DEERE & CO

Previous wording

Industry Sales Outlook for Fiscal Year 2026

Current wording

Industry Sales Outlook for Fiscal Year 2026 (in units)

Previous wording

Deeper integration of technology into equipment to enable customers to do more with less remains a persistent market trend. Customers seek to improve profitability, productivity, and sustainability by selecting our equipment and technology solutions. These technologies are incorporated into customer operations across the varied production systems in which we serve. While we continue to benefit from the adoption of these technologies, revenue from SaaS products did not represent a significant percentage of our revenues in the periods presented.

Current wording

Deeper integration of technology into equipment to enable customers to do more with less remains a persistent market trend. Customers seek to improve profitability, productivity, and sustainability by selecting our equipment and technology solutions. These technologies are incorporated into customer operations across the varied production systems that we serve. While we continue to benefit from the adoption of these technologies, revenue from SaaS products did not represent a significant percentage of our revenues in the periods presented.

Previous wording

Large agriculture sales in North America are expected to remain subdued and soften in South America resulting in decreased sales volume for PPA in 2026 compared to 2025. SAT and CF sales are expected to improve in 2026. Our net sales are expected to increase in 2026 compared to 2025 with the anticipated decline in PPA sales, more than offset by improvements in CF and SAT.

Current wording

Large agriculture sales are expected to remain subdued in North America and to soften in South America resulting in decreased sales volume for PPA in 2026 compared to 2025. SAT and CF sales are expected to improve in 2026. Our net sales are expected to increase in 2026 compared to 2025, with the anticipated decline in PPA sales more than offset by improvements in CF and SAT.

Previous wording

Global Trade Policies. In 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and on certain materials. Several countries also implemented retaliatory tariffs on imports from the U.S. and introduced additional trade barriers. Trade policies impact us in various ways. We are a net exporter of agriculture and turf equipment from the U.S. Nearly 75% of our domestic sales are assembled in the U.S., with the remaining products imported primarily from Europe, Mexico, India, and Japan. Incremental import tariffs adversely affected the cost of our products and components beginning in the third quarter of 2025 and are expected to continue to do so in 2026. The direct impact of incremental tariffs incurred by us was $361 in the first quarter of 2026, excluding the impact of tariffs on our suppliers and market demand. Trade policies are evolving, causing uncertainty in the agriculture and construction industries. We are actively taking steps to mitigate potential impacts on our business, to the extent possible.

Current wording

Global Trade Policies. In 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and on certain materials. Several countries also implemented retaliatory tariffs on imports from the U.S. and introduced additional trade barriers.

Previous wording

Legal Proceeding** –** On January 15, 2025, the Federal Trade Commission (FTC), along with the Attorneys General of the States of Illinois and Minnesota filed a lawsuit against us in the United States District Court for the Northern District of Illinois Western Division. The Attorneys General of the States of Arizona, Michigan, and Wisconsin joined the lawsuit. The lawsuit alleges monopolization and unfair competition in violation of the federal and state antitrust laws. Plaintiffs seek a permanent injunction and other equitable relief to allow owners of our equipment, as well as independent repair providers, access to our repair tools and any other repair resources available to authorized John Deere dealers. We are in preliminary discussions with the FTC with respect to a potential resolution. At this stage, we are unable to estimate the potential impact on our business.

Current wording

**Legal Proceeding –**On January 15, 2025, the Federal Trade Commission (FTC), along with the Attorneys General of the States of Illinois and Minnesota filed a lawsuit against us in the United States District Court for the Northern District of Illinois Western Division. The Attorneys General of the States of Arizona, Michigan, and Wisconsin joined the lawsuit. The lawsuit alleges monopolization and unfair competition in violation of the federal and state antitrust laws. Plaintiffs seek a permanent injunction and other equitable relief to allow owners of our equipment, as well as independent repair providers, access to our repair tools and any other repair resources available to authorized John Deere dealers. We are in discussions with the FTC and plaintiff states with respect to a potential resolution. At this stage, we are unable to estimate the potential impact on our business.

Previous wording

Net sales and revenues increased 13% for the quarter, primarily due to higher sales volumes of $988 and the positive effects of foreign currency translation of $227. Net income decreased $213, primarily due to incremental tariffs of $272 ($361 pretax) and prior period favorable discrete tax items of $163 described in Note 21, partially offset by the impact of higher shipment volumes of $188 ($249 pretax). The discussion of segment net sales and operating profit is included in the Business Segment Results below.

Current wording

Net sales and revenues increased 5% and 8% for the quarter and year-to-date periods, respectively, primarily due to higher sales volumes and the positive effects of foreign currency translation. Net income decreased $31 in the second quarter primarily due to the impact of lower PPA shipment volumes of $313 ($402 pretax), increased production costs of $122 ($157 pretax) from higher material costs, and higher warranty expenses of $64 ($82 pretax), partially offset by the impact of higher shipment volumes for CF of $148 ($191 pretax) and SAT of $79 ($101 pretax), favorable price realization of $131 ($169 pretax), and the favorable impact of foreign currency exchange of $107 ($138 pretax). Results for the first six months were also affected by favorable discrete tax items in the prior period (see Note 22) of $163. The discussion of net sales and operating profit is included in the Business Segment Results below.

Previous wording

The equipment operations segment results were impacted by incremental tariffs in 2026. The change in tariff costs was included in the “Production Costs” category below.

Current wording

The tariff impact was primarily included in the “Production Costs” category below.

Previous wording

Production & Precision Agriculture sales increased for the quarter as a result of the positive effects of foreign currency translation (primarily the Euro and Brazilian real). Operating profit decreased primarily due to higher tariffs, unfavorable sales mix, and higher warranty expenses.

Current wording

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S., Canada, and Brazil, offset by Europe), partially offset by the positive effects of foreign currency translation (primarily the Euro and Brazilian real). Operating profit decreased for the first six months primarily due to lower shipment volumes / sales mix and higher production costs, from an increase in material costs and higher tariffs.

Previous wording

Small Agriculture & Turf sales increased for the quarter due to higher shipment volumes (primarily in the U.S., Canada, Europe, and India) driven by increased customer demand. Sales also increased as a result of the positive impact of the Euro foreign currency translation. Operating profit increased primarily as a result of higher shipment volumes and price realization, partially offset by higher tariffs.

Current wording

Small Agriculture & Turf sales increased for the quarter as a result of higher shipment volumes (primarily in the U.S. and Europe) and the positive effects of foreign currency translation (primarily the Euro). Operating profit increased due to higher shipment volumes and favorable price realization.

Previous wording

Construction & Forestry sales increased for the quarter due to higher U.S. shipment volumes, driven by increased customer demand from a strong construction market. Additionally, sales increased as a result of the positive impacts of the Euro foreign currency translation. Operating profit increased primarily due to higher shipment volumes and production efficiencies, partially offset by higher tariffs.

Current wording

Construction & Forestry sales increased for the quarter primarily as a result of higher shipment volumes (primarily in the U.S.) and the positive effects of foreign currency translation (primarily the Euro). Operating profit increased due to higher shipment volumes and favorable price realization, partially offset by higher production costs, driven by an increase in material costs and higher tariffs.

Previous wording

Revenue decreased primarily due to the deconsolidation of Banco John Deere S.A. (BJD) in the second quarter of 2025 and a 2% lower average balance of receivables and leases portfolio compared to the same period last year. Interest expense decreased as a result of lower average borrowing rates and lower average borrowings. Net income for the quarter increased primarily due to favorable financing spreads and a lower provision for credit losses, partially offset by the prior period decreased valuation allowance on BJD “Assets held for sale” (see Note 21).

Current wording

Revenue for the first six months decreased primarily due to the deconsolidation of Banco John Deere S.A. (BJD) in the second quarter of 2025. The average balance of receivables and leases financed was 1% lower in the second quarter of 2026 and 2% lower in the first six months of 2026 compared with the same periods last year. Interest expense decreased as a result of lower average borrowing rates and lower average borrowings.

Previous wording

We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting operating cash flows from equipment operations in 2026 to remain flat compared with 2025 driven by an offsetting decrease in net income adjusted for non-cash provisions, and higher cash flows generated from inventory reductions.

Current wording

We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting operating cash flows from equipment operations in 2026 to remain flat compared with 2025 driven by an offsetting decrease in net income adjusted for non-cash provisions, and higher cash flows generated from higher accounts payable and accrued expenses and inventory reductions.

Previous wording

We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers. The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.

Current wording

We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers.

Previous wording

Cash outflows from consolidated operating activities in the first three months of 2026 were $890. This resulted mainly from the payout of employee profit-sharing incentives, an increase in inventories, and a reduction in dealer sales incentive accruals, partially offset by net income adjusted for non-cash provisions. Cash inflows from investing activities were $1,822 in the first three months of this year. The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment. Cash outflows from financing activities were $2,490 in the first three months of 2026 due to lower borrowings, dividends paid, and repurchases of common stock. Cash returned to shareholders was $743 in the first three months of 2026. Cash, cash equivalents, and restricted cash decreased $1,460 during the first three months of this year.

Current wording

Cash inflows from consolidated operating activities in the first six months of 2026 were $1,042. This resulted mainly from net income adjusted for non-cash provisions, partially offset by an increase in receivables related to sales, an increase in inventories, a decrease in accrued employee profit-sharing incentives, and an OPEB contribution. Cash inflows from investing activities were $93 in the first six months of this year. The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment and the acquisition of Tenna LLC (see Note 21). Cash outflows from financing activities were $1,627 in the first six months of 2026, due to cash returned to shareholders and lower external borrowings. Cash returned to shareholders was $1,378 in the first six months of 2026. Cash, cash equivalents, and restricted cash decreased $398 during the first six months of 2026.

Previous wording

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $676 during the first three months of 2026, and increased $1,062 compared to a year ago, both due to higher sales. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 2% at February 1, 2026, 3% at November 2, 2025, and 6% at January 26, 2025.

Current wording

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $2,254 during the first six months of 2026, primarily due to a seasonal increase and higher sales volumes. These receivables increased $823 compared to a year ago due to higher sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1% at May 3, 2026, 3% at November 2, 2025, and 7% at April 27, 2025.

Previous wording

**Financing Receivables and Equipment on Operating Leases.**Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases decreased $2,902 during the first quarter of 2026, primarily due to seasonal payments and lower retail customer receivables, and decreased $706 in the past 12 months due to lower wholesale notes. Total acquisition volumes of financing receivables and equipment on operating leases were 12% higher in the first three months of 2026, compared with the same period last year, as volumes of wholesale notes and revolving charge accounts were higher compared to the same period last year.

Current wording

Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases decreased $2,476 during the first six months of 2026 and decreased $1,600 in the past 12 months. The decrease for both periods was due to lower agriculture and turf retail customer receivables reflecting reduced demand and lower wholesale receivables driven by lower dealer inventory levels. Total acquisition volumes of financing receivables and equipment on operating leases were 12% higher in the first six months of 2026, compared with the same period last year, as volumes of wholesale notes, and revolving charge accounts were higher compared to the same period last year.

Previous wording

Inventories. Inventories increased by $880 during the first three months, primarily due to a seasonal increase. Inventories increased $542 compared to a year ago due to the effects of foreign currency translation. A majority of these inventories are valued on the last-in, first-out (LIFO) method.

Current wording

Inventories. Inventories increased by $782 during the first six months of 2026 primarily due to a seasonal increase, and increased by $318 compared to a year ago. A majority of these inventories are valued at cost on the “last-in, first-out” (LIFO) method.

Previous wording

Property and Equipment. Property and equipment cash expenditures in the first three months of 2026 were $256, compared with $352 in the same period last year. Capital expenditures in 2026 are estimated to be approximately $1.4 billion.

Current wording

Property and Equipment. Property and equipment cash expenditures in the first six months of 2026 were $451 compared with $555 in the same period last year. Capital expenditures in 2026 are estimated to be approximately $1,400.

Previous wording

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $1,376 in the first three months of 2026, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales incentives. Accounts payable and accrued expenses increased $371 compared to a year ago, due to an increase in accounts payable associated with trade payables, partially offset by a decrease in accrued expenses associated with employee benefits.

Current wording

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $256 in the first six months of 2026, primarily due to a decrease in accrued expenses associated with employee benefits partially offset by an increase in trade payables. Accounts payable and accrued expenses increased $308 compared to a year ago due to an increase in trade payables, partially offset by a decrease in accrued expenses associated with employee benefits.

Previous wording

Borrowings. Total external borrowings decreased by $1,457 in the first three months of 2026 and decreased $1,902 compared to a year ago, generally corresponding with the level of the receivable and lease portfolio, as well as other working capital requirements.

Current wording

Borrowings. Total external borrowings decreased by $114 in the first six months of 2026 and decreased $2,499 compared to a year ago, generally corresponding with the level of the receivable and lease portfolio, as well as other working capital requirements.

Previous wording

John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 10). The facility was renewed in November 2025, with an expiration in November 2026, and with a total capacity or “financing limit” of $2,500. At February 1, 2026, $2,025 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

Current wording

John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 10). The facility was renewed in November 2025, with an expiration in November 2026, and total capacity or “financing limit” of $2,500. At May 3, 2026, $1,738 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

Previous wording

In the first three months of 2026, the financial services operations issued $659 and retired $974 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in total short-term borrowings (original maturities three months or less).”

Current wording

In the first six months of 2026, the financial services operations issued $1,439 and retired $2,108 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).”

Previous wording

Worldwide lines of credit totaled $12.2 billion at February 1, 2026, consisting primarily of:

Current wording

Worldwide lines of credit totaled $12.7 billion at May 3, 2026, consisting primarily of:

Previous wording

At February 1, 2026, $7.2 billion of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements.

Current wording

At May 3, 2026, $5,947 of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements.

Previous wording

Certain statements contained herein, including in the section entitled “Overview,” “Trends and Economic Conditions,” and “Condensed Notes to Interim Consolidated Financial Statements” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business.

Current wording

Certain statements contained herein, including in the sections entitled “Overview,” “Trends and Economic Conditions,” and “Condensed Notes to Interim Consolidated Financial Statements” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business.