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Global industrial equipment manufacturer Caterpillar reported worse than expected fourth quarter 2018 EPS before the market open Monday after last quarter issuing weaker guidance due to global and trade tensions which have hit the stock price.


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

 $2.55 Missed $2.98 EPS Forecast on $14.3B Beat $12.90 billion forecast in revenue 

Earnings Preview

Caterpillar Inc. (NYSE: CAT) reported earnings on Monday swinging to a profit in the fourth quarter from a loss last year with improved demand across the three primary segments, including a rise in dealer inventories, driving revenue higher. The top line beat analysts’ expectations but the bottom line missed consensus estimates.

Net profit was $1.05 billion or $1.80 per share compared to a loss of $1.30 billion or $2.18 per share in the previous year quarter. Adjusted earnings increased 18% to $2.55 per share. Total sales and revenues grew 11% to $14.3 billion. CAT was expected to post earnings per share of $2.98, up from $2.16 in the year-earlier period, according to analysts polled by FactSet. Estimize, which crowdsource estimates from buy- and sell-side analysts, hedge funds, academics and others, is expecting EPS of $3.00. Revenue was expected at $14.3 billion, up from $12.9 billion a year ago according to Fact set. Estimize is also expecting revenue of $14.3 billion.    

Market Reaction > Caterpillar Inc. NYSE: CAT

Pre-market $125.21 −$11.65 (-8.51%) 

Highlights

  • Total sales and revenues grew 11% to $14.3 billion with increase was due to higher sales volume from the three primary segments.
  • Favorable price realization also contributed to the sales improvement partially offset by unfavorable currency impacts on a stronger US dollar.
  • The global workforce increased about 7,300 to 124,000 as of December 31, 2018, from the prior year, primarily due to higher production volumes.
  • For the fourth quarter, sales from Construction Industries grew 8% on higher sales volume for construction equipment.
  • In North America, the sales growth of 17% was driven by higher demand for new equipment, with about half due to rise in dealer inventories.
  • The increase in demand was primarily to support oil and gas activities, including pipelines, and non-residential building construction activities.
  • Resource Industries’ total sales jumped 21% on higher demand for both mining and heavy construction equipment, including quarry and aggregate.
  • Mining activities were robust as commodity market fundamentals remained positive, and increased non-residential construction activities drove higher sales.
  • Energy & Transportation’s total sales increased 11% on higher sales volume across all applications except Industrial, which was flat.
  • Financial Products’ segment revenues rose 4% on higher average financing rates and higher average earning assets in North America and Asia/Pacific. This was partially offset by an unfavorable impact from returned or repossessed equipment in Europe and Latin America.

Caterpillar Q4 2018 Earnings Infographic

Outlook

Looking ahead into the full year 2019, the company expects earnings in the range of $11.75 to $12.75 per share. The forecast assumes a modest sales growth based on the fundamentals of its diverse end markets as well as the macroeconomic and geopolitical environment.

Beginning in 2019, the company does not plan to exclude restructuring costs from adjusted profit per share as these costs are expected to return to normalized levels.

Caterpillar Q3 Earnings Recap

$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.

 Source: CAT, AlphaStreet

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