Caterpillar CFO Andrew Bonfield's Overview of First-Quarter 2020 Results

It's great to see you, Rusty. And obviously we are not together in person, which is the difference, which is part of the impact of the pandemic on us all. Just want to start by saying how proud I am of our colleagues and dealers around the world who are working really, really hard to enable our customers to be successful in this crisis. You know, obviously our businesses are generally deemed to be essential. That is because we provide the backup power to hospitals, machines build the roads, and enable food and medicines to get to people around the globe. And also at the same time we're extracting the commodities that people need to be able to build a better world. So you know, this has been a tremendous quarter in very difficult circumstances. And at the same time that strong safety culture in Caterpillar is still coming through, and people making sure they're taking the right preventative measures in response to COVID-19, including things like social distancing and frequent cleaning. So really, really proud of all our colleagues around the world.

Yes, so from a top-line perspective, sales and revenues were down 21%, or $2.8 billion, to $10.6 billion. Two major factors: lower what we call end-user sales — these are sales of original equipment, be it machines or engines — those were down slightly below our expectations of the quarter, in part due to the global economic uncertainty and obviously directly a little bit from COVID impacts. But in China we also did see — we normally build inventories in our dealers in Q1 ahead of Q2, which is when they generally sell machines in the selling season. We did expect a lower level of inventory build; it was in line with our expectations at around $100 million. That compares to $1.3 billion last year, so they had about a $1.2 billion impact in the quarter.

Profit per share reduced by 39% to $1.98 from $3.25 last year. And primarily that was due to the lower volume that I talked about a moment ago, although there was some cost offsets on that, particularly around low incentive compensation and some expense deferrals. We also had a higher tax rate during the year, which impacted us. And in both years we had some credits — last year we had a tax discrete item of 31 cents, and this year we had a pension adjustment of 38 cents as well, which impacted the numbers.

Well, obviously the most important thing in these sorts of situations is to make sure you have plenty of sources of liquidity. This company has a very strong balance sheet position. We have $7.1 billion of cash on hand at the end of the quarter. On top of that, we have about $20 billion of incremental liquidity available to us. That makes sure that we have plenty of resources available to deal with the situation in front of us and to deal with any of the impacts of the pandemic.

Well, CONEXPO is a large North American trade show, and it was a great opportunity to see lots of customers, our dealers, and actually our machines in action. And it was a great opportunity for me to go down there and actually interact with them. Let's watch.

Thank you very much, Rusty, and to all of you watching — stay positive, stay safe. We'll see you soon.