NASHVILLE, Tenn., April 28, 2020 /CNW/ -- Cat Financial reported
first-quarter 2020 revenues of $695
million, a decrease of $41
million, or 6%, compared with the first quarter of 2019.
First-quarter 2020 profit was $90
million, an $8 million, or 8%,
decrease from the first quarter of 2019.
The decrease in revenues was primarily due to a $29 million unfavorable impact from lower average
earning assets and a $5 million
unfavorable impact due to the February
2019 termination of a committed credit facility with
Caterpillar.
First-quarter 2020 profit before income taxes was $127 million, a $15
million, or 11%, decrease from the first quarter of 2019.
The decrease was primarily due to a $12
million unfavorable impact from lower average earning
assets, an $8 million increase in
provision for credit losses and the $5
million unfavorable impact mentioned above from the
termination of a committed credit facility with Caterpillar. These
unfavorable impacts were partially offset by a $16 million decrease in general, operating and
administrative expenses primarily due to lower short-term incentive
compensation expense.
The provision for income taxes reflected an estimated annual tax
rate of 26% in the first quarter of 2020, compared with 27% in the
first quarter of 2019.
During the first quarter of 2020, retail new business volume was
$2.31 billion, a decrease of
$40 million, or 2%, from the first
quarter of 2019. The decrease was driven by lower volume across all
segments with the exception of an increase in North America.
At the end of the first quarter of 2020, past dues were 4.13%,
compared with 3.61% at the end of the first quarter of 2019. The
increase was primarily due to North
America, Asia/Pacific and
Mining, partially offset by a decrease in Caterpillar Power
Finance. Write-offs, net of recoveries, were $30 million for the first quarter of both 2020
and 2019. As of March 31, 2020, the
allowance for credit losses totaled $457
million, or 1.69% of finance receivables, compared with
$424 million, or 1.50% of finance
receivables at December 31, 2019. The
increase in allowance for credit losses was primarily driven by the
forecast of deteriorating economic conditions from the COVID-19
pandemic.
Response to COVID-19 and Global Business Conditions
In
the first quarter of 2020, COVID-19 became a global pandemic
presenting new challenges around the world, as indicated by Cat
Financial in the Form 8-K it filed on March
30, 2020 to update its risk factors.
Governments responded with guidance to manage the crisis and, in
many instances, classified Cat Financial's operations as essential
activity for support of financial services. Our customers and
dealers use our services, mainly, to obtain retail and wholesale
financing for Caterpillar products. Cat Financial is taking many
actions to manage through this pandemic:
Liquidity
Cat Financial continues to maintain our
strong financial position and liquidity. Cat Financial ended the
first quarter with $670 million of
cash and available global credit facilities of $7.75 billion. In addition, Cat Financial
benefits from $8.0 billion of
supplemental liquidity facilities that were secured by Cat
Financial and Caterpillar in April.
Operational Impacts
Cat Financial remains dedicated to
the safety, health and well-being of its employees. Employees who
can work from home are doing so. In offices that remain open, Cat
Financial has implemented safeguards in its facilities to protect
team members, including increased frequency of cleaning and
disinfecting facilities, social distancing practices and other
measures consistent with specific regulatory requirements and
guidance from health authorities.
In order to manage costs, Cat Financial took actions to reduce
discretionary expenses and suspended 2020 salary increases and
short-term incentives for many employees and all senior
executives.
Cat Financial is monitoring the situation closely and continues
to focus on portfolio health. Cat Financial is responding to
government requirements globally to adjust the repayment terms for
customers and is providing payment relief through Customer Care
Programs launched globally, including account modifications to
accommodate customer needs. We continue to support qualified
customers and dealers with new loans and leases to support their
current and future business needs.
"Despite the challenges on our business, customers and employees
from the COVID-19 global pandemic, we were pleased with the results
delivered by Cat Financial in the first quarter," said Dave Walton, president of Cat Financial and vice
president with responsibility for the Financial Products Division
of Caterpillar Inc. "With the health and safety of employees as our
top priority, the global Cat Financial team remained focused on
actively managing portfolio health and continuing to help
Caterpillar customers and dealers succeed through financial
services excellence."
For over 35 years, Cat Financial, a wholly owned subsidiary of
Caterpillar, has provided financial service excellence to
customers. The company offers a wide range of financing solutions
to customers and Cat® dealers for machines, engines, Solar® gas
turbines, marine vessels and various operational needs. Cat
Financial has offices and subsidiaries located throughout North and
South America, Asia, Australia, Europe, Africa and the Middle East, with its headquarters in
Nashville, Tennessee.
STATISTICAL
HIGHLIGHTS:
|
|
FIRST-QUARTER 2020
VS. FIRST-QUARTER 2019
(ENDED MARCH 31,
EXCEPT TOTAL ASSETS)
(Millions of
dollars)
|
|
|
2020
|
|
2019
|
|
CHANGE
|
Revenues
|
$
|
695
|
|
$
|
736
|
|
(6)%
|
Profit Before Income
Taxes
|
$
|
127
|
|
$
|
142
|
|
(11)%
|
Profit (excluding
profit attributable to noncontrolling interests)
|
$
|
90
|
|
$
|
98
|
|
(8)%
|
Retail New Business
Volume
|
$
|
2,312
|
|
$
|
2,352
|
|
(2)%
|
Total Assets at March
31 and December 31, respectively
|
$
|
32,332
|
|
$
|
33,693
|
|
(4)%
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements in this press release relate
to future events and expectations and are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Words such as "believe," "estimate," "will be,"
"will," "would," "expect," "anticipate," "plan," "project,"
"intend," "could," "should" or other similar words or expressions
often identify forward-looking statements. All statements other
than statements of historical fact are forward-looking statements,
including, without limitation, statements regarding our outlook,
projections, forecasts or trend descriptions. These statements do
not guarantee future performance and speak only as of the date they
are made, and we do not undertake to update our forward-looking
statements.
Cat Financial's actual results may differ materially from those
described or implied in our forward-looking statements based on a
number of factors, including, but not limited to: (i) disruptions
or volatility in global financial markets limiting our sources of
liquidity; (ii) failure to maintain our credit ratings and
potential resulting increases to our cost of borrowing and adverse
effects on our cost of funds, liquidity, competitive position and
access to capital markets; (iii) changes in interest rates,
currency fluctuations or market liquidity conditions; (iv) an
increase in delinquencies, repossessions or net losses of our
customers; (v) residual values of leased equipment; (vi) our
compliance with financial and other restrictive covenants in debt
agreements; (vii) government monetary or fiscal policies; (viii)
political and economic risks, commercial instability and events
beyond our control in the countries in which we operate; (ix)
demand for Caterpillar products; (x) marketing, operational or
administrative support received from Caterpillar; (xi) our ability
to develop, produce and market quality products that meet our
customers' needs; (xii) information technology security threats and
computer crime; (xiii) alleged or actual violations of trade or
anti-corruption laws and regulations; (xiv) new regulations or
changes in financial services regulations; (xv) additional tax
expense or exposure; (xvi) changes in accounting guidance; (xvii)
the recent global coronavirus pandemic, which has led to periods of
significant volatility in financial and other markets; and (xviii)
other factors described in more detail in Cat Financial's Forms
10-Q, 10-K and other filings with the Securities and Exchange
Commission.
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SOURCE Cat Financial