Caterpillar, Inc. · NYSE:CAT
Caterpillar — Q3 2015 Earnings Presentation
18 slides from Caterpillar's earnings presentation, Oct 22, 2015
Slide 1: Third-Quarter Financial Release – Discussion Material
Third-Quarter Financial Release – Discussion Material 22 October 2015
Slide 2: Forward-looking statements
Certain statements in this presentation 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,”
Slide 3: Discussion
Discussion ►Third-Quarter Results / Outlook – Mike DeWalt ►Business Review – Doug Oberhelman Segments / Key Industries Actions / Progress 3
Slide 4: Third-Quarter 2015 Financial Results
Third-Quarter 2015 Financial Results 3rd Quarter 3rd Quarter 2014 2015 Change Sales and Revenues $ 13.5 Billion $ 11.0 Billion $ (2.5) Billion Profit Per Share $ 1.63 $ 0.62 $ (1.01) Profit Per Share $ 1.72 $ 0.75 $ (0.97) Excluding Restructuring Costs Sales and Revenues Profit • Lower sales in all
Slide 5: 2015 Outlook
2015 Outlook Outlook from Second-Quarter Today’s Outlook Update Financial Release in July Sales and Revenues Top end about $48 Billion Sales and Revenues About $49 Billion Profit Per Share About $3.70 Profit Per Share About $4.70 Profit Per Share About $4.60 Profit Per Share About $5.00 Excluding Re
Slide 6: Preliminary Outlook for 2016 Sales & Revenues
Preliminary Outlook for 2016 Sales & Revenues Expect 2016 to be down about 5% from 2015 4th consecutive down year • Resource Industries expected to be down about 10% in 2016 … but from a very low base. • Construction Industries flat to down 5% from 2015. • Energy & Transportation down 5% to 10% ...
Slide 7: Sales & Revenues Trend – 2012 Peak to 2016 Estimate
Sales & Revenues Trend – 2012 Peak to 2016 Estimate $70 $60 • Down about $20 billion from the peak … about 31%. $50 $40 • Nearly 2/3 of the decline is from $Billions Resource Industries and mostly $30 related to mining. $20 • About 10% of the decline is $10 related to currency impacts from a stronge
Slide 8: Business Review – Key Industries (Mining)
Business Review – Key Industries Resource Industries (Mining) • Slower growth in developing countries – China in particular – due to weakened commodity prices. • Customers have sufficient supply of equipment and have dramatically lowered CAPEX. • Order rates for our mining products have declined sin
Slide 9: Business Review – Key Industries (Oil & Gas)
Business Review – Key Industries Energy & Transportation (Oil & Gas) • Oil oversupply from production resurgence in the United States. Worldwide demand growing, but supply continues to outpace demand. • Decline in oil prices and investment is impacting Caterpillar most in well servicing and drilling
Slide 10: Business Review – Key Industries (Rail)
Business Review – Key Industries Energy & Transportation (Rail) • We have been focused on growth and have built a substantial rail business over the past 10 years. We acquired Progress Rail and EMD as the cornerstones of our rail business. • We’ve grown the business organically and through acquisiti
Slide 11: Business Review – Key Industries (Construction)
Business Review – Key Industries Construction Industries • North America – improvement in residential and non-residential construction this year … but mostly offset by impact of oil-related construction decline. • Latin America – region is weak in general, and our 2015 equipment sales in Brazil are
Slide 12: Operational Progress
Operational Progress A tough business climate in our key industries … but • We’ve improved our machine market position every year since 2010. • We’re managing costs to minimize the impact of lower volume. Our decremental operating profit pull through has been in our targeted range as sales have decl
Slide 13: Operational Progress
Operational Progress A tough business climate in our key industries … but • ME&T operating cash flow has been strong … 3 of our 4 best years in history have been since 2010. • Since 2009, we’ve increased the quarterly dividend 83% and repurchased more than $8 billion of stock. • The dividend is a pr
Slide 14: Taking Action
Taking Action We have … and will continue to take action • Given current industry weakness, we have sufficient … and in some cases too much capacity. That said, our factories are modern, working on Lean and are well positioned to handle more volume with cyclical recovery when it comes. – We expect C
Slide 15: Taking Action
Taking Action We have … and will continue to take action • Because of the extended downturn in sales … we announced substantial additional restructuring on September 24. – We expect about $1.5 billion of annual cost reduction by 2018 with about $750 million of that expected in 2016. – Reduction of 4
Slide 16: Taking Action for the Future – Lean Journey
Taking Action for the Future – Lean Journey We are taking action focused on the long term Caterpillar Inventory Cost Dollars Gross Margin as a Percent of Sales Down $4.5 2010 2015 YTD billion from peak, flat turns 23.8% 24.4% 2010 2011 2012 2013 2014 2015 Improvement despite lower sales in Sep minin
Slide 17: Taking Action for the Future
Taking Action for the Future We are taking action focused on the long term • We’re executing Across the Table with our dealers ... to drive better performance between Caterpillar and our dealers ... better market position, service performance and value to our customers. • We’re investing in technolo
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures We anticipate incurring significant restructuring costs in 2015. We believe it is important to separately quantify the profit per share impact of restructuring costs in order for our third-quarter 2015 results and the 2015 outlook to be meaningful to our readers. We have