Summary
Caterpillar Inc. (CAT) reported a challenging year for 2016, with sales and revenues declining by 18% to $38.5 billion, reflecting weak demand across its key industries, including construction, oil and gas, and mining. The company incurred a net loss of $67 million, a significant drop from the $2.5 billion profit in 2015, impacted by lower sales volume, unfavorable market-to-market losses on pension and other post-employment benefit plans, and a substantial goodwill impairment charge in the Resource Industries segment. Despite these headwinds, Caterpillar emphasized its strong operating cash flow from its Machinery, Energy & Transportation segment, which was sufficient to cover capital expenditures and dividends, and maintained a robust liquidity position with $7.17 billion in cash at year-end. Management highlighted ongoing restructuring and cost reduction actions aimed at improving efficiency and optimizing the cost structure, with an expectation of further costs in 2017. The company also noted sequential improvements in aftermarket parts sales for Resource Industries and positive trends in quoting and order activity, suggesting potential stabilization in certain areas. Investors should monitor the company's ability to navigate the ongoing cyclical downturn in its core markets, manage restructuring impacts, and capitalize on any emerging signs of recovery, particularly in commodity-driven sectors.
Financial Highlights
52 data points| Revenue | $38.54B |
| Cost of Revenue | $28.31B |
| Gross Profit | $10.23B |
| R&D Expenses | $1.85B |
| SG&A Expenses | $4.38B |
| Operating Expenses | $37.38B |
| Operating Income | $1.16B |
| Net Income | -$67.00M |
| EPS (Basic) | $-0.11 |
| EPS (Diluted) | $-0.11 |
| Shares Outstanding (Basic) | 584.30M |
| Shares Outstanding (Diluted) | 584.30M |
Key Highlights
- 12016 sales and revenues declined 18% year-over-year to $38.5 billion, driven by weak end-user demand across key industries.
- 2The company reported a net loss of $67 million in 2016, a reversal from a profit of $2.5 billion in 2015, due to lower sales, pension/OPEB remeasurement losses, and a goodwill impairment charge.
- 3Significant restructuring costs were incurred in 2016 ($1.019 billion) and 2015 ($898 million), with further costs expected in 2017.
- 4A goodwill impairment charge of $595 million was recognized in the Resource Industries segment, primarily related to the Surface Mining & Technology reporting unit.
- 5Machinery, Energy & Transportation (ME&T) operating cash flow was strong at $3.86 billion, covering capital expenditures and dividends.
- 6Consolidated order backlog decreased to $12.1 billion at year-end 2016 from $13.0 billion at year-end 2015.
- 7Research and development expenses represented 5.1% of sales and revenues in 2016, down from 4.5% in 2015.