NASHVILLE, Tenn., July 31, 2020 /CNW/ -- Cat Financial reported
second-quarter 2020 revenues of $641
million, a decrease of $116
million, or 15%, compared with the second quarter of 2019.
Second-quarter 2020 profit was $59
million, a $20 million, or
25%, decrease from the second quarter of 2019.
The decrease in revenues was primarily due to a $60 million unfavorable impact from lower average
financing rates and a $48 million
unfavorable impact from lower average earning assets.
Second-quarter 2020 profit before income taxes was $89 million, a $52
million, or 37%, decrease from the second quarter of 2019.
The decrease was primarily due to a $25
million decrease in net yield on average earning assets, a
$23 million unfavorable impact from
lower average earning assets and a $15
million increase in provision for credit losses. These
unfavorable impacts were partially offset by a $22 million decrease in general, operating and
administrative expenses primarily due to lower short-term incentive
compensation and employee benefit expenses.
The provision for income taxes reflected an estimated annual tax
rate of 27% in the second quarter of 2020 compared with 29% in the
second quarter of 2019, excluding a discrete item in the second
quarter of 2019 of $13 million for a
valuation allowance against the deferred tax assets of a non-U.S.
subsidiary. The decrease in the estimated annual tax rate was
primarily due to changes in the geographic mix of profits.
During the second quarter of 2020, retail new business volume
was $2.74 billion, a decrease of
$607 million, or 18%, from the second
quarter of 2019. The decrease was driven by lower volume across all
segments with the exception of a slight increase in Asia/Pacific.
At the end of the second quarter of 2020, past dues were 3.74%,
compared with 3.38% at the end of the second quarter of 2019. Past
dues increased primarily due to the impact of the COVID-19
pandemic. Write-offs, net of recoveries, were $30 million for the second quarter of 2020,
compared with $74 million for the
second quarter of 2019. As of June 30,
2020, the allowance for credit losses totaled $515 million, or 1.92% of finance receivables,
compared with $457 million, or 1.69%
of finance receivables at March 31,
2020. The increase in allowance for credit losses was driven
in part by expectations of a lingering impact from COVID-19. The
allowance for credit losses at year-end 2019 was $424 million, or 1.50% of finance
receivables.
Response to COVID-19 and Global Business Conditions
Cat Financial continues to respond to business conditions
impacted by the COVID-19 pandemic. Cat Financial's operations
have been classified by many government entities as an 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 second quarter with
$630 million of cash and available
global credit facilities of $7.75
billion. In July, Cat Financial issued $1.5 billion of new three-year and 18-month
medium-term notes to supplement its liquidity position. In
addition, Cat Financial benefits from $8.0
billion of supplemental liquidity facilities that were
arranged by Cat Financial and Caterpillar in April.
Operational Status
Cat Financial continues to implement safeguards in its
facilities to protect team members, including increased frequency
of cleaning and disinfecting, social distancing practices and other
measures consistent with specific regulatory requirements and
guidance from health authorities.
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 provide qualified
customers and dealers with new loans and leases to support their
current and future business needs.
"Our business performed well during the quarter while managing
the continued challenges from the COVID-19 global pandemic," said
Dave Walton, president of Cat
Financial and vice president with responsibility for the Financial
Products Division of Caterpillar Inc. "Our team remains focused on
executing the strategy to help Caterpillar customers and dealers
succeed through financial services solutions while maintaining our
strong financial position and liquidity."
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:
|
|
SECOND-QUARTER
2020 VS. SECOND-QUARTER 2019
|
(ENDED JUNE 30,
EXCEPT TOTAL ASSETS)
|
(Millions of
dollars)
|
|
|
2020
|
2019
|
CHANGE
|
Revenues
|
$
|
641
|
|
$
|
757
|
|
(15)%
|
Profit Before Income
Taxes
|
$
|
89
|
|
$
|
141
|
|
(37)%
|
Profit (excluding
profit attributable to noncontrolling interests)
|
$
|
59
|
|
$
|
79
|
|
(25)%
|
Retail New Business
Volume
|
$
|
2,738
|
|
$
|
3,345
|
|
(18)%
|
Total Assets at June
30 and December 31, respectively
|
$
|
32,073
|
|
$
|
33,693
|
|
(5)%
|
|
|
SIX-MONTHS 2020
VS. SIX-MONTHS 2019
|
(ENDED JUNE
30)
|
(Millions of
dollars)
|
|
|
2020
|
2019
|
CHANGE
|
Revenues
|
$
|
1,336
|
|
$
|
1,493
|
|
(11)%
|
Profit Before Income
Taxes
|
$
|
216
|
|
$
|
283
|
|
(24)%
|
Profit (excluding
profit attributable to noncontrolling interests)
|
$
|
149
|
|
$
|
177
|
|
(16)%
|
Retail New Business
Volume
|
$
|
5,050
|
|
$
|
5,697
|
|
(11)%
|
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.
View original
content:http://www.prnewswire.com/news-releases/cat-financial-announces-second-quarter-2020-results-301103756.html
SOURCE Cat Financial