Cat Financial Announces Second-Quarter 2019 Results
July 24, 2019
Cat Financial Announces Second-Quarter 2019 Results
Cat Financial reported second-quarter 2019 revenues of $757 million, an increase of $34 million, or 5%, compared with the second quarter of 2018. Second-quarter 2019 profit was $79 million, an $8 million, or 11%, increase from the second quarter of 2018.
The increase in revenues was primarily due to a $26 million favorable impact from higher average financing rates and a $14 million favorable impact from higher average earning assets, partially offset by a $10 million unfavorable impact due to the termination of a committed credit facility with Caterpillar and the absence of the related fees.
Second-quarter 2019 profit before income taxes was $141 million, a $41 million, or 41%, increase from the second quarter of 2018. The increase was primarily due to a $33 million decrease in provision for credit losses and a $28 million increase in net yield on average earning assets. These favorable impacts were partially offset by a $14 million increase in general, operating and administrative expenses and the $10 million unfavorable impact mentioned above related to the termination of a committed credit facility with Caterpillar.
The provision for income taxes reflects an estimated annual tax rate of 29% in the second quarter of 2019, excluding the discrete item discussed in the following paragraph, compared with 24% in the second quarter of 2018. The increase in the estimated annual tax rate is primarily due to changes in the geographic mix of profits.
The provision for income taxes in the second quarter of 2019 also included a $13 million charge for a valuation allowance against the deferred tax assets of a non-U.S. subsidiary.
During the second quarter of 2019, retail new business volume was $3.35 billion, a decrease of $210 million, or 6%, from the second quarter of 2018. The decrease was primarily driven by lower volume in Asia/Pacific, North America and EAME (Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS)), partially offset by higher volume in Mining.
At the end of the second quarter of 2019, past dues were 3.38%, compared with 3.16% at the end of the second quarter of 2018. The increase in past dues was primarily driven by EAME. Write-offs, net of recoveries, were $74 million for the second quarter of 2019, compared with $80 million for the second quarter of 2018. As of June 30, 2019, the allowance for credit losses totaled $523 million, or 1.81% of finance receivables, compared with $534 million, or 1.89% of finance receivables at March 31, 2019. The allowance for credit losses at year-end 2018 was $511 million, or 1.80% of finance receivables.
"We were pleased with the performance of our portfolio and business during the quarter, reflecting good operational execution by the global Cat Financial team," 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."
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.
Click here to download the full version of the Cat Financial 2Q 2019 release, including Statistical Highlights.
Caterpillar media contact: Kate Kenny, 224-551-4133 or Kenny_Kate@cat.com