In 2025, the company acquired businesses for $89 million (net of cash acquired) to advance its technology offerings, providing customers with tools to improve profitability, efficiency, and sustainability. These acquisitions were assigned to the Production and Precision Agriculture (PPA) and Construction and Forestry (CF) segments, aligning with the Smart Industrial Operating Model.

Deere completed the sale of 50% ownership in Banco John Deere S.A. (BJD) in February 2025, deconsolidating the entity from its financial services segment while retaining a 50% equity interest. This move suggests a strategic decision to optimize its financial services portfolio and potentially reduce exposure in the Brazilian market.

Research and development expenses remained largely unchanged, decreasing only 2% for both the three-month ($556M vs $567M) and nine-month ($1,631M vs $1,664M) periods. This indicates a continued focus on developing and incorporating technology solutions, which is a core component of the company's long-term growth strategy.

Management deployed incremental incentive programs, particularly in the Production and Precision Agriculture (PPA) segment, to address high used inventory levels in North America. While this led to unfavorable price realization for the quarter, it demonstrates a proactive approach to managing inventory and market dynamics.

Selling, administrative and general expenses decreased for both the quarter and nine-month periods, partly due to lower employee profit-sharing incentives and the favorable impact from the BJD deconsolidation. These cost-saving measures helped to partially offset the negative impact of lower sales volumes and higher production costs.

Inventories increased by $620 million during the first nine months of 2025, primarily due to seasonal factors, and by $17 million year-over-year. The ratio of inventories to prior 12 months' cost of sales rose to 29% from 23%, indicating a build-up of stock that could signal slowing demand or potential future pricing pressures.

The Federal Trade Commission (FTC) and several State Attorneys General filed a lawsuit in January 2025, alleging monopolization and unfair competition by limiting self-repair capabilities. The company is unable to estimate the potential impact, but the lawsuit represents a material legal and reputational risk that could affect future business operations.

New U.S. tariffs and retaliatory tariffs from other countries adversely affected product and component costs by approximately $300 million in the first nine months of 2025. The scope of steel and aluminum duties expanded in August 2025, further increasing costs and creating uncertainty in the agriculture and construction industries.

Elevated interest rates in the U.S. and Brazil, coupled with economic uncertainty, are negatively impacting demand for equipment across all segments, leading to lower sales volumes. This macroeconomic headwind also affects financing spreads for the financial services operations and increases customer borrowing costs.

Unfavorable price realization was noted in the Production and Precision Agriculture (PPA) and Construction and Forestry (CF) segments for the quarter, primarily due to incremental incentive programs deployed to address competitive pressures and high used inventory levels. This indicates a challenging pricing environment.

Industry sales outlook for fiscal year 2025 projects significant declines, with large agricultural equipment demand in the U.S. and Canada expected to drop by 30%, and construction equipment sales also forecasted to be down. These widespread demand reductions suggest a challenging competitive landscape for market share.

While North American large agriculture and construction markets face significant headwinds, demand in Europe for agriculture is forecasted to be flat to down slightly, and South America agriculture is expected to be roughly flat with positive impacts from record crop yields. This regional differentiation requires tailored competitive strategies.

The cost of sales to net sales ratio increased to 73.1% for the three months and 71.3% for the nine months ended July 27, 2025, compared to 68.9% and 68.2% respectively in the prior year. This rise is attributed to higher overhead costs from lower production volumes and the impact of incremental tariffs, indicating a decline in operational efficiency.

Inventories increased by $620 million during the first nine months of 2025 and by $17 million year-over-year, with the ratio to prior 12 months' cost of sales rising from 23% to 29%. This accumulation suggests that production may not be fully aligned with current market demand, potentially leading to increased carrying costs or future write-downs.

Selling, administrative and general expenses decreased for both the three-month ($1,217M vs $1,278M) and nine-month ($3,387M vs $3,608M) periods, primarily due to lower employee profit-sharing incentives and the deconsolidation of BJD. These reductions provide some offset to the rising cost of sales and other operational pressures.

Despite a significant decline in overall financial performance, Research and Development expenses remained nearly flat, decreasing only 2% for both the quarter and nine-month periods. This indicates a strategic commitment to continued investment in technology solutions, which is crucial for long-term growth and competitive differentiation.

In 2025, Deere acquired businesses specifically to advance its existing technology offerings, providing customers with more comprehensive tools for profitability, efficiency, and sustainability. These acquisitions, costing $89 million, underscore the company's strategy to integrate advanced technology into its core products and services.

The ongoing FTC antitrust lawsuit alleges monopolization by limiting access to repair tools and resources, directly challenging the company's control over its proprietary technology and intellectual property. This legal battle could impact future innovation strategies and the monetization of advanced technological capabilities.

Share repurchases decreased substantially to $1,136 million for the nine months ended July 27, 2025, from $3,227 million in the prior year. This significant reduction suggests a shift towards capital preservation or re-evaluation of capital return strategies amidst declining profitability and uncertain market conditions.

The company declared a quarterly dividend of $1.62 per share on August 27, 2025, an increase from $1.47 in the prior year. Total dividends paid for the nine months increased to $1,282 million from $1,202 million, demonstrating a continued commitment to returning value to shareholders despite the overall decline in net income.

Total external borrowings increased by $1,453 million during the first nine months of 2025 and by $791 million year-over-year, contributing to higher cash and cash equivalents. This indicates reliance on debt markets to support ongoing operations and maintain liquidity amidst a challenging operating environment.

The 10-Q filing does not contain a dedicated section or extensive quantitative data on specific environmental, social, or governance (ESG) initiatives. Information regarding carbon reduction targets, social responsibility programs beyond employee separation, or board diversity enhancements is not explicitly detailed.

Management's discussion mentions that customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations. The company's Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this trend, implying an indirect contribution to sustainability through product offerings.

In 2024, the company implemented employee-separation programs to meet strategic priorities and reduce overlap, affecting salaried workforce in several geographic areas. While aimed at efficiency, such programs carry social implications regarding employee morale and institutional knowledge, which are noted as risk factors.

Elevated interest rates in the U.S. and Brazil, high used inventory levels, and lower commodity prices are causing a projected 30% decline in large agricultural equipment demand in the U.S. and Canada, and overall lower sales volumes for construction equipment. These factors reflect a challenging macroeconomic environment impacting customer purchasing power.

Ongoing global and regional political conflicts, alongside new U.S. tariffs and retaliatory trade measures, have increased product and component costs by approximately $300 million in the first nine months of 2025. This volatile geopolitical and trade landscape creates significant uncertainty and pressure on profit margins.

The Federal Trade Commission (FTC) and several State Attorneys General filed a lawsuit in January 2025, alleging monopolization related to self-repair capabilities. This legal action highlights an evolving regulatory environment, particularly concerning 'right to repair' legislation, which could have a material impact on the company's business model and operations.