What were the primary drivers behind the significant decrease in sales and revenue?

The primary driver was a substantial decrease in sales volume across all segments, reflecting continued weak economic conditions in key industries such as construction, oil and gas, mining, and rail. Unfavorable price realization and the impact of a stronger U.S. dollar also contributed to the decline.

How is Caterpillar addressing the challenging business environment, and what is the financial impact?

Caterpillar is implementing restructuring actions to reduce operating costs. In Q1 2016, this included discontinuing the production of on-highway vocational trucks, resulting in $161 million of restructuring costs. These costs had an after-tax impact of $0.21 per share on diluted earnings per share.

What is the current state of Caterpillar's liquidity and financial position?

Caterpillar maintained positive consolidated operating cash flow of $489 million in Q1 2016, although this was down from $1.27 billion in Q1 2015. The company ended the quarter with $5.89 billion in cash and short-term investments. The ME&T debt-to-capital ratio was 37.7%, within the company's target range.

How did the Financial Products segment perform, and what are the key contributing factors?

The Financial Products segment experienced an 8% decrease in revenues to $681 million. This was primarily due to lower average earning assets and a decrease in average financing rates across all regions. Profit for the segment decreased to $168 million from $227 million in the prior year's quarter.

CAT 10-Q Quarterly Report Q1 FY2016 — Revenue, Net Income, EPS

Summary

Caterpillar Inc. (CAT) reported a significant decrease in sales and revenue for the first quarter of 2016, down 26% to $9.461 billion compared to $12.702 billion in the prior year. This decline was primarily driven by lower sales volumes across all segments, reflecting weak conditions in the construction, oil and gas, mining, and rail industries. Consequently, profit per share also saw a substantial drop of 77% to $0.46 from $2.03 year-over-year. The company is actively managing costs through restructuring initiatives, including a decision to discontinue production of on-highway vocational trucks, which contributed $161 million in restructuring costs during the quarter. Despite the challenging sales environment, Caterpillar maintained positive operating cash flow in both its Machinery, Energy & Transportation (ME&T) and Financial Products segments.

Financial Highlights

47 data points

Beta

Revenue

$9.46B

0.2% Gross Margin

Net Income

$271.00M

0.0% Net Margin

EPS (Diluted)

$0.46

Total Assets

$78.31B

Free Cash Flow

$490.00M

Financial Statements

Beta

Revenue	$9.46B
Cost of Revenue	$6.82B
Gross Profit	$1.96B
R&D Expenses	$508.00M
SG&A Expenses	$1.09B
Operating Expenses	$8.97B
Operating Income	$494.00M
Net Income	$271.00M
EPS (Basic)	$0.46
EPS (Diluted)	$0.46
Shares Outstanding (Basic)	582.80M
Shares Outstanding (Diluted)	587.70M

Key Highlights

1Total sales and revenues decreased by 26% to $9.461 billion, primarily due to lower sales volume across all segments.
2Profit per share (diluted) fell significantly by 77% to $0.46, compared to $2.03 in the prior year's quarter.
3Restructuring costs amounted to $161 million, impacting earnings per share by $0.21 after tax.
4Machinery, Energy & Transportation (ME&T) operating cash flow was $218 million, a notable decrease from $1.042 billion in Q1 2015.
5The Financial Products segment saw a 7% revenue decline to $681 million, attributed to lower average earning assets and financing rates.
6Consolidated operating profit declined by 71% to $494 million, largely due to lower sales volume and unfavorable price realization.
7The company ended the quarter with $5.89 billion in cash and short-term investments, a decrease from the prior year-end.

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2016

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions