Caterpillar (CAT) Q4 2020 earnings summary

Executive summary

• FY2020 sales and revenues fell 22% YoY to $41.748B; operating profit margin was 10.9% reported and 11.8% adjusted, within the investor-day target range.

• Q4 sales and revenues declined 15% YoY to $11.235B; operating profit fell 25% to $1.380B, while lower volume and dealer inventory reductions remained the main pressures.

• FY2020 operating cash flow was $6.327B; year-end cash was $9.352B and available liquidity was $11.613B.

Financial highlights

• Q4 profit was $780M and diluted EPS was $1.42, versus $1.098B and $1.97 in Q4 2019; adjusted EPS was $2.12, excluding pension/OPEB mark-to-market losses and restructuring costs.

• Q4 operating profit was $1.380B, down $470M YoY; lower sales volume was partly offset by lower manufacturing, SG&A and R&D costs.

• FY2020 profit was $2.998B and diluted EPS was $5.46, versus $6.093B and $10.74 in 2019; adjusted EPS was $6.56 versus $11.40.

• FY2020 operating cash flow was $6.327B, down $585M YoY; working capital and lower incentive-compensation payments partly offset lower profit.

Outlook and guidance

• 2021 ME&T capital expenditures expected at $1.0B–$1.2B; pension and OPEB contributions expected at ~$310M.

• 2021 restructuring costs expected at ~$400M; prior actions are expected to lower operating costs by ~$150M versus 2020.

• 2021 short-term incentive compensation expense expected at ~$900M, compared with none recognized in 2020.

• No significant dealer inventory reduction was expected in 2021; production operations remained subject to COVID-related conditions and possible temporary shutdowns.