Deere (DE) Q3 2026 Earnings Call: Q&A Summary

Q: Jamie Cook from Truist Securities asked about the setup for 2027, specifically regarding production versus retail by region and pricing expectations for the early order program.

A: Chris Seibert noted that production is modestly under retail demand for Production and Precision Ag and Construction and Forestry. Deanna Kovar added that pricing aims to cover inflation across the portfolio.

Q: Jerry Revich from Wells Fargo asked for an update on early order program demand variability by region and the potential for high single-digit growth.

A: Deanna Kovar stated that the U.S. is trending slightly better than Canada and that strong technology take rates for planters and sprayers are encouraging signals for recovery.

Q: David Raso from Evercore ISI asked about the cadence of early order program orders and if recent grain price improvements influenced the results.

A: Deanna Kovar noted that the cadence is as expected and that she would not read too much into the timing of the orders.

Q: Rob Wertheimer from Melius Research asked about A-Series tractor orders and the outlook for Europe given farmer stress and input costs.

A: Chris Seibert said 8R orders are as expected. He noted that Europe is a mixed picture, but dairy and livestock producers remain stable.

Q: Sabahat Khan from RBC Capital Markets asked about the positioning of Brazilian and U.S. farmers regarding input costs and their impact on crop decisions.

A: Deanna Kovar explained that farmers remain resilient and focused on yield, and while they are considering alternatives for inputs, they are staying nimble.

Q: Tami Zakaria from JPMorgan asked for clarification on the change in tariff impact from $1.2 billion to $1.1 billion.

A: Chris Seibert attributed the change to Section 232 tariff adjustments effective June 1st, noting that this will provide a tailwind for fiscal year 2027.

Q: Steve Fisher from UBS asked whether the net tariff impact would be a headwind or tailwind going into 2027.

A: Brent Norwood stated that net tariff exposure is approximately $750 million this year and expects it to be closer to $1 billion next year, representing a step-up in expense.

Q: Tami Zakaria from JPMorgan asked for an update on the excavator launch and the timeline for broader adoption.

A: Brent Norwood said three models have launched with positive feedback, and the company will continue to roll out the portfolio over the next 3 to 4 years.

Q: Steve Volkmann from Jefferies asked about the status of Construction and Forestry early order programs and the role of rental fleet loading.

A: Chris Seibert reported positive order trends with 4 to 5 months of backlog, noting that rental fleet growth is a key driver of momentum.

Q: Chad Dillard from Bernstein asked about pricing dynamics in Construction and Forestry and the company's rental fleet strategy.

A: Chris Seibert stated that pricing is going well, and Brent Norwood added that rental exposure is growing, with 30% to 35% of earthmoving transactions starting as rentals.

Q: Kristen Owen from Oppenheimer asked about the inventory build in the third quarter and the bridge between the third and fourth quarters.

A: Chris Seibert advised not to read too much into the recent inventory changes. Brent Norwood noted that fourth-quarter margins will be lower due to the absence of refunds and seasonal R&D and SA&G costs.

Q: Tim Thein from Raymond James asked about the potential impact of technology sales on the mix in 2027.

A: Chris Seibert said it is too early to tell, emphasizing that the company is focused on controllables like inventory management.

Q: Angel Castillo from Morgan Stanley asked about early order program pricing, incentives, and the implications of the FTC settlement on the aftermarket business.

A: Chris Seibert stated that pricing covers inflation. Brent Norwood added that the FTC agreement formalizes existing support for customer repair and will support the life cycle solutions business.

Q: Peter Kallikrein from Baird asked if European demand might be pulled forward or delayed due to upcoming policy changes in 2028.

A: Chris Seibert said it is too early to tell, as the order book is only 4 to 5 months out.