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FY2026 Q2
Improving
Deere & Company earnings call
Buzzberg read
2026 expected to mark bottom of the ag cycle
Deere reported mixed Q2 results with strong growth in construction and small ag segments offset by weakness in large ag. Management reiterated its view that FY2026 marks the bottom of the ag cycle and expects a recovery in 2027, supported by lower inventories and favorable policy developments. Q2 results included a one-time $272 million tariff refund, boosting margins; ongoing tariff run-rate remains at $1.2 billion.
Buzzberg read 2026 expected to mark bottom of the ag cycle Deere reported mixed Q2 results with strong growth in construction and small ag segments offset by weakness in large ag. Management reiterated its view that FY2026 marks the bottom of the ag cycle and expects a recovery in 2027, supported by lower inventories and favorable policy developments. Q2 results included a one-time $272 million tariff refund, boosting margins; ongoing tariff run-rate remains at $1.2 billion. Read full analysisCollapse analysis
Deere reported mixed Q2 results with strong growth in construction and small ag segments offset by weakness in large ag. Management reiterated its view that FY2026 marks the bottom of the ag cycle and expects a recovery in 2027, supported by lower inventories and favorable policy developments. Q2 results included a one-time $272 million tariff refund, boosting margins; ongoing tariff run-rate remains at $1.2 billion.
- Construction & Forestry segment saw 29% YoY growth in Q2, driven by robust infrastructure and data center demand. Full-year sales guide raised to up 20%.
- South America industry outlook was cut to a decline of 15% from 5%, citing high interest rates, strong BRL, and input costs.
- Fleet age and used inventory levels are improving, supporting expectations for a large ag recovery in 2027.
Revenue$13.369B+39% QoQ
EPS$6.55Reported
Gross margin38.17%Reported
Operating margin22.48%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Demand
Construction order book up 60%, over 80% of slots filled
Tariffs
Tariff refund of $272 million recognized, but annual exposure unchanged
Show 3 more callouts
Pricing
Company deliberately avoiding customer tariff surcharges
Recurring Revenue
Precision subscription renewals exceed 90% for second-year cohort
Market Share
Brazil delivering share gains and double-digit margins at trough
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $13.369B | +39% QoQ |
| EPS | $6.55 | Reported |
| Gross margin | 38.17% | Reported |
| Operating margin | 22.48% | Reported |
| Free cash flow | $0.874B | Reported |
| Capex | $1.058B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Operating marginCONSTRUCTION_AND_FORESTR | FY2026 | 10%–12% | 11% | Raised |
| Operating marginPRODUCTION_AND_PRECISION | FY2026 | 11%–13% | 12% | Maintained |
| Operating marginSMALL_AG_AND_TURF | FY2026 | 13.5%–15% | 14.25% | Maintained |
| RevenueCONSTRUCTION_AND_FORESTR | FY2026 | 20% | 20% | Raised |
| RevenuePRODUCTION_AND_PRECISION | FY2026 | -10%–-5% | -7.5% | Maintained |
| RevenueSMALL_AG_AND_TURF | FY2026 | 15% | 15% | Maintained |
AI, capex & demand read
Management read
Confident
Management struck a confident tone, repeatedly pointing to portfolio diversification, share gains, and a view that 2026 is the ag cycle bottom while acknowledging tariff and input-cost headwinds.
Investment and capacity
Management reiterated a long-term commitment to U.S. manufacturing, citing $20 billion in planned U.S. manufacturing investments over the next 10 years and a $70 million expansion to build excavators in North Carolina; it also stressed sustaining record R&D and capital investment through the cycle.
External signals
Supply-chain alpha · 2returns since call
Deere is facing a $1.2B annual run-rate tariff expense, but received a one-time $272M refund this quarter, that is not included in the run rate.
Evidence
“our overall run rate, uh, for tariff expense really remains, um, you know, un unchanged at about, um, you know, a billion two for the full year. Those splits that we've provided in the past, you know, really haven't changed as well. So it'…”
Deere's new excavator from Kernersville, NC has all production slots filled for the year, indicating a strong reception to their domestic manufacturing push.
Evidence
“And we continue to stand behind our commitment towards 20 billion of investments in U.S. manufacturing over the next 10 years.”
Methodology & coverage
Management-only analysis. All 0 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.