are maybe a little bit further along and maybe just even very early days on combines and also just the commentary you made on quoting activity. Just to the extent that you have the ability to kind of see how those are trending and how much better that might be versus Sprayers, that would be helpful.

Question: Timothy Thein - Raymond James & Associates, Inc. - Analyst : The question is on the cash flow guidance, call it a $1 billion range with just a quarter left. I'm curious how much of that reflects maybe potential difference in outcomes with respect to channel inventory. I guess you are saying that you're kind of done under producing, but obviously, the fourth quarter can have -- is always have some variability with production. How you're thinking about channel inventory an initial look into '26? And again, there's a lot there. But maybe just help us with why with the quarter left, there's such a wide range in operating cash flow guidance? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. AUGUST 14, 2025 / 2:00PM, DE.N - Q3 2025 Deere & Co Earnings Call

Question: Kyle Menges - Citi Infrastructure Investments LLC - Analyst : I was hoping if you could just comment a little bit more on CMS. It seems like the order book is improving nicely, yet a lot of pricing competition is still in the market. Just curious how you're thinking about pricing, if you think that your price realization could improve a bit and maybe turn positive next year. And I guess just what pricing is in that order book.

Question: Paddy Bogart - Melius Research LLC - Analyst : Yes. So there's been a lot of talk about AI agents performing more complex tasks and assistance semi-autonomously. And I was wondering if you guys see the opportunity for Deere as farmers might be able to utilize the agents to make using the advanced technologies easier in terms of recommendations, prescriptions and so on? And what might be a time line for Deere's investing in that? Cory Reed - Deere & Co - President - Worldwide Agriculture & Turf Division, Production & Precision Ag, Sales & Marketing Regions of the Americas and Australia Yes, Paddy, this is Cory. I think, look, first of all, you're seeing a lot of AI in the form of machine learning that's showing up in our current products. So if you think about See & Spray, if you think about FurrowVision, a number of the products that we have that are in the market. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. AUGUST 14, 2025 / 2:00PM, DE.N - Q3 2025 Deere & Co Earnings Call I think you point out a tremendous opportunity for the next generation of efficiency in agriculture will come from the analysis of the large data sets. If you look we're sitting now at the 400 million -- 480 million acre mark, multiple passes across that. Farmers who want to be able to use that data compare to others like them to put themselves in a position to start using artificial intelligence and tools like it to be able to inform their decisions going forward, we'll have access to those tools. And it's something that we're investing in today to be able to do.

Question: Kristen Owen - Oppenheimer & Co Inc - Analyst : I wanted to ask about your updated tariff assumptions. I think you said $300 million year-to-date realized $600 million now for the full year. Just can you help us bucket that in terms of those direct tariffs versus maybe some of the steel and aluminum impact? Any non-regrettable actions you've taken to mitigate that? And how that is allocated among the business units given the implied 4Q decrementals?

Question: Chad Dillard - Sanford C Bernstein & Co LLC - Analyst : So my question is about the incremental pool funds that will be deployed to address the used equipment situation. So if you guys are discounting used and raising your prices, I guess, like what does that mean ultimately for the farmer and the trade cycle? Cory Reed - Deere & Co - President - Worldwide Agriculture & Turf Division, Production & Precision Ag, Sales & Marketing Regions of the Americas and Australia Yes. I think the pool funds give the dealers flexibility to be able to put the customers into machine, be able to make the trade and be able to help offset some of what they're seeing in terms of higher interest cost. So we've seen adjustments in the market relative to used pricing. We start see those prices now come back. So you look at the spreads between what you've seen in retail versus auction price, they've stabilized. We've seen increased quoting activity. With that quoting activity now what pool funds do is give our customers and our dealers the opportunity to agree on a rate that's attractive to them going forward. So we mentioned the tremendous work that's been done to reduce used inventories. A lot of that's come from the use of that flexibility. The good news is, we've got a huge crop in the field right now. We've got used inventory, and we're seeing a lot of pricing activity. We made the decision to put those pool funds in, so we can give our dealers the tools to be able to move as much of that used as they possibly can, and be able to put ourselves in a position. As our customers close out the in the North American market, they're seeing yields higher than expected. They're seeing good tax policy and they're trying to make a decision right now on, can I come in, update a little bit, get my stuff through this year. And by the end of the year, we think we're going to start seeing some tax-based buying decisions. The longer term, on the commodity side will be based on how we see these things like tariffs change and what we see in terms of trade deals. We had eight of nine countries right now. Most of those are including commodity programs inside of them. So we see those kick in, together with RVOs. We think we're going to see some really good demand in the future. It's just a question of how it turns. So we don't know when that detail will be ready for everyone to see the response in demand, but we think we're positioned as well as we can be to respond when it does.

Question: Jamie Cook - Truist Securities - Analyst : I guess just drilling down on the Big Beautiful Bill, Jepsen, just wondering what your thoughts are in terms of implications for tax, for cash flow and just any early indications you're hearing from customers more on the bonus depreciation side.