CAT
$147.78
Caterpillar
($.09)
(.06%)
Earnings Details
3rd Quarter September 2019
Wednesday, October 23, 2019 6:30:00 AM
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Summary

Caterpillar Misses

Caterpillar (CAT) reported 3rd Quarter September 2019 earnings of $2.66 per share on revenue of $12.8 billion. The consensus earnings estimate was $2.82 per share on revenue of $13.5 billion. The Earnings Whisper number was $2.83 per share. Revenue fell 5.6% compared to the same quarter a year ago.

The company said it now expects 2019 earnings of $10.90 to $11.40 per share. The company's previous guidance was earnings to be at the lower-end of $12.06 to $13.06 per shar and the current consensus earnings estimate is $11.58 per share for the year ending December 31, 2019.

Caterpillar Inc is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Company is also a U.S. exporter.

Results
Reported Earnings
$2.66
Earnings Whisper
$2.83
Consensus Estimate
$2.82
Reported Revenue
$12.76 Bil
Revenue Estimate
$13.52 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Caterpillar Reports Third-Quarter 2019 Results

DEERFIELD, Ill., Oct. 23, 2019 /PRNewswire/ --

Highlights:

  • Sales and revenues down 6%; profit per share down 8%
  • Returned about $1.8 billion in share repurchases and dividends
  • Full-year profit per share outlook range lowered to $10.90 to $11.40

 


Third Quarter


($ in billions except profit per share)

2019

2018


Sales and Revenues

$12.8

$13.5


Profit Per Share

$2.66

$2.88


Caterpillar Inc. (NYSE: CAT) today announced third-quarter 2019 sales and revenues of $12.8 billion, a 6% decrease compared with $13.5 billion in the third quarter of 2018. Third-quarter 2019 profit per share was $2.66, compared with $2.88 profit per share in the third quarter of 2018.

The primary driver of the decline in sales and revenues was a $1.2 billion movement in dealers' inventories. Dealers decreased their inventories about $400 million during the third quarter of 2019, after increasing their inventories about $800 million during the third quarter of 2018.

During the third quarter of 2019, the company made a $1.5 billion discretionary pension contribution financed from proceeds of a debt issuance. As a result, Machinery, Energy & Transportation (ME&T) operating cash flow was negative $188 million. The company also repurchased $1.2 billion of Caterpillar common stock and paid dividends of $0.6 billion in the third quarter of 2019. The enterprise cash balance at the end of the third quarter of 2019 was $7.9 billion.

"Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations," said Caterpillar Chairman and CEO Jim Umpleby. "We remain focused on executing our strategy and continuing to achieve our Investor Day targets for margin improvement and free cash flow."

2019 Outlook

The company is lowering its full-year profit per share outlook range to $10.90 to $11.40, compared to the previous outlook which was at the low end of the $12.06 to $13.06 range. Both ranges include the first-quarter $0.31 per share discrete tax benefit. The revised guidance now assumes modestly lower sales in 2019. The company remains focused on maintaining a competitive and flexible cost structure, including managing production levels.

"In the fourth quarter, we now expect end-user demand to be flat and dealers to make further inventory reductions due to global economic uncertainty," said Umpleby. "Caterpillar's improved lead times, along with these dealer inventory reductions, will enable us to respond quickly to positive or negative developments in the global economy in 2020. We are expanding our offerings and investing in services, including digital capabilities, to drive long-term profitable growth, while continuing to achieve our Investor Day targets for improved financial performance."

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 material discrete items.

CONSOLIDATED RESULTS

Consolidated Sales and Revenues

Consolidated Sales and Revenues Comparison 
Third Quarter 2019 vs. Third Quarter 2018 

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar third-quarter 2019 earnings. 

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the third quarter of 2018 (at left) and the third quarter of 2019 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.

Total sales and revenues of $12.758 billion in the third quarter of 2019 decreased $752 million, or 6%, compared with $13.510 billion in the third quarter of 2018. The decline was due to lower sales volume driven by the unfavorable impact from changes in dealer inventories, partially offset by higher end-user demand across the three primary segments. Dealers decreased machine and engine inventories about $400 million during the third quarter of 2019, compared with an increase of about $800 million during the third quarter of 2018. Sales decreased across the three primary segments and in all regions except for Latin America, which was about flat.

Sales and Revenues by Segment


(Millions of dollars)

Third
Quarter
2018


Sales
Volume


Price

Realization


Currency


Inter-

Segment /
Other


Third
Quarter
2019


$

Change


%

Change

















Construction Industries

$

5,683



$

(358)



$

26



$

(47)



$

(15)



$

5,289



$

(394)



(7%)

Resource Industries

2,638



(389)



50



(20)



32



2,311



(327)



(12%)

Energy & Transportation

5,555



31



11



(57)



(88)



5,452



(103)



(2%)

All Other Segment

113



(9)





(1)



8



111



(2)



(2%)

Corporate Items and Eliminations

(1,226)



(26)



(1)



1



63



(1,189)



37




Machinery, Energy & Transportation


12,763




(751)




86




(124)







11,974




(789)



(6%)

















Financial Products Segment


845













20




865




20



2%

Corporate Items and Eliminations

(98)









17



(81)



17




Financial Products Revenues


747













37




784




37



5%

















Consolidated Sales and Revenues

$

13,510



$

(751)



$

86



$

(124)



$

37



$

12,758



$

(752)



(6%)

















 

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

Third Quarter 2019




























Construction Industries

$

2,728



3%


$

413



12%


$

1,048



(6%)


$

1,086



(29%)


$

5,275



(7%)


$

14



(52%)


$

5,289



(7%)

Resource Industries

789



(7%)


349



(18%)


396



(31%)


645



(6%)


2,179



(14%)


132



32%


2,311



(12%)

Energy & Transportation

2,129



(8%)


378



15%


1,224



4%


831



10%


4,562



—%


890



(9%)


5,452



(2%)

All Other Segment

1



(93%)


6



—%


8



100%


12



(33%)


27



(27%)


84



11%


111



(2%)

Corporate Items and Eliminations

(62)





1





(7)





(1)





(69)





(1,120)





(1,189)




Machinery, Energy & Transportation

5,585



(3%)


1,147



2%


2,669



(7%)


2,573



(14%)


11,974



(6%)




—%


11,974



(6%)





























Financial Products Segment

560



—%


79



16%


102



1%


124



6%


865



2%




—%


865



2%

Corporate Items and Eliminations

(43)





(15)





(8)





(15)





(81)









(81)




Financial Products Revenues

517



4%


64



14%


94



(1%)


109



10%


784



5%




—%


784



5%





























Consolidated Sales and Revenues

$

6,102



(3%)


$

1,211



2%


$

2,763



(7%)


$

2,682



(13%)


$

12,758



(6%)


$



—%


$

12,758



(6%)





























Third Quarter 2018




























Construction Industries

$

2,646





$

369





$

1,109





$

1,530





$

5,654





$

29





$

5,683




Resource Industries

849





427





574





688





2,538





100





2,638




Energy & Transportation

2,309





330





1,180





758





4,577





978





5,555




All Other Segment

15









4





18





37





76





113




Corporate Items and Eliminations

(40)





1





(5)





1





(43)





(1,183)





(1,226)




Machinery, Energy & Transportation

5,779





1,127





2,862





2,995





12,763









12,763
































Financial Products Segment

559





68





101





117





845









845




Corporate Items and Eliminations

(62)





(12)





(6)





(18)





(98)









(98)




Financial Products Revenues

497





56





95





99





747









747
































Consolidated Sales and Revenues

$

6,276





$

1,183





$

2,957





$

3,094





$

13,510





$





$

13,510
































Consolidated Operating Profit

Consolidated Operating Profit Comparison 
Third Quarter 2019 vs. Third Quarter 2018 

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar third-quarter 2019 earnings. 

The chart above graphically illustrates reasons for the change in consolidated operating profit between the third quarter of 2018 (at left) and the third 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's other operating (income) expenses.

Operating profit for the third quarter of 2019 was $2.020 billion, a decrease of $115 million, or 5%, compared with $2.135 billion in the third quarter of 2018. The decrease was primarily due to lower sales volume. This decrease was partially offset by favorable price realization and lower selling, general and administrative (SG&A) and research and development (R&D) expenses.

Favorable price realization continued to offset manufacturing costs and lower SG&A/R&D expenses were mostly due to a reduction in short-term incentive compensation expense.

Operating profit margin was 15.8% for both the third quarters of 2019 and 2018.

Profit (Loss) by Segment


(Millions of dollars)

Third Quarter
2019


Third Quarter
2018


$

Change


%

 Change

Construction Industries

$

940



$

1,058



$

(118)



(11)

%

Resource Industries

311



414



(103)



(25)

%

Energy & Transportation

1,021



973



48



5

%

All Other Segment

(21)



(10)



(11)



(110)

%

Corporate Items and Eliminations

(363)



(371)



8




Machinery, Energy & Transportation


1,888




2,064




(176)



(9)

%









Financial Products Segment


218




201




17



8

%

Corporate Items and Eliminations

21



(30)



51




Financial Products


239




171




68



40

%









Consolidating Adjustments

(107)



(100)



(7)












Consolidated Operating Profit

$

2,020



$

2,135



$

(115)



(5)

%









Other Profit/Loss and Tax Items

The provision for income taxes for the third quarter of 2019 reflected an estimated annual tax rate of 26%, compared with 24% for the third 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





Third
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Third
Quarter 2019


$

 Change


%

 Change

Total Sales


$

5,683



$

(358)



$

26



$

(47)



$

(15)



$

5,289



$

(394)



(7)

%


















Sales by Geographic Region











Third
Quarter 2019


Third
Quarter 2018


$

Change


%

Change









North America


$

2,728



$

2,646



$

82



3

%









Latin America


413



369



44



12

%









EAME


1,048



1,109



(61)



(6)

%









Asia/Pacific


1,086



1,530



(444)



(29)

%









External Sales


5,275



5,654



(379)



(7)

%









Inter-segment


14



29



(15)



(52)

%









Total Sales


$

5,289



$

5,683



$

(394)



(7)

%


























Segment Profit











Third
Quarter 2019


Third
Quarter 2018


 

Change


%

Change









Segment Profit


$

940



$

1,058



$

(118)



(11)

%









Segment Profit Margin


17.8

%


18.6

%


(0.8

pts)




























































Construction Industries' total sales were $5.289 billion in the third quarter of 2019, a decrease of $394 million, or 7%, compared with $5.683 billion in the third quarter of 2018. The decrease was due to lower sales volume driven by the unfavorable impact from changes in dealer inventories, partially offset by higher end-user demand for construction equipment. Dealers increased inventories during the third quarter of 2018, compared with a decrease in the third quarter of 2019.

  • In North America, sales increased primarily due to favorable price realization and higher demand for equipment, mostly to support road and non-residential building construction activities.
  • Sales were higher in Latin America, but construction activities remained at low levels.
  • In EAME, the sales decrease was primarily due to currency impacts related to the euro. Unfavorable price realization and lower sales volume also contributed to the decrease.
  • Sales in Asia/Pacific were lower across most of the region primarily due to lower demand in China, including unfavorable changes in dealer inventories, amid continued competitive pressures.

Construction Industries' profit was $940 million in the third quarter of 2019, a decrease of $118 million, or 11%, compared with $1.058 billion in the third quarter of 2018. The decrease was primarily due to lower sales volume, partially offset by lower SG&A/R&D expenses and favorable price realization. Lower SG&A/R&D expenses were primarily due to lower short-term incentive compensation expense.

RESOURCE INDUSTRIES

(Millions of dollars)

Segment Sales




Third
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Third
Quarter 2019


$

 Change


%

 Change

Total Sales


$

2,638



$

(389)



$

50



$

(20)



$

32



$

2,311



$

(327)



(12)

%


















Sales by Geographic Region











Third
Quarter 2019


Third
Quarter 2018


$

Change


%

Change









North America


$

789



$

849



$

(60)



(7)

%









Latin America


349



427



(78)



(18)

%









EAME


396



574



(178)



(31)

%









Asia/Pacific


645



688



(43)



(6)

%









External Sales


2,179



2,538



(359)



(14)

%









Inter-segment


132



100



32



32

%









Total Sales


$

2,311



$

2,638



$

(327)



(12)

%


























Segment Profit











Third
Quarter 2019


Third
Quarter 2018


 

Change


%

Change









Segment Profit


$

311



$

414



$

(103)



(25)

%









Segment Profit Margin


13.5

%


15.7

%


(2.2

pts)




























































Resource Industries' total sales were $2.311 billion in the third quarter of 2019, a decrease of $327 million, or 12%, compared with $2.638 billion in the third quarter of 2018. The decrease was due to lower sales volume driven by the unfavorable impact from changes in dealer inventories, partially offset by higher end-user demand for equipment and favorable price realization. Dealers decreased inventories during the third quarter of 2019, compared with an increase in the third quarter of 2018. While commodity prices are generally supportive of reinvestment, the company believes mining customers are cautious due to economic uncertainty. Mining sales were also impacted by lower thermal coal prices. In addition, sales decreased for equipment supporting non-residential construction and quarry and aggregates driven by a reduction in dealer inventories.

Resource Industries' profit was $311 million in the third quarter of 2019, a decrease of $103 million, or 25%, compared with $414 million in the third quarter of 2018. The decrease was primarily due to lower sales volume, partially offset by favorable price realization.

ENERGY & TRANSPORTATION

(Millions of dollars)



Segment Sales










Third
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Third
Quarter 2019


$

 Change


%

 Change

Total Sales


$

5,555



$

31



$

11



$

(57)



$

(88)



$

5,452



$

(103)



(2)

%


















Sales by Application











Third
Quarter 2019


Third
Quarter 2018


$

Change


%

Change









Oil and Gas


$

1,246



$

1,362



$

(116)



(9)

%









Power Generation


1,123



1,102



21



2

%









Industrial


980



863



117



14

%









Transportation


1,213



1,250



(37)



(3)

%









External Sales


4,562



4,577



(15)



%









Inter-segment


890



978



(88)



(9)

%









Total Sales


$

5,452



$

5,555



$

(103)



(2)

%


























Segment Profit











Third
Quarter 2019


Third
Quarter 2018


 

Change


%

Change









Segment Profit


$

1,021



$

973



$

48



5

%









Segment Profit Margin


18.7

%


17.5

%


1.2

pts




























































Energy & Transportation's total sales were $5.452 billion in the third quarter of 2019, a decrease of $103 million, or 2%, compared with $5.555 billion in the third quarter of 2018. Sales decreased primarily due to lower inter-segment engine sales.

  • Oil and Gas – Sales decreased for reciprocating engines in North America primarily due to lower demand in well servicing applications. This was partially offset by higher sales of turbines and turbine-related services.
  • Power Generation – Sales increased mostly due to higher deliveries in North America for large diesel reciprocating engines and turbines, partially offset by lower sales of reciprocating engines in EAME.
  • Industrial – Sales improved primarily in EAME and Asia/Pacific driven by higher end-user demand.
  • Transportation – Sales were lower primarily due to timing of locomotive deliveries.

Energy & Transportation's profit was $1.021 billion in the third quarter of 2019, an increase of $48 million, or 5%, compared with $973 million in the third quarter of 2018. Lower sales volume, including an unfavorable mix of products, was more than offset by favorable other operating income/expense and SG&A/R&D expenses mostly due to a reduction in short-term incentive compensation expense.

FINANCIAL PRODUCTS SEGMENT

(Millions of dollars)

















Revenues by Geographic Region




















Third
Quarter 2019


Third
Quarter 2018


$

Change


%

Change









North America


$

560



$

559



$

1



%









Latin America


79



68



11



16

%









EAME


102



101



1



1

%









Asia/Pacific


124



117



7



6

%









Total Revenues


$

865



$

845



$

20



2

%


























Segment Profit











Third
Quarter 2019


Third
Quarter 2018


 

Change


%

Change









Segment Profit


$

218



$

201



$

17



8

%


























Financial Products' segment revenues were $865 million in the third quarter of 2019, an increase of $20 million, or 2%, from the third quarter of 2018. The increase was primarily due to higher average financing rates in North America and Asia/Pacific, partially offset by an unfavorable impact due to the absence of fees associated with an intercompany credit facility in North America.

Financial Products' segment profit was $218 million in the third quarter of 2019, up 8% compared with $201 million in the third quarter of 2018. The favorable change was primarily due to an increase in net yield on average earning assets and a decrease in the provision for credit losses at Cat Financial, partially offset by unfavorable impacts from higher SG&A expenses, the mark-to-market on equity securities in Insurance Services and the absence of the intercompany credit facility.

At the end of the third quarter of 2019, past dues at Cat Financial were 3.19%, compared with 3.47% at the end of the third quarter of 2018. Write-offs, net of recoveries, were $103 million for the third quarter of 2019, compared with $40 million for the third quarter of 2018. The increase in write-offs, net of recoveries, was primarily driven by Caterpillar Power Finance, concentrated in the marine portfolio, and EAME, mostly in the Middle East. As of September 30, 2019, Cat Financial's allowance for credit losses totaled $434 million, or 1.57% of finance receivables, compared with $523 million, or 1.81% of finance receivables at June 30, 2019. The allowance for credit losses at year-end 2018 was $511 million, or 1.80% of finance receivables.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $342 million in the third quarter of 2019, a decrease of $59 million from the third quarter of 2018, primarily due to lower restructuring costs.

Dealer Inventories and Order Backlog

Dealers decreased machine and engine inventories about $400 million during the third quarter of 2019, compared with an increase of about $800 million during the third quarter of 2018, led by Construction Industries and Resource Industries.

At the end of the third quarter of 2019, the order backlog was $14.6 billion, about $400 million lower than the second 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 21.
  • Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 7:30 a.m. Central Time on Wednesday, October 23, 2019, to discuss its 2019 third-quarter financial results. The accompanying slides will be available before the webcast on the Caterpillar website at http://www.caterpillar.com/investors/events-and-presentations.

About Caterpillar

For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2018 sales and revenues of $54.722 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.

Forward-Looking Statements

Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "forecast," "target," "guide," "project," "intend," "could," "should" or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.

Caterpillar's actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers' needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events including natural disasters; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment's risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial's customers; (xviii) currency fluctuations; (xix) our or Cat Financial's compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; and (xxvi) other factors described in more detail in Caterpillar's Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.

Machinery, Energy & Transportation

Caterpillar defines Machinery, Energy & Transportation as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. Machinery, Energy & Transportation information relates to the design, manufacture and marketing of Caterpillar products. Financial Products' information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. The nature of these businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. The company also believes this presentation will assist readers in understanding Caterpillar's business. Pages 12-20 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


Nine Months Ended



September 30,


September 30,



2019


2018


2019


2018

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

11,974




$

12,763




$

38,369




$

38,192




Revenues of Financial Products


784





747





2,287





2,188




Total sales and revenues


12,758





13,510





40,656





40,380
























Operating costs:





















Cost of goods sold


8,569





9,022





27,513





27,010




Selling, general and administrative expenses


1,251





1,299





3,879





4,015




Research and development expenses


431





479





1,307





1,384




Interest expense of Financial Products


189





185





571





533




Other operating (income) expenses


298





390





946





1,028




Total operating costs


10,738





11,375





34,216





33,970
























Operating profit


2,020





2,135





6,440





6,410

























Interest expense excluding Financial Products


103





102





309





305




Other income (expense)


88





102





316





350
























Consolidated profit before taxes


2,005





2,135





6,447





6,455

























Provision (benefit) for income taxes


518





415





1,470





1,377




Profit of consolidated companies


1,487





1,720





4,977





5,078

























Equity in profit (loss) of unconsolidated affiliated companies


7





7





20





21























Profit of consolidated and affiliated companies


1,494





1,727





4,997





5,099























Less:  Profit (loss) attributable to noncontrolling interests










2



























Profit 1

$

1,494




$

1,727




$

4,995




$

5,099












































Profit per common share

$

2.69




$

2.92




$

8.84




$

8.57
























Profit per common share – diluted 2

$

2.66




$

2.88




$

8.75




$

8.45
























Weighted-average common shares
outstanding (millions)





















- Basic


556.3





592.1





565.2





595.3




- Diluted2


561.2





599.4





570.8





603.8


































































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)



September 30,


December 31,


2019


2018

Assets











Current assets:












Cash and short-term investments

$

7,906




$

7,857





Receivables - trade and other


8,275





8,802





Receivables - finance


9,192





8,650





Prepaid expenses and other current assets


1,607





1,765





Inventories


12,180





11,529




Total current assets


39,160





38,603















Property, plant and equipment – net


12,842





13,574




Long-term receivables - trade and other


1,193





1,161




Long-term receivables - finance


12,412





13,286




Noncurrent deferred and refundable income taxes


1,372





1,439




Intangible assets


1,630





1,897




Goodwill


6,142





6,217




Other assets


3,242





2,332



Total assets

$

77,993




$

78,509













Liabilities











Current liabilities:












Short-term borrowings:













-- Machinery, Energy & Transportation

$




$






-- Financial Products


4,268





5,723





Accounts payable


6,141





7,051





Accrued expenses


3,727





3,573





Accrued wages, salaries and employee benefits


1,518





2,384





Customer advances


1,309





1,243





Dividends payable






495





Other current liabilities


2,188





1,919





Long-term debt due within one year:













-- Machinery, Energy & Transportation


25





10






-- Financial Products


8,025





5,820




Total current liabilities


27,201





28,218

















Long-term debt due after one year:













-- Machinery, Energy & Transportation


9,134





8,005






-- Financial Products


16,454





16,995




Liability for postemployment benefits


5,900





7,455




Other liabilities


4,311





3,756



Total liabilities


63,000





64,429























Shareholders' equity











Common stock


5,951





5,827




Treasury stock


(23,693)





(20,531)




Profit employed in the business


34,477





30,427




Accumulated other comprehensive income (loss)


(1,783)





(1,684)




Noncontrolling interests


41





41



Total shareholders' equity


14,993





14,080



Total liabilities and shareholders' equity

$

77,993




$

78,509




























 

Caterpillar Inc

Condensed Consolidated Statement of Cash Flow

(Unaudited)

(Millions of dollars)



Nine Months Ended


September 30,


2019


2018

Cash flow from operating activities:











Profit of consolidated and affiliated companies

$

4,997




$

5,099




Adjustments for non-cash items:












Depreciation and amortization


1,933





2,065





Other


627





630




Changes in assets and liabilities, net of acquisitions and divestitures:












Receivables – trade and other


427





(725)





Inventories


(676)





(1,822)





Accounts payable


(669)





496





Accrued expenses


114





(32)





Accrued wages, salaries and employee benefits


(858)





(418)





Customer advances


169





59





Other assets – net


3





394





Other liabilities – net


(1,589)





(1,271)



Net cash provided by (used for) operating activities


4,478





4,475



Cash flow from investing activities:











Capital expenditures – excluding equipment leased to others


(723)





(921)




Expenditures for equipment leased to others


(1,133)





(1,208)




Proceeds from disposals of leased assets and property, plant and equipment


812





732




Additions to finance receivables


(9,453)





(9,092)




Collections of finance receivables


9,144





8,032




Proceeds from sale of finance receivables


183





416




Investments and acquisitions (net of cash acquired)


(6)





(357)




Proceeds from sale of businesses and investments (net of cash sold)


3





14




Proceeds from sale of securities


281





363




Investments in securities


(425)





(417)




Other – net


(37)





24



Net cash provided by (used for) investing activities


(1,354)





(2,414)



Cash flow from financing activities:











Dividends paid


(1,564)





(1,444)




Common stock issued, including treasury shares reissued


59





292




Common shares repurchased


(3,283)





(2,000)




Proceeds from debt issued (original maturities greater than three months)


8,827





7,073




Payments on debt (original maturities greater than three months)


(6,062)





(5,642)




Short-term borrowings – net (original maturities three months or less)


(1,006)





(465)




Other – net


(2)





(32)



Net cash provided by (used for) financing activities


(3,031)





(2,218)



Effect of exchange rate changes on cash


(47)





(117)



Increase (decrease) in cash and short-term investments and restricted cash


46





(274)



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

$

7,936




$

8,046




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 September 30, 2019

(Unaudited)
(Millions of dollars)





Supplemental Consolidating Data




Machinery,






Consolidated


Energy &
Transportation 1


Financial
Products


Consolidating
Adjustments

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

11,974




$

11,974




$




$




Revenues of Financial Products


784









920





(136)


2


Total sales and revenues


12,758





11,974





920





(136)
























Operating costs:





















Cost of goods sold


8,569





8,569












Selling, general and administrative expenses


1,251





1,095





163





(7)


3


Research and development expenses


431





431












Interest expense of Financial Products


189









198





(9)


4


Other operating (income) expenses


298





(9)





320





(13)


3


Total operating costs


10,738





10,086





681





(29)
























Operating profit


2,020





1,888





239





(107)

























Interest expense excluding Financial Products


103





103












Other income (expense)


88





(27)





8





107


5






















Consolidated profit before taxes


2,005





1,758





247





























Provision (benefit) for income taxes


518





457





61








Profit of consolidated companies


1,487





1,301





186





























Equity in profit (loss) of unconsolidated affiliated  companies


7





7












Equity in profit of Financial Products' subsidiaries






180









(180)


6





















Profit of consolidated and affiliated companies


1,494





1,488





186





(180)























Less:  Profit (loss) attributable to noncontrolling interests






(6)





6



























Profit 7

$

1,494




$

1,494




$

180




$

(180)




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.


 

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended September 30, 2018
(Unaudited)
(Millions of dollars)





Supplemental Consolidating Data




Machinery,






Consolidated


Energy &
Transportation 1


Financial
Products


Consolidating
Adjustments

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

12,763




$

12,763




$




$




Revenues of Financial Products


747









867





(120)


2


Total sales and revenues


13,510





12,763





867





(120)
























Operating costs:





















Cost of goods sold


9,022





9,022












Selling, general and administrative expenses


1,299





1,135





169





(5)


3


Research and development expenses


479





479












Interest expense of Financial Products


185









194





(9)


4


Other operating (income) expenses


390





63





333





(6)


3


Total operating costs


11,375





10,699





696





(20)
























Operating profit


2,135





2,064





171





(100)

























Interest expense excluding Financial Products


102





114









(12)


4


Other income (expense)


102





(5)





19





88


5






















Consolidated profit before taxes


2,135





1,945





190





























Provision (benefit) for income taxes


415





376





39








Profit of consolidated companies


1,720





1,569





151





























Equity in profit (loss) of unconsolidated affiliated  companies


7





7












Equity in profit of Financial Products' subsidiaries






145









(145)


6





















Profit of consolidated and affiliated companies


1,727





1,721





151





(145)























Less:  Profit (loss) attributable to noncontrolling interests






(6)





6



























Profit 7

$

1,727




$

1,727




$

145




$

(145)




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.

 

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 2019
(Unaudited)
(Millions of dollars)






Supplemental Consolidating Data





Machinery,







Consolidated


Energy &
Transportation 1


Financial

Products


Consolidating
Adjustments

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

38,369




$

38,369




$




$




Revenues of Financial Products


2,287









2,684





(397)


2


Total sales and revenues


40,656





38,369





2,684





(397)
























Operating costs:





















Cost of goods sold


27,513





27,515









(2)


3


Selling, general and administrative expenses


3,879





3,324





564





(9)


3


Research and development expenses


1,307





1,307












Interest expense of Financial Products


571









599





(28)


4


Other operating (income) expenses


946





2





974





(30)


3


Total operating costs


34,216





32,148





2,137





(69)
























Operating profit


6,440





6,221





547





(328)

























Interest expense excluding Financial Products


309





318









(9)


4


Other income (expense)


316





(71)





68





319


5






















Consolidated profit before taxes


6,447





5,832





615





























Provision (benefit) for income taxes


1,470





1,294





176








Profit of consolidated companies


4,977





4,538





439





























Equity in profit (loss) of unconsolidated affiliated companies


20





20












Equity in profit of Financial Products' subsidiaries






422









(422)


6





















Profit of consolidated and affiliated companies


4,997





4,980





439





(422)























Less:  Profit (loss) attributable to noncontrolling interests


2





(15)





17



























Profit 7

$

4,995




$

4,995




$

422




$

(422)




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.

 

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 2018
(Unaudited)
(Millions of dollars)





Supplemental Consolidating Data




Machinery,






Consolidated


Energy &
Transportation 1


Financial
Products


Consolidating
Adjustments

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

38,192




$

38,192




$




$




Revenues of Financial Products


2,188









2,527





(339)


2


Total sales and revenues


40,380





38,192





2,527





(339)
























Operating costs:





















Cost of goods sold


27,010





27,010












Selling, general and administrative expenses


4,015





3,445





581





(11)


3


Research and development expenses


1,384





1,384












Interest expense of Financial Products


533









558





(25)


4


Other operating (income) expenses


1,028





100





949





(21)


3


Total operating costs


33,970





31,939





2,088





(57)
























Operating profit


6,410





6,253





439





(282)

























Interest expense excluding Financial Products


305





337









(32)


4


Other income (expense)


350





76





24





250


5






















Consolidated profit before taxes


6,455





5,992





463





























Provision (benefit) for income taxes


1,377





1,274





103








Profit of consolidated companies


5,078





4,718





360





























Equity in profit (loss) of unconsolidated affiliated  companies


21





21












Equity in profit of Financial Products' subsidiaries






345









(345)


6





















Profit of consolidated and affiliated companies


5,099





5,084





360





(345)























Less:  Profit (loss) attributable to noncontrolling interests






(15)





15



























Profit 7

$

5,099




$

5,099




$

345




$

(345)




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.

 

Caterpillar Inc

Supplemental Data for Cash Flow

For the Nine Months Ended September 30, 2019

(Unaudited)

 (Millions of dollars)





Supplemental Consolidating Data




Machinery,






Consolidated


Energy &
Transportation 1


Financial
Products


Consolidating
Adjustments

Cash flow from operating activities:





















Profit of consolidated and affiliated companies

$

4,997




$

4,980




$

439




$

(422)


2


Adjustments for non-cash items:






















Depreciation and amortization


1,933





1,283





650









Undistributed profit of Financial Products






(422)









422


3



Other


627





395





(111)





343


4


Changes in assets and liabilities, net of acquisitions and divestitures:






















Receivables – trade and other


427





125





(16)





318


4,5



Inventories


(676)





(702)









26


4



Accounts payable


(669)





(651)





6





(24)


4



Accrued expenses


114





105





11





(2)


4



Accrued wages, salaries and employee benefits


(858)





(865)





7









Customer advances


169





171









(2)


4



Other assets – net


3





(47)





47





3


4



Other liabilities – net


(1,589)





(1,740)





144





7


4

Net cash provided by (used for) operating activities


4,478





2,632





1,177





669



Cash flow from investing activities:





















Capital expenditures – excluding equipment leased to others


(723)





(709)





(14)








Expenditures for equipment leased to others


(1,133)





(21)





(1,151)





39


4


Proceeds from disposals of leased assets and property, plant and equipment


812





149





766





(103)


4


Additions to finance receivables


(9,453)









(10,633)





1,180


5


Collections of finance receivables


9,144









10,166





(1,022)


5


Net intercompany purchased receivables










763





(763)


5


Proceeds from sale of finance receivables


183









183








Net intercompany borrowings






721





1





(722)


6


Investments and acquisitions (net of cash acquired)


(6)





(6)












Proceeds from sale of businesses and investments (net of cash sold)


3





3












Proceeds from sale of securities


281





16





265








Investments in securities


(425)





(16)





(409)








Other – net


(37)





1





(38)







Net cash provided by (used for) investing activities


(1,354)





138





(101)





(1,391)



Cash flow from financing activities:





















Dividends paid


(1,564)





(1,564)












Common stock issued, including treasury shares reissued


59





59












Common shares repurchased


(3,283)





(3,283)












Net intercompany borrowings






(1)





(721)





722


6


Proceeds from debt issued > 90 days


8,827





1,479





7,348








Payments on debt > 90 days


(6,062)





(8)





(6,054)








Short-term borrowings – net < 90 days


(1,006)









(1,006)








Other – net


(2)





(2)











Net cash provided by (used for) financing activities


(3,031)





(3,320)





(433)





722



Effect of exchange rate changes on cash


(47)





(38)





(9)







Increase (decrease) in cash and short-term investments and restricted cash


46





(588)





634







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

$

7,936




$

6,406




$

1,530




$





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 Nine Months Ended September 30, 2018

 (Unaudited)

 (Millions of dollars)





Supplemental Consolidating Data




Machinery,






Consolidated


Energy &
Transportation 1


Financial
Products


Consolidating
Adjustments

Cash flow from operating activities:





















Profit of consolidated and affiliated companies

$

5,099




$

5,084




$

360




$

(345)


2


Adjustments for non-cash items:






















Depreciation and amortization


2,065





1,410





655









Undistributed profit of Financial Products






(345)









345


3



Other


630





327





36





267


4


Changes in assets and liabilities, net of acquisitions and divestitures:






















Receivables – trade and other


(725)





19





(33)





(711)


4,5



Inventories


(1,822)





(1,774)









(48)


4



Accounts payable


496





544





(55)





7


4



Accrued expenses


(32)





(63)





31









Accrued wages, salaries and employee benefits


(418)





(403)





(15)









Customer advances


59





59













Other assets –  net


394





343





(9)





60


4



Other liabilities – net


(1,271)





(1,321)





110





(60)


4

Net cash provided by (used for) operating activities


4,475





3,880





1,080





(485)



Cash flow from investing activities:





















Capital expenditures - excluding equipment leased to others


(921)





(822)





(99)








Expenditures for equipment leased to others


(1,208)





(23)





(1,258)





73


4


Proceeds from disposals of leased assets and property, plant and equipment


732





122





632





(22)


4


Additions to finance receivables


(9,092)









(10,151)





1,059


5,7


Collections of finance receivables


8,032









9,135





(1,103)


5


Net intercompany purchased receivables










(484)





484


5


Proceeds from sale of finance receivables


416









416








Net intercompany borrowings






66









(66)


6


Investments and acquisitions (net of cash acquired)


(357)





(357)












Proceeds from sale of businesses and investments (net of cash sold)


14





20









(6)


7


Proceeds from sale of securities


363





154





209








Investments in securities


(417)





(21)





(396)








Other – net


24





25





(2)





1


8

Net cash provided by (used for) investing activities


(2,414)





(836)





(1,998)





420



Cash flow from financing activities:





















Dividends paid


(1,444)





(1,444)












Common stock issued, including treasury shares reissued


292





292





1





(1)


8


Common shares repurchased


(2,000)





(2,000)












Net intercompany borrowings










(66)





66


6


Proceeds from debt issued > 90 days


7,073





47





7,026








Payments on debt > 90 days


(5,642)





(6)





(5,636)








Short-term borrowings – net < 90 days


(465)





14





(479)








Other – net


(32)





(32)











Net cash provided by (used for) financing activities


(2,218)





(3,129)





846





65



Effect of exchange rate changes on cash


(117)





(106)





(11)







Increase (decrease) in cash and short-term investments and restricted cash


(274)





(191)





(83)







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

$

8,046




$

7,225




$

821




$






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 three significant items in order for the company's results to be meaningful to readers. These items consist of (i) a discrete tax benefit related to U.S. tax reform in the first quarter of 2019, (ii) restructuring costs in 2018, which were incurred to generate longer-term benefits and (iii) a net tax benefit to adjust deferred tax balances in the third quarter of 2018. 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:


Third Quarter


Full-Year Outlook




2018


2019


Previous1


Current2



Profit per share

$2.88


$2.66


$12.06-$13.06


$10.90-$11.40



Per share U.S. tax reform impact



($0.31)


($0.31)



Per share restructuring costs3

$0.14






Per share deferred tax balance adjustment

($0.16)



 


 



Adjusted profit per share

$2.86


$2.66


$11.75-$12.75


$10.59-$11.09























1 Profit per share outlook range as of July 24, 2019

2 Profit per share outlook range as of October 23, 2019

3 2018 restructuring costs at an estimated annual tax rate of 24%. 2019 restructuring costs are not material


 

Cision View original content:http://www.prnewswire.com/news-releases/caterpillar-reports-third-quarter-2019-results-300943821.html

SOURCE Caterpillar Inc.