Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Net Sales and Revenues | $12,608 million | Up 5% |
| Equipment Operations Net Sales | $10,999 million | Up 6% |
| Net Income | $1,379 million | Not stated |
| EPS | $5.10 per diluted share | Not stated |
| Production and Precision Ag Operating Margin | 13.2% | Not stated |
| Construction and Forestry Operating Margin | 12.1% | Not stated |
Guidance and outlook
- Full-year net income is expected to be between $4.75 billion and $5 billion.
- Production and Precision Ag net sales are expected to be down approximately 10% for the year.
- Small Ag and Turf net sales are expected to be up approximately 15% for the full year.
- Construction and Forestry net sales are expected to be up approximately 20% for the full year.
- Equipment operations cash flow is expected to be in the range of $5 billion to $5.5 billion.
How management sounded
Positive (+6 on our -10 to +10 scale). Management raised full-year net income and cash flow guidance, citing strong operational execution and a solid order book despite regional market softness. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Production vs. Retail
Asked: Jamie Cook from Truist Securities asked about the setup for 2027 regarding production versus retail by region.
Answer: Management noted they are underproducing retail demand by a couple of percentage points in both Production and Precision Ag and Construction and Forestry to manage inventory levels, particularly given caution in South America.
Tariff Impact
Asked: Tami Zakaria from JPMorgan asked about the change in tariff expense expectations.
Answer: The annual tariff expense outlook was lowered to $1.1 billion from $1.2 billion, primarily due to changes in Section 232 tariff rates effective June 1st.
Early Order Programs
Asked: Jerry Revich from Wells Fargo asked about regional demand variability in early order programs.
Answer: Management noted that the U.S. is trending slightly better than Canada, and they are encouraged by high technology take rates, such as See & Spray adoption.
Europe Outlook
Asked: Peter Kallikrein from Baird asked if policy changes in 2028 might pull demand forward in 2027.
Answer: Management stated it is too early to tell, as they are just beginning to collect orders for the first quarter and are monitoring input costs and commodity prices.
What to watch before the next call
- The pace of recovery in the agricultural equipment cycle for 2027.
- The impact of potential changes in European agricultural policy on demand.
- The continued adoption rates of precision agriculture technologies like See & Spray.
