2026 05 21 Deere DE Q2 Fy2026 Earnings Call

Summary

Deere Q2 FY2026 net sales grew 5% to $13.4B, with strength in construction and infrastructure offsetting large agriculture weakness. Large ag demand declined because grower margins face headwinds from elevated input costs (fertilizer, interest rates) — directly relevant to the cattle cycle/El Niño/nitrogen thesis. The company maintained full-year net income guidance of $4.5–5B but flagged $1.2B direct tariff exposure (~3% margin headwind). Precision ag adoption accelerates: See & Spray covered 1M acres globally, and monthly active digital users reached 440,000.

Transcript

Brent Norwood (CFO): Deere's net sales increased 5% to $13.369 billion, driven by "diversified performance across segments" with strong construction demand offsetting weakness in large agriculture.

Brent Norwood (CFO): Large ag demand declined significantly because "grower margins face headwinds from elevated and volatile input costs and high interest rates." Commodity price improvements provided limited relief as farmers face margin compression from fertilizer cost increases.

Brent Norwood (CFO): "Year 1, we covered 1 million acres last year globally" with See & Spray technology, demonstrating growing digital solution penetration. The company reported "nearly 440,000 monthly active digital users" and "25% quarterly growth in global JDLink Boost kit sales."

Brent Norwood (CFO): Management maintained full-year net income guidance of $4.5–$5 billion but warned that "direct tariff exposure remains essentially unchanged at approximately $1.2 billion which is approximately a 3% margin headwind," creating structural profitability pressure despite pricing discipline.