EX-99.1 2 cat_exx991x2qx2019xearning.htm EXHIBIT 99.1 Exhibit

1


Exhibit 99.1
Caterpillar Inc.                                     
2Q 2019 Earnings Release

July 24, 2019

FOR IMMEDIATE RELEASE
 
 
 
 
 
Caterpillar Reports Second-Quarter 2019 Results
Delivered Higher Sales and Revenues and Returned about $1.9 Billion to Shareholders
 
 
Second Quarter
 
 
 
($ in billions except profit per share)
 
2019
2018
 
●
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


Sales and Revenues
 
$14.4
$14.0
 
 
 
 
●
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

Profit Per Share
 
$2.83
$2.82
 
 
 
 
 
DEERFIELD, Ill. – 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.

(more)


2


CONSOLIDATED RESULTS
Consolidated Sales and Revenues
conssalesandrevenues2q2019.jpgThe 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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(more)


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(more)


4


Consolidated Operating Profit
consopprofit2q2019a01.jpgThe 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.


(more)


5


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.

(more)


6


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
%
 
0.6
 pts
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

(more)


7


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
%
 
0.9
 pts
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

(more)


8


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
%
 
(1.5
 pts)
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

(more)


9


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.

(more)


10


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 investor relations contact: Jennifer Driscoll, 309-675-4549 or Driscoll_Jennifer@cat.com
Caterpillar media contact: Kate Kenny, 224-551-4133 or Kenny_Kate@cat.com

(more)


11


Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
 
Three Months Ended
June 30,
 
Six Months Ended
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

– Diluted 2
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.

(more)


12


Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
 
June 30,
2019
 
December 31,
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



(more)


13


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.


(more)


14


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.


(more)


15


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.



(more)


16


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.


(more)


17


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.



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18


Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2019
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.

(more)


19


Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
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.

(more)


20


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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