DJ Caterpillar Inc.: Reports Third Quarter 2019 Results_Exhibit 99.1
Caterpillar Inc.
Caterpillar Inc.: Reports Third Quarter 2019 Results_Exhibit 99.1
23-Oct-2019 / 16:19 CET/CEST
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The issuer is solely responsible for the content of this announcement.
Exhibit 99.1
Caterpillar Inc.
3Q 2019 Earnings Release
October 23, 2019
FOR IMMEDIATE RELEASE
Caterpillar Reports Third-Quarter 2019 Results
Third Quarter
Highlights:
($ in billions 2019 2018 - Sales and revenues
except profit down 6%; profit per
per share) share down 8%
Sales and $12.8 $13.5 - Returned about $1.8
Revenues billion in share
repurchases and
dividends
Profit Per $2.66 $2.88 - Full-year profit
Share per share outlook
range lowered to
$10.90 to $11.40
DEERFIELD, Ill. - 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
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 Third Sales Price Currency Inter-Segment / Third $ %
dollars) Quarte Other Quarte
r 2018 r 2019
Volume Realization Change Change
Construction $ 5, $ (358 ) $ 26 $ (47 ) $ (15 ) $ 5, $ (394 ) (7%)
Industries 68 28
3 9
Resource 2,63 (389 ) 50 (20 ) 32 2,31 (327 ) (12%)
Industries 8 1
Energy & 5,55 31 11 (57 ) (88 ) 5,45 (103 ) (2%)
Transportati 5 2
on
All Other 113 (9 ) - (1 ) 8 111 (2 ) (2%)
Segment
Corporate (1,2 ) (26 ) (1 ) 1 63 (1,1 ) 37
Items and 26 89
Eliminations
Machinery, 12,7 (751 ) 86 (124 ) - 11,9 (789 ) (6%)
Energy & 63 74
Transportati
on
Financial 845 - - - 20 865 20 2%
Products
Segment
Corporate (98 ) - - - 17 (81 ) 17
Items and
Eliminations
Financial 747 - - - 37 784 37 5%
Products
Revenues
Consolidated $ 13 $ (751 ) $ 86 $ (124 ) $ 37 $ 12 $ (752 ) (6%)
Sales and ,5 ,7
Revenues 10 58
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 $ % Chg
dollars)
Third
Quarter 2019
Construction $ 2, 3% $ 413 12% $ 1, (6%) $ 1,0 (29%) $ 5, (7%) $ 14 (52%) $ 5, (7%)
Industries 72 04 86 27 28
8 8 5 9
Resource 789 (7%) 349 (18%) 396 (31%) 645 (6%) 2,17 (14%) 132 32% 2,31 (12%)
Industries 9 1
Energy & 2,12 (8%) 378 15% 1,22 4% 831 10% 4,56 -% 890 (9%) 5,45 (2%)
Transportati 9 4 2 2
on
All Other 1 (93%) 6 -% 8 100% 12 (33%) 27 (27%) 84 11% 111 (2%)
Segment
Corporate (62 ) 1 (7 ) (1 ) (69 ) (1,120 ) (1,1 )
Items and 89
Eliminations
Machinery, 5,58 (3%) 1,147 2% 2,66 (7%) 2,573 (14%) 11,9 (6%) - -% 11,9 (6%)
Energy & 5 9 74 74
Transportati
on
Financial 560 -% 79 16% 102 1% 124 6% 865 2% - -% 865 2%
Products
Segment
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Corporate (43 ) (15 ) (8 ) (15 ) (81 ) - (81 )
Items and
Eliminations
Financial 517 4% 64 14% 94 (1%) 109 10% 784 5% - -% 784 5%
Products
Revenues
Consolidated $ 6, (3%) $ 1,2 2% $ 2, (7%) $ 2,6 (13%) $ 12 (6%) $ - -% $ 12 (6%)
Sales and 10 11 76 82 ,7 ,7
Revenues 2 3 58 58
Third
Quarter 2018
Construction $ 2, $ 369 $ 1, $ 1,5 $ 5, $ 29 $ 5,
Industries 64 10 30 65 68
6 9 4 3
Resource 849 427 574 688 2,53 100 2,63
Industries 8 8
Energy & 2,30 330 1,18 758 4,57 978 5,55
Transportati 9 0 7 5
on
All Other 15 - 4 18 37 76 113
Segment
Corporate (40 ) 1 (5 ) 1 (43 ) (1,183 ) (1,2 )
Items and 26
Eliminations
Machinery, 5,77 1,127 2,86 2,995 12,7 - 12,7
Energy & 9 2 63 63
Transportati
on
Financial 559 68 101 117 845 - 845
Products
Segment
Corporate (62 ) (12 ) (6 ) (18 ) (98 ) - (98 )
Items and
Eliminations
Financial 497 56 95 99 747 - 747
Products
Revenues
Consolidated $ 6, $ 1,1 $ 2, $ 3,0 $ 13 $ - $ 13
Sales and 27 83 95 94 ,5 ,5
Revenues 6 7 10 10
Consolidated Operating Profit
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 by Segment
(Millions of Third Third $ %
dollars) Quarter Quarter
2019 2018
Change Change
Construction $ 940 $ 1,0 $ (118 ) (11 %)
Industries 58
Resource 311 414 (103 ) (25 %)
Industries
Energy & 1,021 973 48 5 %
Transportatio
n
All Other (21 ) (10 ) (11 ) (110 %)
Segment
Corporate (363 ) (371 ) 8
Items and
Eliminations
Machinery, 1,888 2,064 (176 ) (9 %)
Energy &
Transportatio
n
Financial 218 201 17 8 %
Products
Segment
Corporate 21 (30 ) 51
Items and
Eliminations
Financial 239 171 68 40 %
Products
Consolidating (107 ) (100 ) (7 )
Adjustments
Consolidated $ 2,0 $ 2,1 $ (115 ) (5 %)
Operating 20 35
Profit
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 Sales Price Currency Inter-Segment Third $ %
Quarter Volume Realizatio Quarte
2018 n r 2019
Change Change
Total Sales $ 5,6 $ (358 ) $ 26 $ (47 ) $ (15 ) $ 5, $ (394 ) (7 %)
83 28
9
Sales by Geographic Region
Third Third $ %
Quarter Quarter
2019 2018
Change Change
North America $ 2,7 $ 2,64 $ 82 3 %
28 6
Latin America 413 369 44 12 %
EAME 1,048 1,109 (61 ) (6 %)
Asia/Pacific 1,086 1,530 (444 ) (29 %)
External 5,275 5,654 (379 ) (7 %)
Sales
Inter-segment 14 29 (15 ) (52 %)
Total Sales $ 5,2 $ 5,68 $ (394 ) (7 %)
89 3
Segment Profit
Third Third %
Quarter Quarter
2019 2018
Change Change
Segment $ 940 $ 1,05 $ (118 ) (11 %)
Profit 8
Segment 17.8 % 18.6 % (0.8 pts)
Profit Margin
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.
1) 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.
2) Sales were higher in Latin America, but construction activities remained at low levels.
3) 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.
4) 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 Sales Price Currency Inter-Segment Third $ %
Quarter Volume Realizatio Quarte
2018 n r 2019
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