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DE Deere & Co.

Participants
Josh Jepsen Director of Investor Relations
Brent Norwood Manager Investor Communications
Cory Reed President of Production & Precision Ag
Ryan Campbell Chief Financial Officer
John Stone President of Construction & Forestry
Rob Wertheimer Melius Research
Jerry Revich Goldman Sachs
Jamie Cook Crédit Suisse
Stephen Volkmann Jefferies
Chad Dillard Bernstein
Tim Thein Citigroup
Kristen Owen Oppenheimer
Adam Uhlman Cleveland Research
Ross Gilardi Bank of America
Mig Dobre Robert W. Baird
Joel Tiss BMO Capital Markets
Stanley Elliott Stifel
Courtney Yakavonis Morgan Stanley
Larry De Maria William Blair
Call transcript
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Operator

Good morning and welcome to the Deere & Company Fourth Quarter Earnings Conference Call.

Your lines have been placed on listen-only and for the question-and-answer session of today's conference. I would now like to turn the call over to Mr. Josh Jepsen, Director of Investor Relations. Thank you.

begin. may You

Josh Jepsen

Today, can on are Chief Also and markets this spend today Ryan we'll earnings Investor are Ag; at closer Good fourth Deere's questions. your respond Officer; the our current Cory our quarter Communications. of accessed available Manager Financial Brent complement Production take for Reed, Campbell, a call and and be slides look the morning. and Norwood, call to we'll President Precision time They website some about fiscal our outlook morning. to Please our talking at XXXX. that, on note, After johndeere.com/earnings. of

Any remarks is and of transmission use, portion as prohibited. reminder, transmission of call, the including uncertainties. that recording media of by call future to any First, without and Q&A broadcast that strictly subject stored this session, forward-looking is consent may live Participants Company. call. agree the for the likeness projections on use and the written being in plans are important used concerning recorded part this the other for comments earnings of Deere in includes the risks be This expressed Internet the all company's call or and a copyrighted & and as future broadcast and Deere their

GAAP. Securities with in in the of not is Additional with are recent information and United concerning generally include accounting factors Exchange differ reports financial actual or the principles accepted call company's may in filed contained most that results that materially America could States cause Commission. X-K measures periodic to conformance the This Form and

on call is Quarterly to the reconciliations to Additional now the and Brent information Events. johndeere.com/earnings under measures, measures, at release website over GAAP concerning included turn our I'll these in Norwood. Earnings and comparable including posted

Brent Norwood

of continued the of from the over the strong quarter, in our equipment year the demand in the course lean another Deere fundamentals also through XX.X% and operations. XX remained XXXX. benefit Ag to solid in robust markets financial fourth to execution the Forestry years. order indicate resulting strong Meanwhile, results strongest books with leading in margin year demand the John division's Construction finished & inventories, year a for and

let's look results X. on at closer take Now, XXXX, a beginning year-end for our Slide

like equipment I'd XX% was the and for call Company to Cory? nearly time, results were income full diluted the $X.XXX attributable results XX% $XX.X an share. Cory ag equipment quarter. were update to and Deere global the billion, For Ag, the for while $XX.XX Net $XX were Slide operations sales $XX.X fourth was net sales or billion sales to share. increased Reed, billion. Company to President per At discuss for XX% provide year, sales attributable net welcome the on to up and XX% income while of up Production this revenues per to billion environment. net Net Deere diluted the the & and shows to revenue segment's & $X.XX Net or Precision $X.XX X billion. operations to $XX.X to billion, up

Cory Reed

Thanks, Brent.

results, dedication of times part and often of toughest and network, upon also I'd in but the dealer running. Deere hard tremendous John with to unpredictability. the called of throughout that's all and a keep our our our filled market for only employees cover in I'd like value the I capabilities XX,XXX Before their also recognize recognize quarter Deere's John work proposition efforts ongoing not customers unparalleled fourth year an of to to integral up the like

was realization. Price were of shipment the on primarily fourth Slide realization last and last seven XX% year. roughly Production operating price quarter period for million, increase Net X. and results to for was the point. in Operating in driven year-over-year quarter Turf with higher up translation fourth was employee was XX.X% The mix, billion price just was $XXX the Shifting activities. the higher impacted four to $X.XX the was worth realization, $X.X year, positive same totaling Small billion were and by by currency margin fourth margin a that volumes translation quarter by The offset resulting due positive over start realization. by Precision the shipment by to last primarily by production Let's positive it's from noting XX%, for up starting resulting restructuring increase about costs. points, one expenses Price price Ag in profit XX.X% separation sales sales on & segment quarter compared Net by Slide minimal. points volumes results volumes higher was quarter. also in positive compared X. Ag and to realization partially currency Also, shipment and negatively focus driven year's higher were while

period fourth U.S. year's separation ag expect and in turf In globally. XX.X% operating resulting another exceed ability outpaced delays offset outlook costs, and XXXX, margin. The to year to as year shipment the constrain large Slide a costs shipments. Canada, quarter, and supply. $XX consecutive in quarter supply-based to few of early ongoing. fleet care Series combination later ExactRate for order markets advanced demand the pressure for of year. in are the to the combine increases keep When low Series partially impairments. X cases production year, Planners full, where and reflecting of the compared XX% supply production of XX% the mix combined over fundamentals, to produce the were industry's we've books strong orders well dynamics year approximately as SA&G. was of to still demand and X all and second except allow operating take Advisor, year of the and of full, we shows inventory by are inflationary a Meanwhile, XR up industry a comparing the sales industry's are customer quarter products, our XX for More XX%, track continue remainder our introductions mainstay the crop orders year-over-year. rates be the realization still premium with 'XX, continue saw the $XXX upcoming when ag the mind, for are large included book million, while 'XX, higher expect sourced significant our caused age to price tractor manage activation profit in the For and rates sales program In volumes, complete an R&D Currently, in to shortly. With ability into by prior our million while and higher third to industry demand. out to slots present to driven strong Order expect these that for equipment we fiscal fill we production over the reevaluate automation us our orders for mostly and challenges take Combine software encouraged ExactEmerge, product last higher and technologies recent such tractors. for like We're precision ExactApply and are

to acres of doubled our digital of XXX tools engagement million in with acres, in a in the saw has number part significant past sharp Engaged engaged the XXXX. in industry digital increases where has stand over increase the Europe, now limit last Likewise, and acres Additionally, use over customer at as our due we such increased by features expect and Alerts challenges Service In continue we production. year. compared Canada Ag segment, in & supply Remote about Advisor Expert to industry for XX% the to to year remain Small sales flat U.S. as Turf year. the

field demand, to levels of XXXX. years are begin until are two robust lows very at and sometime multiyear inventory Following recovering in unlikely

commodity business dairy as in remain some Arable conditions Europe; to roughly industry strengthened segment prices on be the up even prices forecast resilient Moving pressure margins from to and input is rising as the show X% costs. higher

to as profitability robust customers Tractors. to production we prices, at sales continue for will outstripping expect Mannheim order supply-based favorable of from our tractors X%. South face this book and In America, from benefit year. the industry into about industry the combines demand the third and Farmer steady commodity environment. and expect production in all-time remains sentiment quarter currency our constraints, resulting time, At highs extends a increase We record

sentiment by Our into as and which allowed grow. currently to financing far equipment in it sales units, Despite strength the strong XXXX. customers enable strong is supporting market extends continued is farmer the as limited order many steady Asia in hold are private programs, sheets flat second quarter as we've reflect Industry demand, books be while financing government-sponsored using in balance world's to tractor largest cash. to India, the forecasted purchase

our X. on beginning Moving segment to Slide on forecast

in between fiscal Ag, sales are For to net and Production Precision XX% 'XX. XX% year be & up forecasted

full the expectations of price of nine year. points for about Forecast realization positive includes

reflecting operating For performance for year the Turf and Ag forecast consistently full the financial segment. between forecast & Slide segment's our regions. across various XX% the geographical our solid Small X is margin, shows XX%,

We point Norwood. back one turn range is in to With Brent margin includes XX% of headwind. year expect forecasted This between of up roughly seven and XX% be net guidance currency 'XX I'll segment's to and nearly sales XX%. price The to over positive operating that, it realization fiscal XX%. points to

Brent Norwood

Thanks, Cory.

let's Now Slide & Forestry Construction focus XX. on on

and higher partially resulting moved of six realization $XXX shipment included shipment SA&G net production billion X.X% higher positive price of XX%, points offset sales and the quarter and expenses were by onetime due volumes, the margin primarily costs, lack also to For of a the in to operating positive $X.X profit due from volumes Operating higher benefited million, prior R&D. period. price to higher The quarter, up realization. in year-over-year

and activity and to in earthmoving expect XX% come in industry oil forecast, Demand Forestry gas even now Let's CapEx programs to for earthmoving from the down construction lumber levels, production XX%. expected X% and fiscal from continued housing to XXXX forestry, have as the well though compact as as low America the strong rental construction expected to our strong earthmoving equipment we our equipment. between sales expected sector 'XX are industry North compact turn up on equipment production In peaks resulting year End in be prices to companies. exceed and especially strength construction our levels market from for benefiting in remain XX. about year, compact in throughout continued markets remain Slide the lumber to increased Construction year, are is & independent the inventory for compact XX% up in the to Both mid-summer. be equipment at elevated outlook for industry and looks

XXXX Moving up XX%. to & to between sales Forestry forecasted net XX% on outlook segment are Construction Slide XX. the Deere's to C&F be

eight year sales positive points for of net the Our includes realization. guidance about price

year. prior XX.X% to the and the volume for between segment's margin year, lack the and be items operating of We onetime price, from XX.X% benefiting expect from

now on partially earned let's on operations our in the Financial attributable to quarter net employee lease operating improvements $XXX also portfolio, was credit Services prior Now, affected for Results as to separation offset losses. by financial & XX. move from income fourth services Deere a million, Worldwide provision the by higher for were Company Slide income costs. the benefiting

year guidance for effective net fiscal average $XXX For higher is is expected operating to net a segment and XX XXXX, to portfolio. income, income from our the rate as our million the Slide flow. tax benefit cash forecast continue outlines

expect is half and as logistics price for XXXX, this the to likely prices the cost our For year higher negative to realization income is entire comparisons of the material net $X.X material from of and quarter. time, price impact the fiscal back 'XX. both to will we get billion easier forecast expected full At and year, of first outlook we fiscal in costs half billion. in though XXXX. cost itself our for of to The manifest time, the $X this At relative freight be year that is full increase forecasted year year raw in between X/X the the first forecasted year be outpace inclusive

Moving effective guidance tax; between on projected rate an our XX% tax to XX%. incorporates and to be

contribution voluntary and the is $X range equipment in includes billion our $X OPEB to and the operations of $X.X from flow to expected be to cash a billion plans. pension billion Lastly

details Q&A, Before additional we range cover around as new we'd to the the around well like first to I'll of some our current provide for some the the on line as year. few open for dynamics, for we'll next the the likely questions. our agreement market allocation topics, a of and labor and To financial up questions address then open call color today's additional the thoughts provide participants up line engage results capital

and color can start some additional resonating which demand on ag ag new to with like demand I'd with First, for for large current the technologies environment customers? products equipment. large you provide Cory, are

Cory Reed

of take going I Brent. of that Yes. technology. Thanks, order like XXXX. both for latest in let doesn't We're by has and since to Demand of velocity strong look books earlier. our XXXX. overall, this the encouraged some been beginning rates the touched our on And the up really it's

seeds most our new know Center entire part will subscription in easier technology Planner, and leverages finish the line and ExactRate of your we'll really Deere find creates exactly of includes Our products, customer's and X and that foundational products and we've row the [ph] step of including displays, a technology feedback we've both first SF-XXXX helping order accurate. Deere more XXXX that path, of lines. manual customers. grow productivity row highest-value our or strategies of important F-Series where package combines. in to represents our for newer We'll Deere's North customers every it software. strong fertilizer. data global new even step this of just our and customers' making the Future making a We're That year, ship ramp-up to of automated the product application X,XXX-plus In and in an guidance while demand the X continue season, further like seeing harvest, planned add close to AutoPath. in In in SFX production is onboard near we January, establishing the a Fertilizer signal for then Systems of the Class full product planting precision nitrogen market rates correction from books iterations some activation efficiency. harvest launch our value like year use of easier fertilizer large XXXX In be precision applications, automation solidify and more EOP ExactRate XXXX, or for units efficiency software we'll John production John in to are double, precision clear combine the of the future, Plus John with makes to passes XX is to Power XX rates This our XX AutoPath, of subsequent package combine be more to AutoPath, second for production benchmark through better. first America efficient. product Operations the for even critical ag it our for embedded receivers, in-season unit leverages plant to to easy beyond, multiyear software each categories, into North for us production first features take will production AutoPath. out seeing linked or be our will weeding we're the either new also production XX% for take and full alone. technologies Deere's our AutoPath ag John levels of EOP, saw and protection for and full Starting tremendous of system also Applied which a traveled American leading cultivation we'll where already AutoPath sold from throughout even seen improve it's as a which farming with encouraging. for more Similarly, leadership in ag enabled Gen makes cycle. the crop At in

& Spray we're to a hands. and customers' the as year Spray hit is We into just on get view going See market limited basis & Spray. Lastly, & we're See the to excited Ultimate See this In more & in both that early journey, for series first step see future. See itself long to of by to demand sense management and products a related plant multiple Spray the act. and encouraged in level

Brent Norwood

in this little market us bit North in 'XX fiscal a expectations then ag share Can the some let's dive next Let's Cory? American saw walk for we for in through market that progression provide year fluctuations 'XX. share you 'XX, on the year first deeper year and of fiscal large

Cory Reed

from Demand we due share our 'XX asset-light in sharply on year. XXXX to to And a model. pressure 'XX October January [ph] early was market inflected year timeframe. result, Yes. experienced a as Sure. unique the

you that noted earnings fourth last and If our in to talked dynamic that's quarter share call quickly. we what recall, recover exactly that expected this year about we And happened.

last see tractor In fact, products market share the an that we in for our of three gained two for of quarters North the And XXX-plus you points horsepower of in can retail ag America sales categories. data year-end. by large example

Brent Norwood

didn't our play recent market might this agreement ratify that next most year, XX? how until share So labor out November given

Cory Reed

question. record great quarter with precision, and we forecast us to ramp throughout our to first a the also see similar production lot the year. as a that's to inventories expect very very in it's maintain recover pressure execute but out low likely as play similarly. from see Yes, position XXXX even a early too we for while the we We're And of that grow helps potential

Brent Norwood

the some agreement. to of latest our pivot Let's labor details on

the of there incremental the on of cost new contract is out relative the previous most One questions one. frequent the to

the structure? So cost to investors about think how impact should our

Josh Jepsen

impact First, of With contract UAW really the to put that our it's in structure, moving have we there and parts are to we're proud agreement. groundbreaking few our employees back on note, to glad a factories our respect important in to the cost it's place.

directly Some benefits immediately. and impact components wages

period. accrue benefits, While outside longer largely many have the will tail of the others, contract retirement like a that of

Over $XXX million operating the per be and cost impacting that six-year pretax million year, of XX% margins. $XXX with will contract, the between incremental

Brent Norwood

resulting lost cadence run, of results? a current contract that the impact in financial experienced of we So our How does weeks the quarterly production. a between gap the last and few

Josh Jepsen

quarter. impacting items of Yes, there are number a first the unique

'XX, a about quarter expect for pretty plus the you First, the to line weeks first -- first the ops equip would to be of Missing if we quarter top we few similar the 'XX. will and things Cory some of that ramping to margins, With consider. terms up production benefits a to there respect to of in neutralize few of January. December mentioned higher line in rates are think

The for year. first our quarter the comp have will toughest price/cost

that We year. full positive negative for expect the the quarter in first be to but

don't and credits expect first experience that We average. All are And items to quarter onetime first of to some quarter poor 'XX. be to the in some due digits have also the in, favorable 'XX, to bonus as including lower tax to equipment drag, be that there expect affected for below mentioned. absorption the a saw margins single other ratification businesses in most with few we repeat additional provide volumes will that we delayed that been mid- ratification by the high that those operations, overhead

thinking averages. the the And rest of maybe just it supply some margins, stoppage as full about and year a first work margins of we disruption. do and the more about expect to back the we'd combination quarter, will beyond one and the in more be on though stepping is impact for of say with favorable of historical lower result line year a be incremental point Looking

Brent Norwood

Switching 'XX? would what in topics, we might capital strategy characterize this discussion year? fiscal let's expect And year how our Ryan, capital with you conclude around some upcoming allocation. allocation

Ryan Campbell

cash XXXX, and priorities. to to us liquidity respect execute With against really allowed our all Brent. our flow Thanks, cash of generation our Yes. position strong

our our that, growth in on we But and organically A beyond credit focus maintaining both invested rating. strategic inorganically. to continue We solid priorities,

capital billion shareholders $X.X through and share to over in dividends returned we repurchases. addition, In

Our to evidence confidence as blueprint our all our Overall, of expect in we two we how about power of serve in of have our as a execute actions structural XXXX XXXX priorities. think business. to earnings again, against made the are in we've improvements the for dividend good the increases

Brent Norwood

capital. discipline businesses? continue to on with respect But back can into investing returning like you Sounds further we'll to elaborate any see our

Ryan Campbell

through foundation our that we smart are The industrial investment customer a increase the of resources value Brent. M&A. that focus both lens differentiated into to place put for and inorganically areas on most in business, that Sure, we through organically the Yes. back to strategy from XXXX during us are the perspective. that It's our positioned level is

We're the up The and Investor solutions, on you focus capabilities to autonomy, which of tech can stack our investment accelerates connectivity in our digital is the our see at mid-XXXX. in R&D related As and is increase Tech developing many XXXX. sense planning to our of in electrification. Day guidance, XX% further demonstrate new our act, technologies

So exciting that stay event. tuned for

as the to to relates us continue the we to Finally, last it aligned expect with be year. that themes over M&A, active, discussed have

Brent Norwood

to in there is else investors like for anything you'd Lastly, XXXX? expect to that highlight

Ryan Campbell

in goals, that do to are a important put for the We That strategy positioned rolling the of opportunity of have note, this we new year and out XXXX related On suite to place sunset our very set sustainability well business we have be what shaping the can to the we next a we'll highlight is accomplish that our and rest up goals. us. that will and accomplish Accordingly, year. of we will be over think goals decade. both

value, we our outcomes of the improving delivering and earnings sustainable more Importantly, in customer direct own are creation environment. there for positioned, uniquely our alignment is that between

So expect see to -- those together. a that comprehensive elements to of expect of all really suite brings see Brent, us goals

Josh Jepsen

of the to to please participate we're others ready one of The allow in the procedure. hope the call. question. more consideration yourself of and you operator on to instruct Now, In our Q&A limit the polling you will to portion call, begin

If queue. you the you we questions, have that Tasha? ask rejoin additional

Operator

first Instructions] Research. [Operator Melius Wertheimer question Our comes from Rob with

Your open. is line

Rob Wertheimer

the for all technology pipeline means, if herbicide on whatever launch? question can expand what Thank for geographic My the the way how Spray versus good you wonder, color. the fertilizer if in limited scope everybody the launch thanks is I of Hi, & Ultimate. and morning you you. don't could, and/or can talk See progressing. know I is on about you

Josh Jepsen

in. Cory, and there start add I'll Yes, please

so we out hands. about really continuing evolve customers' and And performing again, response with good as We in get both And the that customer we'll think how production cotton, corn, out, their we into numbers we're exact units. I have again, feel haven't it to put but through there. multiple really, hands soybeans, products,

Cory Reed

the would the with nozzle use Yes. I individual Spray through in put control. product this market to & gone into and our year journey say full See ExactApply supply. Select and started ability the We've

the that's Ultimate. a in XXXX with many brown business taking Select 'XX show green model in commercial See value units to of We're and now So Spray both That's prove we'll application there. & or out on into customers ramp then solution. the -- our from and

it's So and journey. a lot We're of exciting going a about for it really excited it we're demand seeing forward.

Josh Jepsen

Yes. Thanks, Rob. We'll go ahead question. and go to our next

Operator

Jerry Revich Sachs. with Goldman

line Your open. is

Jerry Revich

good we hi, looks that of cut stands half in levels. tell inventories And outstrip for where 'XX? you supply potential Yes, on specifically? wondering XXXX base from it to folks equipment Thanksgiving talk can in about I'm what maybe your you beyond everyone. you're know But you comment new data what on the installed used you if closely does morning equipment I industry and happy what like can that's demand for about that the seeing see, based track it equipment? equipment

Josh Jepsen

as which making trade is trading more in increasing farmers our really differentials, are -- trade differential for excuse me. impacting differentials those been that make look so when levels been driving at think has what mean, up their at pull well or inventory, prices we've that's in that ag, of used, that over particularly decade haven't we I I levels So, for down. a tremendously large And low seen we used positive used they and we're less, at product,

So I big piece. think a that's

and we those about that the levels the are, just cycle overall cycle. also Cory, inventory as replacement that that recovery think we're it's seeing some you'd think lower I I of extends think important, anything there, add?

Cory Reed

we've the the and well would see Josh we that No. below we're said years. in bands been XX normally lowest it,

have of some combination a have on albeit you of the income solid on. with financial farmers, inputs. part Obviously, in You going factors headwinds

driving their new have it's highest you you opportunity We values ever the have the an trade fleet, tremendous demand. to they've equipment traded at have technologies, aging and

can that So It's out right right now, making side is we demand product limitation into but used figuring used all-time and market the supply is significant going now sure really deliver creating the every the at is forward. low.

Josh Jepsen

go and We'll our next question. ahead Jerry. to Thanks, go

Operator

Cook Jamie Suisse. Crédit with

is open. line Your

Jamie Cook

-- up a Hi, of just the given high up be R&D jump. good in going XX%. forward? big the pipeline wondering range M&A R&D, ag focused for that morning. teens is it guess with precision technologies, can type the you front, sort And a then if just on and just sort on we're of structural solutions? technology, there about I'm question, just going what should I That's implies the Thanks. where talk

Josh Jepsen

components really effects R&D, at to the is of increase centralize where we're pulling to maybe, pull the that and The bit some of 'XX, a some stack. Technology org the creating down Officer we compared that which looking allow 'XX, were in was Chief and the the of of together did tech organization, us

So we saw some elimination of redundancies.

mentioned, we can focused and sense differentiate 'XX like act, the areas accelerate really connectivity. and that's in where of really which we electrification, So increase on Ryan terms jumping the off in point this that for then autonomy, is feel

there customers M&A? value the accordingly. So to opportunities for where see those are biggest and deliver spending areas the we Relative are to

Ryan Campbell

is This Yes. Ryan.

we've it example and these that. and an the example for value solutions, use. connectivity respect a and autonomy with got Harvest Profit transaction of over year, along trends customer's like overall with platform it P&L to autonomy, last we as to we With to of act thematic management as to M&A, relates we've also that and digital sense building, the and talked digital electrification. So solutions, An we're making of see our super accelerating, expectations of Bareflag which and respect seamless is that's a them right delivering easy acquired

months. the relatively so next full several pipeline And over got we've a

along to do to that us allow active deals see and us and close continue be You'll thematic deals our those trends. source accelerate journey

more the you'll and come to area in over this be next years. So stay us several active see tuned,

Josh Jepsen

thing, one maybe And Jamie.

that's a the missed This in question or this opportunities technologies always Sorry, step-up invest fair where compared reserve represent see were. And for part today. I to value. think does reasonable think a view the we bit to the to future we where of Again, level. we where as we new are just of was create new of I your operate. a we right But broadly, level is

Jamie Cook

thank Okay, you.

Josh Jepsen

Thanks.

Operator

Stephen Volkmann with Jefferies.

Your line is open.

Stephen Volkmann

we inventory new Does Or but morning, 'XX? anticipate go new if your on good side. of I'm everybody. And get the does touch pushed sort into back rebuilding inventories? that wondering could to any for out plan 'XX

Josh Jepsen

does little imply very no it inventory Steve, to build. really

Given some demand the broadly seeing of to field above build the industry's coming historic levels ability what produce lows. inventory off we're of

inventory targets For or are at And the look year. teens they inventory tractors small equipment, there example, the construction XX%-plus the are to to if probably closer we in sales sales. compact we ended to as

there's So room low large there. really comes sales, combines inventory of single we're row to crop seen to And traditionally a XX% down, not digits. before, we've go even which where levels at ag tractors, lot

So not that as very we we continued see And drives I recover one. inventory do this can few see the need just how we very, to forward, in as replacement see low. think years, over a positive that

Stephen Volkmann

Thank you.

Operator

Chad Dillard with Bernstein.

Your line is open.

Chad Dillard

guys. morning, good Hi,

of cost So you labor the on my the increase. any to I'm fatigue question fertilizer sense on what price term, get in of is, there pass there's we could farmers? near trying guide? actually equipment how And a given much on impose from whether prices the to higher cost room some just the see is

Cory Reed

Yes. Thanks question. for the

to think their certainly, headwinds cost. relative have farmers seen input some I overall

their them think for the -- able being to is I to first deliver technologies focus improve on to that profitability. part help us

or and technologies our yield ability our make more to So create or of the deliver differently. their the comes give to cost machines pricing that a manage them them from ability lot

of part that's So big a it.

for efficient or their out equipment the model for the in can with we obviously, allow field. to upon what of and by that. of we our XX examples you sure Now in delivering commodity using by tell can is or go the of commodities also that's the and put large, the increases, him last AutoPath, each But they more and do more they been make either field, pricing to us would each to And profitable or allowed is Spray a do, that's I the See and recover that opportunity those that's more based cost to And create there. there's them lot yield the relative some manage them being able to to that focus. XX time months, value make that the be the &

Josh Jepsen

thing pricing. too, very other seen overseas that's The price impacted strong been we've has

both as environments, reacted taken well to FX inflationary So price. movements as as more we've we've

throughout market really production that 'XX we -- and seeing the ag, that. 'XX, we're in into has precision overseas if and So low double look pricing digit at driven

So don't piece see that as is one looking to as The continue discounts. much tailwind we we that or we repeating lower on forward, see occurring. think,

back half the 'XX, not As down pulled and 'XX discounts of left there. there's we through much throughout

we So that when another thing is price. think about to consider

So thanks, ahead Chad. Appreciate the question. We'll go next caller. our and go to

Operator

Thein Citigroup. Tim with

Your line is open.

Tim Thein

the Josh, of points margin of, percent XX-plus basis it, Precision so so Production morning. billion maybe Ag on improvement Good & dig sales into price. growth, guidance to $X.X Thanks. or XXX under call of with positive

that points through, it, that walk assume from call we maybe you margin to us how of I segment? you just tailwinds amount -- maybe assume, for XXX and that I'm full to but disproportionate you that correct work obviously, is the segment? on -- maybe basis me can talked get for that company, I as about maybe would us the walk total through as Maybe the Just that, stoppages, about, the think impacting headwinds

Josh Jepsen

cost impact amount impacting freight of the Production some we and The affected. largely right. takes, Sure. proportion would & most that quarter, cost, about mentioned, in first particularly you've think outsized as Precision we material There's overhead and higher I drives lower And got ratification is you year lower you're the puts portion onetime expect again, production and had the of -- Ag, an $XX the of there, which bonus. if that absorption, in items And some may last benefit million about XQ fourth me, Ag. recall, have price from in first negative Precision to larger be year like quarter, then excuse you And overseas quarter & or we last Production a -- the related. in in taxes, in

quarter. first the in this against goes that So

XXX run to absolute down from thinking margin which margin of the expect mentioned, from that incrementals Stepping pulls return the full to and see forward pretty point an absolute historically them. view, you would we about that where bps then significantly. So the about we higher that year

through for year, QX rest So of around XX% XQ so [ph] PPA. incremental

Tim Thein

Thank you.

Josh Jepsen

question. Tim. go jump Thanks, We'll our and to next ahead

Operator

Oppenheimer. with Owen Kristen

open. is line Your

Kristen Owen

Can really incremental for et customers' question exploring in you're cetera, service, is that you what types for speak incremental coming you. at of Thank The of rolling functionality? years. that AutoPath that Cory, ability how current the to model functionality about sort and participate over talked one just the about out about business to you you're you're looking thinking that subscription, be models, solution? it

Cory Reed

see Sure. this. for in from on And this coming thinking some we out quarters roll objectives we're how you'll us as the more about

functionality things ways of is of allow machines solutions base working did will the put AutoPath with into easier future. automation this the where either to we'll functionality that that and both we vehicle every customers for, the functionality new further just make we're adopt. start One in at talking sure the about through functionality of like making vehicle new case, we into with looking ahead And would us to us started or machine, in for that that guidance to the putting and a making years allow ship the the series base sure to or we're business past, in the models upgrade it features

that right rolling we're on that We're our journey, precision we're So hardware. out ways ag doing that path that with now.

software do us more see You'll subscriptions with our it and going forward.

they and work with can today from in revenue it we're grow customers and us that to how how consume that their you'll we So operations and cooperating continue out to working stream on future. and the see make like

Ryan Campbell

Kristen, it's Ryan.

and how the we're through ongoing As the our business about what see model can you'll over about our goals, field we roll decade think to across our evolution of with respect more and of Cory an us customers think basis. value business time next-generation an every the delivering a go talked talk next that's and through out model of we

to more come on So that.

and can from that us have we what targets deliver think see some relatively goals we You'll on evolution. specific

Kristen Owen

you. Thank

Operator

Cleveland Research. Adam with Uhlman

is open. line Your

Adam Uhlman

forecast? turn you better. be won't more you've improve? that what guess to some with getting which so share Thanksgiving. be should to Happy tough What at chain everybody. And that held maybe had your you're included up I what back insights exactly you much have still limitations curious I could I'm seeing? wanted capacity Could more could visibility mentioned. to Hey, start on maybe so? how the chips what that or back in issues and supply to free And the year by suppliers maybe you supply maybe for chain another

Josh Jepsen

expected work a so of quarter, call to and supply more the the more or Between challenges There if We in challenging ago deteriorate. was quarter supply saw. of environment point it, in quarter impactful XQ probably some did back in it the the you the impacted third stoppage, by, the a Adam, what operations. be we that's equipment go and we fourth challenges margin fourth that quarter. the for X.X see

as So the it we we challenging. in similar disruption supply more was went that 'XX in assuming think And in about of level plan, activity chain.

embedded So of there. we a haven't improvement significant amount

continue We and choppy. challenged be expect to to

parts our continue is in, couple One of facilities. of the last things we bring months we parts components to did during the into and do

didn't down. So continue slow we We were able to that. that

important broad-based. it's a continues to ramp back. as ramp start coming And but Cory to positive that that's think mentioned, production up be That's So up, challenge. we we as

chips, very you mentioned, So tight.

many challenge We logistics labor become there's as supply There's material and things, expect through Other in challenges. this so well. that the continues in base availability a geographies, 'XX. extent across

working visibility work suppliers. closely work accordingly. through those to more try our before to we've than to tried through management to this ever continuing We've we're and given with So we teams had really supply them plan

Cory Reed

This I would echo that. Yes. Cory. is

can challenges can was We're have well knew half better think saw of to the than that us have industry. that If off we're in have execute what anyone the to components, kick labor, make managed confident of do and you up them. And we where look on were are a and have they we through coming whole logistics year back. up was to I have forward. the we manage what point going to through you this to task we as been to to we our going the manage going well. it And pop-ups And be that's there and at some lot XXXX, forward. workforce said but we sure back be that positioned electronic folks that we task And the come,

Josh Jepsen

Yes, we regional seen disparities. some have

operated I little a smoothly us more Asia. has Americas and think than, for Europe probably say, the

update continue as differences and deltas year. that businesses some differently are we through there there impacted go have So our Thanks, but and the we'll executing Adam.

Operator

Bank Ross Gilardi America. of with

open. is line Your

Ross Gilardi

of I'm rates too? if in Thanks. going fertilizer the to well lead yields. isn't given ag cost chain just for And application I precision like demand a then And equipment there in morning, to seems be be or as constraints? to slowdown address you the which premature farmer aftermath far that guys. to supply to away chatter just that end address lower a lead then cycle. of planting the Yes. greater true ability Could investor the seems of all demand and as deliver time just Good for wondering in for opposite soaring season lower also, lot might you big could your the mean, strike input that are it the if

Cory Reed

This Thanks, Cory. Yes. is Ross.

the the Planting our in even focused were I is right. as middle we're interruption, of we is products sure making could things on mean customers. end the was on the You're that deliver one for we of time top of that. seasonally

do as our got continued risks. to order later into really planters to do in our confident are that's and But coming the feel that year. We've well. market about made We out we plan talked and as customers that. where we'll we lines program want we our could is. We dealers have are with components where we And sure surge deliver are what commensurate into gone in some a the ability to where We've customers and with planners season, if even accept more we our production our about back. opportunity, the this planning have people early

meet That talk standpoint, that that and to put dealers operate then we transparency, from So good with demand. together allows plan market customers demand slowed. hasn't a our production us and to

planters that products, are optimum large much ag continued of post other all like are and of taking planning our one the people product. those even fact, window, In it's things

Josh Jepsen

cycle. in related out, feel land Ross, runway very be recovery and seeing inventory elongate like are seen receipts, 'XX, broadly we're deliver. part little of in few earlier, 'XX income, as and Further, that for in out and above one, the industry's we and ability continue have impact talk We to to to look seeing, we're And to how are you does strong, America maybe whether back low. we example, values, in both this. see or North you of we've continue age that heard had. replacement to levels this about fleet And older. the it's here this that a our question where repeated bit when overall for underlying to us right demand for more is the reasons, how recovery as quite input mentioned expect continued a replacement. a fundamentals got then, fleet, mind, positive. 'XX, as But you've for costs are age 'XX, play new there stretches is lot. what of demand of out. farm we we the And then be those in this The cycle, address And to that stepping used dynamic and I'll at where even -- we'd your and And now cash

again, comparisons leveraging the levels comparing to 'XX replacement inputs, drive rise, and significantly more chemical with demand And push a lastly, about bit that And lower Cory these sprayers, think you the some XX%. on up. more technology seeing quite through some to we significant Where to -- lower And in technologies, as take yields inventory bit XXXX up which in of remarks terms when pretty and whether can make terms the step is dynamics, a we of the input a attractive. it makes are ExactApply; and that our significant the use back across that ExactEmerge XX% back, cost you on precision that back to big prepared in but again, that then a accuracy, relates seeing technology more fertilizer this costs if precision. the of we're of precision have even impact a then change increased as value the talked proposition really seed, little bit. costs, took planters, of further. better his about rates So technology input on of that's which is out function of one drives, get differences and we're at tools step

recovery that So we're there are this one but right like now. feel we execute to we'll year continue legs began there and to in really about ago

our go So next ahead jump to We'll and question. thanks, Ross.

Operator

Mig Dobre with Baird.

is line Your open.

Mig Dobre

Yes. Thanks for taking the question.

commentary raw little that material Just looking on a the called billion get to you color headwinds, out. the on $X more maybe

questions So kind that. to two of

you kind terms Thanks. the this kind that of doing order where where First, given And materials of Like are for curious terms in terms prices visibility forward you're into then, higher-than-normal be you're have that various you either to in buying baked shaping I'm of in things assumptions like components made, steel? the to current early or up, of what to seem as need? of to the relative going programs spot the what's that you number?

Josh Jepsen

all those Brent so by freight compared it's impactful driven and billion different expect 'XX costs, to truck, we and essentially, roughly whether all are mentioned this, split freight. of $X freight material material is air, The there. headwinds XX% the And that's about XX% modes, ocean, things

the quarter steel, buy a the Traditionally, you On we roughly things ahead. for side, mentioned, material example. raw that it's like

probably seen ago. a or pure spot some a price, so quarter have peaking you've We was a bit, from it seen where moderate from steel

we do base we we've work ensure that significantly, got availability. supply haven't with to adjusted So

the availability we that. we given and have customer sure try demand balance of having to product raws. the So will we've product, in to get terms making desire got in the of

we're first little year more price get of a through from the we come do in. where perspective, of to mean, a of into I the back So easier and our in detail gotten at the bit definitely, where see expect the we're haven't But half that or locking comps we half.

through lastly, that, similar of Turf; to About about a is is businesses. the So about of that of 'XX. roughly in $X And ahead lot Ag; material. to of that half overall that products and XX% maybe Small Precision Ag first billion, the makeup next And go come we terms X/X half With expect of question. in Production we'll based of and XX%, the jump & varies C&F. and our on the their splits just

Operator

BMO. with Tiss Joel

line open. Your is

Joel Tiss

guys. Hey,

us going margin XX what focus you about can targeted the just a XXX bit. of a mean? of any points the talk you you improvement some guidelines sort Just basis of switching restructuring? basis Or bit gears points? think future of give a And or Can year to it's little areas little that about and

Josh Jepsen

in feel the through value. do and the can operating most out and really the 'XX started we of seeing we of work going and model in smart we industrial to and like the business organization terms invest Joel, XXXX, in put feel refocus like parts the model the we that where capital the we're play to benefits changes shift as differentiate how then we the allocation guide we and create of in made

see in that's of I think you the year increasing and maybe I think areas that next we've now you impact that this see as some on. we that, worked So, R&D focused through as

work we're resources. like divestitures how organized made XXXX. some things we're we to through and So adjustments to how allocating in We

continued the that's think I So model.

Ryan Campbell

Yes, it's Ryan.

components to have. the kind our next of that goals that stack we will as of come the we that value. next there'll additional focus infrastructure-related announce of out really that growth be There'll pivot particularly you'll the I technology our generation on of investments us make think can also see customer be but goals, set opportunities unlock with we financial

spent last profitability the opportunities have couple both about more to and allocation But we're dynamic restructuring as process. to taking that's of So unique and now forward, customer focused. wise. doing advantage that where going it's we more value, some we We move the a be capital of activities having years growth create sustainability

Joel Tiss

Great. Thanks.

Josh Jepsen

go and question. Joel. Thanks, ahead our We'll to go next

Operator

Elliott Stanley with Stifel.

open. Your line is

Stanley Elliott

through -- with the the versus question. you infrastructure road the build the Can you good week, Thank morning the everyone. between then the about also see any construction other all on a expect core? And nuances bit that to for sort the when you would news little talk the Hey, portfolio? business legacy maybe taking of

Josh Jepsen

we see expect really one produce 'XX. But impact the probably we towards on start of infrastructure, end industry's supply, is start as might the as thing 'XX. to more there above think to probably ability to as Stanley, jobs the of dynamic the due demand in move to interesting that, or much given not hope

'XX. So tends our significant to look see to that, that. probably very the run that funding we'll we continue of of those have broadband, really is there's roads, it's think to long attractive of step are which industry. impact It watch in more a of that very positive all When of at and building but and applicable -- amount and We to start type that for very, earthmoving a back businesses. road waterways, bridges, program,

positive. particularly that's So think -- I that's

again, we're muted industry compact we'd outlooks, our X% building at construction by is in North and for Globally, and say both to XX% just of probably to is -- somewhat but vein supply same look If America constraints you up that XX%. road this the X% construction.

obviously keep there. out Dealers very with we'll working are our So closely eyes customers.

good rental leading of independent and to CapEx 'XX some we'll of upward on in some into I think probably coming. watch the We've move work indicator their infrastructure companies. seen the and a start that's 'XX of

Stanley Elliott

everyone and Thanksgiving. happy you, Thank

Josh Jepsen

Thanks, Stanley. Take care.

Operator

Courtney Yakavonis Morgan with Stanley.

is line Your open.

Courtney Yakavonis

help but levels you really pricing you Small it understand Or guidance a the us bit that Thanks two? most of guidance? expecting mix? just part a Can the pair to just inventory guys. said and the gap Ag I for question. Obviously, those industry your don't for morning, little is Good the difference you're between Hi. of it sales between to think your us

Josh Jepsen

The or flat. Small Ag & Turf be be in North up -- expect to America, expect to we

unit up XX% Our overall sales XX% are business [ph]. for that to

big it part price. is of a So

about points operation. also there. price embedded seven in That a global is So of more

some and has the around we how where operate that when we world. impact about think So

a piece there's there. So

share. market of bit little a there's So

expect the it gains inventory on relatively assume to think a little of bit segments some margins build muted. very then, be of some but there. maybe we would And little fair tractors, on I to

components those So outlooks. are I difference think driving are the the between that those

Courtney Yakavonis

Ag a margins segment? as just you being the down Is segment? that's Small in follow-up, year-over-year that the also anything that just maybe And comment on disproportionately -- on can weighing

Josh Jepsen

Small the Yes. Ag but Turf it's price/cost most I'd for Good 'XX & question. positive It's for is challenged. say

price it's in And we're as it are margin bigger -- incremental margins to cost I So challenged particularly, -- a seeing and impact we're positive that's side more that of there say but relates that business more the business, would maybe seeing some of impacting parts on are than are the supply that a that's we where little constraints part others. the bit regard.

think So got that, one question. for we've I with time more

Operator

Maria with De Larry William Blair.

is line open. Your

Larry De Maria

congratulations. Hey, morning. another thanks, here. But good topic off labor Slightly strike have concluded negotiation

We the vaccines. mandatory have horizon rules potential OSHA on around

here talks that, And there's potentially production if expectation what trying in you. both the around further the to is? curious to contract Mannheim? issues Thank even anything Just understand that policy in and just your in

Josh Jepsen

as through on. parts order couple of the I and those been safe. to our focus other here number to early shifted of keep of last put the We'll our to in that I'd guidelines multi-shift requirements be I on were important all place months the say, place. early of everything of the Larry. guidelines to as ahead We to in contract take mean We put of in pandemic, continue of taking create work back negotiations and Thanks, has well to the over Yes. really operating. back Sure. if them the say employees go getting things we workforce, facilities and world CDC the ahead in operations distance. days our in measures around we care a would the to needs

have think to our of work about and safe taking care keeping I we'll employees we and good that. our is pretty do track So, and the we safe environment continue feel record

the has a We that, everyone's I care. appreciate Take call. wrap hope we'll talk ahead good Thanksgiving we'll time. and everyone and with soon. So go up

Operator

your today's Thank conference. participation you for in

this at time. You disconnect may