Caterpillar, Inc. · NYSE:CAT
Caterpillar — Investor Day (May 2019)
23 slides from Caterpillar's investor day presentation, May 2, 2019
Slide 1: Investor Day 2019
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. INVESTOR DAY 2019 CATERPILLAR’ 4
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this financial 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,” “expec
Slide 3: Agenda
Welcome Agenda Strategy Execution – Jim Umpleby Services – Bob De Lange Operational Excellence / Expanded Offerings – Denise Johnson Financial Framework – Andrew Bonfield Q&A – Executive Office INVESTOR DAY 2019
Slide 4: Financial Framework
INVESTOR DAY 2019 Financial Framework Andrew Bonfield Chief Financial Officer
Slide 5: Delivered Stronger Financial Results
Delivered Stronger Financial Results Improved Financial Performance Historical Adjusted Operating Margin Range 7% - 15% Record PPS in 2018 $66B $60B $56B $55B $55B $47B $45B $43B 15% 13% $39B 16% 11% 11% 10% 10% 7% 13% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Historical Sales & Revenues $B Histo
Slide 6: 2018 Financial Results: Record Profit Per Share
2018 Financial Results: Record Profit Per Share Full Year 2018 vs. Full Year 2017 Adjusted Sales and Revenues Profit Per Share Profit Per Share* Full-Year Highlights (in billions of dollars) (in dollars) (in dollars) Sales and Revenues up 20% $54.7 $10.26 $11.22 • Increased across the three $54.7 pr
Slide 7: 2019 First Quarter Financial Results: Another Record
2019 First Quarter Financial Results: Another Record First Quarter 2019 vs. First Quarter 2018 1st Quarter Highlights Sales and Revenues Profit Per Share (in billions of dollars) (in dollars) Sales and Revenues up 5% • Increase primarily in Resource Industries $13.5 $3.25 1 1 and Construction Indust
Slide 8: Full Year 2019 Outlook
Full Year 2019 Outlook 2018 Previous Current Actual 2019 Outlook1 2019 Outlook2 Profit Per Share $10.26 $11.75 - $12.75 $12.06 - $13.06 1 As of January 28, 2019. 2 As of April 24, 2019. Current outlook now includes a first-quarter discrete tax benefit related to U.S. tax reform of $0.31 per share. 2
Slide 9: Improved Adjusted Operating Margin Performance Through the Cycles
Improved Adjusted Operating Margin Performance Through the Cycles Future Expected Adjusted Operating Margin Range 10% - 21% 18%-21% 16%-19% 14%-17% 14%-17% +3%-6% 13%-16% 13%-16% 15% 13% 10%-13% 16% Margin pts 11% 11% 10% 10% Improvement 7% 13% $43B $60B $66B $56B $55B $47B $39B $45B $55B 2010 2011
Slide 10: A Lean and Disciplined Company
A Lean and Disciplined Company Reduced Reduced Disciplined Consistently Maintained Delivered Period Cost Manufacturing Capex Invested Strong Solid Structure Footprint Less than ~$1.8B Balance ME&T Over $1.8B 29% reduction depreciation annually Sheet Free Cash in annual in sq. ft.1 & amortization in
Slide 11: OPACC is Our Internal Measure of Profitable Growth
OPACC is Our Internal Measure of Profitable Growth OPACC Calculation ME&T Adjusted $66B Operating Profit $60B less Capital Charge $56B $55B $55B $47B $45B $43B $39B 2010 2011 2012 2013 2014 2015 2016 2017 2018 Historical Sales & Revenues $B OPACC Demonstrated Results INVESTOR DAY 2019
Slide 12: OPACC is Our Internal Measure of Profitable Growth
OPACC is Our Internal Measure of Profitable Growth ~3X OPACC from OPACC Calculation 2014 to 2018 ME&T Adjusted $66B $55B Operating Profit $55B $55B $60B less Capital Charge $56B $55B $55B $47B $45B $43B $39B 2010 2011 2012 2013 2014 2015 2016 2017 2018 Historical Sales & Revenues $B 2014 OPACC Demon
Slide 13: Historical Free Cash Flow Results
Historical Free Cash Flow Results Historical ME&T Free Cash Flow Range $3B-$6B* $66B $60B $56B $55B $6B $47B $5B $6B $43B $4B $4B $39B $3B $1B* 1 2010 2011 2012 2013 2014 2015 2016 2017 1 2018 Historical Sales & Revenues $B Historical ME&T Free Cash Flow $B INVESTOR DAY 2019 *Historical ME&T Free Ca
Slide 14: Delivered Stronger Free Cash Flow
Delivered Stronger Free Cash Flow Strong Free Cash Flow Historical ME&T Free Cash Flow Range $3B-$6B 1 on Increased Sales & Revenues $66B $60B $56B $55B $55B $45B $6B $47B $5B $6B $43B $6B $6B $4B $4B $39B $3B $1B 1 2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2 Historical Sales & Revenues $B Hist
Slide 15: Improved Free Cash Flow Performance Through the Cycles
Improved Free Cash Flow Performance Through the Cycles Future Expected ME&T Free Cash Flow Range $4B-$8B $6B-$7B* $7B-$8B $6B-$7B $7B-$8B +$1B-$2B $5B-$6B $5B $6B $6B $5B-$6B $4B-$5B $6B ME&T Free $6B $4B $4B Cash Flow $3B $1B 1 $43B $60B $66B $56B $55B $47B $39B $45B $55B 2 2 2010 2011 2012 2013 20
Slide 16: Inconsistent ME&T Free Cash Flow Deployment
Inconsistent ME&T Free Cash Flow Deployment % of ME&T Free Cash Flow Returned to Shareholders $7 49% 94% $7 65% of ME&T FCF returned 100% ME&T Free Cash Flow $B $6 22% 33% $6 to shareholders 2010-2018 $5 $5 27% $4 107% $4 Annual dividend $3 67% $3 increases the last 25 years $2 212% $2 $1 $1 $0 $0 H
Slide 17: Future ME&T FCF Deployment to Drive Improved Shareholder Returns
Future ME&T FCF Deployment to Drive Improved Shareholder Returns 20% Dividend increase 2 Targeting at least a high single-digit Return substantially percent increase each of the next 4 years all free cash flow to shareholders 1 More consistent share repurchases Strong Balance Sheet Disciplined M&A 1
Slide 18: Why Invest in Caterpillar?
Why Invest in Caterpillar? Achieving Financially Targets Stronger Continuous Improving . Operational Cash Flow Improvement Returning Investing Capital to for Growth Shareholders INVESTOR DAY 2019
Slide 19: Agenda
Welcome Agenda Strategy Execution – Jim Umpleby Services – Bob De Lange Operational Excellence / Expanded Offerings – Denise Johnson Financial Framework – Andrew Bonfield Q&A – Executive Office INVESTOR DAY 2019
Slide 20: Appendix
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. INVESTOR DAY 2019 Appendix CATERPILLAR’
Slide 21: Appendix A of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix A of Reconciliation to U.S. GAAP Operating Margin % to Adjusted Operating Margin % $66B $60B $56B $55B $55B $47B $45B 15% $43B 14% 13% 11% $39B 10% 10% 10% 8% 3% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Operating margin % 10% 13% 14% 11% 10% 8% 3% 10% 15% Operating ma
Slide 22: Appendix B of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix B of Reconciliation to U.S. GAAP ME&T Cash Flow from Operations to ME&T Free Cash Flow $66B $60B $56B $55B $55B $9B $47B $45B $43B $8B $7B $39B $6B $6B $5B $5B $4B $4B (USD in billions) 2010 2011 2012 2013 2014 2015 2016 2017 2018 ME&T cash flow from operations $ 6 $ 8 $
Slide 23: Appendix C of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix C of Reconciliation to U.S. GAAP Services Revenues to ME&T Services Sales (USD in billions) 2016 2018 Services revenues $ 18 $ 21 Financial Products’ revenues (3) (3) Discontinued products (1) (1) ME&T services sales $ 14 $ 18 Note: Amounts may not add due to rounding. No