Caterpillar Earnings Shares Hit By Weak Outlook on Tariffs and Costs

Global industrial equipment manufacturer Caterpillar reported third quarter 2018 earnings before the market open Tuesday beating estimates but weaker guidance due to global and trade tensions have hit the stock price.

Global industrial equipment manufacturer Caterpillar reported third quarter 2018 earnings before the market open Tuesday beating estimates but weaker guidance due to global and trade tensions have hit the stock price.

Caterpillar Convoy

Caterpillar Inc. (NYSE: $CAT) Reported Earnings Before Open Tuesday

$2.86 BEAT $2.83 EPS Forecast and $13.50 BEAT $13.29 billion forecast in revenue 

Earnings

Caterpillar Inc. (NYSE: CAT) reported third quarter earnings on Tuesday of EPS of $2.86 on revenue of $13.5 billion beating the consensus estimates for $2.83 in EPS and $13.29 billion in revenue. Shares have traded in a 52-week range of $129.43 to $173.24.

Caterpillar September global machine sales were released ahead of earnings, all regions were down

  • LatAm +25% vs 18% prior
  • APAC +23% vs +28% prior
  • EAME +6% vs 9% prior
  • North America +28% vs 19% prior
  • World +21% vs 23% prior

Market Reaction > Caterpillar Inc. NYSE: CAT

Pre-market $119.48 −9.23 (-7.17%)

Highlights

  • Q3 sales from Construction Industries grew 16% on higher sales volume for construction equipment.
  • In North America, the sales growth of 22% was mostly due to higher demand for new equipment, primarily to support oil and gas activities, including pipelines, and non-residential building construction activities.
  • Resource Industries’ total sales jumped 35% on higher demand for both mining and heavy construction equipment.
  • Commodity market fundamentals remained positive, contributing to higher mining equipment sales.
  • Increased sales to heavy construction and quarry and aggregate customers were driven by positive global economic growth.
  • Energy & Transportation’s total sales increased 15% on higher sales volume across all applications except Industrial.
  • Financial Products’ segment revenues rose 9% on higher average financing rates and higher average earning assets in North America and Asia/Pacific as well as a favorable impact from returned or repossessed equipment.

CAT Earnings Q3 18

Outlook

Full-year EPS seen at $10.65-$11.65, still largely below consensus for $11.65 from the prior estimate of $10.50 to $11.50 range. However, adjusted EPS forecast has been reiterated in the range of $11 to $12.

Most end markets continue to improve. Order rates and backlog remain healthy. In the fourth quarter, price realization, operational excellence, and cost discipline are expected to more than offset higher material and freight costs, including tariffs.

 

Caterpillar Inc. Q2 Earnings Recap

$2.97 Beat $2.73 EPS and $14.00 billion Beat $13.88 billion forecast in revenue 

Earnings

Adjusted earnings of $2.97 per share beat analyst consensus of $2.73 and was up more than 83% from the same period last year. Revenue was $14 billion ahead of analysts’ estimates of $13.88 billion. 

Caterpillar reports results Tuesday morning Caterpillar results are due in the premarket tomorrow but there are headlines crossing on global machine sales. The rolling 3-month Sept machine sales: LatAm +25% vs 18% prior APAC +23% vs +28% prior EAME +6% vs 9% prior North America +28% vs 19% prior World +21%

Caterpillar Inc NYSE: $CAT

Market Reaction > Pre-Market $146.03  +$3.24 (2.27%)

Highlights

  • Construction Industries sales rose to $6.1 billion, mainly due to higher sales volume for construction equipment. The segment saw sales increases across all geographies.
  • Resource Industries sales rose to $2.5 billion, driven by higher demand for equipment across all regions.
  • Energy & Transportation sales grew to $5.7 billion from last year, primarily due to higher sales volume across all applications.
  • Financial Products segment posted revenues of $829 million, up 7% from last year helped by higher average financing rates in North America and higher average earning assets in Asia/Pacific and North America

“Caterpillar delivered record second-quarter profit per share,” said CEO Jim Umpleby. “Our team is doing a great job executing our strategy for profitable growth, focusing on operational excellence, expanded offerings and services.”

CAT Earnings Q2 18

Outlook

$CAT said it expects to see full year earnings of between $10.50 and $11.50 per share, up from a prior forecast of $9.75 to $10.75.

The improved outlook followed comments from Caterpillar in April saying the first quarter represented a “high water mark” for the year. The compnay noted that “recently imposed tariffs are expected to impact material costs in the second half of the year by approximately $100 million to $200 million and the company expects supply chain challenges to continue to pressure freight costs.”

CAT said its order backlog at the end of the second quarter was $17.7 billion, a figure it said was “about flat with the first quarter of 2018” but around $2.9 billion higher from the same period last year as decreases in construction orders were offset by gains in energy and transportation.

 Source: CAT, AlphaStreet

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