Caterpillar. Dave Burritt. Chief Financial Officer & Vice President of Global Finance & Strategic Support. JPMorgan Basics and Industrials Conference

Transcription

1 Caterpillar JPMorgan Basics and Industrials Conference Dave Burritt Chief Financial Officer & Vice President of Global Finance & Strategic Support MAKING PROGRESS POSSIBLE

2 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF Certain statements contained in this presentation are forward-looking and involve risks, assumptions and uncertainties that cause actual results of Caterpillar to be materially different from those projected or implied in the forward looking statements. In this context, words such as "will", believes, expects, estimates, anticipates, will be, should and similar words or expressions identify forwardlooking statements made on behalf of Caterpillar. It is important to note that actual results of Caterpillar may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, changes in economic conditions; currency exchange or interest rates; political stability; market acceptance of Caterpillar's products and services; significant changes in the competitive environment; changes in law, regulations and tax rates; and other general economic, business and financing conditions and factors. A more complete summary of risks and uncertainties is described in more detail in Caterpillar's Form 10Q filed with the Securities and Exchange Commission on May 2, Caterpillar undertakes no obligation to update these forward-looking statements.

3 Vision 2020 Strategy Unchanged 3 Economic uncertainty, particularly in the US, is making the short-term environment a challenge VISION 2020 But, there s big opportunity for Caterpillar over the next decade, particularly related to mining, energy, and infrastructure STRATEGIC PROFILE People STRATEGIC GOALS Performance Product & Process Profitable Growth CRITICAL SUCCESS FACTORS EMERGING PEOPLE QUALITY PRODUCT VELOCITY DISTRIBUTION MARKETS Trough ENTERPRISE STRATEGIC AREAS OF IMPROVEMENT New Product Introduction Order-to-Delivery Encoding 6 Sigma Sustainable Development Growth Beyond Core Our Values in Action INTEGRITY, EXCELLENCE, TEAMWORK, COMMITMENT WORLDWIDE CODE OF CONDUCT

4 What I ll Cover Today 4 Overview of Caterpillar and recent history Brief review of 2008 A broader look forward

5 5 Years of Growth 36% EPS CAGR 2002 to Sales and Revenues $41.5 $41 $45.0 $43 Earnings Per Share $5.17 $5.37 $30.3 $30 $36.3 $36 $4.04 $20.2 $20 $22.8 $23 $2.88 $1.15 $

6 Product Range Machines 6 About 300 Models in a broad range of product categories Backhoe Loaders Skid Steer Loaders Multi Terrain Loaders Integrated Tool Carriers Wheel Loaders Excavators Wheel Excavators Track-Type Tractors Track Loaders Pipelayers Landfill Compactors Soil Compactors Wheel Dozers Motor Graders Wheel Tractor Scrapers Articulated Trucks Off Highway Trucks Underground Trucks Underground Loaders Track Skidders Wheel Skidders Feller Bunchers Vibratory Compactors Asphalt Compactors Asphalt Pavers Pneumatic Compactors Cold Planers Rotary Mixers

7 Machines From a mini-excavator that fits in the back of a pick-up to big iron 7 Operator

8 8 New D7E at CONEXPO Innovative From the Inside Out 35% more visibility 50% less operator noise 35-70% lower undercarriage operating cost 60% fewer moving parts in the electric drive train 50% better steering performance Up to 20% less fuel consumed per hour Less fluids used

9 End markets Machines 9 Residential Nonresidential Industrial Infrastructure Mining & Quarrying Energy Waste Forestry

10 Product Range Broadest Range of Engines in Our Industry 10 From 100 KW to 22,000 KW

11 Engines and everything in between 11 Model 3616 Model 3003

12 End markets Engines 12 Electric Power Cat Machines Petroleum On-Highway Truck Marine Industrial

13 Geographic Diversity The Global Leader 13 Caterpillar Broadest footprint in the industry About 101,000 Employees About 300 Facilities In about 50 countries Geographic Mix - Sales and Revenues Outside North America 43% North America 57% Outside North America 56% North America 44% Caterpillar Dealers 181 Cat dealers 3,000+ branches & rental stores Over 120,000 employees

14 Caterpillar Overview Sales & Revenues $45B in 2007 up 8% from 2006 Sales and Costs Machinery & Engines Operating Costs $37B in Machines Up 9% Material Costs Factory Labor & Overhead 63% 30% 56% 31% 7% Engines Up 6% 4% 9% Financial Products Up 13% R&D SG & A

15 Investing in the future Increase Capacity and Product Development 15 Capital Expenditures Research & Development $1.2B $926M $682M $1.6B $1.7B $2.3B $669M $928M $1.1B $1.3B $1.4B Up 15-20% * * 3.2% 3.3% 3.5% 4.1% 4.1% 4.7% 3.2% 3.3% 3.2% 3.3% 3.3% 3.4% % of Sales % of Sales * Outlook

16 Sales and Revenues Synergistic growth & improved earnings stability Sales and Revenues $45 Billion Genuine Cat Replacement Parts Products 64% $29 Billion Integrated Services 36% $16 Billion Solar Customer Services

17 1st Quarter 2008 Results Sales & Revenues and EPS up 18% despite a very weak US economy 17 1st Q 1st Q Change Sales and Revenues $10.0B $11.8B $1.8B 18% Earnings Per Share $1.26 $1.45 $ %

18 1st Qtr Sales & Revenue Growth is largely outside North America 18 Sales and Revenues were up $1.8 Billion. or 18% vs. the 1st Quarter of 2007 Percentage Increase by Region Increase by Price, Volume, Currency, Financial Products 40% 37% 35% 30% 25% 30% 24% Price Realization $.3B Financial Products $.1B 20% 15% 10% 4% Currency Translation $.3B Volume $1.1B 5% 0% Asia Pacific EAME Latin America North America

19 Priorities for Use of Cash 19 Well Established Priorities Cash From Operations Maintain Financial Strength A Credit Rating Fund Growth Pension/Benefit Plans Dividend Growth Stock Repurchase

20 Cash Flow Machinery & Engines Operating Cash Flow How we ve spent increasing cash flow 20 Billions of Dollars Actual Actual Actual Operating Cash Flow $ 2.8 $ 4.6 $ 5.4 Key Uses of Cash - Growth (CAPEX & Acquisitions) $ 1.2 $ 2.1 $ Dividends $ 0.6 $ 0.7 $ Stock Repurchase $ 1.7 $ 3.2 $ 2.4

21 What I ll Cover Today 21 Overview of Caterpillar and recent history Brief review of 2008 A broader look forward

22 Worldwide Machine Industry Sales patterns diverging Machine Industry Unit Index 2002 = 100 Outside North America 28% 18% North America -11% -10% to -15% Caterpillar Estimate

23 2008 Sales and Revenues By Geographic Region 23 Worldwide up 5 to 10% North America +/- 2% EAME Up 7 to 12% Asia Pacific Up 15 to 20% Latin America Up 15 to 20%

24 2008 Outlook We expect another record year despite U.S. weakness Actual Outlook Sales and Revenues $45 B Up 5-10% Earnings Per Share $5.37 Up 5-15%

25 What I ll Cover Today 25 Overview of Caterpillar and recent history Brief review of 2008 A broader look forward

26 World Economic Growth Strong World Economic Growth Continues World North America EAME Latin America Asia Pacific Japan

27 Key Longer-term Trends Long-term Positive for Caterpillar 27 We expect continued strong growth in worldwide infrastructure spending over the next decade Significant growth in the developing world and they have the money! Significant need to improve and rebuild infrastructure in the developed world after years of under investment

28 Factors Driving Construction Years of construction underinvestment 28 Developed Economies Old, outdated buildings Insufficient infrastructure Modest economic growth Developing Economies Large, rapidly growing populations Inadequate infrastructure Rapid economic growth We expect continued good growth in construction

29 Mining & Energy A Very Positive Future 29 Growing world demand Prolonged underinvestment Tight inventories & spare capacity

30 Commodity Prices Are Favorable Generally positive for investment 30 Dollars per Market Unit Average Price 2007 Average Price 2008 Forecast Average Price Estimated Threshold for investment Oil Coal Natural Gas Copper Source: Haver Analytics, Business Economics

31 Worldwide Mining Fleets Replacement opportunity 31 % of Machines More Than 10 Years Old (2007) 1,160 Units 657 7, ,254 1,075 65% 50% 54% 69% 56% 57% Coal Mines Crawlers Trucks Wheel Loaders Metals Mines Source: Parker Bay.

32 32 Our goals for 2010 Sales and Profit Last Year Today 2010 Sales & Revenues $50 billion plus In a plausible range of $45 to $60 billion Approaching $60 billion EPS Growth EPS CAGR of 15% to 20% from a 2005 base That means EPS in a range of about $8 to $10 per share No Change

33 World North America EAME Latin America Asia Pacific Japan World Economic Growth Our customers Make Progress Possible No company is better positioned than Caterpillar Global infrastructure needs Broadest product line On a foundation of a large population of machines & engines Unparalleled global dealer network Global manufacturing footprint

34 Questions?