• Sound execution contributes to net sales gain of 34% and higher earnings.
  • Results benefit from healthy demand for farm and construction equipment and improved operating environment.
  • Full-year net income forecast increased to $9.25 billion to $9.50 billion with cash flow from equipment operations expected to be $10.00 billion to $10.50 billion.

MOLINE, Ill., May 19, 2023 /CNW/ -- Deere & Company (NYSE: DE) reported net income of $2.860 billion for the second quarter ended April 30, 2023, or $9.65 per share, compared with net income of $2.098 billion, or $6.81 per share, for the quarter ended May 1, 2022. For the first six months of the year, net income attributable to Deere & Company was $4.819 billion, or $16.18 per share, compared with $3.001 billion, or $9.72 per share, for the same period last year.

Worldwide net sales and revenues increased 30 percent, to $17.387 billion, for the second quarter of 2023 and rose 31 percent, to $30.038 billion, for six months. Net sales were $16.079 billion for the quarter and $27.481 billion for six months, compared with $12.034 billion and $20.565 billion last year.

"As shown by the company's outstanding second-quarter results, Deere continues to benefit from favorable market conditions and an improving operating environment," said John C. May, chairman and chief executive officer. "We also are being helped by the sound execution of our business plans by our employees, dealers, and suppliers. They are doing an exceptional job meeting demand for our products and serving customers. Though supply-chain constraints continue to present a challenge, we are seeing further improvement."

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2023 is forecast to be in a range of $9.25 billion to $9.50 billion.

"Based on Deere's results to date, it's clear we are well on our way to another year of exceptional achievement," May said. "This is due in no small part to the success of our smart industrial operating model and our ability to provide value to our customers by helping them be more profitable, productive, and sustainable."

Deere & Company


Second Quarter


Year to Date

$ in millions, except per share amounts


2023


2022


% Change


2023


2022


% Change

Net sales and revenues


$

17,387


$

13,370


30 %


$

30,038


$

22,939


31 %

Net income


$

2,860


$

2,098


36 %


$

4,819


$

3,001


61 %

Fully diluted EPS


$

9.65


$

6.81




$

16.18


$

9.72



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

Production & Precision Agriculture


Second Quarter

$ in millions


2023


2022


% Change

Net sales


$

7,822


$

5,117


53 %

Operating profit


$

2,170


$

1,057


105 %

Operating margin



27.7 %



20.7 %



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 volumes, partially offset by increased SA&G and R&D expenses, higher production costs, and the unfavorable effects of foreign currency exchange.

 

Small Agriculture & Turf


Second Quarter


$ in millions


2023


2022


% Change


Net sales


$

4,145


$

3,570


16 %


Operating profit


$

849


$

520


63 %


Operating margin



20.5 %



14.6 %




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 / mix, partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable effects of foreign currency exchange.

 

Construction & Forestry


Second Quarter


$ in millions


2023


2022


% Change


Net sales


$

4,112


$

3,347


23 %


Operating profit


$

838


$

814


3 %


Operating margin



20.4 %



24.3 %




Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment volumes. Operating profit improved due to price realization and improved shipment volumes / mix, partially offset by higher production costs and increased SA&G and R&D expenses. Prior period results benefited from the non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture.

 

Financial Services


Second Quarter


$ in millions


2023


2022


% Change


Net income


$

28


$

208


-87 %


Financial services net income for the quarter decreased due to less-favorable financing spreads and a higher provision for credit losses, partially offset by income earned on a higher average portfolio. Additionally impacting the quarter's results was a $135 million after-tax correction of the accounting treatment for financing incentives offered to John Deere dealers, which affected the timing of expense recognition. The accounting correction is unrelated to current market conditions or the credit quality of the financial services portfolio, which remains strong. The allowance for credit losses, excluding the portfolio in Russia, was .40 percent of financing receivables as of April 30, 2023, compared with .42 percent in the prior period.

Industry Outlook for Fiscal 2023








Agriculture & Turf








U.S. & Canada:








Large Ag






Up ~ 10%


Small Ag & Turf






Down ~ 5%


Europe






Flat to Up 5%


South America (Tractors & Combines)






Flat


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 %


+15 %


Small Ag & Turf


Up ~ 5%


-1 %


+9 %


Construction & Forestry


Up ~ 15%


0 %


+10 %










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, the correction of the accounting treatment for financing incentives offered to John Deere dealers, unfavorable derivative market valuation adjustments, 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:

  • 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;
  • 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;
  • 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;
  • changes in the company's credit ratings, and failure to comply with financial covenants in credit agreements could impact access to funding;
  • stress in the banking sector may have adverse impacts on vendors or customers as well as the company's ability to access cash deposits;
  • availability and price of raw materials, components, and whole goods;
  • 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;
  • 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, and availability of transport for crops; and
  • housing starts and supply, real estate and housing prices, levels of public and nonresidential 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

SECOND QUARTER 2023 PRESS RELEASE

(In millions of dollars) Unaudited



Three Months Ended


Six Months Ended



April 30


May 1


%


April 30


May 1


%



2023


2022


Change


2023


2022


Change

Net sales and revenues:

















Production & precision ag net sales


$

7,822


$

5,117


+53


$

13,021


$

8,473


+54

Small ag & turf net sales



4,145



3,570


+16



7,146



6,201


+15

Construction & forestry net sales



4,112



3,347


+23



7,314



5,891


+24

Financial services revenues



1,107



864


+28



2,147



1,734


+24

Other revenues



201



472


-57



410



640


-36

Total net sales and revenues


$

17,387


$

13,370


+30


$

30,038


$

22,939


+31


















Operating profit: *

















Production & precision ag


$

2,170


$

1,057


+105


$

3,378


$

1,353


+150

Small ag & turf



849



520


+63



1,296



891


+45

Construction & forestry



838



814


+3



1,463



1,085


+35

Financial services



41



279


-85



279



577


-52

Total operating profit



3,898



2,670


+46



6,416



3,906


+64

Reconciling items **



(47)



(111)


-58



(69)



(195)


-65

Income taxes



(991)



(461)


+115



(1,528)



(710)


+115

Net income attributable to Deere & Company


$

2,860


$

2,098


+36


$

4,819


$

3,001


+61



*

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, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.

 

DEERE & COMPANY

STATEMENTS OF CONSOLIDATED INCOME

For the Three and Six Months Ended April 30, 2023 and May 1, 2022

(In millions of dollars and shares except per share amounts) Unaudited



Three Months Ended


Six Months Ended



2023


2022


2023


2022

Net Sales and Revenues













Net sales


$

16,079


$

12,034


$

27,481


$

20,565

Finance and interest income



1,079



796



2,073



1,595

Other income



229



540



484



779

Total



17,387



13,370



30,038



22,939














Costs and Expenses













Cost of sales



10,730



8,918



18,663



15,613

Research and development expenses



547



453



1,043



855

Selling, administrative and general expenses



1,330



932



2,283



1,713

Interest expense



569



187



1,049



417

Other operating expenses



363



328



660



638

Total



13,539



10,818



23,698



19,236














Income of Consolidated Group before Income Taxes



3,848



2,552



6,340



3,703

Provision for income taxes



991



461



1,528



710














Income of Consolidated Group



2,857



2,091



4,812



2,993

Equity in income of unconsolidated affiliates



2



6



3



8














Net Income



2,859



2,097



4,815



3,001

Less: Net loss attributable to noncontrolling interests



(1)



(1)



(4)




Net Income Attributable to Deere & Company


$

2,860


$

2,098


$

4,819


$

3,001














Per Share Data













Basic


$

9.69


$

6.85


$

16.26


$

9.78

Diluted



9.65



6.81



16.18



9.72

Dividends declared



1.25



1.05



2.45



2.10

Dividends paid



1.20



1.05



2.33



2.10














Average Shares Outstanding













Basic



295.1



306.2



296.3



306.8

Diluted



296.5



308.1



297.8



308.8



See Condensed Notes to Interim Consolidated Financial Statements.

 

DEERE & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars) Unaudited



April 30


October 30


May 1



2023


2022


2022

Assets










Cash and cash equivalents


$

5,267


$

4,774


$

3,878

Marketable securities



856



734



682

Trade accounts and notes receivable - net



9,971



6,410



6,258

Financing receivables - net



38,954



36,634



34,085

Financing receivables securitized - net



5,659



5,936



4,073

Other receivables



2,593



2,492



2,306

Equipment on operating leases - net



6,524



6,623



6,465

Inventories



9,713



8,495



9,030

Property and equipment - net



6,288



6,056



5,715

Goodwill



3,963



3,687



3,812

Other intangible assets - net



1,222



1,218



1,352

Retirement benefits



3,519



3,730



3,059

Deferred income taxes



1,308



824



1,104

Other assets



2,510



2,417



2,280

Total Assets


$

98,347


$

90,030


$

84,099











Liabilities and Stockholders' Equity




















Liabilities










Short-term borrowings


$

17,109


$

12,592


$

12,413

Short-term securitization borrowings



5,379



5,711



4,006

Accounts payable and accrued expenses



14,716



14,822



12,679

Deferred income taxes



511



495



584

Long-term borrowings



35,611



33,596



32,447

Retirement benefits and other liabilities



2,520



2,457



2,964

Total liabilities



75,846



69,673



65,093











Redeemable noncontrolling interest



102



92



99











Stockholders' Equity










Total Deere & Company stockholders' equity



22,395



20,262



18,904

Noncontrolling interests



4



3



3

Total stockholders' equity



22,399



20,265



18,907

Total Liabilities and Stockholders' Equity


$

98,347


$

90,030


$

84,099



See Condensed Notes to Interim Consolidated Financial Statements.

 

DEERE & COMPANY

STATEMENTS OF CONSOLIDATED CASH FLOWS

For the Six Months Ended April 30, 2023 and May 1, 2022

(In millions of dollars) Unaudited



2023


2022

Cash Flows from Operating Activities







Net income


$

4,815


$

3,001

Adjustments to reconcile net income to net cash used for operating activities:







Provision (credit) for credit losses



(89)



45

Provision for depreciation and amortization



995



933

Impairments and other adjustments



173



77

Share-based compensation expense



54



44

Gain on remeasurement of previously held equity investment






(326)

Provision (credit) for deferred income taxes



(377)



37

Changes in assets and liabilities:







Receivables related to sales



(4,407)



(1,535)

Inventories



(982)



(2,265)

Accounts payable and accrued expenses



(313)



(443)

Accrued income taxes payable/receivable



(96)



(139)

Retirement benefits



(68)



(1,020)

Other



148



(171)

Net cash used for operating activities



(147)



(1,762)








Cash Flows from Investing Activities







Collections of receivables (excluding receivables related to sales)



12,593



11,190

Proceeds from sales of equipment on operating leases



993



1,035

Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold



36




Cost of receivables acquired (excluding receivables related to sales)



(13,451)



(11,971)

Acquisitions of businesses, net of cash acquired



(41)



(473)

Purchases of property and equipment



(584)



(346)

Cost of equipment on operating leases acquired



(1,229)



(1,004)

Collateral on derivatives - net



367



(248)

Other



(178)



(71)

Net cash used for investing activities



(1,494)



(1,888)








Cash Flows from Financing Activities







Increase in total short-term borrowings



3,992



812

Proceeds from long-term borrowings



4,868



4,298

Payments of long-term borrowings



(3,567)



(3,625)

Proceeds from issuance of common stock



30



50

Repurchases of common stock



(2,546)



(1,226)

Dividends paid



(697)



(649)

Other



(63)



(46)

Net cash provided by (used for) financing activities



2,017



(386)








Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash



70



(110)








Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash



446



(4,146)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period



4,941



8,125

Cash, Cash Equivalents, and Restricted Cash at End of Period


$

5,387


$

3,979



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 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 suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region, which made it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties.




In the second quarter of 2022, the company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery Co., Ltd. The remeasurement of the previously held equity investment resulted in a non-cash gain of $326 million (pretax and after-tax).




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 six months ended April 30, 2023 and May 1, 2022:





Three Months


Six Months



PPA


SAT


CF


FS


Total


PPA


SAT


CF


FS


Total

2023 Expense:































Financing incentive – SA&G expense











$

173


$

173











$

173


$

173
































2022 Expense (benefit):































Gain on remeasurement of equity investment – Other income








$

(326)






(326)








$

(326)






(326)

Total Russia/Ukraine events expense


$

46


$

1



47



26



120


$

46


$

1



47



26



120

UAW ratification bonus – Cost of Sales


















53



9



28






90

Total expense (benefit)



46



1



(279)



26



(206)



99



10



(251)



26



(116)
































Period over period change


$

(46)


$

(1)


$

279


$

147


$

379


$

(99)


$

(10)


$

251


$

147


$

289



(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 April 30, 2023 and May 1, 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


$

16,079


$

12,034














$

16,079


$

12,034


Finance and interest income



121



36


$

1,206


$

847


$

(248)


$

(87)



1,079



796

1

Other income



185



584



91



104



(47)



(148)



229



540

2, 3

Total



16,385



12,654



1,297



951



(295)



(235)



17,387



13,370




























Costs and Expenses


























Cost of sales



10,737



8,919









(7)



(1)



10,730



8,918

4

Research and development expenses



547



453















547



453


Selling, administrative and general expenses



935



753



397



181



(2)



(2)



1,330



932

4

Interest expense



103



97



540



112



(74)



(22)



569



187

5

Interest compensation to Financial Services



174



62









(174)



(62)







5

Other operating expenses



85



99



316



377



(38)



(148)



363



328

6, 7

Total



12,581



10,383



1,253



670



(295)



(235)



13,539



10,818




























Income before Income Taxes



3,804



2,271



44



281









3,848



2,552


Provision for income taxes



974



387



17



74









991



461




























Income after Income Taxes



2,830



1,884



27



207









2,857



2,091


Equity in income of unconsolidated affiliates



1



5



1



1









2



6




























Net Income



2,831



1,889



28



208









2,859



2,097


Less: Net loss attributable to noncontrolling interests



(1)



(1)















(1)



(1)


Net Income Attributable to Deere & Company


$

2,832


$

1,890


$

28


$

208








$

2,860


$

2,098





























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 Six Months Ended April 30, 2023 and May 1, 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


$

27,481


$

20,565














$

27,481


$

20,565


Finance and interest income



234



70


$

2,274


$

1,675


$

(435)


$

(150)



2,073



1,595

1

Other income



417



801



268



192



(201)



(214)



484



779

2, 3

Total



28,132



21,436



2,542



1,867



(636)



(364)



30,038



22,939




























Costs and Expenses


























Cost of sales



18,675



15,614









(12)



(1)



18,663



15,613

4

Research and development expenses



1,043



855















1,043



855


Selling, administrative and general expenses



1,719



1,410



569



307



(5)



(4)



2,283



1,713

4

Interest expense



204



188



983



270



(138)



(41)



1,049



417

5

Interest compensation to Financial Services



297



106









(297)



(106)







5

Other operating expenses



137



138



707



712



(184)



(212)



660



638

6, 7

Total



22,075



18,311



2,259



1,289



(636)



(364)



23,698



19,236




























Income before Income Taxes



6,057



3,125



283



578









6,340



3,703


Provision for income taxes



1,455



568



73



142









1,528



710




























Income after Income Taxes



4,602



2,557



210



436









4,812



2,993


Equity in income of unconsolidated affiliates



1



5



2



3









3



8




























Net Income



4,603



2,562



212



439









4,815



3,001


Less: Net loss attributable to noncontrolling interests



(4)


















(4)





Net Income Attributable to Deere & Company


$

4,607


$

2,562


$

212


$

439








$

4,819


$

3,001





























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 expense.

 

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEETS

(In millions of dollars) Unaudited







EQUIPMENT


FINANCIAL








OPERATIONS


SERVICES


ELIMINATIONS


CONSOLIDATED




Apr 30


Oct 30


May 1


Apr 30


Oct 30


May 1


Apr 30


Oct 30


May 1


Apr 30


Oct 30


May 1




2023


2022


2022


2023


2022


2022


2023


2022


2022


2023


2022


2022


Assets






































Cash and cash equivalents


$

3,587


$

3,767


$

3,167


$

1,680


$

1,007


$

711











$

5,267


$

4,774


$

3,878


Marketable securities



14



61



2



842



673



680












856



734



682


Receivables from Financial Services



5,899



6,569



5,669











$

(5,899)


$

(6,569)


$

(5,669)










8

Trade accounts and notes receivable - net



1,562



1,273



1,358



10,422



6,434



6,079



(2,013)



(1,297)



(1,179)



9,971



6,410



6,258

9

Financing receivables - net



54



47



49



38,900



36,587



34,036












38,954



36,634



34,085


Financing receivables securitized - net



1






6



5,658



5,936



4,067












5,659



5,936



4,073


Other receivables



2,201



1,670



1,944



481



832



405



(89)



(10)



(43)



2,593



2,492



2,306

9

Equipment on operating leases - net












6,524



6,623



6,465












6,524



6,623



6,465


Inventories



9,713



8,495



9,030





















9,713



8,495



9,030


Property and equipment - net



6,254



6,021



5,678



34



35



37












6,288



6,056



5,715


Goodwill



3,963



3,687



3,812





















3,963



3,687



3,812


Other intangible assets - net



1,222



1,218



1,352





















1,222



1,218



1,352


Retirement benefits



3,450



3,666



2,996



69



66



65






(2)



(2)



3,519



3,730



3,059

10

Deferred income taxes



1,355



940



1,247



59



45



49



(106)



(161)



(192)



1,308



824



1,104

11

Other assets



1,961



1,794



1,767



564



626



516



(15)



(3)



(3)



2,510



2,417



2,280

9

Total Assets


$

41,236


$

39,208


$

38,077


$

65,233


$

58,864


$

53,110


$

(8,122)


$

(8,042)


$

(7,088)


$

98,347


$

90,030


$

84,099








































Liabilities and Stockholders' Equity












































































Liabilities






































Short-term borrowings


$

1,755


$

1,040


$

1,554


$

15,354


$

11,552


$

10,859











$

17,109


$

12,592


$

12,413


Short-term securitization borrowings









5



5,379



5,711



4,001












5,379



5,711



4,006


Payables to Equipment Operations












5,899



6,569



5,669


$

(5,899)


$

(6,569)


$

(5,669)










8

Accounts payable and accrued expenses



13,759



12,962



11,370



3,074



3,170



2,534



(2,117)



(1,310)



(1,225)



14,716



14,822



12,679

9

Deferred income taxes



402



380



454



215



276



322



(106)



(161)



(192)



511



495



584

11

Long-term borrowings



7,310



7,917



8,556



28,301



25,679



23,891












35,611



33,596



32,447


Retirement benefits and other liabilities



2,410



2,351



2,855



110



108



111






(2)



(2)



2,520



2,457



2,964

10

Total liabilities



25,636



24,650



24,794



58,332



53,065



47,387



(8,122)



(8,042)



(7,088)



75,846



69,673



65,093








































Redeemable noncontrolling interest



102



92



99





















102



92



99








































Stockholders' Equity






































Total Deere & Company stockholders' equity



22,395



20,262



18,904



6,901



5,799



5,723



(6,901)



(5,799)



(5,723)



22,395



20,262



18,904

12

Noncontrolling interests



4



3



3





















4



3



3


Financial Services equity



(6,901)



(5,799)



(5,723)












6,901



5,799



5,723










12

Adjusted total stockholders' equity



15,498



14,466



13,184



6,901



5,799



5,723












22,399



20,265



18,907


Total Liabilities and Stockholders' Equity


$

41,236


$

39,208


$

38,077


$

65,233


$

58,864


$

53,110


$

(8,122)


$

(8,042)


$

(7,088)


$

98,347


$

90,030


$

84,099









































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 Six Months Ended April 30, 2023 and May 1, 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


$

4,603


$

2,562


$

212


$

439








$

4,815


$

3,001



Adjustments to reconcile net income to net cash provided by (used for) operating activities:



























Provision (credit) for credit losses



4



1



(93)



44









(89)



45



Provision for depreciation and amortization



565



518



500



530


$

(70)


$

(115)



995



933

13


Impairments and other adjustments






77



173












173



77



Share-based compensation expense















54



44



54



44

14


Gain on remeasurement of previously held equity investment






(326)


















(326)



Distributed earnings of Financial Services



12



232









(12)



(232)







15


Provision (credit) for deferred income taxes



(304)



75



(73)



(38)









(377)



37



Changes in assets and liabilities:



























Receivables related to sales



(255)



(215)









(4,152)



(1,320)



(4,407)



(1,535)

16, 18, 19


Inventories



(910)



(2,201)









(72)



(64)



(982)



(2,265)

17


Accounts payable and accrued expenses



161



(99)



243



(7)



(717)



(337)



(313)



(443)

18


Accrued income taxes payable/receivable



(97)



(144)



1



5









(96)



(139)



Retirement benefits



(67)



(1,024)



(1)



4









(68)



(1,020)



Other



54



(102)



103



(117)



(9)



48



148



(171)

13, 14, 17


Net cash provided by (used for) operating activities



3,766



(646)



1,065



860



(4,978)



(1,976)



(147)



(1,762)






























Cash Flows from Investing Activities



























Collections of receivables (excluding receivables related to sales)









13,169



12,004



(576)



(814)



12,593



11,190

16


Proceeds from sales of equipment on operating leases









993



1,035









993



1,035



Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold









36












36






Cost of receivables acquired (excluding receivables related to sales)









(13,584)



(12,260)



133



289



(13,451)



(11,971)

16


Acquisitions of businesses, net of cash acquired



(41)



(473)















(41)



(473)



Purchases of property and equipment



(583)



(345)



(1)



(1)









(584)



(346)



Cost of equipment on operating leases acquired









(1,327)



(1,090)



98



86



(1,229)



(1,004)

17


Increase in investment in Financial Services



(799)












799










20


Increase in trade and wholesale receivables









(5,310)



(2,159)



5,310



2,159







16


Collateral on derivatives – net






6



367



(254)









367



(248)



Other



(37)



(46)



(142)



(49)



1



24



(178)



(71)

19


Net cash used for investing activities



(1,460)



(858)



(5,799)



(2,774)



5,765



1,744



(1,494)



(1,888)






























Cash Flows from Financing Activities



























Increase (decrease) in total short-term borrowings



(225)



128



4,217



684









3,992



812



Change in intercompany receivables/payables



932



(424)



(932)



424















Proceeds from long-term borrowings



41



55



4,827



4,243









4,868



4,298



Payments of long-term borrowings



(47)



(308)



(3,520)



(3,317)









(3,567)



(3,625)



Proceeds from issuance of common stock



30



50















30



50



Repurchases of common stock



(2,546)



(1,226)















(2,546)



(1,226)



Capital Investment from Equipment Operations









799






(799)










20


Dividends paid



(697)



(649)



(12)



(232)



12



232



(697)



(649)

15


Other



(35)



(27)



(28)



(19)









(63)



(46)



Net cash provided by (used for) financing activities



(2,547)



(2,401)



5,351



1,783



(787)



232



2,017



(386)






























Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash



62



(113)



8



3









70



(110)






























Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash



(179)



(4,018)



625



(128)









446



(4,146)



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


$

3,602


$

3,182


$

1,785


$

797








$

5,387


$

3,979































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 Six Months Ended


Operations

Precision Ag

& Turf

& Forestry



Apr 30

May 1

Apr 30

May 1

Apr 30

May 1

Apr 30

May 1

Dollars in millions


2023

2022

2023

2022

2023

2022

2023

2022

Net Sales


$

27,481


$

20,565


$

13,021


$

8,473


$

7,146


$

6,201


$

7,314


$

5,891


Average Identifiable Assets


























With Inventories at LIFO


$

21,303


$

18,846


$

9,317


$

7,933


$

4,774


$

4,296


$

7,212


$

6,617


With Inventories at Standard Cost



23,358



20,449



10,388



8,736



5,321



4,758



7,649



6,955


Operating Profit


$

6,137


$

3,329


$

3,378


$

1,353


$

1,296


$

891


$

1,463


$

1,085


Percent of Net Sales



22.3

%


16.2

%


25.9

%


16.0

%


18.1

%


14.4

%


20.0

%


18.4

%

Operating Return on Assets


























With Inventories at LIFO



28.8

%


17.7

%


36.3

%


17.1

%


27.1

%


20.7

%


20.3

%


16.4

%

With Inventories at Standard Cost



26.3

%


16.3

%


32.5

%


15.5

%


24.4

%


18.7

%


19.1

%


15.6

%

SVA Cost of Assets


$

(1,401)


$

(1,227)


$

(623)


$

(525)


$

(319)


$

(285)


$

(459)


$

(417)


SVA



4,736



2,102



2,755



828



977



606



1,004



668






























Financial



















For the Six Months Ended


Services





















Apr 30

May 1



















Dollars in millions


2023

2022



















Net Income Attributable to Deere & Company


$

212


$

439




















Average Equity



6,180



5,683




















Return on Equity



3.4

%


7.7

%



















Operating Profit


$

279


$

577




















Cost of Equity



(415)



(377)




















SVA



(136)



200




















 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/deere-reports-second-quarter-net-income-of-2-860-billion-301829085.html

SOURCE Deere & Company

Copyright 2023 Canada NewsWire

Deere (NYSE:DE)
Historical Stock Chart
From Nov 2023 to Dec 2023 Click Here for more Deere Charts.
Deere (NYSE:DE)
Historical Stock Chart
From Dec 2022 to Dec 2023 Click Here for more Deere Charts.