CAT
$133.78
Caterpillar
$2.03
1.54%
Earnings Details
2nd Quarter June 2019
Wednesday, July 24, 2019 7:30:00 AM
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Summary

Caterpillar Misses

Caterpillar (CAT) reported 2nd Quarter June 2019 earnings of $2.83 per share on revenue of $14.4 billion. The consensus earnings estimate was $3.12 per share on revenue of $14.5 billion. The Earnings Whisper number was $3.17 per share. Revenue grew 3.0% on a year-over-year basis.

The company said it expects 2019 earnings to be at the lower-end of its previous guidance range of $12.06 to $13.06 per share. The current consensus earnings estimate is $12.21 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
$2.83
Earnings Whisper
$3.17
Consensus Estimate
$3.12
Reported Revenue
$14.43 Bil
Revenue Estimate
$14.54 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Caterpillar Reports Second-Quarter 2019 Results

DEERFIELD, Ill., July 24, 2019 /PRNewswire/ -- 

  • Sales and revenues up 3%; profit per share slightly up
  • Strong ME&T operating cash flow; returned about $1.9 billion in share repurchases and dividends
  • Full-year profit per share outlook range is maintained at $12.06 to $13.06; the company currently expects to be at the lower end of this range

 


Second Quarter

($ in billions except profit per share)

2019

2018

Sales and Revenues

$14.4

$14.0

Profit Per Share

$2.83

$2.82

Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2019 sales and revenues of $14.4 billion, a 3% increase compared with $14.0 billion in the second quarter of 2018. Second-quarter 2019 profit per share was $2.83, compared with $2.82 profit per share in the second quarter of 2018.

During the second quarter of 2019, Machinery, Energy & Transportation (ME&T) operating cash flow was $2.0 billion. The company repurchased $1.4 billion of Caterpillar common stock and paid dividends of $0.5 billion in the second quarter of 2019. The enterprise cash balance at the end of the second quarter of 2019 was $7.4 billion.

"Sales and revenues increased this quarter, including a record performance from Construction Industries, which reflected our strong competitive position globally," said Caterpillar Chairman and CEO Jim Umpleby. "Our strong operating cash flow in the quarter allowed us to repurchase shares and pay dividends of about $1.9 billion. This is in line with our intention to return substantially all free cash flow to shareholders."

2019 Outlook

The full-year profit per share outlook range is maintained at $12.06 to $13.06, which includes the first-quarter $0.31 per share discrete tax benefit. The company currently expects to be at the lower end of this outlook range.

The company continues to expect modest sales growth in 2019, which assumes a recovery in Oil and Gas near the end of the year and dealers working through higher machine inventory levels. The company still expects price realization to offset manufacturing costs. With a higher amount of restructuring costs incurred in the second quarter of 2019, the company expects restructuring costs for the remainder of the year to be significantly lower.

"We expect our profit per share in 2019 to be another record," added Umpleby. "We have the right strategy in place to deliver long-term profitable growth through our continued focus on strategic investments, including growing services and expanding offerings. We will also continue to focus on driving operational excellence including a flexible and competitive cost structure."

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 discrete items.

CONSOLIDATED RESULTS

Consolidated Sales and Revenues

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

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

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the second quarter of 2018 (at left) and the second 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 were $14.432 billion in the second quarter of 2019, an increase of $421 million, or 3%, compared with $14.011 billion in the second quarter of 2018. The improvement was primarily due to favorable price realization and higher sales volume driven by improved demand for equipment, including a favorable impact from changes in dealer inventories. The increase was partially offset by unfavorable currency impacts. Sales increased in Construction Industries and Resource Industries, while Energy & Transportation sales decreased. Sales increased in North America and Latin America, partially offset by decreases in Asia/Pacific and EAME.

Sales and Revenues by Segment


(Millions of dollars)

Second
Quarter
2018


Sales

Volume


Price

Realization


Currency


Inter-
Segment /
Other


Second
Quarter
2019


$

Change


%

Change

















Construction Industries

$

6,172



$

199



$

253



$

(143)



$

(14)



$

6,467



$

295



5%

Resource Industries

2,526



188



129



(37)



(6)



2,800



274



11%

Energy & Transportation

5,724



(143)



44



(91)



(48)



5,486



(238)



(4%)

All Other Segment

124



(6)





(1)



8



125



1



1%

Corporate Items and Eliminations

(1,267)



(1)



1





60



(1,207)



60




Machinery, Energy & Transportation

$

13,279



$

237



$

427



$

(272)



$



$

13,671



$

392



3%

















Financial Products Segment

$

829



$



$



$



$

44



$

873



$

44



5%

Corporate Items and Eliminations

(97)









(15)



(112)



(15)




Financial Products Revenues

$

732



$



$



$



$

29



$

761



$

29



4%

















Consolidated Sales and Revenues

$

14,011



$

237



$

427



$

(272)



$

29



$

14,432



$

421



3%

















 

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

Second Quarter 2019




























Construction Industries

$

3,513



28%


$

392



—%


$

1,108



(5%)


$

1,433



(22%)


$

6,446



5%


$

21



(40%)


$

6,467



5%

Resource Industries

1,058



32%


448



14%


446



(22%)


759



14%


2,711



12%


89



(6%)


2,800



11%

Energy & Transportation

2,297



(11%)


325



13%


1,160



1%


742



7%


4,524



(4%)


962



(5%)


5,486



(4%)

All Other Segment

14



(18%)


1



—%


4



—%


15



(21%)


34



(17%)


91



10%


125



1%

Corporate Items and Eliminations

(39)





(2)





(5)





2





(44)





(1,163)





(1,207)




Machinery, Energy & Transportation

6,843



12%


1,164



9%


2,713



(6%)


2,951



(8%)


13,671



3%




—%


13,671



3%





























Financial Products Segment

563



5%


76



7%


102



1%


132



10%


873



5%




—%


873



5%

Corporate Items and Eliminations

(72)





(11)





(9)





(20)





(112)









(112)




Financial Products Revenues

491



2%


65



8%


93



(1%)


112



14%


761



4%




—%


761



4%





























Consolidated Sales and Revenues

$

7,334



11%


$

1,229



9%


$

2,806



(6%)


$

3,063



(7%)


$

14,432



3%


$



—%


$

14,432



3%





























Second Quarter 2018




























Construction Industries

$

2,739





$

392





$

1,171





$

1,835





$

6,137





$

35





$

6,172




Resource Industries

804





394





569





664





2,431





95





2,526




Energy & Transportation

2,582





287





1,153





692





4,714





1,010





5,724




All Other Segment

17





1





4





19





41





83





124




Corporate Items and Eliminations

(40)





(3)









(1)





(44)





(1,223)





(1,267)




Machinery, Energy & Transportation

6,102





1,071





2,897





3,209





13,279









13,279
































Financial Products Segment

537





71





101





120





829









829




Corporate Items and Eliminations

(57)





(11)





(7)





(22)





(97)









(97)




Financial Products Revenues

480





60





94





98





732









732
































Consolidated Sales and Revenues

$

6,582





$

1,131





$

2,991





$

3,307





$

14,011





$





$

14,011
































Consolidated Operating Profit

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

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

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

Operating profit for the second quarter of 2019 was $2.213 billion, up 2% compared with $2.167 billion in the second quarter of 2018. The increase of $46 million was due to favorable price realization and lower selling, general and administrative (SG&A) and research and development (R&D) expenses, offset by higher manufacturing costs and unfavorable sales volume due to product mix.

The increase in manufacturing costs was primarily due to higher material costs, including tariffs, variable labor and burden and warranty expense. Favorable SG&A/R&D expenses were mostly due to lower short-term incentive compensation expense.

The change in sales volume was the result of an unfavorable mix of products primarily within Energy & Transportation and Construction Industries.

Operating profit margin was 15.3% for the second quarter of 2019, compared with 15.5% for the second quarter of 2018.

Profit by Segment

(Millions of dollars)

Second Quarter
2019


Second Quarter
2018


$

Change


%

 Change

Construction Industries

$

1,247



$

1,154



$

93



8

%

Resource Industries

481



411



70



17

%

Energy & Transportation

886



1,012



(126)



(12)

%

All Other Segment

11



23



(12)



(52)

%

Corporate Items and Eliminations

(441)



(466)



25




Machinery, Energy & Transportation

$

2,184



$

2,134



$

50



2

%









Financial Products Segment

$

193



$

134



$

59



44

%

Corporate Items and Eliminations

(50)



(5)



(45)




Financial Products

$

143



$

129



$

14



11

%









Consolidating Adjustments

(114)



(96)



(18)












Consolidated Operating Profit

$

2,213



$

2,167



$

46



2

%









Other Profit/Loss and Tax Items

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

















Second
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Second
Quarter 2019


$

 Change


%

 Change

Total Sales


$

6,172



$

199



$

253



$

(143)



$

(14)



$

6,467



$

295



5

%


















Sales by Geographic Region











Second
Quarter 2019


Second
Quarter 2018


$

Change


%

Change









North America


$

3,513



$

2,739



$

774



28

%









Latin America


392



392





%









EAME


1,108



1,171



(63)



(5)

%









Asia/Pacific


1,433



1,835



(402)



(22)

%









External Sales


6,446



6,137



309



5

%









Inter-segment


21



35



(14)



(40)

%









Total Sales


$

6,467



$

6,172



$

295



5

%


























Segment Profit











Second
Quarter 2019


Second
Quarter 2018


 

Change


%

Change









Segment Profit


$

1,247



$

1,154



$

93



8

%









Segment Profit Margin


19.3

%


18.7

%


0.6pts





























Construction Industries' total sales were a record $6.467 billion in the second quarter of 2019, a 5% increase compared with $6.172 billion in the second quarter of 2018. Sales increased primarily due to the favorable impact of dealers increasing inventories in the second quarter of 2019, compared with decreasing inventories in the second quarter of 2018. Favorable price realization was partially offset by unfavorable currency impacts.

  • In North America, sales increased primarily due to higher demand, including the favorable impact of dealer inventories, and favorable price realization.
  • Construction activities remained at low levels in Latin America, leading to flat sales.
  • In EAME, the sales decrease was primarily due to currency impact related to the euro.
  • Sales in Asia/Pacific declined due to lower demand mainly due to China driven by continued competitive pricing pressures and timing of the selling season as well as unfavorable currency impacts.

Construction Industries' profit was a record $1.247 billion in the second quarter of 2019, an 8% increase compared with $1.154 billion in the second quarter of 2018. The increase in profit was due to favorable price realization, which was mostly offset by higher manufacturing costs. The increase in sales volume was more than offset by an unfavorable mix of products. Higher material costs and variable labor and burden, including the absence of Brazil incentives, were the primary drivers of increased manufacturing costs.

RESOURCE INDUSTRIES

(Millions of dollars)

















Segment Sales

















Second
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Second
Quarter 2019


$

 Change


%

 Change

Total Sales


$

2,526



$

188



$

129



$

(37)



$

(6)



$

2,800



$

274



11

%


















Sales by Geographic Region











Second
Quarter 2019


Second
Quarter 2018


$

Change


%

Change









North America


$

1,058



$

804



$

254



32

%









Latin America


448



394



54



14

%









EAME


446



569



(123)



(22)

%









Asia/Pacific


759



664



95



14

%









External Sales


2,711



2,431



280



12

%









Inter-segment


89



95



(6)



(6)

%









Total Sales


$

2,800



$

2,526



$

274



11

%


























Segment Profit











Second
Quarter 2019


Second
Quarter 2018


 

Change


%

Change









Segment Profit


$

481



$

411



$

70



17

%









Segment Profit Margin


17.2

%


16.3

%


0.9pts





























Resource Industries' total sales were $2.800 billion in the second quarter of 2019, an 11% increase compared with $2.526 billion in the second quarter of 2018. The increase was primarily due to higher equipment demand and favorable price realization. Mining customers increased capital spending to support ongoing mine site operations, which drove higher sales. In addition, sales increased for non-residential construction and quarry and aggregate customers.

Resource Industries' profit was $481 million in the second quarter of 2019, a 17% increase compared with $411 million in the second quarter of 2018. The improvement was mostly due to favorable price realization and increased sales volume, partially offset by higher manufacturing costs. Manufacturing costs increased due to unfavorable operating leverage from changes in inventory, as well as higher material costs, variable labor and burden and warranty expense.

ENERGY & TRANSPORTATION

(Millions of dollars)

















Segment Sales

















Second
Quarter 2018


Sales
Volume


Price
Realization


Currency


Inter-
Segment


Second
Quarter 2019


$

 Change


%

 Change

Total Sales


$

5,724



$

(143)



$

44



$

(91)



$

(48)



$

5,486



$

(238)



(4)

%


















Sales by Application











Second
Quarter 2019


Second
Quarter 2018


$

Change


%

Change









Oil and Gas


$

1,305



$

1,467



$

(162)



(11)

%









Power Generation


1,021



992



29



3

%









Industrial


957



969



(12)



(1)

%









Transportation


1,241



1,286



(45)



(3)

%









External Sales


4,524



4,714



(190)



(4)

%









Inter-segment


962



1,010



(48)



(5)

%









Total Sales


$

5,486



$

5,724



$

(238)



(4)

%


























Segment Profit











Second
Quarter 2019


Second
Quarter 2018


 

Change


%

Change









Segment Profit


$

886



$

1,012



$

(126)



(12)

%









Segment Profit Margin


16.2

%


17.7

%


(1.5pts)





























Energy & Transportation's total sales were $5.486 billion in the second quarter of 2019, a 4% decrease compared with $5.724 billion in the second quarter of 2018. Sales decreased primarily due to lower sales volume and unfavorable currency impacts. The decrease was partially offset by favorable price realization.

  • Oil and Gas – Sales decreased in North America primarily due to the timing of turbine project deliveries that occurred in the second quarter of 2018 and from lower demand for new equipment in the Permian Basin. This was partially offset by increased sales in EAME primarily due to higher turbine sales for production applications.
  • Power Generation – Sales slightly increased mostly due to higher deliveries in North America for both large diesel reciprocating engines and turbines. Increases in North America were partially offset by lower sales in EAME for gas power generation applications.
  • Industrial – Sales were slightly down, with a decrease in EAME primarily due to unfavorable currency impacts partially offset by higher volume in Asia Pacific and Latin America.
  • Transportation – Sales were slightly lower primarily due to the timing of locomotive deliveries in the second quarter of 2018 and reduced marine activity in North America, partially offset by higher sales for rail services.

Energy & Transportation's profit was $886 million in the second quarter of 2019, compared with $1.012 billion in the second quarter of 2018. The decrease of 12% was mostly due to an unfavorable mix of applications and lower volume. Price realization was slightly favorable, offset by slightly higher manufacturing costs.

FINANCIAL PRODUCTS SEGMENT

(Millions of dollars)

















Revenues by Geographic Region











Second
Quarter 2019


Second
Quarter 2018


$

Change


%

Change









North America


$

563



$

537



$

26



5

%









Latin America


76



71



5



7

%









EAME


102



101



1



1

%









Asia/Pacific


132



120



12



10

%









Total Revenues


$

873



$

829



$

44



5

%


























Segment Profit











Second
Quarter 2019


Second
Quarter 2018


 

Change


%

Change









Segment Profit


$

193



$

134



$

59



44

%


























Financial Products' segment revenues were $873 million in the second quarter of 2019, an increase of $44 million, or 5%, from the second quarter of 2018. The increase was primarily due to higher average financing rates in North America and Asia/Pacific and higher average earning assets in North America.

Financial Products' segment profit was $193 million in the second quarter of 2019, up 44% compared with $134 million in the second quarter of 2018. The increase was primarily due to a decrease in the provision for credit losses at Cat Financial and an increase in net yield on average earning assets.

At the end of the second quarter of 2019, past dues at Cat Financial were 3.38%, compared with 3.16% at the end of the second quarter of 2018. The increase in past dues was primarily driven by EAME. Write-offs, net of recoveries, were $74 million for the second quarter of 2019, compared with $80 million for the second quarter of 2018. As of June 30, 2019, Cat Financial's allowance for credit losses totaled $523 million, or 1.81% of finance receivables, compared with $534 million, or 1.89% of finance receivables at March 31, 2019. The allowance for credit losses at year-end 2018 was $511 million, or 1.80% of finance receivables.

Dealer Inventories and Order Backlog

Dealer machine and engine inventories increased about $500 million during the second quarter of 2019, compared with an increase of about $100 million during the second quarter of 2018.

At the end of the second quarter of 2019, the order backlog was $15.0 billion, about $1.9 billion lower than the first 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 20.
  • Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Wednesday, July 24, 2019, to discuss its 2019 second-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 11-19 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


Six Months Ended



June 30,


June 30,



2019


2018


2019


2018

Sales and revenues:





















Sales of Machinery, Energy & Transportation

$

13,671




$

13,279




$

26,395




$

25,429




Revenues of Financial Products


761





732





1,503





1,441




Total sales and revenues


14,432





14,011





27,898





26,870
























Operating costs:





















Cost of goods sold


9,941





9,422





18,944





17,988




Selling, general and administrative expenses


1,309





1,440





2,628





2,716




Research and development expenses


441





462





876





905




Interest expense of Financial Products


192





182





382





348




Other operating (income) expenses


336





338





648





638




Total operating costs


12,219





11,844





23,478





22,595
























Operating profit


2,213





2,167





4,420





4,275

























Interest expense excluding Financial Products


103





102





206





203




Other income (expense)


68





121





228





248
























Consolidated profit before taxes


2,178





2,186





4,442





4,320

























Provision (benefit) for income taxes


565





490





952





962




Profit of consolidated companies


1,613





1,696





3,490





3,358

























Equity in profit (loss) of unconsolidated affiliated companies


6





9





13





14























Profit of consolidated and affiliated companies


1,619





1,705





3,503





3,372























Less:  Profit (loss) attributable to noncontrolling interests


(1)





(2)





2



























Profit 1

$

1,620




$

1,707




$

3,501




$

3,372












































Profit per common share

$

2.85




$

2.86




$

6.14




$

5.65
























Profit per common share – diluted 2

$

2.83




$

2.82




$

6.08




$

5.56
























Weighted-average common shares
outstanding (millions)





















- Basic


567.8





596.2





569.9





597.0




- Diluted2


573.1





604.2





575.8





606.1


































































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)


June 30,


December 31,


2019


2018

Assets











Current assets:












Cash and short-term investments

$

7,429




$

7,857





Receivables - trade and other


8,996





8,802





Receivables - finance


9,539





8,650





Prepaid expenses and other current assets


1,818





1,765





Inventories


12,007





11,529




Total current assets


39,789





38,603















Property, plant and equipment – net


13,172





13,574




Long-term receivables - trade and other


1,154





1,161




Long-term receivables - finance


12,461





13,286




Noncurrent deferred and refundable income taxes


1,473





1,439




Intangible assets


1,733





1,897




Goodwill


6,211





6,217




Other assets


3,194





2,332



Total assets

$

79,187




$

78,509













Liabilities











Current liabilities:












Short-term borrowings:













-- Machinery, Energy & Transportation

$




$






-- Financial Products


5,266





5,723





Accounts payable


7,022





7,051





Accrued expenses


3,789





3,573





Accrued wages, salaries and employee benefits


1,411





2,384





Customer advances


1,263





1,243





Dividends payable


579





495





Other current liabilities


2,157





1,919





Long-term debt due within one year:













-- Machinery, Energy & Transportation


13





10






-- Financial Products


6,235





5,820




Total current liabilities


27,735





28,218

















Long-term debt due after one year:













-- Machinery, Energy & Transportation


7,657





8,005






-- Financial Products


17,107





16,995




Liability for postemployment benefits


7,448





7,455




Other liabilities


4,362





3,756



Total liabilities


64,309





64,429























Shareholders' equity











Common stock


5,822





5,827




Treasury stock


(22,467)





(20,531)




Profit employed in the business


32,981





30,427




Accumulated other comprehensive income (loss)


(1,499)





(1,684)




Noncontrolling interests


41





41



Total shareholders' equity


14,878





14,080



Total liabilities and shareholders' equity

$

79,187




$

78,509




























 


Caterpillar Inc.

Condensed Consolidated Statement of Cash Flow

(Unaudited)

(Millions of dollars)


Six Months Ended


June 30,


2019


2018

Cash flow from operating activities:











Profit of consolidated and affiliated companies

$

3,503




$

3,372




Adjustments for non-cash items:












Depreciation and amortization


1,288





1,367





Other


440





446




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












Receivables – trade and other


(166)





(703)





Inventories


(487)





(1,208)





Accounts payable


134





545





Accrued expenses


151





(31)





Accrued wages, salaries and employee benefits


(979)





(768)





Customer advances


14





(54)





Other assets – net


(221)





174





Other liabilities – net


32





(57)



Net cash provided by (used for) operating activities


3,709





3,083



Cash flow from investing activities:











Capital expenditures – excluding equipment leased to others


(479)





(645)




Expenditures for equipment leased to others


(746)





(883)




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


422





539




Additions to finance receivables


(6,181)





(6,143)




Collections of finance receivables


5,902





5,405




Proceeds from sale of finance receivables


119





124




Investments and acquisitions (net of cash acquired)


(3)





(348)




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






12




Proceeds from sale of securities


170





168




Investments in securities


(243)





(318)




Other – net


(40)





21



Net cash provided by (used for) investing activities


(1,079)





(2,068)



Cash flow from financing activities:











Dividends paid


(986)





(933)




Common stock issued, including treasury shares reissued


39





256




Common shares repurchased


(2,105)





(1,250)




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


5,340





4,307




Payments on debt (original maturities greater than three months)


(4,901)





(4,436)




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


(436)





1,487




Other – net


(2)





(4)



Net cash provided by (used for) financing activities


(3,051)





(573)



Effect of exchange rate changes on cash


(10)





(68)



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


(431)





374



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

$

7,459




$

8,694




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 June 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

$

13,671




$

13,671




$




$





Revenues of Financial Products


761









894





(133)


2



Total sales and revenues


14,432





13,671





894





(133)


























Operating costs:






















Cost of goods sold


9,941





9,943









(2)


3



Selling, general and administrative expenses


1,309





1,102





209





(2)


3



Research and development expenses


441





441













Interest expense of Financial Products


192









201





(9)


4



Other operating (income) expenses


336





1





341





(6)


3



Total operating costs


12,219





11,487





751





(19)


























Operating profit


2,213





2,184





143





(114)



























Interest expense excluding Financial Products


103





105









(2)


4



Other income (expense)


68





(63)





19





112


5
























Consolidated profit before taxes


2,178





2,016





162































Provision (benefit) for income taxes


565





502





63









Profit of consolidated companies


1,613





1,514





99































Equity in profit (loss) of unconsolidated affiliated companies


6





6













Equity in profit of Financial Products' subsidiaries






94









(94)


6























Profit of consolidated and affiliated companies


1,619





1,614





99





(94)

























Less:  Profit (loss) attributable to noncontrolling interests


(1)





(6)





5





























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.

 

 

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 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

$

13,279




$

13,279




$




$




Revenues of Financial Products


732









849





(117)


2


Total sales and revenues


14,011





13,279





849





(117)
























Operating costs:





















Cost of goods sold


9,422





9,422












Selling, general and administrative expenses


1,440





1,223





223





(6)


3


Research and development expenses


462





462












Interest expense of Financial Products


182









191





(9)


4


Other operating (income) expenses


338





38





306





(6)


3


Total operating costs


11,844





11,145





720





(21)
























Operating profit


2,167





2,134





129





(96)

























Interest expense excluding Financial Products


102





111









(9)


4


Other income (expense)


121





27





7





87


5






















Consolidated profit before taxes


2,186





2,050





136





























Provision (benefit) for income taxes


490





457





33








Profit of consolidated companies


1,696





1,593





103





























Equity in profit (loss) of unconsolidated affiliated companies


9





9












Equity in profit of Financial Products' subsidiaries






98









(98)


6





















Profit of consolidated and affiliated companies


1,705





1,700





103





(98)























Less:  Profit (loss) attributable to noncontrolling interests


(2)





(7)





5



























Profit 7

$

1,707




$

1,707




$

98




$

(98)




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 Six Months Ended June 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

$

26,395




$

26,395




$




$




Revenues of Financial Products


1,503









1,764





(261)


2


Total sales and revenues


27,898





26,395





1,764





(261)
























Operating costs:





















Cost of goods sold


18,944





18,946









(2)


3


Selling, general and administrative expenses


2,628





2,229





401





(2)


3


Research and development expenses


876





876












Interest expense of Financial Products


382









401





(19)


4


Other operating (income) expenses


648





11





654





(17)


3


Total operating costs


23,478





22,062





1,456





(40)
























Operating profit


4,420





4,333





308





(221)

























Interest expense excluding Financial Products


206





215









(9)


4


Other income (expense)


228





(44)





60





212


5






















Consolidated profit before taxes


4,442





4,074





368





























Provision (benefit) for income taxes


952





837





115








Profit of consolidated companies


3,490





3,237





253





























Equity in profit (loss) of unconsolidated affiliated companies


13





13












Equity in profit of Financial Products' subsidiaries






242









(242)


6





















Profit of consolidated and affiliated companies


3,503





3,492





253





(242)























Less:  Profit (loss) attributable to noncontrolling interests


2





(9)





11



























Profit 7

$

3,501




$

3,501




$

242




$

(242)




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 Six Months Ended June 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

$

25,429




$

25,429




$




$




Revenues of Financial Products


1,441









1,660





(219)


2


Total sales and revenues


26,870





25,429





1,660





(219)
























Operating costs:





















Cost of goods sold


17,988





17,988












Selling, general and administrative expenses


2,716





2,310





412





(6)


3


Research and development expenses


905





905












Interest expense of Financial Products


348









364





(16)


4


Other operating (income) expenses


638





37





616





(15)


3


Total operating costs


22,595





21,240





1,392





(37)
























Operating profit


4,275





4,189





268





(182)

























Interest expense excluding Financial Products


203





223









(20)


4


Other income (expense)


248





81





5





162


5






















Consolidated profit before taxes


4,320





4,047





273





























Provision (benefit) for income taxes


962





898





64








Profit of consolidated companies


3,358





3,149





209





























Equity in profit (loss) of unconsolidated affiliated companies


14





14












Equity in profit of Financial Products' subsidiaries






200









(200)


6





















Profit of consolidated and affiliated companies


3,372





3,363





209





(200)























Less:  Profit (loss) attributable to noncontrolling interests






(9)





9



























Profit 7

$

3,372




$

3,372




$

200




$

(200)




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 Six Months Ended June 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

$

3,503




$

3,492




$

253




$

(242)


2


Adjustments for non-cash items:






















Depreciation and amortization


1,288





855





433









Undistributed profit of Financial Products






(242)









242


3



Other


440





264





(51)





227


4


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






















Receivables – trade and other


(166)





161





(5)





(322)


4,5



Inventories


(487)





(489)









2


4



Accounts payable


134





(94)





279





(51)


4



Accrued expenses


151





158





(5)





(2)


4



Accrued wages, salaries and employee benefits


(979)





(978)





(1)









Customer advances


14





18









(4)


4



Other assets – net


(221)





(228)





57





(50)


4



Other liabilities – net


32





(97)





75





54


4

Net cash provided by (used for) operating activities


3,709





2,820





1,035





(146)



Cash flow from investing activities:





















Capital expenditures – excluding equipment leased to others


(479)





(468)





(11)








Expenditures for equipment leased to others


(746)





(24)





(725)





3


4


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


422





97





367





(42)


4


Additions to finance receivables


(6,181)









(7,027)





846


5


Collections of finance receivables


5,902









6,548





(646)


5


Net intercompany purchased receivables










15





(15)


5


Proceeds from sale of finance receivables


119









119








Net intercompany borrowings






213





1





(214)


6


Investments and acquisitions (net of cash acquired)


(3)





(3)












Proceeds from sale of securities


170





13





157








Investments in securities


(243)





(12)





(231)








Other – net


(40)





(9)





(31)







Net cash provided by (used for) investing activities


(1,079)





(193)





(818)





(68)



Cash flow from financing activities:





















Dividends paid


(986)





(986)












Common stock issued, including treasury shares reissued


39





39












Common shares repurchased


(2,105)





(2,105)












Net intercompany borrowings






(1)





(213)





214


6


Proceeds from debt issued > 90 days


5,340









5,340








Payments on debt > 90 days


(4,901)





(4)





(4,897)








Short-term borrowings – net < 90 days


(436)









(436)








Other – net


(2)





(2)











Net cash provided by (used for) financing activities


(3,051)





(3,059)





(206)





214



Effect of exchange rate changes on cash


(10)





(8)





(2)







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


(431)





(440)





9







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

$

7,459




$

6,554




$

905




$






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 Six Months Ended June 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

$

3,372




$

3,363




$

209




$

(200)


2


Adjustments for non-cash items:






















Depreciation and amortization


1,367





933





434









Undistributed profit of Financial Products






(200)









200


3



Other


446





197





61





188


4


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






















Receivables – trade and other


(703)





136





(74)





(765)


4,5



Inventories


(1,208)





(1,186)









(22)


4



Accounts payable


545





570





(56)





31


4



Accrued expenses


(31)





(40)





9









Accrued wages, salaries and employee benefits


(768)





(745)





(23)









Customer advances


(54)





(54)













Other assets – net


174





176





(10)





8


4



Other liabilities – net


(57)





(118)





69





(8)


4

Net cash provided by (used for) operating activities


3,083





3,032





619





(568)



Cash flow from investing activities:





















Capital expenditures - excluding equipment leased to others


(645)





(550)





(95)








Expenditures for equipment leased to others


(883)





(4)





(919)





40


4


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


539





93





461





(15)


4


Additions to finance receivables


(6,143)









(6,823)





680


5,7


Collections of finance receivables


5,405









6,144





(739)


5


Net intercompany purchased receivables










(608)





608


5


Proceeds from sale of finance receivables


124









124








Net intercompany borrowings






112









(112)


6


Investments and acquisitions (net of cash acquired)


(348)





(348)












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


12





18









(6)


7


Proceeds from sale of securities


168





10





158








Investments in securities


(318)





(19)





(299)








Other – net


21





24





(4)





1


8

Net cash provided by (used for) investing activities


(2,068)





(664)





(1,861)





457



Cash flow from financing activities:





















Dividends paid


(933)





(933)












Common stock issued, including treasury shares reissued


256





256





1





(1)


8


Common shares repurchased


(1,250)





(1,250)












Net intercompany borrowings










(112)





112


6


Proceeds from debt issued > 90 days


4,307









4,307








Payments on debt > 90 days


(4,436)





(3)





(4,433)








Short-term borrowings – net < 90 days


1,487





34





1,453








Other – net


(4)





(4)











Net cash provided by (used for) financing activities


(573)





(1,900)





1,216





111



Effect of exchange rate changes on cash


(68)





(61)





(7)







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


374





407





(33)







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

$

8,694




$

7,823




$

871




$






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 two significant items in order for the company's results to be meaningful to readers. These items consist of a discrete tax benefit related to U.S. tax reform in the first quarter of 2019, and 2018 restructuring costs, which were incurred to generate longer-term benefits. 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:


Second Quarter


Outlook




2018


2019


Previous1


Current2



Profit per share

$2.82


$2.83


$12.06-$13.06


$12.06-$13.06



Per share U.S. tax reform impact



($0.31)


($0.31)



Per share restructuring costs3

$0.15






Adjusted profit per share

$2.97


$2.83


$11.75-$12.75


$11.75-$12.75























1 Profit per share outlook range as of April 24, 2019.

2 Profit per share outlook range as of July 24, 2019. The company expects to be at the lower end of this range.

3 At estimated annual tax rate of 24%. 2019 restructuring costs are not material.

 

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SOURCE Caterpillar Inc.