Caterpillar Reports First-Quarter 2018 Results
DEERFIELD, Illinois, April 24, 2018 /PRNewswire/ --
Delivered Higher Sales and Revenues and Record First-Quarter Profit Per Share; Raised Full-Year Outlook
First Quarter
($ in billions except profit per share) 2018 2017
Sales and Revenues $12.9 $9.8
Profit Per Share $2.74 $0.32
Adjusted Profit Per Share $2.82 $1.28
- First-quarter sales and revenues up 31 percent
- Significant increase in profit per share; adjusted profit per share more than doubled
- Raised full-year profit per share outlook
- Repurchased $500 million of common stock
Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2018 sales and revenues of $12.9 billion, compared with $9.8 billion in the first quarter of 2017. First-quarter 2018 profit of $2.74 per share was a first-quarter record. Profit was $0.32 per share in the first quarter of 2017. Adjusted profit per share in the first quarter of 2018 was $2.82, compared with first-quarter 2017 adjusted profit per share of $1.28.
Caterpillar's financial position remains strong. During the first quarter of 2018, Machinery, Energy & Transportation (ME&T) operating cash flow was $948 million and the company repurchased $500 million of Caterpillar common stock. The company ended the first quarter of 2018 with an enterprise cash balance of $7.9 billion.
"I'd like to thank our global Caterpillar team for outstanding results. The combination of strength in many of our end markets and our team's continued focus on operational excellence - including strong cost control - helped us deliver improved margins and a record first-quarter profit," said Caterpillar CEO Jim Umpleby.
2018 Outlook
In January, Caterpillar provided a 2018 profit outlook range of $7.75 to $8.75 per share. The company is increasing its 2018 profit outlook by $2.00 per share to a range of $9.75 to $10.75 per share, primarily due to growing demand for products and services. The outlook includes about $400 million of restructuring costs, unchanged from the previous outlook. The revised outlook range for adjusted profit is $10.25 to $11.25 per share.
"Based on our strong first-quarter results and higher demand across all regions and most end markets, we are raising our outlook for 2018. We will continue to make targeted investments in expanded offerings and services, consistent with our strategy for long-term profitable growth," said Umpleby.
Following is a summary of sales assumptions for 2018 as compared to 2017:
Construction Industries - The company expects broad-based growth in all regions in 2018, with the biggest drivers being continued strength for construction activity in North America and infrastructure development in China. EAME is expected to continue to grow amid high business confidence and stability in oil-producing countries. The recovery that has started in Latin America is expected to continue.
Resource Industries - The company believes global economic conditions and favorable commodity price levels will drive miners to increase capital expenditures in 2018 for both equipment replacement cycles and expansions. In addition, higher machine utilization levels should support aftermarket parts growth. Strong global demand for commodities is also expected to be a positive for heavy construction and quarry and aggregate customers.
Energy & Transportation - Sales into Oil and Gas applications are expected to increase in 2018, led by continued strong demand for reciprocating engines for well servicing and gas compression applications in North America. The current turbines backlog remains healthy in support of the midstream Oil and Gas business. Rail traffic in North America has increased, with reductions in the number of idled locomotives and railcars. As a result, the company expects an increase in Transportation sales primarily from growth in rail services. After a multi-year downturn, the company expects Power Generation sales to increase as global economic conditions improve. Sales of engines into Industrial applications are expected to be up in 2018 primarily due to projected demand in EAME.
Following are key elements of the revised 2018 profit outlook:
- Better than expected sales volume is the primary driver of the raised profit outlook, with higher volume expected across the three primary segments when compared with the prior outlook.
- Improved price realization is expected to be partially offset by material cost increases primarily driven by higher commodity prices.
- Despite the anticipated increase in volume, the company expects period costs, excluding short-term incentive compensation expense, to be in line with the prior outlook.
- Short-term incentive compensation expense is now expected to be about $1.4 billion, nearly the same as 2017.
- The outlook assumes continued global economic growth. Any potential impacts from future geopolitical risks and increased trade restrictions have not been included in the outlook.
- The outlook does not include a mark-to-market gain or loss for remeasurement of pension and other postemployment benefit (OPEB) plans or changes to provisional estimates recorded in 2017 for U.S. tax reform.
Notes:
- Glossary of terms is included on pages 15-16; first occurrence of terms shown in bold italics.
- Information on non-GAAP financial measures is included on page 17.
- Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Tuesday, April 24, 2018, to discuss its 2018 first-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 2017 sales and revenues of $45.462 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," "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) our ability to develop, produce and market quality products that meet our customers' needs; (vi) the impact of the highly competitive environment in which we operate on our sales and pricing; (vii) information technology security threats and computer crime; (viii) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (ix) failure to realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (x) inventory management decisions and sourcing practices of our dealers and our OEM customers; (xi) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xii) union disputes or other employee relations issues; (xiii) adverse effects of unexpected events including natural disasters; (xiv) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xv) 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; (xvi) our Financial Products segment's risks associated with the financial services industry; (xvii) changes in interest rates or market liquidity conditions; (xviii) an increase in delinquencies, repossessions or net losses of Cat Financial's customers; (xix) currency fluctuations; (xx) our or Cat Financial's compliance with financial and other restrictive covenants in debt agreements; (xxi) increased pension plan funding obligations; (xxii) alleged or actual violations of trade or anti-corruption laws and regulations; (xxiii) international trade policies and their impact on demand for our products and our competitive position; (xxiv) additional tax expense or exposure, including the impact of U.S. tax reform; (xxv) significant legal proceedings, claims, lawsuits or government investigations; (xxvi) new regulations or changes in financial services regulations; (xxvii) compliance with environmental laws and regulations; and (xxviii) other factors described in more detail in Caterpillar's Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
First Quarter 2018 vs. First Quarter 2017
To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 1Q 2018 earnings.
The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the first quarter of 2017 (at left) and the first quarter of 2018 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's board of directors and employees.
Sales and Revenues
Total sales and revenues were $12.859 billion in the first quarter of 2018, an increase of $3.037 billion, or 31 percent, compared with $9.822 billion in the first quarter of 2017. The increase was primarily due to higher sales volume driven by improved end-user demand across all regions and most end markets as well as favorable changes in dealer inventories. The impact of changes in dealer inventories was favorable as there was a more significant increase in the first quarter of 2018 than in the first quarter of 2017. The company believes the increase in dealer inventories is reflective of current end-user demand.
Strong end-user demand and favorable changes in dealer inventories drove higher sales volume across the three primary segments with the largest increase in Construction Industries. Sales were also higher due to currency impacts, primarily from a stronger euro and Chinese yuan. Favorable price realization across the three primary segments also contributed to the sales improvement.
The largest sales increase was in North America, which improved 33 percent as strong economic conditions in key end markets drove higher end-user demand. Also contributing to the increase was the impact of a more significant increase in dealer inventories in the first quarter of 2018 than in the first quarter of 2017.
Asia/Pacific sales increased 44 percent mostly due to higher end-user demand, primarily for construction equipment in China, the impact of favorable changes in dealer inventories and a stronger Chinese yuan. The impact of changes in dealer inventories was favorable as dealer inventories increased slightly in the first quarter of 2018, compared to a decrease in the first quarter of 2017.
EAME sales increased 25 percent primarily due to the impact of a stronger euro, the impact of favorable changes in dealer inventories and higher end-user demand as economic conditions have improved. The impact of changes in dealer inventories was favorable as increases were greater in the first quarter of 2018 than in the first quarter of 2017.
Sales increased 24 percent in Latin America primarily due to stabilizing economic conditions in several countries in the region that resulted in improved demand from low levels.
Consolidated Operating Profit
Consolidated Operating Profit Comparison
First Quarter 2018 vs. First Quarter 2017
To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 1Q 2018 earnings.
The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the first quarter of 2017 (at left) and the first quarter of 2018 (at right). Items favorably impacting operating profitappear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's board of directors and employees. The bar entitled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.
Operating profit for the first quarter of 2018 was $2.108 billion, compared to $380 million in the first quarter of 2017. The increase of $1.728 billion was mostly due to higher sales volume and lower restructuring costs. Favorable price realization was largely offset by higher selling, general and administrative (SG&A) and research and development (R&D) expenses and lower operating profit from Financial Products.
Manufacturing costs were about flat as lower warranty expense and the favorable impact from cost absorption were about offset by higher material costs, freight costs and short-term incentive compensation expense. Cost absorption was favorable as inventory increased more in the first quarter of 2018 than in the first quarter of 2017, as production volumes continue to increase in 2018. Material costs were unfavorable primarily due to increases in steel prices. SG&A/R&D expenses were unfavorable mostly due to higher short-term incentive compensation expense and targeted investments that primarily impacted SG&A.
Restructuring costs were $69 million in the first quarter of 2018. In the first quarter of 2017, restructuring costs of $723 million were primarily related to the announced closure of the facility in Gosselies, Belgium.
Other Profit/Loss Items
- Interest expense excluding Financial Products in the first quarter of 2018 was $101 million, a decrease of $22 million from the first quarter of 2017, primarily due to an early debt retirement in the fourth quarter of 2017.
- Other income/expense in the first quarter of 2018 was income of $127 million, compared with income of $32 million in the first quarter of 2017. The favorable change was primarily due to pension and OPEB plans, including the absence of restructuring costs and higher expected return on plan assets (see Q&A #7 for additional information). Also contributing to the favorable change were lower net losses from currency translation and hedging in the first quarter of 2018 than in the first quarter of 2017.
- The provision for income taxes in the first quarter of 2018 reflects an estimated annual tax rate of 24 percent, compared to 32 percent for the first quarter of 2017, excluding the discrete items discussed in the following paragraph. The decrease is primarily due to the reduction in the U.S. corporate tax rate beginning January 1, 2018, along with other changes in the geographic mix of profits from a tax perspective.
In addition, a discrete tax benefit of $40 million was recorded in the first quarter of 2018, compared to $17 million in the first quarter of 2017, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. The provision for income taxes in the first quarter of 2017 also included a $15 million increase to prior year taxes related to non-U.S. restructuring costs.
Global Workforce
Caterpillar worldwide full-time employment was about 99,700 at the end of the first quarter of 2018. The increase of about 4,400 full-time employees from the end of the first quarter of 2017 was due to an increase in production employment primarily to support higher volumes. Support and management employment was about flat. The flexible workforce increased by about 6,500, also primarily due to higher production volumes. In total, the global workforce increased by about 10,900.
March 31
2018 2017 Increase
Full-time employment 99,700 95,300 4,400
Flexible workforce 19,100 12,600 6,500
Total 118,800 107,900 10,900
Geographic Summary
U.S. workforce 51,500 46,500 5,000
Non-U.S. workforce 67,300 61,400 5,900
Total 118,800 107,900 10,900
SEGMENT RESULTS
Sales and Revenues by Geographic Region
North Latin
America America EAME Asia/Pacific
(Millions of
dollars) $ % Chg $ % Chg $ % Chg $ % Chg
First Quarter 2018
Construction
Industries $2,620 37% $344 38% $1,067 31% $ 1,628 46%
Resource
Industries 798 33% 360 34% 520 25% 530 37%
Energy &
Transportation 2,225 29% 280 2% 1,092 21% 679 48%
All Other Segments 15 88% - - 4 (75%) 18 38%
Corporate Items
and Eliminations (28) 1 (3) -
Machinery, Energy
& Transportation $5,630 33% $985 24% $2,680 25% $ 2,855 44%
Financial Products
Segment $512 5% $74 (11%) $101 1% $106 16%
Corporate Items
and Eliminations (49) (13) (5) (17)
Financial Products
Revenues $463 3% $61 (12%) $96 - $89 13%
Consolidated Sales
and Revenues $6,093 31% $1,046 21% $2,776 24% $2,944 43%
First Quarter 2017
Construction
Industries $1,913 $250 $812 $1,116
Resource
Industries 598 269 416 387
Energy &
Transportation 1,722 275 900 459
All Other Segments 8 - 16 13
Corporate Items
and Eliminations (23) - (2) 1
Machinery, Energy
& Transportation $4,218 $794 $2,142 $1,976
Financial Products
Segment $486 $83 $100 $91
Corporate Items
and Eliminations (38) (14) (4) (12)
Financial Products
Revenues $448 $69 $96 $79
Consolidated Sales
and Revenues $4,666 $863 $2,238 $2,055
Sales and Revenues by Segment
First Sales Price Inter-Segment
Quarter 2017 Volume Realization Currency / Other
(Millions of
dollars)
Construction
Industries $4,100 $1,340 $59 $169 $9
Resource
Industries 1,761 424 86 28 10
Energy &
Transportation 4,136 769 41 110 163
All Other
Segments 132 (1) - 1 (16)
Corporate
Items and
Eliminations (999) (6) - - (166)
Machinery,
Energy &
Transportation $9,130 $2,526 $186 $308 -
Financial
Products
Segment 760 - - - 33
Corporate
Items and
Eliminations (68) - - - (16)
Financial
Products
Revenues $692 - - - $17
Consolidated
Sales and
Revenues $9,822 $2,526 $186 $308 $17
Table continues...
SEGMENT RESULTS
Sales and Revenues by Geographic Region
External
Sales Total Sales
and Revenues Inter-Segment and Revenues
(Millions of
dollars) $ % Chg $ % Chg $ % Chg
First Quarter 2018
Construction
Industries $5,659 38% $18 100% $5,677 38%
Resource
Industries 2,208 32% 101 11% 2,309 31%
Energy &
Transportation 4,276 27% 943 21% 5,219 26%
All Other Segments 37 - 79 (17%) 116 (12%)
Corporate Items
and Eliminations (30) (1,141) (1,171)
Machinery, Energy
& Transportation $12,150 33% - -12,150 33%
Financial Products
Segment $793 4% - - $793 4%
Corporate Items
and Eliminations (84) - (84)
Financial Products
Revenues $709 2% - - $709 2%
Consolidated Sales
and Revenues $12,859 31% - -$12,859 31%
First Quarter 2017
Construction
Industries $4,091 $9 $4,100
Resource
Industries 1,670 91 1,761
Energy & 1,72
Transportation 3,356 780 4,136
All Other Segments 37 95 132
Corporate Items
and Eliminations (24) (975) (999)
Machinery, Energy
& Transportation $9,130 - $9,130
Financial Products
Segment $760 - $760
Corporate Items
and Eliminations (68) - (68)
Financial Products
Revenues $692 - $692
Consolidated Sales
and Revenues $9,822 - $9,822
Sales and Revenues by Segment
First $ %
Quarter 2018 Change Change
(Millions of
dollars)
Construction
Industries $5,677 $1,577 38%
Resource
Industries 2,309 548 31%
Energy &
Transportation 5,219 1,083 26%
All Other
Segments 116 (16) (12%)
Corporate
Items and
Eliminations (1,171) (172)
Machinery,
Energy &
Transportation $12,150 $3,020 33%
Financial
Products
Segment 793 33 4%
Corporate
Items and
Eliminations (84) (16)
Financial
Products
Revenues $709 $17 2%
Consolidated
Sales and
Revenues $12,859 $3,037 31%
First First $ %
Profit by Segment Quarter 2018 Quarter 2017 Change Change
(Millions of dollars)
Construction Industries $1,117 $634 $483 76%
Resource Industries 378 160 218 136%
Energy & Transportation 874 545 329 60%
All Other Segments 57 (14) 71 n/a
Corporate Items and
Eliminations (371) (1,060) 689
Machinery, Energy &
Transportation $2,055 $265 $1,790 675%
Financial Products Segment $141 $183 ($42) (23%)
Corporate Items and
Eliminations (2) 3 (5)
Financial Products $139 $186 ($47) (25%)
Consolidating Adjustments (86) (71) (15)
Consolidated Operating Profit $2,108 $380 $1,728 455%
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
First Price Inter- First $ %
Quarter 2017 Sales Volume Realization Currency Segment Quarter 2018 Change Change
Total
Sales $4,100 $1,340 $59 $169 $9 $5,677 $1,577 38%
Sales by Geographic Region
First First $ %
Quarter 2018 Quarter 2017 Change Change
North America $2,620 $1,913 $707 37%
Latin America 344 250 94 38%
EAME 1,067 812 255 31%
Asia/Pacific 1,628 1,116 512 46%
External
Sales $5,659 $4,091 $1,568 38%
Inter-Segment 18 9 9 100%
Total Sales $5,677 $4,100 $1,577 38%
Segment Profit
First First %
Quarter 2018 Quarter 2017 Change Change
Segment
Profit $1,117 $634 $483 76%
Segment
Profit Margin 19.7% 15.5% 4.2 pts 27%
`
Construction Industries' total sales were $5.677 billion in the first quarter of 2018, compared with $4.100 billion in the first quarter of 2017. The increase was primarily due to higher sales volume.
- Sales volume increased primarily due to the impact of favorable changes in dealer inventories and higher end-user demand for construction equipment. Dealer inventories increased significantly more in the first quarter of 2018 than in the first quarter of 2017. The company believes the increase in dealer inventories is reflective of current end-user demand.
Sales increased across all regions with the largest increases in North America and Asia/Pacific.
- In North America, the sales increase was mostly due to the impact of favorable changes in dealer inventories, which increased significantly more in the first quarter of 2018 than in the first quarter of 2017. In addition, sales increased due to higher end-user demand for construction equipment, primarily due to non-residential, infrastructure and oil and gas construction activities, including pipelines.
- Sales in Asia/Pacific were higher across the region, with about half due to improved end-user demand in China stemming from increased building construction and infrastructure investment. In addition, the impact of changes in dealer inventories was favorable as dealer inventories decreased more in the first quarter of 2017 than in the first quarter of 2018. The favorable impact of a stronger Chinese yuan also contributed to the increase.
- Sales increased in EAME primarily due to the impact of favorable changes in dealer inventories, the impact from a stronger euro and higher end-user demand for construction equipment. Dealer inventories increased more in the first quarter of 2018 than in the first quarter of 2017.
- Although construction activity remained weak in Latin America, sales were higher as end-user demand increased from low levels due to stabilizing economic conditions in several countries in the region.
Construction Industries' profit was $1.117 billion in the first quarter of 2018, compared with $634 million in the first quarter of 2017. The increase in profit was a result of higher sales volume and favorable price realization. The increase was partially offset by higher SG&A/R&D expenses, material costs, primarily for steel, and freight costs. The increase in SG&A/R&D expenses was primarily due to higher short-term incentive compensation expense and targeted investments.
RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
First Price Inter- First $ %
Quarter 2017 Sales Volume Realization Currency Segment Quarter 2018 Change Change
Total
Sales $1,761 $424 $86 $28 $10 $2,309 $548 31%
Sales by Geographic Region
First First $ %
Quarter 2018 Quarter 2017 Change Change
North America $798 $598 $200 33%
Latin America 360 269 91 34%
EAME 520 416 104 25%
Asia/Pacific 530 387 143 37%
External
Sales $2,208 $1,670 $538 32%
Inter-Segment 101 91 10 11%
Total Sales $2,309 $1,761 $548 31%
Segment Profit
First First %
Quarter 2018 Quarter 2017 Change Change
Segment
Profit $378 $160 $218 136%
Segment
Profit Margin 16.4% 9.1% 7.3pts 80%
`
Resource Industries' total sales were $2.309 billion in the first quarter of 2018, an increase of $548 million from the first quarter of 2017. The increase was primarily due to higher end-user demand for equipment in all regions. Compared to the first quarter of 2017, commodity prices remained strong and drove improved market conditions and financial health of mining companies. As a result, mining customers invested in delayed replacement cycles and initiated expansions, resulting in higher equipment sales in the first quarter of 2018. Macroeconomic growth globally also contributed to stronger sales for quarry and aggregate and heavy construction equipment. In addition, favorable price realization and the favorable impact of changes in dealer inventories contributed to increased sales. Dealer inventories increased more in the first quarter of 2018 than in the first quarter of 2017. Aftermarket parts sales have also experienced growth related to increased production and higher machine utilization in the industries the company serves.
Resource Industries' profit was $378 million in the first quarter of 2018, compared with $160 million in the first quarter of 2017. The improvement was primarily due to higher sales volume. Favorable price realization and variable manufacturing costs, including cost absorption, were partially offset by higher short-term incentive compensation expense and a slightly unfavorable impact from currency. Cost absorption was favorable as inventory increased in the first quarter of 2018 to support higher production and was about flat in the first quarter of 2017.
ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
First Price Inter- First $ %
Quarter 2017 Sales Volume Realization Currency Segment Quarter 2018 Change Change
Total
Sales $4,136 $769 $41 $110 $163 $5,219 $1,083 26%
Sales by Application
First First $ %
Quarter 2018 Quarter 2017 Change Change
Oil and Gas $1,215 $809 $406 50%
Power
Generation 969 716 253 35%
Industrial 906 777 129 17%
Transportation 1,186 1,054 132 13%
External Sales $4,276 $3,356 $920 27%
Inter-Segment 943 780 163 21%
Total Sales $5,219 $4,136 $1,083 26%
Segment Profit
First First %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $874 $545 $329 60%
Segment Profit
Margin 16.7% 13.2% 3.5pts 27%
Energy & Transportation's total sales were $5.219 billion in the first quarter of 2018, compared with $4.136 billion in the first quarter of 2017. The increase was primarily due to higher external sales volume across all applications.
- Oil and Gas - Sales increased primarily due to higher demand in North America for gas compression, production and well servicing applications. Higher energy prices and growth in U.S. onshore oil and gas drove increased sales for reciprocating engines and related aftermarket parts. Sales in North America were also positively impacted by the timing of turbine project deliveries.
- Power Generation - Sales improved across all regions, with the largest increase in EAME primarily due to the timing of several large projects and favorable impacts from currency. In addition, sales in North America increased due to higher sales for turbines and aftermarket parts for reciprocating engines.
- Industrial - Sales were higher across all regions except Latin America, primarily due to improving global economic conditions supporting higher engine sales into industrial end-user applications. Sales in EAME were also positively impacted by favorable currency.
- Transportation - Sales were higher in Asia/Pacific and North America for rail services, driven primarily by growth in Australia and increased rail traffic in North America. Marine sales were higher primarily in Asia/Pacific due to timing of deliveries.
Energy & Transportation's profit was $874 million in the first quarter of 2018, compared with $545 million in the first quarter of 2017. The increase was mostly due to higher sales volume and favorable price realization, partially offset by higher short-term incentive compensation expense and targeted investments.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
First First $ %
Quarter 2018 Quarter 2017 Change Change
North America $512 $486 $26 5%
Latin America 74 83 (9) (11%)
EAME 101 100 1 1%
Asia/Pacific 106 91 15 16%
Total $793 $760 $33 4%
Segment Profit
First First $ %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $141 $183 ($42) (23%)
Financial Products' segment revenues were $793 million in the first quarter of 2018, an increase of $33 million, or 4 percent, from the first quarter of 2017. The increase was primarily due to higher average earning assets in Asia/Pacific and higher average financing rates in North America, partially offset by an unfavorable impact from lower intercompany lending activity in North America.
Financial Products' segment profit was $141 million in the first quarter of 2018, compared with $183 million in the first quarter of 2017. The decrease was primarily due to an increase in the provision for credit losses at Cat Financial, partially offset by an increase in net yield on average earning assets.
At the end of the first quarter of 2018, past dues at Cat Financial were 3.17 percent, compared with 2.64 percent at the end of the first quarter of 2017, primarily due to increases in the Caterpillar Power Finance and Latin America portfolios. Write-offs, net of recoveries, in the first quarter of 2018 were $30 million, compared with $15 million in the first quarter of 2017. The largest contributors to the increase were the Latin America and Caterpillar Power Finance portfolios.
As of March 31, 2018, Cat Financial's allowance for credit losses totaled $403 million, or 1.45 percent of finance receivables, compared with $346 million, or 1.28 percent of finance receivables at March 31, 2017. The allowance for credit losses at year-end 2017 was $365 million, or 1.33 percent of finance receivables. The increase in the allowance for credit losses was primarily driven by the Caterpillar Power Finance and mining portfolios.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $373 million in the first quarter of 2018, a decrease of $684 million from the first quarter of 2017. Corporate items and eliminations include: restructuring costs; corporate-level expenses; timing differences, as some expenses are reported in segment profit on a cash basis; currency differences for ME&T, as segment profit is reported using annual fixed exchange rates; cost of sales methodology differences, as segments use a current cost methodology; and inter-segment eliminations.
The decrease in expense was primarily due to lower restructuring costs, which were $69 million in the first quarter of 2018. In the first quarter of 2017, restructuring costs of $723 million were primarily related to the announced closure of the facility in Gosselies, Belgium.
QUESTIONS AND ANSWERS
Q1: Can you discuss changes in dealer inventories during the first quarter of 2018?
Dealers generally increase inventories during the first quarter in preparation for the spring selling season.
Dealer machine and engine inventories increased about $1.2 billion in the first quarter of 2018,
compared to an increase of about $200 million in the first quarter of 2017. The increase in the first quarter of
A: 2018 was primarily in Construction Industries. We believe the increase in dealer inventories is reflective of current end-user demand.
Q2: Can you discuss changes to your order backlog by segment?
At the end of the first quarter of 2018, the order backlog was about $17.5 billion, an increase of about $1.7 billion from the end of 2017. The increase was in
A: Energy & Transportation and Construction Industries, while Resource Industries was about flat.
Q3: Can you comment on expense related to your 2018 short-term incentive compensation plans and the impact on the 2018 outlook?
Short-term incentive compensation expense is directly related to financial and operational performance, measured against targets set annually. First-quarter
A: 2018 expense was about $360 million, compared to first-quarter 2017 expense of about $235 million.
For the full year of 2018, our current outlook includes short-term incentive compensation expense of about $1.4 billion, nearly the same as 2017.
Q4: In January, you commented that significant increases in demand could impact your growth potential in 2018 due
to supplier constraints. Can you provide an update?
We continue to work with our global suppliers to respond to significant increases in demand. Although constraints remain for some parts and components, we
A: are seeing improvements in material flows.
Q5: Can you give us an update on the quality of Cat Financial's asset portfolio? How are write-offs, past dues and allowance for credit losses performing?
Cat Financial's core asset portfolio continues to perform well overall. Write-offs during the first quarter of 2018 were $30 million, or 0.45 percent
of average retail portfolio, which is about the same level as our 10-year average of 0.44 percent for the first quarter. This total compares with
write-offs of $15 million during the first quarter of 2017, which was an unusually low quarterly write-off period based on Cat Financial's
historical performance. The increase from a year ago was driven by higher write-offs in the Latin America and Cat Power Finance portfolios.
Past dues increased during the first quarter to 3.17 percent, which is slightly above the first-quarter historical
average of 3.09 percent, and was impacted by higher delinquencies in Cat Power Finance and Latin America.
The provision for credit losses was higher in the first quarter of 2018 by $51 million, primarily due to higher
provision expense in Cat Power Finance and on a small number of transactions in our mining portfolio. In addition, higher
write-offs compared with a low quarter
A: for write-offs in the first quarter of 2017 were also a contributor.
Q6: Can you comment on your balance sheet and cash priorities?
Our cash and liquidity positions remain strong with an enterprise cash balance of $7.9 billion as of March 31, 2018.
ME&T operating cash flow for the first quarter of 2018 was $948 million, compared with $1.5 billion in
2017. The decrease was primarily due to higher short-term incentive compensation payments in the first quarter of
2018, compared with the first quarter of 2017. We repurchased $500 million of common stock in
A: the first quarter of 2018. While our short-term priorities for the use of cash may vary from time to time as business
needs and conditions dictate, our long-term cash deployment strategy is focused on the following priorities:
Our top priority is to maintain a strong financial position in support of a Mid-A rating. Next, we intend to fund operational
requirements and commitments. Then, we intend to fund
priorities that profitably grow the company and return capital to shareholders through dividend growth and stock repurchases.
Q7: Your 2017 operating costs and other income/expense changed from what you reported last year. Can you explain the change?
Effective January 1, 2018, we adopted a new U.S. GAAP accounting standard related to pension and OPEB costs. Components of
pension and OPEB costs, other than service costs, have been reclassified from operating
costs to other income/expense. The change was made to prior periods and the table below provides the recast
2017 amounts by quarter. This change had a small impact on 2017 profit for the segments within ME&T, which has
A: also been recast to be consistent with the revised classification. There was no impact on Financial Products.
2017 Recast
(Millions of First Second Third Fourth Full Year
dollars) Quarter Quarter Quarter Quarter 2017
Cost of goods sold $6,801 $7,816 $7,678 $8,966 $31,261
Selling, general
and administrative
expenses 940 1,169 1,084 1,218 4,411
Research and
development
expenses 425 458 461 498 1,842
Other operating
(income) expenses 699 111 51 195 1,056
ME&T operating
costs $8,865 $9,554 $9,274 $10,877 $38,570
Financial Products
operating costs 591 607 645 648 2,491
Consolidating
adjustments (14) (14) (15) (16) (59)
Consolidated
operating costs $9,442 $10,147 $9,904 $11,509 $41,002
Consolidated
operating profit 380 1,184 1,509 1,387 4,460
Consoliated other
income (expense) $32 $96 $132 ($107) $153
Reclassification to
other income
(expense) * $37 $67 $68 ($226) ($54)
* First-quarter 2017 includes $29 million of curtailment losses and
termination benefits included in restructuring costs and
fourth-quarter 2017 includes $301 million of mark-to-market losses.
GLOSSARY OF TERMS
1. Adjusted Profit Per Share - Profit per share excluding restructuring costs for 2018 and 2017.
All Other Segments - Primarily includes activities such as: business strategy, product management and development, manufacturing of filters and fluids,
undercarriage, ground engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat(R) products; parts
distribution; integrated logistics solutions, distribution services responsible for dealer development and administration including a wholly owned dealer in
Japan, dealer portfolio management and ensuring the most efficient and effective
distribution of machines, engines and parts; digital investments for new customer
2. and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience.
3. Consolidating Adjustments - Elimination of transactions between Machinery, Energy & Transportation and Financial Products.
Construction Industries - A segment primarily responsible for supporting customers using machinery in infrastructure, forestry and building construction
applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product
support. The product portfolio includes asphalt pavers, backhoe loaders, compactors, cold planers, compact track and multi-terrain loaders, mini, small,
medium and large track excavators, forestry excavators, feller bunchers, harvesters, knuckleboom loaders, motor graders, pipelayers, road reclaimers, site
prep tractors, skidders, skid steer loaders, telehandlers, small and medium track-type tractors, track-type loaders, wheel excavators, compact, small and
4. medium wheel loaders and related parts and work tools.
5. Currency - With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange
rates versus the U.S. dollar. With respect to operating profit, currency represents the net
translation impact on sales and operating costs resulting from changes in foreign
currency exchange rates versus the U.S. dollar. Currency only includes the impact
on sales and operating profit for the Machinery, Energy & Transportation lines of
business excluding restructuring costs; currency impacts on Financial Products'
revenues and operating profit are included in the Financial Products' portions of
the respective analyses. With respect to other income/expense, currency represents
the effects of forward and option contracts entered into by the company to reduce
the risk of fluctuations in exchange rates (hedging) and the net effect of changes
in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results (translation).
6. EAME - A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).
Earning Assets - Assets consisting primarily of total finance receivables net of
unearned income, plus equipment on operating leases, less accumulated depreciation
7. at Cat Financial.
Energy & Transportation - A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-
electric locomotives and related
parts across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine and rail-related businesses.
Responsibilities include business strategy, product design, product management and
development, manufacturing, marketing and sales and product support of turbine
machinery and integrated systems and solutions and turbine-related services, reciprocating engine-powered generator sets, integrated systems used in the
electric power generation industry, reciprocating engines and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines
supplied to the industrial industry as well as Cat machinery; the remanufacturing of Cat engines and components and remanufacturing services for other companies;
the business strategy, product design, product management and development, manufacturing, remanufacturing, leasing and service of diesel-electric locomotives
and components and other rail-related products and services and product support of
8. on-highway vocational trucks for North America.
Financial Products Segment - Provides financing alternatives to customers and dealers around the world for Caterpillar products, as well as financing for
vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance
leases, installment sale contracts, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and
services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory
protection plans, extended service coverage for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and
risk management products offered to customers and dealers help support the purchase and lease of our equipment. Financial Products segment profit is
9. determined on a pretax basis and includes other income/expense items.
10.Latin America - A geographic region including Central and South American countries and Mexico.
11.Machinery, Energy & Transportation (ME&T) - Represents the aggregate total of Construction Industries, Resource Industries,
Energy & Transportation, All Other Segments and related corporate items and eliminations.
Machinery, Energy & Transportation Other Operating (Income) Expenses - Comprised primarily of gains/losses on disposal of long-lived assets, gains/losses on
12.divestitures and legal settlements and accruals. Restructuring costs classified as
other operating expenses on the Results of Operations are presented separately on
the Operating Profit Comparison. Manufacturing Costs - Manufacturing costs exclude the impacts of currency and
restructuring costs (see definition below) and represent the volume-adjusted
change for variable costs and the absolute dollar change for period manufacturing
costs. Variable manufacturing costs are defined as having a direct relationship
with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume such as freight, power to
operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not
having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility
13.support, procurement, factory scheduling, manufacturing planning and operations management.
14.Pension and Other Postemployment Benefit (OPEB) - The company's defined-benefit pension and postretirement benefit plans.
Price Realization - The impact of net price changes excluding currency and new product introductions. Price realization includes geographic mix of sales, which
15.is the impact of changes in the relative weighting of sales prices between geographic regions.
Resource Industries - A segment primarily responsible for supporting customers using machinery in mining, quarry and aggregates, waste and material handling
applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product
support. The product portfolio includes large track-type tractors, large mining trucks, hard rock vehicles, longwall miners, electric rope shovels, draglines,
hydraulic shovels, rotary drills, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors,
soil compactors, hard rock continuous mining systems, select work tools, machinery components, electronics and control systems and related parts. In addition to
equipment, Resource Industries also develops and sells technology products and
services to provide customers fleet management, equipment management analytics and
autonomous machine capabilities. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing
16.and research and development.
Restructuring Costs - Primarily costs for employee separation, long-lived asset
impairments and contract terminations. These costs are included in Other operating
(income) expenses except for defined-benefit plan curtailment losses and special
termination benefits, which are included in Other income (expense). Restructuring
costs also include other exit-related costs primarily for accelerated depreciation, inventory write-downs, equipment relocation and project management
17.costs and LIFO inventory decrement benefits from inventory liquidations at closed facilities, primarily included in Cost of goods sold.
Sales Volume - With respect to sales and revenues, sales volume represents the
impact of changes in the quantities sold for Machinery, Energy & Transportation as
well as the incremental sales impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume
represents the impact of changes in the quantities sold for Machinery, Energy & Transportation combined with product mix as well as the net operating profit
impact of new product introductions, including emissions-related product updates.
Product mix represents the net operating profit impact of changes in the relative
weighting of Machinery, Energy & Transportation sales with respect to total sales.
18.The impact of sales volume on segment profit includes inter-segment sales.
NON-GAAP FINANCIAL MEASURES
The following definitions are provided for the non-GAAP financial measures used in this report. 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 incurred restructuring costs in 2017 and in the first quarter of 2018 and expects to incur additional restructuring costs during the remainder of 2018. The company believes it is important to separately quantify the profit per share impact of restructuring costs in order for Caterpillar's results and outlook to be meaningful to readers as these costs are incurred in the current year to generate longer-term benefits.
Reconciliations of adjusted profit per share to the most directly comparable GAAP measure, diluted profit per share, are as follows:
First Quarter 2018 Outlook
2017 2018 Previous [1] Current [2]
Profit per
share $0.32 $2.74 $7.75-$8.75 $9.75-$10.75
Per share
restructuring
costs[3] $0.96 $0.08 $0.50 $0.50
Adjusted profit
per share $1.28 $2.82 $8.25-$9.25 $10.25-$11.25
[1]2018 profit per share outlook range as of January 25, 2018.
[2]2018 profit per share outlook range as of April 24, 2018.
[3]At estimated annual tax rate based on full-year outlook for per share
restructuring costs at statutory tax rates. 2018 at estimated annual tax
rate of 24 percent.
First-quarter 2017 at estimated annual tax rate of 22 percent plus a $15
million increase to prior year taxes related to non-U.S. restructuring costs.
First-quarter 2017 also includes a favorable interim adjustment of $0.06 per
share resulting from the difference in the estimated annual tax rate for
consolidated reporting of 32 percent and the estimated annual tax rate for
profit per share excluding restructuring costs and discrete items of 28 percent.
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 18- 24 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 via:
Telephone: 800-228-7717 (Inside the United States and Canada)
858-764-9492 (Outside the United States and Canada)
Internet: www.caterpillar.com/en/investors.html
www.caterpillar.com/en/investors/quarterly-results.html (live
broadcast/replays of quarterly conference call)
Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
Three Months Ended
March 31,
2018 2017
Sales and revenues:
Sales of Machinery, Energy
& Transportation $ 12,150 $ 9,130
Revenues of Financial
Products 709 692
Total sales and revenues 12,859 9,822
Operating costs:
Cost of goods sold 8,566 6,801
Selling, general and
administrative expenses 1,276 1,061
Research and development
expenses 443 425
Interest expense of
Financial Products 166 159
Other operating (income)
expenses 300 996
Total operating costs 10,751 9,442
Operating profit 2,108 380
Interest expense excluding
Financial Products 101 123
Other income (expense) 127 32
Consolidated profit before taxes 2,134 289
Provision (benefit) for
income taxes 472 90
Profit of consolidated
companies 1,662 199
Equity in profit (loss) of
unconsolidated affiliated
companies 5 (5)
Profit of consolidated and affiliated
companies 1,667 194
Less: Profit (loss) attributable to
noncontrolling interests 2 2
Profit [1] $ 1,665 $ 192
Profit per common share $ 2.78 $ 0.33
Profit per common share - diluted [2] $ 2.74 $ 0.32
Weighted-average common shares
outstanding (millions)
- Basic 598.0 587.5
- Diluted[2] 608.0 593.2
Cash dividends declared per common
share $ - $ -
[1] Profit attributable to common shareholders.
[2] Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
March 31, December 31,
2018 2017
Assets
Current assets:
Cash and short-term
investments $ 7,888 $ 8,261
Receivables -
trade and other 7,894 7,436
Receivables -
finance 8,772 8,757
Prepaid expenses and
other current assets 1,856 1,772
Inventories 10,947 10,018
Total current assets 37,357 36,244
Property, plant and
equipment - net 13,912 14,155
Long-term receivables
- trade and other 1,004 990
Long-term receivables
- finance 13,359 13,542
Noncurrent deferred
and refundable income
taxes 1,687 1,693
Intangible assets 2,163 2,111
Goodwill 6,376 6,200
Other assets 2,156 2,027
Total assets $ 78,014 $ 76,962
Liabilities
Current liabilities:
Short-term borrowings:
--Machinery, Energy &
Transportation $ 7 $ 1
--Financial Products 5,726 4,836
Accounts payable 6,938 6,487
Accrued expenses 3,551 3,220
Accrued wages,
salaries and employee
benefits 1,474 2,559
Customer advances 1,399 1,426
Dividends payable - 466
Other current liabilities 1,890 1,742
Long-term debt
due within one year:
--Machinery, Energy &
Transportation 8 6
--Financial Products 6,409 6,188
Total current
liabilities 27,402 26,931
Long-term debt due
after one year:
--Machinery, Energy &
Transportation 7,980 7,929
--Financial Products 15,185 15,918
Liability for
postemployment benefits 8,233 8,365
Other liabilities 3,942 4,053
Total liabilities 62,742 63,196
Shareholders' equity
Common stock 5,640 5,593
Treasury stock (17,347) (17,005)
Profit employed in
the business 27,929 26,301
Accumulated other
comprehensive income
(loss) (1,016) (1,192)
Noncontrolling
interests 66 69
Total shareholders' equity 15,272 13,766
Total liabilities and
shareholders' equity $ 78,014 $ 76,962
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Three Months Ended
March 31,
2018 2017
Cash flow from operating
activities:
Profit of consolidated
and affiliated
companies $ 1,667 $ 194
Adjustments for
non-cash items:
Depreciation
and
amortization 681 710
Other 148 302
Changes in assets and
liabilities, net of
acquisitions and
divestitures:
Receivables -
trade and
other (326) (353)
Inventories (803) (444)
Accounts
payable 486 732
Accrued
expenses 66 132
Accrued
wages,
salaries and
employee
benefits (1,110) 360
Customer
advances (46) 234
Other assets
- net 165 (261)
Other
liabilities -
net 7 (64)
Net cash provided by (used
for) operating activities 935 1,542
Cash flow from investing
activities:
Capital expenditures -
excluding equipment
leased to others (412) (204)
Expenditures for
equipment leased to
others (345) (305)
Proceeds from disposals
of leased assets and
property, plant and
equipment 258 234
Additions to finance (2,621) (2,122)
receivables
Collections of finance
receivables 2,671 2,272
Proceeds from sale of
finance receivables 69 17
Investments and
acquisitions (net of
cash acquired) (340) (18)
Proceeds from sale of
business and
investments (net of
cash sold) 12 -
Proceeds from sale of
securities 89 89
Investments in
securities (197) (65)
Other - net 16 9
Net cash provided by (used
for) investing activities (800) (93)
Cash flow from financing
activities:
Dividends paid (467) (452)
Common stock issued,
including treasury
shares reissued 149 (19)
Treasury shares
purchased (500) -
Proceeds from debt
issued (original
maturities greater than
three months) 1,541 2,715
Payments on debt
(original maturities
greater than three (2,409) (1,978)
months)
Short-term borrowings -
net (original
maturities three months
or less) 1,151 618
Other - net (3) (6)
Net cash provided by (used
for) financing activities (538) 878
Effect of exchange rate
changes on cash 10 9
Increase (decrease) in cash
and short-term investments
and restricted cash (393) 2,336
Cash and short-term
investments and restricted
cash at beginning of period 8,320 7,199
Cash and short-term
investments and restricted
cash at end of period $ 7,927 $ 9,535
All short-term investments, which consist primarily of highly liquid
investments with original maturities of three months or less, are
considered to be cash equivalents.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2018
(Unaudited)
(Millions of dollars)
Supplemental
Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and revenues:
Sales of
Machinery,
Energy &
Transportation $ 12,150 $ 12,150 $ - $ -
Revenues of
Financial
Products 709 - 811 (102) [2]
Total sales
and revenues 12,859 12,150 811 (102)
Operating costs:
Cost of goods
sold 8,566 8,566 - -
Selling,
general and
administrative
expenses 1,276 1,087 189 -
Research and
development
expenses 443 443 - -
Interest
expense of
Financial
Products 166 - 173 (7) [4]
Other
operating
(income)
expenses 300 (1) 310 (9) [3]
Total
operating
costs 10,751 10,095 672 (16)
Operating profit 2,108 2,055 139 (86)
Interest
expense
excluding
Financial
Products 101 112 - (11) [4]
Other income
(expense) 127 54 (2) 75 [5]
Consolidated profit before
taxes 2,134 1,997 137 -
Provision
(benefit) for
income taxes 472 441 31 -
Profit of
consolidated
companies 1,662 1,556 106 -
Equity in
profit (loss)
of
unconsolidated
affiliated
companies 5 5 - -
Equity in
profit of
Financial
Products'
subsidiaries - 102 - (102) [6]
Profit of consolidated and
affiliated companies 1,667 1,663 106 (102)
Less: Profit (loss)
attributable to
noncontrolling interests 2 (2) 4 -
Profit [7] $ 1,665 $ 1,665 $ 102 $ (102)
[1] Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
[2] Elimination of Financial Products' revenues earned from Machinery, Energy & Transportation.
[3] Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
[4] Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
[6] Elimination of Financial Products' profit due to equity method of accounting.
[7] Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation[1] Products Adjustments
Sales and revenues:
Sales of Machinery,
Energy & Transportation $ 9,130 $ 9,130 $ - $ -
Revenues of Financial
Products 692 - 777 (85) [2]
Total sales and
revenues 9,822 9,130 777 (85)
Operating costs:
Cost of goods sold 6,801 6,801 - -
Selling, general
and
administrative
expenses 1,061 940 126 (5) [3]
Research and
development expenses 425 425 - -
Interest expense of
Financial Products 159 - 163 (4) [4]
Other operating
(income) expenses 996 699 302 (5) [3]
Total operating
costs 9,442 8,865 591 (14)
Operating profit 380 265 186 (71)
Interest expense
excluding Financial
Products 123 144 - (21) [4]
Other income
(expense) 32 (16) (2) 50 [5]
Consolidated profit
before taxes 289 105 184 -
Provision (benefit)
for income taxes 90 34 56 -
Profit of
consolidated
companies 199 71 128 -
Equity in profit
(loss) of unconsolidated
affiliated companies (5) (5) - -
Equity in profit of
Financial Products'
subsidiaries - 126 - (126) [6]
Profit of consolidated
and affiliated companies 194 192 128 (126)
Less: Profit (loss)
attributable to
noncontrolling interests 2 - 2 -
Profit [7] $ 192 $ 192 $ 126 $ (126)
[1] Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
[2] Elimination of Financial Products' revenues earned from Machinery, Energy & Transportation.
[3] Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
[4] Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
[6] Elimination of Financial Products' profit due to equity method of accounting.
[7] Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2018
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Cash flow from
operating activities:
Profit of
consolidated and
affiliated
companies $ 1,667 $ 1,663 $ 106 $ (102) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 681 468 213 -
Undistributed
profit of
Financial
Products - (102) - 102 [3]
Other 148 62 (6) 92 [4]
Changes in assets
and liabilities,
net of acquisitions
and divestitures:
Receivables -
trade and
other (326) 90 - (416) [4],[5]
Inventories (803) (803) - -
Accounts
payable 486 505 (19) -
Accrued
expenses 66 43 23 -
Accrued
wages,
salaries and
employee
benefits (1,110) (1,083) (27) -
Customer
advances (46) (46) - -
Other assets
- net 165 173 28 (36) [4]
Other
liabilities -
net 7 (22) (7) 36 [4]
Net cash provided by
(used for) operating
activities 935 948 311 (324)
Cash flow from
investing activities:
Capital
expenditures -
excluding equipment
leased to others (412) (321) (92) 1 [4]
Expenditures for
equipment leased to
others (345) (2) (346) 3 [4]
Proceeds from
disposals of leased
assets and
property, plant and
equipment 258 54 207 (3) [4]
Additions to
finance receivables (2,621) - (2,955) 334 [5]
Collections of
finance receivables 2,671 - 3,171 (500) [5]
Net intercompany
purchased
receivables - - (489) 489 [5]
Proceeds from sale
of finance
receivables 69 - 69 -
Net intercompany
borrowings - 107 - (107) [6]
Investments and
acquisitions (net
of cash acquired) (340) (340) - -
Proceeds from sale
of businesses and
investments (net of
cash sold) 12 12 - -
Proceeds from sale
of securities 89 5 84 -
Investments in
securities (197) (18) (179) -
Other - net 16 19 (3) -
Net cash provided by
(used for) investing
activities (800) (484) (533) 217
Cash flow from
financing activities:
Dividends paid (467) (467) - -
Common stock
issued, including
treasury shares
reissued 149 149 - -
Treasury shares
purchased (500) (500) - -
Net intercompany
borrowings - - (107) 107 [6]
Proceeds from debt
issued (original
maturities greater
than three months) 1,541 - 1,541 -
Payments on debt
(original
maturities greater
than three months) (2,409) (1) (2,408) -
Short-term
borrowings - net
(original
maturities three
months or less) 1,151 6 1,145 -
Other - net (3) (3) - -
Net cash provided by
(used for) financing
activities (538) (816) 171 107
Effect of exchange
rate changes on cash 10 6 4 -
Increase (decrease) in
cash and short-term
investments and
restricted cash (393) (346) (47) -
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 $ 7,927 $ 7,070 $ 857 $ -
[1] Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
[2] Elimination of Financial Products' profit after tax due to equity method of accounting.
[3] Elimination of non-cash adjustment for the undistributed earnings from Financial Products.
[4] Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.
[5] Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.
[6] Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and Financial Products.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Cash flow from
operating activities:
Profit of
consolidated and
affiliated
companies $ 194 $ 192 $ 128 $ (126) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 710 491 219 -
Undistributed
profit of
Financial
Products - (126) - 126 [3]
Other 302 302 (47) 47 [4]
Changes in assets
and liabilities,
net of acquisitions
and divestitures:
Receivables -
trade and
other (353) (8) 52 (397) [4],[5]
Inventories (444) (444) - -
Accounts
payable 732 734 6 (8) [4]
Accrued
expenses 132 130 2 -
Accrued
wages,
salaries and
employee
benefits 360 364 (4) -
Customer
advances 234 234 - -
Other assets
- net (261) (196) (25) (40) [4]
Other
liabilities -
net (64) (149) 45 40 [4]
Net cash provided by
(used for) operating
activities 1,542 1,524 376 (358)
Cash flow from
investing activities:
Capital
expenditures -
excluding equipment
leased to others (204) (203) (1) -
Expenditures for
equipment leased to
others (305) (6) (302) 3 [4]
Proceeds from
disposals of leased
assets and
property, plant and
equipment 234 41 194 (1) [4]
Additions to
finance receivables (2,122) - (2,535) 413 [5]
Collections of
finance receivables 2,272 - 2,788 (516) [5]
Net intercompany
purchased
receivables - - (459) 459 [5]
Proceeds from sale
of finance
receivables 17 - 17 -
Net intercompany
borrowings - 50 (1,500) 1,450 [6]
Investments and
acquisitions (net
of cash acquired) (18) (18) - -
Proceeds from sale
of securities 89 6 83 -
Investments in
securities (65) (2) (63) -
Other - net 9 (1) 10 -
Net cash provided by
(used for) investing
activities (93) (133) (1,768) 1,808
Cash flow from
financing activities:
Dividends paid (452) (452) - -
Common stock
issued, including
treasury shares
reissued (19) (19) - -
Net intercompany
borrowings - 1,500 (50) (1,450) [6]
Proceeds from debt
issued (original
maturities greater
than three months) 2,715 360 2,355 -
Payments on debt
(original
maturities greater
than three months) (1,978) (4) (1,974) -
Short-term
borrowings - net
(original
maturities three
months or less) 618 226 392 -
Other - net (6) (6) - -
Net cash provided by
(used for) financing
activities 878 1,605 723 (1,450)
Effect of exchange
rate changes on cash 9 3 6 -
Increase (decrease) in
cash and short-term
investments and
restricted cash 2,336 2,999 (663) -
Cash and short-term
investments and
restricted cash at
beginning of period 7,199 5,259 1,940 -
Cash and short-term
investments and
restricted cash at end
of period $ 9,535 $ 8,258 $ 1,277 $ -
[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.
CONTACT: Caterpillar contact: Corrie Scott, 224-551-4133 (Office), 808-351-3865 (Mobile) or Scott_Corrie@cat.com
This is a disclosure announcement from PR Newswire.
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