Caterpillar Raises Earnings Outlook on Energy and Transportation

Global industrial equipment manufacturer Caterpillar reported better than expected second quarter 2018 earnings before the market open Monday. $CAT machinary sales soared from energy and transportation orders and guided higher for the next quarter,

Global industrial equipment manufacturer Caterpillar $CAT reported better than expected second quarter 2018 earnings before the market open Monday. $CAT machinary sales soared from energy and transportation orders and guided higher for next quarter. 

Caterpillar Convoy

Caterpillar Inc. (NYSE: $CAT) Beat Earnings Before Open Monday

$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 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.

 

Caterpillar Q1 Earnings Recap

Earnings

$CAT reported net income of $1.67 billion, or $2.74 per share. This compares with $0.19 billion, or $0.32 per share, in last year’s first quarter. The results were ahead of analysts expectations of $2.07 per share, according to Thomson Reuters. Caterpillar’s revenue for the quarter rose 31.0% to $12.86 billion from $9.82 billion last year. Caterpillar full year EPS guidance: $10.25 – $11.25

Market Reaction > Caterpillar Inc. NYSE: $CAT Pre-market 160.20 +6.21 (+4.03%)

Highlights

Over that three-month rolling period of November to January

  • Caterpillar reported a 34% machinery rise vs. a year earlier, including 23% in North America. 
  • $CAT had retail sales gains across every geographic region in its resources industries and construction businesses.
  • Machine retail sales total were up across all regions over that time.
  • Within construction, biggest gains were  in the Asia-Pacific and Latin America region.
  • Within resources, the Latin America and Europe, Middle East and Africa regions were the leaders
  • Within Energy & Transportation segment sales were strong
  • The only downturn was a 7% drop in sales in January within Caterpillar’s Power Generation category. 
  • The company added 10,900 jobs from a year earlier, bringing its worldwide total to 118,800.

“The combination of strength in many of our end markets and our team’s continued focus on operational excellence — including strong cost control — helped us deliver improved margins and a record first-quarter profit,” Caterpillar CEO Jim Umpleby said in a statement. 

Outlook

$Cat raised its 2018 profit outlook by $2 a share over the previous quarter, to a range of $10.25 to $11.25 per share. A Reuters analyst survey had expected a range of $8.39 to $10.60 a share. The company cited better-than-expected sales volume as the main driver of its improved full-year guidance.

 Source: CAT, AlphaStreet

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