Business Context and Reporting Period
Company: Deere & Company (DE)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Second quarter ended May 3, 2026 (13 weeks) and the six months ended May 3, 2026 (26 weeks).
Segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services (FS).
Key Financial Metrics
| Metric ($ millions) | Q2 2026 | Q2 2025 | 6M 2026 | 6M 2025 |
|---|---|---|---|---|
| Net Sales | $11,778 | $11,171 | $19,779 | $17,980 |
| Total Revenues | $13,369 | $12,763 | $22,981 | $21,272 |
| Net Income Attributable to Deere | $1,773 | $1,804 | $2,429 | $2,673 |
| Diluted EPS | $6.55 | $6.64 | $8.97 | $9.82 |
| Operating Cash Flow (6M) | $1,042 (vs. $568 prior year) | |||
| Cash & Equivalents | $7,905 (May 3, 2026) | |||
| Total Debt (Short + Long Term) | $57,893 (May 3, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 5% in Q2 and 10% year-to-date (YTD) compared to the prior year, driven by higher shipment volumes in SAT and CF segments and favorable foreign currency translation.
- Profitability Decline: Net income decreased 2% in Q2 and 9% YTD. The decline was primarily due to lower PPA shipment volumes, increased material costs, and higher warranty expenses, partially offset by favorable price realization and currency impacts.
- Segment Performance:
- PPA: Sales decreased 14% (Q2) and 8% (YTD) due to lower volumes in North America and Brazil. Operating profit dropped 39% (Q2) and 43% (YTD).
- SAT: Sales increased 16% (Q2) and 19% (YTD). Operating profit rose 25% (Q2) and 31% (YTD) driven by volume and price realization.
- CF: Sales surged 29% (Q2) and 31% (YTD). Operating profit increased 48% (Q2) and 57% (YTD) due to strong U.S. demand.
- Financial Services: Net income increased 18% (Q2) and 11% (YTD) due to favorable financing spreads and lower credit loss provisions.
- Tariff Impact: Incremental import tariffs incurred $372 million in the first six months of 2026. However, a $272 million refund claim related to IEEPA tariffs was accepted, resulting in a net favorable impact on cost of sales.
Guidance, Outlook, and Risks
- 2026 Outlook: Management expects 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: The company repurchased $500 million of common stock in the first six months of 2026. A quarterly dividend of $1.62 per share was declared in May 2026.
- Acquisitions: Acquired Tenna LLC in February 2026 for $439 million to expand construction technology solutions.
- Key Risks:
- Legal Proceedings: Ongoing antitrust lawsuit filed by the FTC and several states regarding repair tools and data access. A motion to dismiss was denied; discussions for resolution are ongoing.
- Trade Policy: Continued uncertainty regarding global trade policies and tariffs.
- Market Conditions: Volatility in commodity prices, input costs, and foreign exchange rates.
Investor Verification Checklist
- PPA Volume Trends: Verify the extent of the decline in large agriculture equipment demand in North America and Brazil against industry data.
- Tariff Refund Realization: Confirm the timing and certainty of the $272 million tariff refund and potential for additional recoveries.
- Warranty Costs: Review the $64 million increase in warranty expenses in Q2 to assess if this is a one-time event or a structural increase.
- Antitrust Litigation: Monitor the status of the FTC lawsuit and potential settlement terms or injunctions.
- Financial Services Portfolio: Assess the credit quality of the financing receivables portfolio given the lower provision for credit losses in the current period.