Caterpillar, Inc. · NYSE:CAT
Caterpillar — Q4 2019 Earnings Presentation
23 slides from Caterpillar's earnings presentation, Jan 31, 2020
Slide 1: Fourth Quarter and Full Year 2019 Financial Review
Fourth Quarter and Full Year 2019 Financial Review January 31, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this financial review 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,” “a
Slide 3: Fourth Quarter 2019 Financial Results
Fourth Quarter 2019 Financial Results Sales & Revenues Profit Per Share $13.1B $1.97 (8%) +11% (8%) Operating Profit Margin Adjusted Profit Per Share1 14.1% +1.0pts $2.63 +3% 1 Adjusted PPS for 2019 excludes pension and OPEB mark-to-market losses. Adjusted PPS for 2018 excludes pension and OPEB mark
Slide 4: Full Year 2019 Financial Results
Full Year 2019 Financial Results Sales & Revenues Profit Per Share $53.8B $10.74 (8%) +5% (2%) Operating Profit Margin Adjusted Profit Per Share1 15.4% +0.2pts $11.06 (1%) 1 Adjusted PPS for 2019 excludes pension and OPEB mark-to-market losses and a discrete tax benefit in the first quarter related
Slide 5: 2019 Highlights
2019 Highlights BEST SAFETY 15.4% OPERATING $6.9B ENTERPRISE OPERATING CASH FLOW PERFORMANCE ON RECORD MARGIN WITHIN INVESTOR $4.9B ME&T OPERATING CASH FLOW DAY TARGET RANGE $5.3B FREE CASH FLOW* $6.2B RETURNED TO SHAREHOLDERS; 9% SHARE COUNT $18B INCREASED DIVIDEND BY 20% REDUCTION ACHIEVED ME&T SE
Slide 6: Executing Our Strategy
Executing Our Strategy OPERATIONAL EXCELLENCE • Best safety performance on record • Proactively managed production levels • Strong cost control EXPANDED OFFERINGS • New product launches to meet diverse customer needs • Increase in mining trucks using Cat’s autonomous solutions SERVICES • Continued g
Slide 7: Full Year 2020 Outlook
Full Year 2020 Outlook $10.74 $11.06 $8.50 - $10.00 Lower Sales & Revenues on expected decrease in end-user demand and dealers reducing their inventories Ready to respond quickly to positive or negative changes in demand Continue to take action to maintain a competitive and flexible cost structure C
Slide 8: 2020 Key Areas of Focus
2020 Key Areas of Focus OPERATIONAL EXCELLENCE • Maintain focus on safety and quality • Continue Lean journey with focus on improving cost structure • Address underperforming products EXPANDED OFFERINGS • Invest in new products to add value for our customers • Expand our line of GC products SERVICES
Slide 9: 2020 End Market Assumptions by Segment
2020 End Market Assumptions by Segment CONSTRUCTION RESOURCE ENERGY & INDUSTRIES INDUSTRIES TRANSPORTATION North America Mining Oil & Gas • Reduction in dealer inventories • End-user demand up mid-single digits • Weakness continuing in NA on-shore: • Investment in state and local infrastructure • We
Slide 10: 2019 Financial Results
2019 Financial Results Fourth Quarter 2019 vs. Fourth Quarter 2018 ADJUSTED SALES & REVENUES OPERATING PROFIT PROFIT PER SHARE (in billions of dollars) as a percent of sales & revenues (in dollars) PROFIT PER SHARE1 (in dollars) $14.3 $13.1 $1.97 $1.78 $2.63 14.1% $2.55 13.1% 2019 2019 2018 2019 201
Slide 11: Consolidated Sales & Revenues
Consolidated Sales & Revenues Fourth Quarter 2019 vs. Fourth Quarter 2018 16,000 14,342 (1,046) 14,000 (95) (103) 46 13,144 4th Quarter Highlights 12,000 Sales & Revenues Decreased ($1.2B) or (8%) 10,000 • Sales volume decreased primarily in Construction Millions of $ Industries and Resource Industr
Slide 12: Consolidated Operating Profit
Consolidated Operating Profit Fourth Quarter 2019 vs. Fourth Quarter 2018 2,000 1,883 (337) 30 1,850 121 1,800 188 (54) 1,600 (95) 114 4th Quarter Highlights 1,400 Operating Profit Decreased ($33M) or (2%) 1,200 • Lower sales volume Millions of $ • Favorable SG&A/R&D, driven by short-term 1,000 ince
Slide 13: Energy & Transportation
Full Year 2019 Energy & Transportation Total Sales* $22.1B Fourth Quarter 2019 vs. Fourth Quarter 2018 Segment Margin 17.7% 4th Quarter Highlights Total Sales* Segment Profit Segment Profit (in billions of dollars) (in millions of dollars) as a percent of total sales* Total Sales Decreased ($338M) o
Slide 14: Construction Industries
Full Year 2019 Construction Industries Total Sales* $22.6B Fourth Quarter 2019 vs. Fourth Quarter 2018 Segment Margin 17.4% 4th Quarter Highlights Total Sales* Segment Profit Segment Profit (in billions of dollars) (in millions of dollars) as a percent of total sales* Total Sales Decreased ($685M) o
Slide 15: Resource Industries
Full Year 2019 Resource Industries Total Sales* $10.3B Fourth Quarter 2019 vs. Fourth Quarter 2018 Segment Margin 15.9% 4th Quarter Highlights Total Sales* Segment Profit Segment Profit (in billions of dollars) (in millions of dollars) as a percent of total sales* $2.8 Total Sales Decreased ($402M)
Slide 16: Financial Products
Full Year 2019 Financial Products Total Revenues* $3.4B Fourth Quarter 2019 vs. Fourth Quarter 2018 Segment Profit $0.8B 4th Quarter Highlights Total Revenues* Segment Profit (in millions of dollars) (in millions of dollars) Total Revenues Increased +$34M or +4% $812 $846 $210 • Absence of returned
Slide 17: Full Year 2020 Outlook
Full Year 2020 Outlook $10.74 $11.06 $8.50 - $10.00 OUTLOOK ASSUMPTIONS: Lower Sales & Revenues year-over-year Restructuring costs at normal level; In addition, $200M End-user demand down about 4% - 9% placeholder for strategic actions Dealer inventory expected to decline about $1.0 - $1.5B Tax rate
Slide 18: Cash Flow and Capital Structure
Cash Flow and Capital Structure RETURNED TO 2019 FREE CASH ENTERPRISE 2019 FREE SHAREHOLDERS FLOW CASH BALANCE CASH FLOW* IN 2019 DEPLOYMENT $8.3B $5.3B $6.2B ~115% STRONG FINANCIAL STRONG CASH THROUGH DIVIDENDS & TARGET TO RETURN POSITION GENERATION SHARE REPURCHASES SUBSTANITIALLY ALL FREE CASH FL
Slide 19: 2019 Key Takeaways
2019 Key Takeaways Sales & 2020 Proactively Increased Returned Executing our Revenues PPS outlook managing dividend by $6.2B to strategy & decreased range of production 20% shareholders continuing to (2%); PPS of $8.50 to $10.00 through share invest for $10.74 repurchases & long-term dividends profi
Slide 20: Q&A
Q&A CATERPILLAR’ =
Slide 21: Consolidated Sales & Revenues
Consolidated Sales & Revenues Full Year 2019 vs. Full Year 2018 60,000 54,722 (1,017) 710 (760) 145 53,800 50,000 Full Year Highlights 40,000 Sales & Revenues Decreased ($0.9B) or (2%) • Sales decreased primarily in Energy & Transportation Millions of $ and Construction Industries 30,000 • Decrease
Slide 22: Consolidated Operating Profit
Consolidated Operating Profit Full Year 2019 vs. Full Year 2018 9,000 8,293 (563) 710 (643) 229 82 8,290 327 (145) 8,000 Full Year Highlights 7,000 Operating Profit nearly flat 6,000 • Lower sales volume • Favorable price realization more than offset Millions of $ 5,000 higher manufacturing costs 4,
Slide 23: Appendix – Reconciliation to U.S. GAAP
Appendix – Reconciliation to U.S. GAAP ME&T Cash Flow from Operations to ME&T Free Cash Flow (USD in billions) 2019 ME&T cash flow from operations $ 4.9 ME&T discretionary pension and OPEB plan contributions 1.5 ME&T capital expenditures (1.1) ME&T free cash flow $ 5.3 Note: Amounts may not add due