Business Context and Reporting Period
Company: DEERE & CO (John Deere)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: August 2, 2026 (Third Quarter of Fiscal Year 2026)
Business Overview: Global leader in agricultural, turf, construction, and forestry equipment and solutions, alongside financial services (John Deere Financial). Operations are managed through four segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services (FS).
Key Financial Metrics
| Metric (in millions, except per share) | Q3 2026 | Q3 2025 | 9M 2026 | 9M 2025 |
|---|---|---|---|---|
| Net Sales | $10,999 | $10,357 | $30,779 | $28,338 |
| Total Revenues | $12,608 | $12,018 | $35,589 | $33,290 |
| Net Income Attributable to Deere | $1,379 | $1,289 | $3,808 | $3,962 |
| Diluted EPS | $5.10 | $4.75 | $14.06 | $14.57 |
| Operating Cash Flow (9M) | $3,250 (vs. $3,464 prior year) | |||
| Cash & Equivalents (End of Period) | $8,928 | |||
| Total Debt (Short + Long Term) | $57,741 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 6% in Q3 and 9% year-to-date (YTD) compared to the prior year, driven by higher shipment volumes, favorable price realization, and positive foreign currency translation.
- Profitability: Q3 Net Income rose 7% ($90 million increase) primarily due to favorable price realization ($286 million benefit), partially offset by higher production costs ($89 million) and unfavorable tax impacts ($114 million). YTD Net Income declined 4% due to favorable special tax items in the prior year.
- Segment Performance:
- PPA: Sales and operating profit declined due to lower volumes in Brazil and Europe and higher material costs.
- SAT: Sales and operating profit increased significantly (12% and 28% in Q3) driven by higher volumes in the U.S. and favorable pricing.
- CF: Strong performance with sales up 18% and operating profit up 84% in Q3, driven by U.S. volumes and price realization.
- Tariffs: Incremental import tariffs incurred $502 million in the first nine months of 2026. However, the company recorded $382 million in tariff recoveries following a Supreme Court decision invalidating certain tariffs, with 80% received as of August 2, 2026.
Guidance, Outlook, and Risks
- 2026 Outlook: Management expects overall net sales to increase in 2026 compared to 2025. Large agriculture sales (PPA) are expected to remain subdued in North America and soften in South America. Conversely, SAT and CF sales are expected to improve, offsetting the PPA decline.
- Capital Allocation: Capital expenditures for 2026 are estimated at approximately $1.3 billion. The company returned $2.013 billion to shareholders in the first nine months of 2026 via dividends and share repurchases.
- Legal Proceedings: Settled a lawsuit with the FTC and several states regarding repair resources. The company agreed to provide repair resources to farmers and independent providers on "fair and reasonable terms" and submit to FTC oversight.
- Risks: Key risks include the agricultural business cycle, global trade policies (tariffs), supply chain disruptions, input costs (fertilizer, energy), and foreign currency fluctuations.
Investor Verification Checklist
- Tariff Recovery Realization: Verify the timing and full receipt of the remaining 20% of the $382 million tariff recovery recorded in 2026.
- PPA Volume Trends: Monitor shipment volumes in Brazil and Europe, which are cited as primary drivers for the decline in the Production & Precision Agriculture segment.
- Material Cost Inflation: Assess the trajectory of material costs, which increased production expenses by $89 million in Q3 and impacted margins across segments.
- Financial Services Portfolio: Review the average portfolio balance of receivables and leases, which was 2% lower in Q3 2026, impacting revenue generation in the FS segment.
- FTC Settlement Compliance: Track the operational impact and costs associated with the new requirements to provide repair resources under the FTC settlement.