Higher end-user demand drives 25 percent sales and revenue boost for Caterpillar

Increased end-user demand for equipment and services drove higher sales volumes in the third quarter of 2021 for Caterpillar Inc. That, combined with favourable price realization, helped the company's sales and revenues jump by nearly 25 percent over the same period in 2020.

Sales and revenues of $12.4 billion, up from $9.9 billion the year previous, paired with an operating profit margin of 13.4 percent in the third quarter, compared with 10.0 percent last year. Third-quarter 2021 profit per share was $2.60, compared with third-quarter 2020 profit per share of $1.22. Adjusted profit per share in the third quarter of 2021 was $2.66, compared with third-quarter 2020 adjusted profit per share of $1.52. Third-quarter 2021 adjusted profit per share of $2.66 reflected strong operational performance and a lower-than-expected effective tax rate. Adjusted profit per share for both quarters excluded restructuring costs, while the third quarter of 2020 also excluded remeasurement losses of $0.12 per share, resulting from the settlements of pension obligations.

For the nine months ended September 30, 2021, enterprise operating cash flow was $5.8 billion and the company ended the third quarter with $9.4 billion of enterprise cash. In the quarter, the company repurchased $1.4 billion of Caterpillar common stock and paid dividends of $0.6 billion.

"Our global team continues to execute our long-term strategy for profitable growth while working to mitigate supply chain challenges as we serve our customers," said Chairman and CEO Jim Umpleby. "Our third-quarter results reflect higher sales and revenues across our three primary segments and in all regions."

Gains also reported at Cat Financial

Cat Financial reported third-quarter 2021 revenues of $634 million, an increase of $36 million, or 6 percent, compared with the third quarter of 2020. Third-quarter 2021 profit was $101 million, an increase of $53 million, or 110 percent, compared with the third quarter of 2020.

Third-quarter 2021 profit before income taxes was $131 million, an increase of $35 million, or 36 percent, compared with the third quarter of 2020. The increase was primarily due to a $27 million favorable impact from returned or repossessed equipment, an $11 million decrease in provision for credit losses and a $10 million increase in net yield on average earning assets. These favorable impacts were partially offset by a $19 million increase in general, operating and administrative expenses, mostly due to higher short-term incentive compensation expense.

The provision for income taxes reflected an estimated annual tax rate of 24 percent in the third quarter of 2021, compared with 33 percet in the third quarter of 2020.

During the third quarter of 2021, retail new business volume was $3.34 billion, an increase of $742 million, or 29 percent, from the third quarter of 2020. The increase was driven by higher volume across all segments with the exception of a decrease in Asia/Pacific.

At the end of the third quarter of 2021, past dues were 2.41 percent, compared with 3.81 percent at the end of the third quarter of 2020. Past dues decreased across all portfolio segments as global markets generally improved. Write-offs, net of recoveries, were $76 million for the third quarter of 2021, compared with $125 million for the third quarter of 2020. As of September 30, 2021, the allowance for credit losses totaled $378 million, or 1.41 percent of finance receivables, compared with $402 million, or 1.46 percent of finance receivables, at June 30, 2021.  The allowance for credit losses at year-end 2020 was $479 million, or 1.77 percent of finance receivables.

"Cat Financial delivered strong third-quarter results through execution of our strategy," said Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. "With our ongoing focus on expanding our ability to serve customers through financial services solutions, we remain well-positioned to serve the needs of Caterpillar, Cat dealers and our growing customer base worldwide."