Q3 2026 Deere & Co Earnings Call Transcript
Key Points
- Deere & Co (DE) delivered a strong third quarter with equipment operations achieving a 14.4% operating margin, exceeding expectations.
- The company raised its full-year net income outlook to $4.75-$5 billion and improved cash flow expectations to $5-$5.5 billion.
- Construction & Forestry segment saw net sales up 18% year-over-year, with strong demand from infrastructure, data center, and energy projects, and backlogs extending into fiscal 2027.
- Small Ag and Turf segment performed well, with net sales up 12% and operating margin improved to 18.4%, supported by healthy dairy and livestock sectors.
- Early order programs for planters and sprayers are showing mid-single-digit growth year-over-year, signaling a potential bottom in the agricultural equipment cycle.
- Precision agriculture technology adoption is accelerating, with See & Spray factory adoption expected to nearly double and over 40% of planters featuring advanced technologies.
- Production & Precision Ag segment net sales declined 6% year-over-year, with full-year sales now expected to be down approximately 10% due to softening in South America and Europe.
- The agricultural equipment industry outlook remains challenging, with U.S. and Canada large ag sales expected to decline 15-20% and South America down 15-20%.
- Direct tariff expenses are expected to be approximately $1.1 billion for fiscal 2026, with a net tariff headwind of about $750 million after refunds.
- Global forestry industry is expected to be down 10% for the year, impacted by subdued residential construction and softer log and lumber prices.
- Farm profitability remains under pressure due to elevated input costs, commodity price volatility, and uncertainty around trade flows, leading to cautious capital spending.
- The company expects a step-up in tariff expense in fiscal 2027, with net tariffs projected to be around $1 billion, creating a headwind for next year.
Good morning, and welcome to Deere & Company third-quarter earnings conference call. (Operator Instructions)
I would now like to turn the call over to Mr. Chris Seibert, Director of Investor Relations. Thank you. You may begin.
Hello. Welcome, and thank you for joining us on today's call. Joining me on the call today are Brent Norwood, Chief Financial Officer; Deanna Kovar, President, Worldwide Agriculture and Turf Division, Production & Precision Ag, Sales and Marketing Regions of the Americas and Australia; and Dan Pulley, Manager, Investor Communications.
Today, we'll take a closer look at this third-quarter earnings, then spend some time talking about our end markets and our current outlook for fiscal 2026. After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at johndeere.com/earnings.
First, a reminder. This call is broadcast live on the internet and recorded
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