DJ Caterpillar Inc.: Form 8-K Exhibit 99.1
Caterpillar Inc.
Caterpillar Inc.: Form 8-K Exhibit 99.1
28-Oct-2020 / 17:21 CET/CEST
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The issuer is solely responsible for the content of this announcement.
Exhibit 99.1
Caterpillar Inc.
3Q 2020 Earnings Release
October 27, 2020
FOR IMMEDIATE RELEASE
Caterpillar Reports Third-Quarter 2020 Results
($ in billions except Third Quarter
profit per share)
2020
2019
Sales and Revenues $9.9 $12.8
-
Third-quarter
sales and
revenues
decreased 23%;
profit per
share declined
54%
Profit Per Share $1.22 $2.66
- Strong
balance sheet;
$9.3 billion
of enterprise
cash
DEERFIELD Ill. - Caterpillar Inc. (NYSE: CAT) today announced third-quarter
2020 sales and revenues of $9.9 billion, a 23% decrease compared with $12.8
billion in the third quarter of 2019. The decline was primarily due to lower
sales volume driven by lower end-user demand for equipment and services.
Third-quarter 2020 profit per share was $1.22, compared with $2.66 profit
per share in the third quarter of 2019. Profit per share in the third
quarter of 2020 included pre-tax remeasurement losses of $77 million, or
$0.12 per share, resulting from the settlements of pension obligations.
Profit per share benefited from lower than expected taxes in the quarter.
Operating profit margin was 10.0% for the third quarter of 2020, compared
with 15.8% for the third quarter of 2019.
For the nine months ended September 30, 2020, enterprise operating cash flow
was $4.3 billion. Caterpillar ended the third quarter with $9.3 billion of
enterprise cash and more than $14 billion of available liquidity sources.
"I'm proud of our global team's performance as we continue to safely
navigate the pandemic while remaining firmly committed to serving our
customers," said Caterpillar Chairman and CEO Jim Umpleby. "Our
third-quarter results largely aligned with our expectations, and we're
encouraged by positive signs in certain industries and geographies. We're
executing our strategy and are ready to respond quickly to changing market
conditions."
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2
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 2019 (at left)
and the third 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 third quarter of 2020 were $9.881 billion,
a decrease of $2.877 billion, or 23%, compared with $12.758 billion in the
third quarter of 2019. The decline was mostly due to lower sales volume
driven by lower end-user demand for equipment and services and the impact
from changes in dealer inventories. Dealers decreased inventories more
during the third quarter of 2020 than during the third quarter of 2019.
Sales were lower across all regions and the three primary segments.
Sales and Revenues by Segment
(Millions of Third Sales Price Currency Inter- Third $ %
dollars) Quarter Volume Reali Segment Quarter Change Chang
zatio / e
n Other
2019 2020
Construction $ 5,289 $ $ $ (17) $ (6) $ 4,056 $ (23%)
Industries (1,150 (60) (1,233
) )
Resource 2,310 (425) (46) (4) (19) 1,816 (494) (21%)
Industries
Energy & 5,452 (1,086 (16) 15 (204) 4,161 (1,291 (24%)
Transportati ) )
on
All Other 111 (3) 1 - (3) 106 (5) (5%)
Segment
Corporate (1,188) 45 - - 232 (911) 277
Items and
Eliminations
Machinery, 11,974 (2,619 (121) (6) - 9,228 (2,746 (23%)
Energy & ) )
Transportati
on
Financial 865 - - - (141) 724 (141) (16%)
Products
Segment
Corporate (81) - - - 10 (71) 10
Items and
Eliminations
Financial 784 - - - (131) 653 (131) (17%)
Products
Revenues
Consolidated $ $ $ $ (6) $ (131) $ 9,881 $ (23%)
Sales and 12,758 (2,619 (121) (2,877
Revenues ) )
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3
Sales and Revenues by Geographic Region
External Sales Total Sales
North America Latin America EAME Asia/Pacific and Revenues Inter-Segment and
Revenues
(Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ %
Chg
Third Quarter 2020
Construction Industries $ 1,781 (35%) $ 230 (44%) $ 796 (24%) $ 1,241 14% $
4,048 (23%) $ 8 (43%) $ 4,056 (23%)
Resource Industries 487 (38%) 269 (23%) 384 (3%) 564 (13%) 1,704 (22%) 112
(15%) 1,816 (21%)
Energy & Transportation 1,584 (26%) 221 (42%) 1,113 (9%) 557 (33%) 3,475
(24%) 686 (23%) 4,161 (24%)
All Other Segment 10 900% 1 (83%) 1 (88%) 13 8% 25 (7%) 81 (4%) 106 (5%)
Corporate Items and Eliminations (22) (2) - - (24) (887) (911)
Machinery, Energy & Transportation 3,840 (31%) 719 (37%) 2,294 (14%) 2,375
(8%) 9,228 (23%) - -% 9,228 (23%)
Financial Products Segment 448 (20%) 63 (20%) 100 (2%) 113 (9%) 724 (16%) -
-% 724 (16%)
Corporate Items and Eliminations (37) (10) (10) (14) (71) - (71)
Financial Products Revenues 411 (21%) 53 (17%) 90 (4%) 99 (9%) 653 (17%) -
-% 653 (17%)
Consolidated Sales and Revenues $ 4,251 (30%) $ 772 (36%) $ 2,384 (14%) $
2,474 (8%) $ 9,881 (23%) $ - -% $ 9,881 (23%)
Third Quarter 2019
Construction Industries $ 2,728 $ 413 $ 1,048 $ 1,086 $ 5,275 $ 14 $ 5,289
Resource Industries 789 349 396 645 2,179 131 2,310
Energy & Transportation 2,129 378 1,224 831 4,562 890 5,452
All Other Segment 1 6 8 12 27 84 111
Corporate Items and Eliminations (62) 1 (7) (1) (69) (1,119) (1,188)
Machinery, Energy & Transportation 5,585 1,147 2,669 2,573 11,974 - 11,974
Financial Products Segment 560 79 102 124 865 - 865
Corporate Items and Eliminations (43) (15) (8) (15) (81) - (81)
Financial Products Revenues 517 64 94 109 784 - 784
Consolidated Sales and Revenues $ 6,102 $ 1,211 $ 2,763 $ 2,682 $ 12,758 $ -
$ 12,758
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4
Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in
consolidated operating profit between the third quarter of 2019 (at left)
and the third 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 third quarter of 2020 was $985 million, a decrease
of $1.035 billion, or 51%, compared with $2.020 billion in the third quarter
of 2019. The decrease was primarily due to lower sales volume. Favorable
selling, general and administrative (SG&A) and research and development
(R&D) expenses were mostly offset by unfavorable price realization and lower
profit from financial products.
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
Third Quarter Third $ %
Quart
er
(Millions of 2020 2019 Change Change
dollars)
Construction $ 585 $ 940 $ (355) (38%)
Industries
Resource 167 311 (144) (46%)
Industries
Energy & 492 1,021 (529) (52%)
Transportatio
n
All Other 27 (21) 48 n/a
Segment
Corporate (346) (363) 17
Items and
Eliminations
Machinery, 925 1,888 (963) (51%)
Energy &
Transportatio
n
Financial 142 218 (76) (35%)
Products
Segment
Corporate (15) 21 (36)
Items and
Eliminations
Financial 127 239 (112) (47%)
Products
Consolidating (67) (107) 40
Adjustments
Consolidated $ 985 $ $ (1,035) (51%)
Operating 2,020
Profit
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5
Other Profit/Loss and Tax Items
? Other income (expense) in the third quarter of 2020 was income of $14
million, compared with income of $88 million in the third quarter of 2019.
The change was primarily due to the unfavorable impacts from foreign
currency exchange gains (losses) and lower investment and interest income.
? The provision for income taxes for the third quarter of 2020 reflected
an estimated annual tax rate of 31%, excluding the discrete items
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DJ Caterpillar Inc.: Form 8-K Exhibit 99.1 -2-
discussed below, compared with 26% for the third 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.
In the third quarter of 2020, the company recorded discrete tax benefits of
$80 million to adjust prior year U.S. taxes and $13 million for the
settlement of stock-based compensation awards with associated tax deductions
in excess of cumulative U.S. GAAP compensation expense. In addition, the
company recorded a $12 million tax benefit related to the $77 million of
remeasurement losses resulting from the settlements of pension obligations.
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6
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
Third Sales Price Inter- Third $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 5,289 $ (1,150) $ (60) $ (17) $
(6) $
4,056 $
(1,233)
Sales by Region Third $ (23%)
Geographic
Third Quarter 2019 Change %
Change
Quarter 2020
North America $ 1,781 $ 2,728 $ (947) (35%)
Latin America 230 413 (183) (44%)
EAME 796 1,048 (252) (24%)
Asia/Pacific 1,241 1,086 155 14%
External Sales 4,048 5,275 (1,227) (23%)
Inter-segment 8 14 (6) (43%)
Total Sales $ 4,056 $ 5,289 $ (1,233) (23%)
Segment Profit
Third Third %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 585 $ 940 $ (355) (38%)
Segment Profit Margin 14.4 % 17.8 % (3.4 pts)
Construction Industries' total sales were $4.056 billion in the third
quarter of 2020, a decrease of $1.233 billion, or 23%, compared with $5.289
billion in the third 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. During the third quarter of 2020, dealers decreased
inventories in all regions except for Asia/Pacific where dealers increased
inventories, compared with the third quarter of 2019 when dealer inventories
were about flat in all regions except for Asia/Pacific where dealers
decreased inventories. Overall, dealers decreased inventories more during
the third quarter of 2020 than during the third quarter of 2019.
? 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 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 increased in Asia/Pacific primarily due to the impact of changes
in dealer inventories, partially offset by unfavorable price realization.
The increase in sales was primarily driven by China demand, which was
partially offset by lower sales in the rest of the region.
Construction Industries' profit was $585 million in the third quarter of
2020, a decrease of $355 million, or 38%, compared with $940 million in the
third 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 driven
by lower period manufacturing costs and favorable variable labor and burden.
SG&A/R&D expenses and period manufacturing costs both benefited from cost
reductions related to lower sales volumes.
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7
RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
Third Sales Price Inter- Third $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 2,310 $ (425) $ (46) $ (4) $
(19) $
1,816 $
(494)
Sales by Region Third $ (21%)
Geographic
Third Quarter 2019 Change %
Change
Quarter 2020
North America $ 487 $ 789 $ (302) (38%)
Latin America 269 349 (23%)
80)
EAME 384 396 (12) (3%)
Asia/Pacific 564 645 (13%)
1)
External Sales 1,704 2,179 (475) (22%)
Inter-segment 112 131 (19) (15%)
Total Sales $ 1,816 $ 2,310 $ (494) (21%)
Segment Profit
Third Third %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 167 $ 311 $ (144) (46%)
Segment Profit 9.2 % 13.5 % (4.3 pts)
Margin
Resource Industries' total sales were $1.816 billion in the third quarter of
2020, a decrease of $494 million, or 21%, compared with $2.310 billion in
the third quarter of 2019. The decrease was due to lower sales volume driven
by lower end-user demand for equipment and aftermarket parts, partially
offset by the impact of changes in dealer inventories. Dealers decreased
inventories more during the third quarter of 2019 than during the third
quarter of 2020. End-user demand was lower across non-residential
construction and quarry and aggregates and mining, primarily in North
America.
Resource Industries' profit was $167 million in the third quarter of 2020, a
decrease of $144 million, or 46%, compared with $311 million in the third
quarter of 2019. The decrease was mainly because of lower sales volume and
unfavorable price realization, partially offset by favorable manufacturing
costs and lower SG&A/R&D expenses. Favorable manufacturing costs were driven
by lower period manufacturing costs, favorable material costs and lower
warranty expense, partially offset by unfavorable cost absorption. Cost
absorption was unfavorable as inventory increased in the third quarter of
2019, compared with a decrease in the third quarter of 2020. SG&A/R&D
expenses, along with period manufacturing costs, benefited from lower
short-term incentive compensation expense, other cost-reduction actions
implemented in response to lower sales volumes and benefits from prior
restructuring programs.
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8
ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
Third Sales Price Inter- Third $ %
Quarter 2019 Volume Realization Currency Segment Quarter 2020 Change Change
Total Sales $ 5,452 $ (1,086) $ (16) $ 15 $ (204) $ 4,161 $ (1,291) (24%)
Sales by Application
Third Third $ %
Change
Quarter 2020 Quarter 2019 Change
Oil and Gas $ 734 $ 1,246 $ (512) (41%)
Power Generation 1,034 1,123 (89) (8%)
Industrial 730 980 (250) (26%)
Transportation 977 1,213 (236) (19%)
External Sales 3,475 4,562 (1,087) (24%)
Inter-segment 686 890 (204) (23%)
Total Sales $ 4,161 $ 5,452 $ (1,291) (24%)
Segment Profit
Third Third %
Quarter 2020 Quarter 2019 Change Change
Segment Profit $ 492 $ 1,021 $ (529) (52%)
Segment Profit Margin 11.8 % 18.7 % (6.9 pts)
Energy & Transportation's total sales were $4.161 billion in the third
quarter of 2020, a decrease of $1.291 billion, or 24%, compared with $5.452
billion in the third 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. In addition, sales were lower for
turbines and turbine-related services.
? Power Generation - Sales decreased primarily due to lower sales volume
in engine aftermarket parts, and small reciprocating engine applications,
as well as turbines and turbine-related services. The sales decrease was
partially offset by an increase in large reciprocating engine
applications, mainly for data centers.
? Industrial - Sales decreased due to lower demand across all regions.
? Transportation - Sales declined in rail due to lower deliveries of
locomotives and related services, primarily in North America, and in
marine due to lower sales of engine aftermarket parts, primarily in EAME.
Energy & Transportation's profit was $492 million in the third quarter of
2020, a decrease of $529 million, or 52%, compared with $1.021 billion in
the third quarter of 2019. The decrease was due to lower sales volume,
partially offset by lower SG&A/R&D expenses and period manufacturing costs.
SG&A/R&D expenses and period manufacturing costs were mostly impacted by a
reduction in short-term incentive compensation expense and other
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