Summary
Caterpillar Inc. reported a significant decline in sales and profit for the third quarter and first nine months of 2016 compared to the same periods in 2015. This downturn was primarily attributed to weak end-user demand across most industries served, driven by low commodity prices and general economic weakness globally. While sales volume and price realization were unfavorable, the company's profit was partially offset by lower costs resulting from extensive restructuring activities and other cost reduction measures undertaken throughout the year. Restructuring costs significantly impacted profitability, with $324 million recognized in Q3 2016 and $624 million year-to-date, compared to lower amounts in the prior year. These costs are part of Caterpillar's strategy to improve its long-term cost structure. Despite the challenging operating environment, Caterpillar maintained a strong liquidity position and generated positive operating cash flow in both its Machinery, Energy & Transportation (ME&T) and Financial Products segments.
Financial Highlights
47 data points| Revenue | $9.16B |
| Cost of Revenue | $6.53B |
| Gross Profit | $1.94B |
| R&D Expenses | $453.00M |
| SG&A Expenses | $992.00M |
| Operating Expenses | $8.68B |
| Operating Income | $481.00M |
| Net Income | $283.00M |
| EPS (Basic) | $0.48 |
| EPS (Diluted) | $0.48 |
| Shares Outstanding (Basic) | 584.70M |
| Shares Outstanding (Diluted) | 589.60M |
Key Highlights
- 1Consolidated sales and revenues for the third quarter of 2016 decreased by 16% to $9.16 billion compared to $10.96 billion in Q3 2015, reflecting weak end-user demand across key industries.
- 2Profit per share for Q3 2016 was $0.48, a 49% decrease from $0.94 in Q3 2015, impacted by lower sales and significant restructuring costs.
- 3Restructuring costs were $324 million in Q3 2016, a substantial increase from $98 million in Q3 2015, primarily related to actions in Resource Industries and efforts to discontinue certain product lines.
- 4The Machinery, Energy & Transportation (ME&T) segment experienced a 18% decline in sales for the quarter, driven by weakness in Construction Industries, Resource Industries, and Energy & Transportation.
- 5Financial Products segment revenues remained relatively flat, but segment profit decreased by 8% due to lower gains on securities sales.
- 6Caterpillar maintained a solid financial position with a ME&T debt-to-capital ratio of 37.1% at September 30, 2016, within its target range.
- 7Operating cash flow for ME&T was $1.78 billion for the first nine months of 2016, down from $3.45 billion in the prior year, reflecting lower profitability.