Deere & Company (NYSE:DE) Q1 2023 Earnings Call Transcript

Brent Norwood: Yes. Hey Mike. Thanks for the question. It will depend a little bit on what product line we are talking about for large ag. If we meet our production goals, this year tractors will sort of maintain their age. We won’t €“ they won’t age up further, but they really won’t get younger. We pointed to that, this out before in the past. Our production levels in 2023 are still 20%, 25% below prior replacement cycles. So, as a result, we will likely just maintain large tractor age in 2023. We will make a little bit of progress on combines pulling down the age a bit, but I would note that, the ending point for this year is still above sort of the average fleet age over a longer period of time. For construction, it depends on the end market we are talking about, to some degree.

That age is normalizing in some pockets. But we also have, I would say, the rental channel is really re-fleeting right now. And this is because they obviously had lower CapEx budgets in 2020, €˜21. And then in 2022, they weren’t able to get maybe as much allocation as they wanted, given how earlier in the year, that market was so strong. So, I think there is probably a longer way to go when we think about rental fleet age and that may be a multiyear journey there. Thanks for the question Mike.

Mike Shlisky: Thank you.

Brent Norwood: And that’s our final question for today. We thank everybody for joining us and look forward to reporting in three months from now. Thanks all.

Operator: That will conclude today’s conference and we thank you for participating. You may disconnect at this time.