PEORIA, Illinois, July 25, 2017 /PRNewswire/ --
Delivered Strong Quarter with
Higher Sales and Revenues and
Profit; Raised Full-Year Outlook
Second Quarter
($ in billions except profit per share) 2017 2016
Sales and Revenues $11.331 $10.342
Profit Per Share $1.35 $0.93
Adjusted Profit Per Share $1.49 $1.09
- Second-quarter sales and revenues up $1
billion from a year ago
- Profitability across enterprise reflects strong operational
performance
- Delivered strong operating cash flow and increased the
quarterly cash dividend
- Raised full-year outlook for 2017 sales and revenues and profit
per share
Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2017
sales and revenues of $11.3 billion,
compared with $10.3 billion in the
second quarter of 2016. Second-quarter 2017 profit per share was
$1.35, compared with $0.93 per share in the second quarter of 2016.
Excluding restructuring costs and a gain on the sale
of an equity investment in IronPlanet, second-quarter 2017
adjusted profit per share was $1.49, compared to second-quarter 2016 adjusted
profit per share of $1.09.
Caterpillar's financial position continued to strengthen.
Machinery, Energy & Transportation (ME&T)
operating cash flow was $2.0 billion
during the quarter, and ME&T's debt-to-capital
ratio improved to 38.6 percent, compared with 41.7 percent
at the end of the first quarter of 2017. In June, the company
announced a quarterly cash dividend increase and ended the quarter
with an enterprise cash balance of $10.2
billion.
"Our team delivered an impressive quarter. As demand increased,
we continued to control costs and generated higher profit margins,"
said Caterpillar CEO Jim Umpleby.
"While a number of our end markets remain challenged, construction
in China and gas compression in
North America were highlights in
the quarter. Mining and oil-related activities have come off of
recent lows, and we are seeing improving demand for construction in
most regions."
2017 Outlook
As a result of increased demand across many end markets and
disciplined cost control, Caterpillar is raising its 2017 outlook.
Some risks remain in the outlook, including weakness in the
Middle East and Latin America, as well as geopolitical
and commodity risk.
In April 2017, Caterpillar
provided an outlook range for full-year 2017 sales and revenues of
$38 billion to $41 billion with a
midpoint of $39.5 billion. The
company is raising its full-year 2017 expectations for sales and
revenues to a range of $42 billion to $44
billion with a midpoint of $43
billion.
For the full year of 2017, Caterpillar expects profit per share
of about $3.50 at the midpoint of the
sales and revenues outlook range, or adjusted profit per share of
about $5.00. The previous outlook for
2017 profit was about $2.10 per share
at the midpoint of the sales and revenues outlook, or adjusted
profit per share of about $3.75. The
company now expects to incur about $1.2
billion of restructuring costs in 2017. The outlook does not
include potential mark-to-market gains or losses related to
pension and other postemployment benefit (OPEB)
plans.
"Given our performance in the first half of the year and current
quotation and ordering activity, we are confident in raising our
full-year 2017 outlook," continued Umpleby. "We remain focused on
serving our customers, delivering strong operational performance
and executing our ongoing restructuring activities. During the
second half of 2017, we anticipate making targeted investments in
initiatives that are important to our future competitiveness,
including enhanced digital capabilities and accelerating technology
updates to our products. We intend to do this without adding to the
structural costs we've worked so hard to streamline. These
investments will prepare us to take advantage of the growth
opportunities ahead."
Notes:
- Glossary of terms is included on pages 14-15; first
occurrence of terms shown in bold italics.
- Information on non-GAAP financial measures is included on
page 16.
- Caterpillar will conduct a teleconference and live webcast,
with a slide presentation, beginning at 10
a.m. Central Time on Tuesday, July
25, 2017, to discuss its 2017 second-quarter financial
results. The accompanying slides will be available before the
webcast on the Caterpillar website at
http://www.caterpillar.com/investors/events-and-presentations.
About Caterpillar:
For more than 90 years, Caterpillar Inc. has been making
sustainable progress possible and driving positive change on every
continent. Customers turn to Caterpillar to help them develop
infrastructure, energy and natural resource assets. With 2016 sales
and revenues of $38.537 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 product 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; (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
Second Quarter 2017 vs. Second
Quarter2016
To access this chart, go to
http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 2Q 2017 earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Sales and Revenues between the second quarter of
2016 (at left) and the second quarter of 2017 (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 $11.331
billion in the second quarter of 2017, an increase of
$989 million, or 10 percent, compared
with $10.342 billion in the second
quarter of 2016. The increase was primarily due to higher
sales volume, with the largest increase in
Construction Industries mostly due to higher end-user
demand for construction equipment. Sales volume for Resource
Industries increased due to improved end-user demand for
aftermarket parts and the favorable impact of changes in dealer
inventories. Energy & Transportation's sales were
higher mostly due to increased demand for aftermarket parts for
reciprocating engines. Favorable price realization in
Construction Industries also contributed to the sales improvement.
The unfavorable impact of currency was mostly the
result of a weaker euro and British pound. Financial
Products' segment revenues were about flat.
Sales increased in Asia/Pacific, North
America and Latin America,
and were about flat in EAME. Asia/Pacific sales increased 25 percent
primarily due to an increase in construction equipment sales in
China resulting from increased
infrastructure and residential investment. In North America, sales increased 7 percent due
to higher demand for aftermarket parts and construction equipment,
partially offset by the unfavorable impact of changes in dealer
inventories as dealers decreased inventories more in the second
quarter of 2017 than in the second quarter of 2016. Sales increased
20 percent in Latin America
primarily due to stabilizing economic conditions in several
countries in the region that resulted in improved end-user demand
from low levels.
Consolidated Operating Profit
Consolidated Operating Profit
Comparison
Second Quarter
2017 vs. Second Quarter 2016
To access this chart, go to
http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 2Q 2017 earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Operating Profit between the second quarter of 2016
(at left) and the second quarter of 2017 (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 second quarter of 2017 was $1.251 billion, compared with $785 million in the second quarter of 2016. The
increase of $466 million was
primarily due to higher sales volume, including a favorable mix of
products. Improved price realization and lower variable
manufacturing costs were about offset by higher
period costs. Price realization was favorable in
Construction Industries and about flat in Resource Industries and
Energy & Transportation.
Variable manufacturing costs were lower primarily due to the
favorable impact from cost absorption, partially offset by higher
warranty expense. Cost absorption was favorable as inventory
decreased in the second quarter of 2016 and increased in the second
quarter of 2017.
Period costs increased primarily due to higher short-term
incentive compensation expense, partially offset by the favorable
impact of restructuring and cost reduction actions over the past
year. These actions primarily impacted depreciation expense and
research and development (R&D) expenses.
Restructuring costs of $169
million in the second quarter of 2017 were primarily related
to restructuring programs in Resource Industries and Energy &
Transportation, compared to $139
million in the second quarter of 2016.
Other Profit/Loss Items
- Other income/expense in the second quarter of 2017 was
income of $29 million, compared with
income of $84 million in the second
quarter of 2016. The unfavorable change was a result of currency
translation and hedging net losses during the second quarter of
2017, primarily due to the euro and British pound. The unfavorable
change was partially offset by a pretax gain of $85 million on the sale of Caterpillar's equity
investment in IronPlanet.
- The provision for income taxes in the second quarter
reflects an estimated annual tax rate of 32 percent, which excludes
the discrete item discussed in the following paragraph, compared to
25 percent for the second quarter of 2016. The increase is
primarily due to higher non-U.S. restructuring costs in 2017 that
are taxed at relatively lower non-U.S. tax rates, along with other
changes in the geographic mix of profits from a tax
perspective.
In addition, a tax benefit of $10 million was recorded for the settlement of
stock-based compensation awards with tax deductions in excess of
cumulative U.S. GAAP compensation expense.
Excluding restructuring costs, gain on sale of
equity investment and discrete items, the 2017 estimated annual tax
rate is expected to be 29 percent.
Global Workforce
Caterpillar worldwide, full-time employment was about 94,800 at
the end of the second quarter of 2017, a decrease of about 5,200
full-time employees from the end of the second quarter of 2016,
primarily the result of restructuring programs. The flexible
workforce increased by about 3,500, primarily due to higher
production volumes. In total, the global workforce decreased by
about 1,700.
June 30
Increase/
2017 2016 (Decrease)
Full-time employment 94,800 100,000 (5,200)
Flexible workforce 16,400 12,900 3,500
Total 111,200 112,900 (1,700)
Geographic summary
U.S. workforce 48,500 49,600 (1,100)
Non-U.S. workforce 62,700 63,300 (600)
Total 111,200 112,900 (1,700)
SEGMENT RESULTS
Sales and Revenues by Geographic Region
% North %
(Millions of dollars) Total Change America Change
Second Quarter 2017
Construction Industries[1] $ 4,930 11 % $ 2,318 3 %
Resource Industries[2] 1,759 21 % 612 14 %
Energy & Transportation[3] 3,941 5 % 1,982 10 %
All Other Segments[4] 33 (20) % 10 (29) %
Corporate Items and Eliminations (24) (22)
Machinery, Energy & Transportation $10,639 10 % $ 4,900 7 %
Financial Products Segment $ 776 2 % $ 505 7 %
Corporate Items and Eliminations (84) (51)
Financial Products Revenues $ 692 (1) % $ 454 3 %
Consolidated Sales and Revenues $11,331 10 % $ 5,354 7 %
Second Quarter 2016
Construction Industries[1] $ 4,426 $ 2,247
Resource Industries[2] 1,457 539
Energy & Transportation[3] 3,750 1,809
All Other Segments[4] 41 14
Corporate Items and Eliminations (29) (25)
Machinery, Energy & Transportation $ 9,645 $ 4,584
Financial Products Segment $ 759 $ 473
Corporate Items and Eliminations (62) (34)
Financial Products Revenues $ 697 $ 439
Consolidated Sales and Revenues $10,342 $ 5,023
[1] Does not include inter-segment sales of $29 million and $12 million in second
quarter 2017 and 2016, respectively.
[2] Does not include inter-segment sales of $77 million and $57 million in second
quarter 2017 and 2016, respectively.
[3] Does not include inter-segment sales of $827 million and $658 million in second
quarter 2017 and 2016, respectively.
[4] Does not include inter-segment sales of $105 million and $101 million in second
quarter 2017 and 2016, respectively.
Table continues below...
Sales and Revenues by Geographic Region
Latin % % Asia/ %
(Millions of dollars) America Change EAME Change Pacific Change
Second Quarter 2017
Construction Industries[1] $ 364 31 % $ 964 (5) % $ 1,284 44 %
Resource Industries[2] 299 16 % 396 25 % 452 32 %
Energy & Transportation[3] 312 13 % 1,079 2 % 568 (6) %
All Other Segments[4] 1 (50) % 11 22 % 11 (31) %
Corporate Items and Eliminations - (2) -
Machinery, Energy & Transportation $ 976 20 % $ 2,448 2 % $ 2,315 25 %
Financial Products Segment $ 79 (4) % $ 101 (2) % $ 91 (10) %
Corporate Items and Eliminations (15) (5) (13)
Financial Products Revenues $ 64 (9) % $ 96 (2) % $ 78 (13) %
Consolidated Sales and Revenues $ 1,040 18 % $ 2,544 2 % $ 2,393 23 %
Second Quarter 2016
Construction Industries[1] $ 277 $ 1,010 $ 892
Resource Industries[2] 258 317 343
Energy & Transportation[3] 277 1,062 602
All Other Segments[4] 2 9 16
Corporate Items and Eliminations - (2) (2)
Machinery, Energy & Transportation $ 814 $ 2,396 $ 1,851
Financial Products Segment $ 82 $ 103 $ 101
Corporate Items and Eliminations (12) (5) (11)
Financial Products Revenues $ 70 $ 98 $ 90
Consolidated Sales and Revenues $ 884 $ 2,494 $ 1,941
[1] Does not include inter-segment sales of $29 million and $12 million in second
quarter 2017 and 2016, respectively.
[2] Does not include inter-segment sales of $77 million and $57 million in second
quarter 2017 and 2016, respectively.
[3] Does not include inter-segment sales of $827 million and $658 million in second
quarter 2017 and 2016, respectively.
[4] Does not include inter-segment sales of $105 million and $101 million in second
quarter 2017 and 2016, respectively.
Sales and Revenues by Segment
Second Sales Price Second $ %
(Millions of dollars) Quarter Volume Realization Currency Other Quarter Change Change
2016 2017
Construction
Industries $ 4,426 $ 374 $ 191 $ (61) $ - $ 4,930 $ 504 11 %
Resource Industries 1,457 313 (7) (4) - 1,759 302 21 %
Energy &
Transportation 3,750 236 (3) (42) - 3,941 191 5 %
All Other Segments 41 (8) - - - 33 (8) (20) %
Corporate Items and
Eliminations (29) 4 2 (1) - (24) 5
Machinery, Energy &
Transportation $ 9,645 $ 919 $ 183 $ (108) $ - $ 10,639 $ 994 10 %
Financial Products
Segment $ 759 $ - $ - $ - $ 17 $ 776 $ 17 2 %
Corporate Items and
Eliminations (62) - - - (22) (84) (22)
Financial Products
Revenues $ 697 $ - $ - $ - $ (5) $ 692 $ (5) (1) %
Consolidated Sales
and Revenues $ 10,342 $ 919 $ 183 $ (108) $ (5) $ 11,331 $ 989 10 %
Operating Profit (Loss) by Segment
Second Second $ %
(Millions of dollars) Quarter 2017 Quarter 2016 Change Change
Construction Industries $ 901 $ 550 $ 351 64 %
Resource Industries 97 (163) 260 n/a %
Energy & Transportation 700 602 98 16 %
All Other Segments (20) (14) (6) (43) %
Corporate Items and Eliminations (526) (297) (229)
Machinery, Energy & Transportation $ 1,152 $ 678 $ 474 70 %
Financial Products Segment $ 191 $ 202 $ (11) (5) %
Corporate Items and Eliminations (5) (31) 26
Financial Products $ 186 $ 171 $ 15 9 %
Consolidating Adjustments (87) (64) (23)
Consolidated Operating Profit $ 1,251 $ 785 $ 466 59 %
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Sales Comparison
Second Sales Price Second $ %
Quarter Volume Realization Currency Quarter Change Change
2016 2017
Sales
Comparison[1] $4,426 $374 $191 ($61) $4,930 $504 11 %
Sales by Geographic Region
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
North America $2,318 $2,247 $71 3 %
Latin America 364 277 87 31 %
EAME 964 1,010 (46) (5) %
Asia/Pacific 1,284 892 392 44 %
Total[1] $4,930 $4,426 $504 11 %
Segment Profit
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
Segment Profit $901 $550 $351 64 %
[1] Does not include inter-segment sales of $29 million and $12 million in second quarter
2017 and 2016, respectively.
Construction Industries' sales were $4.930 billion in the second quarter of 2017,
compared with $4.426 billion in the
second quarter of 2016. The increase was due to higher sales volume
and favorable price realization.
- Sales volume increased primarily due to higher end-user demand
for construction equipment in Asia/Pacific and North America, partially offset by the
unfavorable impact of changes in dealer inventories. A more
significant decrease in North
America dealer inventories in the second quarter of 2017
than in the second quarter of 2016 was partially offset by an
increase in dealer inventories in Asia/Pacific in the second quarter of
2017.
- Although market conditions remain competitive, price
realization was favorable due to a particularly weak pricing
environment in the second quarter of 2016 and previously announced
price increases impacting the second quarter of 2017.
Sales increased in Asia/Pacific
and Latin America and were about
flat in North America and
EAME.
- Sales in Asia/Pacific were
higher as a result of an increase in end-user demand, primarily in
China, stemming from increased
government support for infrastructure and strong residential
investment. In addition, changes in dealer inventories in
China favorably impacted sales as
dealer inventories increased in the second quarter of 2017 and were
about flat in the second quarter of 2016.
- Sales in Latin America were
higher due to an increase in end-user demand and the favorable
impact of changes in dealer inventories, which increased in the
second quarter of 2017 and were about flat in the second quarter of
2016. Although construction activity remained weak across the
region, end-user demand increased from low levels due to
stabilizing economic conditions in several countries in the
region.
- In North America, an increase
in end-user demand and favorable price realization was mostly
offset by an unfavorable impact from changes in dealer inventories.
End-user demand was higher primarily due to improved residential
and non-residential building construction activity, slightly offset
by lower sales for infrastructure construction equipment. The
unfavorable impact of changes in dealer inventories resulted from a
more significant decrease in dealer inventories in the second
quarter of 2017 than in the second quarter of 2016.
- Sales in EAME were about flat as lower end-user demand and the
unfavorable impact of the weaker euro and British pound were mostly
offset by favorable price realization. The decline in end-user
demand was primarily in Africa/Middle
East due to volatile financial and economic conditions, as
well as continued tight construction spending in oil-producing
countries.
Construction Industries' profit was $901
million in the second quarter of 2017, compared with
$550 million in the second quarter of
2016. The increase in profit was primarily due to favorable price
realization and higher sales volume, including a favorable mix of
products. Period costs were about flat as higher short-term
incentive compensation expense was mostly offset by the favorable
impact of restructuring and cost reduction actions.
RESOURCE INDUSTRIES
(Millions of dollars)
Sales Comparison
Second Sales Price Second $ %
Quarter 2016 Volume Realization Currency Quarter 2017 Change Change
Sales
Comparison[1] $1,457 $313 ($7) ($4) $1,759 $302 21 %
Sales by Geographic Region
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
North
America $612 $539 $73 14 %
Latin
America 299 258 41 16 %
EAME 396 317 79 25 %
Asia/Pacific 452 343 109 32 %
Total[1] $1,759 $1,457 $302 21 %
Segment Profit (Loss)
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
Segment Profit
(Loss) $97 ($163) $260 n/a %
[1] Does not include inter-segment sales of $77 million and $57 million in second quarter 2017
and 2016, respectively.
Resource Industries' sales were $1.759
billion in the second quarter of 2017, an increase of
$302 million, or 21 percent, from the
second quarter of 2016. The increase was primarily due to higher
sales volume for aftermarket parts and the favorable impact of
changes in dealer inventories. Dealer inventories were about flat
in the second quarter of 2017, compared with a decrease in the
second quarter of 2016. Dealer deliveries for equipment were about
flat. Increases in certain commodity prices over the past year,
along with continued commodity consumption, have resulted in
increased mining activity, driving the need for maintenance and
rebuild activities. The company believes commodity prices need to
stabilize at these higher levels to drive stronger activity and
longer-term demand for equipment.
Resource Industries' profit was $97
million in the second quarter of 2017, compared with a loss
of $163 million in the second quarter
of 2016. The favorable change was due to higher sales volume,
including a favorable mix of products, lower period costs and the
favorable impact of cost absorption. These items were partially
offset by higher warranty expense. Period costs were lower
primarily due to the favorable impact of restructuring and cost
reduction actions, partially offset by an increase in short-term
incentive compensation expense. The favorable impact of cost
absorption was a result of a decrease in inventory in the second
quarter of 2016, compared to an increase in inventory in the second
quarter of 2017.
ENERGY & TRANSPORTATION
(Millions of dollars)
Sales Comparison
Second Sales Price Second $ %
Quarter 2016 Volume Realization Currency Quarter 2017 Change Change
Sales
Comparison[1] $3,750 $236 ($3) ($42) $3,941 $191 5 %
Sales by Geographic Region
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
North
America $1,982 $1,809 $173 10 %
Latin
America 312 277 35 13 %
EAME 1,079 1,062 17 2 %
Asia/Pacific 568 602 (34) (6) %
Total[1] $3,941 $3,750 $191 5 %
Segment
Profit
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
Segment
Profit $700 $602 $98 16 %
[1] Does not include inter-segment sales of $827 million and $658 million in second
quarter 2017 and 2016, respectively.
Energy & Transportation's sales were $3.941 billion in the second quarter of 2017,
compared with $3.750 billion in the
second quarter of 2016. The increase was primarily due to higher
sales of aftermarket parts for reciprocating engines.
- Oil and Gas - Sales increased in North America due to higher demand for
reciprocating engines used in gas compression as natural gas
infrastructure build-out continues and for aftermarket parts as a
result of strong rebuild activity in well servicing and gas
compression applications. This was partially offset by a decrease
in demand for equipment used in production applications in
Asia/Pacific.
- Industrial - Sales were higher in all regions reflecting
increased sales for aftermarket parts.
- Power Generation - Sales were about flat as a slight
increase in North America was
mostly offset by decreases in other regions.
- Transportation - Sales decreased in North America as the rail industry continues
to have a significant number of idle locomotives. This was
partially offset by an increase in sales for rail services as North
American rail traffic has increased. Sales declined in marine
applications mostly due to lower demand, primarily for offshore
vessels.
Energy & Transportation's profit was $700 million in the second quarter of 2017,
compared with $602 million in the
second quarter of 2016. The increase was primarily due to higher
sales volume and lower variable manufacturing costs, partially
offset by higher period costs. Variable manufacturing costs were
favorable primarily due to cost absorption and improved material
costs. Cost absorption was favorable as inventory increased in the
second quarter of 2017 and was about flat in the second quarter of
2016. The increase in period costs was primarily due to higher
short-term incentive compensation expense.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
North America $505 $473 $32 7 %
Latin America 79 82 (3) (4) %
EAME 101 103 (2) (2) %
Asia/Pacific 91 101 (10) (10) %
Total $776 $759 $17 2 %
Segment Profit
Second Second $ %
Quarter 2017 Quarter 2016 Change Change
Segment Profit $191 $202 ($11) (5) %
Financial Products' revenues were $776
million in the second quarter of 2017, an increase of
$17 million, or 2 percent, from the
second quarter of 2016. The increase was due to a favorable impact
from intercompany lending activity in North America, higher average financing rates
in North America and a favorable
impact from returned or repossessed equipment in North America. These favorable impacts were
partially offset by lower average earning assets in
North America and lower average
financing rates in Asia/Pacific.
Financial Products' profit was $191
million in the second quarter of 2017, compared with
$202 million in the second quarter of
2016. The decrease was primarily due to the absence of gains on
sales of securities at Insurance Services, an increase in SG&A
expenses due to higher short-term incentive compensation expense
and an unfavorable impact from lower average earning assets. These
unfavorable impacts were partially offset by a decrease in the
provision for credit losses at Cat Financial, increased
intercompany lending activity and a favorable impact from returned
or repossessed equipment.
At the end of the second quarter of 2017, past dues at Cat
Financial were 2.71 percent, compared with 2.93 percent at the end
of the second quarter of 2016. Write-offs, net of recoveries, were
$26 million for the second quarter of
2017, compared with $33 million for
the second quarter of 2016.
As of June 30, 2017, Cat
Financial's allowance for credit losses totaled $338 million, or 1.25 percent of finance
receivables, compared with $346
million, or 1.25 percent of finance receivables as of
June 30, 2016. The allowance for
credit losses at year-end 2016 was $343
million, or 1.29 percent of finance receivables.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $531 million in the second quarter of 2017, an
increase of $203 million from the
second quarter of 2016. Corporate items and eliminations include:
restructuring costs; corporate-level expenses; timing differences,
as some expenses are reported in segment profit on a cash basis;
retirement benefit costs other than service cost; 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 increase in expense from the second quarter of 2016 was
primarily due to timing differences, an increase in restructuring
costs, higher stock-based compensation expense and other
methodology differences.
QUESTIONS AND ANSWERS
Q1: Can you comment on second-quarter restructuring costs and your 2017 outlook for
restructuring costs?
A: Restructuring costs of $169 million in the second quarter of 2017 were primarily
related to programs in Resource Industries and Energy & Transportation.
Second-quarter restructuring costs included a LIFO Inventory Decrement Benefit of
$33 million related to the closure of the Gosselies, Belgium, facility.
We have incurred $921 million of restructuring costs through the first six months
of 2017 and expect to incur about $1.2 billion for the full-year 2017, slightly
lower than the previous outlook for 2017 restructuring costs of $1.25 billion. We
expect costs for the remainder of 2017 to be primarily for previously announced
restructuring actions.
Q2: Can you discuss changes in dealer inventories during the second quarter of 2017?
A: Changes in dealer inventories had little impact on sales from the second quarter
of 2016 to the second quarter of 2017. Dealer machine and engine inventories
decreased about $300 million in the second quarter of 2017, compared to a decrease
of about $400 million in the second quarter of 2016. During the first six months
of 2017 and 2016, dealer machine and engine inventories decreased about $100
million.
Q3: Can you discuss changes to your order backlog by segment?
A: At the end of the second quarter of 2017, the order backlog was about $14.8
billion, about flat with the first quarter of 2017. Resource Industries' order
backlog increased about $300 million, Construction Industries' decreased about
$300 million and Energy & Transportation's was about flat. It is not uncommon for
the construction order backlog to decline during the second-quarter selling
season.
Compared with the second quarter of 2016, the order backlog increased about $3.0
billion. The increase was across all segments, most significantly in Construction
Industries and Resource Industries.
Q4: Can you comment on expense related to your 2017 short-term incentive compensation
plans?
A: Short-term incentive compensation expense is directly related to financial and
operational performance, measured against targets set annually. Second-quarter
2017 expense was about $415 million. Second-quarter 2016 expense was about $85
million.
For 2017, our current outlook includes short-term incentive compensation expense
of about $1.3 billion. Our 2017 outlook, issued in January, assumed short-term
incentive compensation expense of about $750 million. Full-year 2016 short-term
incentive compensation expense was about $250 million, significantly below
targeted levels.
Q5: Can you comment on your balance sheet and cash priorities?
A: The ME&T debt-to-capital ratio was 38.6 percent at the end of the second quarter
of 2017, compared with 41.7 percent at the end of the first quarter of 2017. Our
cash and liquidity positions remain strong with an enterprise cash balance of
$10.232 billion as of June 30, 2017. ME&T operating cash flow for the second
quarter of 2017 was $2.029 billion, compared with $1.168 billion in the second
quarter of 2016. The increase was primarily due to higher profit adjusted for
non-cash charges, including short-term incentive compensation expense, in the
second quarter of 2017 versus the second quarter of 2016.
Although 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
remains unchanged: maintain a strong financial position in support of our credit
rating; provide capital to support growth; appropriately fund employee benefit
plans; pay dividends; and repurchase common stock.
GLOSSARY OF TERMS
1. Adjusted Profit Per Share - Profit per share excluding restructuring costs for
2017 and 2016. For 2017, adjusted profit per share also excludes a gain on the
sale of an equity investment in IronPlanet recognized in the second quarter.
2. All Other Segments - Primarily includes activities such as: business strategy,
product management and development, and manufacturing of filters and fluids,
undercarriage, tires and rims, ground engaging tools, fluid transfer products,
precision seals, and rubber sealing and connecting components primarily for Cat(R)
products; parts distribution; 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 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.
4. 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 backhoe loaders, small wheel loaders,
small track-type tractors, skid steer loaders, multi-terrain loaders, mini
excavators, compact wheel loaders, telehandlers, select work tools, small, medium
and large track excavators, wheel excavators, medium wheel loaders, compact track
loaders, medium track-type tractors, track-type loaders, motor graders,
pipelayers, forestry and paving products and related parts.
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 includes the impact on
sales and operating profit for the Machinery, Energy & Transportation lines of
business only 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. Debt-to-Capital Ratio - A key measure of Machinery, Energy & Transportation's
financial strength used by management. The metric is defined as Machinery, Energy
& Transportation's short-term borrowings, long-term debt due within one year and
long-term debt due after one year (debt) divided by the sum of Machinery, Energy &
Transportation's debt and shareholders' equity. Debt also includes Machinery,
Energy & Transportation's long-term borrowings from Financial Products.
7. EAME - A geographic region including Europe, Africa, the Middle East and the
Commonwealth of Independent States (CIS).
8. Earning Assets - Assets consisting primarily of total finance receivables net of
unearned income, plus equipment on operating leases, less accumulated depreciation
at Cat Financial.
9. Energy & Transportation - A segment primarily responsible for supporting customers
using reciprocating engines, turbines, diesel-electric locomotives and related
parts across industries serving power generation, industrial, oil and gas 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 turbines
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 on-highway vocational
trucks for North America.
10. 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
determined on a pretax basis and includes other income/expense items.
11. Latin America - A geographic region including Central and South American countries
and Mexico.
12. LIFO Inventory Decrement Benefits - A significant portion of Caterpillar's
inventory is valued using the last-in, first-out (LIFO) method. With this method,
the cost of inventory is comprised of "layers" at cost levels for years when
inventory increases occurred. A LIFO decrement occurs when inventory decreases,
depleting layers added in earlier, generally lower cost years. A LIFO decrement
benefit represents the impact on operating profit of charging cost of goods sold
with prior-year cost levels rather than current period costs.
13 Machinery, Energy & Transportation (ME&T) - Represents the aggregate total of
Construction Industries, Resource Industries, Energy & Transportation and All
Other Segments and related corporate items and eliminations.
14. Machinery, Energy & Transportation Other Operating (Income) Expenses - Comprised
primarily of gains/losses on disposal of long-lived assets, gains/losses on
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.
15. Pension and Other Postemployment Benefit (OPEB) - The company's defined benefit
pension and postretirement benefit plans.
16. Period Costs - Includes period manufacturing costs, ME&T selling, general and
administrative (SG&A) and research and development (R&D) expenses excluding the
impact of currency and exit-related costs that are included in restructuring costs
(see definition below). 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 support, procurement, factory scheduling,
manufacturing planning and operations management. SG&A and R&D costs are not
linked to the production of goods or services and include marketing, legal and
finance services and the development of new and significant improvements in
products or processes.
17. Price Realization - The impact of net price changes excluding currency and new
product introductions. Price realization includes geographic mix of sales, which
is the impact of changes in the relative weighting of sales prices between
geographic regions.
18. Resource Industries - A segment primarily responsible for supporting customers
using machinery in mining, quarry, 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,
track and rotary drills, highwall miners, large wheel loaders, off-highway trucks,
articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors,
soil compactors, material handlers, continuous miners, scoops and haulers,
hardrock 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 and research and
development.
19. Restructuring Costs - Primarily costs for employee separation, long-lived asset
impairments and contract terminations. These costs are included in Other Operating
(Income) Expenses. Restructuring costs also include other exit-related costs
primarily for accelerated depreciation, inventory write-downs, equipment
relocation and project management costs and also LIFO inventory decrement benefits
from inventory liquidations at closed facilities (primarily included in Cost of
goods sold).
20. 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 revenue 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.
The impact of sales volume on segment profit includes intersegment sales.
21. Variable Manufacturing Costs - Represents volume-adjusted costs excluding the
impact of currency and restructuring costs (see definition above). 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.
NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures Caterpillar uses 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 substituted for the related GAAP
measure.
Adjusted Profit per Share
Caterpillar believes it is important to separately quantify the
profit impact of two special items in order for the company's
results to be meaningful to readers. These items consist of
restructuring costs, which are incurred in the current year to
generate longer-term benefits, and a gain on sale of an equity
investment. Caterpillar does not consider these items indicative of
earnings from ongoing business activities and believes the non-GAAP
measure will provide useful perspective on underlying business
results and trends, and a means to assess the company's
period-over-period results.
Reconciliations of adjusted profit per share to the most
directly comparable GAAP measure, diluted profit per share, are as
follows:
Second Quarter 2017 Outlook
2016 2017 Previous[1] Current[2]
Profit per share $0.93 $1.35 $2.10 $3.50
Per share restructuring
costs[3] $0.16 $0.23 $1.65 $1.59
Per share gain on sale of
equity investment[4] - ($0.09) - ($0.09)
Adjusted profit per share $1.09 $1.49 $3.75 $5.00
[1] 2017 Sales and Revenues Outlook in a range of
$38-$41 billion (as of April 25, 2017). Profit per
share at midpoint.
[2] 2017 Sales and Revenues Outlook in a range of $42-$44 billion.
Profit per share at midpoint.
[3] At estimated annual tax rate based on full-year outlook for per
share restructuring costs at statutory tax rates. Second-quarter
2017 and 2017 Outlook at
estimated annual rate of 22 percent. 2017 Outlook includes $15 million
increase to prior year taxes related to non-U.S. restructuring costs
recognized in
the first quarter of 2017. Second-quarter 2017 includes a favorable
interim adjustment of $0.01 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, gain on sale of
equity investment and discrete items of 29 percent.
[4] At U.S. statutory tax rate of 35 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 17-25 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 Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Sales and revenues:
Sales of Machinery, $ 10,639 $ 9,645 $19,769 $18,425
Energy & Transportation
Revenues of Financial
Products 692 697 1,384 1,378
Total sales and revenues 11,331 10,342 21,153 19,803
Operating costs:
Cost of goods sold 7,769 7,419 14,527 14,241
Selling, general and
administrative expenses 1,289 1,123 2,334 2,211
Research and development
expenses 453 468 871 976
Interest expense of
Financial Products 162 148 321 300
Other operating (income)
expenses 407 399 1,432 796
Total operating costs 10,080 9,557 19,485 18,524
Operating profit 1,251 785 1,668 1,279
Interest expense
excluding Financial
Products 121 130 244 259
Other income (expense) 29 84 24 84
Consolidated profit before taxes 1,159 739 1,448 1,104
Provision (benefit) for
income taxes 361 184 451 276
Profit of consolidated
companies 798 555 997 828
Equity in profit (loss)
of unconsolidated
affiliated companies 5 (2) - (3)
Profit of consolidated and
affiliated companies 803 553 997 825
Less: Profit (loss) attributable
to noncontrolling interests 1 3 3 4
Profit [1] $ 802 $ 550 $ 994 $ 821
Profit per common share $ 1.36 $ 0.94 $ 1.69 $ 1.41
Profit per common share
- diluted [2] $ 1.35 $ 0.93 $ 1.67 $ 1.40
Weighted-average common shares
outstanding (millions)
- Basic 590.2 584.1 588.8 583.4
- Diluted 2 595.4 588.6 594.4 588.2
Cash dividends declared
per common share $ 1.55 $ 1.54 $ 1.55 $ 1.54
[1] Profit attributable to common shareholders.
Diluted by assumed exercise of stock-based compensation awards using the
[2] treasury stock method.
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
June 30, December 31,
2017 2016
Assets
Current assets:
Cash and
short-term
investments $ 10,232 $ 7,168
Receivables -
trade and other 6,675 5,981
Receivables -
finance 8,920 8,522
Prepaid expenses
and other
current assets 1,776 1,682
Inventories 9,388 8,614
Total current assets 36,991 31,967
Property, plant and
equipment - net 14,420 15,322
Long-term receivables
- trade and other 940 1,029
Long-term receivables
- finance 13,197 13,556
Noncurrent deferred
and refundable income
taxes 2,866 2,790
Intangible assets 2,232 2,349
Goodwill 6,142 6,020
Other assets 1,722 1,671
Total assets $ 78,510 $ 74,704
Liabilities
Current liabilities:
Short-term
borrowings:
-- Machinery,
Energy &
Transportation $ 5 $ 209
-- Financial
Products 6,775 7,094
Accounts payable 5,778 4,614
Accrued expenses 3,211 3,003
Accrued wages,
salaries and
employee
benefits 1,986 1,296
Customer
advances 1,533 1,167
Dividends
payable 461 452
Other current
liabilities 1,787 1,635
Long-term debt
due within one
year:
-- Machinery,
Energy &
Transportation 5 507
-- Finacial
Products 6,592 6,155
Total current
liabilities 28,133 26,132
Long-term debt due
after one year:
-- Machinery
Energy &
Transportation 8,815 8,436
-- Financial
Products 15,000 14,382
Liability for
postemployment
benefits 9,248 9,357
Other liabilities 3,235 3,184
Total liabilities 64,431 61,491
Shareholders' equity
Common stock 5,316 5,277
Treasury stock (17,307) (17,478)
Profit employed in
the business 27,471 27,377
Accumulated other
comprehensive income
(loss) (1,471) (2,039)
Noncontrolling
interests 70 76
Total shareholders' equity 14,079 13,213
Total liabilities and
shareholders' equity $ 78,510 $ 74,704
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Six Months Ended
June 30,
2017 2016
Cash flow from operating
activities:
Profit of consolidated
and affiliated companies $ 997 $ 825
Adjustments for non-cash
items:
Depreciation
and
amortization 1,430 1,494
Other 487 368
Changes in assets and
liabilities, net of
acquisitions and
divestitures:
Receivables -
trade and
other (442) 573
Inventories (688) 305
Accounts
payable 1,113 208
Accrued
expenses 251 1
Accrued
wages,
salaries and
employee
benefits 641 (743)
Customer
advances 322 93
Other assets
- net (280) (127)
Other
liabilities -
net 90 (193)
Net cash provided by (used
for) operating activities 3,921 2,804
Cash flow from investing
activities:
Capital expenditures -
excluding equipment
leased to others (371) (580)
Expenditures for
equipment leased to
others (753) (1,025)
Proceeds from disposals
of leased assets and
property, plant and
equipment 563 383
Additions to finance
receivables (5,264) (4,643)
Collections of finance
receivables 5,508 4,466
Proceeds from sale of
finance receivables 83 42
Investments and
acquisitions (net of
cash acquired) (21) (38)
Proceeds from sale of
businesses and
investments (net of cash
sold) 91 -
Proceeds from sale of
securities 187 195
Investments in
securities (207) (243)
Other - net 5 (14)
Net cash provided by (used
for) investing activities (179) (1,457)
Cash flow from financing
activities:
Dividends paid (906) (898)
Distribution to
noncontrolling interests (6) -
Common stock issued,
including treasury
shares reissued 83 (47)
Proceeds from debt
issued (original
maturities greater than
three months) 4,868 2,841
Payments on debt
(original maturities
greater than three
months) (4,225) (3,331)
Short-term borrowings -
net (original maturities
three months or less) (505) 391
Net cash provided by (used
for) financing activities (691) (1,044)
Effect of exchange rate
changes on cash 13 1
Increase (decrease) in cash
and short-term investments 3,064 304
Cash and short-term
investments at beginning of
period 7,168 6,460
Cash and short-term
investments at end of period $ 10,232 $ 6,764
All short-term investments, which consist primarily of highly
liquid investments with original maturities of three months or
less, are considered to be cash equivalents.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation[1] Products Adjustments
Sales and
revenues:
Sales of
Machinery
, Energy
&
Transport
ation $ 10,639 $ 10,639 $ - $ -
Revenues
of
Financial
Products 692 - 793 (101)[2]
Total
sales and
revenues 11,331 10,639 793 (101)
Operating
costs:
Cost of
goods
sold 7,769 7,769 - -
Selling,
general
and
administr
ative
expenses 1,289 1,154 139 (4)[3]
Research
and
developme
nt
expenses 453 453 - -
Interest
expense
of
Financial
Products 162 - 167 (5)[4]
Other
operating
(income)
expenses 407 111 301 (5)[3]
Total
operating
costs 10,080 9,487 607 (14)
Operating
profit 1,251 1,152 186 (87)
Interest
expense
excluding
Financial
Products 121 146 - (25)[4]
Other
income
(expense) 29 (35) 2 62[5]
Consolidated
profit before
taxes 1,159 971 188 -
Provision
(benefit)
for
income
taxes 361 303 58 -
Profit of
consolida
ted
companies 798 668 130 -
Equity in
profit
(loss) of
unconsoli
dated
affiliate
d
companies 5 5 - -
Equity in
profit of
Financial
Products'
subsidiar
ies - 129 - (129)[6]
Profit of
consolidated
and affiliated
companies 803 802 130 (129)
Less: Profit
(loss)
attributable to
noncontrolling
interests 1 - 1 -
Profit 7 $ 802 $ 802 $ 129 $ (129)
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
[1] for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery, Energy &
[2] Transportation.
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to
[3] Financial Products.
Elimination of interest expense recorded between Financial Products and Machinery,
[4] Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
receivables sold to Financial Products and of interest earned between Machinery,
[5] Energy & Transportation and Financial Products.
[6] Elimination of Financial Products' profit due to equity method of accounting.
[7] Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2016
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery
, Energy
&
Transport
ation $ 9,645 $ 9,645 $ - $ -
Revenues
of
Financial
Products 697 - 778 (81) [2]
Total
sales and
revenues 10,342 9,645 778 (81)
Operating
costs:
Cost of
goods
sold 7,419 7,419 - -
Selling
general
and
administr
ative
expenses 1,123 981 147 (5) [3]
Research
and
developme
nt
expenses 468 468 - -
Interest
expense
of
Financial
Products 148 - 152 (4) [4]
Other
operating
(income)
expenses 399 99 308 (8) [3]
Total
operating
costs 9,557 8,967 607 (17)
Operating
profit 785 678 171 (64)
Interest
expense
excluding
Financial
Products 130 143 - (13) [4]
Other
income
(expense) 84 5 28 51 [5]
Consolidated
profit before
taxes 739 540 199 -
Provision
(benefit)
for
income
taxes 184 122 62 -
Profit of
consolida
ted
companies 555 418 137 -
Equity in
profit
(loss) of
unconsoli
dated
affiliate
d
companies (2) (2) - -
Equity in
profit of
Financial
Products'
subsidiar
ies - 135 - (135) [6]
Profit of
consolidated
and affiliated
companies 553 551 137 (135)
Less: Profit
(loss)
attributable to
noncontrolling
interests 3 1 2 -
Profit [7] $ 550 $ 550 $ 135 $ (135)
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
[1] for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery, Energy &
[2] Transportation.
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to
[3] Financial Products.
Elimination of interest expense recorded between Financial Products and Machinery,
[4] Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
receivables sold to Financial Products and of interest earned between Machinery,
[5] Energy & Transportation and Financial Products.
[6] Elimination of Financial Products' profit due to equity method of accounting.
[7] Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery
, Energy
&
Transport
ation $ 19,769 $ 19,769 $ - $ -
Revenues
of
Financial
Products 1,384 - 1,570 (186) [2]
Total
sales and
revenues 21,153 19,769 1,570 (186)
Operating
costs:
Cost of
goods
sold 14,527 14,527 - -
Selling,
general
and
administr
ative
expenses 2,334 2,078 265 (9) [3]
Research
and
developme
nt
expenses 871 871 - -
Interest
expense
of
Financial
Products 321 - 330 (9) [4]
Other
operating
(income)
expenses 1,432 839 603 (10) [3]
Total
operating
costs 19,485 18,315 1,198 (28)
Operating
profit 1,668 1,454 372 (158)
Interest
expense
excluding
Financial
Products 244 290 - (46) [4]
Other
income
(expense) 24 (88) - 112 [5]
Consolidated
profit before
taxes 1,448 1,076 372 -
Provision
(benefit)
for
income
taxes 451 337 114 -
Profit of
consolida
ted
companies 997 739 258 -
Equity in
profit
(loss) of
unconsoli
dated
affiliate
d
companies - - - -
Equity in
profit of
Financial
Products'
subsidiar
ies - 255 - (255) [6]
Profit of
consolidated
and affiliated
companies 997 994 258 (255)
Less: Profit
(loss)
attributable to
noncontrolling
interests 3 - 3 -
Profit [7] $ 994 $ 994 $ 255 $ (255)
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
[1] for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery, Energy &
[2] Transportation.
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to
[3] Financial Products.
Elimination of interest expense recorded between Financial Products and Machinery,
[4] Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
receivables sold to Financial Products and of interest earned between Machinery,
[5] Energy & Transportation and Financial Products.
[6] Elimination of Financial Products' profit due to equity method of accounting.
[7] Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2016
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery
, Energy
&
Transport
ation $ 18,425 $ 18,425 $ - $ -
Revenues
of
Financial
Products 1,378 - 1,537 (159) [2]
Total
sales and
revenues 19,803 18,425 1,537 (159)
Operating
costs:
Cost of
goods
sold 14,241 14,241 - -
Selling,
general
and
administr
ative
expenses 2,211 1,936 286 (11) [3]
Research
and
developme
nt
expenses 976 976 - -
Interest
expense
of
Financial
Products 300 - 307 (7) [4]
Other
operating
(income)
expenses 796 204 606 (14) [3]
Total
operating
costs 18,524 17,357 1,199 (32)
Operating
profit 1,279 1,068 338 (127)
Interest
expense
excluding
Financial
Products 259 283 - (24) [4]
Other
income
(expense) 84 (47) 28 103 [5]
Consolidated
profit before
taxes 1,104 738 366 -
Provision
(benefit)
for
income
taxes 276 162 114 -
Profit of
consolida
ted
companies 828 576 252 -
Equity in
profit
(loss) of
unconsoli
dated
affiliate
d
companies (3) (3) - -
Equity in
profit of
Financial
Products'
subsidiar
ies - 249 - (249) [6]
Profit of
consolidated
and affiliated
companies 825 822 252 (249)
Less: Profit
(loss)
attributable to
noncontrolling
interests 4 1 3 -
Profit [7] $ 821 $ 821 $ 249 $ (249)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
for on the equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy &
Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation paid to
Financial Products.
4 Elimination of interest expense recorded between Financial Products and Machinery,
Energy & Transportation.
5 Elimination of discount recorded by Machinery, Energy & Transportation on
receivables sold to Financial Products and of interest earned between Machinery,
Energy & Transportation and Financial Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 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 $ 997 $ 994 $ 258 $ (255) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 1,430 998 432 -
Undistributed
profit of
Financial
Products - (255) - 255 [3]
Other 487 453 (87) 121 [4]
Changes in assets
and liabilities,
net of acquisitions
and divestitures:
Receivables -
trade and
other (442) (54) 63 (451) [4],[5]
Inventories (688) (688) - -
Accounts
payable 1,113 1,145 (52) 20 [4]
Accrued
expenses 251 234 17 -
Accrued
wages,
salaries and
employee
benefits 641 634 7 -
Customer
advances 322 322 - -
Other assets
- net (280) (152) (48) (80)[4]
Other
liabilities
net 90 (78) 88 80 [4]
Net cash provided by
(used for) operating
activities 3,921 3,553 678 (310)
Cash flow from
investing activities:
Capital
expenditures -
excluding equipment
leased to others (371) (367) (4) -
Expenditures for
equipment leased to
others (753) (12) (749) 8 [4]
Proceeds from
disposals of leased
assets and
property, plant and
equipment 563 87 481 (5)[4]
Additions to
finance receivables (5,264) - (6,240) 976 [5]
Collections of
finance receivables 5,508 - 6,602 (1,094)[5]
Net intercompany
purchased
receivables - - (425) 425 [5]
Proceeds from sale
of finance
receivables 83 - 83 -
Net intercompany
borrowings - 44 (1,500) 1,456 [6]
Investments and
acquisitions (net
of cash acquired) (21) (21) - -
Proceeds from sale
of businesses and
investments (net of
cash sold) 91 91 - -
Proceeds from sale
of securities 187 9 178 -
Investments in
securities (207) (11) (196) -
Other - net 5 (25) 30 -
Net cash provided by
(used for) investing
activities (179) (205) (1,740) 1,766
Cash flow from
financing activities:
Dividends paid (906) (906) - -
Distribution to
noncontrolling
interests (6) (6) - -
Common stock
issued, including
treasury shares
reissued 83 83 - -
Net intercompany
borrowings - 1,500 (44) (1,456)[6]
Proceeds from debt
issued (original
maturities greater
than three months) 4,868 361 4,507 -
Payments on debt
(original
maturities greater
than three months) (4,225) (505) (3,720) -
Short-term
borrowings - net
(original
maturities three
months or less) (505) (200) (305) -
Net cash provided by
(used for) financing
activities (691) 327 438 (1,456)
Effect of exchange
rate changes on cash 13 (6) 19 -
Increase (decrease) in
cash and short-term
investments 3,064 3,669 (605) -
Cash and short-term
investments at
beginning of period 7,168 5,257 1,911 -
Cash and short-term
investments at end of
period $ 10,232 $ 8,926 $ 1,306 $ -
[1] Represents Caterpillar Inc. and its subsidiaries with
Financial Products accounted for on the equity basis.
[2] Elimination of Financial Products' profit after tax due to
equity method of accounting.
[3] Elimination of non-cash adjustment for the undistributed
earnings from Financial Products.
[4] Elimination of non-cash adjustments and changes in assets and
liabilities related to consolidated reporting.
[5] Reclassification of Financial Products' cash flow activity
from investing to operating for receivables that arose from
the sale of inventory.
[6] Elimination of net proceeds and payments to/from Machinery,
Energy & Transportation and Financial Products.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2016
(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 $ 825 $ 822 $ 252 $ (249) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 1,494 1,056 438 -
Undistributed
profit of
Financial
Products - (242) - 242 [3]
Other 368 257 9 102 [4]
Changes in assets
and liabilities,
net of acquisitions
and divestitures:
Receivables -
trade and
other 573 45 19 509[4],[5]
Inventories 305 309 - (4) [4]
Accounts
payable 208 284 (16) (60) [4]
Accrued
expenses 1 8 (7) -
Accrued
wages,
salaries and
employee
benefits (743) (726) (17) -
Customer
advances 93 93 - -
Other assets
- net (127) (187) 82 (22)[4]
Other
liabilities -
net (193) (332) 117 22 [4]
Net cash provided by
(used for) operating
activities 2,804 1,387 877 540
Cash flow from
investing activities:
Capital
expenditures -
excluding equipment
leased to others (580) (577) (3) -
Expenditures for
equipment leased to
others (1,025) (41) (1,001) 17 [4]
Proceeds from
disposals of leased
assets and
property, plant and
equipment 383 49 344 (10)[4]
Additions to
finance receivables (4,643) - (6,026) 1,383 [5]
Collections of
finance receivables 4,466 - 6,007 (1,541) [5]
Net intercompany
purchased
receivables - - 396 (396) [5]
Proceeds from sale
of finance
receivables 42 - 42 -
Net intercompany
borrowings - (832) (1,000) 1,832 [6]
Investments and
acquisitions (net
of cash acquired) (38) (38) - -
Proceeds from sale
of securities 195 17 178 -
Investments in
securities (243) (15) (228) -
Other - net (14) (1) (20) 7 [8]
Net cash provided by
(used for) investing
activities (1,457) (1,438) (1,311) 1,292
Cash flow from
financing activities:
Dividends paid (898) (898) (7) 7 [7]
Common stock
issued, including
treasury shares
reissued (47) (47) 7 (7) [8]
Net intercompany
borrowings - 1,000 832 (1,832) [6]
Proceeds from debt
issued (original
maturities greater
than three months) 2,841 1 2,840 -
Payments on debt
(original
maturities greater
than three months) (3,331) (7) (3,324) -
Short-term
borrowings - net
(original
maturities three
months or less) 391 255 136 -
Net cash provided by
(used for) financing
activities (1,044) 304 484 (1,832)
Effect of exchange
rate changes on cash 1 (14) 15 -
Increase (decrease) in
cash and short-term
investments 304 239 65 -
Cash and short-term
investments at
beginning of period 6,460 5,340 1,120 -
Cash and short-term
investments at end of
period $ 6,764 $ 5,579 $ 1,185 $ -
[1] Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
for on the equity basis.
[2] Elimination of Financial Products' profit after tax due to equity method of
accounting.
[3] Elimination of non-cash adjustment for the undistributed earnings from Financial
Products.
[4] Elimination of non-cash adjustments and changes in assets and liabilities related to
consolidated reporting.
[5] Reclassification of Financial Products' cash flow activity from investing to
operating for receivables that arose from the sale of inventory.
[6] Elimination of net proceeds and payments to/from Machinery, Energy & Transportation
and Financial Products.
[7] Elimination of dividend from Financial Products to Machinery, Energy &
Transportation.
[8] Elimination of change in investment and common stock related to Financial Products.
CONTACT: Rachel Potts, Caterpillar, 309-675-6892 (Office),
309-573-3444 (Mobile) or Potts_Rachel_A@cat.com
This is a disclosure announcement from PR Newswire.