Deere & Company Conference Call Highlights

reported its third quarter earnings on Wednesday. Shares of the company are down 1 percent. Below are some key highlights from its conference call. • We restrained costs, we reduced assets and we realized the benefit of having a broad based business lineup. • As a result, Deere was able to deliver strong results, including our second best year ever in terms of net income. • We also maintained our sound financial condition, generated healthy levels of cash flow and returned some $3.5 billion to investors in dividends and share repurchases. • All in all, it was another good year. • One in which the company further demonstrated its commitment to disciplined operations and the resilience of its business model. • Net sales and revenues were down 5% to $8.965 billion. • Net income attributable to Deere & Company was $649 million. • EPS was $1.83 in the quarter. • Total worldwide equipment operations net sales were down 7% to $8 billion. • In the quarter-over-quarter comparison of net sales, landscapes and water accounted for 4 points of the change. • Price realization in the quarter was positive by 1 point. Currency translation was a negative 1 point. • Sales were down 13% primarily due to lower shipment volumes of large Ag equipment in the United States and Canada. • Operating profit was $682 million. In addition to volume, margins in the quarter were negatively impacted by lower production in our factories. • Output hours in the large Ag equipment factories were down. Depending on the factory, anywhere from 35% to 55%. • Crop receipts for 2015 are forecast to be down about 17% lower than 2012's crop receipt record. • R&D was up about 2% in the fourth quarter and down about 2% for the year. • Our 2015 forecast calls for R&D to be about flat with 2014 levels. • Moving now to slide 20. SA&G expense for the equipment operations was down about 14% in the fourth quarter and down 12% for the full year. • Landscapes and water accounted for about nine points of the change in the fourth quarter and about eight points for the year. • The full year forecast calls for net sales to be down about 15%. Price realization is expected to be positive by about two points. Finally, our full year 2015 net income forecast is about $1.9 billion. • In closing, there is no question John Deere faces challenging conditions in 2015. • Yet even with a further pullback in the global agricultural sector, the company expects to remain solidly profitable in the year ahead. • Our earnings forecast reflects the aggressive actions we are taking to control costs and assets and make deep cuts in factory production and it shows the benefits of having a business lineup that is about more than large farm equipment. • And one other thing. The trends that hold so much promise for John Deere's future, trends based on population growth, rising living standards, and increased demand for grain remain very much intact. • They are largely unaffected by the periodic ups and downs of the farm economy. • As a result, we believe John Deere can earn solid returns even in a weak farm economy, deliver financial performance much improved over downturns of the past, and see substantial benefits from the world's growing need for food, shelter and infrastructure in the years ahead.