1 Q 2 0 1 7 Earnings Call 17 February 2017 1
Safe Harbor Statem ent & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the company’s plans and projections for the future, including estimates and assumptions with respect to economic, political, technological, weather, market acceptance and other factors that impact our businesses and customers. They also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Words such as “forecast,” “projection,” “outlook,” “prospects,” “expected,” “estimated,” “will,” “plan,” “anticipate,” “intend,” “believe,” or other similar words or phrases often identify forward-looking statements. Actual results may differ materially from those projected in these forward-looking statements based on a number of factors and uncertainties. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s most recent Form 8-K and periodic report filed with the U.S. Securities and Exchange Commission, and is incorporated by reference herein. Investors should refer to and consider the incorporated information on risks and uncertainties in addition to the information presented here. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. The company, except as required by law, undertakes no obligation to update or revise its forward-looking statements whether as a result of new developments or otherwise. The call and accompanying materials are not an offer to sell or a solicitation of offers to buy any of the company’s securities. 2
1 Q 2 0 1 7 Overview 1 Q 2 0 1 7 1 Q 2 0 1 7 vs. 1 Q 2 0 1 6 ( $ m illions except w here noted) Net Sales & Revenues $ 5 ,6 2 5 2 % Net Sales (equipment operations) $ 4 ,6 9 8 1 % Net I ncom e (attributable to Deere & Company) $ 1 9 4 2 4 % Diluted EPS ($ per share) 2 4 % $ 0 .6 1 3
1 Q 2 0 1 7 Overview Equipment Operations 1 Q 2 0 1 7 vs. 1 Q 2 0 1 6 Net Sales 1 % Price realization 2 points Currency translation 1 point 4
W orldw ide Agriculture & Turf 1Q 2017 Overview 1 Q 2 0 1 7 1 Q 2 0 1 7 vs. 1 Q 2 0 1 6 ( $ m illions) Net Sales $ 3 ,5 9 8 Flat Operating Profit* $ 2 1 3 4 8 % * 1Q 2017 operating profit impacted by: + Gain on sale of partial interest in SiteOne Landscape Supply, Inc. + Price realization − Voluntary employee-separation program expenses − Warranty costs − Foreign-currency exchange 5
U.S. Farm Cash Receipts $500 $400 $300 $ Billions $200 $100 $0 2001 2003 2005 2007 2009 2011 2013 2015 2017F Crops Livestock Government Payments Source: 2001–2015: USDA, 7 February 2017 2016F–2017F: Deere & Company forecast as of 17 February 2017 6
Global Stocks-to-Use Ratios 60% 120% 50% 100% 40% 80% W heat Cotton Cotton Ratios Corn 30% 60% 20% 40% Soybeans 10% 20% 0% 0% 1995 1998 2001 2004 2007 2010 2013 2016P Source: USDA, 9 February 2017 7
Econom ic Update EU 28 Dairy, Beef and Pork Prices Crop Value of Production* $150 €470 €420 Beef meat and Pork meat - € per 100 kg $120 €420 €360 Milk - € per MT US$ Billions $90 €370 €300 $60 €320 €240 €270 €180 $30 €220 €120 $0 2008 2011 2014 2017F 2008 2011 2014 2017F Milk Milk 10yr avg Beef meat Beef meat 10yr avg Pork meat Pork meat 10yr avg * Includes wheat, barley, corn, sunflower seed, rapeseed, soybean, sugar beet, cotton, rice Source: EU Com, LTO, IFCN, January 2017 Source: IHS Global Insight, February 2017 Deere & Company forecast as of 17 February 2017 8
Econom ic Update Brazil Crop Value of Production* Eligible Finance Rates for Agriculture Equipment $150 12% Rate change effective July 2016 10.5% 10% $120 8.5% 8% US$ Billions $90 6% $60 4% $30 2% $0 0% 2008 2011 2014 2017F 2011 2012 2013 2014 2015 2016 All Farmers Farmers with Annual Revenues > R$90M Farmers with Annual Revenues < R$90M Note: PSI-FINAME was key credit line for machinery acquisition 2011–2014; Moderfrota is currently the most attractive credit line * Includes key grains, ethanol, sugar Source: ABIMAQ (Brazilian Association of Machinery & Equipment) and BNDES Source: IHS Global Insight, February 2017 9
Agriculture & Turf Retail Sales Industry Outlook Fiscal 2 0 1 7 Previous Forecast Forecast U.S. and Canada Ag 5 -1 0 % 5-10% EU 2 8 Ag ~ 5 % ~ 5% South Am erica Ag (tractors and combines) 1 5 -2 0 % ~ 15% Asia Ag Flat to up slightly Flat to up slightly ~ Flat U.S. and Canada Turf and Utility ~ Flat Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 10
W orldw ide Agriculture & Turf Deere & Company Outlook Fiscal 2 0 1 7 Previous Forecast Forecast Net Sales ~ 3 % ~ 1% Currency translation ~ Flat ~ 1 point Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 11
W orldw ide Construction & Forestry 1Q 2017 Overview 1 Q 2 0 1 7 1 Q 2 0 1 7 vs. 1 Q 2 0 1 6 ( $ m illions) Net Sales $ 1 ,1 0 0 6 % Operating Profit* $ 3 4 5 1 % * 1Q 2017 operating profit impacted by: − Sales-incentive expenses − Voluntary employee-separation program expenses 12
W orldw ide Construction & Forestry U.S. Economic Indicators Fiscal 2 0 1 7 Previous Forecast Forecast ( annual percentage rate* except w here noted) GDP Grow th 2 .2 % 2.0% Housing Starts (thousands) 1 ,2 2 0 1,197 Total Construction I nvestm ent 2 .5 % 1.9% Governm ent Construction I nvestm ent 1 .4 % 2.6% * Change from prior year in real dollars Source: IHS Global Insight, Calendar Year Estimates – January 2017 (previous forecast as of October 2016) 13
W orldw ide Construction & Forestry Deere & Company Outlook Fiscal 2 0 1 7 Previous Forecast Forecast Net Sales ~ 7 % ~ 1% Currency translation ~ Flat ~ 1 point Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 14
W orldw ide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 2.0% 1.5% 1.0% 0 .2 9 % 0.5% 15 Year Average 10 Year Average 0.0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017F Source: Deere & Company forecast as of 17 February 2017 15
W orldw ide Financial Services Fiscal 2 0 1 7 Previous 1 Q 2 0 1 7 Forecast Forecast ( $ m illions) Net I ncom e (attributable to Deere & Company) $ 1 1 4 ~ $ 4 8 0 ~ $480 Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 16
Consolidated Trade Receivables & I nventory Fiscal 2 0 1 7 Previous 1 Q 2 0 1 7 * Forecast* * Forecast* * ( $ m illions) Agriculture & Turf $ 3 0 7 ~ $ 1 2 5 ~ $125 Construction & Forestry $ 1 5 4 ~ $ 7 5 ~ $125 Total (as reported) $ 4 6 1 ~ $ 2 0 0 ~ $250 Total (constant exchange) ~ $ 2 0 0 ~ $300 $ 5 6 7 * Change at 29 January 2017 vs. 31 January 2016 * * Forecasted change at 29 October 2017 vs. 30 October 2016 Note: Before the sale of receivables to John Deere Financial Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 17
Cost of Sales Equipment Operations Fiscal 2 0 1 7 Previous 1 Q 2 0 1 7 Forecast Forecast COS (percent of Net Sales) 8 0 .8 % ~ 7 8 % ~ 78% Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 18
Research & Developm ent Expense Equipment Operations 1 Q 2 0 1 7 Fiscal 2 0 1 7 Previous vs. 1 Q 2 0 1 6 Forecast Forecast R&D Expense 3 % ~ 2 % ~ 3% Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 19
Selling, Adm inistrative & General Expense Equipment Operations 1 Q 2 0 1 7 Fiscal 2 0 1 7 Previous vs. 1 Q 2 0 1 6 Forecast Forecast SA&G Expense 1 2 % ~ 5 % ~ 1% Voluntary separation program 9 points ~ 2 points ~ 2 points Commissions paid to dealers 2 points ~ 1 point ~ Flat Currency translation 1 point ~ Flat ~ 1 point Pension/ OPEB 1 point ~ Flat ~ Flat Incentive compensation 1 point ~ Flat ~ 1 point Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 20
I ncom e Taxes Equipment Operations Fiscal 2 0 1 7 Previous 1 Q 2 0 1 7 Forecast Forecast Effective Tax Rate 5 0 % 3 3 -3 5 % 33-35% Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 21
Net Operating Cash Flow s Equipment Operations Fiscal 2 0 1 7 Forecast* ~ $ 2 .6 billion $5,000 $4,000 $3,000 $ Millions $2,000 $1,000 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F * Previous forecast ~ $2.5 billion Source: Deere & Company forecast as of 17 February 2017 (previous forecast as of 23 November 2016) 22
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