Caterpillar CFO Andrew Bonfield's Overview of Third-Quarter 2018 Results

Hello everyone, welcome to this overview of Caterpillar's third quarter financial results. I'm Rusty Dunn, alongside our Chief Financial Officer, Andrew Bonfield. Andrew, welcome! I know we're talking about third quarter numbers, but this is your first quarter coming to Caterpillar, so welcome to the new job.

Let's get into some of the numbers.

Well Andrew, with those strong numbers, I want to ask you about cash deployment. Our cash deployment strategy, how does that impact cash flow? What does that mean for us?

So Andrew, as we head into the fourth quarter, give us some insight into our outlook.

And as you mentioned, fourth quarter still to come, three months left. Any final thoughts, takeaways for employees as they wind up this great performance?

Well before we leave and the numbers completely, let's talk about beyond the numbers. Some every quarter we like to go out and about a little bit to explore beyond the numbers that we love to talk about. You had the chance recently to learn a little bit about Caterpillar history, which I think was a lot of fun.

Thank you, thanks Andrew. Thanks, revenue. We're actually literally blocks away from almost 110 years of track-type tractor history. What a lot of people don't know is what's actually the original track-type tractor was created in California in 1904, but very shortly production was moved out here to Peoria.

Yeah, actually they originally started kind of in the San Francisco Bay Area, and our original headquarters actually in 1925 was in the San Francisco Bay Area. It's moved around to a lot of different places, and you'll see on our tour today we're even going to see the façade of one of our original headquarters buildings.

Sure, absolutely. Well, you know, originally our machines were gray, and the reason for that was Caterpillar was formed by two companies that merged together, and the gray was part of a company called Holt, who also had the Caterpillar trademark. And when the color changed, you know, the color change in 1931, and one of the main reasons was our machines originally were used for agricultural purposes, but by 1931 they were pushing dirt just like today, and there were many safety issues right where you had a machine sitting on the side of the road, and that's why our first color was actually called Highway Yellow. So that's really just how the iconic color started, was basically for safety reasons. Absolutely excellent. And then the Caterpillar, well, you know, we got the name Caterpillar because Benjamin Holt tested his first track-type tractor on the field in California, and as it was going across the field, the tracks were moving, and someone commented, 'Doesn't that look like a giant caterpillar?' And he originally hated the name, but you know, eventually it stuck, and it became Holt's trademark, and became our name today.

Yeah, that'd be great, thank you. Let's go.

Andrew, we're standing right now in front of the façade that we talked about. This was actually the headquarters of the former Holt Factory, and later became the building that was CAT's headquarters in the 1950s. You know, as we talked about 110 years ago or close to that, Holt came out here, and they almost immediately started doing factory tours. You're gonna go on one today in a modern factory.

This is where it all began for Caterpillar, and it's a great place to work. So when we're going to walk is we're going to walk all the way back, yeah, no shipping floor, and I'll show you. It will kind of walk back. The B11 is the only one that runs through here. The track is coiled around, and then we pull it out with a small tractor, and then we drop it around. So I've been from here we go to wash, then he goes to paint, and then in the back of the building we pretty much strap up to the tractors, and once you detract some, we drive it around, and we're able to go in and see that it evaluate the quality of the inside, and then we paint it. And then from the paint, all of the covers, the cap, the roller protection, the decoys, and all of the attachments go here at the back of the building. So basically what we do is we'll ship by truck, and descent of our shipping yard, and then from this side we have two spurs which will mostly ship by rail, mostly in North America, and and this is how we get it for dealers which end up furnishing the and finalizing the customization of the product before we deliver to the end customer.

Andrew, obviously a great field trip. Next time out we're gonna put you in a D11 and have you do a little operating of the machine. That would be fun.

That does it for the quarterly update on the company's financial results. Andrew, thanks for spending a few minutes with us. Good, appreciate it. Thank you very much, Rusty, thank you everybody.