Cat Financial Announces 2020 Year-End Results

January 29, 2021

Full-Year 2020 vs. Full-Year 2019

Cat Financial reported revenues of $2.55 billion for 2020, a decrease of $416 million, or 14%, compared with 2019. Profit was $293 million for 2020, a $117 million, or 29%, decrease from 2019.

The decrease in revenues was primarily due to a $190 million unfavorable impact from lower average financing rates and a $151 million unfavorable impact from lower average earning assets.

Profit before income taxes was $434 million for 2020, a $194 million, or 31%, decrease from 2019. The decrease was primarily due to a $104 million increase in provision for credit losses, a $69 million unfavorable impact from lower average earning assets, a $52 million decrease in net yield on average earning assets and a $36 million unfavorable impact from returned or repossessed equipment. These unfavorable impacts were partially offset by an $82 million decrease in general, operating and administrative expenses, primarily due to lower incentive compensation.

The provision for income taxes reflected an annual tax rate of 29% for 2020, compared with 31% for 2019. The decrease in the annual tax rate was primarily due to changes in the geographic mix of profits.

During 2020, retail new business volume was $10.76 billion, a decrease of $1.13 billion, or 9%, from 2019. The decrease was driven by lower volume across all segments with the exception of an increase in Asia/Pacific.

At the end of 2020, past dues were 3.49%, compared with 3.14% at the end of 2019. Past dues increased primarily due to the impact of the COVID-19 pandemic, partially offset by decreases in the Caterpillar Power Finance, EAME and Latin American portfolios. Write-offs, net of recoveries, were $222 million for 2020, compared with $237 million for 2019. As of December 31, 2020, the allowance for credit losses totaled $479 million, or 1.77% of finance receivables, compared with $424 million, or 1.50% of finance receivables at December 31, 2019.

Fourth-Quarter 2020 vs. Fourth-Quarter 2019

Cat Financial reported fourth-quarter 2020 revenues of $616 million, a decrease of $109 million, or 15%, compared with the fourth quarter of 2019. Fourth-quarter 2020 profit was $96 million, an $8 million, or 8%, decrease from the fourth quarter of 2019.

The decrease in revenues was primarily due to a $50 million unfavorable impact from lower average financing rates and a $34 million unfavorable impact from lower average earning assets.

Fourth-quarter 2020 profit before income taxes was $122 million, a $39 million, or 24%, decrease from the fourth quarter of 2019. The decrease was primarily due to a $31 million increase in provision for credit losses, a $24 million unfavorable impact from returned or repossessed equipment and a $16 million unfavorable impact from lower average earning assets. These unfavorable impacts were partially offset by a $24 million decrease in general, operating and administrative expenses, primarily due to lower incentive compensation.

The provision for income taxes reflected an effective tax rate of 20% in the fourth quarter of 2020, compared with 32% in the fourth quarter of 2019. The decrease in the effective tax rate was primarily due to changes in the geographic mix of profits.

During the fourth quarter of 2020, retail new business volume was $3.11 billion, a decrease of $153 million, or 5%, from the fourth quarter of 2019. The decrease was driven by lower volume across all segments with the exception of Asia/Pacific and EAME.

"We were pleased with the overall performance of our business and the resilience of our team in 2020 as we managed through the challenges from the global pandemic," said Dave Walton, president of Cat Financial and vice president of the Financial Products Division of Caterpillar Inc. "The global Cat Financial team remains laser focused on executing our strategy to continue helping Caterpillar customers and dealers succeed with innovative financial services solutions."

For almost 40 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.