Good morning and welcome to Deere & Company's First Quarter Earnings Conference Call. Your lines have been placed on a listen-only mode until the question-and-answer session of today's conference. I would now like to turn the call over to Mr. Tony Huegel, Director of Investor Relations. Thank you, sir. You may begin.

Thank you. Also on the call today are Raj Kalathur, our Chief Financial Officer; and Susan Karlix, our Manager of Investor Communications. Today we'll take a closer look at Deere's first quarter earnings then spend some time talking about our markets and our outlook for fiscal 2015. After that, we will respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our Web site at www.johndeere.com. First, a reminder. This call is being broadcast live on the Internet and recorded for future transmission and use by Deere & Company. Any other use, recording or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward-looking comments concerning the company's plans and projections for the future that are subject to important risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K and periodic reports filed with the Securities and Exchange Commission. This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America or GAAP. Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our Web site at www.johndeere.com/earnings under Other Financial Information. Susan?

Thank you, Tony. With the announcement of our first quarter results, John Deere has started out 2015 on a good note. And we did so in spite of sluggish conditions in the global farm economy, which are reducing demand for agricultural machinery, particularly for larger models. As a result, both sales and profits for our agriculture and turf equipment operations were lower for the quarter and are forecast to be down for the year as well. At the same time, our construction and forestry and financial services businesses had higher profit, showing the value of a well-rounded business lineup. Deere's results for the quarter also demonstrated the progress we've made managing costs and creating a more flexible, responsive cost structure. One other item worth emphasizing in today's earnings report is the impact of a stronger U.S. dollar. It is putting significant pressure on reported sales made outside of the United States, a fact reflected in both our first quarter results and our full-year forecast. Now let's take a closer look at the first quarter in detail, beginning on Slide 3. Net sales and revenues were down 17% to $6.383 billion. Net income attributable to Deere & Company was $387 million. EPS was $1.12 in the quarter. On Slide 4, total worldwide equipment operations net sales were down 19% to $5.6 billion. In the quarter-over-quarter comparison of net sales, Landscapes and Water accounted for 2 points of the change; price realization in the quarter was positive by 1 point; currency translation was negative by 2 points. Turning to a review of our individual businesses, let's start with agriculture and turf on Slide 5. Sales were down 27% due to lower shipment volumes of large ag equipment in the United States and Canada and lower sales in Europe and Brazil. Operating profit…

Thank you, Susan. Now we're ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure, but in consideration of others and our hope to allow more of you to participate in the call, we will be limiting each caller to one question today. If you have additional questions we ask that you rejoin the queue. Operator?

Thank you. [Operator Instructions] And our first question today is from Timothy Thein from Citi Research.

Great, thanks. Good morning. My single question here is just on the ag and turf receivable and inventory guidance there. Can you maybe give some underlying color within that, the change from last forecast in terms of the large versus small ag? I'm just curious given your comments on improving dairy and livestock markets and some of the more consumer-affected markets within small ag going up, has the outlook for large ag within that guidance changed versus the prior forecast? Thank you.

Yes. I don't have a great detail, Tim, on the large versus small in terms of the ending receivables and inventory. But I would tell you generally it would not be a significant difference. Keep in mind, FX is – as you look at that line from the $375 million to the $525 million, there is some FX impact in there as well, in terms of bringing the inventory and receivables down. So as you might expect, as our overall forecast for the year has not changed significantly, at this point we really haven't made significant shifts in the ending inventory and receivables as it relates to that – as you point out the breakdown between large and small. But thank you. Next caller.

Thank you. Our next question is from Rob Wertheimer from Vertical Research Partners.

Hey, good morning, everybody.

Hi, Rob.

Wondered if you could comment on the combine early order program and the current level of orders for row crop tractors versus retail sales and production? Thank you.

Sure. And I would say – I will go a little broader than just combines. As you think about the early order program and the order book in general, I would say that from a large perspective we would say it's kind of coming in line with what our expectations were. You have plus and minuses here and there. And that's again why you didn't see much – really any change in our outlook on the U.S. and Canada side. But combines, we did end that program in early January. And it was down roughly 30% year-over-year, which again was maybe even slightly better than what we had anticipated. And we've had some others that are going a little bit different direction. But all in all, very much in line with our expectations and you've seen that reflected in our outlook. As you think about tractors, again as you look year-over-year and I want to make sure I point out, obviously, we have much lower daily order – our daily production in our Waterloo factory on those large tractors. So on that lower production schedule, our availability on large tractors are pretty much in line with where we were last year. 8R tractors would be a little lighter. Our availability this year is in June. Keep in mind, too, last year there was some impact from Tier 4 transitions as well. But as you think about the 8R tractor, this year availability is out into June; last year it would've been a little further out into August. But 9R tractors were in early June; last year it was actually early May. So we're little further out on availability there. And on 7R tractors, again, we are very much in line. Last year was late June; this year is very early July. Again that was as of the first week in February. So again, very much in line year-over-year or very much in line with our expectations. Thank you. Next caller.

Thank you. Our next question is from Vishal Shah from Deutsche Bank.

Yes. Hi. Thanks for taking my question. Maybe can you talk about how we should think about the decremental margins going forward as you are looking at the rest of the year? Thank you.

Sure. Well, as you think about from a – in the – I assume you're referring to the ag and turf division, since you are talking about decremental margin. In the first quarter, of course, the decremental margins were right at 35%. If you look at our guidance for the year with the margins around 7%, the annual guidance is going to get you very close to the same type of decremental margins. So again, you'll see some pluses and minuses perhaps in given quarters; but as you think about for the full year, roughly in line with what we were able to do in the first quarter. Okay. Next caller.

Thank you. Our next question is from Seth Weber from RBC Capital Markets.

Hey, good morning.

Hi, Seth.

Hi. The pricing outlook, up 2% for the year; you did 1% in the quarter. Can you talk about just the cadence on how you get to the 2% and whether you are seeing positive pricing in both segments? Thank you.

Sure. For the year certainly we are seeing positive pricing in both segments. In the quarter you may have noticed the note in the earnings release around incentive costs on C&F, and that's really related to an accrual in the quarter. So that will – if you look at the full year, the incentive budget as a percent of sales is basically flat year-over-year. So that accrual from the first quarter will effectively reverse itself throughout the year. And so that obviously impacted pricing for the quarter. And again, I would remind you that certainly you've got some rounding in there, too, as you move between the 1% and the 2%. So I wouldn't expect a significant change other than perhaps the impact of that accrual.

Hey, Seth; this is Raj. I would add that we do have some slight pressure. But overall, broadly we're still at that same 2%. But there is some slight pressure, yes.

Okay. Thank you. Next caller.

Thank you. Our next question is from David Raso from Evercore ISI.

Hi. I'm just trying to get a little more specific on the inventory. Did the inventory growth sequentially go as planned? I know historically the first quarter usually sees a nice build sequentially. I just would have thought, given the downturn in ag, we would have looked to take out some inventory sequentially. So can you just give us some thoughts on how inventory ended up versus your expectations? Then I have a related question to the year-end expected inventory.

Yes. We'll have to have you get back in the queue for the year-end one, unfortunately. But as it relates to the quarter, I would tell you it was very much in line with our expectations. Even in a lower production year, we are ramping up for the spring selling season, and so it's natural from the end of the year to see some level of build as we go into the first quarter in particular. So that again was very much in line. And I would point out and remind people that, yes, while we are expecting some lower production in the year, we took a dramatic amount of inventory and receivables out of the system in fourth quarter last year, which is why you didn't see a significant continued reduction this year and really more – we set up the year so that we could be more in line with that lower production. And that's what you are seeing in the inventory and receivables as we move through the year, and I think you'll see them again come back down by the end of the year, as our forecast indicates. So thank you. Next caller.

Thank you. Our next question is from Jamie Cook from Credit Suisse.

Hi. Good morning and nice quarter. I guess my question relates to inventory in the channel, both on the used and the new level. Can you talk about the progress you made in the first quarter versus your expectations? And is there any change in where you want to be in year-end relative to what you originally thought? Thanks.

Yes. I think certainly a related question may be: did we see a significant benefit from Section 179 being passed at the end of the year? Certainly on the margin it was helpful. But as everyone knows, that was a – I think we had two weeks maybe at the end of the year to provide a little bit of benefit for the year. But certainly we are making progress. But used inventories in particular continue to be at high levels. I think it's important to point out, however, as we indicated last quarter, relative to competition our used inventory as a percent of sales continues to be in a much better position than the competition. So we feel like we're in good position in that regard, but certainly have a lot of work to do with our dealers in continuing to bring used inventory down as we move through the year. That will continue to be our focus, as we talked about at the beginning of the year.

All right.

Thank you. Next caller.

Thank you. Our next question is from Stephen Volkmann from Jefferies.

Hi, good morning. Wondering if you can just comment a little bit on C&F. Your forecast is up 5%, but you did up 13% in the quarter. I think maybe Susan might have said you are starting to see some slowing in the energy-related markets. Does that explain some of this incentive comp that you are seeing there or just maybe a little more color on any slowing that you are seeing in those markets.

Right. I would point out, as you think about the first quarter increased sales versus the outlook, remember: as you think about the comparison for 2014, we have much tougher comps as we move through the year, especially in the third and fourth quarter. So we had a relatively light first and second quarter. And we also do have some FT 4 transition that's going to create some moves from one quarter to the other. In some cases that contributed to the very strong first quarter. So there are a lot of things along that line. As it relates to the incentives, and I mentioned this on an earlier question, I want to be clear. This isn't an increased incentive for the full year. It's really a timing issue as it relates to an accrual that was booked for some changes in some of the incentive structures that will largely reverse itself as we go through the year. In fact, you'll see a lot of that reverse in the second quarter, so it should not indicate a higher level of year-over-year incentives. In fact, as I mentioned earlier, there's – if you look at the total budget, incentives as a percent of sales are flat year-over-year for that division. So but specific to energy, certainly the expectation is that you'll start to see some slowing in terms of orders. For dealers that are in regions that are heavily impacted by energy, yes, we've seen a little bit of slowdown in replenishment orders, as one would expect, again, in those specific regions. But some of that's being offset by strength in other areas. The overall economy continues to improve and so you are seeing some strength there as well. We would tell you longer term that as you think about lower oil prices, certainly in the short-term that's going to have a negative impact on the business from an energy sector perspective. But longer term, if they stay at these levels it could have a more positive impact on the overall economy, which could help with some offsetting strength longer term in other parts of the business. So it's a little bit of give and take. But certainly in the short-term the lower oil prices would be a little bit more take than give for us, but from a longer term perspective, not necessarily a bad deal.

Thanks, Tony.

Okay. Thank you. Next caller.

Thank you. Our next question is from Larry De Maria from William Blair.

Hey, good morning. Thanks. Seems like there is a move towards leasing in the market. We're seeing some farmers even probably liquidate some of their fleets and move towards that model. Curious, what do you think that means for Deere in maybe the near and short-term – near and longer term? Are you pushing that model? And just curious what the impact is and if we should think about is this a change to your business model, and what that might mean.

Yes. I think certainly even if you looked last year we did see a little bit higher rate of leases versus retail notes in our financial services portfolio. I don't know that it necessarily has a major impact on our bottom-line longer term. I think the risk obviously shifts a little bit from a residual value perspective. But we have a lot of history that we put in play when we set those residual values on the equipment. And so I think that's the advantage we have with having a financial services organization like we do, is that we can evaluate those things both from a short-term potential and risk as well as a longer term potential, a positive as well as risk and act accordingly. And that's really what we are doing. I would not say that we're aggressively pursuing leasing necessarily. Certainly not participating in some of the very aggressive leasing programs that are rumored to be in the market and that wouldn't be our expectation going forward. But certainly for those customers who choose to lease their product versus buying it and financing through a retail note, we would be able to accommodate that through our financial services operations.

Hey, Larry, this is Raj. Let me add that leases are still only about a tenth of our total portfolio, okay? And we are – as we have historically done, we will continue to manage our residual values very conservatively, okay?

Thank you. Next caller.

Okay, thanks.

Thank you. Our next question is from Steven Fisher from UBS.

Great. Thanks very much. Wondering how you guys are thinking about when you could see the trough year of revenues in ag and maybe how that view has changed at all in the last few months. Thank you.

Thank you. I don't know that our view has changed necessarily in the last few months. I think the first and maybe the last thing I'll say on it is, it's very premature really to talk about market conditions beyond 2015. As we all know, that will largely be impacted by the upcoming growing season and it's just very, very early. That being said, as we talked about previously, if you look at and assume more normal weather patterns and we've talked about an analysis that our Chief Economist has completed. If you look at normal weather patterns, trend yields, with the expected lower acreage that most are anticipating for corn as we go into the upcoming growing season that would result in production slightly less than usage. And you would see stocks brought down and pricing being more supported. If that would transpire, we would certainly expect to see some improvement next year. Now again, that's based on assumptions of weather, and that's always risky. While we've had two very good years in a row now for growing, especially last year had pretty much ideal growing conditions that doesn't mean we won't see it again this year. And so that's the risk to the outlook. So again, we'll be watching closely as planting season approaches and what actually gets planted in terms of various crops, as well as of course as we move through the summer what happens with the growing conditions. And that will largely drive what we would expect to see as we move into 2016. So again, I'll end where I started, it's really very premature to talk about things beyond 2015.

Thank you.

Okay. Thank you. Next caller.

Thank you. Our next question is from Ann Duignan from JPMorgan.

Hi, good morning. Just building on those comments, why would you then be saying on Slide 27 that the downturn is over in 2015 and that you should be able to react quickly when the market recovers? What if the market does not recover and we get a decade like we saw in the 2000s of significantly lower equipment sales?

Certainly we would be in a position – and that's where I think if you look at how we've handled this particular downturn, as we look out into 2016 certainly – and as you point out on Slide 27, we looked at it through 2015 in terms of what our outlook is and where our performance has been relative to those past downturns. If for some reason – and again, it would be a rare occurrence that you would see a longer downturn without any kind of increase as you move into 2016. It's not – wouldn't be unprecedented, but it would be very, very rare, you would have to go back much further than the 1980s to find that kind of consistent downturn. But if that were to happen, certainly we are positioning ourselves as we move through the year such that if the downturn persists we can be in a good, strong position to be able to continue to perform well during that downturn. But also believe that we are in a good position to react quickly if we need to bring production back up and so on. One good – one example I would point out in that regard is, as you know, with our UAW contracts we have the ability to utilize inventory adjustment shutdowns or indefinite layoff. And certainly as you've noted I'm sure, we have largely utilized indefinite layoffs in our UAW facilities, our large ag facilities, versus choosing to keep a higher level of workforce and leveraging a little more heavily the inventory adjustment shutdown. So that does put us again in a bit better footing as we move towards 2016 from a workforce perspective. So while we would argue, if you wanted to play percentages, that there is probably a greater likelihood that 2015 would be the lowest year and again, recognizing there is always that risk that we could see a further downturn – we aren't playing that risk internally in how we are managing the businesses, with full assumption that we'll see that return in 2016. So we're playing it conservatively internally even though we are optimistic as we look forward. Okay? Next caller.

Thank you. Our next question is from Andy Casey from Wells Fargo Securities, LLC.

Good morning. Thanks.

Hi, Andy.

Question for you, I wanted to follow up on the construction and forestry, given your comment about reasonably easy comps continuing into Q2. Does your guidance embed any year-to-year declines in the second half?

Well, I think as you go through the year, I mean certainly – and again, I would point out and probably should have mentioned before remember, as you think about first quarter, the other thing I would point out is first quarter does tend to be a seasonally light quarter relative to the others. But yes, you are certainly looking at some tougher comparisons. Fourth quarter in particular was a very strong quarter for that division. So I'm not going to get too specific in terms of quarter-by-quarter, but that one in particular I would point out will be a particularly tough compare for the division.

Okay. Thank you.

Okay. Thank you. Next caller.

Thank you. Our next question is from Mike Shlisky from Global Hunter Securities.

Good morning.

Good morning.

Good morning. I was wondering if you can maybe update us on the Certified Pre-Owned program. I know you just said it's just very recently. But perhaps on the original categories that are covered, tell us whether you plan to expand that to some additional categories going forward.

Yes. You stole some of my thunder by pointing out that we had added the sprayer, which I think is an indication and again, that was a pull really from our dealer organization requesting that. So I think that alone indicates the confidence they have in the program. I do want to make sure we clarify as we talk about this, we do not want to characterize the Certified Pre-Owned program as some sort of silver bullet. But it certainly is beneficial, especially as our dealers look to market some of this newer used John Deere equipment, in a lot of cases marketing against brand-new competitive equipment. And that's really the biggest strength that the Certified Pre-Owned program provides. I think our dealers are embracing that. It's growing, and I think there is a fair amount of confidence from the dealer organization around this being a very useful tool for them. So again, I think all very positive signs as we move forward with that program. As far as other products being added, I think it would be premature to talk about that; but certainly if that's an area where our dealers feel that it would be beneficial to them that would certainly be something we would consider in conjunction with them. Thank you.

Okay.

Next caller.

Thank you. Our next question is from Eli Lustgarten from Longbow Securities.

Good morning, everyone.

Hello.

Can we talk – go back one more time to the C&F outlook and much easier comparison second quarter and it should get tougher in the third and fourth quarter. Two questions are, one, can you maintain the profitability numbers in the second half of the year that you will average in the first half of the year, or do they begin to weaken? And an associate with it, you indicated that your inventories and stuff are mostly going up because of C&F. Would you begin to rethink your C&F inventories and maybe want to trim them, particularly if the energy market gets softer? And can you add, what percent of your business is related to the energy markets in C&F?

Sure. Yes. I think in answer to the first part of the question – that was very creative in adding two questions into one, but --

Right, we try.

Certainly, we talked about 10% margins in the first quarter and I'll note that for the full year it's 11%, so 1 point higher. And again, I want to be clear. It's not that sales are expected to fall off in the back half of the year. It's just the year-over-year comparison. So the growth year-over-year is what would be challenged as we go through the year. So I think that's probably the key there as you think about that. From an energy perspective, certainly in recent years that's been a stronger portion of our business, a strong portion of the industry. We've seen a lot of strength in the energy business across the industry. We would tell you, if you look at the machines that go directly into things like pipeline, oil, gas, fracking, those sorts of things, we would estimate roughly 10% to 15% -- again, in recent years. Deere would not be out of line from where the industry was in that regard. But I would also point out that in those regions that are heavily influenced by energy, you have the residual impact as well on the overall economy, in other types of construction that occurs in support of the strength of energy, so in terms of overall business, for some could be a bit heavier than that. So that would be our view on that. Thank you. Next caller.

Thank you. Our next question is from Ross Gilardi from Bank of America Merrill Lynch.

Good morning. Thank you.

Good morning.

Hey, Tony, I was just wondering, have you gotten any more color on the size of the credit line under the Moderfrota program for Brazil, because this program had become pretty trivial over the last three to five years. Is it really sort of fair to say that rates are going to be – are flat with where they were last year, given you're comparing Moderfrota to FINAME? Is the program actually getting tapped and are approvals happening? Is it active right now?

Yes. I think what my understanding is, as we speak with our sales group there in-country, is that the financing is available for Moderfrota. Again, because there was financing in place, set up in place, that wasn't being utilized in the early part of their fiscal year. So the second half of calendar 2014. So again, we believe that there's certainly available credit. People are beginning to utilize the Moderfrota program. Really, if you think about differences between the two to be fair, rates are the same as you switch to Moderfrota, but there is a slightly higher down payment. Under PSI last year it would have been zero percent down payment and it's 10% under Moderfrota. So there is a slightly higher down payment. But from a funding perspective, at least through the middle of the year, which is where we have the rates available, the belief is that there will be adequate funding for that.

Thanks.

Okay. Thank you. Next caller.

Thank you. Our next question is from Adam Uhlman from Cleveland Research.

Yes. Hi, guys. Good morning.

Hello.

Can we circle back to the small ag products in the U.S. and your outlook there? I know you mentioned weaker dairy markets over in Europe, but there wasn't any comment to dairy and livestock conditions here in the U.S. So could you maybe just talk about what you've been seeing in the order trends for that product and if you've changed your outlook at all?

Yes. I think certainly as you go through 2014 and as we go into 2015, I would say overall for livestock our view would be – and of course as we've talked about before, we do use Informa Economics as an external consultant. And their views would be consistent in that livestock profitability generally is expected to continue through 2015. There are a couple areas where you will see some margins compressing a bit. Dairy would be one area I would point out that as the herd expanded through 2015, you're likely to see some squeezing of margin. Today, they would be close to breakeven, roughly, but still slightly profitable. Poultry again coming off of very strong margins last year. We believe those strong margins will continue through the first half of the year. But production is up and so that's a part of the industry that can recover fairly quickly and so we would expect to see perhaps some margin squeezing there. And pork of course, again we would expect to see some growth in the herd and some reduction as we move through the year. Second half in particular could be a challenge from a margin perspective there. So we are seeing some squeezing there. Beef, of course that takes a while to rebuild herds. So profitability is expected to still be relatively strong, especially for cow/calf producers. And so overall we're still looking at small ag, which tends to be a little more closely tied to livestock to be relatively strong versus certainly large ag as we move through 2015, again, coming off of some pretty strong years for livestock producers. Thank you. Next caller.

Thank you. Our next question is from Sameer Rathod from Macquarie Capital.

Hello and good morning.

Hello.

Could you expand a little bit on the competitive landscape and what it looks like, given the current downturn and how the dealers are doing just given the competition? Thank you.

Yes. I would simply say I would go back to inventory levels. Our dealers are very, very strong, very capable. We've proven that time and time again. And we entered this downturn with inventories, while we would tell you a little higher than we would like in used in much better position than the competition. So we feel very good about the competitive position that we're in and feel confident that, like in other downturns, we'll come through this – both Deere and our dealers will come through this much stronger on the back end. And again, I am referring specifically to North America which I'm assuming is where your question was directed so. Thank you. Next caller.

Thank you. Our next question is from Jerry Revich from Goldman Sachs.

Good morning.

Good morning.

I am wondering if you can talk about for John Deere Capital Corp., really good credit loss provision performance. Can you just give us a more color on trends and frequency of repossessions, severity of losses, for instance, delinquency rates? I know we haven't approached it in the past on prior calls. But now that it's a third of the earnings here I am wondering if you could just give some additional color on those indicators.

Yes. I think the short answer there is certainly we aren't seeing any kind of spike in losses. Our residuals, we talked earlier about leases. We've tended to be relatively conservative with leases. And so again we are really nothing cautionary on that at this point in time. But to be fair, it is a little early in the sense that many of our annual payments are coming due today and so we'll have probably better guidance on that topic as we move into second quarter.

This is Raj. Let me add a couple of points there. We watch this very carefully. There are a couple of small revolving products that we offer. One is a seasonal pay. So last fall we did not see anything that would indicate additional caution, although we are in a cautionary environment, we are watching it carefully. Another would be a monthly pay, more like a credit card. Even there we watch that carefully, like Tony said. We haven't seen anything that would raise a red flag for us yet.

Thank you.

Thank you. Next caller.

Thank you. Our next question is from Mig Dobre from Robert Baird.

Yes, good morning. Just going back to A&T again, decremental margin performance there has been pretty good versus our expectations at least at about 35%. I understand that that's your guidance for the full year as well. But I am wondering. Based on everything you know of the cost structure, how should we think about this longer term? Especially if, say for instance, ag declines continue into 2016?

Yes. Certainly we would continue to – that's a tough want to answer, candidly, as you think about that. But if you would anticipate further reductions, obviously we would evaluate that. We would continue to look for ways we could pull costs out and keep those margins in positive territory. We've talked a lot about the lever studies we have and plans that we have in place to make sure we do that as we move down the line. Now certainly, we are well down the line, especially if you think about large ag, but that doesn't mean that as you continue down the line you don't find additional levers that you can pull. The best example I would point out to that is in our C&F division in 2009. We certainly went to levels that were far lower than what most would have anticipated they could have gone and additional levers were pulled in that regard in order to try to compensate for that. So we would – again, as we look into 2016 we're trying to position ourselves for whatever the market brings and we'll make further changes as we need to.

And Mig, this is Raj. It also depends on the products, okay? So depending on which product line is impacted, more or less, if it's large ag the impact is going to be different than with small ag.

Thank you. Next caller.

Thank you. Our next question is from Nicole DeBlase from Morgan Stanley.

Yes. Thanks for fitting me in, guys. So my question is just around used equipment pricing. I don't think we've touched on this subject yet. Can you comment on what you've seen quarter to date, how it compares with last quarter, and if you are seeing any increased competition from the other guys out there as everyone in the industry is looking to move inventory?

Yes. So far it's actually not a bad story, it's a pretty good story. As you look at – and again, looking at large ag in the U.S. and Canada, I would tell you product by product it's plus or minus single-digit. There are some that are – again, this is year-over-year pricing. In some cases, you're going to see some small single digits of actually improved pricing year-over-year and in some cases you're going to see some small single digits of lower. So I would argue all in all relatively flattish, but recognizing that some products are stronger than others.

Okay. Thanks.

Thank you. Next caller. And this will be our last caller. Thank you.

Thank you. Our final question today is from Andrew Kaplowitz from Barclays Bank Plc.

Good morning, guys. Nice quarter.

Good morning. Thank you.

Tony, I just wanted to push you on decremental margins this year a little bit more. You did 35%, which I think previous callers have said that's pretty good that beat our estimate. And that was on relatively large mix headwind that you talked about in the past, in combines especially and the big destock year-over-year. So why would decrementals be similar for the rest of the year? Was there some conservatism in that? Can you still push G&A as you have done consistently?

Yes. Well, I think some of that, Andy, as you think about going into the back half of the year, remember, we were pulling levers in the back half of the year of 2014, as we started to see this further reduction coming. And so it does get a bit more difficult in terms of some of the comps. And as you think about SA&G, I would tell you it's the same thing from an SA&G reduction comparison as what I talked about with C&F sales. It becomes more challenging as you go through the year. So certainly, as you put together a forecast, there are a lot of assumptions in there and certainly we try to put our best estimates that we can in that regard. So some of the big questions candidly too, will be what continues to happen with material costs. We've seen some positive move there which has certainly helped at least in the short-term. And if those lower costs, especially in things like steel, if oil prices remain at low levels that flows through not just our logistics but a lot of other oil-related type of inputs. And that certainly would be beneficial as well. So we'll just have to see where those things go. But at this point we are forecasting similar decrementals for the year as what we've seen in the first quarter.

Thanks.

Okay. Thank you very much and with that we'll bring our call to a close. We do appreciate your participation on the call and as always we'll be available the rest of the day to answer any additional questions you may have. Thank you.

Thank you. This does conclude today's conference. You may disconnect at this time.