Sign in
D&

DEERE & CO (DE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 results contracted sharply on lower shipment volumes: net sales and revenues $11.143B, equipment net sales $9.275B, net income $1.245B, and diluted EPS $4.55; equipment operations margin was 13.1% as management proactively underproduced to right-size inventories .
  • Segment operating margins compressed: Production & Precision Ag 15.3%, Small Ag & Turf 10.1%, Construction & Forestry 12.3%, reflecting volume declines and mix; special items included a $57M pretax legal settlement benefit and $28M impairment .
  • FY 2025 guidance: net income $5.0–$5.5B, effective tax rate 23–25%, equipment operations net operating cash flow $4.5–$5.5B; segment sales expected down (PPA ~15%, Small Ag & Turf ~10%, C&F 10–15%), with Financial Services net income ~$750M .
  • Management emphasized structural improvements (full-year equipment operations margin 18.2%) and technology adoption (See & Spray scale-up; engaged acres 455M), positioning margins at trough above prior peaks .
  • Post-quarter dividend raised to $1.62 from $1.47, supporting capital return; a potential near-term sentiment catalyst amid guidance reset .

What Went Well and What Went Wrong

  • What Went Well

    • Proactive inventory actions and underproduction preserved margins through the cycle; Q4 equipment ops margin 13.1% and FY margin 18.2% despite volume pressure .
    • Technology and precision adoption accelerating: See & Spray covered 1M acres in 2024; >1,000 orders for 2025; engaged acres up ~20% to 455M, highly engaged acres >30% YoY .
    • Legal settlement gains: $57M pretax benefit in Q4 ($17M PPA, $40M C&F), partially offsetting headwinds in those segments .

  • What Went Wrong

    • Broad volume declines drove revenue and profit contraction: Q4 net sales and revenues down 28% YoY; net income down 47% YoY; EPS fell to $4.55 .
    • Europe weakness and elevated used inventory levels weighed on demand; France harvest yields at multi-decade lows necessitating further underproduction in 2025 .
    • Special items and credit loss provisions: $28M impairment in SAT; increased valuation allowance tied to Banco John Deere held-for-sale; Financial Services Q4 net income down 9% YoY .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Sales and Revenues ($USD Billions)$15.412 $15.235 $13.152 $11.143
Equipment Net Sales ($USD Billions)$13.801 $13.610 $11.387 $9.275
Net Income ($USD Billions)$2.369 $2.370 $1.734 $1.245
Diluted EPS ($)$8.26 $8.53 $6.29 $4.55
Wall St. Consensus (EPS, Revenue)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)

Segment breakdown

SegmentQ4 2023Q2 2024Q3 2024Q4 2024
PPA Net Sales ($B)$6.965 $6.581 $5.099 $4.305
PPA Operating Profit ($B)$1.836 $1.650 $1.162 $0.657
PPA Operating Margin (%)26.4% 25.1% 22.8% 15.3%
SAT Net Sales ($B)$3.094 $3.185 $3.053 $2.306
SAT Operating Profit ($B)$0.444 $0.571 $0.496 $0.234
SAT Operating Margin (%)14.4% 17.9% 16.2% 10.1%
C&F Net Sales ($B)$3.742 $3.844 $3.235 $2.664
C&F Operating Profit ($B)$0.516 $0.668 $0.448 $0.328
C&F Operating Margin (%)13.8% 17.4% 13.8% 12.3%

Selected KPIs and operating context

KPI / ContextQ2 2024Q3 2024Q4 2024
Financial Services Net Income ($MM)$162 $153 $173
Equipment Ops Operating Margin (%)N/AN/A13.1%
Engaged Acres (Global, Highly Engaged %)N/AN/A455M engaged acres; highly engaged >25% of total and >30% YoY growth; South America highly engaged ~+50%
See & SprayN/AN/A1M acres covered in 2024; >1,000 units ordered for 2025
U.S./Canada Ag Retail (Oct rolling 3 mo)N/AN/ADeere vs industry: 2WD <40 PTO hp “more”; 40–100 PTO hp “in line”; 100+ PTO hp “more”; 4WD “in line”; combines “less”; dealer inventory ratios: 100+ PTO hp 24% (vs 23% 2023), combines 4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income (Deere & Co.)FY 2024 vs FY 2025~$7.0B FY24 $5.0–$5.5B FY25 Lowered
Effective Tax RateFY 2024 vs FY 202523–25% FY24 23–25% FY25 Maintained
Equipment Ops Net Operating Cash FlowFY 2024 vs FY 2025$6.0–$6.5B FY24 $4.5–$5.5B FY25 Lowered
Financial Services Net IncomeFY 2024 vs FY 2025~$720M FY24 ~$750M FY25 Raised
PPA Segment Net SalesFY 2025N/ADown ~15%; price +~1pt; FX ~–0.5pt New
PPA Operating MarginFY 2025N/A17–18% New
Small Ag & Turf Net SalesFY 2025N/ADown ~10%; price +~0.5pt; FX +~0.5pt New
Small Ag & Turf Operating MarginFY 2025N/A13–14% New
C&F Net SalesFY 2025N/ADown 10–15%; price +~1pt; FX ~flat New
C&F Operating MarginFY 2025N/A11.5–12.5% New
Dividend per QuarterQ4 2024 vs Q1 2025$1.47 declared in Q4 2024 $1.62 declared for payment Feb 10, 2025 Raised

Earnings Call Themes & Trends

TopicQ2 2024 (Prev-2)Q3 2024 (Prev-1)Q4 2024 (Current)Trend
AI/Precision Tech & MonetizationEmphasis on precision solutions; stable adoption Continued adoption; segment margin guidance reflects strategy See & Spray scale-up; pay‑per‑use model (8,000 Essentials kits sold, avg vintage 2012) to accelerate adoption Acceleration
Inventory Management & UnderproductionProactive production alignment; equipment ops cash flow guide raised Underproduction in PPA; employee-separation programs for structural savings Underproduction continued (Brazil combines; North America earthmoving ~half production days in Q1 2025); used inventory plateau focus Proactive discipline
Macro/Tariffs/Interest RatesConstruction stable; ag softening; tax 23–25% Ag fundamentals weak; construction moderating; caution into FY25 Large Ag US/Canada ~–30%; Europe down 5–10%; FX, rates headwinds; admin policy uncertainty noted Deterioration in ag
Regional TrendsEurope down ~15%; South America down 15–20% Brazil underproduction; JV for Banco John Deere Brazil shipments to align with retail (ex combines); Europe multi-decade low yields (France) Stabilizing Brazil, weak Europe
R&D & Leap AmbitionsR&D up slightly; capital ~$1.9B Continued investment; outlook reiterated New Brazil R&D center (Indaiatuba) to tailor tropical ag solutions Investment sustained

Management Commentary

  • “2024 was characterized by our resiliency… margins in 2024 exceeded 18%, reflecting nearly 700 bps of improvement from 2020… we emerged more focused than ever on our mission to help our customers do more with less.” – John May, CEO .
  • “Looking ahead to 2025, we expect continued contraction of ag markets globally… [yet] we expect to deliver higher margins at trough than during the previous peak in 2013.” – Josh Jepsen, CFO .
  • “We anticipate production & precision ag net sales to be down ~15% in FY25… operating margin 17–18%… small ag & turf net sales down ~10% with 13–14% margin.” – Prepared remarks .
  • “See & Spray covered 1 million acres this year… we’ve taken over 1,000 orders for new units for 2025.” – Management on technology adoption .

Q&A Highlights

  • Used equipment strategy: dealers deploying pool funds and targeted incentives to right-size used levels; Q4 used ratios plateaued; Q1 offers opportunity via year-end tax buying and lower production .
  • Construction pricing and cadence: competitive environment balanced between price and share; roadbuilding (35–40% of C&F) more stable with pricing opportunity .
  • FY25 cadence: larger declines in H1 given underproduction and comps; sequential improvement with potential flattish/up by Q3/Q4 2025 vs 2024 back half .
  • North America Large Ag pricing: maintain positive price realization aided by tight new inventories (e.g., 220+ HP tractors inventory to sales ~10%; combines ~4%) despite higher used incentives .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q4 2024 EPS and revenue was unavailable due to SPGI daily request limit; therefore, explicit beat/miss vs consensus cannot be assessed in this report. Values would normally be retrieved from S&P Global; given unavailability, we refrain from estimation to preserve accuracy.

Key Takeaways for Investors

  • Volume-driven contraction dominated Q4; structural margin improvements and disciplined underproduction cushioned profitability (equipment ops margin 13.1%; FY 18.2%) .
  • FY25 guide reset lower ($5.0–$5.5B NI) reflects trough-level ag demand (US/Canada Large Ag ~–30%) and softer construction; management targets positive price-cost and stable tax rate .
  • Technology monetization momentum (See & Spray, pay‑per‑use kits) is a medium-term lever to expand margins and attach rates across the fleet .
  • Brazil inventories right-sized with shipments expected to align to retail in 2025 (except combines); Europe remains a risk with weak yields; monitor Q1 production shutdown impact on C&F decrementals .
  • Dividend raised to $1.62 signals confidence in cash generation despite lower FY25 earnings; bolsters return profile .
  • Near-term trading: expect H1 2025 pressure (underproduction, tough comps); watch for improving H2 trajectory and updates on used inventory normalization and pricing discipline .
  • Medium-term thesis: structurally higher margins through cycles, growing precision tech adoption, and disciplined capital allocation position Deere to exit trough stronger; monitor execution against segment margin guides and tech subscription uptake .

Notes: All quantitative figures and commentary are sourced from Deere’s Q4 2024 Form 8‑K, press materials, and Q4 2024 earnings call transcript as cited above. SPGI consensus data was not retrievable at time of analysis due to request limits; no estimates are presented to avoid conjecture.