EX-99.1 2 catex9911q2020earnings.htm EXHIBIT 99.1 Exhibit

1


Exhibit 99.1
Caterpillar Inc.                                     
1Q 2020 Earnings Release

April 28, 2020

FOR IMMEDIATE RELEASE
 
 
 
 
 
Caterpillar Reports First-Quarter 2020 Results
 
 
First Quarter
 
 
 
($ in billions except profit per share)
 
2020
2019
 
●
First-quarter sales and revenues decreased 21%; profit per share declined 39%

Sales and Revenues
 
$10.6
$13.5
 
●
Company bolsters liquidity, improves strong financial position

Profit Per Share
 
$1.98
$3.25
 
●
Returned about $1.6 billion to shareholders
DEERFIELD, Ill. – Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2020 sales and revenues of $10.6 billion, a 21% decrease compared with $13.5 billion in the first quarter of 2019. The decline was due to lower sales volume driven by lower end-user demand and the impact from changes in dealer inventories. Dealers increased machine and engine inventories about $100 million during the first quarter of 2020, compared with about $1.3 billion during the first quarter of 2019.
First-quarter 2020 profit per share was $1.98, compared with $3.25 profit per share in the first quarter of 2019. Profit per share in the first quarter of 2020 included a pre-tax remeasurement gain of $254 million, or $0.38 per share, resulting from the settlement of a non-U.S. pension obligation. Profit per share in the first quarter of 2019 included a discrete tax benefit related to U.S. tax reform of $178 million, or $0.31 per share. The first quarter of 2020 also benefited from the lack of short-term incentive compensation expense partially offset by the higher estimated annual tax rate of 31% excluding discrete items.
Operating profit margin was 13.2% for the first quarter of 2020, compared with 16.4% for the first quarter of 2019.
During the first quarter of 2020, enterprise operating cash flow was $1.130 billion. Caterpillar has taken actions to improve its strong financial position by increasing sources of liquidity. On a consolidated basis, Caterpillar ended the first quarter with $7.1 billion of cash and available global credit facilities of $10.5 billion. In April, Caterpillar raised $2.0 billion of incremental cash by issuing new 10- and 30-year bonds and arranged $8.0 billion of additional back-up facilities to supplement the company’s liquidity position.
Response to COVID-19 and Global Business Conditions
“We remain committed to the safety, health and well-being of our employees around the world, and I am proud of our employees and dealers for their dedication to our customers, their communities and each other,” said Caterpillar Chairman and CEO Jim Umpleby. “Our employees deliver products and services that enable our customers to provide critical infrastructure essential to support society during the COVID-19 pandemic.”

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2


Operational Impacts
Caterpillar has implemented safeguards in its facilities to protect team members, including increased frequency of cleaning and disinfecting facilities, social distancing practices and other measures consistent with specific regulatory requirements and guidance from health authorities.
Many governments classified Caterpillar’s operations as an essential activity for support of critical infrastructure. Caterpillar has suspended operations temporarily at certain facilities during the last several weeks due to supply chain issues, weak customer demand or government regulations. As of mid-April 2020, globally and across the three primary segments, approximately 75% of the company’s primary production facilities continue to operate. Some facilities that were temporarily closed have reopened. The company will continue to monitor the situation and may suspend operations temporarily at additional facilities if warranted by business conditions.
The company has taken actions to reduce costs, including reducing discretionary expenses and suspending 2020 base salary increases and short-term incentive compensation plans for many employees and all senior executives. Caterpillar is prioritizing spending to allow continued investment in services and expanded offerings, key elements of its strategy for profitable growth introduced in 2017.
Outlook
Caterpillar’s financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the COVID-19 pandemic. As such, Caterpillar withdrew its earnings guidance on March 26 and is not providing a financial outlook for 2020 at this time.
“We have taken decisive actions to enhance our strong financial position, while continuing to execute our strategy for profitable growth,” said Umpleby. “Caterpillar has faced and overcome many challenges in our 95-year history. Our goal is to emerge from the pandemic an even stronger company.”

(more)


3


CONSOLIDATED RESULTS
Consolidated Sales and Revenues
conssalesandrevenues1q2020a.jpg
The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2019 (at left) and the first quarter of 2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees.
Total sales and revenues for the first quarter of 2020 were $10.635 billion, a decrease of $2.831 billion, or 21%, compared with $13.466 billion in the first quarter of 2019. The decline was due to lower sales volume driven by lower end-user demand and the impact from changes in dealer inventories. Dealers increased machine and engine inventories about $100 million during the first quarter of 2020, compared with about $1.3 billion during the first quarter of 2019. The changes in dealer inventories came primarily in Construction Industries, driven by North America, and in Resource Industries.
Sales were lower across all regions and in the three primary segments.
Sales and Revenues by Segment
(Millions of dollars)
First Quarter 2019
 
Sales
Volume
 
Price
Realization
 
Currency
 
Inter-Segment / Other
 
First Quarter 2020
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction Industries
$
5,873

 
$
(1,418
)
 
$
(63
)
 
$
(59
)
 
$
(27
)
 
$
4,306

 
$
(1,567
)
 
(27%)
Resource Industries
2,752

 
(607
)
 
(21
)
 
(40
)
 
—

 
2,084

 
(668
)
 
(24%)
Energy & Transportation
5,210

 
(599
)
 
21

 
(37
)
 
(246
)
 
4,349

 
(861
)
 
(17%)
All Other Segment
121

 
(9
)
 
—

 
—

 
(3
)
 
109

 
(12
)
 
(10%)
Corporate Items and Eliminations
(1,232
)
 
22

 
1

 
(1
)
 
276

 
(934
)
 
298

 
 
Machinery, Energy & Transportation
12,724

 
(2,611
)
 
(62
)
 
(137
)
 
—

 
9,914

 
(2,810
)
 
(22%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Products Segment
850

 
—

 
—

 
—

 
(36
)
 
814

 
(36
)
 
(4%)
Corporate Items and Eliminations
(108
)
 
—

 
—

 
—

 
15

 
(93
)
 
15

 
 
Financial Products Revenues
742

 
—

 
—

 
—

 
(21
)
 
721

 
(21
)
 
(3%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Sales and Revenues
$
13,466

 
$
(2,611
)
 
$
(62
)
 
$
(137
)
 
$
(21
)
 
$
10,635

 
$
(2,831
)
 
(21%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(more)


4


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
First Quarter 2020
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
 
Construction Industries
$
2,085

 
(30%)
 
$
265

 
(17%)
 
$
889

 
(12%)
 
$
1,073

 
(31%)
 
$
4,312

 
(26%)
 
$
(6
)
 
(129%)
 
$
4,306

 
(27%)
Resource Industries
696

 
(27%)
 
320

 
(24%)
 
395

 
(16%)
 
568

 
(29%)
 
1,979

 
(25%)
 
105

 
—%
 
2,084

 
(24%)
Energy & Transportation
1,738

 
(19%)
 
249

 
(25%)
 
1,053

 
2%
 
578

 
(19%)
 
3,618

 
(15%)
 
731

 
(25%)
 
4,349

 
(17%)
All Other Segment
5

 
(38%)
 
2

 
—%
 
11

 
—%
 
10

 
(44%)
 
28

 
(24%)
 
81

 
(4%)
 
109

 
(10%)
Corporate Items and Eliminations
(15
)
 
 
 
(2
)
 
 
 
(4
)
 
 
 
(2
)
 
 
 
(23
)
 
 
 
(911
)
 
 
 
(934
)
 
 
Machinery, Energy & Transportation
4,509

 
(25%)
 
834

 
(22%)
 
2,344

 
(7%)
 
2,227

 
(28%)
 
9,914

 
(22%)
 
—

 
—%
 
9,914

 
(22%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Products Segment
525

 
(6%)
 
70

 
—%
 
102

 
—%
 
117

 
(3%)
 
814

 
(4%)
 
—

 
—%
 
814

 
(4%)
Corporate Items and Eliminations
(54
)
 
 
 
(12
)
 
 
 
(9
)
 
 
 
(18
)
 
 
 
(93
)
 
 
 
—

 
 
 
(93
)
 
 
Financial Products Revenues
471

 
(4%)
 
58

 
(2%)
 
93

 
—%
 
99

 
(2%)
 
721

 
(3%)
 
—

 
—%
 
721

 
(3%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Sales and Revenues
$
4,980

 
(24%)
 
$
892

 
(21%)
 
$
2,437

 
(7%)
 
$
2,326

 
(27%)
 
$
10,635

 
(21%)
 
$
—

 
—%
 
$
10,635

 
(21%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2019
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
Construction Industries
$
2,965

 
 
 
$
319

 
 
 
$
1,006

 
 
 
$
1,562

 
 
 
$
5,852

 
 
 
$
21

 
 
 
$
5,873

 
 
Resource Industries
951

 
 
 
423

 
 
 
468

 
 
 
805

 
 
 
2,647

 
 
 
105

 
 
 
2,752

 
 
Energy & Transportation
2,151

 
 
 
332

 
 
 
1,032

 
 
 
718

 
 
 
4,233

 
 
 
977

 
 
 
5,210

 
 
All Other Segment
8

 
 
 
—

 
 
 
11

 
 
 
18

 
 
 
37

 
 
 
84

 
 
 
121

 
 
Corporate Items and Eliminations
(41
)
 
 
 
1

 
 
 
(3
)
 
 
 
(2
)
 
 
 
(45
)
 
 
 
(1,187
)
 
 
 
(1,232
)
 
 
Machinery, Energy & Transportation
6,034

 
 
 
1,075

 
 
 
2,514

 
 
 
3,101

 
 
 
12,724

 
 
 
—

 
 
 
12,724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Products Segment
558

 
 
 
70

 
 
 
102

 
 
 
120

 
 
 
850

 
 
 
—

 
 
 
850

 
 
Corporate Items and Eliminations
(69
)
 
 
 
(11
)
 
 
 
(9
)
 
 
 
(19
)
 
 
 
(108
)
 
 
 
—

 
 
 
(108
)
 
 
Financial Products Revenues
489

 
 
 
59

 
 
 
93

 
 
 
101

 
 
 
742

 
 
 
—

 
 
 
742

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Sales and Revenues
$
6,523

 
 
 
$
1,134

 
 
 
$
2,607

 
 
 
$
3,202

 
 
 
$
13,466

 
 
 
$
—

 
 
 
$
13,466

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(more)


5


Consolidated Operating Profit
consopprofit1q2020a.jpg
The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2019 (at left) and the first quarter of 2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income) expenses.
Operating profit for the first quarter of 2020 was $1.404 billion, a decrease of $803 million, or 36%, compared with $2.207 billion in the first quarter of 2019. The decrease was mostly due to lower sales volume and unfavorable currency impacts related to the Australian dollar, partially offset by lower selling, general and administrative (SG&A) and research and development (R&D) expenses as well as favorable manufacturing costs.
Lower SG&A/R&D expenses reflected reduced short-term incentive compensation expense, a favorable change in fair value adjustments related to deferred compensation plans and other cost-reduction actions implemented in response to lower sales volumes.
Favorable manufacturing costs were primarily driven by lower period manufacturing and material costs, partially offset by higher warranty expense. Period manufacturing costs declined mostly due to a reduction in short-term incentive compensation expense and other cost-reduction actions implemented in response to lower sales volumes.
Profit by Segment
(Millions of dollars)
First Quarter 2020
 
First Quarter 2019
 
$
Change
 
%
 Change
Construction Industries
$
640

 
$
1,085

 
$
(445
)
 
(41
%)
Resource Industries
304

 
576

 
(272
)
 
(47
%)
Energy & Transportation
602

 
838

 
(236
)
 
(28
%)
All Other Segment
7

 
25

 
(18
)
 
(72
%)
Corporate Items and Eliminations
(212
)
 
(375
)
 
163

 
 

Machinery, Energy & Transportation
1,341

 
2,149

 
(808
)
 
(38
%)
 
 
 
 
 
 
 
 
Financial Products Segment
105

 
211

 
(106
)
 
(50
%)
Corporate Items and Eliminations
47

 
(46
)
 
93

 


Financial Products
152

 
165

 
(13
)
 
(8
%)
 
 
 
 
 
 
 
 
Consolidating Adjustments
(89
)
 
(107
)
 
18

 
 
 
 
 
 
 
 
 
 
Consolidated Operating Profit
$
1,404

 
$
2,207

 
$
(803
)
 
(36
%)
 
 
 
 
 
 
 
 

(more)


6


Other Profit/Loss and Tax Items
•
Other income (expense) in the first quarter of 2020 was income of $222 million, compared with income of $160 million in the first quarter of 2019. The change was primarily due to a $254 million remeasurement gain resulting from the settlement of a non-U.S. pension obligation, partially offset by unfavorable impacts from equity securities at Insurance Services and foreign currency exchange gains (losses) primarily due to the Australian dollar and Brazilian real. The unfavorable impact of equity securities was due to unrealized losses in the first quarter of 2020, compared with unrealized gains in the first quarter of 2019. The company experienced foreign currency exchange net losses in the first quarter of 2020, compared with net gains in the first quarter of 2019.
•
The provision for income taxes for the first quarter of 2020 reflected a higher estimated annual tax rate of 31% compared with 26% for the first quarter of 2019, excluding the discrete items discussed below. The increase in the estimated annual tax rate is primarily related to changes in the expected geographic mix of profits from a tax perspective for 2020, including the impact of U.S. tax on non-U.S. earnings as a result of U.S. tax reform.
In the first quarter of 2020, a $43 million tax charge was recorded related to the $254 million remeasurement gain resulting from the settlement of a non-U.S. pension obligation. In the first quarter of 2019, a discrete tax benefit of $201 million was recorded.  




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7


CONSTRUCTION INDUSTRIES
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2019
 
Sales Volume
 
Price Realization
 
Currency
 
Inter-Segment
 
First Quarter 2020
 
$
 Change
 
%
 Change
Total Sales
 
$
5,873

 
$
(1,418
)
 
$
(63
)
 
$
(59
)
 
$
(27
)
 
$
4,306

 
$
(1,567
)
 
(27
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales by Geographic Region
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
North America
 
$
2,085

 
$
2,965

 
$
(880
)
 
(30
%)
 
 
 
 
 
 
 
 
Latin America
 
265

 
319

 
(54
)
 
(17
%)
 
 
 
 
 
 
 
 
EAME
 
889

 
1,006

 
(117
)
 
(12
%)
 
 
 
 
 
 
 
 
Asia/Pacific
 
1,073

 
1,562

 
(489
)
 
(31
%)
 
 
 
 
 
 
 
 
External Sales
 
4,312

 
5,852

 
(1,540
)
 
(26
%)
 
 
 
 
 
 
 
 
Inter-segment
 
(6
)
 
21

 
(27
)
 
(129
%)
 
 
 
 
 
 
 
 
Total Sales
 
$
4,306

 
$
5,873

 
$
(1,567
)
 
(27
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 

Change
 
%
Change
 
 
 
 
 
 
 
 
Segment Profit
 
$
640

 
$
1,085

 
$
(445
)
 
(41
%)
 
 
 
 
 
 
 
 
Segment Profit Margin
 
14.9
%
 
18.5
%
 
(3.6
 pts)
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction Industries’ total sales were $4.306 billion in the first quarter of 2020, a decrease of $1.567 billion, or 27%, compared with $5.873 billion in the first quarter of 2019. The decrease was due to lower sales volume, driven by lower end-user demand and the impact from changes in dealer inventories. Dealers increased inventories significantly more during the first quarter of 2019 than in the first quarter of 2020.
▪
In North America, sales decreased due to lower demand driven by the impact from changes in dealer inventories and lower end-user demand. Dealers increased inventories more during the first quarter of 2019 than in the first quarter of 2020. The lower end-user demand was driven primarily by non-residential and pipeline construction.
▪
Sales declined in Latin America primarily due to the impact from changes in dealer inventories and unfavorable currency impacts from a weaker Brazilian real. Dealers decreased inventories more during the first quarter of 2020 than in the first quarter of 2019.
▪
In EAME, the sales decrease was primarily due to lower end-user demand across most of the region and unfavorable currency impacts from a weaker euro.
▪
Sales declined in Asia/Pacific due to lower end-user demand across most of the region, primarily in China. Decreases in China reflected lower end-user demand mostly due to COVID-19 pandemic-related impacts.
Construction Industries’ profit was $640 million in the first quarter of 2020, a decrease of $445 million, or 41%, compared with $1.085 billion in the first quarter of 2019. The decrease was mainly due to lower sales volume, partially offset by lower manufacturing costs. Favorable manufacturing costs were primarily due to lower period manufacturing and material costs, partially offset by higher warranty expense. Lower period manufacturing costs reflected a reduction in short-term incentive compensation expense and targeted cost-reduction actions implemented in response to lower sales volumes.

(more)


8


RESOURCE INDUSTRIES
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2019
 
Sales Volume
 
Price Realization
 
Currency
 
Inter-Segment
 
First Quarter 2020
 
$
 Change
 
%
 Change
Total Sales
 
$
2,752

 
$
(607
)
 
$
(21
)
 
$
(40
)
 
$
—

 
$
2,084

 
$
(668
)
 
(24
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales by Geographic Region
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
North America
 
$
696

 
$
951

 
$
(255
)
 
(27
%)
 
 
 
 
 
 
 
 
Latin America
 
320

 
423

 
(103
)
 
(24
%)
 
 
 
 
 
 
 
 
EAME
 
395

 
468

 
(73
)
 
(16
%)
 
 
 
 
 
 
 
 
Asia/Pacific
 
568

 
805

 
(237
)
 
(29
%)
 
 
 
 
 
 
 
 
External Sales
 
1,979

 
2,647

 
(668
)
 
(25
%)
 
 
 
 
 
 
 
 
Inter-segment
 
105

 
105

 
—

 
—
%
 
 
 
 
 
 
 
 
Total Sales
 
$
2,084

 
$
2,752

 
$
(668
)
 
(24
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 

Change
 
%
Change
 
 
 
 
 
 
 
 
Segment Profit
 
$
304

 
$
576

 
$
(272
)
 
(47
%)
 
 
 
 
 
 
 
 
Segment Profit Margin
 
14.6
%
 
20.9
%
 
(6.3
 pts)
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resource Industries’ total sales were $2.084 billion in the first quarter of 2020, a decrease of $668 million, or 24%, compared with $2.752 billion in the first quarter of 2019. The decrease was due to lower sales volume, driven by changes in dealer inventories and lower end-user demand. Dealers increased inventories during the first quarter of 2019, compared with a decrease during the first quarter of 2020. Mining equipment sales were lower due to weakness in certain commodities. In addition, demand decreased for equipment supporting non-residential construction and quarry and aggregates.
Resource Industries’ profit was $304 million in the first quarter of 2020, a decrease of $272 million, or 47%, compared with $576 million in the first quarter of 2019. The decrease was mainly due to lower sales volume. Manufacturing costs were about flat as the unfavorable impact of cost absorption and higher warranty expense were more than offset by lower period manufacturing costs, freight expense and material costs. Cost absorption was unfavorable as inventory increased more in the first quarter of 2019 than in the first quarter of 2020. Lower period manufacturing costs were primarily due to lower short-term incentive compensation expense and the favorable impact of restructuring and other cost-reduction actions.

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9


ENERGY & TRANSPORTATION
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2019
 
Sales Volume
 
Price Realization
 
Currency
 
Inter-Segment
 
First Quarter 2020
 
$
 Change
 
%
 Change
Total Sales
 
$
5,210

 
$
(599
)
 
$
21

 
$
(37
)
 
$
(246
)
 
$
4,349

 
$
(861
)
 
(17
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales by Application
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
Oil and Gas
 
$
861

 
$
1,131

 
$
(270
)
 
(24
%)
 
 
 
 
 
 
 
 
Power Generation
 
854

 
1,036

 
(182
)
 
(18
%)
 
 
 
 
 
 
 
 
Industrial
 
801

 
904

 
(103
)
 
(11
%)
 
 
 
 
 
 
 
 
Transportation
 
1,102

 
1,162

 
(60
)
 
(5
%)
 
 
 
 
 
 
 
 
External Sales
 
3,618

 
4,233

 
(615
)
 
(15
%)
 
 
 
 
 
 
 
 
Inter-segment
 
731

 
977

 
(246
)
 
(25
%)
 
 
 
 
 
 
 
 
Total Sales
 
$
4,349

 
$
5,210

 
$
(861
)
 
(17
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 

Change
 
%
Change
 
 
 
 
 
 
 
 
Segment Profit
 
$
602

 
$
838

 
$
(236
)
 
(28
%)
 
 
 
 
 
 
 
 
Segment Profit Margin
 
13.8
%
 
16.1
%
 
(2.3
 pts)
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy & Transportation’s total sales were $4.349 billion in the first quarter of 2020, a decrease of $861 million, or 17%, compared with $5.210 billion in the first quarter of 2019. Sales declined across all applications and inter-segment engine sales.
▪
Oil and Gas – Sales were lower mainly in North America. The sales decline was largely due to lower demand for reciprocating engines used in gas compression and well servicing.
▪
Power Generation – Sales decreased primarily due to lower sales in Asia/Pacific and North America for both reciprocating engines and turbine-related projects.
▪
Industrial – Sales decreased due to lower demand across all regions.
▪
Transportation – Sales declined in both rail and marine applications.
Energy & Transportation’s profit was $602 million in the first quarter of 2020, a decrease of $236 million, or 28%, compared with $838 million in the first quarter of 2019. The decrease was mostly due to lower sales volume. The decline was partially offset by lower SG&A/R&D expenses and manufacturing costs, both of which were mostly impacted by a reduction in short-term incentive compensation expense and other cost-reduction actions implemented in response to lower sales volumes.

(more)


10


FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Geographic Region
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
North America
 
$
525

 
$
558

 
$
(33
)
 
(6
%)
 
 
 
 
 
 
 
 
Latin America
 
70

 
70

 
—

 
—
%
 
 
 
 
 
 
 
 
EAME
 
102

 
102

 
—

 
—
%
 
 
 
 
 
 
 
 
Asia/Pacific
 
117

 
120

 
(3
)
 
(3
%)
 
 
 
 
 
 
 
 
Total Revenues
 
$
814

 
$
850

 
$
(36
)
 
(4
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit
 
 
 
 
 
 
 
 
 
 
First Quarter 2020
 
First Quarter 2019
 

Change
 
%
Change
 
 
 
 
 
 
 
 
Segment Profit
 
$
105

 
$
211

 
$
(106
)
 
(50
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Products’ segment revenues were $814 million in the first quarter of 2020, a decrease of $36 million, or 4%, from the first quarter of 2019. The decrease was primarily due to lower average earning assets in North America.
Financial Products’ segment profit was $105 million in the first quarter of 2020, compared with $211 million in the first quarter of 2019. Most of the decrease was due to an unfavorable impact from equity securities in Insurance Services. Additionally, Cat Financial experienced lower average earning assets. These unfavorable impacts were partially offset by a reduction in SG&A expenses due to lower short-term incentive compensation expense.
At the end of the first quarter of 2020, past dues at Cat Financial were 4.13%, compared with 3.61% at the end of the first quarter of 2019. The increase was primarily due to North America, Asia/Pacific and Mining, partially offset by a decrease in Caterpillar Power Finance. Write-offs, net of recoveries, were $30 million for the first quarter of both 2020 and 2019. As of March 31, 2020, Cat Financial's allowance for credit losses totaled $457 million, or 1.69% of finance receivables, compared with $424 million, or 1.50% of finance receivables, at December 31, 2019. The increase in allowance for credit losses was driven by the forecast of deteriorating economic conditions from the COVID-19 pandemic.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $165 million in the first quarter of 2020, a decrease of $256 million from the first quarter of 2019, primarily due to a favorable change in fair value adjustments related to deferred compensation plans and segment reporting methodology differences.



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11


Notes
i.
Glossary of terms is included on the Caterpillar website at http://www.caterpillar.com/investors/.
ii.
Information on non-GAAP financial measures is included in the appendix on page 12.
iii.
Some amounts within this report are rounded to the millions or billions and may not add.
iv.
Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 7:30 a.m. Central Time on Tuesday, April 28, 2020, to discuss its 2020 first-quarter 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
Since 1925, Caterpillar Inc. has been helping our customers build a better world – making sustainable progress possible and driving positive change on every continent. With 2019 sales and revenues of $53.8 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Services offered throughout the product life cycle, cutting-edge technology and decades of product expertise set Caterpillar apart, providing exceptional value to help our customers succeed. The company principally operates through three primary segments – Construction Industries, Resource Industries and Energy & Transportation – and provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect on social media, visit caterpillar.com/social-media.
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, +1 224-551-4382 or Driscoll_Jennifer@cat.com
Caterpillar media contact: Kate Kenny, +1 224-551-4133 or Kenny_Kate@cat.com
Forward-Looking Statements
Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.
Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) the duration and geographic spread of, business disruptions caused by, and the overall global economic impact of, the COVID-19 pandemic; and (xxvii) other factors described in more detail in Caterpillar’s Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.


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12


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
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 (i) a remeasurement gain resulting from the settlement of a non-U.S. pension obligation in the first quarter of 2020 and (ii) a discrete tax benefit related to U.S. tax reform in the first quarter of 2019. 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 2020, excluding mark-to-market gains or losses for remeasurement of pension and other postemployment benefit plans along with any other discrete items.
Reconciliations of adjusted profit per share to the most directly comparable GAAP measure, diluted profit per share, are as follows:
 
First Quarter
 
 
 
 
2020
 
2019
 
 
 
Profit per share
$
1.98

 
$
3.25

 
 
 
Per share remeasurement gain of a non-U.S. pension obligation1
$
(0.38
)
 
$
—

 
 
 
Per share U.S. tax reform impact
$
—

 
$
(0.31
)
 
 
 
Adjusted profit per share
$
1.60

 
$
2.94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 At statutory tax rates.
Note: On March 26, 2020, the company withdrew its previous financial outlook due to the continued global economic uncertainty related to the COVID-19 pandemic.
 
Machinery, Energy & Transportation
Caterpillar defines Machinery, Energy & Transportation as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. Machinery, Energy & Transportation information relates to the design, manufacture and marketing of Caterpillar products. Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. The nature of these businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. The company also believes this presentation will assist readers in understanding Caterpillar’s business. Pages 13-21 reconcile Machinery, Energy & Transportation with Financial Products on the equity basis to Caterpillar Inc. consolidated financial information.

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13


Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
 
Three Months Ended
March 31,
 
2020
 
2019
Sales and revenues:
 
 
 
Sales of Machinery, Energy & Transportation
$
9,914

 
$
12,724

Revenues of Financial Products
721

 
742

Total sales and revenues
10,635

 
13,466

 
 
 
 
Operating costs:
 
 
 
Cost of goods sold
7,266

 
9,003

Selling, general and administrative expenses
1,121

 
1,319

Research and development expenses
356

 
435

Interest expense of Financial Products
175

 
190

Other operating (income) expenses
313

 
312

Total operating costs
9,231

 
11,259

 
 
 
 
Operating profit
1,404

 
2,207

 
 
 
 
Interest expense excluding Financial Products
113

 
103

Other income (expense)
222

 
160

 
 
 
 
Consolidated profit before taxes
1,513

 
2,264

 
 
 
 
Provision (benefit) for income taxes
425

 
387

Profit of consolidated companies
1,088

 
1,877

 
 
 
 
Equity in profit (loss) of unconsolidated affiliated companies
5

 
7

 
 
 
 
Profit of consolidated and affiliated companies
1,093

 
1,884

 
 
 
 
Less: Profit (loss) attributable to noncontrolling interests
1

 
3

 
 
 
 
Profit 1
$
1,092

 
$
1,881

 
 
 
 
 
 
 
 
Profit per common share
$
2.00

 
$
3.29

Profit per common share — diluted 2
$
1.98

 
$
3.25

 
 
 
 
Weighted-average common shares outstanding (millions)
 

 
 

– Basic
546.8

 
572.4

– Diluted 2
551.1

 
578.8

 
 
 
 
1 
Profit attributable to common shareholders.
2 
Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

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14


Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
 
March 31,
2020
 
December 31,
2019
Assets
 
 
 
Current assets:
 
 
 

Cash and short-term investments
$
7,123

 
$
8,284

Receivables – trade and other
7,834

 
8,568

Receivables – finance
9,120

 
9,336

Prepaid expenses and other current assets
1,761

 
1,739

Inventories
11,748

 
11,266

Total current assets
37,586

 
39,193

 
 
 
 
Property, plant and equipment – net
12,488

 
12,904

Long-term receivables – trade and other
1,196

 
1,193

Long-term receivables – finance
12,021

 
12,651

Noncurrent deferred and refundable income taxes
1,426

 
1,411

Intangible assets
1,478

 
1,565

Goodwill
6,140

 
6,196

Other assets
3,559

 
3,340

Total assets
$
75,894

 
$
78,453

 
 
 
 
Liabilities
 
 
 

Current liabilities:
 
 
 

Short-term borrowings:
 
 
 

-- Machinery, Energy & Transportation
$
—

 
$
5

-- Financial Products
4,789

 
5,161

Accounts payable
5,769

 
5,957

Accrued expenses
3,776

 
3,750

Accrued wages, salaries and employee benefits
878

 
1,629

Customer advances
1,295

 
1,187

Dividends payable
—

 
567

Other current liabilities
2,074

 
2,155

Long-term debt due within one year:
 

 
 

-- Machinery, Energy & Transportation
143

 
16

-- Financial Products
7,792

 
6,194

Total current liabilities
26,516

 
26,621

 
 
 
 
Long-term debt due after one year:
 
 
 

-- Machinery, Energy & Transportation
8,998

 
9,141

-- Financial Products
15,371

 
17,140

Liability for postemployment benefits
6,333

 
6,599

Other liabilities
4,437

 
4,323

Total liabilities
61,655

 
63,824

 
 
 
 
Shareholders’ equity
 
 
 

Common stock
6,046

 
5,935

Treasury stock
(25,341
)
 
(24,217
)
Profit employed in the business
35,504

 
34,437

Accumulated other comprehensive income (loss)
(2,012
)
 
(1,567
)
Noncontrolling interests
42

 
41

Total shareholders’ equity
14,239

 
14,629

Total liabilities and shareholders’ equity
$
75,894

 
$
78,453



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15


Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
 
Three Months Ended
March 31,
 
2020
 
2019
Cash flow from operating activities:
 
 
 
Profit of consolidated and affiliated companies
$
1,093

 
$
1,884

Adjustments for non-cash items:
 

 
 

Depreciation and amortization
614

 
641

Gain on remeasurement of a non-U.S. pension obligation
(254
)
 
—

Provision (benefit) for deferred income taxes
20

 
(11
)
Other
534

 
88

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

 
 

Receivables – trade and other
500

 
(150
)
Inventories
(541
)
 
(813
)
Accounts payable
90

 
355

Accrued expenses
(97
)
 
135

Accrued wages, salaries and employee benefits
(722
)
 
(1,185
)
Customer advances
116

 
105

Other assets – net
(50
)
 
(7
)
Other liabilities – net
(173
)
 
79

Net cash provided by (used for) operating activities
1,130

 
1,121

Cash flow from investing activities:
 
 
 

Capital expenditures – excluding equipment leased to others
(305
)
 
(278
)
Expenditures for equipment leased to others
(243
)
 
(269
)
Proceeds from disposals of leased assets and property, plant and equipment
216

 
209

Additions to finance receivables
(2,953
)
 
(2,615
)
Collections of finance receivables
3,153

 
2,818

Proceeds from sale of finance receivables
31

 
44

Investments and acquisitions (net of cash acquired)
(35
)
 
(2
)
Proceeds from sale of securities
68

 
57

Investments in securities
(180
)
 
(107
)
Other – net
35

 
(38
)
Net cash provided by (used for) investing activities
(213
)
 
(181
)
Cash flow from financing activities:
 
 
 

Dividends paid
(567
)
 
(494
)
Common stock issued, including treasury shares reissued
(23
)
 
(5
)
Common shares repurchased
(1,043
)
 
(751
)
Proceeds from debt issued (original maturities greater than three months)
2,141

 
2,665

Payments on debt (original maturities greater than three months)
(2,466
)
 
(2,567
)
Short-term borrowings – net (original maturities three months or less)
(40
)
 
(522
)
Other – net
(1
)
 
(1
)
Net cash provided by (used for) financing activities
(1,999
)
 
(1,675
)
Effect of exchange rate changes on cash
(80
)
 
3

Increase (decrease) in cash and short-term investments and restricted cash
(1,162
)
 
(732
)
Cash and short-term investments and restricted cash at beginning of period
8,292

 
7,890

Cash and short-term investments and restricted cash at end of period
$
7,130

 
$
7,158

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.


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16


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2020
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
 
Sales and revenues:
 

 
 

 
 

 
 

 
Sales of Machinery, Energy & Transportation
$
9,914

 
$
9,914

 
$
—

 
$
—

 
Revenues of Financial Products
721

 
—

 
830

 
(109
)
2 
Total sales and revenues
10,635

 
9,914

 
830

 
(109
)
 
 
 
 
 
 
 
 
 
 
Operating costs:
 

 
 

 
 

 
 

 
Cost of goods sold
7,266

 
7,267

 
—

 
(1
)
3 
Selling, general and administrative expenses
1,121

 
940

 
182

 
(1
)
3 
Research and development expenses
356

 
356

 
—

 
—

 
Interest expense of Financial Products
175

 
—

 
176

 
(1
)
4 
Other operating (income) expenses
313

 
10

 
320

 
(17
)
3 
Total operating costs
9,231

 
8,573

 
678

 
(20
)
 
 
 
 
 
 
 
 
 
 
Operating profit
1,404

 
1,341

 
152

 
(89
)
 
 
 
 
 
 
 
 
 
 
Interest expense excluding Financial Products
113

 
112

 
—

 
1

4 
Other income (expense)
222

 
179

 
(47
)
 
90

5 
 
 
 
 
 
 
 
 
 
Consolidated profit before taxes
1,513

 
1,408

 
105

 
—

 
 
 
 
 
 
 
 
 
 
Provision (benefit) for income taxes
425

 
397

 
28

 
—

 
Profit of consolidated companies
1,088

 
1,011

 
77

 
—

 
 
 
 
 
 
 
 
 
 
Equity in profit (loss) of unconsolidated affiliated companies
5

 
5

 
—

 
—

 
Equity in profit of Financial Products’ subsidiaries
—

 
73

 
—

 
(73
)
6 
 
 
 
 
 
 
 
 
 
Profit of consolidated and affiliated companies
1,093

 
1,089

 
77

 
(73
)
 
 
 
 
 
 
 
 
 
 
Less: Profit (loss) attributable to noncontrolling interests
1

 
(3
)
 
4

 
—

 
 
 
 
 
 
 
 
 
 
Profit 7
$
1,092

 
$
1,092

 
$
73

 
$
(73
)
 
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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17


Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 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
$
12,724

 
$
12,724

 
$
—

 
$
—

 
Revenues of Financial Products
742

 
—

 
870

 
(128
)
2 
Total sales and revenues
13,466

 
12,724

 
870

 
(128
)
 
 
 
 
 
 
 
 
 
 
Operating costs:
 

 
 

 
 

 
 

 
Cost of goods sold
9,003

 
9,003

 
—

 
—

 
Selling, general and administrative expenses
1,319

 
1,127

 
192

 
—

 
Research and development expenses
435

 
435

 
—

 
—

 
Interest expense of Financial Products
190

 
—

 
200

 
(10
)
4 
Other operating (income) expenses
312

 
10

 
313

 
(11
)
3 
Total operating costs
11,259

 
10,575

 
705

 
(21
)
 
 
 
 
 
 
 
 
 
 
Operating profit
2,207

 
2,149

 
165

 
(107
)
 
 
 
 
 
 
 
 
 
 
Interest expense excluding Financial Products
103

 
110

 
—

 
(7
)
4 
Other income (expense)
160

 
19

 
41

 
100

5 
 
 
 
 
 
 
 
 
 
Consolidated profit before taxes
2,264

 
2,058

 
206

 
—

 
 
 
 
 
 
 
 
 
 
Provision (benefit) for income taxes
387

 
335

 
52

 
—

 
Profit of consolidated companies
1,877

 
1,723

 
154

 
—

 
 
 
 
 
 
 
 
 
 
Equity in profit (loss) of unconsolidated affiliated companies
7

 
7

 
—

 
—

 
Equity in profit of Financial Products’ subsidiaries
—

 
148

 
—

 
(148
)
6 
 
 
 
 
 
 
 
 
 
Profit of consolidated and affiliated companies
1,884

 
1,878

 
154

 
(148
)
 
 
 
 
 
 
 
 
 
 
Less: Profit (loss) attributable to noncontrolling interests
3

 
(3
)
 
6

 
—

 
 
 
 
 
 
 
 
 
 
Profit 7
$
1,881

 
$
1,881

 
$
148

 
$
(148
)
 
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 Financial Position
At March 31, 2020
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
 
Assets
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and short-term investments
$
7,123

 
$
6,251

 
$
872

 
$
—

 
Receivables – trade and other
7,834

 
2,722

 
482

 
4,630

2,3 
Receivables – finance
9,120

 
—

 
13,886

 
(4,766
)
3 
Prepaid expenses and other current assets
1,761

 
1,237

 
555

 
(31
)
4 
Inventories
11,748

 
11,748

 
—

 
—

 
Total current assets
37,586

 
21,958

 
15,795

 
(167
)
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment – net
12,488

 
8,385

 
4,103

 
—

 
Long-term receivables – trade and other
1,196

 
268

 
266

 
662

2,3 
Long-term receivables – finance
12,021

 
—

 
12,694

 
(673
)
3 
Investments in Financial Products subsidiaries
—

 
3,999

 
—

 
(3,999
)
5 
Noncurrent deferred and refundable income taxes
1,426

 
1,975

 
96

 
(645
)
6 
Intangible assets
1,478

 
1,478

 
—

 
—

 
Goodwill
6,140

 
6,140

 
—

 
—

 
Other assets
3,559

 
2,048

 
1,610

 
(99
)
7 
Total assets
$
75,894

 
$
46,251

 
$
34,564

 
$
(4,921
)
 
 
 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 

 
 

 
Current liabilities:
 

 
 

 
 

 
 

 
Short-term borrowings
$
4,789

 
$
—

 
$
4,789

 
$
—

 
Short-term borrowings with consolidated companies
—

 
—

 
—

 
—

 
Accounts payable
5,769

 
5,672

 
233

 
(136
)
9 
Accrued expenses
3,776

 
3,426

 
350

 
—

 
Accrued wages, salaries and employee benefits
878

 
862

 
16

 
—

 
Customer advances
1,295

 
1,295

 
—

 
—

 
Dividends payable
—

 
—

 
—

 
—

 
Other current liabilities
2,074

 
1,500

 
626

 
(52
)
6,10 
Long-term debt due within one year
7,935

 
143

 
7,792

 
—

 
Total current liabilities
26,516

 
12,898

 
13,806

 
(188
)
 
 
 
 
 
 
 
 
 
 
Long-term debt due after one year
24,369

 
9,009

 
15,371

 
(11
)
8 
Liability for postemployment benefits
6,333

 
6,332

 
1

 
—

 
Other liabilities
4,437

 
3,773

 
1,387

 
(723
)
6 
Total liabilities
61,655

 
32,012

 
30,565

 
(922
)
 
 
 

 
 

 
 

 
 

 
Shareholders’ equity
 

 
 

 
 

 
 

 
Common stock
6,046

 
6,046

 
919

 
(919
)
5 
Treasury stock
(25,341
)
 
(25,341
)
 
—

 
—

 
Profit employed in the business
35,504

 
35,504

 
4,057

 
(4,057
)
5 
Accumulated other comprehensive income (loss)
(2,012
)
 
(2,012
)
 
(1,152
)
 
1,152

5 
Noncontrolling interests
42

 
42

 
175

 
(175
)
5 
Total shareholders’ equity
14,239

 
14,239

 
3,999

 
(3,999
)
 
Total liabilities and shareholders’ equity
$
75,894

 
$
46,251

 
$
34,564

 
$
(4,921
)
 
1 
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

2 
Elimination of receivables between Machinery, Energy & Transportation and Financial Products.

3 
Reclassification of Machinery, Energy & Transportation’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

4 
Elimination of Machinery, Energy & Transportation’s insurance premiums that are prepaid to Financial Products.

5 
Elimination of Financial Products’ equity which is accounted for by Machinery, Energy & Transportation on the equity basis.

6 
Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.

7 
Elimination of other intercompany assets between Machinery, Energy & Transportation and Financial Products.

8 
Elimination of debt between Machinery, Energy & Transportation and Financial Products.

9 
Elimination of payables between Machinery, Energy & Transportation and Financial Products.

10 
Elimination of prepaid insurance in Financial Products’ other liabilities.


(more)


19


Caterpillar Inc.
Supplemental Data for Financial Position
At December 31, 2019
(Unaudited)
(Millions of dollars)
 
 
 
Supplemental Consolidating Data
 
 
Consolidated
 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
 
Assets
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and short-term investments
$
8,284

 
$
7,299

 
$
985

 
$
—

 
Receivables – trade and other
8,568

 
3,737

 
451

 
4,380

2,3 
Receivables – finance
9,336

 
—

 
14,489

 
(5,153
)
3 
Prepaid expenses and other current assets
1,739

 
1,290

 
529

 
(80
)
4 
Inventories
11,266

 
11,266

 
—

 
—

 
Total current assets
39,193

 
23,592

 
16,454

 
(853
)
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment – net
12,904

 
8,606

 
4,298

 
—

 
Long-term receivables – trade and other
1,193

 
348

 
152

 
693

2,3 
Long-term receivables – finance
12,651

 
—

 
13,354

 
(703
)
3 
Investments in Financial Products subsidiaries
—

 
4,260

 
—

 
(4,260
)
5 
Noncurrent deferred and refundable income taxes
1,411

 
2,002

 
117

 
(708
)
6 
Intangible assets
1,565

 
1,565

 
—

 
—

 
Goodwill
6,196

 
6,196

 
—

 
—

 
Other assets
3,340

 
1,868

 
1,572

 
(100
)
7 
Total assets
$
78,453

 
$
48,437

 
$
35,947

 
$
(5,931
)
 
 
 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 

 
 

 
Current liabilities:
 

 
 

 
 

 
 

 
Short-term borrowings
$
5,166

 
$
5

 
$
5,161

 
$
—

 
Short-term borrowings with consolidated companies
—

 
—

 
600

 
(600
)
8 
Accounts payable
5,957

 
5,918

 
212

 
(173
)
9 
Accrued expenses
3,750

 
3,415

 
335

 
—

 
Accrued wages, salaries and employee benefits
1,629

 
1,580

 
49

 
—

 
Customer advances
1,187

 
1,187

 
—

 
—

 
Dividends payable
567

 
567

 
—

 
—

 
Other current liabilities
2,155

 
1,689

 
566

 
(100
)
6,10 
Long-term debt due within one year
6,210

 
16

 
6,194

 
—

 
Total current liabilities
26,621

 
14,377

 
13,117

 
(873
)
 
 
 
 
 
 
 
 
 
 
Long-term debt due after one year
26,281

 
9,151

 
17,140

 
(10
)
8 
Liability for postemployment benefits
6,599

 
6,599

 
—

 
—

 
Other liabilities
4,323

 
3,681

 
1,430

 
(788
)
6 
Total liabilities
63,824

 
33,808

 
31,687

 
(1,671
)
 
 
 

 
 

 
 

 
 

 
Shareholders’ equity
 

 
 

 
 

 
 

 
Common stock
5,935

 
5,935

 
919

 
(919
)
5 
Treasury stock
(24,217
)
 
(24,217
)
 
—

 
—

 
Profit employed in the business
34,437

 
34,437

 
3,997

 
(3,997
)
5 
Accumulated other comprehensive income (loss)
(1,567
)
 
(1,567
)
 
(828
)
 
828

5 
Noncontrolling interests
41

 
41

 
172

 
(172
)
5 
Total shareholders’ equity
14,629

 
14,629

 
4,260

 
(4,260
)
 
Total liabilities and shareholders’ equity
$
78,453

 
$
48,437

 
$
35,947

 
$
(5,931
)
 
1 
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

2 
Elimination of receivables between Machinery, Energy & Transportation and Financial Products.

3 
Reclassification of Machinery, Energy & Transportation’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

4 
Elimination of Machinery, Energy & Transportation’s insurance premiums that are prepaid to Financial Products.

5 
Elimination of Financial Products’ equity which is accounted for by Machinery, Energy & Transportation on the equity basis.

6 
Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.

7 
Elimination of other intercompany assets between Machinery, Energy & Transportation and Financial Products.

8 
Elimination of debt between Machinery, Energy & Transportation and Financial Products.

9 
Elimination of payables between Machinery, Energy & Transportation and Financial Products.

10 
Elimination of prepaid insurance in Financial Products’ other liabilities.


(more)


20


Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2020
(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
$
1,093

 
$
1,089

 
$
77

 
$
(73
)
2 
Adjustments for non-cash items:
 

 
 

 
 

 
 

 
Depreciation and amortization
614

 
402

 
212

 
—

 
Undistributed profit of Financial Products
—

 
(73
)
 
—

 
73

3 
Gain on remeasurement of a non-U.S. pension obligation
(254
)
 
(254
)
 
—

 
—

 
Provision (benefit) for deferred income taxes
20

 
75

 
(55
)
 
—

 
Other
534

 
249

 
170

 
115

4 
Changes in assets and liabilities, net of acquisitions and divestitures:
 
 
 
 
 
 
 
 
Receivables – trade and other
500

 
328

 
(56
)
 
228

4, 5 
Inventories
(541
)
 
(538
)
 
—

 
(3
)
4 
Accounts payable
90

 
2

 
51

 
37

4 
Accrued expenses
(97
)
 
(105
)
 
8

 
—

 
Accrued wages, salaries and employee benefits
(722
)
 
(689
)
 
(33
)
 
—

 
Customer advances
116

 
116

 
—

 
—

 
Other assets – net
(50
)
 
15

 
(16
)
 
(49
)
4 
Other liabilities – net
(173
)
 
(299
)
 
73

 
53

4 
Net cash provided by (used for) operating activities
1,130

 
318

 
431

 
381

 
Cash flow from investing activities:
 

 
 

 
 

 
 

 
Capital expenditures – excluding equipment leased to others
(305
)
 
(304
)
 
(1
)
 
—

 
Expenditures for equipment leased to others
(243
)
 
2

 
(249
)
 
4

4 
Proceeds from disposals of leased assets and property, plant and equipment
216

 
61

 
156

 
(1
)
4 
Additions to finance receivables
(2,953
)
 
—

 
(3,213
)
 
260

5 
Collections of finance receivables
3,153

 
—

 
3,421

 
(268
)
5 
Net intercompany purchased receivables
—

 
—

 
376

 
(376
)
5 
Proceeds from sale of finance receivables
31

 
—

 
31

 
—

 
Net intercompany borrowings
—

 
599

 
1

 
(600
)
6 
Investments and acquisitions (net of cash acquired)
(35
)
 
(35
)
 
—

 
—

 
Proceeds from sale of securities
68

 
6

 
62

 
—

 
Investments in securities
(180
)
 
(5
)
 
(175
)
 
—

 
Other – net
35

 
—

 
35

 
—

 
Net cash provided by (used for) investing activities
(213
)
 
324

 
444

 
(981
)
 
Cash flow from financing activities:
 

 
 

 
 

 
 

 
Dividends paid
(567
)
 
(567
)
 
—

 
—

 
Common stock issued, including treasury shares reissued
(23
)
 
(23
)
 
—

 
—

 
Common shares repurchased
(1,043
)
 
(1,043
)
 
—

 
—

 
Net intercompany borrowings
—

 
(1
)
 
(599
)
 
600

6 
Proceeds from debt issued > 90 days
2,141

 
15

 
2,126

 
—

 
Payments on debt > 90 days
(2,466
)
 
(6
)
 
(2,460
)
 
—

 
Short-term borrowings – net < 90 days
(40
)
 
(5
)
 
(35
)
 
—

 
Other – net
(1
)
 
(1
)
 
—

 
—

 
Net cash provided by (used for) financing activities
(1,999
)
 
(1,631
)
 
(968
)
 
600

 
Effect of exchange rate changes on cash
(80
)
 
(59
)
 
(21
)
 
—

 
Increase (decrease) in cash and short-term investments and restricted cash
(1,162
)
 
(1,048
)
 
(114
)
 
—

 
Cash and short-term investments and restricted cash at beginning of period
8,292

 
7,302

 
990

 
—

 
Cash and short-term investments and restricted cash at end of period
$
7,130

 
$
6,254

 
$
876

 
$
—

 
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)


21


Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 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
$
1,884

 
$
1,878

 
$
154

 
$
(148
)
2 
Adjustments for non-cash items:


 
 
 
 
 
 
 
Depreciation and amortization
641

 
424

 
217

 
—

 
Undistributed profit of Financial Products
—

 
(148
)
 
—

 
148

3 
Provision (benefit) for deferred income taxes
(11
)
 
14

 
(25
)
 
—

 
Other
88

 
49

 
(59
)
 
98

4 
Changes in assets and liabilities, net of acquisitions and divestitures:


 
 
 
 
 
 
 
Receivables – trade and other
(150
)
 
75

 
(24
)
 
(201
)
4, 5 
Inventories
(813
)
 
(818
)
 
—

 
5

4 
Accounts payable
355

 
336

 
12

 
7

4 
Accrued expenses
135

 
124

 
11

 
—

 
Accrued wages, salaries and employee benefits
(1,185
)
 
(1,177
)
 
(8
)
 
—

 
Customer advances
105

 
105

 
—

 
—

 
Other assets – net
(7
)
 
(6
)
 
37

 
(38
)
4 
Other liabilities – net
79

 
4

 
35

 
40

4 
Net cash provided by (used for) operating activities
1,121

 
860

 
350

 
(89
)
 
Cash flow from investing activities:
 

 
 
 
 
 
 
 
Capital expenditures – excluding equipment leased to others
(278
)
 
(274
)
 
(4
)
 
—

 
Expenditures for equipment leased to others
(269
)
 
(23
)
 
(247
)
 
1

4 
Proceeds from disposals of leased assets and property, plant and equipment
209

 
26

 
189

 
(6
)
4 
Additions to finance receivables
(2,615
)
 
—

 
(2,971
)
 
356

5 
Collections of finance receivables
2,818

 
—

 
3,096

 
(278
)
5 
Net intercompany purchased receivables
—

 
—

 
(16
)
 
16

5 
Proceeds from sale of finance receivables
44

 
—

 
44

 
—

 
Net intercompany borrowings
—

 
63

 
—

 
(63
)
6 
Investments and acquisitions (net of cash acquired)
(2
)
 
(2
)
 
—

 
—

 
Proceeds from sale of securities
57

 
4

 
53

 
—

 
Investments in securities
(107
)
 
(7
)
 
(100
)
 
—

 
Other – net
(38
)
 
(13
)
 
(25
)
 
—

 
Net cash provided by (used for) investing activities
(181
)
 
(226
)
 
19

 
26

 
Cash flow from financing activities:
 
 
 
 
 
 
 
 
Dividends paid
(494
)
 
(494
)
 
—

 
—

 
Common stock issued, including treasury shares reissued
(5
)
 
(5
)
 
—

 
—

 
Common shares repurchased
(751
)
 
(751
)
 
—

 
—

 
Net intercompany borrowings
—

 
—

 
(63
)
 
63

6 
Proceeds from debt issued > 90 days
2,665

 
—

 
2,665

 
—

 
Payments on debt > 90 days
(2,567
)
 
(2
)
 
(2,565
)
 
—

 
Short-term borrowings – net < 90 days
(522
)
 
4

 
(526
)
 
—

 
Other – net
(1
)
 
(1
)
 
—

 
—

 
Net cash provided by (used for) financing activities
(1,675
)
 
(1,249
)
 
(489
)
 
63

 
Effect of exchange rate changes on cash
3

 
5

 
(2
)
 
—

 
Increase (decrease) in cash and short-term investments and restricted cash
(732
)
 
(610
)
 
(122
)
 
—

 
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
$
7,158

 
$
6,384

 
$
774

 
$
—

 
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 adjustment 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.

#