Exhibit 99.1
Caterpillar Inc.
1Q 2019 Earnings Release
April 24, 2019
FOR IMMEDIATE RELEASE
Caterpillar Reports First-Quarter 2019 Results
Achieved Record First-Quarter Profit Per Share on Higher Sales and Revenues
| First Quarter | ||||||
| ($ in billions except profit per share) | 2019 | 2018 | ● | First-quarter sales and revenues increased 5% | ||
| ● | Record first-quarter profit per share | |||||
| Sales and Revenues | $13.5 | $12.9 | ● | Profit per share outlook now $12.06 to $13.06 due to a first-quarter discrete tax benefit of $0.31 per share | ||
| Profit Per Share | $3.25 | $2.74 | ||||
| ● | Repurchased $751 million in company stock | |||||
DEERFIELD, Ill. - Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2019 sales and revenues of $13.5 billion, compared with $12.9 billion in the first quarter of 2018, a 5% increase. First-quarter 2019 profit of $3.25 per share was a first-quarter record. This was a 19% increase compared with the previous record first-quarter profit per share of $2.74 in 2018.
Profit per share in the first quarter of 2019 included a discrete tax benefit related to U.S. tax reform of $178 million, or $0.31 per share. Profit per share in the first quarter of 2018 included restructuring costs of $0.08 per share.
During the first quarter of 2019, Machinery, Energy & Transportation (ME&T) operating cash flow was $860 million. In the first quarter of 2019, the company repurchased $751 million of Caterpillar common stock and paid dividends of $494 million. The enterprise cash balance at the end of the first quarter of 2019 was $7.1 billion.
“The global Caterpillar team delivered record first-quarter profit per share,” said Caterpillar Chairman and CEO Jim Umpleby. “We are executing our strategy for profitable growth by investing in services, expanding our offerings and improving operational excellence.”
2019 Outlook
The company continues to have confidence in the fundamentals of its diverse end markets, and expectations for 2019 performance are unchanged. However, due to a $0.31 per share discrete tax benefit, Caterpillar is revising its profit per share outlook to a range of $12.06 to $13.06, compared with the previous outlook range of $11.75 to $12.75. The first-quarter discrete tax benefit of $178 million, or $0.31 per share, is related to U.S. tax reform as a result of final regulations recently issued by the U.S. Treasury. The outlook does not include a mark-to-market gain or loss for remeasurement of pension and other postemployment benefit plans, which will be excluded from adjusted profit per share in the fourth quarter of 2019 along with any other discrete items.
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CONSOLIDATED RESULTS
Consolidated Sales and Revenues
The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the first quarter of 2018 (at left) and the first quarter of 2019 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees.Total sales and revenues of $13.466 billion in the first quarter of 2019, increased $607 million, or 5%, compared with $12.859 billion in the first quarter of 2018. The increase was primarily due to higher sales volume driven by improved demand for both equipment and services, with the most significant increase in Resource Industries. Sales volume also increased in Construction Industries, while Energy & Transportation was about flat. Sales grew in all regions except for EAME, with the largest gains in North America and Asia/Pacific. Favorable price realization, primarily in Construction Industries and Resource Industries, also contributed to the sales improvement. The increase was partially offset by unfavorable currency impacts due to a stronger U.S. dollar.
| Sales and Revenues by Segment | |||||||||||||||||||||||||||||
| (Millions of dollars) | First Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment / Other | First Quarter 2019 | $ Change | % Change | |||||||||||||||||||||
| Construction Industries | $ | 5,677 | $ | 164 | $ | 156 | $ | (127 | ) | $ | 3 | $ | 5,873 | $ | 196 | 3% | |||||||||||||
| Resource Industries | 2,309 | 371 | 110 | (42 | ) | (21 | ) | 2,727 | 418 | 18% | |||||||||||||||||||
| Energy & Transportation | 5,219 | 21 | 27 | (91 | ) | 34 | 5,210 | (9 | ) | —% | |||||||||||||||||||
| All Other Segment | 116 | 1 | — | (1 | ) | 5 | 121 | 5 | 4% | ||||||||||||||||||||
| Corporate Items and Eliminations | (1,171 | ) | (14 | ) | (1 | ) | — | (21 | ) | (1,207 | ) | (36 | ) | ||||||||||||||||
| Machinery, Energy & Transportation | $ | 12,150 | $ | 543 | $ | 292 | $ | (261 | ) | $ | — | $ | 12,724 | $ | 574 | 5% | |||||||||||||
| Financial Products Segment | $ | 793 | $ | — | $ | — | $ | — | $ | 57 | $ | 850 | $ | 57 | 7% | ||||||||||||||
| Corporate Items and Eliminations | (84 | ) | — | — | — | (24 | ) | (108 | ) | (24 | ) | ||||||||||||||||||
| Financial Products Revenues | $ | 709 | $ | — | $ | — | $ | — | $ | 33 | $ | 742 | $ | 33 | 5% | ||||||||||||||
| Consolidated Sales and Revenues | $ | 12,859 | $ | 543 | $ | 292 | $ | (261 | ) | $ | 33 | $ | 13,466 | $ | 607 | 5% | |||||||||||||
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| Sales and Revenues by Geographic Region | |||||||||||||||||||||||||||||||||||||||||
| North America | Latin America | EAME | Asia/Pacific | External Sales and Revenues | Inter-Segment | Total Sales and Revenues | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | $ | % Chg | $ | % Chg | $ | % Chg | $ | % Chg | $ | % Chg | $ | % Chg | $ | % Chg | |||||||||||||||||||||||||||
| First Quarter 2019 | |||||||||||||||||||||||||||||||||||||||||
| Construction Industries | $ | 2,965 | 13% | $ | 319 | (7%) | $ | 1,006 | (6%) | $ | 1,562 | (4%) | $ | 5,852 | 3% | $ | 21 | 17% | $ | 5,873 | 3% | ||||||||||||||||||||
| Resource Industries | 951 | 19% | 423 | 18% | 468 | (10%) | 805 | 52% | 2,647 | 20% | 80 | (21%) | 2,727 | 18% | |||||||||||||||||||||||||||
| Energy & Transportation | 2,151 | (3%) | 332 | 19% | 1,032 | (5%) | 718 | 6% | 4,233 | (1%) | 977 | 4% | 5,210 | —% | |||||||||||||||||||||||||||
| All Other Segment | 8 | (47%) | — | —% | 11 | 175% | 18 | —% | 37 | —% | 84 | 6% | 121 | 4% | |||||||||||||||||||||||||||
| Corporate Items and Eliminations | (41 | ) | 1 | (3 | ) | (2 | ) | (45 | ) | (1,162 | ) | (1,207 | ) | ||||||||||||||||||||||||||||
| Machinery, Energy & Transportation | 6,034 | 7% | 1,075 | 9% | 2,514 | (6%) | 3,101 | 9% | 12,724 | 5% | — | —% | 12,724 | 5% | |||||||||||||||||||||||||||
| Financial Products Segment | 558 | 9% | 70 | (5%) | 102 | 1% | 120 | 13% | 850 | 7% | — | —% | 850 | 7% | |||||||||||||||||||||||||||
| Corporate Items and Eliminations | (69 | ) | (11 | ) | (9 | ) | (19 | ) | (108 | ) | — | (108 | ) | ||||||||||||||||||||||||||||
| Financial Products Revenues | 489 | 6% | 59 | (3%) | 93 | (3%) | 101 | 13% | 742 | 5% | — | —% | 742 | 5% | |||||||||||||||||||||||||||
| Consolidated Sales and Revenues | $ | 6,523 | 7% | $ | 1,134 | 8% | $ | 2,607 | (6%) | $ | 3,202 | 9% | $ | 13,466 | 5% | $ | — | —% | $ | 13,466 | 5% | ||||||||||||||||||||
| First Quarter 2018 | |||||||||||||||||||||||||||||||||||||||||
| Construction Industries | $ | 2,620 | $ | 344 | $ | 1,067 | $ | 1,628 | $ | 5,659 | $ | 18 | $ | 5,677 | |||||||||||||||||||||||||||
| Resource Industries | 798 | 360 | 520 | 530 | 2,208 | 101 | 2,309 | ||||||||||||||||||||||||||||||||||
| Energy & Transportation | 2,225 | 280 | 1,092 | 679 | 4,276 | 943 | 5,219 | ||||||||||||||||||||||||||||||||||
| All Other Segment | 15 | — | 4 | 18 | 37 | 79 | 116 | ||||||||||||||||||||||||||||||||||
| Corporate Items and Eliminations | (28 | ) | 1 | (3 | ) | — | (30 | ) | (1,141 | ) | (1,171 | ) | |||||||||||||||||||||||||||||
| Machinery, Energy & Transportation | 5,630 | 985 | 2,680 | 2,855 | 12,150 | — | 12,150 | ||||||||||||||||||||||||||||||||||
| Financial Products Segment | 512 | 74 | 101 | 106 | 793 | — | 793 | ||||||||||||||||||||||||||||||||||
| Corporate Items and Eliminations | (49 | ) | (13 | ) | (5 | ) | (17 | ) | (84 | ) | — | (84 | ) | ||||||||||||||||||||||||||||
| Financial Products Revenues | 463 | 61 | 96 | 89 | 709 | — | 709 | ||||||||||||||||||||||||||||||||||
| Consolidated Sales and Revenues | $ | 6,093 | $ | 1,046 | $ | 2,776 | $ | 2,944 | $ | 12,859 | $ | — | $ | 12,859 | |||||||||||||||||||||||||||
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Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the first quarter of 2018 (at left) and the first quarter of 2019 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.Operating profit for the first quarter of 2019 was $2.207 billion, compared with $2.108 billion in the first quarter of 2018. The increase of $99 million was mostly due to favorable price realization and higher sales volume, partially offset by higher manufacturing costs and increased selling, general and administrative (SG&A) and research and development (R&D) expenses. The increase in manufacturing costs was primarily due to higher variable labor and burden, including freight costs, and material costs, including tariffs. SG&A/R&D expenses were higher primarily due to increased targeted investments and timing of corporate-level expenses, partially offset by lower short-term incentive compensation expense.
Operating profit margin was 16.4% for the first quarter of 2019 and 2018.
| Profit by Segment | ||||||||||||||
| (Millions of dollars) | First Quarter 2019 | First Quarter 2018 | $ Change | % Change | ||||||||||
| Construction Industries | $ | 1,085 | $ | 1,117 | $ | (32 | ) | (3 | %) | |||||
| Resource Industries | 576 | 378 | 198 | 52 | % | |||||||||
| Energy & Transportation | 838 | 874 | (36 | ) | (4 | %) | ||||||||
| All Other Segment | 25 | 57 | (32 | ) | (56 | %) | ||||||||
| Corporate Items and Eliminations | (375 | ) | (371 | ) | (4 | ) | ||||||||
| Machinery, Energy & Transportation | $ | 2,149 | $ | 2,055 | $ | 94 | 5 | % | ||||||
| Financial Products Segment | $ | 211 | $ | 141 | $ | 70 | 50 | % | ||||||
| Corporate Items and Eliminations | (46 | ) | (2 | ) | (44 | ) | ||||||||
| Financial Products | $ | 165 | $ | 139 | $ | 26 | 19 | % | ||||||
| Consolidating Adjustments | (107 | ) | (86 | ) | (21 | ) | ||||||||
| Consolidated Operating Profit | $ | 2,207 | $ | 2,108 | $ | 99 | 5 | % | ||||||
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Other Profit/Loss and Tax Items
The provision for income taxes in the first quarter of 2019 reflected an estimated annual tax rate of 26%, compared with 24% for the first quarter of 2018, excluding the discrete items discussed in the following paragraph. The increase was largely driven by the application of U.S. tax reform provisions to the earnings of certain non-U.S. subsidiaries, which do not have a calendar fiscal year-end. These provisions did not apply to these subsidiaries in 2018.
As a result of final regulations received in January 2019 related to the mandatory deemed repatriation of non-U.S. earnings due to U.S. tax reform, Caterpillar recorded a discrete tax benefit of $178 million in the first quarter of 2019. In addition, a discrete tax benefit of $23 million was recorded in the first quarter of 2019, compared with $40 million in the first quarter of 2018, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.
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| CONSTRUCTION INDUSTRIES | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| First Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | First Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 5,677 | $ | 164 | $ | 156 | $ | (127 | ) | $ | 3 | $ | 5,873 | $ | 196 | 3 | % | ||||||||||||||
| Sales by Geographic Region | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| North America | $ | 2,965 | $ | 2,620 | $ | 345 | 13 | % | |||||||||||||||||||||||
| Latin America | 319 | 344 | (25 | ) | (7 | %) | |||||||||||||||||||||||||
| EAME | 1,006 | 1,067 | (61 | ) | (6 | %) | |||||||||||||||||||||||||
| Asia/Pacific | 1,562 | 1,628 | (66 | ) | (4 | %) | |||||||||||||||||||||||||
| External Sales | 5,852 | 5,659 | 193 | 3 | % | ||||||||||||||||||||||||||
| Inter-segment | 21 | 18 | 3 | 17 | % | ||||||||||||||||||||||||||
| Total Sales | $ | 5,873 | $ | 5,677 | $ | 196 | 3 | % | |||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 1,085 | $ | 1,117 | $ | (32 | ) | (3 | %) | ||||||||||||||||||||||
| Segment Profit Margin | 18.5 | % | 19.7 | % | (1.2 | pts) | |||||||||||||||||||||||||
Construction Industries’ total sales were $5.873 billion in the first quarter of 2019, compared with $5.677 billion in the first quarter of 2018. The increase was mostly due to higher end-user demand for construction equipment, partially offset by a smaller increase in dealer inventories compared with the first quarter of 2018. Favorable price realization was partially offset by unfavorable currency impacts due to a stronger U.S. dollar.
| ▪ | In North America, the sales increase was driven by higher demand for new equipment, primarily to support road construction activities. Favorable price realization also contributed to the sales improvement. |
| ▪ | Construction activities remained at low levels in Latin America. |
| ▪ | In EAME, the sales decrease was primarily due to a smaller increase in dealer inventories compared with the first quarter of 2018, and a weaker euro, partially offset by favorable price realization. |
| ▪ | Sales in Asia/Pacific declined due to unfavorable currency impacts. |
Construction Industries’ profit was $1.085 billion in the first quarter of 2019, compared with $1.117 billion in the first quarter of 2018. The decrease in profit was a result of higher manufacturing costs, partially offset by favorable price realization. Manufacturing costs increased primarily due to higher material, labor and freight costs.
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| RESOURCE INDUSTRIES | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| First Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | First Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 2,309 | $ | 371 | $ | 110 | $ | (42 | ) | $ | (21 | ) | $ | 2,727 | $ | 418 | 18 | % | |||||||||||||
| Sales by Geographic Region | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| North America | $ | 951 | $ | 798 | $ | 153 | 19 | % | |||||||||||||||||||||||
| Latin America | 423 | 360 | 63 | 18 | % | ||||||||||||||||||||||||||
| EAME | 468 | 520 | (52 | ) | (10 | %) | |||||||||||||||||||||||||
| Asia/Pacific | 805 | 530 | 275 | 52 | % | ||||||||||||||||||||||||||
| External Sales | 2,647 | 2,208 | 439 | 20 | % | ||||||||||||||||||||||||||
| Inter-segment | 80 | 101 | (21 | ) | (21 | %) | |||||||||||||||||||||||||
| Total Sales | $ | 2,727 | $ | 2,309 | $ | 418 | 18 | % | |||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 576 | $ | 378 | $ | 198 | 52 | % | |||||||||||||||||||||||
| Segment Profit Margin | 21.1 | % | 16.4 | % | 4.7 | pts | |||||||||||||||||||||||||
Resource Industries’ total sales were $2.727 billion in the first quarter of 2019, an increase of $418 million from the first quarter of 2018. The increase was primarily due to higher equipment demand, favorable price realization and services. Mining production levels and commodity market fundamentals remained positive, which supported higher sales. Higher demand levels for non-residential construction activities and quarry and aggregate operations also drove higher sales.
Resource Industries’ profit was $576 million in the first quarter of 2019, compared with $378 million in the first quarter of 2018. The improvement was mostly due to higher sales volume. Favorable price realization was partially offset by higher manufacturing costs, including increased material and freight costs and slightly higher warranty expense.
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| ENERGY & TRANSPORTATION | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| First Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | First Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 5,219 | $ | 21 | $ | 27 | $ | (91 | ) | $ | 34 | $ | 5,210 | $ | (9 | ) | — | % | |||||||||||||
| Sales by Application | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| Oil and Gas | $ | 1,131 | $ | 1,215 | $ | (84 | ) | (7 | %) | ||||||||||||||||||||||
| Power Generation | 1,036 | 969 | 67 | 7 | % | ||||||||||||||||||||||||||
| Industrial | 904 | 906 | (2 | ) | — | % | |||||||||||||||||||||||||
| Transportation | 1,162 | 1,186 | (24 | ) | (2 | %) | |||||||||||||||||||||||||
| External Sales | 4,233 | 4,276 | (43 | ) | (1 | %) | |||||||||||||||||||||||||
| Inter-segment | 977 | 943 | 34 | 4 | % | ||||||||||||||||||||||||||
| Total Sales | $ | 5,210 | $ | 5,219 | $ | (9 | ) | — | % | ||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 838 | $ | 874 | $ | (36 | ) | (4 | %) | ||||||||||||||||||||||
| Segment Profit Margin | 16.1 | % | 16.7 | % | (0.6 | pts) | |||||||||||||||||||||||||
Energy & Transportation’s total sales were $5.210 billion in the first quarter of 2019, about flat compared with $5.219 billion in the first quarter of 2018. Decreases due to unfavorable currency impacts from a stronger U.S. dollar were nearly offset by favorable price realization and higher sales volumes.
| ▪ | Oil and Gas – Sales were negatively impacted by the timing of turbine project deliveries in North America. The decrease was partially offset by higher demand for reciprocating engines for gas compression in North America. |
| ▪ | Power Generation – Sales increased primarily due to higher shipments for large diesel reciprocating engine applications in all regions except EAME. |
| ▪ | Industrial – Sales were about flat, with a decrease in EAME primarily due to unfavorable currency impacts nearly offset by higher sales in North America. |
| ▪ | Transportation – Sales were slightly lower primarily due to unfavorable currency impacts. |
Energy & Transportation’s profit was $838 million in the first quarter of 2019, compared with $874 million in the first quarter of 2018. The decrease was mostly due to higher manufacturing costs including increased freight costs, higher warranty expense and slightly higher labor costs. The decrease was partially offset by favorable price realization and higher sales volume.
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| FINANCIAL PRODUCTS SEGMENT | |||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||
| Revenues by Geographic Region | |||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | $ Change | % Change | ||||||||||||||||||||
| North America | $ | 558 | $ | 512 | $ | 46 | 9 | % | |||||||||||||||
| Latin America | 70 | 74 | (4 | ) | (5 | %) | |||||||||||||||||
| EAME | 102 | 101 | 1 | 1 | % | ||||||||||||||||||
| Asia/Pacific | 120 | 106 | 14 | 13 | % | ||||||||||||||||||
| Total | $ | 850 | $ | 793 | $ | 57 | 7 | % | |||||||||||||||
| Segment Profit | |||||||||||||||||||||||
| First Quarter 2019 | First Quarter 2018 | Change | % Change | ||||||||||||||||||||
| Segment Profit | $ | 211 | $ | 141 | $ | 70 | 50 | % | |||||||||||||||
Financial Products’ segment revenues were $850 million in the first quarter of 2019, an increase of $57 million, or 7%, from the first quarter of 2018. The increase was primarily due to higher average financing rates and higher average earning assets in North America and Asia/Pacific.
Financial Products’ segment profit was $211 million in the first quarter of 2019, compared with $141 million in the first quarter of 2018. The increase was primarily due to a $42 million favorable impact from mark-to-market on equity securities in Insurance Services, an increase in net yield on average earning assets and a decrease in the provision for credit losses at Cat Financial.
At the end of the first quarter of 2019, past dues at Cat Financial were 3.61%, compared with 3.17% at the end of the first quarter of 2018. The increase in past dues was primarily driven by Cat Power Finance, concentrated in the marine portfolio. Write-offs, net of recoveries, were $30 million for the first quarter of both 2019 and 2018. As of March 31, 2019, Cat Financial’s allowance for credit losses totaled $534 million, or 1.89% of finance receivables, compared with $511 million, or 1.80% of finance receivables, at December 31, 2018.
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QUESTIONS AND ANSWERS
| Q1: | Can you provide more information on the $178 million discrete tax benefit related to U.S. tax reform? |
| A: | On January 15, 2019, the U.S. Treasury issued final regulations related to the mandatory deemed repatriation of non-U.S. earnings required by U.S. tax reform. Due to clarification provided in these regulations supporting the position taken on Caterpillar’s tax return, the company reduced its tax reserves (unrecognized tax benefits) with a corresponding benefit to the provision for income taxes in the first quarter of 2019. A reconciliation of profit per share excluding this discrete tax benefit can be found in the appendix on Page 19. |
| Q2: | Can you discuss changes in dealer inventories during the first quarter of 2019 and the outlook for the year? |
| A: | Dealers generally increase inventories during the first quarter in preparation for the spring selling season. Dealer machine and engine inventories increased about $1.3 billion during the first quarter of 2019, compared with an increase of about $1.2 billion during the first quarter of 2018. The company believes the increase in dealer inventories is reflective of current end-user demand. Caterpillar’s expectation remains that dealer inventories should be about flat for the full year. |
| Q3: | Can you discuss changes to your order backlog by segment? |
| A: | At the end of the first quarter of 2019, the order backlog was $16.9 billion, about $300 million higher than the fourth quarter of 2018. The increase was in Construction Industries and Energy & Transportation, partially offset by a decrease in Resource Industries due to higher dealer inventories. |
| Q4: | Can you comment on expense related to your 2019 short-term incentive compensation plans? |
| A: | Short-term incentive compensation expense is directly related to financial and operational performance, measured against targets set annually. First-quarter 2019 expense was about $220 million, compared with first-quarter 2018 expense of about $360 million. For 2019, short-term incentive compensation expense is expected to be significantly lower than 2018. |
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Notes:
| – | Glossary of terms is included on the Caterpillar website at http://www.caterpillar.com/investors/. |
| – | Information on non-GAAP financial measures is included in the appendix on page 19. |
| – | Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Wednesday, April 24, 2019, to discuss its 2019 first-quarter financial results. The accompanying slides will be available before the webcast on the Caterpillar website at http://www.caterpillar.com/investors/events-and-presentations. |
About Caterpillar:
For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2018 sales and revenues of $54.722 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.
Forward-Looking Statements
Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.
Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events including natural disasters; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; and (xxvi) other factors described in more detail in Caterpillar’s Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.
Machinery, Energy & Transportation
Caterpillar defines Machinery, Energy & Transportation as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. Machinery, Energy & Transportation information relates to the design, manufacture and marketing of Caterpillar products. Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. The nature of these businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. The company also believes this presentation will assist readers in understanding Caterpillar’s business. Pages 12-18 reconcile Machinery, Energy & Transportation with Financial Products on the equity basis to Caterpillar Inc. consolidated financial information.
Caterpillar’s latest financial results and outlook are also available online:
http://www.caterpillar.com/en/investors.html
http://www.caterpillar.com/en/investors/quarterly-results.html (live broadcast/replays of quarterly conference call)
Caterpillar investor relations contact: Jennifer Driscoll, 309-675-4549 or Driscoll_Jennifer@cat.com
Caterpillar media contact: Corrie Scott, 224-551-4133 or Scott_Corrie@cat.com
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12
Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| Sales and revenues: | |||||||
| Sales of Machinery, Energy & Transportation | $ | 12,724 | $ | 12,150 | |||
| Revenues of Financial Products | 742 | 709 | |||||
| Total sales and revenues | 13,466 | 12,859 | |||||
| Operating costs: | |||||||
| Cost of goods sold | 9,003 | 8,566 | |||||
| Selling, general and administrative expenses | 1,319 | 1,276 | |||||
| Research and development expenses | 435 | 443 | |||||
| Interest expense of Financial Products | 190 | 166 | |||||
| Other operating (income) expenses | 312 | 300 | |||||
| Total operating costs | 11,259 | 10,751 | |||||
| Operating profit | 2,207 | 2,108 | |||||
| Interest expense excluding Financial Products | 103 | 101 | |||||
| Other income (expense) | 160 | 127 | |||||
| Consolidated profit before taxes | 2,264 | 2,134 | |||||
| Provision (benefit) for income taxes | 387 | 472 | |||||
| Profit of consolidated companies | 1,877 | 1,662 | |||||
| Equity in profit (loss) of unconsolidated affiliated companies | 7 | 5 | |||||
| Profit of consolidated and affiliated companies | 1,884 | 1,667 | |||||
| Less: Profit (loss) attributable to noncontrolling interests | 3 | 2 | |||||
Profit 1 | $ | 1,881 | $ | 1,665 | |||
| Profit per common share | $ | 3.29 | $ | 2.78 | |||
Profit per common share — diluted 2 | $ | 3.25 | $ | 2.74 | |||
| Weighted-average common shares outstanding (millions) | |||||||
| – Basic | 572.4 | 598.0 | |||||
– Diluted 2 | 578.8 | 608.0 | |||||
1 | Profit attributable to common shareholders. |
2 | Diluted by assumed exercise of stock-based compensation awards using the treasury stock method. |
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13
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
| March 31, 2019 | December 31, 2018 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and short-term investments | $ | 7,128 | $ | 7,857 | |||
| Receivables – trade and other | 8,961 | 8,802 | |||||
| Receivables – finance | 8,932 | 8,650 | |||||
| Prepaid expenses and other current assets | 1,765 | 1,765 | |||||
| Inventories | 12,340 | 11,529 | |||||
| Total current assets | 39,126 | 38,603 | |||||
| Property, plant and equipment – net | 13,259 | 13,574 | |||||
| Long-term receivables – trade and other | 1,149 | 1,161 | |||||
| Long-term receivables – finance | 12,674 | 13,286 | |||||
| Noncurrent deferred and refundable income taxes | 1,378 | 1,439 | |||||
| Intangible assets | 1,807 | 1,897 | |||||
| Goodwill | 6,191 | 6,217 | |||||
| Other assets | 3,142 | 2,332 | |||||
| Total assets | $ | 78,726 | $ | 78,509 | |||
| Liabilities | |||||||
| Current liabilities: | |||||||
| Short-term borrowings: | |||||||
| -- Machinery, Energy & Transportation | $ | 4 | $ | — | |||
| -- Financial Products | 5,586 | 5,723 | |||||
| Accounts payable | 7,198 | 7,051 | |||||
| Accrued expenses | 3,746 | 3,573 | |||||
| Accrued wages, salaries and employee benefits | 1,200 | 2,384 | |||||
| Customer advances | 1,354 | 1,243 | |||||
| Dividends payable | — | 495 | |||||
| Other current liabilities | 2,348 | 1,919 | |||||
| Long-term debt due within one year: | |||||||
| -- Machinery, Energy & Transportation | 13 | 10 | |||||
| -- Financial Products | 5,939 | 5,820 | |||||
| Total current liabilities | 27,388 | 28,218 | |||||
| Long-term debt due after one year: | |||||||
| -- Machinery, Energy & Transportation | 7,650 | 8,005 | |||||
| -- Financial Products | 16,590 | 16,995 | |||||
| Liability for postemployment benefits | 7,441 | 7,455 | |||||
| Other liabilities | 4,179 | 3,756 | |||||
| Total liabilities | 63,248 | 64,429 | |||||
| Shareholders’ equity | |||||||
| Common stock | 5,804 | 5,827 | |||||
| Treasury stock | (21,214 | ) | (20,531 | ) | |||
| Profit employed in the business | 32,435 | 30,427 | |||||
| Accumulated other comprehensive income (loss) | (1,588 | ) | (1,684 | ) | |||
| Noncontrolling interests | 41 | 41 | |||||
| Total shareholders’ equity | 15,478 | 14,080 | |||||
| Total liabilities and shareholders’ equity | $ | 78,726 | $ | 78,509 | |||
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14
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| Cash flow from operating activities: | |||||||
| Profit of consolidated and affiliated companies | $ | 1,884 | $ | 1,667 | |||
| Adjustments for non-cash items: | |||||||
| Depreciation and amortization | 641 | 681 | |||||
| Other | 88 | 148 | |||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | |||||||
| Receivables – trade and other | (150 | ) | (326 | ) | |||
| Inventories | (813 | ) | (803 | ) | |||
| Accounts payable | 355 | 486 | |||||
| Accrued expenses | 135 | 66 | |||||
| Accrued wages, salaries and employee benefits | (1,185 | ) | (1,110 | ) | |||
| Customer advances | 105 | (46 | ) | ||||
| Other assets – net | (44 | ) | 165 | ||||
| Other liabilities – net | 105 | 7 | |||||
| Net cash provided by (used for) operating activities | 1,121 | 935 | |||||
| Cash flow from investing activities: | |||||||
| Capital expenditures – excluding equipment leased to others | (278 | ) | (412 | ) | |||
| Expenditures for equipment leased to others | (269 | ) | (345 | ) | |||
| Proceeds from disposals of leased assets and property, plant and equipment | 209 | 258 | |||||
| Additions to finance receivables | (2,615 | ) | (2,621 | ) | |||
| Collections of finance receivables | 2,818 | 2,671 | |||||
| Proceeds from sale of finance receivables | 44 | 69 | |||||
| Investments and acquisitions (net of cash acquired) | (2 | ) | (340 | ) | |||
| Proceeds from sale of businesses and investments (net of cash sold) | — | 12 | |||||
| Proceeds from sale of securities | 57 | 89 | |||||
| Investments in securities | (107 | ) | (197 | ) | |||
| Other – net | (38 | ) | 16 | ||||
| Net cash provided by (used for) investing activities | (181 | ) | (800 | ) | |||
| Cash flow from financing activities: | |||||||
| Dividends paid | (494 | ) | (467 | ) | |||
| Common stock issued, including treasury shares reissued | (5 | ) | 149 | ||||
| Common shares repurchased | (751 | ) | (500 | ) | |||
| Proceeds from debt issued (original maturities greater than three months) | 2,665 | 1,541 | |||||
| Payments on debt (original maturities greater than three months) | (2,567 | ) | (2,409 | ) | |||
| Short-term borrowings – net (original maturities three months or less) | (522 | ) | 1,151 | ||||
| Other – net | (1 | ) | (3 | ) | |||
| Net cash provided by (used for) financing activities | (1,675 | ) | (538 | ) | |||
| Effect of exchange rate changes on cash | 3 | 10 | |||||
| Increase (decrease) in cash and short-term investments and restricted cash | (732 | ) | (393 | ) | |||
| Cash and short-term investments and restricted cash at beginning of period | 7,890 | 8,320 | |||||
| Cash and short-term investments and restricted cash at end of period | $ | 7,158 | $ | 7,927 | |||
| All short-term investments, which consist primarily of highly liquid investments with original maturities of three months or less, are considered to be cash equivalents. |
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15
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2019
(Unaudited)
(Millions of dollars)
| Supplemental Consolidating Data | |||||||||||||||||
| Consolidated | Machinery, Energy & Transportation 1 | Financial Products | Consolidating Adjustments | ||||||||||||||
| Sales and revenues: | |||||||||||||||||
| Sales of Machinery, Energy & Transportation | $ | 12,724 | $ | 12,724 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 742 | — | 870 | (128 | ) | 2 | |||||||||||
| Total sales and revenues | 13,466 | 12,724 | 870 | (128 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 9,003 | 9,003 | — | — | |||||||||||||
| Selling, general and administrative expenses | 1,319 | 1,127 | 192 | — | |||||||||||||
| Research and development expenses | 435 | 435 | — | — | |||||||||||||
| Interest expense of Financial Products | 190 | — | 200 | (10 | ) | 4 | |||||||||||
| Other operating (income) expenses | 312 | 10 | 313 | (11 | ) | 3 | |||||||||||
| Total operating costs | 11,259 | 10,575 | 705 | (21 | ) | ||||||||||||
| Operating profit | 2,207 | 2,149 | 165 | (107 | ) | ||||||||||||
| Interest expense excluding Financial Products | 103 | 110 | — | (7 | ) | 4 | |||||||||||
| Other income (expense) | 160 | 19 | 41 | 100 | 5 | ||||||||||||
| Consolidated profit before taxes | 2,264 | 2,058 | 206 | — | |||||||||||||
| Provision (benefit) for income taxes | 387 | 335 | 52 | — | |||||||||||||
| Profit of consolidated companies | 1,877 | 1,723 | 154 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 7 | 7 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 148 | — | (148 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 1,884 | 1,878 | 154 | (148 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | 3 | (3 | ) | 6 | — | ||||||||||||
Profit 7 | $ | 1,881 | $ | 1,881 | $ | 148 | $ | (148 | ) | ||||||||
1 | Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. |
2 | Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation. |
3 | Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products. |
4 | Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation. |
5 | Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products. |
6 | Elimination of Financial Products’ profit due to equity method of accounting. |
7 | Profit attributable to common shareholders. |
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16
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2018
(Unaudited)
(Millions of dollars)
| Supplemental Consolidating Data | |||||||||||||||||
| Consolidated | Machinery, Energy & Transportation 1 | Financial Products | Consolidating Adjustments | ||||||||||||||
| Sales and revenues: | |||||||||||||||||
| Sales of Machinery, Energy & Transportation | $ | 12,150 | $ | 12,150 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 709 | — | 811 | (102 | ) | 2 | |||||||||||
| Total sales and revenues | 12,859 | 12,150 | 811 | (102 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 8,566 | 8,566 | — | — | |||||||||||||
| Selling, general and administrative expenses | 1,276 | 1,087 | 189 | — | |||||||||||||
| Research and development expenses | 443 | 443 | — | — | |||||||||||||
| Interest expense of Financial Products | 166 | — | 173 | (7 | ) | 4 | |||||||||||
| Other operating (income) expenses | 300 | (1 | ) | 310 | (9 | ) | 3 | ||||||||||
| Total operating costs | 10,751 | 10,095 | 672 | (16 | ) | ||||||||||||
| Operating profit | 2,108 | 2,055 | 139 | (86 | ) | ||||||||||||
| Interest expense excluding Financial Products | 101 | 112 | — | (11 | ) | 4 | |||||||||||
| Other income (expense) | 127 | 54 | (2 | ) | 75 | 5 | |||||||||||
| Consolidated profit before taxes | 2,134 | 1,997 | 137 | — | |||||||||||||
| Provision (benefit) for income taxes | 472 | 441 | 31 | — | |||||||||||||
| Profit of consolidated companies | 1,662 | 1,556 | 106 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 5 | 5 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 102 | — | (102 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 1,667 | 1,663 | 106 | (102 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | 2 | (2 | ) | 4 | — | ||||||||||||
Profit 7 | $ | 1,665 | $ | 1,665 | $ | 102 | $ | (102 | ) | ||||||||
1 | Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. |
2 | Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation. |
3 | Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products. |
4 | Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation. |
5 | Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products. |
6 | Elimination of Financial Products’ profit due to equity method of accounting. |
7 | Profit attributable to common shareholders. |
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17
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2019
(Unaudited)
(Millions of dollars)
| Supplemental Consolidating Data | ||||||||||||||||
| Consolidated | Machinery, Energy & Transportation 1 | Financial Products | Consolidating Adjustments | |||||||||||||
| Cash flow from operating activities: | ||||||||||||||||
| Profit of consolidated and affiliated companies | $ | 1,884 | $ | 1,878 | $ | 154 | $ | (148 | ) | 2 | ||||||
| Adjustments for non-cash items: | ||||||||||||||||
| Depreciation and amortization | 641 | 424 | 217 | — | ||||||||||||
| Undistributed profit of Financial Products | — | (148 | ) | — | 148 | 3 | ||||||||||
| Other | 88 | 49 | (59 | ) | 98 | 4 | ||||||||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||||
| Receivables – trade and other | (150 | ) | 75 | (24 | ) | (201 | ) | 4, 5 | ||||||||
| Inventories | (813 | ) | (818 | ) | — | 5 | 4 | |||||||||
| Accounts payable | 355 | 336 | 12 | 7 | 4 | |||||||||||
| Accrued expenses | 135 | 124 | 11 | — | ||||||||||||
| Accrued wages, salaries and employee benefits | (1,185 | ) | (1,177 | ) | (8 | ) | — | |||||||||
| Customer advances | 105 | 105 | — | — | ||||||||||||
| Other assets – net | (44 | ) | (16 | ) | 28 | (56 | ) | 4 | ||||||||
| Other liabilities – net | 105 | 28 | 19 | 58 | 4 | |||||||||||
| Net cash provided by (used for) operating activities | 1,121 | 860 | 350 | (89 | ) | |||||||||||
| Cash flow from investing activities: | ||||||||||||||||
| Capital expenditures – excluding equipment leased to others | (278 | ) | (274 | ) | (4 | ) | — | |||||||||
| Expenditures for equipment leased to others | (269 | ) | (23 | ) | (247 | ) | 1 | 4 | ||||||||
| Proceeds from disposals of leased assets and property, plant and equipment | 209 | 26 | 189 | (6 | ) | 4 | ||||||||||
| Additions to finance receivables | (2,615 | ) | — | (2,971 | ) | 356 | 5 | |||||||||
| Collections of finance receivables | 2,818 | — | 3,096 | (278 | ) | 5 | ||||||||||
| Net intercompany purchased receivables | — | — | (16 | ) | 16 | 5 | ||||||||||
| Proceeds from sale of finance receivables | 44 | — | 44 | — | ||||||||||||
| Net intercompany borrowings | — | 63 | — | (63 | ) | 6 | ||||||||||
| Investments and acquisitions (net of cash acquired) | (2 | ) | (2 | ) | — | — | ||||||||||
| Proceeds from sale of securities | 57 | 4 | 53 | — | ||||||||||||
| Investments in securities | (107 | ) | (7 | ) | (100 | ) | — | |||||||||
| Other – net | (38 | ) | (13 | ) | (25 | ) | — | |||||||||
| Net cash provided by (used for) investing activities | (181 | ) | (226 | ) | 19 | 26 | ||||||||||
| Cash flow from financing activities: | ||||||||||||||||
| Dividends paid | (494 | ) | (494 | ) | — | — | ||||||||||
| Common stock issued, including treasury shares reissued | (5 | ) | (5 | ) | — | — | ||||||||||
| Common shares repurchased | (751 | ) | (751 | ) | — | — | ||||||||||
| Net intercompany borrowings | — | — | (63 | ) | 63 | 6 | ||||||||||
| Proceeds from debt issued (original maturities greater than three months) | 2,665 | — | 2,665 | — | ||||||||||||
| Payments on debt (original maturities greater than three months) | (2,567 | ) | (2 | ) | (2,565 | ) | — | |||||||||
| Short-term borrowings – net (original maturities three months or less) | (522 | ) | 4 | (526 | ) | — | ||||||||||
| Other – net | (1 | ) | (1 | ) | — | — | ||||||||||
| Net cash provided by (used for) financing activities | (1,675 | ) | (1,249 | ) | (489 | ) | 63 | |||||||||
| Effect of exchange rate changes on cash | 3 | 5 | (2 | ) | — | |||||||||||
| Increase (decrease) in cash and short-term investments and restricted cash | (732 | ) | (610 | ) | (122 | ) | — | |||||||||
| Cash and short-term investments and restricted cash at beginning of period | 7,890 | 6,994 | 896 | — | ||||||||||||
| Cash and short-term investments and restricted cash at end of period | $ | 7,158 | $ | 6,384 | $ | 774 | $ | — | ||||||||
1 | Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. |
2 | Elimination of Financial Products’ profit after tax due to equity method of accounting. |
3 | Elimination of non-cash adjustment for the undistributed earnings from Financial Products. |
4 | Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. |
5 | Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory. |
6 | Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and Financial Products. |
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18
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2018
(Unaudited)
(Millions of dollars)
| Supplemental Consolidating Data | ||||||||||||||||
| Consolidated | Machinery, Energy & Transportation 1 | Financial Products | Consolidating Adjustments | |||||||||||||
| Cash flow from operating activities: | ||||||||||||||||
| Profit of consolidated and affiliated companies | $ | 1,667 | $ | 1,663 | $ | 106 | $ | (102 | ) | 2 | ||||||
| Adjustments for non-cash items: | ||||||||||||||||
| Depreciation and amortization | 681 | 468 | 213 | — | ||||||||||||
| Undistributed profit of Financial Products | — | (102 | ) | — | 102 | 3 | ||||||||||
| Other | 148 | 62 | (6 | ) | 92 | 4 | ||||||||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||||
| Receivables – trade and other | (326 | ) | 90 | — | (416 | ) | 4, 5 | |||||||||
| Inventories | (803 | ) | (803 | ) | — | — | ||||||||||
| Accounts payable | 486 | 505 | (19 | ) | — | |||||||||||
| Accrued expenses | 66 | 43 | 23 | — | ||||||||||||
| Accrued wages, salaries and employee benefits | (1,110 | ) | (1,083 | ) | (27 | ) | — | |||||||||
| Customer advances | (46 | ) | (46 | ) | — | — | ||||||||||
| Other assets – net | 165 | 173 | 28 | (36 | ) | 4 | ||||||||||
| Other liabilities – net | 7 | (22 | ) | (7 | ) | 36 | 4 | |||||||||
| Net cash provided by (used for) operating activities | 935 | 948 | 311 | (324 | ) | |||||||||||
| Cash flow from investing activities: | ||||||||||||||||
| Capital expenditures – excluding equipment leased to others | (412 | ) | (321 | ) | (92 | ) | 1 | 4 | ||||||||
| Expenditures for equipment leased to others | (345 | ) | (2 | ) | (346 | ) | 3 | 4 | ||||||||
| Proceeds from disposals of leased assets and property, plant and equipment | 258 | 54 | 207 | (3 | ) | 4 | ||||||||||
| Additions to finance receivables | (2,621 | ) | — | (2,955 | ) | 334 | 5 | |||||||||
| Collections of finance receivables | 2,671 | — | 3,171 | (500 | ) | 5 | ||||||||||
| Net intercompany purchased receivables | — | — | (489 | ) | 489 | 5 | ||||||||||
| Proceeds from sale of finance receivables | 69 | — | 69 | — | ||||||||||||
| Net intercompany borrowings | — | 107 | — | (107 | ) | 6 | ||||||||||
| Investments and acquisitions (net of cash acquired) | (340 | ) | (340 | ) | — | — | ||||||||||
| Proceeds from sale of businesses and investments (net of cash sold) | 12 | 12 | — | — | ||||||||||||
| Proceeds from sale of securities | 89 | 5 | 84 | — | ||||||||||||
| Investments in securities | (197 | ) | (18 | ) | (179 | ) | — | |||||||||
| Other – net | 16 | 19 | (3 | ) | — | |||||||||||
| Net cash provided by (used for) investing activities | (800 | ) | (484 | ) | (533 | ) | 217 | |||||||||
| Cash flow from financing activities: | ||||||||||||||||
| Dividends paid | (467 | ) | (467 | ) | — | — | ||||||||||
| Common stock issued, including treasury shares reissued | 149 | 149 | — | — | ||||||||||||
| Common shares repurchased | (500 | ) | (500 | ) | — | — | ||||||||||
| Net intercompany borrowings | — | — | (107 | ) | 107 | 6 | ||||||||||
| Proceeds from debt issued (original maturities greater than three months) | 1,541 | — | 1,541 | — | ||||||||||||
| Payments on debt (original maturities greater than three months) | (2,409 | ) | (1 | ) | (2,408 | ) | — | |||||||||
| Short-term borrowings – net (original maturities three months or less) | 1,151 | 6 | 1,145 | — | ||||||||||||
| Other – net | (3 | ) | (3 | ) | — | — | ||||||||||
| Net cash provided by (used for) financing activities | (538 | ) | (816 | ) | 171 | 107 | ||||||||||
| Effect of exchange rate changes on cash | 10 | 6 | 4 | — | ||||||||||||
| Increase (decrease) in cash and short-term investments and restricted cash | (393 | ) | (346 | ) | (47 | ) | — | |||||||||
| Cash and short-term investments and restricted cash at beginning of period | 8,320 | 7,416 | 904 | — | ||||||||||||
| Cash and short-term investments and restricted cash at end of period | $ | 7,927 | $ | 7,070 | $ | 857 | $ | — | ||||||||
1 | Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. |
2 | Elimination of Financial Products’ profit after tax due to equity method of accounting. |
3 | Elimination of non-cash adjustment for the undistributed earnings from Financial Products. |
4 | Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. |
5 | Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. |
6 | Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and Financial Products. |
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APPENDIX
NON-GAAP FINANCIAL MEASURES
The following definitions are provided for the non-GAAP financial measures. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.
Adjusted Profit Per Share
The company believes it is important to separately quantify the profit impact of two significant items in order for the company’s results to be meaningful to readers. These items consist of a discrete tax benefit related to U.S. tax reform in the first quarter of 2019, and 2018 restructuring costs, which were incurred to generate longer-term benefits. The company does not consider these items indicative of earnings from ongoing business activities and believes the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing the company’s period-over-period results. The company intends to discuss adjusted profit per share for the fourth quarter and full year 2019, excluding a mark-to-market gain or loss for remeasurement of pension and other postemployment benefit plans along with any other discrete items.
Reconciliations of adjusted profit per share to the most directly comparable GAAP measure, diluted profit per share, are as follows:
| First Quarter | Outlook | ||||||||
| 2018 | 2019 | Previous1 | Current2 | ||||||
| Profit per share | $2.74 | $3.25 | $11.75-$12.75 | $12.06-$13.06 | |||||
| Per share U.S. tax reform impact | — | ($0.31) | — | ($0.31) | |||||
Per share restructuring costs3 | $0.08 | — | — | — | |||||
| Adjusted profit per share | $2.82 | $2.94 | $11.75-$12.75 | $11.75-$12.75 | |||||
1 Profit per share outlook range as of January 28, 2019. | |||||||||
2 Profit per share outlook range as of April 24, 2019. | |||||||||
3 At estimated annual tax rate of 24 percent. 2019 restructuring costs are not material. | |||||||||
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