Caterpillar Reports Second-Quarter 2019 Results
DEERFIELD, Ill., July 24, 2019 /PRNewswire/ --
-- 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
-- Full-year profit per share outlook range is maintained at $12.06 to
$13.06; the company currently expects to be at the lower end of this
range
Second Quarter
($ in billions except profit
per share) 2019 2018
Sales and Revenues $14.4 $14.0
---
Profit Per Share $2.83 $2.82
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.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
Second Quarter 2019 vs. Second Quarter 2018
To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar second-quarter 2019 earnings.
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 Sales Price Currency Inter- Second
$ %
Quarter Segment / Quarter
2018 Volume Realization Other 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%
Sales and Revenues by Geographic Region
North America Latin America
EAME Asia/Pacific External Sales Inter-Segment Total Sales
and Revenues 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
Consolidated Operating Profit
Consolidated Operating Profit Comparison
Second Quarter 2019 vs. Second Quarter 2018
To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar second-quarter 2019 earnings.
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.
Profit by Segment
(Millions of dollars) Second Quarter Second Quarter
$ %
2019 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 & $
2,184 $
2,134 $
50 2
Transportation
%
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.
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
Second Sales Price Currency Inter- Second
$ %
Quarter 2018 Volume Realization Segment Quarter 2019
Change Change
Total Sales $
6,172 $
199 $
253 $
(143) $
(14) $
6,467 $
295 5
%
Sales by Geographic Region
Second Second
$ %
Quarter 2019 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 Second %
Quarter 2019 Quarter 2018
Change Change
Segment Profit $
1,247 $
1,154 $
93 8
%
Segment Profit Margin 19.3 18.7
% % 0.6pts
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.
RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
Second Sales Price Currency Inter- Second
$ %
Quarter 2018 Volume Realization Segment Quarter 2019
Change Change
Total Sales $
2,526 $
188 $
129 $
(37) $
(6) $
2,800 $
274 11
%
Sales by Geographic Region
Second Second
$ %
Quarter 2019 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 Second %
Quarter 2019 Quarter 2018
Change Change
Segment Profit $
481 $
411 $
70 17
%
Segment Profit Margin 17.2 16.3
% % 0.9pts
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.
ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
Second Sales Price Currency Inter- Second
$ %
Quarter 2018 Volume Realization Segment Quarter 2019
Change Change
Total Sales $
5,724 $
(143) $
44 $
(91) $
(48) $
5,486 $
(238) (4)
%
Sales by Application
Second Second
$ %
Quarter 2019 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 Second %
Quarter 2019 Quarter 2018
Change Change
Segment Profit $
886 $
1,012 $
(126) (12)
%
Segment Profit Margin 16.2 17.7
% % (1.5pts)
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.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Second Second
$ %
Quarter 2019 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 Second %
Quarter 2019 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.
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 Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
Three Months Ended
Six Months Ended
June 30,
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.
---
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
June 30, December 31
,
2019 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
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.
---
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
Elimination of discount recorded by
Machinery, Energy & Transportation
on receivables sold to Financial
Products and of
interest
earned between Machinery, Energy &
Transportation and Financial
5 Products.
---
6 Elimination of Financial Products'
profit due to equity method of
accounting.
---
7 Profit attributable to common
shareholders.
---
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
Elimination of discount recorded by
Machinery, Energy & Transportation
on receivables sold to Financial
Products and of interest earned
between Machinery, Energy &
Transportation and Financial
5 Products.
---
6 Elimination of Financial Products'
profit due to equity method of
accounting.
---
7 Profit attributable to common
shareholders.
---
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
Elimination of discount recorded by
Machinery, Energy & Transportation
on receivables sold to Financial
Products and of interest earned
between Machinery, Energy &
Transportation and Financial
5 Products.
---
6 Elimination of Financial Products'
profit due to equity method of
accounting.
---
7 Profit attributable to common
shareholders.
---
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
Elimination of discount recorded by
Machinery, Energy & Transportation
on receivables sold to Financial
Products and of interest earned
between Machinery, Energy &
Transportation and Financial
5 Products.
---
6 Elimination of Financial Products'
profit due to equity method of
accounting.
---
7 Profit attributable to common
shareholders.
---
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation (1) Products 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.
---
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
Previous(1)
Current(2)
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 costs(3) $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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SOURCE Caterpillar Inc.
