Josh Jepsen: Yes. As it relates to C&F and if you look at the order book, I mean, I would say, comparing year-over-year is a little bit difficult because we were constrained last year. So probably not a good way to compare just total order activity. But what I would say is on the order book that we have, we’re looking at similar production rates ’23 to ’24, so not a significant change there. And realistically, obviously, less disruption expected as well in ’24 than we saw in ’23. Thanks, David.
Operator: Our next question is from Tami Zakaria with JPMorgan. Ma’am, your line is open.
Tami Zakaria: Hi, good morning. Thank you so much. So, I wanted to step away from the quarterly trend and ask you about your new battery plant. I think you just picked a new battery manufacturing location. Can you tell us a bit more on that? When it will be operating? [And exactly what volume] (ph) you expect that [run with] (ph)? What products do you expect it to feed in to? Any impact on margins or potential cost savings? So, any thoughts on this initiative?
Brent Norwood: Yes. Certainly, Tami. Thanks for the question. So, this stems from the acquisition we made a little over a year ago with Kreisel Electric. So this is really the next step as we continue that evolution to build manufacturing capacity for batteries and charging, which was announced here earlier this week in North Carolina. I would say stepping back and looking at this, as we — this is a strategic investment in growing our production capacity aimed to being the leader, particularly in off-highway. As off-highway is evolving, we’re prioritizing development of robust charging technology, in addition to a battery portfolio that can support the long-term adoption of electrification in our products. So, timeline, we’re probably a year or so out in terms of this facility up and running.
We’re producing them in Europe today at a relatively small scale. But we see the opportunity with the technology we have to really drive charging here in the near term. And we’ve developed a relatively robust pipeline or portfolio plan for Deere products that will begin to incorporate the Kreisel batteries here as we go forward. Starting probably below 125-horsepower and then we’ll continue to evolve that portfolio as we go forward, and you’ll see hybrid technologies and the like. So, thanks, Tami.
Tami Zakaria: You’re welcome.
Operator: Our next question from Chad Dillard with Bernstein. Your line is open, sir.
Chad Dillard: Hi, everyone. So I want to spend some time on the average age of the fleet. Can you just talk about where we will be exiting the year versus normal? And I recall you’re talking about how there are, I guess, five different owners within the fleet. I think where is the bulge in age in terms of the fleet? And then just the last question is the higher average age structural, why or why not?
Brent Norwood: Hey, good morning, Chad. As it relates to the average age of the fleet, I think what you’re seeing is the impact of this replacement cycle really having a sort of delayed deferred start, right? If you think about when demand really inflected it was the beginning of 2021. And you really had factors conspiring to slow down the production really for — not just for Deere, but the industry at large, right? We had — the industry was suffering from labor shortages, supply chain, delinquencies, delays, as well as significant inflation affecting production. So, in the last three years, demand has outpaced supply, and what that’s done is it has really slowed the ability of the industry to bring down the age of the fleet.
If I look at four-wheel drives and 220-plus horsepower tractors, those — we continue to age out most years since really 2013 and we’ve started to sort of flatten the curve a little bit. I would say we brought down the age significantly or even at all for either one of those, and we’re still probably a couple of years older than historic averages. Combines is one where the last — this last year, we were probably — the industry was able to make a little bit of progress bringing down the age of that fleet a little bit. We’ll make further progress in ’24, but we’ll still be above kind of historic averages there. So I think it’s going to take a little more time on tractors, just given some of the challenges that we’ve had, I think particularly for 4-wheel drives, which you guys can see this in the AEM data we just haven’t seen.
It’s been one of the more constrained product lines from an industry perspective, kind of similar to sprayers. We’re just going to take maybe a little more time to bring down the age of the fleet. If you ask kind of where is the bulge, so to speak, in the age of the fleet? I mean, it’s really — if you go back to the vintages of machines that were kind of 2010 to 2014, that’s still a big part of the installed base, and those are the ones that are really aging out on us at a faster rate than the industry has been able to replace it in the last couple of years. So, thanks for the question, Chad.
Josh Jepsen: Yes. Maybe one thing I’d add just on top of that is I think the important piece, too, is we are continuing to see demand for technology across the trade ladder in our equipment. We were just speaking with the dealer principal a couple of weeks ago, and he was talking about this very fact. It’s not just demand for the latest technology by the first owner, but it’s the second, third, fourth or fifth. And I think when we think about the age of the fleet and the health of those — the trade ladder, that is a big, big driver because there’s a desire to upgrade technology no matter where the customer may be in that chain. So I think that’s an important piece that underlies only not on the age, but the demand.
Brent Norwood: Chad, thanks for the question. Fran, I think we have time for one last caller.
Operator: Thank you very much. So our last question now is from Seth Weber with Wells Fargo Securities. And your line is open.
Seth Weber: Hey, guys. Good morning. Thanks for fitting me in. I guess I wanted to ask about the small ag business. Margin was a lot better than what we were expecting. I think I heard you say something about Europe. I’m just wondering, is that — are those structural changes that we should think about as being in place going forward. And then just your comment about small ag inventory kind of coming off the peak? Do you think that we’re past the challenges there and things you’re going to start getting better or just less bad going forward? Thanks.
