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Exhibit 99.1
Caterpillar Inc.
2Q 2019 Earnings Release
July 24, 2019
FOR IMMEDIATE RELEASE
Caterpillar Reports Second-Quarter 2019 Results
Delivered Higher Sales and Revenues and Returned about $1.9 Billion to Shareholders
| Second Quarter | ||||||
| ($ in billions except profit per share) | 2019 | 2018 | ● | Sales and revenues up 3%; profit per share slightly up | ||
| ● | Strong ME&T operating cash flow; returned about $1.9 billion in share repurchases and dividends | |||||
| Sales and Revenues | $14.4 | $14.0 | ||||
| ● | Full-year profit per share outlook range is maintained at $12.06 to $13.06; the company currently expects to be at the lower end of this range | |||||
| Profit Per Share | $2.83 | $2.82 | ||||
DEERFIELD, Ill. – Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2019 sales and revenues of $14.4 billion, a 3% increase compared with $14.0 billion in the second quarter of 2018. Second-quarter 2019 profit per share was $2.83, compared with $2.82 profit per share in the second quarter of 2018.
During the second quarter of 2019, Machinery, Energy & Transportation (ME&T) operating cash flow was $2.0 billion. The company repurchased $1.4 billion of Caterpillar common stock and paid dividends of $0.5 billion in the second quarter of 2019. The enterprise cash balance at the end of the second quarter of 2019 was $7.4 billion.
“Sales and revenues increased this quarter, including a record performance from Construction Industries, which reflected our strong competitive position globally,” said Caterpillar Chairman and CEO Jim Umpleby. “Our strong operating cash flow in the quarter allowed us to repurchase shares and pay dividends of about $1.9 billion. This is in line with our intention to return substantially all free cash flow to shareholders.”
2019 Outlook
The full-year profit per share outlook range is maintained at $12.06 to $13.06, which includes the first-quarter $0.31 per share discrete tax benefit. The company currently expects to be at the lower end of this outlook range.
The company continues to expect modest sales growth in 2019, which assumes a recovery in Oil and Gas near the end of the year and dealers working through higher machine inventory levels. The company still expects price realization to offset manufacturing costs. With a higher amount of restructuring costs incurred in the second quarter of 2019, the company expects restructuring costs for the remainder of the year to be significantly lower.
“We expect our profit per share in 2019 to be another record,” added Umpleby. “We have the right strategy in place to deliver long-term profitable growth through our continued focus on strategic investments, including growing services and expanding offerings. We will also continue to focus on driving operational excellence including a flexible and competitive cost structure.”
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 second quarter of 2018 (at left) and the second 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 were $14.432 billion in the second quarter of 2019, an increase of $421 million, or 3%, compared with $14.011 billion in the second quarter of 2018. The improvement was primarily due to favorable price realization and higher sales volume driven by improved demand for equipment, including a favorable impact from changes in dealer inventories. The increase was partially offset by unfavorable currency impacts. Sales increased in Construction Industries and Resource Industries, while Energy & Transportation sales decreased. Sales increased in North America and Latin America, partially offset by decreases in Asia/Pacific and EAME.
| Sales and Revenues by Segment | |||||||||||||||||||||||||||||
| (Millions of dollars) | Second Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment / Other | Second Quarter 2019 | $ Change | % Change | |||||||||||||||||||||
| Construction Industries | $ | 6,172 | $ | 199 | $ | 253 | $ | (143 | ) | $ | (14 | ) | $ | 6,467 | $ | 295 | 5% | ||||||||||||
| Resource Industries | 2,526 | 188 | 129 | (37 | ) | (6 | ) | 2,800 | 274 | 11% | |||||||||||||||||||
| Energy & Transportation | 5,724 | (143 | ) | 44 | (91 | ) | (48 | ) | 5,486 | (238 | ) | (4%) | |||||||||||||||||
| All Other Segment | 124 | (6 | ) | — | (1 | ) | 8 | 125 | 1 | 1% | |||||||||||||||||||
| Corporate Items and Eliminations | (1,267 | ) | (1 | ) | 1 | — | 60 | (1,207 | ) | 60 | |||||||||||||||||||
| Machinery, Energy & Transportation | $ | 13,279 | $ | 237 | $ | 427 | $ | (272 | ) | $ | — | $ | 13,671 | $ | 392 | 3% | |||||||||||||
| Financial Products Segment | $ | 829 | $ | — | $ | — | $ | — | $ | 44 | $ | 873 | $ | 44 | 5% | ||||||||||||||
| Corporate Items and Eliminations | (97 | ) | — | — | — | (15 | ) | (112 | ) | (15 | ) | ||||||||||||||||||
| Financial Products Revenues | $ | 732 | $ | — | $ | — | $ | — | $ | 29 | $ | 761 | $ | 29 | 4% | ||||||||||||||
| Consolidated Sales and Revenues | $ | 14,011 | $ | 237 | $ | 427 | $ | (272 | ) | $ | 29 | $ | 14,432 | $ | 421 | 3% | |||||||||||||
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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 | |||||||||||||||||||||||||||
| Second Quarter 2019 | |||||||||||||||||||||||||||||||||||||||||
| Construction Industries | $ | 3,513 | 28% | $ | 392 | —% | $ | 1,108 | (5%) | $ | 1,433 | (22%) | $ | 6,446 | 5% | $ | 21 | (40%) | $ | 6,467 | 5% | ||||||||||||||||||||
| Resource Industries | 1,058 | 32% | 448 | 14% | 446 | (22%) | 759 | 14% | 2,711 | 12% | 89 | (6%) | 2,800 | 11% | |||||||||||||||||||||||||||
| Energy & Transportation | 2,297 | (11%) | 325 | 13% | 1,160 | 1% | 742 | 7% | 4,524 | (4%) | 962 | (5%) | 5,486 | (4%) | |||||||||||||||||||||||||||
| All Other Segment | 14 | (18%) | 1 | —% | 4 | —% | 15 | (21%) | 34 | (17%) | 91 | 10% | 125 | 1% | |||||||||||||||||||||||||||
| Corporate Items and Eliminations | (39 | ) | (2 | ) | (5 | ) | 2 | (44 | ) | (1,163 | ) | (1,207 | ) | ||||||||||||||||||||||||||||
| Machinery, Energy & Transportation | 6,843 | 12% | 1,164 | 9% | 2,713 | (6%) | 2,951 | (8%) | 13,671 | 3% | — | —% | 13,671 | 3% | |||||||||||||||||||||||||||
| Financial Products Segment | 563 | 5% | 76 | 7% | 102 | 1% | 132 | 10% | 873 | 5% | — | —% | 873 | 5% | |||||||||||||||||||||||||||
| Corporate Items and Eliminations | (72 | ) | (11 | ) | (9 | ) | (20 | ) | (112 | ) | — | (112 | ) | ||||||||||||||||||||||||||||
| Financial Products Revenues | 491 | 2% | 65 | 8% | 93 | (1%) | 112 | 14% | 761 | 4% | — | —% | 761 | 4% | |||||||||||||||||||||||||||
| Consolidated Sales and Revenues | $ | 7,334 | 11% | $ | 1,229 | 9% | $ | 2,806 | (6%) | $ | 3,063 | (7%) | $ | 14,432 | 3% | $ | — | —% | $ | 14,432 | 3% | ||||||||||||||||||||
| Second Quarter 2018 | |||||||||||||||||||||||||||||||||||||||||
| Construction Industries | $ | 2,739 | $ | 392 | $ | 1,171 | $ | 1,835 | $ | 6,137 | $ | 35 | $ | 6,172 | |||||||||||||||||||||||||||
| Resource Industries | 804 | 394 | 569 | 664 | 2,431 | 95 | 2,526 | ||||||||||||||||||||||||||||||||||
| Energy & Transportation | 2,582 | 287 | 1,153 | 692 | 4,714 | 1,010 | 5,724 | ||||||||||||||||||||||||||||||||||
| All Other Segment | 17 | 1 | 4 | 19 | 41 | 83 | 124 | ||||||||||||||||||||||||||||||||||
| Corporate Items and Eliminations | (40 | ) | (3 | ) | — | (1 | ) | (44 | ) | (1,223 | ) | (1,267 | ) | ||||||||||||||||||||||||||||
| Machinery, Energy & Transportation | 6,102 | 1,071 | 2,897 | 3,209 | 13,279 | — | 13,279 | ||||||||||||||||||||||||||||||||||
| Financial Products Segment | 537 | 71 | 101 | 120 | 829 | — | 829 | ||||||||||||||||||||||||||||||||||
| Corporate Items and Eliminations | (57 | ) | (11 | ) | (7 | ) | (22 | ) | (97 | ) | — | (97 | ) | ||||||||||||||||||||||||||||
| Financial Products Revenues | 480 | 60 | 94 | 98 | 732 | — | 732 | ||||||||||||||||||||||||||||||||||
| Consolidated Sales and Revenues | $ | 6,582 | $ | 1,131 | $ | 2,991 | $ | 3,307 | $ | 14,011 | $ | — | $ | 14,011 | |||||||||||||||||||||||||||
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Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in consolidated operating profit between the second quarter of 2018 (at left) and the second 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 second quarter of 2019 was $2.213 billion, up 2% compared with $2.167 billion in the second quarter of 2018. The increase of $46 million was due to favorable price realization and lower selling, general and administrative (SG&A) and research and development (R&D) expenses, offset by higher manufacturing costs and unfavorable sales volume due to product mix.
The increase in manufacturing costs was primarily due to higher material costs, including tariffs, variable labor and burden and warranty expense. Favorable SG&A/R&D expenses were mostly due to lower short-term incentive compensation expense.
The change in sales volume was the result of an unfavorable mix of products primarily within Energy & Transportation and Construction Industries.
Operating profit margin was 15.3% for the second quarter of 2019, compared with 15.5% for the second quarter of 2018.
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| Profit by Segment | ||||||||||||||
| (Millions of dollars) | Second Quarter 2019 | Second Quarter 2018 | $ Change | % Change | ||||||||||
| Construction Industries | $ | 1,247 | $ | 1,154 | $ | 93 | 8 | % | ||||||
| Resource Industries | 481 | 411 | 70 | 17 | % | |||||||||
| Energy & Transportation | 886 | 1,012 | (126 | ) | (12 | %) | ||||||||
| All Other Segment | 11 | 23 | (12 | ) | (52 | %) | ||||||||
| Corporate Items and Eliminations | (441 | ) | (466 | ) | 25 | |||||||||
| Machinery, Energy & Transportation | $ | 2,184 | $ | 2,134 | $ | 50 | 2 | % | ||||||
| Financial Products Segment | $ | 193 | $ | 134 | $ | 59 | 44 | % | ||||||
| Corporate Items and Eliminations | (50 | ) | (5 | ) | (45 | ) | ||||||||
| Financial Products | $ | 143 | $ | 129 | $ | 14 | 11 | % | ||||||
| Consolidating Adjustments | (114 | ) | (96 | ) | (18 | ) | ||||||||
| Consolidated Operating Profit | $ | 2,213 | $ | 2,167 | $ | 46 | 2 | % | ||||||
Other Profit/Loss and Tax Items
The provision for income taxes for the second quarter of 2019 reflected an estimated annual tax rate of 26%, compared with 24% for the second quarter of 2018. 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.
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| CONSTRUCTION INDUSTRIES | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| Second Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | Second Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 6,172 | $ | 199 | $ | 253 | $ | (143 | ) | $ | (14 | ) | $ | 6,467 | $ | 295 | 5 | % | |||||||||||||
| Sales by Geographic Region | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| North America | $ | 3,513 | $ | 2,739 | $ | 774 | 28 | % | |||||||||||||||||||||||
| Latin America | 392 | 392 | — | — | % | ||||||||||||||||||||||||||
| EAME | 1,108 | 1,171 | (63 | ) | (5 | %) | |||||||||||||||||||||||||
| Asia/Pacific | 1,433 | 1,835 | (402 | ) | (22 | %) | |||||||||||||||||||||||||
| External Sales | 6,446 | 6,137 | 309 | 5 | % | ||||||||||||||||||||||||||
| Inter-segment | 21 | 35 | (14 | ) | (40 | %) | |||||||||||||||||||||||||
| Total Sales | $ | 6,467 | $ | 6,172 | $ | 295 | 5 | % | |||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 1,247 | $ | 1,154 | $ | 93 | 8 | % | |||||||||||||||||||||||
| Segment Profit Margin | 19.3 | % | 18.7 | % | 0.6 | pts | |||||||||||||||||||||||||
Construction Industries’ total sales were a record $6.467 billion in the second quarter of 2019, a 5% increase compared with $6.172 billion in the second quarter of 2018. Sales increased primarily due to the favorable impact of dealers increasing inventories in the second quarter of 2019, compared with decreasing inventories in the second quarter of 2018. Favorable price realization was partially offset by unfavorable currency impacts.
| ▪ | In North America, sales increased primarily due to higher demand, including the favorable impact of dealer inventories, and favorable price realization. |
| ▪ | Construction activities remained at low levels in Latin America, leading to flat sales. |
| ▪ | In EAME, the sales decrease was primarily due to currency impact related to the euro. |
| ▪ | Sales in Asia/Pacific declined due to lower demand mainly due to China driven by continued competitive pricing pressures and timing of the selling season as well as unfavorable currency impacts. |
Construction Industries’ profit was a record $1.247 billion in the second quarter of 2019, an 8% increase compared with $1.154 billion in the second quarter of 2018. The increase in profit was due to favorable price realization, which was mostly offset by higher manufacturing costs. The increase in sales volume was more than offset by an unfavorable mix of products. Higher material costs and variable labor and burden, including the absence of Brazil incentives, were the primary drivers of increased manufacturing costs.
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| RESOURCE INDUSTRIES | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| Second Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | Second Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 2,526 | $ | 188 | $ | 129 | $ | (37 | ) | $ | (6 | ) | $ | 2,800 | $ | 274 | 11 | % | |||||||||||||
| Sales by Geographic Region | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| North America | $ | 1,058 | $ | 804 | $ | 254 | 32 | % | |||||||||||||||||||||||
| Latin America | 448 | 394 | 54 | 14 | % | ||||||||||||||||||||||||||
| EAME | 446 | 569 | (123 | ) | (22 | %) | |||||||||||||||||||||||||
| Asia/Pacific | 759 | 664 | 95 | 14 | % | ||||||||||||||||||||||||||
| External Sales | 2,711 | 2,431 | 280 | 12 | % | ||||||||||||||||||||||||||
| Inter-segment | 89 | 95 | (6 | ) | (6 | %) | |||||||||||||||||||||||||
| Total Sales | $ | 2,800 | $ | 2,526 | $ | 274 | 11 | % | |||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 481 | $ | 411 | $ | 70 | 17 | % | |||||||||||||||||||||||
| Segment Profit Margin | 17.2 | % | 16.3 | % | 0.9 | pts | |||||||||||||||||||||||||
Resource Industries’ total sales were $2.800 billion in the second quarter of 2019, an 11% increase compared with $2.526 billion in the second quarter of 2018. The increase was primarily due to higher equipment demand and favorable price realization. Mining customers increased capital spending to support ongoing mine site operations, which drove higher sales. In addition, sales increased for non-residential construction and quarry and aggregate customers.
Resource Industries’ profit was $481 million in the second quarter of 2019, a 17% increase compared with $411 million in the second quarter of 2018. The improvement was mostly due to favorable price realization and increased sales volume, partially offset by higher manufacturing costs. Manufacturing costs increased due to unfavorable operating leverage from changes in inventory, as well as higher material costs, variable labor and burden and warranty expense.
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| ENERGY & TRANSPORTATION | |||||||||||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||||||||||
| Second Quarter 2018 | Sales Volume | Price Realization | Currency | Inter-Segment | Second Quarter 2019 | $ Change | % Change | ||||||||||||||||||||||||
| Total Sales | $ | 5,724 | $ | (143 | ) | $ | 44 | $ | (91 | ) | $ | (48 | ) | $ | 5,486 | $ | (238 | ) | (4 | %) | |||||||||||
| Sales by Application | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | $ Change | % Change | ||||||||||||||||||||||||||||
| Oil and Gas | $ | 1,305 | $ | 1,467 | $ | (162 | ) | (11 | %) | ||||||||||||||||||||||
| Power Generation | 1,021 | 992 | 29 | 3 | % | ||||||||||||||||||||||||||
| Industrial | 957 | 969 | (12 | ) | (1 | %) | |||||||||||||||||||||||||
| Transportation | 1,241 | 1,286 | (45 | ) | (3 | %) | |||||||||||||||||||||||||
| External Sales | 4,524 | 4,714 | (190 | ) | (4 | %) | |||||||||||||||||||||||||
| Inter-segment | 962 | 1,010 | (48 | ) | (5 | %) | |||||||||||||||||||||||||
| Total Sales | $ | 5,486 | $ | 5,724 | $ | (238 | ) | (4 | %) | ||||||||||||||||||||||
| Segment Profit | |||||||||||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | Change | % Change | ||||||||||||||||||||||||||||
| Segment Profit | $ | 886 | $ | 1,012 | $ | (126 | ) | (12 | %) | ||||||||||||||||||||||
| Segment Profit Margin | 16.2 | % | 17.7 | % | (1.5 | pts) | |||||||||||||||||||||||||
Energy & Transportation’s total sales were $5.486 billion in the second quarter of 2019, a 4% decrease compared with $5.724 billion in the second quarter of 2018. Sales decreased primarily due to lower sales volume and unfavorable currency impacts. The decrease was partially offset by favorable price realization.
| ▪ | Oil and Gas – Sales decreased in North America primarily due to the timing of turbine project deliveries that occurred in the second quarter of 2018 and from lower demand for new equipment in the Permian Basin. This was partially offset by increased sales in EAME primarily due to higher turbine sales for production applications. |
| ▪ | Power Generation – Sales slightly increased mostly due to higher deliveries in North America for both large diesel reciprocating engines and turbines. Increases in North America were partially offset by lower sales in EAME for gas power generation applications. |
| ▪ | Industrial – Sales were slightly down, with a decrease in EAME primarily due to unfavorable currency impacts partially offset by higher volume in Asia Pacific and Latin America. |
| ▪ | Transportation – Sales were slightly lower primarily due to the timing of locomotive deliveries in the second quarter of 2018 and reduced marine activity in North America, partially offset by higher sales for rail services. |
Energy & Transportation’s profit was $886 million in the second quarter of 2019, compared with $1.012 billion in the second quarter of 2018. The decrease of 12% was mostly due to an unfavorable mix of applications and lower volume. Price realization was slightly favorable, offset by slightly higher manufacturing costs.
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| FINANCIAL PRODUCTS SEGMENT | |||||||||||||||||||||||
| (Millions of dollars) | |||||||||||||||||||||||
| Revenues by Geographic Region | |||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | $ Change | % Change | ||||||||||||||||||||
| North America | $ | 563 | $ | 537 | $ | 26 | 5 | % | |||||||||||||||
| Latin America | 76 | 71 | 5 | 7 | % | ||||||||||||||||||
| EAME | 102 | 101 | 1 | 1 | % | ||||||||||||||||||
| Asia/Pacific | 132 | 120 | 12 | 10 | % | ||||||||||||||||||
| Total Revenues | $ | 873 | $ | 829 | $ | 44 | 5 | % | |||||||||||||||
| Segment Profit | |||||||||||||||||||||||
| Second Quarter 2019 | Second Quarter 2018 | Change | % Change | ||||||||||||||||||||
| Segment Profit | $ | 193 | $ | 134 | $ | 59 | 44 | % | |||||||||||||||
Financial Products’ segment revenues were $873 million in the second quarter of 2019, an increase of $44 million, or 5%, from the second quarter of 2018. The increase was primarily due to higher average financing rates in North America and Asia/Pacific and higher average earning assets in North America.
Financial Products’ segment profit was $193 million in the second quarter of 2019, up 44% compared with $134 million in the second quarter of 2018. The increase was primarily due to a decrease in the provision for credit losses at Cat Financial and an increase in net yield on average earning assets.
At the end of the second quarter of 2019, past dues at Cat Financial were 3.38%, compared with 3.16% at the end of the second quarter of 2018. The increase in past dues was primarily driven by EAME. Write-offs, net of recoveries, were $74 million for the second quarter of 2019, compared with $80 million for the second quarter of 2018. As of June 30, 2019, Cat Financial's allowance for credit losses totaled $523 million, or 1.81% of finance receivables, compared with $534 million, or 1.89% of finance receivables at March 31, 2019. The allowance for credit losses at year-end 2018 was $511 million, or 1.80% of finance receivables.
Dealer Inventories and Order Backlog
Dealer machine and engine inventories increased about $500 million during the second quarter of 2019, compared with an increase of about $100 million during the second quarter of 2018.
At the end of the second quarter of 2019, the order backlog was $15.0 billion, about $1.9 billion lower than the first quarter of 2019.
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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 20. |
| – | Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Wednesday, July 24, 2019, to discuss its 2019 second-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 11-19 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: Kate Kenny, 224-551-4133 or Kenny_Kate@cat.com
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11
Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Sales and revenues: | |||||||||||||||
| Sales of Machinery, Energy & Transportation | $ | 13,671 | $ | 13,279 | $ | 26,395 | $ | 25,429 | |||||||
| Revenues of Financial Products | 761 | 732 | 1,503 | 1,441 | |||||||||||
| Total sales and revenues | 14,432 | 14,011 | 27,898 | 26,870 | |||||||||||
| Operating costs: | |||||||||||||||
| Cost of goods sold | 9,941 | 9,422 | 18,944 | 17,988 | |||||||||||
| Selling, general and administrative expenses | 1,309 | 1,440 | 2,628 | 2,716 | |||||||||||
| Research and development expenses | 441 | 462 | 876 | 905 | |||||||||||
| Interest expense of Financial Products | 192 | 182 | 382 | 348 | |||||||||||
| Other operating (income) expenses | 336 | 338 | 648 | 638 | |||||||||||
| Total operating costs | 12,219 | 11,844 | 23,478 | 22,595 | |||||||||||
| Operating profit | 2,213 | 2,167 | 4,420 | 4,275 | |||||||||||
| Interest expense excluding Financial Products | 103 | 102 | 206 | 203 | |||||||||||
| Other income (expense) | 68 | 121 | 228 | 248 | |||||||||||
| Consolidated profit before taxes | 2,178 | 2,186 | 4,442 | 4,320 | |||||||||||
| Provision (benefit) for income taxes | 565 | 490 | 952 | 962 | |||||||||||
| Profit of consolidated companies | 1,613 | 1,696 | 3,490 | 3,358 | |||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 6 | 9 | 13 | 14 | |||||||||||
| Profit of consolidated and affiliated companies | 1,619 | 1,705 | 3,503 | 3,372 | |||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | (1 | ) | (2 | ) | 2 | — | |||||||||
Profit 1 | $ | 1,620 | $ | 1,707 | $ | 3,501 | $ | 3,372 | |||||||
| Profit per common share | $ | 2.85 | $ | 2.86 | $ | 6.14 | $ | 5.65 | |||||||
Profit per common share — diluted 2 | $ | 2.83 | $ | 2.82 | $ | 6.08 | $ | 5.56 | |||||||
| Weighted-average common shares outstanding (millions) | |||||||||||||||
| – Basic | 567.8 | 596.2 | 569.9 | 597.0 | |||||||||||
– Diluted 2 | 573.1 | 604.2 | 575.8 | 606.1 | |||||||||||
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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12
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
| June 30, 2019 | December 31, 2018 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and short-term investments | $ | 7,429 | $ | 7,857 | |||
| Receivables – trade and other | 8,996 | 8,802 | |||||
| Receivables – finance | 9,539 | 8,650 | |||||
| Prepaid expenses and other current assets | 1,818 | 1,765 | |||||
| Inventories | 12,007 | 11,529 | |||||
| Total current assets | 39,789 | 38,603 | |||||
| Property, plant and equipment – net | 13,172 | 13,574 | |||||
| Long-term receivables – trade and other | 1,154 | 1,161 | |||||
| Long-term receivables – finance | 12,461 | 13,286 | |||||
| Noncurrent deferred and refundable income taxes | 1,473 | 1,439 | |||||
| Intangible assets | 1,733 | 1,897 | |||||
| Goodwill | 6,211 | 6,217 | |||||
| Other assets | 3,194 | 2,332 | |||||
| Total assets | $ | 79,187 | $ | 78,509 | |||
| Liabilities | |||||||
| Current liabilities: | |||||||
| Short-term borrowings: | |||||||
| -- Machinery, Energy & Transportation | $ | — | $ | — | |||
| -- Financial Products | 5,266 | 5,723 | |||||
| Accounts payable | 7,022 | 7,051 | |||||
| Accrued expenses | 3,789 | 3,573 | |||||
| Accrued wages, salaries and employee benefits | 1,411 | 2,384 | |||||
| Customer advances | 1,263 | 1,243 | |||||
| Dividends payable | 579 | 495 | |||||
| Other current liabilities | 2,157 | 1,919 | |||||
| Long-term debt due within one year: | |||||||
| -- Machinery, Energy & Transportation | 13 | 10 | |||||
| -- Financial Products | 6,235 | 5,820 | |||||
| Total current liabilities | 27,735 | 28,218 | |||||
| Long-term debt due after one year: | |||||||
| -- Machinery, Energy & Transportation | 7,657 | 8,005 | |||||
| -- Financial Products | 17,107 | 16,995 | |||||
| Liability for postemployment benefits | 7,448 | 7,455 | |||||
| Other liabilities | 4,362 | 3,756 | |||||
| Total liabilities | 64,309 | 64,429 | |||||
| Shareholders’ equity | |||||||
| Common stock | 5,822 | 5,827 | |||||
| Treasury stock | (22,467 | ) | (20,531 | ) | |||
| Profit employed in the business | 32,981 | 30,427 | |||||
| Accumulated other comprehensive income (loss) | (1,499 | ) | (1,684 | ) | |||
| Noncontrolling interests | 41 | 41 | |||||
| Total shareholders’ equity | 14,878 | 14,080 | |||||
| Total liabilities and shareholders’ equity | $ | 79,187 | $ | 78,509 | |||
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13
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
| Six Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| Cash flow from operating activities: | |||||||
| Profit of consolidated and affiliated companies | $ | 3,503 | $ | 3,372 | |||
| Adjustments for non-cash items: | |||||||
| Depreciation and amortization | 1,288 | 1,367 | |||||
| Other | 440 | 446 | |||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | |||||||
| Receivables – trade and other | (166 | ) | (703 | ) | |||
| Inventories | (487 | ) | (1,208 | ) | |||
| Accounts payable | 134 | 545 | |||||
| Accrued expenses | 151 | (31 | ) | ||||
| Accrued wages, salaries and employee benefits | (979 | ) | (768 | ) | |||
| Customer advances | 14 | (54 | ) | ||||
| Other assets – net | (221 | ) | 174 | ||||
| Other liabilities – net | 32 | (57 | ) | ||||
| Net cash provided by (used for) operating activities | 3,709 | 3,083 | |||||
| Cash flow from investing activities: | |||||||
| Capital expenditures – excluding equipment leased to others | (479 | ) | (645 | ) | |||
| Expenditures for equipment leased to others | (746 | ) | (883 | ) | |||
| Proceeds from disposals of leased assets and property, plant and equipment | 422 | 539 | |||||
| Additions to finance receivables | (6,181 | ) | (6,143 | ) | |||
| Collections of finance receivables | 5,902 | 5,405 | |||||
| Proceeds from sale of finance receivables | 119 | 124 | |||||
| Investments and acquisitions (net of cash acquired) | (3 | ) | (348 | ) | |||
| Proceeds from sale of businesses and investments (net of cash sold) | — | 12 | |||||
| Proceeds from sale of securities | 170 | 168 | |||||
| Investments in securities | (243 | ) | (318 | ) | |||
| Other – net | (40 | ) | 21 | ||||
| Net cash provided by (used for) investing activities | (1,079 | ) | (2,068 | ) | |||
| Cash flow from financing activities: | |||||||
| Dividends paid | (986 | ) | (933 | ) | |||
| Common stock issued, including treasury shares reissued | 39 | 256 | |||||
| Common shares repurchased | (2,105 | ) | (1,250 | ) | |||
| Proceeds from debt issued (original maturities greater than three months) | 5,340 | 4,307 | |||||
| Payments on debt (original maturities greater than three months) | (4,901 | ) | (4,436 | ) | |||
| Short-term borrowings – net (original maturities three months or less) | (436 | ) | 1,487 | ||||
| Other – net | (2 | ) | (4 | ) | |||
| Net cash provided by (used for) financing activities | (3,051 | ) | (573 | ) | |||
| Effect of exchange rate changes on cash | (10 | ) | (68 | ) | |||
| Increase (decrease) in cash and short-term investments and restricted cash | (431 | ) | 374 | ||||
| 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 | $ | 7,459 | $ | 8,694 | |||
| 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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14
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 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 | $ | 13,671 | $ | 13,671 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 761 | — | 894 | (133 | ) | 2 | |||||||||||
| Total sales and revenues | 14,432 | 13,671 | 894 | (133 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 9,941 | 9,943 | — | (2 | ) | 3 | |||||||||||
| Selling, general and administrative expenses | 1,309 | 1,102 | 209 | (2 | ) | 3 | |||||||||||
| Research and development expenses | 441 | 441 | — | — | |||||||||||||
| Interest expense of Financial Products | 192 | — | 201 | (9 | ) | 4 | |||||||||||
| Other operating (income) expenses | 336 | 1 | 341 | (6 | ) | 3 | |||||||||||
| Total operating costs | 12,219 | 11,487 | 751 | (19 | ) | ||||||||||||
| Operating profit | 2,213 | 2,184 | 143 | (114 | ) | ||||||||||||
| Interest expense excluding Financial Products | 103 | 105 | — | (2 | ) | 4 | |||||||||||
| Other income (expense) | 68 | (63 | ) | 19 | 112 | 5 | |||||||||||
| Consolidated profit before taxes | 2,178 | 2,016 | 162 | — | |||||||||||||
| Provision (benefit) for income taxes | 565 | 502 | 63 | — | |||||||||||||
| Profit of consolidated companies | 1,613 | 1,514 | 99 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 6 | 6 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 94 | — | (94 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 1,619 | 1,614 | 99 | (94 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | (1 | ) | (6 | ) | 5 | — | |||||||||||
Profit 7 | $ | 1,620 | $ | 1,620 | $ | 94 | $ | (94 | ) | ||||||||
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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15
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 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 | $ | 13,279 | $ | 13,279 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 732 | — | 849 | (117 | ) | 2 | |||||||||||
| Total sales and revenues | 14,011 | 13,279 | 849 | (117 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 9,422 | 9,422 | — | — | |||||||||||||
| Selling, general and administrative expenses | 1,440 | 1,223 | 223 | (6 | ) | 3 | |||||||||||
| Research and development expenses | 462 | 462 | — | — | |||||||||||||
| Interest expense of Financial Products | 182 | — | 191 | (9 | ) | 4 | |||||||||||
| Other operating (income) expenses | 338 | 38 | 306 | (6 | ) | 3 | |||||||||||
| Total operating costs | 11,844 | 11,145 | 720 | (21 | ) | ||||||||||||
| Operating profit | 2,167 | 2,134 | 129 | (96 | ) | ||||||||||||
| Interest expense excluding Financial Products | 102 | 111 | — | (9 | ) | 4 | |||||||||||
| Other income (expense) | 121 | 27 | 7 | 87 | 5 | ||||||||||||
| Consolidated profit before taxes | 2,186 | 2,050 | 136 | — | |||||||||||||
| Provision (benefit) for income taxes | 490 | 457 | 33 | — | |||||||||||||
| Profit of consolidated companies | 1,696 | 1,593 | 103 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 9 | 9 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 98 | — | (98 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 1,705 | 1,700 | 103 | (98 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | (2 | ) | (7 | ) | 5 | — | |||||||||||
Profit 7 | $ | 1,707 | $ | 1,707 | $ | 98 | $ | (98 | ) | ||||||||
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 Six Months Ended June 30, 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 | $ | 26,395 | $ | 26,395 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 1,503 | — | 1,764 | (261 | ) | 2 | |||||||||||
| Total sales and revenues | 27,898 | 26,395 | 1,764 | (261 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 18,944 | 18,946 | — | (2 | ) | 3 | |||||||||||
| Selling, general and administrative expenses | 2,628 | 2,229 | 401 | (2 | ) | 3 | |||||||||||
| Research and development expenses | 876 | 876 | — | — | |||||||||||||
| Interest expense of Financial Products | 382 | �� | — | 401 | (19 | ) | 4 | ||||||||||
| Other operating (income) expenses | 648 | 11 | 654 | (17 | ) | 3 | |||||||||||
| Total operating costs | 23,478 | 22,062 | 1,456 | (40 | ) | ||||||||||||
| Operating profit | 4,420 | 4,333 | 308 | (221 | ) | ||||||||||||
| Interest expense excluding Financial Products | 206 | 215 | — | (9 | ) | 4 | |||||||||||
| Other income (expense) | 228 | (44 | ) | 60 | 212 | 5 | |||||||||||
| Consolidated profit before taxes | 4,442 | 4,074 | 368 | — | |||||||||||||
| Provision (benefit) for income taxes | 952 | 837 | 115 | — | |||||||||||||
| Profit of consolidated companies | 3,490 | 3,237 | 253 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 13 | 13 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 242 | — | (242 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 3,503 | 3,492 | 253 | (242 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | 2 | (9 | ) | 11 | — | ||||||||||||
Profit 7 | $ | 3,501 | $ | 3,501 | $ | 242 | $ | (242 | ) | ||||||||
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. |
(more)
17
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 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 | $ | 25,429 | $ | 25,429 | $ | — | $ | — | |||||||||
| Revenues of Financial Products | 1,441 | — | 1,660 | (219 | ) | 2 | |||||||||||
| Total sales and revenues | 26,870 | 25,429 | 1,660 | (219 | ) | ||||||||||||
| Operating costs: | |||||||||||||||||
| Cost of goods sold | 17,988 | 17,988 | — | — | |||||||||||||
| Selling, general and administrative expenses | 2,716 | 2,310 | 412 | (6 | ) | 3 | |||||||||||
| Research and development expenses | 905 | 905 | — | — | |||||||||||||
| Interest expense of Financial Products | 348 | — | 364 | (16 | ) | 4 | |||||||||||
| Other operating (income) expenses | 638 | 37 | 616 | (15 | ) | 3 | |||||||||||
| Total operating costs | 22,595 | 21,240 | 1,392 | (37 | ) | ||||||||||||
| Operating profit | 4,275 | 4,189 | 268 | (182 | ) | ||||||||||||
| Interest expense excluding Financial Products | 203 | 223 | — | (20 | ) | 4 | |||||||||||
| Other income (expense) | 248 | 81 | 5 | 162 | 5 | ||||||||||||
| Consolidated profit before taxes | 4,320 | 4,047 | 273 | — | |||||||||||||
| Provision (benefit) for income taxes | 962 | 898 | 64 | — | |||||||||||||
| Profit of consolidated companies | 3,358 | 3,149 | 209 | — | |||||||||||||
| Equity in profit (loss) of unconsolidated affiliated companies | 14 | 14 | — | — | |||||||||||||
| Equity in profit of Financial Products’ subsidiaries | — | 200 | — | (200 | ) | 6 | |||||||||||
| Profit of consolidated and affiliated companies | 3,372 | 3,363 | 209 | (200 | ) | ||||||||||||
| Less: Profit (loss) attributable to noncontrolling interests | — | (9 | ) | 9 | — | ||||||||||||
Profit 7 | $ | 3,372 | $ | 3,372 | $ | 200 | $ | (200 | ) | ||||||||
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. |
(more)
18
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 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 | $ | 3,503 | $ | 3,492 | $ | 253 | $ | (242 | ) | 2 | ||||||
| Adjustments for non-cash items: | ||||||||||||||||
| Depreciation and amortization | 1,288 | 855 | 433 | — | ||||||||||||
| Undistributed profit of Financial Products | — | (242 | ) | — | 242 | 3 | ||||||||||
| Other | 440 | 264 | (51 | ) | 227 | 4 | ||||||||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||||
| Receivables – trade and other | (166 | ) | 161 | (5 | ) | (322 | ) | 4, 5 | ||||||||
| Inventories | (487 | ) | (489 | ) | — | 2 | 4 | |||||||||
| Accounts payable | 134 | (94 | ) | 279 | (51 | ) | 4 | |||||||||
| Accrued expenses | 151 | 158 | (5 | ) | (2 | ) | 4 | |||||||||
| Accrued wages, salaries and employee benefits | (979 | ) | (978 | ) | (1 | ) | — | |||||||||
| Customer advances | 14 | 18 | — | (4 | ) | 4 | ||||||||||
| Other assets – net | (221 | ) | (228 | ) | 57 | (50 | ) | 4 | ||||||||
| Other liabilities – net | 32 | (97 | ) | 75 | 54 | 4 | ||||||||||
| Net cash provided by (used for) operating activities | 3,709 | 2,820 | 1,035 | (146 | ) | |||||||||||
| Cash flow from investing activities: | ||||||||||||||||
| Capital expenditures – excluding equipment leased to others | (479 | ) | (468 | ) | (11 | ) | — | |||||||||
| Expenditures for equipment leased to others | (746 | ) | (24 | ) | (725 | ) | 3 | 4 | ||||||||
| Proceeds from disposals of leased assets and property, plant and equipment | 422 | 97 | 367 | (42 | ) | 4 | ||||||||||
| Additions to finance receivables | (6,181 | ) | — | (7,027 | ) | 846 | 5 | |||||||||
| Collections of finance receivables | 5,902 | — | 6,548 | (646 | ) | 5 | ||||||||||
| Net intercompany purchased receivables | — | — | 15 | (15 | ) | 5 | ||||||||||
| Proceeds from sale of finance receivables | 119 | — | 119 | — | ||||||||||||
| Net intercompany borrowings | — | 213 | 1 | (214 | ) | 6 | ||||||||||
| Investments and acquisitions (net of cash acquired) | (3 | ) | (3 | ) | — | — | ||||||||||
| Proceeds from sale of securities | 170 | 13 | 157 | — | ||||||||||||
| Investments in securities | (243 | ) | (12 | ) | (231 | ) | — | |||||||||
| Other – net | (40 | ) | (9 | ) | (31 | ) | — | |||||||||
| Net cash provided by (used for) investing activities | (1,079 | ) | (193 | ) | (818 | ) | (68 | ) | ||||||||
| Cash flow from financing activities: | ||||||||||||||||
| Dividends paid | (986 | ) | (986 | ) | — | — | ||||||||||
| Common stock issued, including treasury shares reissued | 39 | 39 | — | — | ||||||||||||
| Common shares repurchased | (2,105 | ) | (2,105 | ) | — | — | ||||||||||
| Net intercompany borrowings | — | (1 | ) | (213 | ) | 214 | 6 | |||||||||
| Proceeds from debt issued > 90 days | 5,340 | — | 5,340 | — | ||||||||||||
| Payments on debt > 90 days | (4,901 | ) | (4 | ) | (4,897 | ) | — | |||||||||
| Short-term borrowings – net < 90 days | (436 | ) | — | (436 | ) | — | ||||||||||
| Other – net | (2 | ) | (2 | ) | — | — | ||||||||||
| Net cash provided by (used for) financing activities | (3,051 | ) | (3,059 | ) | (206 | ) | 214 | |||||||||
| Effect of exchange rate changes on cash | (10 | ) | (8 | ) | (2 | ) | — | |||||||||
| Increase (decrease) in cash and short-term investments and restricted cash | (431 | ) | (440 | ) | 9 | — | ||||||||||
| 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 | $ | 7,459 | $ | 6,554 | $ | 905 | $ | — | ||||||||
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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Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 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 | $ | 3,372 | $ | 3,363 | $ | 209 | $ | (200 | ) | 2 | ||||||
| Adjustments for non-cash items: | ||||||||||||||||
| Depreciation and amortization | 1,367 | 933 | 434 | — | ||||||||||||
| Undistributed profit of Financial Products | — | (200 | ) | — | 200 | 3 | ||||||||||
| Other | 446 | 197 | 61 | 188 | 4 | |||||||||||
| Changes in assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||||
| Receivables – trade and other | (703 | ) | 136 | (74 | ) | (765 | ) | 4, 5 | ||||||||
| Inventories | (1,208 | ) | (1,186 | ) | — | (22 | ) | 4 | ||||||||
| Accounts payable | 545 | 570 | (56 | ) | 31 | 4 | ||||||||||
| Accrued expenses | (31 | ) | (40 | ) | 9 | — | ||||||||||
| Accrued wages, salaries and employee benefits | (768 | ) | (745 | ) | (23 | ) | — | |||||||||
| Customer advances | (54 | ) | (54 | ) | — | — | ||||||||||
| Other assets – net | 174 | 176 | (10 | ) | 8 | 4 | ||||||||||
| Other liabilities – net | (57 | ) | (118 | ) | 69 | (8 | ) | 4 | ||||||||
| Net cash provided by (used for) operating activities | 3,083 | 3,032 | 619 | (568 | ) | |||||||||||
| Cash flow from investing activities: | ||||||||||||||||
| Capital expenditures – excluding equipment leased to others | (645 | ) | (550 | ) | (95 | ) | — | |||||||||
| Expenditures for equipment leased to others | (883 | ) | (4 | ) | (919 | ) | 40 | 4 | ||||||||
| Proceeds from disposals of leased assets and property, plant and equipment | 539 | 93 | 461 | (15 | ) | 4 | ||||||||||
| Additions to finance receivables | (6,143 | ) | — | (6,823 | ) | 680 | 5, 7 | |||||||||
| Collections of finance receivables | 5,405 | — | 6,144 | (739 | ) | 5 | ||||||||||
| Net intercompany purchased receivables | — | — | (608 | ) | 608 | 5 | ||||||||||
| Proceeds from sale of finance receivables | 124 | — | 124 | — | ||||||||||||
| Net intercompany borrowings | — | 112 | — | (112 | ) | 6 | ||||||||||
| Investments and acquisitions (net of cash acquired) | (348 | ) | (348 | ) | — | — | ||||||||||
| Proceeds from sale of businesses and investments (net of cash sold) | 12 | 18 | — | (6 | ) | 7 | ||||||||||
| Proceeds from sale of securities | 168 | 10 | 158 | — | ||||||||||||
| Investments in securities | (318 | ) | (19 | ) | (299 | ) | — | |||||||||
| Other – net | 21 | 24 | (4 | ) | 1 | 8 | ||||||||||
| Net cash provided by (used for) investing activities | (2,068 | ) | (664 | ) | (1,861 | ) | 457 | |||||||||
| Cash flow from financing activities: | ||||||||||||||||
| Dividends paid | (933 | ) | (933 | ) | — | — | ||||||||||
| Common stock issued, including treasury shares reissued | 256 | 256 | 1 | (1 | ) | 8 | ||||||||||
| Common shares repurchased | (1,250 | ) | (1,250 | ) | — | — | ||||||||||
| Net intercompany borrowings | — | — | (112 | ) | 112 | 6 | ||||||||||
| Proceeds from debt issued > 90 days | 4,307 | — | 4,307 | — | ||||||||||||
| Payments on debt > 90 days | (4,436 | ) | (3 | ) | (4,433 | ) | — | |||||||||
| Short-term borrowings – net < 90 days | 1,487 | 34 | 1,453 | — | ||||||||||||
| Other – net | (4 | ) | (4 | ) | — | — | ||||||||||
| Net cash provided by (used for) financing activities | (573 | ) | (1,900 | ) | 1,216 | 111 | ||||||||||
| Effect of exchange rate changes on cash | (68 | ) | (61 | ) | (7 | ) | — | |||||||||
| Increase (decrease) in cash and short-term investments and restricted cash | 374 | 407 | (33 | ) | — | |||||||||||
| 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 | $ | 8,694 | $ | 7,823 | $ | 871 | $ | — | ||||||||
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. |
7 | Elimination of proceeds received from Financial Products related to Machinery, Energy & Transportation's sale of businesses and investments. |
8 | Elimination of change in investment and common stock related to 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:
| Second Quarter | Outlook | ||||||||
| 2018 | 2019 | Previous1 | Current2 | ||||||
| Profit per share | $2.82 | $2.83 | $12.06-$13.06 | $12.06-$13.06 | |||||
| Per share U.S. tax reform impact | — | — | ($0.31) | ($0.31) | |||||
Per share restructuring costs3 | $0.15 | — | — | — | |||||
| Adjusted profit per share | $2.97 | $2.83 | $11.75-$12.75 | $11.75-$12.75 | |||||
1 Profit per share outlook range as of April 24, 2019. | |||||||||
2 Profit per share outlook range as of July 24, 2019. The company expects to be at the lower end of this range. | |||||||||
3 At estimated annual tax rate of 24%. 2019 restructuring costs are not material. | |||||||||
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