10-QPeriod: Q3 FY2015

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 30, 2015For Securities:CAT

Summary

Caterpillar Inc. reported a significant year-over-year decline in sales and profit for the third quarter and first nine months of 2015. Sales and revenues for the third quarter decreased by 19% to $10.96 billion, while profit per share fell by 62% to $0.62. This downturn was driven by lower sales volume across all segments, particularly in Machinery, Energy & Transportation (ME&T) and Financial Products, impacted by global economic weakness, lower end-user demand, and a strengthening U.S. dollar. Despite the revenue pressures, Caterpillar demonstrated proactive cost management, including a significant reduction in incentive compensation expenses. The company also continued its restructuring efforts, incurring $101 million in costs during the third quarter. ME&T operating cash flow remained robust, providing flexibility. The company's financial position remained solid, with a debt-to-capital ratio of 37.4% for ME&T, within its target range, and ample available credit facilities.

Financial Highlights

47 data points
Beta

Revenue

$10.96B

22.0% Gross Margin

Net Income

$559.00M

5.1% Net Margin

EPS (Diluted)

$0.94

Total Assets

$78.97B

Free Cash Flow

$1.51B

Financial Statements
Beta
Revenue$10.96B
Cost of Revenue$7.87B
Gross Profit$2.41B
R&D Expenses$513.00M
SG&A Expenses$1.13B
Operating Expenses$10.04B
Operating Income$925.00M
Net Income$559.00M
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)588.40M
Shares Outstanding (Diluted)594.80M

Key Highlights

  • 1Total sales and revenues for Q3 2015 decreased by 19% to $10.96 billion compared to $13.55 billion in Q3 2014.
  • 2Profit per share for Q3 2015 was $0.62, a 62% decrease from $1.63 in Q3 2014.
  • 3The decline in sales was attributed to lower sales volume across all segments and a strong U.S. dollar, with notable impacts in Energy & Transportation, Construction Industries, and Resource Industries.
  • 4Restructuring costs were $101 million in Q3 2015, impacting profit per share by $0.13.
  • 5Machinery, Energy & Transportation (ME&T) operating cash flow was $766 million in Q3 2015, down from $1.44 billion in Q3 2014.
  • 6The ME&T debt-to-capital ratio remained stable at 37.4% at the end of Q3 2015.
  • 7Financial Products segment revenues decreased by 12% due to lower average earning assets and financing rates.

Frequently Asked Questions

The primary drivers of the sales decline were lower sales volume across all segments, weak end-user demand due to global economic conditions, and the unfavorable impact of currency translation as the U.S. dollar strengthened against most major currencies, particularly the Euro.

Caterpillar incurred $101 million in restructuring costs during the third quarter of 2015, which reduced profit per share by $0.13. This compares to $81 million in restructuring costs in the prior year's third quarter.

Caterpillar maintained a strong financial position with a ME&T debt-to-capital ratio of 37.4% at September 30, 2015, within its target range. The company also had significant available credit lines totaling $14.3 billion, and ended the quarter with $6.05 billion in cash and short-term investments, indicating good liquidity.

The Financial Products segment saw a 12% decrease in revenues to $752 million, primarily due to lower average earning assets and a reduction in average financing rates. Profit for the segment was $207 million, down from $220 million in the prior year's quarter, impacted by lower net yield and lower average earning assets.