Cat Financial Announces Third-Quarter 2016 Results

October 25, 2016

Cat Financial Announces Third-Quarter 2016 Results

Cat Financial reported third-quarter 2016 revenues of $651 million, a decrease of $2 million, compared with the third quarter of 2015. Third-quarter 2016 profit was $97 million, a $12 million, or 11 percent, decrease from the third quarter of 2015.

The slight decrease in revenues includes a $10 million unfavorable impact from returned or repossessed equipment and a $9 million unfavorable impact from lower average earning assets, offset by a $19 million favorable impact from higher average financing rates.

Profit before income taxes was $146 million for the third quarter of 2016, compared with $153 million for the third quarter of 2015. The decrease was primarily due to a $10 million unfavorable impact from returned or repossessed equipment and a $7 million increase in provision for credit losses, partially offset by a $7 million decrease in general, operating and administrative expenses.

The provision for income taxes reflects an estimated annual tax rate of 31 percent in the third quarter of 2016, compared with 29 percent in the third quarter of 2015. The increase in the estimated annual tax rate is primarily due to changes in the geographic mix of profits.

During the third quarter of 2016, retail new business volume was $2.69 billion, a decrease of $161 million, or 6 percent, from the third quarter of 2015. The decrease was related to lower volume, primarily in North America.

At the end of the third quarter of 2016, past dues were 2.77 percent, compared with 2.68 percent at the end of the third quarter of 2015. Write-offs, net of recoveries, were $29 million for the third quarter of 2016, compared with $69 million for the third quarter of 2015.  The decrease in write-offs, net of recoveries, was due to the absence of large write-offs that occurred in the third quarter of 2015 in the mining and marine portfolios.

As of September 30, 2016, the allowance for credit losses totaled $346 million, or 1.28 percent of net finance receivables, compared with $348 million, or 1.26 percent of net finance receivables at September 30, 2015. The allowance for credit losses at year-end 2015 was $338 million, or 1.22 percent of net finance receivables.

"Cat Financial's portfolio continues to perform well despite challenging market conditions in some of our key segments. We believe customer risk exposure is well managed, with a broad distribution of portfolio exposure across our global customer base," said Kent Adams, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. "Cat Financial remains well positioned to serve Caterpillar customers and dealers worldwide through financial services excellence."

For over 35 years, Cat Financial, a wholly owned subsidiary of Caterpillar Inc., has been providing financial service excellence to customers. The company offers a wide range of financing alternatives to customers and Cat dealers for Cat machinery and engines, Solar® gas turbines, and other equipment and marine vessels. Cat Financial has offices and subsidiaries located throughout North and South America, Asia, Australia and Europe, with its headquarters in Nashville, Tennessee.

Click here to download the full version of the Cat Financial 3Q 2016 results release, including Statistical Highlights.

Caterpillar contact: Rachel Potts, 309-675-6892 or 309-573-3444, [email protected]