Q4 2025 Deere & Co Earnings Call

November 26, 2025

Speaker #1: Good morning and welcome to Deere & Company 4th Quarter Earnings Conference Call. Your lines have been placed on a listen-only basis until the question-and-answer session of today's conference.

Operator: Good morning and welcome to Deere & Company Fourth Quarter Earnings Conference Call. Your lines have been placed on listen-only until the question and answer session of today's conference. I would now like to turn the call over to Mr. Josh Beal, Director of Investor Relations. Thank you. You may begin.

Speaker #1: turn the call over to Mr. Josh I would now like to Beal, Director of Investor Relations. Thank you. begin. You may

Speaker #2: Hello. Welcome, and thank you for joining us on today's call. And happy early Thanksgiving for those of you celebrating tomorrow. Joining me on the call today are John May, Chairman and Chief Executive Officer; Joshua Jepsen, Chief Financial Officer; Qianna Kovar, President, Worldwide Agriculture and Turf Division, Production and Precision Ag, Americas and Australia; and Chris Seibert, Manager, Investor Communications.

Josh Beal: Hello. Welcome and thank you for joining us on today's call. A happy early Thanksgiving for those of you celebrating tomorrow. Joining me on the call today are John May, Chairman and Chief Executive Officer, Josh Jepsen, Chief Financial Officer, Diana Kovar, President, Worldwide Agriculture and Turf Division, Production and Precision Ag, Americas and Australia, and Chris Seibert, Manager, Investor Communications. Today we'll take a closer look at Deere's fourth quarter earnings and spend some time talking about our markets and our current outlook for fiscal 2026. After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at JohnDeere.com/earnings. First, a reminder: this call is broadcast live on the internet and recorded for future transmission and use by Deere & Company.

Josh Beal: Hello. Welcome and thank you for joining us on today's call. A happy early Thanksgiving for those of you celebrating tomorrow. Joining me on the call today are John May, Chairman and Chief Executive Officer, Josh Jepsen, Chief Financial Officer, Deanna Kovar, President, Worldwide Agriculture and Turf Division, Production and Precision Ag, Americas and Australia, and Chris Seibert, Manager, Investor Communications. Today we'll take a closer look at Deere's fourth quarter earnings and spend some time talking about our markets and our current outlook for fiscal 2026. After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at JohnDeere.com/earnings. First, a reminder: this call is broadcast live on the internet and recorded for future transmission and use by Deere & Company.

Speaker #2: Today, we'll take a closer look at Deere's Q4 earnings, then spend some time talking about our markets and our current outlook for fiscal 2026.

Speaker #2: After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at johndeere.com/earnings.

Speaker #2: Reminder: This call is broadcast live on The First, an internet platform, and is recorded for future transmission and use by Deere & Company. Any other use, recording, or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited.

Josh Beal: Any other use, recording, or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward-looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances, and other factors that are difficult to predict. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K, Risk Factors in the Annual Form 10-K, as updated by reports filed with the Securities and Exchange Commission. This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America, GAAP.

Any other use, recording, or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward-looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances, and other factors that are difficult to predict. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K, Risk Factors in the Annual Form 10-K, as updated by reports filed with the Securities and Exchange Commission. This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America, GAAP.

Speaker #2: Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call.

Speaker #2: This call includes forward-looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances, and other factors that are difficult to predict.

Speaker #2: Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K, Risk Factors in the Annual Form 10-K, as updated by reports filed with the Securities and Exchange Commission.

Speaker #2: This call may also include financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at johndeere.com/earnings under Quarterly Earnings and Events.

Josh Beal: Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at JohnDeere.com/earnings under Quarterly Earnings and Events. I will now turn the call over to Chris Seibert.

Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at JohnDeere.com/earnings under Quarterly Earnings and Events. I will now turn the call over to Chris Seibert.

Speaker #2: I will now turn the call over to Chris Seibert.

Speaker #3: Thank you, Josh. And good morning to everyone joining us today. John Deere's fiscal 2025 results for the fourth quarter and for the full year reflect the resilience of our business amidst the challenging and uncertain market backdrop.

Chris Seibert: Thank you, Josh. Good morning to everyone joining us today. John Deere's fiscal 2025 results for the fourth quarter and for the full year reflect resilience of our business amidst a challenging and uncertain market backdrop. In the fourth quarter, the equipment operations delivered 9.2% margins. Full-year operating margins came in at 12.6%, and we delivered over $5 billion in net income, financial performance that represents our best results yet at this point in the cycle. Our teams continue to manage this downturn effectively by focusing on what we can control. We believe the progress we have made throughout this past fiscal year positions us well as we enter fiscal year 2026. Looking ahead to 2026, we anticipate that large ag in North America will continue to be subdued. However, there are indications of stabilization, and we also see areas of optimism emerging in other segments and geographies.

Speaker #3: In the 4th quarter, the equipment operations delivered 9.2% margins. Full year operating margins came in at 12.6%. And we delivered over $5 billion in net income.

Speaker #3: Financial performance that represents our best results yet for this point in the cycle. Our teams continue to manage this downturn effectively by focusing on what we can control.

Speaker #3: And we believe the progress we have made throughout this past fiscal year positions us well as we enter Fiscal Year 2026. Looking ahead to 2026, we anticipate that large Ag in North America will continue to be subdued.

Speaker #3: However, there are indications of stabilization, and we also see areas of optimism emerging in other segments and geographies. Notably, we see opportunities for growth ahead in our small ag, turf, and construction forestry businesses.

Chris Seibert: Notably, we see opportunities for growth ahead in our small ag and turf and construction forestry businesses. Slide three begins with the results for fiscal year 2025. Net sales and revenues were down 12% to $45.7 billion, while net sales for equipment operations were down 13% to $38.9 billion. Net income attributable to Deere & Company was $5 billion, or $18.50 per diluted share. Next, fourth quarter results are on slide four. Net sales and revenues were up 11% to $12.4 billion, while net sales for the equipment operations were up 14% to $10.6 billion. Net income attributable to Deere & Company decreased to $1.1 billion, or $3.93 per diluted share. Diving into our fourth quarter results for our individual business segments, we'll begin on slide five with our production precision ag business.

Notably, we see opportunities for growth ahead in our small ag and turf and construction forestry businesses. Slide three begins with the results for fiscal year 2025. Net sales and revenues were down 12% to $45.7 billion, while net sales for equipment operations were down 13% to $38.9 billion. Net income attributable to Deere & Company was $5 billion, or $18.50 per diluted share. Next, fourth quarter results are on slide four. Net sales and revenues were up 11% to $12.4 billion, while net sales for the equipment operations were up 14% to $10.6 billion. Net income attributable to Deere & Company decreased to $1.1 billion, or $3.93 per diluted share. Diving into our fourth quarter results for our individual business segments, we'll begin on slide five with our production precision ag business.

Speaker #3: Slide 3 begins with the results for fiscal year 2025. Net sales and revenues were down 12% to $45.7 billion, while net sales for equipment operations were down 13% to $38.9 billion.

Speaker #3: Net income attributable to Deere & Company was $5 billion, or $18.50 per diluted share. Next, 4th quarter results are on slide 4. Net sales and revenues were up 11% to $12.4 billion, while net sales for the equipment operations were up 14% to $10.6 billion.

Speaker #3: Net income attributable to Deere & Company decreased to $1.1 billion, or $3.93 per diluted share. Diving into our fourth quarter results for our individual business segments, we'll begin on slide 5 with our production precision ag business.

Speaker #3: Net sales of $4.74 billion were up 10% compared to the 4th quarter last year, primarily due to higher shipment volumes and favorable price realization.

Chris Seibert: Net sales of $4.74 billion were up 10% compared to the fourth quarter last year, primarily due to higher shipment volumes and favorable price realization. Price realization in the quarter was positive by approximately three points. Currency translation was also positive by about one point. Operating profit was $604 million, resulting in a 12.7% operating margin for the segment. The year-over-year decrease in operating profit was primarily due to higher production costs, higher tariffs, and special items, which were partially offset by price realization and higher shipment volumes. Turning to small ag and turf on slide six, net sales were up 7% year-over-year, totaling $2.57 billion in the fourth quarter, primarily due to higher shipment volumes. Price realization in the quarter was positive by approximately one point. Currency was also positive by more than half a point. For the quarter, operating profit declined year-over-year to $25 million.

Net sales of $4.74 billion were up 10% compared to the fourth quarter last year, primarily due to higher shipment volumes and favorable price realization. Price realization in the quarter was positive by approximately three points. Currency translation was also positive by about one point. Operating profit was $604 million, resulting in a 12.7% operating margin for the segment. The year-over-year decrease in operating profit was primarily due to higher production costs, higher tariffs, and special items, which were partially offset by price realization and higher shipment volumes. Turning to small ag and turf on slide six, net sales were up 7% year-over-year, totaling $2.57 billion in the fourth quarter, primarily due to higher shipment volumes. Price realization in the quarter was positive by approximately one point. Currency was also positive by more than half a point. For the quarter, operating profit declined year-over-year to $25 million.

Speaker #3: Price realization in the quarter was positive, by approximately 3 points. Currency translation was also positive, by about 1 point. Operating profit was $604 million, resulting in a 12.7% operating margin for the segment.

Speaker #3: The year-over-year decrease in operating profit was primarily due to higher production costs, higher tariffs, and special items, which were partially offset by price realization and higher shipment volumes.

Speaker #3: Turning to small ag in turf on slide 6. Net sales were up 7% year-over-year, totaling $2.457 billion in the 4th quarter, primarily due to higher shipment volumes.

Speaker #3: Price realization in the quarter was positive, by approximately 1 point. Currency was also positive, by more than half a point. For the quarter, operating profit declined year-over-year to $25 million.

Speaker #3: The decrease was primarily due to higher tariffs, warranty expenses, and production costs. Slide 7 details our fiscal year 2026 outlook in the turf industry.

Chris Seibert: The decrease was primarily due to higher tariffs, warranty expenses, and production costs. Slide seven details our fiscal year 2026 ag and turf industry outlook. We expect industry sales of large equipment in the US and Canada to be down 15% to 20%. Row crop farmers continue to face challenging farm fundamentals, which are pressuring short-term liquidity. Used equipment, while continuing to improve over the past quarter, remains a constraint to investment in new machinery. However, strong crop use and consumption, new trade agreements, growing demand for biofuels, and supportive government payments support potential upside. For small ag and turf in the US and Canada, industry demand is estimated to be flat to up 5%. The dairy and livestock sector continues to generate profits, driven by strong beef prices. Additionally, a modest recovery in turf is anticipated following a rebound in the housing market and growth in the overall economy.

The decrease was primarily due to higher tariffs, warranty expenses, and production costs. Slide seven details our fiscal year 2026 ag and turf industry outlook. We expect industry sales of large equipment in the US and Canada to be down 15% to 20%. Row crop farmers continue to face challenging farm fundamentals, which are pressuring short-term liquidity. Used equipment, while continuing to improve over the past quarter, remains a constraint to investment in new machinery. However, strong crop use and consumption, new trade agreements, growing demand for biofuels, and supportive government payments support potential upside. For small ag and turf in the US and Canada, industry demand is estimated to be flat to up 5%. The dairy and livestock sector continues to generate profits, driven by strong beef prices. Additionally, a modest recovery in turf is anticipated following a rebound in the housing market and growth in the overall economy.

Speaker #3: We expect industry sales of large equipment in the U.S. and Canada to be down 15% to 20%. Row crop farmers continue to face challenging farm fundamentals, which are pressuring short-term liquidity.

Speaker #3: Used equipment, while continuing to improve over the past quarter, remains a constraint to investment in new machinery. However, strong crop yields and consumption, new trade agreements, growing demand for biofuels, and supportive government payments support potential upside.

Speaker #3: For small ag in turf in the U.S. and Canada, industry demand is estimated to be flat to up 5%. The dairy and livestock sector continues to generate profits driven by strong beef prices.

Speaker #3: Additionally, a modest recovery in turf is anticipated, following a rebound in the housing market and growth in the overall economy. In Europe, the industry is projected to be flat to up 5%.

Chris Seibert: In Europe, the industry is projected to be flat to up 5%. The outlook for the dairy sector continues to be robust, with stabilizing interest rates helping to support investment decisions. In addition, margins for arable farmers are strengthening as crop yields recover in major European ag markets. Within South America, we anticipate industry sales of tractors and combines will remain flat in 2026. While soybean and corn acreage is expected to grow at trendline pace in Brazil, customer demand for equipment has been tempered due to the high interest rate environment. Additionally, strong global crop yields are weighing on prices, and the recent trade agreement between China and the US creates uncertainty around demand for Brazil exports of soybeans. In Argentina, industry growth is anticipated to moderate after robust growth in 2025. Industry sales in Asia are expected to be down 5% following slight gains in India last year.

In Europe, the industry is projected to be flat to up 5%. The outlook for the dairy sector continues to be robust, with stabilizing interest rates helping to support investment decisions. In addition, margins for arable farmers are strengthening as crop yields recover in major European ag markets. Within South America, we anticipate industry sales of tractors and combines will remain flat in 2026. While soybean and corn acreage is expected to grow at trendline pace in Brazil, customer demand for equipment has been tempered due to the high interest rate environment. Additionally, strong global crop yields are weighing on prices, and the recent trade agreement between China and the US creates uncertainty around demand for Brazil exports of soybeans. In Argentina, industry growth is anticipated to moderate after robust growth in 2025. Industry sales in Asia are expected to be down 5% following slight gains in India last year.

Speaker #3: The outlook for the dairy sector continues to be robust, with stabilizing interest rates helping to support investment decisions. In addition, margins for herbal farmers are strengthening as crop yields recover in major European ag markets.

Speaker #3: Within South America, we anticipate industry sales of tractors and combines will remain flat in 2026. While soybean and corn acreage is expected to grow at trendline pace in Brazil, customer demand for equipment has been tempered due to the high interest rate environment.

Speaker #3: Additionally, strong global crop yields are weighing on prices. The recent trade agreement between China and the U.S. creates uncertainty around demand for Brazil's exports of soybeans.

Speaker #3: In Argentina, industry growth is anticipated to moderate after robust growth in 2025. Industry sales in Asia are expected to be down 5%, following slight gains in India last year.

Speaker #3: Moving to our segment forecast on slide 8, we anticipate production and precision ag net sales to be down 5% to 10% in fiscal year 2026.

Chris Seibert: Moving to our segment forecast on slide eight, we anticipate production and precision ag net sales to be down 5% to 10% in fiscal year 2026. The forecast assumes roughly 1.5 points of positive price realization and about 1.5 points of positive currency translation. Segment operating margin for the full year is forecasted between 11% and 13%, reflecting stability in international markets amidst incremental tariff and mixed headwinds, with large ag in the US declining another year. Slide nine provides our forecast for the small ag and turf segment. We expect fiscal year 2026 net sales to be up around 10%. This includes 2 points of positive price realization, as well as 1 point of positive currency translation. The segment's operating margin is projected to be between 12.5% and 14%, reflecting strength in the dairy and livestock segment.

Moving to our segment forecast on slide eight, we anticipate production and precision ag net sales to be down 5% to 10% in fiscal year 2026. The forecast assumes roughly 1.5 points of positive price realization and about 1.5 points of positive currency translation. Segment operating margin for the full year is forecasted between 11% and 13%, reflecting stability in international markets amidst incremental tariff and mixed headwinds, with large ag in the US declining another year. Slide nine provides our forecast for the small ag and turf segment. We expect fiscal year 2026 net sales to be up around 10%. This includes 2 points of positive price realization, as well as 1 point of positive currency translation. The segment's operating margin is projected to be between 12.5% and 14%, reflecting strength in the dairy and livestock segment.

Speaker #3: The forecast assumes roughly 1.5 points of positive price realization and about 1.5 points of positive currency translation. Segment operating margin for the full year is forecasted between 11% and 13%.

Speaker #3: Reflecting stability in international markets amidst incremental tariff and mixed headwinds, with large ag in the U.S. declining another year. Slide 9 provides our forecast for the small ag in turf segment.

Speaker #3: We expect fiscal year 2026 net sales to be up around 10%. This includes 2 points of positive price realization, as well as 1 point of positive currency translation.

Speaker #3: The segment's operating margin is projected to be between 12.5% and 14%, reflecting strength in the dairy and livestock segment. Shifting to construction and forestry on slide 10.

Chris Seibert: Shifting to construction and forestry on slide ten, net sales for the quarter were up 27% year-over-year to $3.382 billion due to higher shipment volumes. Price realization was negative by about a point, while currency translation was positive in the quarter by roughly 1.5 points. Operating profit increased to $348 million, resulting in a 10.3% operating margin. Higher shipment volumes and a positive sales mix were partially offset by increased production costs driven by higher tariffs and special items. Slide 11 outlines our 2026 construction forestry industry outlook. Industry sales for earth-moving equipment in the US and Canada are expected to be flat to up 5%, and compact construction equipment in the US and Canada is also expected to be flat to up 5%. Construction markets are expected to experience modest growth, supported by employment at all-time highs, and construction backlogs at robust levels.

Shifting to construction and forestry on slide ten, net sales for the quarter were up 27% year-over-year to $3.382 billion due to higher shipment volumes. Price realization was negative by about a point, while currency translation was positive in the quarter by roughly 1.5 points. Operating profit increased to $348 million, resulting in a 10.3% operating margin. Higher shipment volumes and a positive sales mix were partially offset by increased production costs driven by higher tariffs and special items. Slide 11 outlines our 2026 construction forestry industry outlook. Industry sales for earth-moving equipment in the US and Canada are expected to be flat to up 5%, and compact construction equipment in the US and Canada is also expected to be flat to up 5%. Construction markets are expected to experience modest growth, supported by employment at all-time highs, and construction backlogs at robust levels.

Speaker #3: Net sales for the quarter were up 27% year-over-year to $3.382 billion, due to higher shipment volumes. Price realization was negative by about a point, while currency translation was positive in the quarter by roughly 1.5 points.

Speaker #3: Operating profit increased to $348 million, resulting in a 10.3% operating margin. Higher shipment volumes and a positive sales mix were partially offset by increased production costs driven by higher tariffs and special items.

Speaker #3: Slide 11 outlines our 2026 construction forestry industry outlook. Industry sales for earth-moving equipment in the U.S. and Canada are expected to be flat to up 5%.

Speaker #3: Compact construction equipment in the U.S. and Canada is also expected to be flat to up 5%. Construction markets are expected to experience modest growth, supported by employment at all-time highs and construction backlogs at robust levels.

Speaker #3: U.S. government infrastructure spending continues to bolster the industry. Additionally, declining interest rates, increasing investments in rental fleets, and surging data center construction starts are also providing support.

Chris Seibert: US government infrastructure spending continues to bolster the industry. Additionally, declining interest rates, increasing investments in rental fleets, and surging data center construction starts are also providing support. While US single-family housing starts are expected to show modest improvement in 2026, investment activity in the private commercial sector continues to be restrained. Global forestry markets are expected to remain flat. Global road building markets are expected to remain flat at strong levels. Continuing with our C&F segment outlook on slide 12, 2026 net sales are forecasted to be up around 10%. Our net sales guidance for the year includes about three points of positive price realization, and one point of positive currency translation. The segment's operating margin is projected to be between 8% and 10%, as the benefits of higher North American earth-moving volumes and price realization are tempered by incremental tariff expense.

US government infrastructure spending continues to bolster the industry. Additionally, declining interest rates, increasing investments in rental fleets, and surging data center construction starts are also providing support. While US single-family housing starts are expected to show modest improvement in 2026, investment activity in the private commercial sector continues to be restrained. Global forestry markets are expected to remain flat. Global road building markets are expected to remain flat at strong levels. Continuing with our C&F segment outlook on slide 12, 2026 net sales are forecasted to be up around 10%. Our net sales guidance for the year includes about three points of positive price realization, and one point of positive currency translation. The segment's operating margin is projected to be between 8% and 10%, as the benefits of higher North American earth-moving volumes and price realization are tempered by incremental tariff expense.

Speaker #3: And while U.S. single-family housing starts are expected to show modest improvement in 2026, investment activity in the private commercial sector continues to be restrained.

Speaker #3: Global forestry markets are expected to remain flat. Global road building markets are expected to remain flat, at strong levels. Continuing with our CNF segment outlook on slide 12.

Speaker #3: 2026 net sales are forecasted to be up around 10%. Our net sales guidance for the year includes about 3 points of positive price realization and 1 point of positive currency translation.

Speaker #3: The segment's operating margin is projected to be between 8% and 10%, as the benefits of higher North American earth-moving volumes and price realization are tempered by incremental tariff expenses.

Speaker #3: Switching to our financial service operations on slide 13. Worldwide financial services net income attributable to Deere & Company was $293 million for the fourth quarter.

Chris Seibert: Switching to our financial service operations on slide 13, worldwide financial services net income attributable to Deere & Company was $293 million for the fourth quarter. The year-over-year increase was mainly due to favorable financing spreads, special items, and a lower provision for credit losses. For fiscal year 2026, the net income forecast is $830 million. Results are expected to be lower year-over-year, primarily due to lower portfolio levels driven by volume, partially offset by favorable financing spreads. Slide 14 concludes with our guidance for net income, effective tax rate, and operating cash flow. For fiscal year 2026, our full-year net income forecast is expected to be in the range of $4 billion and $4.75 billion. Included in this estimate is projected pre-tax direct tariff expense of approximately $1.2 billion, with additional inflationary pressures also contemplated from the indirect impacts of tariffs.

Switching to our financial service operations on slide 13, worldwide financial services net income attributable to Deere & Company was $293 million for the fourth quarter. The year-over-year increase was mainly due to favorable financing spreads, special items, and a lower provision for credit losses. For fiscal year 2026, the net income forecast is $830 million. Results are expected to be lower year-over-year, primarily due to lower portfolio levels driven by volume, partially offset by favorable financing spreads. Slide 14 concludes with our guidance for net income, effective tax rate, and operating cash flow. For fiscal year 2026, our full-year net income forecast is expected to be in the range of $4 billion and $4.75 billion. Included in this estimate is projected pre-tax direct tariff expense of approximately $1.2 billion, with additional inflationary pressures also contemplated from the indirect impacts of tariffs.

Speaker #3: The year-over-year increase was mainly due to favorable financing spreads, special items, and a lower provision for credit.

Speaker #1: In are be expected to lower year year , results over primarily due to lower portfolio levels driven by volume , partially offset by favorable financing spreads .

Speaker #1: Slide concludes with 14 guidance for net income effective tax rate and operating cash flow for fiscal year 2026. Our full year net income forecast is expected to be in the range of $4 billion to $4.75 billion.

Speaker #1: Included in this estimate is a projected pre-tax direct tariff expense of approximately $1.2 billion, with additional inflationary pressures contemplated from the direct and indirect impacts of tariffs as well.

Speaker #1: Next, our guidance incorporates an effective tax rate between 25% and 27%, higher year over year, which is a result of fewer discrete items and a less favorable geographic mix driven by projections for a higher percentage of income coming from outside the United States. Lastly.

Chris Seibert: Next, our guidance incorporates an effective tax rate between 25% and 27%, which is higher year-over-year as a result of fewer discrete items and a less favorable geographic mix driven by projections for a higher percentage of income coming from outside the United States. Lastly, cash flow from equipment operations is projected to be in the range of $4 billion to $5 billion. We would like to highlight that our implied midpoint guidance of approximately $16 in earnings per share reflects sub-draft conditions in PPA, with projected fiscal year 2026 sales at less than 80% of mid-cycle levels. This level of performance reflects the structure of improvements we have made to the business over the last several years.

Next, our guidance incorporates an effective tax rate between 25% and 27%, which is higher year-over-year as a result of fewer discrete items and a less favorable geographic mix driven by projections for a higher percentage of income coming from outside the United States. Lastly, cash flow from equipment operations is projected to be in the range of $4 billion to $5 billion. We would like to highlight that our implied midpoint guidance of approximately $16 in earnings per share reflects sub-draft conditions in PPA, with projected fiscal year 2026 sales at less than 80% of mid-cycle levels. This level of performance reflects the structure of improvements we have made to the business over the last several years.

Speaker #1: from equipment , cash flow projected to range be in the of We would like to our implied midpoint guidance of highlight that approximately $16 in earnings per share reflects conditions in PPA , with projected fiscal year 26 sales at less than 80% of levels Midcycle .

Speaker #1: This level of performance reflects the structural improvements we have made to the business over the last several years . Our efforts to ongoing managing the cycle through proactive inventory management and cost control , and a that comes from a more diversified business as both small and turf and construction forestry are projected to grow in 2026 .

Chris Seibert: Our ongoing efforts to manage the cycle through proactive inventory management and cost control, and the resilience that comes from a more diversified business, as both small ag and turf, and construction forestry are projected to grow in 2026. This concludes our formal remarks. We'll now cover a few topics before opening the line for Q&A. Before we get into the details, John, would you like to share your thoughts on the year?

Our ongoing efforts to manage the cycle through proactive inventory management and cost control, and the resilience that comes from a more diversified business, as both small ag and turf, and construction forestry are projected to grow in 2026. This concludes our formal remarks. We'll now cover a few topics before opening the line for Q&A. Before we get into the details, John, would you like to share your thoughts on the year?

Speaker #1: This concludes formal our remarks . We'll now cover a few topics before opening the line for Q&A , but before we get into the details , John , would you like to share your thoughts on the year ?

Speaker #2: Thanks , Chris . 2025 marked a year of significant challenges and uncertainty , but it also reflected the resilience and strength of the dear organization as we continue to demonstrate structurally higher performance levels while making substantial progress smart on our industrial journey .

John May: Thanks, Chris. 2025 marked a year of significant challenges and uncertainty, but it also reflected the resilience and strength of the Deere organization as we continue to demonstrate structurally higher performance levels while making substantial progress on our smart industrial journey. Despite the uncertainty, we delivered over $5 billion in net income, and we achieved equipment operations OROS of 12.6%, which included about a point and a half impact from tariffs. It's notable that these income and margin levels surpassed our performance in 2020, the year we launched smart industrial. Despite being at a lower level point in the cycle that year, continually demonstrating higher cycle-over-cycle performance, particularly in trough years, emboldens us to stay the course as we advance towards our ambitions. We believe this fuels future growth that positions us to unlock even more value for our customers when this cycle inflects.

Speaker #2: Despite the uncertainty , we over $5 billion in net income and we equipment achieved operations , Oros of 12.6% , which included about a point and a half impact from tariffs .

Speaker #2: It's that these income notable and margin levels surpassed our performance in 2020 , the year we launched Smart Industrial . Despite being at a lower level point in the cycle that year , continually demonstrating higher cycle over cycle performance , particularly in trough years , emboldens us to stay the course as advance we towards our ambitions .

Speaker #2: We believe that this fuels future growth, which positions us to unlock even more value for our customers when this cycle inflects.

Speaker #2: I also want to take a moment to thank our teams. Our organization is used to managing cyclicality, but this year we faced an additional headwind of heightened uncertainty in a rapidly changing business environment.

John May: I also want to take a moment to thank our teams. Our organization is used to managing cyclicality, but this year, we faced an additional headwind of heightened uncertainty in a rapidly changing business environment. I am so proud of our team's grit and determination to push forward, as well as the resulting accomplishments from their efforts. To name a few examples, our sales, life cycle, and John Deere Financial teams worked hand in hand with our dealers to keep our customers up and running throughout the year, while at the same time taking the actions needed to continue driving down used inventory levels.

I also want to take a moment to thank our teams. Our organization is used to managing cyclicality, but this year, we faced an additional headwind of heightened uncertainty in a rapidly changing business environment. I am so proud of our team's grit and determination to push forward, as well as the resulting accomplishments from their efforts. To name a few examples, our sales, life cycle, and John Deere Financial teams worked hand in hand with our dealers to keep our customers up and running throughout the year, while at the same time taking the actions needed to continue driving down used inventory levels.

Speaker #2: am I so proud of our team's grit and determination to push forward , as well as the resulting accomplishments , accomplishments from their efforts , to name a few examples .

Speaker #2: Our sales life cycle and John Deere financial teams worked hand in hand with our dealers to keep our customers up and running throughout the year, while at the same time taking the actions needed to continue driving down.

Speaker #2: Used inventory levels . Our logistics supply management and finance teams partnered with the broader organization to assess and mitigate tariff exposures , manage disruptions in global supply chains , and maintain sufficient liquidity , all in an effort to ensure our factories continued producing the complete goods and parts that support our customers on a daily basis .

John May: Our logistics, supply management, and finance teams partnered with the broader organization to assess and mitigate tariff exposures, manage disruptions in global supply chains, and maintain sufficient liquidity, all in an effort to ensure our factories continued producing the complete goods and parts that support our customers on a daily basis. At the same time, our design and go-to-market teams sustained their constant focus on bringing cutting-edge innovations to the multiple production systems we serve, efforts grounded in the core principle of helping our customers do more with less. That fuels customer value unlock, and enables enterprise growth. As a result of this focus, we're seeing accelerating momentum in the growth of our tech stack, which is shown on slide 15 of the presentation. This growth is happening both in the number of solutions that we're bringing to market, and the depth and breadth of customer utilization of those solutions.

Our logistics, supply management, and finance teams partnered with the broader organization to assess and mitigate tariff exposures, manage disruptions in global supply chains, and maintain sufficient liquidity, all in an effort to ensure our factories continued producing the complete goods and parts that support our customers on a daily basis. At the same time, our design and go-to-market teams sustained their constant focus on bringing cutting-edge innovations to the multiple production systems we serve, efforts grounded in the core principle of helping our customers do more with less. That fuels customer value unlock, and enables enterprise growth. As a result of this focus, we're seeing accelerating momentum in the growth of our tech stack, which is shown on slide 15 of the presentation. This growth is happening both in the number of solutions that we're bringing to market, and the depth and breadth of customer utilization of those solutions.

Speaker #2: At the same time , our design and go to market teams sustained their constant focus on bringing cutting edge innovations to the multiple production systems we serve .

Speaker #2: Efforts that are core, grounded in the principle of helping our customers do more with less, fuel customer value. This unlocks and enables enterprise growth.

Speaker #2: As a result of this focus, we're seeing accelerating momentum in the growth of our tech stack, which is shown on Slide 15 of the presentation.

Speaker #2: This growth happening is both in the number of solutions we're bringing to market and the depth and breadth of customer utilization of those solutions.

Speaker #2: And happening across all its layers of the stack, from base precision to digital engagement, to advanced automation, and to full autonomy. More importantly, this growth isn't confined to large ag.

John May: It's happening across all layers of the stack, from base precision to digital engagement, to advanced automation, and to full autonomy. More importantly, this growth isn't confined to large ag. In 2025, we saw an amplification of technology leverage across nearly all production systems. Let's look at two examples, one from the base of the tech stack and one from the top. At the base, we reached new heights in 2025 in terms of connectivity and digital engagement, supported by game-changing connectivity solutions like JDLink Boost, retrofit options like Precision Essentials, and the expansion of the John Deere Operations Center into road building, earth-moving, golf, and turf.

It's happening across all layers of the stack, from base precision to digital engagement, to advanced automation, and to full autonomy. More importantly, this growth isn't confined to large ag. In 2025, we saw an amplification of technology leverage across nearly all production systems. Let's look at two examples, one from the base of the tech stack and one from the top. At the base, we reached new heights in 2025 in terms of connectivity and digital engagement, supported by game-changing connectivity solutions like JDLink Boost, retrofit options like Precision Essentials, and the expansion of the John Deere Operations Center into road building, earth-moving, golf, and turf.

Speaker #2: In 2025, we saw an amplification of technology leverage across nearly all production systems. Let's look at two examples: one from the base of the tech stack and one from the top at the We base.

Speaker #2: reached new heights in 2025 . In terms of connectivity and digital engagement , supported by game changing connectivity solutions like Jdlink , boost retrofit options like Precision Essentials and the expansion of the Deere John Operations Center into road building , earthmoving , golf and turf .

Speaker #2: At the peak of the tech stack, we began the calendar year at CES in Las Vegas, showing you where we're directly leveraging our autonomy tech stack developed in row crop farming into solutions for other industries like commercial mowing, orchards, and quarry operations.

John May: At the peak of the tech stack, we began the calendar year at CES in Las Vegas, showing you where we're directly leveraging our autonomy tech stack developed in row crop farming into solutions for other industries like commercial mowing, orchards, and quarry operations. As we close out the fiscal year, we started taking orders for spring delivery of our autonomous row crop tillage solution, which should help our customers get the job done at the right time, unconstrained by the challenge of labor scarcity. In difficult markets, it's natural for people to focus only on the near-term challenges in front of them.

At the peak of the tech stack, we began the calendar year at CES in Las Vegas, showing you where we're directly leveraging our autonomy tech stack developed in row crop farming into solutions for other industries like commercial mowing, orchards, and quarry operations. As we close out the fiscal year, we started taking orders for spring delivery of our autonomous row crop tillage solution, which should help our customers get the job done at the right time, unconstrained by the challenge of labor scarcity. In difficult markets, it's natural for people to focus only on the near-term challenges in front of them.

Speaker #2: As we close out the fiscal year, we started taking orders for spring delivery of our autonomous row crop tillage solution, which should help our customers get the job done at the right time.

Speaker #2: Unconstrained by the challenge of labor scarcity in difficult markets, it's natural for people to focus only on the near-term challenges in front of them.

Speaker #2: But I am incredibly proud of how our organization has delivered exceptional performance in the current environment, while also continuing to advance the development and delivery of solutions that have the potential to unlock tremendous value for our customers and serve as the foundation for Deere's growth into the future.

John May: I am incredibly proud of how our organization has delivered exceptional performance in the current environment while also continuing to advance the development and delivery of solutions that have the potential to unlock tremendous value for our customers and serve as the foundation for Deere's growth into the future. I'm excited for all of you to hear more about this during our upcoming Investor Day on 8 December, where we're going to spend a little bit of time reflecting on the past five years of smart industrial, but more importantly, talk about where we expect to take us in the years to come.

I am incredibly proud of how our organization has delivered exceptional performance in the current environment while also continuing to advance the development and delivery of solutions that have the potential to unlock tremendous value for our customers and serve as the foundation for Deere's growth into the future. I'm excited for all of you to hear more about this during our upcoming Investor Day on 8 December, where we're going to spend a little bit of time reflecting on the past five years of smart industrial, but more importantly, talk about where we expect to take us in the years to come.

Speaker #2: I'm all of excited for you to hear more about this during our upcoming Investor Day on December 8th , where we're going to spend a little bit of time reflecting on the past five years of smart industrial , but more importantly , talk about where we expect to take us in the years to come .

Speaker #1: Thank you, John. We are really looking forward to hearing more about the future of Industrial in Smart a couple of weeks.

Chris Seibert: Thank you, John. We are really looking forward to hearing more about the future of smart industrial in a couple of weeks. Before we move on to questions about the 2026 guide, I'd like to focus briefly on our 2025 results. This past fiscal year demanded a lot from our teams, but as John mentioned, we still delivered more than $5 billion of net income. Josh Beal, could you please unpack what happened during the quarter as well as the entire fiscal year?

Speaker #1: Before we move on to the questions about the Q2 guide, I'd like to focus briefly on our Q1 results. This past fiscal year demanded a lot from our teams.

Speaker #1: But as John mentioned , we still delivered more than 5 billion of net income . Josh Beal . Could you please unpack what happened during the quarter , as well as the entire fiscal year ?

Speaker #2: Yeah, sure. Chris, I'll begin with the.

Speaker #3: . Quarter results Overall , the were in line with our there were a few moving expectations , but to that I'd like over pieces briefly go .

Josh Beal: Yeah, sure, Chris. I'll begin with the quarter. Overall, the results were in line with our expectations, but there were a few moving pieces that I'd like to briefly go over. Net sales for all segments finished a bit higher than expected, driven by strong execution at our factories, especially in North America. Price realization for PPA in the quarter was nearly 3%, while SAT came in at 1%. Notably, large ag price realization in Brazil in the quarter was strong, closing out 2025 with full-year mid-single-digit price growth after a challenging 2024. Quarterly pricing in construction and forestry was slightly negative due to additional incentives to support retail activity. Turning to cost, direct tariff expense negatively impacted equipment operations margins in the quarter by more than 3%.

Speaker #3: Net sales for finished a bit segments higher than expected , driven by strong execution at our factories , especially in North America . Price realization for PPA in the quarter was While CT nearly 3% .

Speaker #3: at 1% . large AG price realization in Notably , Brazil in the quarter was strong , closing out 2025 with full year , mid-single digit price growth .

Speaker #3: After a challenging 2020, quarterly construction and forestry was slightly negative due to additional incentives to support retail activity. Turning to costs, direct tariff expense negatively impacted equipment operations.

Speaker #3: Margins in the quarter improved by more than 3%. This is Jefferson touching on the full year for a moment. John already noted how our performance is a testament to the organization's perseverance.

Josh Jepsen: This is Jepsen. Touching on the full year for a moment, John already noted how our performance is a testament to the organization's perseverance in a year where we saw industry declines in a majority of major markets that we serve, placing the business below trough levels. The combination of our operational execution and the work that we've done to improve businesses over the last several years continued to yield positive results. Our margins are a notable example of this. Even with the North American large ag industry declining this year by around 30%, we delivered margins over 450 basis points better than 2016, the last time we were at this point in the cycle. Excluding tariff headwinds, that improvement would have exceeded 600 basis points.

Speaker #3: In a year where we saw industry declines in a majority of major markets that we serve, the placing business fell below trough levels.

Speaker #3: The combination of our operational execution and what we've done to improve work over the last several years continued to yield positive results.

Speaker #3: Our are a notable example of margins. Even with the North American large ag industry declining this year by around 30%, we delivered margins over 450 basis points better than 2016.

Speaker #3: The last were at time we this point in the cycle , excluding tariff headwinds . That improvement would have 600 basis exceeded points a decade ago .

Speaker #3: The profitability of our business was heavily indexed to North American large AG, with geographies and other business segments operating at much lower margins.

Josh Jepsen: A decade ago, the profitability of our business was heavily indexed to North American large ag, with other geographies and business segments operating at much lower margins. Since smart industrial, we've significantly raised the level of performance across all our business segments around the globe. While North American large ag continues to be a critical market for Deere, this diversification of profitability has bolstered the company's through-cycle resilience. We're seeing the vision we had when we launched the smart industrial journey come to life, with better performance across the breadth of our businesses.

A decade ago, the profitability of our business was heavily indexed to North American large ag, with other geographies and business segments operating at much lower margins. Since smart industrial, we've significantly raised the level of performance across all our business segments around the globe. While North American large ag continues to be a critical market for Deere, this diversification of profitability has bolstered the company's through-cycle resilience. We're seeing the vision we had when we launched the smart industrial journey come to life, with better performance across the breadth of our businesses.

Speaker #3: Since Smart Industrial, we've significantly raised the level of performance across all our business segments around the globe. While North American large egg continues to be a critical market for Deere, this diversification of profitability has bolstered the company's through-cycle resilience.

Speaker #3: We're seeing the vision we had when we Smart launched the industrial journey come to life with better performance across the breadth of our businesses.

Speaker #3: Thanks for that additional color , Josh . Beyond profitability , this year's results also reflect focused cycle management . Most notably in managing inventory in North America .

Chris Seibert: Thanks for that additional color, Josh. Beyond profitability, this year's results also reflect focused cycle management, most notably in managing inventory. In North America large ag, we produce roughly in line with retail demand for the full year, keeping new field inventory at the very low levels where fiscal 2025 started. Inventory-to-sales ratios for combines and four-wheel drive tractors both closed the year at 8%, while 220 horsepower and above tractors were at 12%. To put in perspective how low absolute inventory levels are, new field inventory for Deere 220 horsepower and above tractors ended fiscal 2025 at the lowest unit level we've seen in over 17 years. For small ag and turf, we underproduced global retail demand in 2025 by around 10%, and as a result, saw a significant reduction in field inventory levels, particularly in North America.

Josh Beal: Thanks for that additional color, Josh. Beyond profitability, this year's results also reflect focused cycle management, most notably in managing inventory. In North America large ag, we produce roughly in line with retail demand for the full year, keeping new field inventory at the very low levels where fiscal 2025 started. Inventory-to-sales ratios for combines and four-wheel drive tractors both closed the year at 8%, while 220 horsepower and above tractors were at 12%. To put in perspective how low absolute inventory levels are, new field inventory for Deere 220 horsepower and above tractors ended fiscal 2025 at the lowest unit level we've seen in over 17 years. For small ag and turf, we underproduced global retail demand in 2025 by around 10%, and as a result, saw a significant reduction in field inventory levels, particularly in North America.

Speaker #3: we Large AG produced roughly with in line for the year , retail demand keeping new full inventory at the very low levels where fiscal , inventory to 2025 started sales ratios for combines and four wheel drive tractors .

Speaker #3: both closed the year at 8% , while above 220 horsepower and tractors were 12% . To put in at low perspective , how inventory levels are , new for inventory deer , 220 horsepower and above tractors ended fiscal 2025 at the lowest unit level .

Speaker #3: We've been in business for over 17 years. For small ag, we produced global retail demand in 2025 by around 10%. As a result, we saw a significant reduction in field inventory levels, particularly in North America.

Speaker #3: Notably, North American tractors below 100 horsepower were down nearly 40% year over year. The inventory of 100 to 220 horsepower tractors in the region was down by nearly a third.

Chris Seibert: Notably, inventory for North American tractors below 100 horsepower was down nearly 40% year over year, while 100 to 220 horsepower tractor inventory in the region was down by nearly 1/3. Similarly, the underproduction that we did in North American earth-moving at the end of fiscal 2024 and into the beginning of fiscal 2025 has also positioned that business well for next year. Field inventory levels of North American earth-moving equipment were down around 35% from the end of our fiscal 2024 third quarter, positioning that business to build in line with retail sales in 2026 as that market shows signs of recovery. Cost management is the other hallmark of managing cycles, and our efforts to control production costs for the equipment operations remained successful throughout fiscal 2025. Excluding the impact from tariffs, full-year production costs were favorable, driven by strong reductions in material cost.

Notably, inventory for North American tractors below 100 horsepower was down nearly 40% year over year, while 100 to 220 horsepower tractor inventory in the region was down by nearly 1/3. Similarly, the underproduction that we did in North American earth-moving at the end of fiscal 2024 and into the beginning of fiscal 2025 has also positioned that business well for next year. Field inventory levels of North American earth-moving equipment were down around 35% from the end of our fiscal 2024 third quarter, positioning that business to build in line with retail sales in 2026 as that market shows signs of recovery. Cost management is the other hallmark of managing cycles, and our efforts to control production costs for the equipment operations remained successful throughout fiscal 2025. Excluding the impact from tariffs, full-year production costs were favorable, driven by strong reductions in material cost.

Speaker #3: Similarly, the production that we did in North American earthmoving at the fiscal end of 2024 and into the beginning of fiscal 2025 has positioned that business well for next year.

Speaker #3: Field inventory levels of earthmoving equipment in North America were down around 35% from the end of our fiscal 2024 third quarter, positioning that build in business to align with retail sales in 2026 as that market shows signs of recovery. Cost management is the other hallmark of managing cycles, and our efforts to control production costs for the equipment operations remain successful throughout fiscal 2025.

Speaker #3: Excluding the impact from tariffs . Full year production costs were favorable , driven by strong reductions in material costs . This enabled price cost sex tariffs to be positive as well , inclusive of the price actions that we took in a competitive earthmoving market and the additional pool of funds that we deployed in large AG to support used inventory management .

Chris Seibert: This enabled price-cost x tariffs to be positive as well, inclusive of the price actions that we took in a competitive earth-moving market, and the additional pool funds that we deployed in large ag to support used inventory management. The work on costs enabled our future growth, evidenced by the record level of R&D investment that we made in fiscal 2025.

This enabled price-cost x tariffs to be positive as well, inclusive of the price actions that we took in a competitive earth-moving market, and the additional pool funds that we deployed in large ag to support used inventory management. The work on costs enabled our future growth, evidenced by the record level of R&D investment that we made in fiscal 2025.

Speaker #3: The work on costs in the future enabled our growth, evidenced by the record level of R&D investment that we made in fiscal 2025.

Speaker #1: Thanks , Josh . You mentioned used inventory management . I would like to discuss that topic a little further . Last quarter we talked about the additional pool funds that we deployed to support used inventory reduction .

Chris Seibert: Thanks, Josh. You mentioned used inventory management. I would like to discuss that topic a little further. Last quarter, we talked about the additional pool funds that we deployed to support used inventory reduction. Could you please provide an update on our current position in North America, and share any notable developments or progress observed?

Speaker #1: Could you please provide an update on our current position in North America and share any notable developments or progress observed?

Speaker #3: Sure , Chris . Support through these pool fund ongoing commitment with the and focus of our dealers on improving the health of the trade ladder , is generating positive momentum .

Chris Seibert: Sure, Chris. Support to these targeted pool fund programs, along with the ongoing commitment and focus of our dealers on improving the health of the trade ladder, is generating positive momentum. This is particularly notable amongst late model year high horsepower tractors, which remain the area of focus in the channel. As an example, Deere 175 horsepower and greater tractors in North America have declined by around 7% since they peaked in March 2025, supported by a 4% sequential decrease in the fourth quarter. Compared to the previous cycle peak 10 years ago, current unit levels for this horsepower category are lower by nearly 15%, although the value of inventory today is higher than the last cycle due to a higher population of late model equipment. However, that mix continues to improve.

Josh Beal: Sure, Chris. Support to these targeted pool fund programs, along with the ongoing commitment and focus of our dealers on improving the health of the trade ladder, is generating positive momentum. This is particularly notable amongst late model year high horsepower tractors, which remain the area of focus in the channel. As an example, Deere 175 horsepower and greater tractors in North America have declined by around 7% since they peaked in March 2025, supported by a 4% sequential decrease in the fourth quarter. Compared to the previous cycle peak 10 years ago, current unit levels for this horsepower category are lower by nearly 15%, although the value of inventory today is higher than the last cycle due to a higher population of late model equipment. However, that mix continues to improve.

Speaker #3: This is particularly notable amongst model late high horsepower tractors , which year remain the area of focus in the channel . As an example , 175 horsepower and greater tractors in North America have declined by around 7% since they peaked in March 2025 , supported by a 4% , 4% sequential decrease in the fourth quarter compared to the previous cycle peak ten years ago .

Speaker #3: Current for this unit levels horsepower category are lower by nearly 15%, although the value of inventory today is higher than the last cycle due to a higher population of late-model equipment.

Speaker #3: However, that mix continues to improve notably. Model year 2022 and model year 2023 used inventory of Deere AR tractors reduced by a percentage in the mid-teens in Q4 and is now around 25% below the peak.

Chris Seibert: Notably, model year '22 and model year '23 used inventory of Deere 8R tractors reduced by a mid-teens percentage in Q4 and is now around 25% below the peak in March 2025. Our used inventory progress in other product categories is also notable. Inventory levels of Deere 100 to 174 horsepower tractors have decreased around 20% from their 2025 peak, while Deere sprayers are down mid-teens, and Deere planters are down nearly 30% from their recent highs. Deere used combines declined over 10% sequentially in our fourth quarter, resulting in a nearly 25% decrease from their spring 2024 peak. Perhaps more importantly, the model year distribution of Deere used combines in the field has returned to a nearly normal level of distribution.

Notably, model year '22 and model year '23 used inventory of Deere 8R tractors reduced by a mid-teens percentage in Q4 and is now around 25% below the peak in March 2025. Our used inventory progress in other product categories is also notable. Inventory levels of Deere 100 to 174 horsepower tractors have decreased around 20% from their 2025 peak, while Deere sprayers are down mid-teens, and Deere planters are down nearly 30% from their recent highs. Deere used combines declined over 10% sequentially in our fourth quarter, resulting in a nearly 25% decrease from their spring 2024 peak. Perhaps more importantly, the model year distribution of Deere used combines in the field has returned to a nearly normal level of distribution.

Speaker #3: Our In March 2025 . used progress in other product inventory categories is notable also . Inventory levels tractors have deer 100 to 174 horsepower decreased around 20% from their 2025 peak , while deer sprayers are down mid-teens and deer planters are down nearly 30% from their recent highs .

Speaker #3: combines Deer use declined over 10% sequentially in our resulting in fourth quarter , a 25% decrease from their spring 2024 peak . Perhaps more importantly , the model year distribution of deer used combines in the field has returned to a nearly normal level of distribution .

Speaker #4: Thanks for highlighting those inventory reduction progress, Josh. This is Deanna. I'm glad to join everyone today and wanted to provide some additional thoughts.

Diana Kovar: Thanks for highlighting those inventory reduction progress, Josh. This is Diana. I'm glad to join everyone today and wanted to provide some additional thoughts. As mentioned, our team has done an excellent job managing new inventory, bringing us to low levels in North America. As we manage inventory through the cycle, considering current industry demand and when that might inflect, we not only think about the total level of inventory in the field, but also the balance between new and used equipment. Our goal is a healthy product mix and a healthy trade ladder that supports the current level of demand in the market. With that in mind, I'm pleased by the used inventory progress we've made jointly with our dealers.

Deanna Kovar: Thanks for highlighting those inventory reduction progress, Josh. This is Deanna. I'm glad to join everyone today and wanted to provide some additional thoughts. As mentioned, our team has done an excellent job managing new inventory, bringing us to low levels in North America. As we manage inventory through the cycle, considering current industry demand and when that might inflect, we not only think about the total level of inventory in the field, but also the balance between new and used equipment. Our goal is a healthy product mix and a healthy trade ladder that supports the current level of demand in the market. With that in mind, I'm pleased by the used inventory progress we've made jointly with our dealers.

Speaker #4: As our team mentioned, we have done an excellent job managing new inventory, bringing us to low levels in North America as we manage inventory through the cycle.

Speaker #4: Considering industry demand and when that might inflect, we not only think about the total level of inventory in the field, but also the balance between new and used equipment. The goal is.

Speaker #4: Our healthy product and mix a healthy trade ladder that supports the current level of demand in the market . With that in mind , I'm pleased by the used inventory progress we've made jointly with our dealers , although there's still work to be done here .

Speaker #4: The combination of our aligned channel and support provided by higher pool fund contribution rates and targeted programs in 2026 gives me confidence that we have the right tools in place to sustain this positive momentum and position the market well in 2026.

Diana Kovar: Although there's still work to be done here, the combination of our aligned channel and support provided by higher pool fund contribution rates, and targeted programs in 2026, gives me confidence that we have the right tools in place to sustain this positive momentum and position the market well in 2026. Nevertheless, our customers are still facing headwinds that are driving near-term investment caution. Although there are incremental demand drivers emerging, our priorities remain clear: manage new inventory carefully, avoid oversupply when demand is still dropping, and double down on used inventory reduction. These priorities influence our approach to production planning. It's our intent to start the new fiscal year with lean production for North American large ag, while building flexibility in the full-year production plan to respond quickly when the market inflects.

Although there's still work to be done here, the combination of our aligned channel and support provided by higher pool fund contribution rates, and targeted programs in 2026, gives me confidence that we have the right tools in place to sustain this positive momentum and position the market well in 2026. Nevertheless, our customers are still facing headwinds that are driving near-term investment caution. Although there are incremental demand drivers emerging, our priorities remain clear: manage new inventory carefully, avoid oversupply when demand is still dropping, and double down on used inventory reduction. These priorities influence our approach to production planning. It's our intent to start the new fiscal year with lean production for North American large ag, while building flexibility in the full-year production plan to respond quickly when the market inflects.

Speaker #4: Nevertheless , our customers are still facing headwinds that are driving near term investment caution . Although there are incremental demand drivers emerging , our priorities remain clear manage new inventory carefully , avoid oversupply when demand is still dropping and double down on used inventory reduction .

Speaker #4: These priorities influence our approach to production planning. It's our intent to start the new fiscal year with lean production for North American large AG, while building flexibility in the full-year production plan to respond quickly when the market inflects.

Speaker #2: is

Speaker #2: John: Building on this, Deanna's comments, I want to take a moment to express gratitude to our dealers for the work that they've done this past year.

John May: This is John. Building on Deanna's comments, I want to take a moment to express my gratitude to our dealers for the work that they've done this past fiscal year in support of our customers and our business. This partnership is critical, particularly when navigating the ups and downs of market cycles. I'm proud to work alongside them, and consistently impressed by how they represent our brand through their dedication to customers, their drive for innovation, and delivery of world-class support.

Speaker #2: In support of our customers and our business, this partnership is critical, particularly when navigating the ups and downs of market cycles.

Speaker #2: I'm proud to work alongside them and am consistently impressed by how they represent our brand through their dedication to customers, their drive for innovation, and the delivery of world-class support.

Speaker #1: Thank you all for your comments and insights. Now let's build on that and talk in more depth about the outlook for fiscal year 2026.

Chris Seibert: Thank you all for your comments and insights. Now, let's build on that and talk in more depth about the ag and turf outlook for fiscal year 2026. The guide varies by segment and geography. Can you please unpack why this is the case?

Speaker #1: The guide varies by segment and by geography. Can you please unpack why this is the case?

Speaker #3: Is Josh Beal happy to... Chris? Let's start with North America. Global farm fundamentals are expected to stay challenged in 2026.

Josh Beal: Yeah, this is Josh Beal. Happy to, Chris. Let's start with North America. Global farm fundamentals are expected to stay challenged in 2026. US crop yields have been strong, and we've seen robust production this year in other major markets as well. As a result, the USDA expects global stocks of corn and wheat to rebuild, and soybean stocks to remain at elevated levels, putting continued pressure on commodity prices. That dynamic, combined with the persistently high input prices we've seen over the last several years, continues to challenge farm profitability. As a positive, commodity demand continues to climb. Demand for US corn remains robust, with projected US exports to reach an all-time high, up 9% from the previous year. The amount of US corn going to ethanol is approaching record levels, with US.

Speaker #3: U.S. crop yields have been strong, and we've seen robust production in other major markets this year as well. As a result, the USDA expects global stocks of corn and wheat to rebuild, while soybean stocks are expected to remain at elevated levels, putting continued pressure on commodity prices.

Speaker #3: That dynamic, combined with the persistently high input prices we've seen over the last several years, continues to challenge farm profitability as a positive commodity.

Speaker #3: Demand continues to climb . Demand for U.S. corn remains robust , with projected US exports to reach an all time high , up 9% from the previous year .

Speaker #3: The amount of U.S. corn going to ethanol is approaching record levels, with U.S. ethanol exports also approaching peak levels for the second consecutive year. This growth is supported by recent trade deals and driven by strong shipments to Canada, the U.K., India, and the Netherlands.

Josh Beal: Ethanol exports approaching a new peak for the second consecutive year, supported by recent trade deals and driven by strong shipments to Canada, the UK, India, and the Netherlands. Meanwhile, Brazil is also allocating significantly more of its corn production for domestic ethanol use. Similar demand drivers exist for soybeans. The projected US soybean crush for the 2025-2026 marketing year is expected to reach an all-time high, marking a 5% year-over-year increase. Similarly, US soybean oil use is also projected to reach record levels, primarily fueled by rising demand for biomass-based diesel. Broadly, US renewable fuel policies continue to move in a positive direction. The EPA's proposed renewable fuel standards for 2026 and 2027 include substantially higher targets for biomass-based diesel, while the Clean Fuel Production Tax Credit was extended via the One Big Beautiful Bill, incentivizing the domestic production of biofuels.

Ethanol exports approaching a new peak for the second consecutive year, supported by recent trade deals and driven by strong shipments to Canada, the UK, India, and the Netherlands. Meanwhile, Brazil is also allocating significantly more of its corn production for domestic ethanol use. Similar demand drivers exist for soybeans. The projected US soybean crush for the 2025-2026 marketing year is expected to reach an all-time high, marking a 5% year-over-year increase. Similarly, US soybean oil use is also projected to reach record levels, primarily fueled by rising demand for biomass-based diesel. Broadly, US renewable fuel policies continue to move in a positive direction. The EPA's proposed renewable fuel standards for 2026 and 2027 include substantially higher targets for biomass-based diesel, while the Clean Fuel Production Tax Credit was extended via the One Big Beautiful Bill, incentivizing the domestic production of biofuels.

Speaker #3: Meanwhile , Brazil is also allocating significantly more of its corn production for domestic ethanol use . Similar demand drivers exist for soybeans . The projected US soybean crush for the 2526 marketing expected to reach an all time high , marking a 5% year over year increase .

Speaker #3: Similarly , US soybean use is also oil projected to reach record levels , primarily fueled by rising demand for biomass based diesel . Broadly , US renewable fuel policies continue to move in a positive direction .

Speaker #3: The proposed EPA Renewable Fuel Standards for 2026 and 2027 include substantially higher targets for biomass-based diesel, while the Clean Fuel Production Tax Credit was extended via the One Big Beautiful Bill, incentivizing the domestic production of biofuels.

Speaker #3: We enacted a California law allowing for the sale of E15, providing additional support for long-term growth in ethanol consumption. We are optimistic that a federal solution will be finalized soon to allow the year-round sale of E15 across the country.

Josh Beal: California enacted a law allowing for the sale of E15, providing additional support for long-term growth in ethanol consumption, and we are optimistic a federal solution will be finalized soon to allow the year-round sale of E15 across the country. In addition to these favorable demand dynamics, US government support for farmers is expected to exceed $40 billion in 2025, with the majority of payments going to row crop producers. While farm balance sheets remain healthy, with land values supportive of good debt-to-equity ratios, additional government support provides help with near-term liquidity challenges facing growers. Moving to the small ag and turf segment, dairy and livestock margins remain healthy, supported by ongoing strength in beef prices. With favorable margins, bonus depreciation from the One Big Beautiful Bill is more attractive for customers in this segment, and is expected to support modest equipment replacement growth in 2026.

California enacted a law allowing for the sale of E15, providing additional support for long-term growth in ethanol consumption, and we are optimistic a federal solution will be finalized soon to allow the year-round sale of E15 across the country. In addition to these favorable demand dynamics, US government support for farmers is expected to exceed $40 billion in 2025, with the majority of payments going to row crop producers. While farm balance sheets remain healthy, with land values supportive of good debt-to-equity ratios, additional government support provides help with near-term liquidity challenges facing growers. Moving to the small ag and turf segment, dairy and livestock margins remain healthy, supported by ongoing strength in beef prices. With favorable margins, bonus depreciation from the One Big Beautiful Bill is more attractive for customers in this segment, and is expected to support modest equipment replacement growth in 2026.

Speaker #3: addition to these In favorable demand dynamics , US government support for farmers is expected to exceed $40 billion in 2025 , with the majority of payments going to row crop producers , while farm balance sheets remain healthy with land values supportive of good near-term good good debt to equity ratios , additional government support support provides help with near-term liquidity challenges facing growers .

Speaker #3: Moving to the small ag and turf segment, dairy and livestock margins remain healthy, supported by ongoing strength in beef prices with favorable margins. Bonus depreciation from the One Big Beautiful Bill is more attractive for customers in this segment and is expected to support modest equipment replacement growth in 2026.

Speaker #3: And as you mentioned earlier, Chris, I expect the turf industry to recover modestly next year as the housing market improves.

Josh Beal: As you mentioned earlier, Chris, we're expecting the turf industry to recover modestly next year as the housing market improves.

As you mentioned earlier, Chris, we're expecting the turf industry to recover modestly next year as the housing market improves.

Speaker #4: Thanks , Josh . With that let me jump in setup , to cover our industry expectations . The backdrop that Josh just laid out , along with our current view of order books , drove our North American industry guides of down 15 to 20% for large ag and flat to up 5% for small ag and turf .

Diana Kovar: Thanks, Josh. With that set up, let me jump in to cover our industry expectations. The backdrop that Josh just laid out, along with our current view of order books, drove our North American industry guides of down 15% to 20% for large ag and flat to up 5% for small ag and turf. Translating that to Deere sales, the low inventory levels that we discussed previously in large ag will enable us to keep producing in line with retail demand in 2026. We mentioned in last quarter's call that based on the results of the early order program, Deere sprayer shipments would be down around 20% this coming year. Our planter early order program resulted in a similar year-over-year change, and our combine EOP, which closes in mid-December, is projected to fall within our guided range for the industry.

Deanna Kovar: Thanks, Josh. With that set up, let me jump in to cover our industry expectations. The backdrop that Josh just laid out, along with our current view of order books, drove our North American industry guides of down 15% to 20% for large ag and flat to up 5% for small ag and turf. Translating that to Deere sales, the low inventory levels that we discussed previously in large ag will enable us to keep producing in line with retail demand in 2026. We mentioned in last quarter's call that based on the results of the early order program, Deere sprayer shipments would be down around 20% this coming year. Our planter early order program resulted in a similar year-over-year change, and our combine EOP, which closes in mid-December, is projected to fall within our guided range for the industry.

Speaker #4: Translating that to deer sales, the low inventory levels that we discussed previously in large AG will enable us to keep producing in line with retail demand.

Speaker #4: In 2026, we mentioned in last quarter's call, based on the results of the early order program, that Deere sprayer shipments would be down around 20% this coming year.

Speaker #4: Planter Our Early Order program resulted in similar year over a year change , and our combined EOP , which closes in mid-December , is projected to fall within our guided range for the industry .

Speaker #4: North American large tractors operate on a rolling order book, with row crop tractor availability already into the pushing third quarter. Current order velocity indicates that demand for North American row crop tractors in 2026 will also be within our forecasted range for the industry. However, it's worth noting that velocity shifts can occur as market conditions change, and we're prepared to respond.

Diana Kovar: North American large tractors operate on a rolling order book, with row crop tractor availability already pushing into the third quarter. Current order velocity indicates that demand for North American row crop tractors in 2026 will also be within our forecasted range for the industry. It's worth noting that velocity can shift as market conditions change, and we're prepared to respond. Preserving this optionality was a primary reason for our lean production approach to start the fiscal year, which will also cause our production to deviate from normal seasonality. For example, for large tractors produced in Waterloo, we typically see a seasonal build in North American inventory in the first quarter of the year. Given higher levels of uncertainty this past summer and early fall, when we were taking orders for Q1, we decided to limit production slots in the quarter for North America.

North American large tractors operate on a rolling order book, with row crop tractor availability already pushing into the third quarter. Current order velocity indicates that demand for North American row crop tractors in 2026 will also be within our forecasted range for the industry. It's worth noting that velocity can shift as market conditions change, and we're prepared to respond. Preserving this optionality was a primary reason for our lean production approach to start the fiscal year, which will also cause our production to deviate from normal seasonality. For example, for large tractors produced in Waterloo, we typically see a seasonal build in North American inventory in the first quarter of the year. Given higher levels of uncertainty this past summer and early fall, when we were taking orders for Q1, we decided to limit production slots in the quarter for North America.

Speaker #4: Preserving this optionality was a primary reason for our lean production approach. To start the fiscal, which will also cause our production to deviate from normal seasonality.

Speaker #4: For example, for large tractors produced in Waterloo, we typically see a seasonal build in North American inventory in the first quarter of the year.

Speaker #4: Given higher levels of uncertainty this past summer and early fall, when we were taking orders for Q1, we decided to limit production slots in the quarter for North America.

Speaker #4: As a result, we'll have a lower than normal level of seasonal production to start the year and won't see the typical early year inventory build. However, we've given ourselves the flexibility to adjust to demand in subsequent quarters.

Diana Kovar: As a result, we'll have a lower than normal level of seasonal production to start the year and won't see the typical early-year inventory build. We've given ourselves flexibility to adjust to demand in subsequent quarters. Since setting our Q1 production plans, we have seen positive developments in the North American market. For example, the recent US trade agreement with China has lifted soybean prices to their highest levels in over a year, providing marketing opportunities for farmers to lock in more favorable prices. Turning to South America, our guide is for a flat industry in 2026. In Brazil, strong commodity production supported by area growth and the potential for interest rate reductions next year are supportive of demand. However, profitability for Brazilian corn and soy growers may be impacted by lower commodity prices and the potential return to more normal soybean trade activity between the US and China.

As a result, we'll have a lower than normal level of seasonal production to start the year and won't see the typical early-year inventory build. We've given ourselves flexibility to adjust to demand in subsequent quarters. Since setting our Q1 production plans, we have seen positive developments in the North American market. For example, the recent US trade agreement with China has lifted soybean prices to their highest levels in over a year, providing marketing opportunities for farmers to lock in more favorable prices. Turning to South America, our guide is for a flat industry in 2026. In Brazil, strong commodity production supported by area growth and the potential for interest rate reductions next year are supportive of demand. However, profitability for Brazilian corn and soy growers may be impacted by lower commodity prices and the potential return to more normal soybean trade activity between the US and China.

Speaker #4: Since setting our Q1 production plans , we have seen positive developments in the North American market . For example , the recent US trade agreement with China lifted soybean prices to their highest levels in over a year , providing marketing opportunities for farmers to lock in more favorable prices .

Speaker #4: Turning to South, our guide is for America, a flat industry in 2026. In Brazil, strong commodity production supported by area growth and the potential for interest rate reductions next year are supportive of demand.

Speaker #4: However, profitability for Brazilian corn and soybean growers may be impacted by lower commodity prices and the potential return to more normal soybean trade activity between the U.S. and China.

Speaker #4: I was just in Brazil a few weeks ago. It was clear that there is strong enthusiasm for our solutions. We have many new products and technologies coming to support increased productivity and precision for our Brazilian customer base.

Diana Kovar: I was just in Brazil a few weeks ago, and it was clear that there is strong enthusiasm for our solutions. We have many new products and technologies coming to support increased productivity and precision for our Brazilian customer base. We have been investing in our solution development, factory production, and channel capabilities in the region, and the extended Deere team is poised to take advantage of it. Brazil is a great market for us today, and an even bigger opportunity in the future. Closing out the ag walk around the world, we expect the European ag industry to be flat to up 5% in 2026. The outlook for dairy margins continues to be robust, and arable cash flows are showing improvement as harvest results exceeded expectations in key markets such as France, Germany, and Spain.

I was just in Brazil a few weeks ago, and it was clear that there is strong enthusiasm for our solutions. We have many new products and technologies coming to support increased productivity and precision for our Brazilian customer base. We have been investing in our solution development, factory production, and channel capabilities in the region, and the extended Deere team is poised to take advantage of it. Brazil is a great market for us today, and an even bigger opportunity in the future. Closing out the ag walk around the world, we expect the European ag industry to be flat to up 5% in 2026. The outlook for dairy margins continues to be robust, and arable cash flows are showing improvement as harvest results exceeded expectations in key markets such as France, Germany, and Spain.

Speaker #4: We have been investing in our solution development, factory production, and channel capabilities in the region, and the extended Deere team is poised to take advantage of it.

Speaker #4: A great market for us in Brazil today and an even bigger opportunity in the closing out of the AG walk around the world.

Speaker #4: We expect the European ag industry to be flat to up 5% in 2026. The dairy outlook for margins continues to be robust. Arable cash flows are showing improvement as harvest results exceeded expectations in key markets such as France, Germany, and Spain.

Speaker #4: Interest rates are stabilizing at current levels. The environment in Europe is conducive for growers to move forward with planned investments following a period of caution.

Diana Kovar: With interest rates stabilizing at current levels, the environment in Europe is conducive for growers to move forward with planned investments following a period of caution.

With interest rates stabilizing at current levels, the environment in Europe is conducive for growers to move forward with planned investments following a period of caution.

Speaker #3: Just a couple of points to add as we translate these industry outlooks to our own sales forecasts. We're expecting small equipment to return to growth in 2026, with sales up about 10%.

Josh Jepsen: This is Jeff. A couple of points to add. As we translate these industry outlooks to our own sales forecast, we're expecting small ag and turf to return to growth in 2026, with sales up about 10%. This is driven by a combination of improving end-market demand, as well as the benefit of producing much closer to retail demand compared to underproduction in 2025. For production and precision ag, we expect sales down 5% to 10%, which is comprised of the market outlooks noted: Europe up, South America flat, North America down. For large ag in North America, while we see the industry declining in 2026, we also see a number of positive factors that lead us to believe this coming year will mark the bottom of the cycle. As noted earlier, consumption of US corn and soy remains strong and is expected to grow.

Speaker #3: And this is driven by a combination of improving demand as end markets, as well as the benefit of producing much closer to retail demand compared to underproduction in 2025.

Speaker #3: For production precision AG , we expect sales down 5 to 10% , which is comprised of the outlooks , market noted Europe . South America , Flat , America for large AG and North we see the industry declining in 26 , we also see a number of positive that lead us factors to believe this coming year will mark the bottom of the cycle .

Speaker #3: As noted earlier, consumption of U.S. corn and soy is strong and is projected to grow, paired with strong support for biofuels and recent improvements in commodity prices.

Speaker #3: The demand picture on grains feels incrementally better than a quarter ago. Additionally, with new trade agreements driving purchase commitments, further stability has been brought to the market.

Josh Jepsen: Paired with strong support for biofuels, and recent improvement in commodity prices, the demand picture on grains feels incrementally better compared to a quarter ago. Additionally, with new trade agreements driving purchase commitments, further stability has been brought to the market. Lastly, the continued reductions that we're seeing in used inventory levels are freeing up the market as the trade ladder gets healthier.

Paired with strong support for biofuels, and recent improvement in commodity prices, the demand picture on grains feels incrementally better compared to a quarter ago. Additionally, with new trade agreements driving purchase commitments, further stability has been brought to the market. Lastly, the continued reductions that we're seeing in used inventory levels are freeing up the market as the trade ladder gets healthier.

Speaker #3: Lastly, the continued reductions that were seen in used inventory levels are freeing up the market as the trade ladder gets healthier.

Speaker #2: This is John . One additional comment . We are encouraged by the administration's support and focus on the AG economy , delivering trade agreements and policies that are driving demand growth and us stability for farmers .

John May: This is John. One additional comment, we are encouraged by the administration's support and focus on the ag economy, delivering trade agreements and policies that are driving demand growth and stability for US farmers.

Speaker #1: Thanks for your insights. I'd like to revisit Diana's comments regarding our production plans and product mix. What implications does this have for seasonality?

Chris Seibert: Thanks for your comments. I'd like to revisit Deanna's comments regarding our production plans and product mix. What implications does this have for seasonality as we begin the year?

Speaker #1: As we begin the year?

Speaker #3: Sure , Chris for , one Q 2026 , in production precision AG , we anticipate net sales will be close to the first quarter of 2025 , but margins will be significantly lower in the low single digits product and mix will be a large driver of the reduction .

Josh Jepsen: Sure, Chris. For Q1 2026, in production precision ag, we anticipate net sales will be close to the first quarter of 2025, but margins will be significantly lower in the low single digits. Product and regional mix will be a large driver of the reduction, as our lean production plan anticipates shipping fewer large tractors in Q1 versus historical first quarters. Absorption of tariffs and lighter price realization, in part due to lower shipment volumes, are also a headwind to margins year-over-year. Since we're talking about first quarter, it's also worth touching on construction and forestry. Compared to the first quarter of 2025, we expect top line to be up about 20%, while margins at similar levels due to the impact of tariffs.

Speaker #3: As our lean production plan anticipates shipping fewer large tractors in Q1 versus historical first quarter absorption of tariffs and lighter price realization, in part due to lower volumes, these are also a headwind to margins year over year.

Speaker #3: And since we're talking about the first quarter, it's also worth touching on construction and forestry compared to the first quarter of 2025. We top line to expect to be up about 20%.

Speaker #3: While margins are at similar levels due to the impact of tariffs.

Speaker #1: Thank you . you for Thank the insights . Building on that last comment , let's pivot overall CNF to the segment . 2025 proved to be a demanding CNF as we faced increased competitive price pressure and the highest level of tariff exposure amongst our business units .

Chris Seibert: Thank you. Thank you for the insights. Building on that last comment, let's pivot to the overall C&F segment. 2025 proved to be a demanding year for C&F as we faced increased competitive price pressure and the highest level of tariff exposure among our business units. Despite these headwinds, we've observed some positive trends in both retail performance and order intake. Our outlook suggests that industry demand is expected to slightly improve in the coming year, with our sales forecasted to outpace this industry growth. Josh Beal, could you provide an overview of what we anticipate for 2026?

Speaker #1: Despite these observed some headwinds , we've positive trends in both retail performance and order intake . Our outlook suggests that industry demand is expected to slightly improve in the coming year , with our sales forecast to outpace this industry growth .

Speaker #1: Josh Beal, could you provide an overview of what we anticipate for 2026?

Speaker #3: Hey , you bet , Chris . As you mentioned , we saw a pickup in retail demand for earth moving equipment in the back half of fiscal 2025 .

Josh Beal: Yeah, you bet, Chris. As you mentioned, we saw a pickup in retail demand for earth-moving equipment in the back half of fiscal 2025. North American earth-moving and forestry retails were up a mid-single digit year-over-year in our third quarter, and we saw this momentum carry into the fourth quarter, although our numbers require a little unpacking. As you can see in the appendix of our earnings call deck, Q4 North American earth-moving and forestry retails were down a single digit year-over-year. However, our construction equipment retails were actually up mid-single digits in the quarter. This was offset by a year-over-year decline in compact construction, which faced a difficult comp as we saw strong activity for this segment in October 2024. Notably, our North American earth-moving order book is up around 25% year-over-year, with availability approximately three to four months out.

Speaker #3: North American earthmoving and retails were up forestry a mid-single digit year over year in our third quarter . And we saw this momentum carry into the fourth quarter .

Speaker #3: Although our numbers require a little unpacking, as you can see in the appendix of our earnings call deck, Q4 North American Earthmoving and Forestry retail sales were down single digits year over year.

Speaker #3: However , our construction equipment retails were actually up mid-single digits in the quarter . This was offset by a year over year decline in comp construction , which faced a difficult comp as we saw strong activity for this segment in October 2024 .

Speaker #3: North, notably, our American Earthmoving order book is up around 25% year over year, with availability of approximately 3 to 4 months out.

Speaker #3: As previously discussed, our underproduction of earthmoving equipment in late 2024 and early 2025 has positioned us well from a field inventory standpoint. We expect to produce North American earthmoving equipment in line with retail in 2026, which is a significant driver of our 2026 net sales.

Josh Beal: As previously discussed, our underproduction earth-moving in late 2024 and early 2025 has positioned us well from a field inventory standpoint. We expect to produce North American earth-moving equipment in line with retail in 2026, which is a significant driver of our 2026 net sales guide up of up around 10%. Road building and forestry industry volumes are expected to remain flat year-over-year. Notably, our road building business, given its market leadership position and global diversification, continues to benefit from strength in infrastructure spending around the world.

As previously discussed, our underproduction earth-moving in late 2024 and early 2025 has positioned us well from a field inventory standpoint. We expect to produce North American earth-moving equipment in line with retail in 2026, which is a significant driver of our 2026 net sales guide up of up around 10%. Road building and forestry industry volumes are expected to remain flat year-over-year. Notably, our road building business, given its market leadership position and global diversification, continues to benefit from strength in infrastructure spending around the world.

Speaker #3: Net sales guide , net sales guide up of up around 10% . Road building and forestry industry volumes are expected to remain flat year over year .

Speaker #3: road building Notably , our business , given position its market and global leadership diversification , benefit from strength in infrastructure spending around the continues to .

Speaker #2: This is

Speaker #2: John, it's important to note the impressive synergies that we're seeing building, particularly in terms of leveraging Deere technology. As the industry leader, we're now expanding the value proposition to customers with tools like the John Deere Operations Center, which we plan to roll out for road building in 2025.

John May: This is John. I think it's important to note the impressive synergies that we're seeing in road building, particularly in terms of leveraging Deere technology. As the industry leader, we're now expanding the value proposition to customers with tools like the John Deere Operations Center, which we brought to road building in 2025. We believe that customers are now benefiting from an advanced digital platform to monitor fleet, logistics, and job performance. We've already seen over 3,200 customer organizations engage with this platform. This is just one of many opportunities we have for delivering more value to customers in this sector.

Speaker #2: We believe that customers are now benefiting from a digital platform to fleet advanced monitoring logistics and job performance. We've already seen over 3,200 customer organizations engage with this platform.

Speaker #2: This is one of many opportunities we have for delivering more value to customers in this sector.

Speaker #1: Thank you for your comments. You clarified the dynamics we have across different segments and geographies, and your explanation suggests that our net sales will increase year over year.

Chris Seibert: Thank you both for your comments. Your insights have clarified the dynamics across different segments and geographies, and explained why our overall forecast suggests net sales will increase year-over-year. Now that harvest is complete, I'm also interested in learning about the technological progress we have made during the past fiscal year. What's ahead, and how these advancements will further benefit our customers? Josh Beal, could you share some updated statistics?

Speaker #1: Now that harvest is complete , I'm also learning interested in about the technological progress we have made during the past fiscal year . What's ahead and how these advancements will further benefit our customers .

Speaker #1: Could you, Josh Beal, share some updated statistics?

Speaker #3: Sure , Chris . Just like many customers of our operations post harvest , it's a good time to take stock of what we did in the past year .

Josh Beal: Sure, Chris. Just like many of our customers' operations post-harvest, it's a good time to take stock of what we did in the past year. As John mentioned earlier, in fiscal 2025, we made significant progress across all layers of the tech stack, both in terms of expanded offerings and utilization, but also in greater leveraging of technology across more production systems and geographies. Let's start with the foundational layer of the tech stack, base precision. We've talked in the past about how Precision Essentials, our retrofit kit, brings the core elements of precision technology, guidance, connectivity, and onboard compute deeper in the installed base of Deere and non-Deere equipment via a low upfront cost with an annual license. Reception of this offering continues to be strong.

Speaker #3: As John mentioned earlier, in fiscal 2025, we made significant progress across all layers of the tech stack, both in terms of expanded offerings and utilization, but also in greater leveraging of technology across more production systems and geographies.

Speaker #3: Let's start foundational with the layer of the stack tech based precision . We've talked in the past about how precision Essentials , our retrofit brings the core kit of elements precision technology , guidance , connectivity , and onboard compute deeper in the the installed base of Deere and non Deere equipment via a low upfront cost with an annual license .

Speaker #3: Reception of this offering continues to be strong. In the two years since it's been on the market, we've had orders for over 24,000 kits, and this core technology has brought 3,300 new organizations into the John Deere Operations Center.

Josh Beal: In the two years since it's been on the market, we've had orders for over 24,000 kits, and this core technology has brought 3,300 new organizations into the John Deere Operations Center. Another key example of our growth in base precision is JDLink Boost, which brings Starlink-enabled satellite connectivity to areas of the world where terrestrial cell is insufficient for machine connectivity. We launched this solution in Brazil and the US in January of this year, and expanded the offering to additional regions over the summer. Since launch, we've taken over 8,000 orders for this solution globally. The next layer of the tech stack is digital, the John Deere Operations Center. John already mentioned how we've leveraged the Operations Center in the road building business. We've also brought it to earth-moving, commercial landscaping, and golf. In agriculture, we continue to see higher and higher levels of digital engagement.

In the two years since it's been on the market, we've had orders for over 24,000 kits, and this core technology has brought 3,300 new organizations into the John Deere Operations Center. Another key example of our growth in base precision is JDLink Boost, which brings Starlink-enabled satellite connectivity to areas of the world where terrestrial cell is insufficient for machine connectivity. We launched this solution in Brazil and the US in January of this year, and expanded the offering to additional regions over the summer. Since launch, we've taken over 8,000 orders for this solution globally. The next layer of the tech stack is digital, the John Deere Operations Center. John already mentioned how we've leveraged the Operations Center in the road building business. We've also brought it to earth-moving, commercial landscaping, and golf. In agriculture, we continue to see higher and higher levels of digital engagement.

Speaker #3: Another key part of our base precision is JDLink Boost, which brings Starlink-enabled satellite connectivity to areas of the world where terrestrial cell service is insufficient for machine connectivity.

Speaker #3: We launched this solution in the U.S. in January this year and expanded the offering to additional regions over the summer. Since launch, we've taken over 8,000 orders for this solution globally.

Speaker #3: The next layer of the tech stack is digital: the Gender Operations Center. John already mentioned how we've leveraged the Operations Center in the road building business.

Speaker #3: We've also brought it to earthmoving, commercial, and golf in agriculture. We continue to see higher and higher levels of digital engagement.

Speaker #3: The operations center now covers 500 million engaged over acres , a 10% increase from last year and the number of highly engaged acres rose by 17% year over year , reaching 147 million more highly engaged acres suggests more customers each day are realizing the value gained from digitally documenting multiple production executing steps and value enhancing actions using the tool .

Josh Beal: The John Deere Operations Center now covers over 500 million engaged acres, a 10% increase from last year. The number of highly engaged acres rose by 17% year-over-year, reaching 147 million. More highly engaged acres suggest more customers each day are realizing the value gain from digitally documenting multiple production steps and executing value-enhancing actions using the tool. The next layer of the tech stack is automation. Deanna, last quarter, Cory Reed shared some early customer feedback related to our newest combine offerings, harvest settings automation, and predictive ground speed automation. Now that harvest is wrapping up, would you mind sharing your thoughts on how the season went?

The John Deere Operations Center now covers over 500 million engaged acres, a 10% increase from last year. The number of highly engaged acres rose by 17% year-over-year, reaching 147 million. More highly engaged acres suggest more customers each day are realizing the value gain from digitally documenting multiple production steps and executing value-enhancing actions using the tool. The next layer of the tech stack is automation. Deanna, last quarter, Cory Reed shared some early customer feedback related to our newest combine offerings, harvest settings automation, and predictive ground speed automation. Now that harvest is wrapping up, would you mind sharing your thoughts on how the season went?

Speaker #3: The next layer of the tech stack is automation . Last quarter , Cory Reed shared some early customer related to feedback our newest combine offerings , Harvest Settings predictive , automation , and ground speed automation .

Speaker #3: Now, the harvest is wrapping up. Would you mind sharing your thoughts on how the season went?

Speaker #4: Absolutely. Fiscal Year 2025 marked the first year of availability for both solutions. Harvest Settings Automation had an impressive year, with a take rate of over 90% on North American combines.

Josh Beal: Absolutely. Fiscal year 2025 marked the first year of availability for both solutions. Harvest settings automation had an impressive year-one take rate of over 90% on North American combines. On average, operators used the technology over 60% of the time they were in the combine, resulting in over 5 million acres covered by this solution. The adoption of this tech isn't limited to the North American market. The 5 million acres covered, and more importantly, value realized from this technology included acres in Brazil, Europe, and Australia. Predictive ground speed automation, which further enhances the harvest experience, yielded a nearly 30% increase in throughput measured by bushels per hour. Continuing with automation, I'd also like to highlight the results we saw from CNSpray in 2025. This year, CNSpray technology also covered over 5 million acres after covering over 1 million acres in 2024.

Deanna Kovar: Absolutely. Fiscal year 2025 marked the first year of availability for both solutions. Harvest settings automation had an impressive year-one take rate of over 90% on North American combines. On average, operators used the technology over 60% of the time they were in the combine, resulting in over 5 million acres covered by this solution. The adoption of this tech isn't limited to the North American market. The 5 million acres covered, and more importantly, value realized from this technology included acres in Brazil, Europe, and Australia. Predictive ground speed automation, which further enhances the harvest experience, yielded a nearly 30% increase in throughput measured by bushels per hour. Continuing with automation, I'd also like to highlight the results we saw from CNSpray in 2025. This year, CNSpray technology also covered over 5 million acres after covering over 1 million acres in 2024.

Speaker #4: On average, operators use the technology over 60% of the time they were in the combine, resulting in over 5 million acres being covered by this solution. The adoption of this tech isn't limited to the North American market.

Speaker #4: The 5 million acres covered , and more value importantly , realized from this technology included acres in Brazil , Europe and Australia . Predictive ground speed automation , which further enhances the harvest experience , yielded a nearly 30% increase in throughput measured by bushels per hour .

Speaker #4: Continuing with automation, I'd also like to highlight the results we saw from C and spray in 2025. This year, spray technology also covered over 5 million acres.

Speaker #4: After covering over 1 million acres in 2024, the average herbicide savings from the technology in 2025 was around 50%. To give you a sense of this value that customers can realize, let me share an example from Agritechnica.

Josh Beal: The average herbicide savings from the technology in 2025 was around 50%. To give you a sense of this value that customers can realize, let me share an example from Agritechnica this month. A customer from the State of Washington approached us at the show and shared that in one day, he saved more than $20,000 using CNSpray. Examples like this give us confidence in the continued growth in both adoption and utilization of the technology. The tech is working. When customers see that value in their operation, it's anticipated that they will continue to use it pass over pass and season over season.

The average herbicide savings from the technology in 2025 was around 50%. To give you a sense of this value that customers can realize, let me share an example from Agritechnica this month. A customer from the State of Washington approached us at the show and shared that in one day, he saved more than $20,000 using CNSpray. Examples like this give us confidence in the continued growth in both adoption and utilization of the technology. The tech is working. When customers see that value in their operation, it's anticipated that they will continue to use it pass over pass and season over season.

Speaker #4: This month, a customer from the state of Washington approached us at the show and shared that in one day, he saved more than $20,000 using Sea and Spray.

Speaker #4: Examples like this give us confidence in the continued growth in both adoption and utilization of the technology. The tech is working, and when customers see that value in their operation, it's anticipated that they will continue to use it.

Speaker #4: Over, pass, pass and season over season.

Speaker #1: all Thanks . It's hear the great to examples of technology adding real value to our customers . Deanna , would you mind sharing some thoughts on the top layer of the tech stack ?

Chris Seibert: Thanks, all. It's great to hear the examples of technology adding real value to our customers. Deanna, would you mind sharing some thoughts on the top layer of the tech stack, autonomy?

Speaker #1: Autonomy ?

Speaker #4: Certainly .

Speaker #4: Chris , as John . mentioned , we recently up opened dealer orders our for tillage autonomy kits that are retrofittable onto AR and Nar tractors .

Josh Beal: Certainly, Chris. As John mentioned, we recently opened up dealer orders for our tillage autonomy kits that are retrofitable onto 8R and 9R tractors. I had the opportunity to visit an early autonomy customer two weeks ago in Illinois. He was pleased with their experience with autonomy on a 9RX and a 2680 high-speed disc this fall. Autonomy is unique because the value to the customer is really more about operational flexibility. Autonomy certainly addresses labor shortages while also allowing existing resources to concentrate on higher-value tasks within their operations. To this customer I visited in Illinois, it was even more than convenience. He said it was invaluable to have the ability to get a job done when there was no one around to put in the seat, to just take the tractor to the field and let it go to work.

Deanna Kovar: Certainly, Chris. As John mentioned, we recently opened up dealer orders for our tillage autonomy kits that are retrofitable onto 8R and 9R tractors. I had the opportunity to visit an early autonomy customer two weeks ago in Illinois. He was pleased with their experience with autonomy on a 9RX and a 2680 high-speed disc this fall. Autonomy is unique because the value to the customer is really more about operational flexibility. Autonomy certainly addresses labor shortages while also allowing existing resources to concentrate on higher-value tasks within their operations. To this customer I visited in Illinois, it was even more than convenience. He said it was invaluable to have the ability to get a job done when there was no one around to put in the seat, to just take the tractor to the field and let it go to work.

Speaker #4: I had the opportunity to visit an Autonomy early customer two weeks ago in Illinois. He was pleased with their experience with Autonomy on the A9R and a 2680 high-speed disk.

Speaker #4: This fall . Autonomy is unique because the value to the customer is really more about operational flexibility . Autonomy certainly addresses labor shortages , while also allowing existing resources to concentrate on higher value tasks within their operations .

Speaker #4: But to this customer , I visited in Illinois , it was even more than convenience , he said . It was invaluable to have the ability to get a job done when there is no one around to put in the seat , to just take the tractor to the field and let it go to work .

Speaker #4: No matter where I go in the world, labor availability is a huge issue on the farm, especially in busy seasons like spring and fall.

Josh Beal: No matter where I go in the world, labor availability is a huge issue on the farm, especially in busy seasons like spring and fall. That's why we began by concentrating on our corn and soy production system and started developing a solution that can support customers in those peak activity periods. Since the start of our autonomous tillage journey, we've covered over 200,000 acres autonomously, and we're looking forward to even more next spring. Labor availability isn't unique to the corn and soy production system. It's prevalent across all the production systems that Deere supports, which is why you saw us at CES this year highlight how we're leveraging the technology in high-value crops, turf care, and earth moving. The value of autonomous solutions can be tremendous, and we're just getting started.

No matter where I go in the world, labor availability is a huge issue on the farm, especially in busy seasons like spring and fall. That's why we began by concentrating on our corn and soy production system and started developing a solution that can support customers in those peak activity periods. Since the start of our autonomous tillage journey, we've covered over 200,000 acres autonomously, and we're looking forward to even more next spring. Labor availability isn't unique to the corn and soy production system. It's prevalent across all the production systems that Deere supports, which is why you saw us at CES this year highlight how we're leveraging the technology in high-value crops, turf care, and earth moving. The value of autonomous solutions can be tremendous, and we're just getting started.

Speaker #4: That's why we began by concentrating on our corn and soy production system and started developing a solution that can support customers in those peak activity periods.

Speaker #4: start of our Since the autonomous tillage journey , we've covered over 200,000 acres autonomously , and we're looking forward to even more next spring .

Speaker #4: And labor availability isn't unique to the corn and soy production system. It's prevalent across all the production systems that Deere supports, which is why you saw us at CES this year.

Speaker #4: Highlight how we're leveraging the technology in value high crops , turf care , and earth moving value of the autonomous solutions can be tremendous , and we're just getting started .

Speaker #1: Thank you. It's numerous examples that are ongoing, showing how tech investments are fueling substantial innovation and creating real value for our customers.

Chris Seibert: Thank you. It's encouraging to see numerous examples that show how our ongoing tech investments are fueling substantial innovation and creating real value for our customers. Now, before we open the line for questions, do you have any final thoughts you'd like to share, Josh Jepsen?

Speaker #1: Before we open the line for now, questions, do you have any final thoughts you'd like to share? Joshua Jepsen.

Speaker #3: Yeah , I'll be brief . 2025 was a challenging year for the industry and for our team at As the Deere . agricultural sector continued its downturn for a second straight year .

Josh Beal: Yeah, I'll be brief. 2025 was a challenging year for the industry and for our team at Deere as the agricultural sector continued its downturn for a second straight year. As mentioned before, I've never witnessed Deere's resilience more than I did this year, represented by how we took care of customers while achieving performance that exceeded similar points, other similar points in the cycle. From a shareholder perspective, our performance yielded $18.50 in earnings per share that supported continued strong cash generation. Equipment operations cash flow was $5.1 billion, a significant improvement from past downturns and better than any year outside of the period of 2021 to 2024, which enabled us to return over $2.8 billion to shareholders via dividends and share repurchases. We paused buybacks in the fourth quarter due to heightened market uncertainty, but we expect to resume our normal capital allocation activities in 2026.

Josh Jepsen: Yeah, I'll be brief. 2025 was a challenging year for the industry and for our team at Deere as the agricultural sector continued its downturn for a second straight year. As mentioned before, I've never witnessed Deere's resilience more than I did this year, represented by how we took care of customers while achieving performance that exceeded similar points, other similar points in the cycle. From a shareholder perspective, our performance yielded $18.50 in earnings per share that supported continued strong cash generation. Equipment operations cash flow was $5.1 billion, a significant improvement from past downturns and better than any year outside of the period of 2021 to 2024, which enabled us to return over $2.8 billion to shareholders via dividends and share repurchases. We paused buybacks in the fourth quarter due to heightened market uncertainty, but we expect to resume our normal capital allocation activities in 2026.

Speaker #3: As mentioned before, I've never witnessed Deere's resilience more than I did this year, represented by how we took care of customers while achieving performance that exceeded similar points.

Speaker #3: Other similar points in the cycle from a shareholder perspective , our performance yielded $18.50 in earnings per share that supported continued strong cash equipment operations , cash generation flow was $5.1 billion , a significant improvement from past downturns and better than any year outside of the period of 21 to 2024 , which enabled us to return over $2.8 billion to shareholders via dividends and share repurchases .

Speaker #3: We paused buybacks in the fourth quarter due to heightened market uncertainty, but we expect to resume our normal capital allocation activities in 2026.

Speaker #3: As we look ahead to the next year, we believe our field inventories across all segments are in good shape. We expect to see growth in smog and turf, as well as in forestry.

Josh Beal: As we look ahead to the next year, we believe our field inventories across all segments are in good shape. We expect to see growth in small ag and turf, as well as in construction and forestry. In North American large ag, we will enter the year lean from a production perspective, but with flexibility to allow us to respond swiftly as market demand inflects. The structural improvements we've made empower us to support robust levels of R&D and capital expending. We remain focused on the long-term customer value that we expect unlocked through technology, which should enable future growth for Deere and greater levels of value for shareholders and all stakeholders. Finally, the achievements we delivered this year are a direct result of the commitment and hard work of our teams worldwide.

As we look ahead to the next year, we believe our field inventories across all segments are in good shape. We expect to see growth in small ag and turf, as well as in construction and forestry. In North American large ag, we will enter the year lean from a production perspective, but with flexibility to allow us to respond swiftly as market demand inflects. The structural improvements we've made empower us to support robust levels of R&D and capital expending. We remain focused on the long-term customer value that we expect unlocked through technology, which should enable future growth for Deere and greater levels of value for shareholders and all stakeholders. Finally, the achievements we delivered this year are a direct result of the commitment and hard work of our teams worldwide.

Speaker #3: And in North large American construction and AG . We will enter the year , lean from a production perspective , but with flexibility to allow us to respond swiftly as market demand inflects .

Speaker #3: Improvements we've made structurally empower us to support robust levels of R&D and capital spending. We remain focused on the long-term customer value that we expect to unlock through technology, which should enable future growth.

Speaker #3: For Deere and greater levels of value for shareholders and all stakeholders. Finally, the achievements delivered this year are a direct result of the commitment and hard work of our teams worldwide.

Speaker #3: Truly, I'm proud of what we've accomplished together and excited to keep advancing our mission to empower customers to do more with less in 2026 and beyond.

Josh Beal: I'm truly proud of what we've accomplished together, and am excited to keep advancing our mission to empower customers to do more with less in 2026 and beyond.

I'm truly proud of what we've accomplished together, and am excited to keep advancing our mission to empower customers to do more with less in 2026 and beyond.

Speaker #1: Thanks, Josh. Now, let's open the line to questions from investors.

Speaker #3: Now ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure and consideration of others, and our hope is to allow more of you to participate in the call.

Chris Seibert: Thanks, Josh. Now, let's open the line to questions from our investors.

Josh Beal: We're now ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure. In consideration of others, and our hope to allow more of you to participate in the call, please limit yourself to one question. If you have additional questions, we ask that you rejoin the queue.

Speaker #3: Please limit yourself to one question . If you have additional questions , we ask that you rejoin the queue .

Speaker #5: Thank you. We will now take questions and begin the answer session. If you would like to ask a question, please press star one.

Operator: Thank you. We will now begin our question and answer session. If you'd like to ask a question, please press star one. Please press star two if you'd like to withdraw your question. Our first question will come from Stephen Volkman from Jefferies. Your line is open.

Speaker #5: Please press star two if you would like to withdraw your question. Our first question will come from Stephen Volkmann from Jefferies.

Speaker #5: Your line is open .

Speaker #6: Great . Good everybody . morning Thank you for taking the question . I guess I will focus on tariffs . And you talked about the 1.2 billion , I think headwind .

Josh Jepsen: Great. Good morning, everybody. Thank you for taking the question. I guess I will focus on tariffs. You talked about the $1.2 billion, I think, headwind. I think that was your 2026 number. How are you thinking about offsetting that? Over what period would you think that perhaps you'd be able to kind of recapture that? I'm trying to think a little bit about the cadence of the year. I assume you'll improve as the year progresses, but I'm curious how you're thinking about it. Thanks.

Stephen Volkmann: Great. Good morning, everybody. Thank you for taking the question. I guess I will focus on tariffs. You talked about the $1.2 billion, I think, headwind. I think that was your 2026 number. How are you thinking about offsetting that? Over what period would you think that perhaps you'd be able to kind of recapture that? I'm trying to think a little bit about the cadence of the year. I assume you'll improve as the year progresses, but I'm curious how you're thinking about it. Thanks.

Speaker #6: I think that was your 26 number. Are you? But how about thinking offsetting that and over what period would you think that that perhaps able to kind of recapture that?

Speaker #6: I'm trying to think a little bit about the cadence of the year. I assume you'll improve as the year progresses, but I'm curious how you're thinking about it.

Speaker #6: Thanks .

Speaker #3: Yeah , thanks . Thanks , Steve , for the question . You got you got the numbers , right . So it's a billion .

Speaker #3: Two is the is the pre-tax tariff hit in 2026 . That's about 600 million incremental . You know , from the 600 million that we saw in in 2025 .

Josh Beal: Yeah, thanks, Steve, for the question. You got the numbers right. It's $1.2 billion as the pre-tax tariff hit in 2026. That's about $600 million incremental from the $600 million that we saw in 2025. Run rate of the tariffs by quarter is pretty evenly spread, roughly $300 million per quarter. If you look at our price cost expectation for 2026, inclusive of tariffs in that number, we expect to be price cost positive. We'll start to capture back. We'll capture the incremental exposure this year and some of the exposure that we saw in 2025. That won't get us fully there, but it gives us a good chunk along the way. We'll continue to execute activities to mitigate that. We expect to take some continued price in the future as well to cover that additional piece. Thanks for the question, Steve.

Speaker #3: rate of the Run tariffs by Is pretty quarter . evenly spread . You know , roughly 300 million per quarter . If if you look at our price cost , you know , expectation for 2026 , inclusive of of tariffs in that number , we expect to be price cost positive .

Speaker #3: You know , so we'll start to , you know , capture back . We'll capture the incremental This exposure . year . And some of the exposure that we saw in 2025 that won't get us fully there .

Speaker #3: But it gives us a good indication along the way. We'll continue to execute activities to mitigate that and expect to take some continued price increases in the future as well.

Speaker #3: You know, to cover that additional piece. Thanks for the question, Steve.

Speaker #6: Thank you .

Speaker #5: Thank you. Our next question comes from Jamie Cook with Truist Securities. Your line is open.

Josh Jepsen: Thank you.

Stephen Volkmann: Thank you.

Operator: Thank you. Our next question comes from Jamie Cook with Truist Securities. Your line is open.

Speaker #7: Hi . Good morning . question on and precision AG . Just Just a production the , you know , a on 7% sales decline , the implied decrementals , I think are approaching 60% .

Chris Seibert: Hi, good morning. Just a question on production and precision ag, just on a 7% sales decline, the implied decrementals, I think, are approaching 60%. Just trying to understand that, I mean, I'm assuming a good portion of that is tariffs. How much is allocated to tariffs? Also, just your comments on mix, understanding North American large ag is going to be down a lot, but you've also spoken to improving profitability in other regions, in particular, Brazil. If you could just unpack the decremental margin on the sales decline. Thank you.

Jamie Cook: Hi, good morning. Just a question on production and precision ag, just on a 7% sales decline, the implied decrementals, I think, are approaching 60%. Just trying to understand that, I mean, I'm assuming a good portion of that is tariffs. How much is allocated to tariffs? Also, just your comments on mix, understanding North American large ag is going to be down a lot, but you've also spoken to improving profitability in other regions, in particular, Brazil. If you could just unpack the decremental margin on the sales decline. Thank you.

Speaker #7: So, just trying to understand that. Assuming a portion of a good that is tariffs, how much is allocated to tariffs?

Speaker #7: And just your comments on the mixed understanding: North American large AG is going to be down a lot. But you've also spoken to improving profitability in other regions, in particular, Brazil.

Speaker #7: So, if you could unpack the decremental margin on the sales decline. Thank you.

Speaker #3: Yeah , yeah . numbers are right , if looking Your Jamie . at , you know , PPA specifically in the 2026 , it's around 60 would be the implied , you decremental margin tariffs for that business have and a approximately point half or so margin impact for the full year of 2026 .

Josh Beal: Yeah, yeah. Your numbers are right, Jamie. If looking at PPA specifically into 2026, it's around 60 would be the implied decremental margin. Tariffs for that business have approximately 1.5 or so margin impact for the full year of 2026. If you back out that piece, it takes decrementals to kind of the low to mid-50s. Still elevated above normal levels for PPA. That delta between a normal would be the geographic mix that you're seeing. You're right, that profitability levels around the world have improved. We've talked to that. Still, North America large ag remains our most profitable market. It is negative mix for the year. Just given the magnitude of decline, that's what's driving the higher level of decrementals next year. Thanks, Jamie.

Speaker #3: So if you back out that piece , it takes Decrementals kind of the to low to 50s . mid So still elevated above normal , normal levels for PPA .

Speaker #3: And that that delta between a normal would be the geographic mix seeing . You're that you're right . That profitability levels around the world have improved .

Speaker #3: We've talked about the still, but you know, North America large AG remains our most profitable market. So it is a negative mix for the year.

Speaker #3: And just given the magnitude of decline, that's what's driving the higher level of decrementals next year. Thanks, Jamie.

Speaker #5: Thank you. Our next question comes from Kristen Owen with Oppenheimer. Your line is open.

Operator: Thank you. Our next question comes from Kristen Owen with Oppenheimer. Your line is open.

Speaker #8: morning . Thank Hi . Good you for the question . I wanted to double click on the large ag price assumption . That 1.5% , I think when we were talking about early order program , that number in North America was was closer to 3 to 4 .

Josh Beal: Hi, good morning. Thank you for the question. I wanted to double-click on the large ag price assumption, that 1.5%. I think when we were talking about early order program, that number in North America was closer to 3% to 4%. Could you just help us unpack that 1.5%? How much of that is being driven by maybe some of the geographic mix? Just a little bit more color on the underlying assumptions for that number. Thank you.

Kristen Owen: Hi, good morning. Thank you for the question. I wanted to double-click on the large ag price assumption, that 1.5%. I think when we were talking about early order program, that number in North America was closer to 3% to 4%. Could you just help us unpack that 1.5%? How much of that is being driven by maybe some of the geographic mix? Just a little bit more color on the underlying assumptions for that number. Thank you.

Speaker #8: Could you help us unpack that 1.5%? How much of that is being driven by maybe some of the geographic mix?

Speaker #8: Just a little bit more color on the underlying assumptions for that number? Thank you.

Speaker #3: thanks for the Yeah , question , Kristen . You're right . Early order programs and large tractor pricing in North America for for 2026 , less price increases are in the range of 3 to 4% .

Josh Beal: Yeah, thanks for the question, Kristen. You're right. Early order programs in large tractor pricing in North America for 2026, list price increases are in the range of 3% to 4%. That's held. What you're seeing with the point and a half price guide is a couple of things. One thing you're spot on is geographic mix. We talked about Brazil in 2025. We did very strong price in Brazil in 2025, mid-single digit price increase, positive. It'll still be positive in 2026, but more muted. Think about closer to that guide range. That is pulling down some of the list price. The other thing that's happening in North America is called a parts mix versus complete goods. As we go down in the cycle, parts make up a bigger mix of our sales in a given year.

Speaker #3: that's And held you know what you're seeing with the point and a half price guide is a couple of things . One thing you're spot on is geographic mix .

Speaker #3: You know , we talked about Brazil in 2025 . We did very strong price in Brazil in 25 . You know , mid-single digit price increase positive .

Speaker #3: It'll still be positive in in 2026 . But more muted . You know think about you know closer to closer to that guide range .

Speaker #3: So that is pulling down. You know some of the list price. The other thing that's happening in North America is a called a parts mix versus complete goods.

Speaker #3: You know, as we go down in the cycle, parts make up a bigger mix of our sales in a given year.

Speaker #3: And our price , price , parts , pricing . Excuse me . You know , was a little more muted for 2026 . So the combination of those two is really what's what's pulling down .

Josh Beal: Our parts pricing, excuse me, was a little more muted for 2026. The combination of those two is really what's pulling down that guide versus the list price increases.

Our parts pricing, excuse me, was a little more muted for 2026. The combination of those two is really what's pulling down that guide versus the list price increases.

Speaker #3: You know, that guide versus you, the list price increases.

Speaker #4: for Yeah . Thanks unpacking that . Josh this is Deanna . And as we think about North American overall , pricing we go back to to two of our priorities .

Josh Beal: Yeah, thanks for unpacking that, Josh. This is Deanna. As we think about North American pricing overall, we go back to two of our priorities. First is the continued focus on use reduction. You will see us continue to provide pool fund opportunities to our dealers at a similar level in 2026 as we did in 2025. From an overall pricing standpoint, we remain mindful of where our customers are at in the cycle, and maintaining our opportunities for the future.

Deanna Kovar: Yeah, thanks for unpacking that, Josh. This is Deanna. As we think about North American pricing overall, we go back to two of our priorities. First is the continued focus on use reduction. You will see us continue to provide pool fund opportunities to our dealers at a similar level in 2026 as we did in 2025. From an overall pricing standpoint, we remain mindful of where our customers are at in the cycle, and maintaining our opportunities for the future.

Speaker #4: And first is the continued focus on use reduction. So you will see us continue to provide pool fund opportunities to our dealers at a similar level in 2026 as we did in 2025.

Speaker #4: And from an overall pricing standpoint, we remain mindful of where our customers are at in the cycle and maintaining our opportunities for the future.

Speaker #3: Thanks , Kristin .

Speaker #5: Thank you. Our next question comes from Tim Theon with Raymond James. Your line is open.

Josh Beal: Thanks, Kristen.

Operator: Thank you. Our next question comes from Tim Thean with Raymond James. Your line is open.

Speaker #9: Thank you. I just saw, thinking how we're kind of helping build thinking. The costs about overall we look but just that.

Josh Beal: Thank you. Good morning. The question is just on production costs in 2026. You highlighted tariffs, but just X that. You saw kind of a build throughout 2025 just in terms of production costs. How are you thinking about that as we look into 2026? Obviously, a number of pieces that flow into that. Maybe just some help in terms of, for the overall equipment ops, how we're thinking about production costs. Thank you. Yeah, thanks, Tim, for the question. If you back off the incremental $600 million of tariffs in production costs, we would still expect to be slightly unfavorable for production costs in 2026. There are a few moving pieces there. Overheads for our business, particularly in large ag, are expected to be unfavorable next year. We do have some headwinds in our North American labor from our current contract.

Tim Thein: Thank you. Good morning. The question is just on production costs in 2026. You highlighted tariffs, but just X that. You saw kind of a build throughout 2025 just in terms of production costs. How are you thinking about that as we look into 2026? Obviously, a number of pieces that flow into that. Maybe just some help in terms of, for the overall equipment ops, how we're thinking about production costs. Thank you.

Speaker #9: A that into pieces X that 26 number just in terms of production costs of 26, you morning. Thank you.

Speaker #3: Yeah . Tim , for the Thanks , question . you if you back If off , you know , the incremental 600 million of tariffs in production costs , we would still expect to be slightly unfavorable for for production costs in 2026 .

Josh Beal: Yeah, thanks, Tim, for the question. If you back off the incremental $600 million of tariffs in production costs, we would still expect to be slightly unfavorable for production costs in 2026. There are a few moving pieces there. Overheads for our business, particularly in large ag, are expected to be unfavorable next year. We do have some headwinds in our North American labor from our current contract.

Speaker #3: But there are a few moving pieces for our business. Overheads, particularly in large AG, are expected to be unfavorable next year.

Speaker #3: We do have some headwinds related to labor from American in our current contract. 2026 is a step-up year in that contract for production labor.

Speaker #3: So that provides a headwind. That's largely offset by some favorability and sharing that we'll see next year profit, just on lower income levels.

Josh Beal: 2026 is a step-up year in that contract for production labor. That provides a headwind. That's largely offset by some favorability in profit sharing that we'll see next year just on lower income levels. Material X tariffs will be slightly negative, pretty close to flat. That does include the inflationary impact of indirect impacts of tariffs that we're seeing in the business, but slightly negative when you roll that all together. I think the point to make, price costs, we'd expect to be favorable for the full year. That helps offset some of the tariff costs that we saw in 2025 that we weren't able to mitigate with price that year. Thanks.

2026 is a step-up year in that contract for production labor. That provides a headwind. That's largely offset by some favorability in profit sharing that we'll see next year just on lower income levels. Material X tariffs will be slightly negative, pretty close to flat. That does include the inflationary impact of indirect impacts of tariffs that we're seeing in the business, but slightly negative when you roll that all together. I think the point to make, price costs, we'd expect to be favorable for the full year. That helps offset some of the tariff costs that we saw in 2025 that we weren't able to mitigate with price that year. Thanks.

Speaker #3: Material ex-tariffs slightly negative. It will be pretty close to flat. That does include the inflationary impact of the indirect effects of tariffs that we're seeing in the business.

Speaker #3: But, but slightly negative when you roll it all together. But again, I think the point to make, you know, price costs, we'd expect to be favorable for the full year.

Speaker #3: And again, that helps offset some of the tariff costs that we saw in 2025 that we weren't able to mitigate with price that year.

Speaker #3: Thanks . Hey , Tim , this is Jeff . I'd say the other thing is we still have a bunch of runway as it opportunity and relates to taking cost out of product and process production costs .

Diana Kovar: Hey, Tim. This is Jepsen. I'd say the other thing is we still have a bunch of opportunity and runway as it relates to taking cost out of product and process production costs. The teams have done a really good job over the last couple of years, and we think that will continue. We're by no means done on that journey. I think that'll continue to create opportunity for us to grow margins, particularly as we've seen some of these headwinds here over the back half of 2025 into 2026. Thank you.

Josh Jepsen: Hey, Tim. This is Jepsen. I'd say the other thing is we still have a bunch of opportunity and runway as it relates to taking cost out of product and process production costs. The teams have done a really good job over the last couple of years, and we think that will continue. We're by no means done on that journey. I think that'll continue to create opportunity for us to grow margins, particularly as we've seen some of these headwinds here over the back half of 2025 into 2026. Thank you.

Speaker #3: So, the teams have really done a good job over the last couple of years, and we think that will continue. So, we're by no means done.

Speaker #3: And on that journey , I think that'll continue to create opportunity for us to , to to grow margins , particularly as we've seen some of these headwinds over , here you know , the back half of 25 and 26 .

Speaker #3: Thank you .

Speaker #5: Thank you. Our next question comes from David Raso with Evercore ISI. Your line is open.

Operator: Thank you. Our next question comes from David Raso with Evercore ISI. Your line is open.

Speaker #10: Thank you. Hi. Given the full-year large Ag sales guide in the first quarter, it implied a flat outlook, which is suggesting the rest of the year will be down 9%.

John May: Hi, thank you. Given the full year large ag sales guide and the first quarter implied a flat, it's implying the rest of the year down 9%. I was just curious, when you think of PP&A for the rest of the year after the first quarter, are we down every quarter? Maybe to help us with the margins for the rest of the year, any cadence you can give us on the pricing? Obviously, the pricing was up. I know it was an easy comp in Brazil. Just the 1.5% for the full year, just how to think about that cadence, just to think how we get over the hump on kind of price costs later in the year if we don't have any growth in any quarter for large ag. Thank you.

David Raso: Hi, thank you. Given the full year large ag sales guide and the first quarter implied a flat, it's implying the rest of the year down 9%. I was just curious, when you think of PP&A for the rest of the year after the first quarter, are we down every quarter? Maybe to help us with the margins for the rest of the year, any cadence you can give us on the pricing? Obviously, the pricing was up. I know it was an easy comp in Brazil. Just the 1.5% for the full year, just how to think about that cadence, just to think how we get over the hump on kind of price costs later in the year if we don't have any growth in any quarter for large ag. Thank you.

Speaker #10: I was just curious, when you think of PA for the rest of the year, after the first quarter, are we down every quarter?

Speaker #10: Maybe to add, and then help us with the margins for the rest of the year? Any cadence you can give us on the pricing? Obviously, the pricing was up.

Speaker #10: I know it was an easy comp in, but just Brazil, the 1.5% for the full year. Just how to think about that cadence.

Speaker #10: Just so we can think about how we get over the hump on price kind of costs later in the year if we don't, you know, if we don't have any growth in any quarter for large AG.

Speaker #10: Thank you .

Speaker #3: Yeah. Thank you, David. For the question Deana talked about, as you know earlier, seasonality will be a little different for large AG in next year given our leaner start in Q1.

Josh Beal: Yeah, thanks, David, for the question. As Deanna talked earlier, seasonality will be a little different for large ag next year given our leaner start in Q1. We will see that typical ramp up in the second quarter. Actually, you're going to have a fourth quarter that's going to be particularly strong as well, just given some of the timing of the shipments. To your question, we would expect to be down year over year in all those quarters, just given the level of decline that we're seeing. You see margin improve quite a bit as you get into the second quarter, and we'll stay at those higher margin levels through the balance of the year. It's really an impact on Q1, given the lean production that's driving that.

Speaker #3: We typical ramp will see up . You know , in the second quarter . And actually going to have a fourth quarter that's going to be strong as well .

Speaker #3: Just given some of the timing of the shipments to your question, we would expect to be down, you know, year over year in all those quarters.

Speaker #3: Just given the level of decline that we're seeing, you see. But margin improves quite a bit as you get into the second quarter.

Speaker #3: And we'll stay at those higher margin You know , through levels . the balance of the year . You know , it's it's really an impact on Q1 given the lean production that's that's driving that .

Speaker #3: David, this is Jeff. The other thing I'd add is we would expect to post one Q to kind of return to more normal seasonality.

Diana Kovar: David, this is Jepsen. Another thing I'd add is we would expect to post Q1 to kind of return to more normal seasonality, highest net sales, highest margin in the second quarter. A more traditional seasonality as we go from there. If you just step back and look at Q2 through Q4, those margins, we would expect, based on the guide, to be north of 14% or around there. A pretty big step up, and then more even performance through the remainder of the year. Thank you.

Josh Jepsen: David, this is Jepsen. Another thing I'd add is we would expect to post Q1 to kind of return to more normal seasonality, highest net sales, highest margin in the second quarter. A more traditional seasonality as we go from there. If you just step back and look at Q2 through Q4, those margins, we would expect, based on the guide, to be north of 14% or around there. A pretty big step up, and then more even performance through the remainder of the year. Thank you.

Speaker #3: You know , highest , highest net sales , margin highest in the second quarter . So a more traditional , you know , seasonality as we go from there .

Speaker #3: if you And just step back and look at two Q through four Q , you know , those those margins , we would expect based on the guide , you know , to be , you know , north of 14% or around there .

Speaker #3: So pretty big step up . And then more , more even performance through through the , the year . remainder of the Thank you .

Speaker #5: Thank you. Our next question comes from Jerry Revich with Wells Fargo. Your line is open.

Operator: Thank you. Our next question comes from Jerry Revich with Wells Fargo. Your line is open.

Speaker #11: Yes . Hi . Good morning , everyone , and happy Thanksgiving . I'm wondering if you would care to provide an update on the expectations for CN spray in terms of deliveries of retrofit kits into the US for 26 and any expectations on acres coverage and overall , as we look back on fiscal 25 , any update on progress on the subscription build out that you can share ?

Josh Jepsen: Yes, hi. Good morning, everyone, and happy Thanksgiving. I'm wondering if you would care to provide an update on the expectations for See & Spray in terms of deliveries of retrofit kits into the US for 2026, and any expectations on acres coverage. Overall, as we look back on fiscal 2025, any update on progress on the subscription buildout that you can share.

Jerry Revich: Yes, hi. Good morning, everyone, and happy Thanksgiving. I'm wondering if you would care to provide an update on the expectations for See & Spray in terms of deliveries of retrofit kits into the US for 2026, and any expectations on acres coverage. Overall, as we look back on fiscal 2025, any update on progress on the subscription buildout that you can share.

Speaker #3: Thanks , Jerry . Happy happy Thanksgiving to Yeah . you as well . I mean , maybe a points couple of You know , first , just as we look at take rates of sea spray on our 2026 early order program at a pretty similar level to what we saw in 2025 .

Josh Beal: Yeah, thanks, Jerry. Happy Thanksgiving to you as well. I mean, maybe a couple of points there. First, just as we look at take rates of See & Spray on our 2026 early order program, at a pretty similar level to what we saw in 2025 in terms of that factory install piece. We'll need to see what happens with retrofit orders, which tend to be placed over the course of the winter. From a take rate standpoint, we're at a pretty similar level to what we saw in 2025. I think one point to make on acres covered is the returning customers that had machines in 2024 and moving into 2025, we saw them cover on average about 20% more acres of their operation in the 2025 year. That's a positive sign to us for a number of reasons.

Speaker #3: In terms of that factory installed piece , we'll need to see what happens with retrofit orders , which which tend to be placed over the course of the winter .

Speaker #3: But from a take rate standpoint, we're at a pretty similar level to what we saw in 2025. I think one point to make on acres covered is, you know, the returning customers that had machines in 2024 and are moving into 2025. We saw them cover, on average, about 20% more acres in their operation in the 2025 year.

Speaker #3: And that's that's a positive sign to us for a reasons . number of It validates what Deanna said earlier that the technology is working .

Speaker #3: It's delivering And as a result , you know , we see customers increasing utilization year over year . So our expectations we to continue to grow that number in 2026 .

Josh Beal: It validates what Diana said earlier, that the technology is working. It's delivering savings, and as a result, we see customers increasing utilization year over year. Our expectations would be to continue to grow that number in 2026.

It validates what Deanna said earlier, that the technology is working. It's delivering savings, and as a result, we see customers increasing utilization year over year. Our expectations would be to continue to grow that number in 2026.

Speaker #4: And this is Deanna . In addition to the increasing installed base with new model year 26 sprayers coming out of the factory and additional retrofit kits increased per machine usage in their second year , we also know that sea and spray is expanding globally , as we see other markets in the world beginning to to take up this technology as well .

Josh Beal: Yeah, this is Diana. In addition to the increasing install base with new model year '26 sprayers coming out of the factory, and additional retrofit kits, increase per machine usage in their second year. We also know that See & Spray is expanding globally as we see other markets in the world beginning to take up this technology as well. Our expectation is to see growth in acres covered in 2026, and we look forward to seeing our customers have those great savings that we saw in 2025 continue.

Deanna Kovar: Yeah, this is Deanna. In addition to the increasing install base with new model year '26 sprayers coming out of the factory, and additional retrofit kits, increase per machine usage in their second year. We also know that See & Spray is expanding globally as we see other markets in the world beginning to take up this technology as well. Our expectation is to see growth in acres covered in 2026, and we look forward to seeing our customers have those great savings that we saw in 2025 continue.

Speaker #4: Our expectation is to see growth in acres covered in 2026, and we look forward to seeing our customers have those great savings that we saw in 2025.

Speaker #4: Continue .

Speaker #3: you Thank .

Speaker #5: You. Our next question comes from Dillard with Bernstein. Your line is open.

Josh Beal: Thank you.

Operator: Thank you. Our next question comes from Chad Dillard with Bernstein. Your line is open.

Speaker #12: Hi . Good morning everyone . So a question for you on your guidance . So as we think about 2026 , to what extent does it embed any additional assistance from the government .

Chad Dillard: Hi, good morning, everyone. A question for you on your guidance. As we think about 2026, to what extent does it embed any additional farm assistance from the government? Also, just how do you think about the operating leverage of the business coming out of this deeper than the normal cycle?

Speaker #12: And then also just like how do you think about the operating leverage of the business coming out of this deeper than normal cycle?

Speaker #3: Yeah . Happy to I would our , you know , our Chad . baseline expectation is not for any more more I mean assistance .

Josh Beal: Yeah, happy to, Chad. I would say our baseline expectation is not for any more assistance. I mean, we base our forecast off of what we see in the market today, informed by order velocity. Deanna mentioned this in the comments that we can see order velocity change. We've seen some positives over the last, call it, month or so. As an example, the trade agreement with China, we've seen a pickup in purchases of soybeans. That's been reflected in the soy price as well. We'll see how the rest of the year plays out. We've intentionally put some flexibility in the back half to respond to changes in velocity. We'll see how that plays out over the balance of the year.

Speaker #3: we we base our forecast off of , you know , what we see in the market today , informed by our order velocity and Deanna mentioned this comments in the that we can see order velocity change .

Speaker #3: And know , , you we've seen some positives last call it a month or so . You know , as an example , the trade agreement with China .

Speaker #3: We've seen a pickup in purchases of soybeans, and that's been reflected in the soybean price as well. So we'll see how the rest of the outlook goes.

Speaker #3: year plays We've intentionally put some in the flexibility back half , to know , to respond you , you know , to respond to to to changes in velocity .

Speaker #3: And we'll see how that plays out over the balance of the year . Yeah . Chad , this is Jeff . As it relates to to leverage your question on kind of what as things inflect , I as we think as , start to see , you know , those volumes pick up and even in production precision AG , as we discussed , kind of first quarter versus the rest of year , you see some of that improvement and benefit as we go through the year .

Diana Kovar: Yeah, Chad, this is Jepsen. As it relates to leverage, your question on kind of as things inflect, I think as we start to see those volumes pick up, and even in production precision ag, as we discussed, first quarter versus the rest of the year, you see some of that improvement and benefit as we go through the year. Clearly, we're seeing that on small ag and turf and construction, even with, call it, 10% increased sales. Those, particularly if you take out the tariff impact, those incrementals are really solid. I think that's a positive reflection of that. I think across the businesses too, we're seeing more from a technology perspective, whether that's in construction, forestry, where we saw 20% growth in technology sales there, the opportunities in small ag and turf continuing to present themselves.

Josh Jepsen: Yeah, Chad, this is Jepsen. As it relates to leverage, your question on kind of as things inflect, I think as we start to see those volumes pick up, and even in production precision ag, as we discussed, first quarter versus the rest of the year, you see some of that improvement and benefit as we go through the year. Clearly, we're seeing that on small ag and turf and construction, even with, call it, 10% increased sales. Those, particularly if you take out the tariff impact, those incrementals are really solid. I think that's a positive reflection of that. I think across the businesses too, we're seeing more from a technology perspective, whether that's in construction, forestry, where we saw 20% growth in technology sales there, the opportunities in small ag and turf continuing to present themselves.

Speaker #3: Clearly , we're seeing that on small egg and turf and construction , even with , you know , call it 10% . You know , increased sales .

Speaker #3: Those particularly if you if out the tariff the those , those incrementals are are really solid . So I that's , think that's a positive reflection of that .

Speaker #3: I think I think across the businesses too , we're seeing more from a technology perspective , whether that's in construction , forestry , where we saw 20% growth in technology sales .

Speaker #3: There . The opportunities in in egg and turf continuing to small present themselves . So I think the combination of , you know , the work we've done on the cost structure , obviously we've got more work ahead of us as we as we work to mitigate and take out some of that tariffs .

Diana Kovar: I think the combination of the work we've done on the cost structure, obviously, we've got more work ahead of us as we work to mitigate and take out some of that tariffs. I think the leverage for us as we inflect will be positive from a margin perspective. Thanks, Chad. We'll go ahead and do one more question.

I think the combination of the work we've done on the cost structure, obviously, we've got more work ahead of us as we work to mitigate and take out some of that tariffs. I think the leverage for us as we inflect will be positive from a margin perspective.Thanks, Chad. We'll go ahead and do one more question.

Speaker #3: think the But I leverage for us as we we as inflect will , positive will be from a margin perspective . Thanks , Chad .

Speaker #3: We’ll go ahead and do one more question.

Speaker #5: Thank you. Our last question comes from Steven Fisher with UBS. Your line is open.

Operator: Thank you. Our last question comes from Stephen Fisher with UBS. Your line is open.

Speaker #6: Thanks .

Speaker #3: wanted to Good morning . I just clarify a couple of that you mentioned assumptions in the dialogue . I think there's some that were folks surprised to see the expectation of South America flat in light of some of the , you know , sort of incremental caution we've seen there .

John May: Thanks. Good morning. I wanted to just clarify a couple of assumptions that you mentioned in the dialogue. I think there's some folks that were surprised to see the expectation of South America flat in light of some of the sort of incremental caution we've seen there. It sounds like you cited some potential for lower interest rates. Can you just kind of give us a little more color on your confidence there? On the small ag side, you cited some expected improvement or better results as a result of better housing activity. Can you just clarify if you've seen any indications of that already? Thank you.

Steven Fisher: Thanks. Good morning. I wanted to just clarify a couple of assumptions that you mentioned in the dialogue. I think there's some folks that were surprised to see the expectation of South America flat in light of some of the sort of incremental caution we've seen there. It sounds like you cited some potential for lower interest rates. Can you just kind of give us a little more color on your confidence there? On the small ag side, you cited some expected improvement or better results as a result of better housing activity. Can you just clarify if you've seen any indications of that already? Thank you.

Speaker #3: But it sounded like you cited some potential for lower interest rates . you Can just kind of give us a little more color on on your confidence there ?

Speaker #3: And then on the AG small side, you cited some expected improvement in or a better result.

Speaker #6: result .

Speaker #3: Of better housing activity.

Speaker #3: just clarify if you've seen A any indications of of that Thank you already ? . Yeah , thanks for the question . You know , a couple of things on South America .

Speaker #3: know , You we've we've talked kind of a about , you know , mix of caution and optimism in that region . And , you know , as we've seen , I think , over the past quarter or so , it's probably a bit more more caution there .

Josh Beal: Yeah, thank you for the question. A couple of things on South America. We've talked about kind of a mix of caution and optimism in that region. As we've seen, I think over the past quarter or so, it's probably a bit more caution there. Interest rates have been a big driver. The benchmark rate at 15% certainly having an impact on replacement. As we look at expectations over the last month or so, inflation expectations have eased a little bit. As a result, you're seeing expectations for that rate to come down by a couple of points over the course of 2026. Obviously, we need to see how that plays out, and that will be impactful on the market. I think that's embedded sort of in that combination of caution and optimism, which is what's reflected in the flag guide.

Speaker #3: And rates have interest been a big driver . You know , the the benchmark rate at 15% , you know , certainly having an impact , you know , on on replacement as we look at expectations over the last month or so , you know inflation expectations have eased a little bit .

Speaker #3: And as a result you're seeing expectations for that rate to come down . You know , couple of points by a over the course of over the course of 2026 .

Speaker #3: So obviously we need to see plays out how that . And that will be impactful . On the market . But you know , we'll that's I think that's embedded sort of in that that combination of caution and optimism , which is reflected in the flat guide .

Speaker #3: The other day, I saw just on our order books in the region. They look really strong. I mean, we are about five months out in Brazil, so we've got pretty good coverage through most of the first part of the year.

Josh Beal: The other thing I would say is just on our order books in the region, they look really strong. I mean, we are about five months out in Brazil. We have pretty good coverage through most of the first part of the year. Obviously, we need to see how that plays out in the back half. From an order velocity standpoint, it looks good.

The other thing I would say is just on our order books in the region, they look really strong. I mean, we are about five months out in Brazil. We have pretty good coverage through most of the first part of the year. Obviously, we need to see how that plays out in the back half. From an order velocity standpoint, it looks good.

Speaker #3: Obviously , we need to see how that plays out in the back half , but from an order velocity standpoint , you know , it looks good .

Speaker #3: I think one other positive there in Brazil is on high value crop . You know , as we've seen some some tariff relief on things like coffee , beef , citrus , particularly if you think about our small and mid tractor business , I think that that bodes well for for the industry .

Diana Kovar: I think one other positive there in Brazil is on high-value crop. As we've seen some tariff relief on things like coffee, beef, citrus, particularly if you think about our small and mid-tractor business, I think that bodes well for the industry, and in turn for us and our dealers as well.

Josh Jepsen: I think one other positive there in Brazil is on high-value crop. As we've seen some tariff relief on things like coffee, beef, citrus, particularly if you think about our small and mid-tractor business, I think that bodes well for the industry, and in turn for us and our dealers as well.

Speaker #3: And in turn for for us and our dealers as well . On , on small ag Steve . And specific to turf , you know , our our forecast is based off of , you know , housing starts coming up a little bit next year .

Josh Beal: On small ag, Steve, and specific to turf, our forecast is based off of housing starts coming up a little bit next year, not a massive increase, but a low single-digit increase in home sales, I should say, not housing starts, home sales in 2026. That is based off of some expectations around easing in the US. We'll see how that plays out. As we see home sales come back, that tends to be supportive of our turf business. We have some modest growth in turf as well, which is reflected in that small ag guide of flat to up 5%.

Speaker #3: not a Not massive increase but but you know a low single digit home sales , I should say . increase in Not housing starts home sales in in 2026 .

Speaker #3: You know that's based off of you know , some expectations around easing in the US . We'll see how that plays out . But as as we see home sales come back , that tends to be supportive of our turf business .

Speaker #3: And so, we've got some modest growth in turf as well, which is reflected in that small Ag guide of flat to up 5.

Speaker #3: Yeah . One thing I'd add is Jefferson . I think the , you know some the prospect of a little more , a few more interest rate cuts and what that could mean for , for housing , both for our earth moving compact construction and turf are all positive , particularly given just the low levels of inventory we're under inventory from a single family housing perspective .

Diana Kovar: Yeah. One thing I'd add is, Jepsen, I think the prospect of a few more interest rate cuts and what that could mean for housing, both for our earth-moving, compact construction, and turf, are all positive, particularly given just the low levels of inventory. We're under-inventory from a single-family housing perspective. I think that a little bit of continued rate easing there would be positive.

Josh Jepsen: Yeah. One thing I'd add is, Jepsen, I think the prospect of a few more interest rate cuts and what that could mean for housing, both for our earth-moving, compact construction, and turf, are all positive, particularly given just the low levels of inventory. We're under-inventory from a single-family housing perspective. I think that a little bit of continued rate easing there would be positive.

Speaker #3: I So think , you know that a little bit of continued rate easing there would would be positive . Yeah . Thanks . Thanks for the question , Steve .

Speaker #3: This concludes today's call, and we really appreciate everybody's time with us today. Just as a reminder, we'll be hosting our upcoming Investor Day on December 8th.

Josh Beal: Yeah, thanks for the question, Steve. This concludes today's call, and we really appreciate everybody's time with us today. Just as a reminder, we'll be hosting our upcoming Investor Day on 8 December. You can find additional details for the event in the appendix of today's slide deck. For all those of you in the US who are celebrating, we hope you have a great Thanksgiving holiday. Have a great day.

Speaker #3: You can find additional details for the event in the appendix of today's slide deck. And for all of those of you in the U.S. who are celebrating, we hope you have a great Thanksgiving holiday.

Speaker #3: Have a great day !

Operator: That concludes today's conference. Thank you for participating. You may disconnect and have a great rest of your day.

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