Summary
Caterpillar Inc. (CAT) reported its first-quarter 2020 financial results, which were significantly impacted by the onset of the COVID-19 pandemic and a slowdown in global demand. Total sales and revenues decreased by 21% year-over-year to $10.635 billion, driven by lower sales volume across all regions and segments, coupled with a substantial reduction in dealer inventory build-up compared to the prior year. Profitability also declined, with first-quarter profit per share falling 39% to $1.98. This decrease was exacerbated by ongoing global economic uncertainty and a strategic shift in cost management, including reduced incentive compensation. Despite these challenges, Caterpillar maintained a strong liquidity position and took proactive steps to bolster its financial flexibility, including raising additional debt. The company is navigating a complex operating environment, with continued uncertainty expected for the remainder of 2020.
Financial Highlights
52 data points| Revenue | $10.63B |
| Cost of Revenue | $7.27B |
| Gross Profit | $2.65B |
| R&D Expenses | $356.00M |
| SG&A Expenses | $1.12B |
| Operating Expenses | $9.23B |
| Operating Income | $1.40B |
| Net Income | $1.09B |
| EPS (Basic) | $2.00 |
| EPS (Diluted) | $1.98 |
| Shares Outstanding (Basic) | 546.80M |
| Shares Outstanding (Diluted) | 551.10M |
Key Highlights
- 1Total sales and revenues for Q1 2020 were $10.635 billion, a 21% decrease from $13.466 billion in Q1 2019, primarily due to lower sales volume and reduced dealer inventory build.
- 2Profit per share decreased by 39% to $1.98 in Q1 2020, compared to $3.25 in Q1 2019, reflecting the decline in sales and other factors.
- 3Operating profit margin declined to 13.2% from 16.4% year-over-year, impacted by lower sales and unfavorable currency effects.
- 4The Machinery, Energy & Transportation (ME&T) segment saw sales decrease by 22% to $9.914 billion, with Construction Industries, Resource Industries, and Energy & Transportation all experiencing significant declines.
- 5The Financial Products segment's revenues decreased by 4% to $721 million, impacted by lower average earning assets.
- 6Caterpillar ended Q1 2020 with $7.1 billion in cash and $10.5 billion in available global credit facilities, and has since raised additional capital to enhance liquidity.
- 7The company is actively managing costs, including suspending salary increases and short-term incentive compensation for many employees in response to economic uncertainty and the COVID-19 pandemic.