DJ Caterpillar Inc.: Form 8-K Exhibit 99.1
Caterpillar Inc.
Caterpillar Inc.: Form 8-K Exhibit 99.1
07-Aug-2020 / 00:20 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Exhibit 99.1
Caterpillar Inc.
2Q 2020 Earnings Release
July 31, 2020
FOR IMMEDIATE RELEASE
Caterpillar Reports Second-Quarter 2020 Results
($ in billions except profit per Second Quarter
share)
Sales and Revenues
2020
2019
$10.0 $14.4
Profit Per Share $0.84 $2.83
Second-quarter sales and revenues decreased 31%; profit per share declined 70%
Strong balance sheet; $8.8 billion of enterprise cash
DEERFIELD, Ill. - Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2020 sales and
revenues of $10.0 billion, a 31% decrease compared with $14.4 billion in the second quarter of
2019. The decline was due to lower sales volume driven by lower end-user demand and the impact
from changes in dealer inventories. Dealers decreased machine and engine inventories about $1.4
billion during the second quarter of 2020, compared with an increase of about $500 million during
the second quarter of 2019.
Second-quarter 2020 profit per share was $0.84, compared with $2.83 profit per share in the second
quarter of 2019. Profit per share in the second quarter of 2020 included pre-tax remeasurement
losses of $122 million, or $0.19 per share, resulting from the settlements of pension obligations.
Operating profit margin was 7.8% for the second quarter of 2020, compared with 15.3% for the
second quarter of 2019.
For the first half of 2020, enterprise operating cash flow was $2.5 billion. Caterpillar ended the
second quarter with $8.8 billion of enterprise cash and $18.5 billion of available liquidity
sources. In July, Cat Financial issued $1.5 billion of new three-year and 18-month medium-term
notes to supplement its liquidity position.
Response to COVID-19 and Global Business Conditions
"I am proud of the global team's continued focus on safety while executing our strategy and
serving our customers," said Caterpillar Chairman and CEO Jim Umpleby. "In the second quarter, our
employees and dealers remained dedicated to providing the essential products and services the
world needs under very challenging conditions."
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Operational Status
Caterpillar continues to implement safeguards in its facilities to protect team members, including
increased frequency of cleaning and disinfecting, social distancing practices and other measures
consistent with specific regulatory requirements and guidance from health authorities.
As of mid-July 2020, globally and across Caterpillar's three primary segments, nearly all of the
company's primary production facilities continued to operate. This continues to fluctuate as
conditions warrant, including the pace of economic recovery and the potential for additional
COVID-related temporary shutdowns.
The company has continued to take actions to reduce costs and prioritize its spending to provide
for investment in services and expanded offerings, key elements of its strategy for profitable
growth, which was introduced in 2017.
Outlook
Caterpillar's financial results for the remainder of 2020 will be impacted by continued global
economic uncertainty due to the COVID-19 pandemic. As such, Caterpillar withdrew its earnings
guidance on March 26 and is not providing a financial outlook for 2020 at this time.
"We are well positioned for these challenging times because of the successful execution of our
strategy," said Umpleby. "We are focused on employee safety and maintaining a competitive and
flexible cost structure while continuing to invest in services and expanded offerings to better
serve our customers. We will adjust production as conditions warrant and are prepared to respond
quickly to any positive or negative changes in customer demand."
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CONSOLIDATED RESULTS
Consolidated Sales and Revenues
The chart above graphically illustrates reasons for the change in consolidated sales and revenues
between the second quarter of 2019 (at left) and the second quarter of 2020 (at right).
Caterpillar management utilizes these charts internally to visually communicate with the company's
Board of Directors and employees.
Total sales and revenues for the second quarter of 2020 were $9.997 billion, a decrease of $4.435
billion, or 31%, compared with $14.432 billion in the second quarter of 2019. The decline was due
to lower sales volume driven by lower end-user demand and the impact from changes in dealer
inventories. Dealers decreased machine and engine inventories about $1.4 billion during the second
quarter of 2020, compared with an increase of about $500 million during the second quarter of
2019. The changes in dealer inventories came primarily in Construction Industries and Resource
Industries.
Unfavorable price realization also contributed to the sales decline due to the geographic mix of
sales and competitive market conditions in China. Sales were lower across all regions and in the
three primary segments.
Sales and Revenues by Segment
(Millions of Second Sales Price Currency Inter- Second $ %
dollars) Quarter Volume Reali Segment Quarter Change Chang
zatio / e
n Other
2019 2020
Construction $ 6,467 $ $ $ (81) $ (5) $ 4,048 $ (37%)
Industries (2,075 (258) (2,419
) )
Resource 2,819 (933) (23) (45) 8 1,826 (993) (35%)
Industries
Energy & 5,486 (942) 23 (64) (354) 4,149 (1,337 (24%)
Transportati )
on
All Other 125 (5) - (1) (4) 115 (10) (8%)
Segment
Corporate (1,226) 43 (1) 1 355 (828) 398
Items and
Eliminations
Machinery, 13,671 (3,912 (259) (190) - 9,310 (4,361 (32%)
Energy & ) )
Transportati
on
Financial 873 - - - (110) 763 (110) (13%)
Products
Segment
Corporate (112) - - - 36 (76) 36
Items and
Eliminations
Financial 761 - - - (74) 687 (74) (10%)
Products
Revenues
Consolidated $ $ $ $ (190) $ (74) $ 9,997 $ (31%)
Sales and 14,432 (3,912 (259) (4,435
Revenues ) )
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Sales and Revenues by Geographic Region
(Millions of North Latin EAME Asia/Pacific External Inter-Segment Total
dollars) America America Sales and Sales and
Second Revenues Revenues
Quarter 2020
$ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg
Construction $ (54%) $ (46%) $ (16%) $ (10%) $ (37%) $ 16 (24%) $ (37%)
Industries 1,60 212 933 1,283 4,032 4,048
4
Resource 507 (52%) 270 (40%) 379 (15%) 554 (27%) 1,710 (37%) 116 7% 1,826 (35%)
Industries
Energy & 1,81 (21%) 197 (39%) 929 (20%) 599 (19%) 3,541 (22%) 608 (37%) 4,149 (24%)
Transportati 6
on
All Other 7 (50%) 1 -% 5 25% 15 -% 28 (18%) 87 (4%) 115 (8%)
Segment
Corporate 2 - (2) (1) (827) (828)
Items and
Eliminations 1)
Machinery, 3,93 (42%) 679 (42%) 2,2 (17%) 2,449 (17%) 9,310 (32%) - -% 9,310 (32%)
Energy & 6 46
Transportati
on
Financial 493 (12%) 60 (21%) 96 (6%) 114 (14%) 763 (13%) - -% 763 (13%)
Products
Segment
Corporate (43) (9) (9) (15) (76) - (76)
Items and
Eliminations
Financial 450 (8%) 51 (22%) 87 (6%) 99 (12%) 687 (10%) - -% 687 (10%)
Products
Revenues
Consolidated $ (40%) $ (41%) $ (17%) $ (17%) $ (31%) $ - -% $ (31%)
Sales and 4,38 730 2,3 2,548 9,997 9,997
Revenues 6 33
Second
Quarter 2019
Construction $ $ $ $ $ $ 21 $
Industries 3,51 392 1,1 1,433 6,446 6,467
3 08
Resource 1,05 448 446 759 2,711 108 2,819
Industries 8
Energy & 2,29 325 1,1 742 4,524 962 5,486
Transportati 7 60
on
All Other 14 1 4 15 34 91 125
Segment
Corporate (39) (5) 2 (44) (1,182) (1,22
Items and 6)
Eliminations 2)
Machinery, 6,84 1,16 2,7 2,951 13,67 - 13,67
Energy & 3 4 13 1 1
Transportati
on
Financial 563 76 102 132 873 - 873
Products
Segment
Corporate (72) (11) (9) (20) (112) - (112)
Items and
Eliminations
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DJ Caterpillar Inc.: Form 8-K Exhibit 99.1 -2-
Financial 491 65 93 112 761 - 761
Products
Revenues
Consolidated $ $ $ $ $ $ - $
Sales and 7,33 1,22 2,8 3,063 14,43 14,43
Revenues 4 9 06 2 2
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Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in consolidated operating profit
between the second quarter of 2019 (at left) and the second quarter of 2020 (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 second quarter of 2020 was $784 million, a decrease of $1.429 billion, or
65%, compared with $2.213 billion in the second quarter of 2019. The decrease was due to lower
sales volume and unfavorable price realization, partially offset by favorable manufacturing costs
and lower selling, general and administrative (SG&A) and research and development (R&D) expenses.
Favorable manufacturing costs were mostly driven by lower period manufacturing costs. Both period
manufacturing costs and SG&A/R&D expenses benefited from reduced short-term incentive compensation
expense and other cost reductions related to lower sales volumes.
Profit (Loss) by Segment
Second Quarter Second Quarter $ %
(Millions of 2020 2019 Change Change
dollars)
Construction $ 518 $ 1,247 $ (58%)
Industries (729)
Resource 152 481 (329) (68%)
Industries
Energy & 624 886 (262) (30%)
Transportatio
n
All Other (3) 11 (14) n/a
Segment
Corporate (542) (441) (101)
Items and
Eliminations
Machinery, 749 2,184 (1,435 (66%)
Energy & )
Transportatio
n
Financial 148 193 (45) (23%)
Products
Segment
Corporate (38) (50) 12
Items and
Eliminations
Financial 110 143 (33) (23%)
Products
Consolidating (75) (114) 39
Adjustments
Consolidated $ 784 $ 2,213 $ (65%)
Operating (1,429
Profit )
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Other Profit/Loss and Tax Items
? Other income (expense) in the second quarter of 2020 was income of $29 million, compared with
income of $68 million in the second quarter of 2019. The change was primarily due to the
unfavorable impact of pension and other postemployment benefit (OPEB) plans, including $122
million of remeasurement losses resulting from the settlements of pension obligations, partially
offset by favorable impacts from foreign currency exchange gains (losses), primarily due to the
Australian dollar.
? The provision for income taxes for the second quarter of 2020 reflected an estimated annual
tax rate of 31%, excluding a $21 million discrete tax benefit related to the $122 million of
remeasurement losses resulting from the settlements of pension obligations. The tax rate was 26%
for the second quarter of 2019. The increase in the estimated annual tax rate was primarily
related to changes in the expected geographic mix of profits from a tax perspective for 2020,
including the impact of U.S. tax on non-U.S. earnings as a result of U.S. tax reform.
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CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
Second Sales Price Inter- Second $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 6,467 $ (2,075) $ (258) $ (81) $ (5) $ 4,048 $ (2,419) (37%)
Sales by Geographic Region
Second Second $ %
Quarter 2020 Quarter 2019 Change Change
North America $ 1,604 $ 3,513 $ (1,909) (54%)
Latin America 212 392 (180) (46%)
EAME 933 1,108 (175) (16%)
Asia/Pacific 1,283 1,433 (150) (10%)
External Sales 4,032 6,446 (2,414) (37%)
Inter-segment 16 21 (5) (24%)
Total Sales $ 4,048 $ 6,467 $ (2,419) (37%)
Segment Profit
Second Second %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 518 $ 1,247 $ (729) (58%)
Segment Profit Margin 12.8% 19.3% (6.5 pts)
Construction Industries' total sales were $4.048 billion in the second quarter of 2020, a decrease
of $2.419 billion, or 37%, compared with $6.467 billion in the second quarter of 2019. The
decrease was due to lower sales volume, driven by lower end-user demand and the impact from
changes in dealer inventories. In all regions, dealers decreased inventories during the second
quarter of 2020, compared with an increase during the second quarter of 2019. Unfavorable price
realization also contributed to the sales decline due to the geographic mix of sales and
competitive market conditions in China.
In North America, sales decreased mostly due to lower sales volume driven by lower end-user demand
and the impact from changes in dealer inventories. The lower end-user demand was driven primarily
by pipeline and road construction.
Sales declined in Latin America primarily due to lower end-user demand across the region, the
impact from changes in dealer inventories and unfavorable currency impacts from a weaker Brazilian
real.
In EAME, sales decreased mostly because of lower sales volume across the region, driven by lower
end-user demand and the impact from changes in dealer inventories.
Sales declined in Asia/Pacific primarily due to unfavorable price realization and currency impacts
from a weaker Chinese yuan. In China, sales were about flat as higher end-user demand was mostly
offset by the impact of changes in dealer inventories and unfavorable price realization.
Construction Industries' profit was $518 million in the second quarter of 2020, a decrease of $729
million, or 58%, compared with $1.247 billion in the second quarter of 2019. The decrease was
mainly due to lower sales volume and unfavorable price realization, partially offset by favorable
manufacturing costs and lower SG&A/R&D expenses. Favorable manufacturing costs were primarily
attributed to lower period manufacturing costs. Both period manufacturing costs and SG&A/R&D
expenses benefited from reduced short-term incentive compensation expense and other cost
reductions related to lower sales volumes.
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RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
Second Sales Price Inter- Second $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 2,819 $ (933) $ (23) $ (45) $ 8 $ 1,826 $ (993) (35%)
Sales by Geographic Region
Second Second $ %
Quarter 2020 Quarter 2019 Change Change
North America $ 507 $ 1,058 $ (551) (52%)
Latin America 270 448 (178) (40%)
EAME 379 446 (67) (15%)
Asia/Pacific 554 759 (205) (27%)
External Sales 1,710 2,711 (1,001) (37%)
Inter-segment 116 108 8 7%
Total Sales $ 1,826 $ 2,819 $ (993) (35%)
Segment Profit
Second Second %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 152 $ 481 $ (329) (68%)
Segment Profit Margin 8.3% 17.1% (8.8 pts)
Resource Industries' total sales were $1.826 billion in the second quarter of 2020, a decrease of
$993 million, or 35%, compared with $2.819 billion in the second quarter of 2019. The decrease was
due to lower sales volume, driven by changes in dealer inventories and lower end-user demand.
Dealers decreased inventories during the second quarter of 2020, compared with an increase during
the second quarter of 2019. Lower end-user demand was primarily driven by equipment supporting
non-residential construction and quarry and aggregates. Mining equipment end-user demand was down
in the quarter, though to a lesser extent. The company's mining customers faced production
disruptions impacting machine utilization and aftermarket parts demand.
Resource Industries' profit was $152 million in the second quarter of 2020, a decrease of $329
million, or 68%, compared with $481 million in the second quarter of 2019. The decrease was mainly
because of lower sales volume, partially offset by favorable manufacturing costs. Favorable
manufacturing costs were mostly due to lower period manufacturing costs driven by lower short-term
incentive compensation expense, other cost-reduction actions implemented in response to lower
sales volumes and the benefits of prior restructuring programs.
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ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
Second Sales Price Inter- Second $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 5,486 $ (942) $ 23 $ (64) $ (354) $ 4,149 $ (1,337) (24%)
Sales by Application
Second Second $ %
Quarter 2020 Quarter 2019 Change Change
Oil and Gas $ 1,027 $ 1,305 $ (278) (21%)
Power Generation 895 1,021 (126) (12%)
Industrial 678 957 (279) (29%)
Transportation 941 1,241 (300) (24%)
External Sales 3,541 4,524 (983) (22%)
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DJ Caterpillar Inc.: Form 8-K Exhibit 99.1 -3-
Inter-segment 608 962 (354) (37%)
Total Sales $ 4,149 $ 5,486 $ (1,337) (24%)
Segment Profit
Second Second %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 624 $ 886 $ (262) (30%)
Segment Profit Margin 15.0% 16.2% (1.2 pts)
Energy & Transportation's total sales were $4.149 billion in the second quarter of 2020, a
decrease of $1.337 billion, or 24%, compared with $5.486 billion in the second quarter of 2019.
Sales declined across all applications and inter-segment engine sales.
Oil and Gas - Sales decreased mainly due to lower demand in North America for reciprocating
engines used in gas compression and decreased sales of engine aftermarket parts, partially offset
by higher sales of turbines and turbine-related services.
Power Generation - Sales decreased primarily due to lower sales volume in small reciprocating
engine applications and engine aftermarket parts.
Industrial - Sales decreased due to lower demand across all regions.
Transportation - Sales declined in rail due to lower deliveries of locomotives and related
services and in marine applications, primarily in EAME and Asia/Pacific.
Energy & Transportation's profit was $624 million in the second quarter of 2020, a decrease of
$262 million, or 30%, compared with $886 million in the second quarter of 2019. The decrease was
due to lower sales volume, partially offset by lower manufacturing costs and SG&A/R&D expenses.
Manufacturing costs and SG&A/R&D expenses were both impacted by a reduction in short-term
incentive compensation expense and other cost reductions related to lower sales volumes.
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FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Second Quarter Second Quarter $ %
2020 2019 Change
Change
North America $ 493 $ 563 $ (70) (12%)
Latin America 60 76 (16) (21%)
EAME 96 102 (6) (6%)
Asia/Pacific 114 132 (18) (14%)
Total Revenues $ 763 $ 873 $ (110) (13%)
Segment Profit
Second Second %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 148 $ 193 $ (45) (23%)
Financial Products' segment revenues were $763 million in the second quarter of 2020, a decrease
of $110 million, or 13%, from the second quarter of 2019. The decrease was primarily because of
lower average financing rates and lower average earning assets across all regions.
Financial Products' segment profit was $148 million in the second quarter of 2020, compared with
$193 million in the second quarter of 2019. The decrease was due to lower net yield on average
earning assets, lower average earning assets and higher provision for credit losses at Cat
Financial. These unfavorable impacts were partially offset by a reduction in SG&A expenses
primarily due to lower short-term incentive compensation and employee benefit expenses and a
favorable impact from equity securities in Insurance Services.
At the end of the second quarter of 2020, past dues at Cat Financial were 3.74%, compared with
3.38% at the end of the second quarter of 2019. Past dues increased primarily due to the impact of
the COVID-19 pandemic. Write-offs, net of recoveries, were $30 million for the second quarter of
2020, compared with $74 million for the second quarter of 2019. As of June 30, 2020, Cat
Financial's allowance for credit losses totaled $515 million, or 1.92% of finance receivables,
compared with $457 million, or 1.69% of finance receivables at March 31, 2020. The increase in
allowance for credit losses was driven in part by expectations of the lingering impact from
COVID-19. The allowance for credit losses at year-end 2019 was $424 million, or 1.50% of finance
receivables.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $580 million in the second quarter of 2020, an
increase of $89 million from the second quarter of 2019, primarily due to an unfavorable change in
fair value adjustments related to deferred compensation plans and segment reporting methodology
differences.
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Notes
i) Glossary of terms is included on the Caterpillar website at
https://investors.caterpillar.com/overview/default.aspx. [1]
ii) End-user demand is demonstrated by the company's Rolling 3 Month Retail Sales Statistics
filed in a Form 8-K on Friday, July 31, 2020.
iii) Information on non-GAAP financial measures is included in the appendix on page 12.
iv) Some amounts within this report are rounded to the millions or billions and may not add.
v) Caterpillar will conduct a teleconference and live webcast, with a slide presentation,
beginning at 7:30 a.m. Central Time on Friday, July 31, 2020, to discuss its 2020 second-quarter
results. The accompanying slides will be available before the webcast on the Caterpillar website
at https://investors.caterpillar.com/events-presentations/default.aspx. [2]
About Caterpillar
Since 1925, Caterpillar Inc. has been helping our customers build a better world - making
sustainable progress possible and driving positive change on every continent. With 2019 sales and
revenues of $53.8 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. Services offered throughout the product life cycle, cutting-edge technology and
decades of product expertise set Caterpillar apart, providing exceptional value to help our
customers succeed. The company principally operates through three primary segments - Construction
Industries, Resource Industries and Energy & Transportation - and provides financing and related
services through its Financial Products segment. For more information, visit caterpillar.com [3].
To connect on social media, visit caterpillar.com/social-media. [4]
Caterpillar's latest financial results are also available online:
https://investors.caterpillar.com/overview/default.aspx [5]
https://investors.caterpillar.com/financials/quarterly-results/default.aspx [6] (live
broadcast/replays of quarterly conference call)
Caterpillar investor relations contact: Jennifer Driscoll, +1 224-551-4382 or [7] Driscoll
Jennifer@cat.com
Caterpillar media contact: Kate Kenny, +1 309-361-9333 or [8] Kenny Kate@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," "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; (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; (xxvi) the
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DJ Caterpillar Inc.: Form 8-K Exhibit 99.1 -4-
duration and geographic spread of, business disruptions caused by, and the overall global economic
impact of, the COVID-19 pandemic; and (xxvii) other factors described in more detail in
Caterpillar's Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.
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APPENDIX
NON-GAAP FINANCIAL MEASURES
The following definitions are provided for the non-GAAP financial measures. These non-GAAP
financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely
to be comparable to the calculation of similar measures for other companies. Management does not
intend these items to be considered in isolation or as a substitute for the related GAAP measures.
Adjusted Profit Per Share
The company believes it is important to separately quantify the profit impact of a significant
item in order for the company's results to be meaningful to readers. This item is remeasurement
losses resulting from the settlements of pension obligations in the second quarter of 2020. The
company does not consider this item 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 2020, excluding
mark-to-market gains or losses 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
2020 2019
Profit per share $ 0.84 $ 2.83
Per share remeasurement losses of pension $ 0.19 $ -
obligations1
Adjusted profit per share $ 1.03 $ 2.83
1 At statutory tax rates.
Note: On March 26, 2020, the company withdrew its previous financial outlook due to the continued
global economic uncertainty related to the COVID-19 pandemic.
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 13-23 reconcile Machinery, Energy & Transportation with Financial
Products on the equity basis to Caterpillar Inc. consolidated financial information.
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Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
Sales and Three Months Ended June Six Months Ended
revenues: 30, June 30,
2020 2019 2020 2019
Sales of $ 9,310 $ 13,671 $ 19,224 $ 26,395
Machinery, Energy
& Transportation
Revenues of 687 761 1,408 1,503
Financial
Products
Total sales and 9,997 14,432 20,632 27,898
revenues
Operating costs:
Cost of goods 7,113 9,941 14,379 18,944
sold
Selling, general 1,179 1,309 2,300 2,628
and
administrative
expenses
Research and 341 441 697 876
development
expenses
Interest expense 149 192 324 382
of Financial
Products
Other operating 431 336 744 648
(income) expenses
Total operating 9,213 12,219 18,444 23,478
costs
Operating profit 784 2,213 2,188 4,420
Interest expense 135 103 248 206
excluding
Financial
Products
Other income 29 68 251 228
(expense)
Consolidated 678 2,178 2,191 4,442
profit before
taxes
Provision 227 565 652 952
(benefit) for
income taxes
Profit of 451 1,613 1,539 3,490
consolidated
companies
Equity in profit 8 6 13 13
(loss) of
unconsolidated
affiliated
companies
Profit of 459 1,619 1,552 3,503
consolidated and
affiliated
companies
Less: Profit 1 (1) 2 2
(loss)
attributable to
noncontrolling
interests
Profit 1 $ 458 $ 1,620 $ 1,550 $ 3,501
Profit per common $ 0.84 $ 2.85 $ 2.85 $ 6.14
share
Profit per common $ 0.84 $ 2.83 $ 2.83 $ 6.08
share - diluted 2
Weighted-average
common shares
outstanding
(millions)
- Basic 541.5 567.8 544.5 569.9
- Diluted 2 544.5 573.1 548.2 575.8
(more)
14
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
Assets June 30, December 31,
Current assets: 2020 2019
Cash and short-term
investments
Receivables - trade and
other
Receivables - finance
Prepaid expenses and
other current assets
Inventories
$ 8,784 7,134 $ 8,284 8,568 9,336
8,781 1,792 1,739 11,266
11,371
Total current assets 37,862 39,193
Property, plant and 12,357 12,904
equipment - net
Long-term receivables - 1,167 1,193
trade and other
Long-term receivables - 12,560 12,651
finance
Noncurrent deferred and 1,459 1,411
refundable income taxes
Intangible assets 1,420 1,565
Goodwill 6,192 6,196
Other assets 3,549 3,340
Total assets $ 76,566 $ 78,453
Liabilities
Current liabilities:
Short-term borrowings:
=- Machinery, Energy & $ 13 $ 5
Transportation
=- Financial Products 4,301 5,161
Accounts payable 5,083 5,957
Accrued expenses 3,547 3,750
Accrued wages, salaries 958 1,629
and employee benefits
Customer advances 1,227 1,187
Dividends payable 558 567
Other current liabilities 2,143 2,155
Long-term debt due within
one year:
=- Machinery, Energy & 1,395 16
Transportation
=- Financial Products 6,006 6,194
Total current liabilities 25,231 26,621
Long-term debt due after
one year:
=- Machinery, Energy & 9,729 9,141
Transportation
=- Financial Products 17,178 17,140
Liability for 6,285 6,599
postemployment benefits
Other liabilities 4,366 4,323
Total liabilities 62,789 63,824
Shareholders' equity
Common stock 6,120 5,935
Treasury stock (25,412) (24,217)
Profit employed in the 34,841 34,437
business
Accumulated other (1,815) (1,567)
comprehensive income
(loss)
Noncontrolling interests 43 41
Total shareholders' 13,777 14,629
equity
Total liabilities and $ 76,566 $ 78,453
shareholders' equity
(more)
15
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Cash flow from operating Six Months Ended June 30,
activities:
2020 2019
Profit of consolidated and $ 1,552 $ 3,503
affiliated companies
Adjustments for non-cash
items:
Depreciation and amortization 1,222 1,288
Net gain on remeasurement of (132) -
pension obligations
Provision (benefit) for (32)
deferred income taxes
34)
Other 674 440
Changes in assets and
liabilities, net of
acquisitions and
divestitures:
Receivables - trade and other 1,176 (166)
Inventories (145) (487)
Accounts payable (655) 134
Accrued expenses (253) 151
Accrued wages, salaries and (648) (979)
employee benefits
Customer advances (2) 14
Other assets - net (7) (120)
Other liabilities - net (229)
1)
Net cash provided by (used 2,521 3,709
for) operating activities
Cash flow from investing
activities:
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Capital expenditures - (472) (479)
excluding equipment leased to
others
Expenditures for equipment (526) (746)
leased to others
Proceeds from disposals of 382 422
leased assets and property,
plant and equipment
Additions to finance (6,712) (6,181)
receivables
Collections of finance 6,801 5,902
receivables
Proceeds from sale of finance 31 119
receivables
Investments and acquisitions (49) (3)
(net of cash acquired)
Proceeds from sale of 13 -
businesses and investments
(net of cash sold)
Proceeds from sale of 151 170
securities
Investments in securities (369) (243)
Other - net 7 (40)
Net cash provided by (used (743) (1,079)
for) investing activities
Cash flow from financing
activities:
Dividends paid (1,125) (986)
Common stock issued, (10) 39
including treasury shares
reissued
Common shares repurchased (1,130) (2,105)
Proceeds from debt issued 6,159 5,340
(original maturities greater
than three months)
Payments on debt (original (4,629) (4,901)
maturities greater than three
months)
Short-term borrowings - net (477) (436)
(original maturities three
months or less)
Other - net (1) (2)
Net cash provided by (used (1,213) (3,051)
for) financing activities
Effect of exchange rate (66) (10)
changes on cash
Increase (decrease) in cash 499 (431)
and short-term investments
and restricted cash
Cash and short-term 8,292 7,890
investments and restricted
cash at beginning of period
Cash and short-term $ 8,791 $ 7,459
investments and restricted
cash at end of period
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.
(more)
16
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2020
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Sales of
Machinery,
Energy &
Transportati
on
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
$ 9,310 $ 9,310 $ - $ -
Revenues of 687 - 780 2
Financial
Products
(93)
Total sales 9,997 9,310 780 (93)
and revenues
Operating
costs:
Cost of 7,113 7,114 - 3
goods sold
(1)
Selling, 1,179 984 201 (6) 3
general and
administrati
ve expenses
Research and 341 341 - -
development
expenses
Interest 149 - 149 -
expense of
Financial
Products
Other 431 122 320 3
operating
(income)
expenses
(11)
Total 9,213 8,561 670 (18)
operating
costs
Operating 784 749 110 (75)
profit
Interest 135 135 - -
expense
excluding
Financial
Products
Other income 29 (77) 31 75 4
(expense)
Consolidated 678 537 141 -
profit
before taxes
Provision 227 190 37 -
(benefit)
for income
taxes
Profit of 451 347 104 -
consolidated
companies
Equity in 8 8 - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 99 - (99) 5
profit of
Financial
Products'
subsidiaries
Profit of 459 454 104 (99)
consolidated
and
affiliated
companies
Less: Profit 1 (4) 5 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 6 $ 458 $ 458 $ 99 $ (99)
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 discount recorded by Machinery, Energy & Transportation on receivables sold to
Financial Products and of interest earned between Machinery, Energy & Transportation and Financial
Products.
5 Elimination of Financial Products' profit due to equity method of accounting.
6 Profit attributable to common shareholders.
(more)
17
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
Sales of $ 13,671 $ 13,671 $ - $ -
Machinery,
Energy &
Transportati
on
Revenues of 761 - 894 2
Financial
Products
(133)
Total sales 14,432 13,671 894 (133)
and revenues
Operating
costs:
Cost of 9,941 9,943 - 3
goods sold
(2)
Selling, 1,309 1,102 209 (2) 3
general and
administrati
ve expenses
Research and 441 441 - -
development
expenses
Interest 192 - 201 4
expense of
Financial
Products
(9)
Other 336 1 341 (6) 3
operating
(income)
expenses
Total 12,219 11,487 751 (19)
operating
costs
Operating 2,213 2,184 143 (114)
profit
Interest 103 105 - (2) 4
expense
excluding
Financial
Products
Other income 68 (63) 19 112 5
(expense)
Consolidated 2,178 2,016 162 -
profit
before taxes
Provision 565 502 63 -
(benefit)
for income
taxes
Profit of 1,613 1,514 99 -
consolidated
companies
Equity in 6 6 - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 94 - (94) 6
profit of
Financial
Products'
subsidiaries
Profit of 1,619 1,614 99 (94)
consolidated
and
affiliated
companies
Less: Profit (1) (6) 5 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 7 $ 1,620 $ 1,620 $ 94 $ (94)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the
equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy & Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial
Products.
4 Elimination of interest expense recorded between Financial Products and Machinery, Energy &
Transportation.
5 Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to
Financial Products and of interest earned between Machinery, Energy & Transportation and Financial
Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common shareholders.
(more)
18
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2020
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
Sales of $ 19,224 $ 19,224 $ - $ -
Machinery,
Energy &
Transportati
on
Revenues of 1,408 - 1,610 (202) 2
Financial
Products
Total sales 20,632 19,224 1,610 (202)
and revenues
Operating
costs:
Cost of 14,379 14,381 - (2) 3
goods sold
,
Selling, 2,300 1,924 383 (7) 3
general and
administrati
ve expenses
Research and 697 697 - -
development
expenses
Interest 324 - 325 4
expense of
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