01—Abstract
Summary
Summary of the 10-K filed February 14, 2019. Cited figures are marked; the original filing is the authoritative source.
Caterpillar Inc. reported robust performance in its 2018 10-K filing, with sales and revenues increasing by 20% to $54.72 billiona, driven by broad-based demand across all three primary segments: Construction Industries, Resource Industries, and Energy & Transportation.
This significant revenue growth translated into a substantial improvement in profitability, with profit per share rising from $1.26 in 2017 to $10.26b in 2018. The company also saw its operating profit margin improve significantly to 15.2% from 9.8% in the prior year, demonstrating effective cost management and price realization. Financially, Caterpillar maintained a strong liquidity position with $7.86 billion in cash and short-term investments.
The company returned capital to shareholders through dividends and share repurchases, announcing a new $10 billionc share repurchase authorization for 2019. The filing highlights Caterpillar's commitment to strategic growth initiatives, including investments in research and development, while navigating a complex global economic landscape and managing operational and financial risks. The company's diversified business segments and geographic presence contributed to its overall positive financial results.
02—Key points
Key Highlights
- Sales and revenues increased by 20% to $54.72 billion in 2018, up from $45.46 billion in 2017, driven by higher sales volume across all segments and regions.
- Profit per share surged to $10.26 in 2018, a significant increase from $1.26 in 2017, reflecting strong operational performance and benefits from U.S. tax reform.
- Operating profit margin improved to 15.2% in 2018, up from 9.8% in 2017, indicating enhanced profitability and operational efficiency.
- Machinery, Energy & Transportation (ME&T) operating cash flow was $6.3 billion, sufficient to cover capital expenditures and dividends.
- Caterpillar repurchased $3.80 billion of its common stock in 2018 and announced a new $10 billion share repurchase authorization effective January 1, 2019.
- Restructuring costs decreased significantly to $386 million in 2018 from $1.256 billion in 2017, reflecting the completion of major restructuring actions.
- The Financial Products segment's profit decreased by 23% to $505 million, primarily due to an increase in the provision for credit losses at Cat Financial.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Caterpillar Inc kept $0.11.
- Revenue$54.72B100.0%
- Cost of revenue−$37.00B67.6%
- Gross profit$17.73B32.4%
- Operating costs−$9.43B17.2%
- Operating income$8.29B15.2%
- Interest, other & tax−$2.15B3.9%
- Net income$6.15B11.2%
Where FY2018 revenue went
$54.72B- Cost of revenue: $37.00B, 68% of revenue
- Net income: $6.15B, 11% of revenue
- R&D: $1.85B, 3.4% of revenue
- SG&A: $5.48B, 10% of revenue
- Other operating costs: $2.10B, 3.8% of revenue
- Interest, other & tax: $2.15B, 3.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 14, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $54.72B$45.46B | +20.4% |
| Cost of Revenue | $37.00B$31.05B | +19.2% |
| Gross Profit | $17.73B$14.41B | +23.0% |
| R&D Expenses | $1.85B$1.84B | +0.4% |
| SG&A Expenses | $5.48B$5.00B | +9.6% |
| Operating Expenses | $46.43B$41.00B | +13.2% |
| Operating Income | $8.29B$4.46B | +85.9% |
| Net Income | $6.15B$754.00M | +715.3% |
| EPS (Basic) | $10.39$1.27 | +718.1% |
| EPS (Diluted) | $10.26$1.26 | +714.3% |
| Shares Outstanding (Basic) | 591.40M591.80M | −0.1% |
| Shares Outstanding (Diluted) | 599.40M599.30M | 0.0% |
05—Questions
Frequently Asked Questions
What was Caterpillar's overall financial performance in 2018?
Caterpillar demonstrated strong financial performance in 2018, with sales and revenues growing by 20% to $54.72 billion. This revenue growth led to a substantial increase in profit per share to $10.26, up from $1.26 in 2017, and an improvement in operating profit margin to 15.2%.
How did Caterpillar manage its liquidity and capital?
Caterpillar maintained a strong liquidity position with $7.86 billion in cash and short-term investments at year-end 2018. The company funded its operations and returned capital to shareholders through dividends and significant share repurchases, totaling $3.80 billion in 2018. A new $10 billion share repurchase authorization was also announced for 2019.
What were the key drivers of Caterpillar's improved profitability in 2018?
The improved profitability was driven by several factors, including higher sales volume across all segments due to increased demand, favorable price realization, lower restructuring costs, and the impact of U.S. tax reform. These factors helped offset increased manufacturing costs and higher selling, general, and administrative (SG&A) and research and development (R&D) expenses.
How did the different business segments perform?
All three primary segments (Construction Industries, Resource Industries, and Energy & Transportation) saw increased sales and improved profitability. Construction Industries sales grew 21%, Resource Industries sales increased 31%, and Energy & Transportation sales were up 18%. The Financial Products segment experienced a decrease in profit due to higher credit loss provisions, though revenues saw a slight increase.
06—Continue