Business Context and Reporting Period
This Form 8-K filing by Caterpillar Inc. was submitted on February 17, 2017, under Item 7.01 (Regulation FD Disclosure). The report provides supplemental, unaudited data regarding retail sales of machines and power systems to end users and Original Equipment Manufacturers (OEMs). The data covers the rolling three-month period ended January 2017, with comparative data for December 2016 and November 2016. The information is derived from voluntary reports by independent dealers and is not subject to Caterpillar's internal controls over financial reporting.
Key Financial Metrics and Sales Trends
The filing does not provide audited revenue, profit, cash flow, margin, debt, or liquidity figures. Instead, it presents percentage changes in retail sales volume (reported in constant dollars) compared to the same period in the prior year.
Total Machines Retail Sales (3-Month Rolling Period Ended Jan 2017)
- World Total: DOWN 8%
- Asia/Pacific: UP 26%
- North America: DOWN 13%
- EAME (Europe, Africa, CIS, Middle East): DOWN 13%
- Latin America: DOWN 29%
Segment-Specific Machine Sales (Jan 2017)
- Resource Industries (World): DOWN 7%
- Construction Industries (World): DOWN 8%
Energy & Transportation Retail Sales (Jan 2017)
- Total: DOWN 11%
- Power Gen: DOWN 15%
- Transportation: DOWN 15%
- Oil & Gas: DOWN 8%
- Industrial: DOWN 7%
Material Changes Versus Prior Period
Global retail sales for machines declined by 8% in the three months ended January 2017, an improvement from the 12% decline in December 2016 and the 17% decline in November 2016. The Asia/Pacific region was the only geographic area to show growth, with sales up 26% for total machines, 26% for Resource Industries, and 27% for Construction Industries. Conversely, Latin America continued to experience significant contraction, with total machine sales down 29% and Resource Industries sales down 44%. In the Energy & Transportation segment, all major end-use categories reported declines, though the rate of decline in Oil & Gas (-8%) and Industrial (-7%) was less severe than in Power Gen (-15%) and Transportation (-15%).
Guidance, Outlook, Risks, and Unusual Items
Management Commentary: Caterpillar states that this data is intended to convey an approximate indication of trends and is not a substitute for audited financial statements. The company does not undertake to update or adjust prior period information.
Risks and Contingencies: The filing includes a comprehensive list of factors that could cause actual results to differ from forward-looking statements, including:
- Global and regional economic conditions and commodity price fluctuations.
- Political and economic risks in operating countries.
- Competitive environment impacts on sales and pricing.
- Inventory management decisions by dealers and OEMs.
- Currency fluctuations and interest rate changes.
- Legal proceedings, trade policies, and environmental regulations.
- Credit risks associated with Cat Financial.
Unusual Items: The filing notes that retail sales of highwall miners and longwall miners are excluded from the Resource Industries segment for the purposes of this report.
Important Facts for Investor Verification
- Data Source Limitations: Verify that the sales data is unaudited and based on voluntary dealer reports, meaning it may not be accurate or complete.
- Regional Divergence: Confirm the stark contrast between the 26% growth in Asia/Pacific and the 29% decline in Latin America to understand regional demand drivers.
- Segment Performance: Note that both Resource and Construction Industries saw global declines (~7-8%), while Energy & Transportation saw an 11% decline.
- Exclusions: Be aware that specific mining equipment (highwall and longwall miners) is excluded from the Resource Industries retail sales figures in this report.
- Constant Dollars: Ensure comparisons account for the fact that figures are reported in constant dollars, isolating volume trends from currency fluctuations.