Deere & Company: Cash Generation Holds While Revenue and Earnings Pull Back

Deere & Company’s FY2024: Revenue and Earnings Slip, Cash Flow Carries the Day#

Deere & Company reported a 16.15% decline in revenue to $50.52B in FY2024 and a 30.16% drop in net income to $7.10B versus the prior year, while maintaining robust cash generation that funded significant shareholder returns and continued investment in product development and capacity. Those headline contrasts — a material top‑line contraction alongside durable operating cash flow — create the central tension in Deere’s financial story: underlying demand and cycle normalization weighed on sales, but operational cash conversion and active capital allocation kept the company’s strategic agenda moving forward. (FY2024 figures filed 2024‑12‑12.)

What the numbers say: margin profile, cash conversion and leverage#

Across Deere’s FY2021–FY2024 track record the company shows a high‑margin industrial business that is cyclical at the top line. Revenue fell from $60.25B in FY2023 to $50.52B in FY2024 (‑16.15%), while gross profit contracted to $19.50B and gross margin ticked up slightly to 38.59% as mix and pricing partly offset lower volumes. Operating income was $11.43B (operating margin 22.62%) and reported net income was $7.10B (net margin 14.05%). Those margin rates remain strong for heavy equipment manufacturing even as operating and net margins compressed versus the prior year because the revenue base declined. (All FY2024 income‑statement figures from company filings filed 2024‑12‑12.)

Cash flow quality is the stabilizer in the picture. Deere generated $9.23B of cash from operations and $4.43B of free cash flow in FY2024, which implies a free‑cash‑flow‑to‑net‑income conversion of about +62.4% (4.43/7.09). That conversion — and the absolute FCF level — supported $4.01B of share repurchases and $1.60B of dividends in the year, while the company also increased capital spending (investments in property, plant and equipment of $4.8B). The interplay between healthy cash generation and active capital allocation is the defining operational reality for Deere today. (Cash flow line items from FY2024 cash‑flow statement filed 2024‑12‑12.)

However, leverage is meaningfully higher than a year ago. Total debt increased to $65.46B (long‑term debt $43.23B) while cash on hand was $7.32B, producing net debt of $58.14B. Using FY2024 EBITDA of $14.67B, Deere’s net‑debt‑to‑EBITDA (FY) is approximately 3.96x (58.14 / 14.67). Calculated enterprise value (market capitalization $127.42B + total debt $65.46B ‑ cash & short‑term investments $8.48B) gives an EV roughly $184.40B, and EV/EBITDA on FY2024 is about 12.58x. Those leverage and valuation metrics differ from some TTM or consensus figures in third‑party summaries; the differences stem from the use of FY versus TTM bases and alternative cash definitions. I prioritize the company’s FY totals for comparability across the published statements, and note that leverage rose because EBITDA declined while absolute debt remained elevated. (Balance‑sheet and market figures from FY2024 filing and market quote.)

Income statement evolution (FY2021–FY2024)#

To see the trend visually and to anchor the margin discussion, the table below shows Deere’s income statement highlights and margins across the last four fiscal years as reported in its filings.

(Income‑statement data from company filings filed 2024‑12‑12, 2023‑12‑15, 2022‑12‑15 and 2021‑12‑16.)

Deere’s gross margin expanded in FY2024 even as revenue fell, reflecting pricing and product‑mix strength in a down cycle, but operating and net margins weakened due to the revenue contraction’s fixed‑cost absorption effects and modest increases in R&D and SG&A. Research and development expense rose to $2.29B (about 4.53% of FY2024 revenue), underscoring continued investment in electrification, automation and precision‑agriculture technology. That steady R&D cadence means Deere is prioritizing product and software capability even through a cyclical soft patch.

Balance sheet, liquidity and capital allocation (FY2024 snapshot)#

The balance sheet supports Deere’s current strategy but shows rising indebtedness versus recent history. The following consolidated table summarizes the key balance‑sheet and cash‑flow metrics and includes author‑calculated ratios to illustrate the company’s financial profile.

(Balance‑sheet and cash‑flow figures from FY2024 filing filed 2024‑12‑12. Ratios calculated from those line items.)

Two points stand out from the balance‑sheet read. First, Deere’s current assets comfortably exceed current liabilities on the published FY2024 balance sheet, producing a calculated current ratio around 2.13x, which indicates short‑term liquidity is ample at the reporting date. Second, Deere is deploying a large share of free cash flow to buybacks: $4.01B of repurchases in FY2024 consumed roughly 90% of that year’s FCF, illustrating how the company prioritizes share repurchases alongside dividend payments even as leverage has risen.

It is important to note and reconcile data‑feed discrepancies: some third‑party TTM ratios in the market summary show materially different current‑ratio and leverage figures (for example, TTM current ratio figures near 0.74x and net‑debt multiples of ~4.9x). These differences come from timing mismatches (TTM vs fiscal year snapshot), alternate definitions of cash and debt, and inclusion or exclusion of finance receivables tied to John Deere Financial. For a clear picture of structural balance‑sheet health, the FY2024 consolidated totals above (company filing 2024‑12‑12) are the preferred anchor. Investors should be careful when comparing a fiscal snapshot to rolling TTM aggregates: the choice of basis can materially change leverage and liquidity signals.

Strategic context: investment, R&D and the product cycle#

Deere’s higher R&D spend (FY2024 $2.29B) and elevated capex ($4.8B) reflect management’s ongoing investment in higher‑margin product capabilities: precision ag, telematics, electrified drivetrains, and autonomy/automation layers. Those investments are capital‑intensive but intended to raise long‑term pricing power and lower unit costs through product differentiation — a strategic posture that helps explain why Deere sustained buybacks and dividends even in a weaker sales year.

At the same time, Deere’s industrial cycle dynamics are visible in the revenue swing. FY2023 reflected a peak demand environment tied to favorable farm economics, supply‑chain fills and replacement cycles; FY2024 shows normalization as market inventories and dealer fill rates adjusted. That cyclical pattern is not a new strategic problem for Deere — the company has historically navigated multi‑year equipment cycles — but it does mean near‑term revenue and earnings are sensitive to commodity prices, farmer incomes and trade conditions. The strategic question is whether Deere’s product investments will accelerate structural share gains and higher recurring software and services revenue as equipment sales moderate.

Competitive positioning and margin durability#

Deere operates in a concentrated competitive set (notably CNH Industrial and AGCO) where brand, dealer networks, and product reliability are key moats. Its FY2024 operating margin above 22% and gross margin near 39% are demonstrably higher than many industrial peers in normal cycles, indicating pricing power and cost discipline. Those margin levels are a competitive advantage because they provide room to invest in R&D and absorb cyclical revenue swings while still generating cash.

That said, higher leverage and aggressive buybacks reduce flexibility relative to a conservatively capitalized peer. If demand weakness persisted, the combination of elevated debt and ongoing capital returns could compel a recalibration of repurchases or slower capex growth. For now, Deere’s cash flow has been sufficient to fund the strategy, but margin resilience will be an important monitoring metric going forward.

Earnings quality and recent quarterly beats#

A practical test of earnings quality is the relationship between reported earnings and cash flow. Deere’s FY2024 net income of $7.09B and operating cash flow of $9.23B indicate earnings are backed by cash generation rather than purely non‑cash items. In addition, recent quarterly results in 2025 showed multiple earnings beats versus consensus (several quarters with actual EPS above estimates in 2025), suggesting operational momentum as dealer inventories and aftermarket services helped margins. Those beats point to execution credibility, but the larger FY2024 decline in revenue and net income highlights that timing and cyclical demand remain primary drivers.

What this means for investors#

Deere’s FY2024 results present a clear two‑part story. On one hand, the business is cyclical and the top line contracted meaningfully in FY2024 (‑16.15%), pressuring earnings (‑30.16%). On the other hand, Deere continues to generate solid operational cash flow ($9.23B) and converts a substantial share of income into free cash flow ($4.43B), enabling ongoing R&D, capex and sizable shareholder returns ($4.01B in repurchases; $1.60B in dividends). The strategic emphasis on product investment — R&D of $2.29B and capex near $4.8B — indicates management is balancing near‑term cyclicality against longer‑term positioning in electrification, autonomy and digital services.

Investors should watch three near‑term datapoints that will resolve the core tension between cyclical risk and structural investment payoff: the trajectory of dealer orders and backlogs (top‑line readthrough), margin stability or recovery as volumes normalize, and the company’s net‑debt path (does leverage decline as cash generation continues?). Together those indicators will determine whether Deere is in a cyclical trough with preserved strategic optionality or entering a phase where capital returns and investment must be rebalanced.

Key takeaways#

Deere’s FY2024 results combine a pronounced top‑line pullback with durable cash generation and elevated capital deployment. The company delivered $4.43B of free cash flow while repurchasing $4.01B of stock and paying $1.60B in dividends. Leverage rose — net debt to FY EBITDA around 3.96x — and that increase merits monitoring. R&D spending at $2.29B and capex of $4.8B show management is maintaining investment in future differentiation. In short: cyclical weakness hit revenue and earnings, but cash flow and margins remain strong enough to sustain strategic investment and shareholder returns — at the cost of higher leverage.

What to watch next#

The next critical inputs will be quarterly order cadence and dealer inventory trends, guidance around equipment demand and services growth, and the company’s stated priorities for buybacks versus debt reduction. Because Deere’s balance sheet includes significant finance receivables tied to agricultural financing programs, monitor any shifts in credit provisioning and the composition of current assets. Finally, watch margins closely: a rebound in volumes with stable gross margins would materially improve free cash flow and reduce leverage quickly.

Conclusion#

Deere enters the next stage with a mixed but coherent financial picture. The FY2024 revenue and net‑income declines underscore the cyclical exposure at the heart of its business, yet the company's ability to convert earnings into cash and to continue investing in R&D and capacity is notable. The elevated leverage from recent years changes the risk calculus — it raises sensitivity to prolonged demand softness — but does not negate Deere’s structural strengths: high margins, deep dealer networks, and a clear technology investment roadmap. The coming quarters will show whether product investments and services growth can convert cyclical variability into a more resilient, higher‑quality earnings stream.

(Unless otherwise noted, all financial figures cited are drawn from Deere & Company’s reported FY2024 consolidated financial statements filed 2024‑12‑12 and the company’s market quote as provided.)