Higher new business originations boost Cat Financial’s earnings

Caterpillar’s equipment financing arm, Cat Financial, posted increased revenues in the first quarter of 2024, following strong profit margins in 2023.  

Profits in Q1 were $229 million, up 12% from Q1 2023. Higher new business volume originations in North America drove up earnings — retail new business volume for Cat Financial grew 11% year over year to $2.74 billion.  

“The Cat Financial team remains focused on execution of our strategy and supporting Caterpillar customers and dealers with financial services solutions,” Dave Walton, president and chief executive of Cat Financial, said in a statement today. 

 “Past dues remain at historically low levels, reflecting strong portfolio health, and we continue to deliver solid operational results,” he said. 

BY THE NUMBERS 

• Cat Financial’s revenues in Q1 were $853 million, up 11% YoY;  
• Q1 profit was $229 million; up 12% YoY; 
• Past dues were 1.78% at the end of Q1, down from 2% in Q1 2023;  
• Net recovery write-offs increased to $55 million, up YoY from $10 million; and  
• Allowance for credit losses shrunk slightly; in Q1 allowances were $281 million, or 1.1% of finance receivables, compared to $331 million as of yearend 2023.  

“This is the lowest first-quarter past dues since 2006,” Caterpillar Chief Financial Officer Andrew Bonfield said during the parent company’s earnings call today, adding that the allowance rate was the “lowest on record.”  

“Business activity remains strong as new business volume increased versus the prior year, primarily driven by North America,” Bonfield stated on the call. “We continue to see strong demand for used equipment, and inventories remain close to historically low levels, with just slight increases over recent quarters.”  

Shares of CAT [NASDAQ: CAT] were trading at $338.00 today, down 7.02% or $25.52 from market open. The company has a market cap of $169 billion.  

Registration is now open for Equipment Finance Connect, the nation’s only dealer-centric equipment lending and leasing event, which will take place May 5-7 in Nashville, Tenn. Learn about the event and free dealer registration at EquipmentFinanceConnect.com.