DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K Earnings Release dated 28 January 2019
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Caterpillar Inc.
Caterpillar Inc.: Exhibit 99.1 to Form 8-K Earnings Release dated 28 January 2019
28-Jan-2019 / 14:08 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Caterpillar Inc.
4Q 2018 Earnings Release
January 28, 2019
FOR IMMEDIATE RELEASE
Caterpillar Reports Fourth-Quarter and Full-Year 2018 Results; Provides Outlook for 2019
Record Full-Year Profit Per Share; 2019 Profit Per Share Expected to Increase
* Fourth-quarter sales and revenues up 11 percent; full-year sales and revenues up 20 percent
* Strong financial position; ended 2018 with $7.9 billion of enterprise cash
* Repurchased $1.8 billion in company stock in the fourth quarter and $3.8 billion for the full year
* 2019 profit per share expected to increase; outlook range of $11.75 to $12.75
Fourth Quarter Full Year
($ in 2018 2017 2018 2017
billions
except profit
per share)
Sales and $14.3 $12.9 $54.7 $45.5
Revenues
Profit (Loss) $1.78 ($2.18) $10.26 $1.26
Per Share
Adjusted $2.55 $2.16 $11.22 $6.88
Profit Per
Share
DEERFIELD, Ill. - Caterpillar Inc. (NYSE: CAT) today announced fourth-quarter and full-year results for 2018.
Sales and revenues in the fourth quarter of 2018 were $14.3 billion, compared with $12.9 billion in the fourth quarter of 2017, an 11 percent increase.
Fourth-quarter 2018 profit was $1.78 per share, compared with a loss of $2.18 per share in the fourth quarter of 2017. Adjusted profit per share in the
fourth quarter of 2018 was $2.55, compared with fourth-quarter 2017 adjusted profit per share of $2.16, up 18 percent.
Full-year sales and revenues in 2018 were $54.7 billion, up 20 percent from $45.5 billion in 2017. Full-year profit was $10.26 per share in 2018,
compared with profit of $1.26 per share in 2017. Adjusted profit per share in 2018 was $11.22, up 63 percent compared with 2017 adjusted profit per
share of $6.88.
Adjusted profit per share excludes several adjustments consisting of restructuring costs, mark-to-market losses for remeasurement of pension and other
postemployment benefit (OPEB) plans, certain deferred tax valuation allowance adjustments, the impact of U.S. tax reform and a gain on sale of an
equity investment in 2017.
Fourth-quarter 2018 Machinery, Energy & Transportation (ME&T) operating cash flow was $2.5 billion. In the fourth quarter of 2018, the company
repurchased $1.8 billion of Caterpillar common stock and paid dividends of $507 million.
For the full year of 2018, ME&T operating cash flow was $6.3 billion. During the year the company deployed significant capital, including the
repurchase of $3.8 billion of Caterpillar common stock, dividend payments of $2.0 billion and a discretionary pension contribution of $1.0 billion.
After returning $5.8 billion of capital to shareholders, the enterprise cash balance was $7.9 billion at the end of 2018, compared with $8.3 billion at
the end of 2017.
"In 2018, Caterpillar achieved record profit per share and returned significant levels of capital to shareholders," said Caterpillar Chairman and CEO
Jim Umpleby. "Our global team remained focused on serving our customers, executing our strategy and investing for future profitable growth."
2019 Outlook
Following a record year for profit per share, Caterpillar expects 2019 profit to increase to a range of $11.75 to $12.75 per share.
"Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical
environment. We will continue to focus on operational excellence, including cost discipline, while investing in expanded offerings and services to
drive long-term profitable growth," added Umpleby.
Beginning in 2019, the company does not plan to exclude restructuring costs from adjusted profit per share as these costs are expected to return to
normalized levels. The outlook does not include a mark-to-market gain or loss for remeasurement of pension and OPEB plans or any changes to estimates
related to U.S. tax reform due to interpretations released in 2019.
Notes:
- Glossary of terms is included on pages 14-16.
- Information on non-GAAP financial measures is included on page 17.
- Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Monday, January 28, 2019,
to discuss its 2018 fourth-quarter and full-year 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.
Caterpillar media contact: Corrie Scott, 224-551-4133 or Scott_Corrie@cat.com
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," "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) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (x) failure to
realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (xi) inventory
management decisions and sourcing practices of our dealers and our OEM customers; (xii) a failure to realize, or a delay in realizing, all of the
anticipated benefits of our acquisitions, joint ventures or divestitures; (xiii) union disputes or other employee relations issues; (xiv) adverse
effects of unexpected events including natural disasters; (xv) disruptions or volatility in global financial markets limiting our sources of liquidity
or the liquidity of our customers, dealers and suppliers; (xvi) 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; (xvii) our Financial Products
segment's risks associated with the financial services industry; (xviii) changes in interest rates or market liquidity conditions; (xix) an increase in
delinquencies, repossessions or net losses of Cat Financial's customers; (xx) currency fluctuations; (xxi) our or Cat Financial's compliance with
financial and other restrictive covenants in debt agreements; (xxii) increased pension plan funding obligations; (xxiii) alleged or actual violations
of trade or anti-corruption laws and regulations; (xxiv) additional tax expense or exposure, including the impact of U.S. tax reform; (xxv) significant
legal proceedings, claims, lawsuits or government investigations; (xxvi) new regulations or changes in financial services regulations; (xxvii)
compliance with environmental laws and regulations; and (xxviii) other factors described in more detail in Caterpillar's Forms 10-Q, 10-K and other
filings with the Securities and Exchange Commission.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the fourth quarter of 2017 (at left) and the
fourth quarter of 2018 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts
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DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -2-
above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above
each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.
Total sales and revenues were $14.342 billion in the fourth quarter of 2018, an increase of $1.446 billion, or 11 percent, compared with $12.896
billion in the fourth quarter of 2017. The increase was due to higher sales volume driven by improved demand across all regions and in the three
primary segments. Favorable price realization, primarily in Construction Industries, also contributed to the sales improvement. The increase was
partially offset by unfavorable currency impacts due to a stronger U.S. dollar.
Sales and Revenues by Segment
(Millions of Fourth Sales Price Currency Inter-Segment / Fourth $ %
dollars) Quarter Other Quarter
2017 2018
Volume Realization Change Change
Construction $ 5,2 $ 382 $ 111 $ (85 ) $ 2 $ 5,7 $ 410 8%
Industries.. 95 05
......
Resource 2,308 504 34 (32 ) (17 ) 2,797 489 21%
Industries..
........
Energy & 5,640 599 33 (73 ) 88 6,287 647 11%
Transportati
on.......
All Other 155 (13 ) - - (13 ) 129 (26 ) (17%)
Segments....
......
Corporate (1,20 ) (25 ) 1 - (60 ) (1,28 ) (84 )
Items and 4 8
Eliminations
..
Machinery, $ 12, $ 1,4 $ 179 $ (190 ) $ - $ 13, $ 1,4 12%
Energy & 194 47 630 36
Transportati
on
Financial $ 783 $ - $ - $ - $ 29 $ 812 $ 29 4%
Products
Segment.....
Corporate (81 ) - - - (19 ) (100 ) (19 )
Items and
Eliminations
..
Financial $ 702 $ - $ - $ - $ 10 $ 712 $ 10 1%
Products
Revenues...
Consolidated $ 12, $ 1,4 $ 179 $ (190 ) $ 10 $ 14, $ 1,4 11%
Sales and 896 47 342 46
Revenues
Sales and Revenues by Geographic Region
North Latin EAME Asia/Pacific External Inter-Segment Total Sales
America America Sales and and
Revenues Revenues
(Millions of $ % Chg $ % Chg $ % Chg $ % $ % Chg $ % Chg $ % Chg
dollars) Chg
Fourth
Quarter 2018
Construction $ 2, 17% $ 374 (5%) $ 1,0 9% $ 1,4 (4%) $ 5, 8% $ 39 5% $ 5, 8%
Industries.. 74 63 80 66 70
..... 9 6 5
Resource 906 15% 466 21% 554 17% 785 41% 2,71 23% 86 (17%) 2,79 21%
Industries.. 1 7
......
Energy & 2,56 10% 434 16% 1,509 17% 753 5% 5,26 12% 1,022 9% 6,28 11%
Transportati 9 5 7
on......
All Other 16 (27%) 2 100% 6 (57%) 15 -% 39 (25%) 90 (13%) 129 (17%)
Segments....
.....
Corporate (47 ) 1 (3 ) (2 ) (51 ) (1,237 ) (1,2 )
Items and 88
Eliminations
..
Machinery, 6,19 13% 1,277 11% 3,129 14% 3,031 7% 13,6 12% - -% 13,6 12%
Energy & 3 30 30
Transportati
on
Financial 545 8% 68 (15%) 84 (21%) 115 26% 812 4% - -% 812 4%
Products
Segment....
Corporate (66 ) (10 ) (8 ) (16 ) (100 ) - (100 )
Items and
Eliminations
..
Financial 479 5% 58 (15%) 76 (25%) 99 27% 712 1% - -% 712 1%
Products
Revenues...
Consolidated $ 6, 13% $ 1,3 10% $ 3,2 12% $ 3,1 8% $ 14 11% $ - -% $ 14 11%
Sales and 67 35 05 30 ,3 ,3
Revenues 2 42 42
Fourth
Quarter 2017
Construction $ 2, $ 392 $ 976 $ 1,5 $ 5, $ 37 $ 5,
Industries.. 34 44 25 29
..... 6 8 5
Resource 791 384 475 555 2,20 103 2,30
Industries.. 5 8
......
Energy & 2,32 374 1,286 719 4,70 934 5,64
Transportati 7 6 0
on......
All Other 22 1 14 15 52 103 155
Segments....
.....
Corporate (27 ) - - - (27 ) (1,177 ) (1,2 )
Items and 04
Eliminations
..
Machinery, 5,45 1,151 2,751 2,833 12,1 - 12,1
Energy & 9 94 94
Transportati
on
Financial 505 80 107 91 783 - 783
Products
Segment....
Corporate (50 ) (12 ) (6 ) (13 ) (81 ) - (81 )
Items and
Eliminations
..
Financial 455 68 101 78 702 - 702
Products
Revenues...
Consolidated $ 5, $ 1,2 $ 2,8 $ 2,9 $ 12 $ - $ 12
Sales and 91 19 52 11 ,8 ,8
Revenues 4 96 96
Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the fourth quarter of 2017 (at left) and the
fourth quarter of 2018 (at right). Items favorably impacting operating profit appear as upward stair steps with the corresponding dollar amounts above
each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar.
Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees. The bar entitled
Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.
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Operating profit for the fourth quarter of 2018 was $1.883 billion, compared with $1.387 billion in the fourth quarter of 2017. The increase of $496
million was mostly due to higher sales volume. Favorable price realization and lower restructuring costs were mostly offset by higher manufacturing
costs and lower profit from Financial Products.
Financial Products' operating profit was lower primarily due to an increase in the provision for credit losses, which was mostly driven by a $72
million unfavorable impact from an increase in allowance rate and an increase in write-offs of $13 million, due to continued weakening in the Cat Power
Finance portfolio. This was partially offset by higher average earning assets.
Operating profit margin for the fourth quarter of 2018 was 13.1 percent, compared with 10.8 percent in the fourth quarter of 2017.
Profit (Loss) by Segment
(Millions of Fourth Fourth $ %
dollars) Quarter Quarter
2018 2017
Change Change
Construction $ 845 $ 837 $ 8 1 %
Industries...
.............
........
Resource 400 210 190 90 %
Industries...
.............
..........
Energy & 1,079 874 205 23 %
Transportatio
n............
...........
All Other (47 ) (16 ) (31 ) (194 %)
Segments.....
.............
.........
Corporate (375 ) (588 ) 213
Items and
Eliminations.
.............
..
Machinery, $ 1,9 $ 1,31 $ 585 44 %
Energy & 02 7
Transportatio
n............
Financial $ 29 $ 233 $ (204 ) (88 %)
Products
Segment......
.............
.
Corporate 54 (77 ) 131
Items and
Eliminations.
.............
..
Financial $ 83 $ 156 $ (73 ) (47 %)
Products.....
.............
........
Consolidating (102 ) (86 ) (16 )
Adjustments..
.............
....
Consolidated $ 1,8 $ 1,38 $ 496 36 %
Operating 83 7
Profit.......
..........
Other Profit/Loss Items
? Interest expense excluding Financial Products in the fourth quarter of 2018 was $99 million, a decrease of $70 million primarily due to an early debt
retirement in the fourth quarter of 2017.
? Other income/expense in the fourth quarter of 2018 was a loss of $417 million, compared with a loss of $107 million in the fourth quarter of 2017.
The unfavorable change was primarily a result of an increase in mark-to-market losses related to pension and OPEB plans and an unfavorable impact from
equity securities.
? The provision for income taxes in the fourth quarter reflected an annual effective tax rate of approximately 24 percent, compared with approximately
28 percent for the full year of 2017, excluding the items discussed below. The decrease was primarily due to the reduction in the U.S. corporate tax
rate beginning January 1, 2018, along with other changes in the geographic mix of profits from a tax perspective.
The provision for income taxes also included the following:
* Non-cash benefits of $63 million and $111 million in the fourth quarter of 2018 and 2017, respectively, from reductions in the valuation allowance
against U.S. state deferred tax assets due to improved profits in the United States.
* A $50 million increase in the fourth quarter of 2018 related to the $2.371 billion charge recorded in the fourth quarter of 2017 due to the enactment
of U.S. tax reform legislation.
* A tax benefit of $4 million in the fourth quarter of 2018, compared with $19 million in the fourth quarter of 2017, for the settlement of stock-based
compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.
* A $130 million benefit in the fourth quarter of 2017 related to the change from the third-quarter estimated annual tax rate.
Global Workforce
The global workforce increased about 7,300 during 2018, primarily due to higher production volumes.
December 31
2018 2017 Increase
Full-time 104, 98,400 5,600
employment 000
Flexible 20,0 18,300 1,700
workforce 00
Total 124, 116,70 7,300
000 0
Geographic
summary
U.S. 53,7 50,500 3,200
workforce 00
Non-U.S. 70,3 66,200 4,100
workforce 00
Total 124, 116,70 7,300
000 0
CONSTRUCTION INDUSTRIES
(Millions of
dollars)
Segment Sales
Fourth Sales Price Currency Inter-Segment Fourth $ %
Quarter Volume Realizati Quarte
2017 on r 2018
Change Change
Total Sales $ 5,2 $ 382 $ 111 $ (85 ) $ 2 $ 5, $ 410 8 %
95 70
5
Sales by Geographic Region
Fourth Fourth $ %
Quarter Quarter
2018 2017
Change Change
North America $ 2,7 $ 2,3 $ 403 17 %
49 46
Latin America 374 392 (18 ) (5 %)
EAME 1,063 976 87 9 %
Asia/Pacific 1,480 1,544 (64 ) (4 %)
External 5,666 5,258 408 8 %
Sales
Inter-segment 39 37 2 5 %
Total Sales $ 5,7 $ 5,2 $ 410 8 %
05 95
Segment Profit
Fourth Fourth %
Quarter Quarter
2018 2017
Change Change
Segment $ 845 $ 837 $ 8 1 %
Profit
Segment 14.8 % 15.8 % (1.0 pts)
Profit Margin
Construction Industries' total sales were $5.705 billion in the fourth quarter of 2018, compared with $5.295 billion in the fourth quarter of 2017. The
increase was mostly due to higher sales volume for construction equipment. Favorable price realization was mostly offset by unfavorable currency
impacts due to a stronger U.S. dollar.
? In North America, the sales increase was driven by higher demand for new equipment, with about half due to an increase in dealer inventories. The
increase in demand was primarily to support oil and gas activities, including pipelines, and non-residential building construction activities.
Favorable price realization also contributed to the sales improvement.
? Construction activities remained at low levels in Latin America.
? Sales increased in EAME as infrastructure, road and non-residential building construction activities drove higher demand in Europe, partially offset
by weakness in the Middle East.
? Sales in Asia/Pacific declined due to lower demand in China, partially offset by higher demand in a few other countries in the region. Unfavorable
currency impacts also contributed to the sales decline.
Construction Industries' profit was $845 million in the fourth quarter of 2018, compared with $837 million in the fourth quarter of 2017. The increase
in profit was a result of favorable price realization and higher sales volume, mostly offset by higher manufacturing costs, including material, labor
and freight costs.
RESOURCE INDUSTRIES
(Millions of
dollars)
Segment Sales
Fourth Sales Price Currency Inter-Segment Fourth $ %
Quarter Volume Realizat Quarte
2017 ion r 2018
Change Change
Total Sales $ 2,3 $ 504 $ 34 $ (32 ) $ (17 ) $ 2, $ 489 21 %
08 79
7
Sales by Geographic Region
Fourth Fourth $ %
Quarter Quarter
2018 2017
Change Change
North America $ 906 $ 791 $ 115 15 %
Latin America 466 384 82 21 %
EAME 554 475 79 17 %
Asia/Pacific 785 555 230 41 %
External 2,711 2,205 506 23 %
Sales
Inter-segment 86 103 (17 ) (17 %)
Total Sales $ 2,7 $ 2,3 $ 489 21 %
97 08
Segment Profit
Fourth Fourth %
Quarter Quarter
2018 2017
Change Change
Segment $ 400 $ 210 $ 190 90 %
Profit
Segment 14.3 % 9.1 % 5.2 pts
Profit Margin
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