10-KPeriod: FY2017

CATERPILLAR INC Annual Report, Year Ended Dec 31, 2017

Filed February 15, 2018For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a significant turnaround in 2017 compared to the previous year, with sales and revenues increasing by 18% to $45.462 billion. This growth was driven by improved end-user demand across all regions and key markets, coupled with favorable changes in dealer inventories. The company successfully returned to profitability, posting a profit per share of $1.26, a substantial improvement from a loss per share of $0.11 in 2016. This positive performance reflects the company's ability to navigate challenging economic conditions and leverage increasing demand in its core segments. The company's operational focus in 2017 included significant restructuring efforts, with $1.256 billion in costs mainly related to the closure of its Gosselies, Belgium facility. Looking ahead to 2018, Caterpillar anticipates continued growth, supported by expected increases in capital expenditures by mining companies and stabilization in construction activities. Management projects higher material costs in 2018 due to anticipated increases in commodity prices, but also expects improved operational efficiency and cost absorption to mitigate these impacts. The company remains committed to returning capital to shareholders while maintaining a strong financial position.

Financial Highlights

52 data points
Beta

Revenue

$45.46B

31.7% Gross Margin

Net Income

$754.00M

1.7% Net Margin

EPS (Diluted)

$1.26

Total Assets

$76.96B

Cash & Equivalents

$8.32B

Free Cash Flow

$5.71B

Financial Statements
Beta
Revenue$45.46B
Cost of Revenue$31.05B
Gross Profit$14.41B
R&D Expenses$1.84B
SG&A Expenses$5.00B
Operating Expenses$41.00B
Operating Income$4.46B
Net Income$754.00M
EPS (Basic)$1.27
EPS (Diluted)$1.26
Shares Outstanding (Basic)591.80M
Shares Outstanding (Diluted)599.30M

Key Highlights

  • 12017 saw a strong recovery with sales and revenues up 18% to $45.462 billion, driven by improved end-user demand across all regions and segments.
  • 2The company returned to profitability with a profit per share of $1.26, a significant improvement from a loss per share of $0.11 in 2016.
  • 3Restructuring costs in 2017 amounted to $1.256 billion, largely due to the closure of the Gosselies, Belgium facility.
  • 4The order backlog increased significantly to $15.8 billion at the end of 2017, up from $12.1 billion in 2016, indicating strong future demand.
  • 5Energy & Transportation segment showed robust profit growth of 30%, primarily driven by increased demand in oil and gas and industrial applications.
  • 6The company ended 2017 with $8.26 billion in cash, an increase of $1.09 billion from the previous year, indicating a strong liquidity position.
  • 7Despite overall positive performance, the company expects higher material costs in 2018 due to anticipated increases in commodity prices.

Frequently Asked Questions

Caterpillar experienced a significant turnaround in 2017. Sales and revenues increased by 18% to $45.462 billion, compared to $38.537 billion in 2016. The company also returned to profitability, reporting a profit of $1.26 per share in 2017, up from a loss of $0.11 per share in 2016. This improvement was driven by higher sales volume due to improved end-user demand and favorable changes in dealer inventories.

The primary drivers of sales growth were higher sales volume across all segments, fueled by improved end-user demand in infrastructure, mining, and energy sectors. Favorable changes in dealer inventories, where dealer inventories shifted from a decrease in 2016 to being about flat in 2017, also contributed positively. Additionally, favorable price realization, particularly in the Construction Industries segment, supported the revenue increase.

Caterpillar incurred $1.256 billion in restructuring costs in 2017, with approximately half related to the closure of its facility in Gosselies, Belgium. These costs impacted profitability for the current year but are part of the company's strategy to achieve a more flexible and competitive cost structure for long-term benefits. The company anticipates further restructuring actions in 2018, with estimated costs of about $400 million.

Based on the 2017 10-K, Caterpillar expected continued improvement in 2018, with higher end-user demand anticipated across most markets. The company anticipated increased capital expenditures from mining companies and stabilizing construction activities. However, management also foresaw higher material costs in 2018 due to anticipated increases in commodity prices, which they planned to mitigate through operational efficiencies and cost reduction initiatives.