10-QPeriod: Q1 FY2004

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 10, 2004For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a significant increase in financial performance for the first quarter ended March 31, 2004, compared to the same period in 2003. Total sales and revenues grew by approximately 34% year-over-year to $6.47 billion, driven primarily by a robust recovery in the global economy and strong demand for its machinery and engines. The company's operating profit more than doubled to $574 million, demonstrating effective cost management and operational efficiencies. Profit per common share surged to $1.20, a substantial improvement from $0.37 in the prior year's quarter. This strong performance reflects broad-based economic growth across key geographic regions, including North America, EAME, Latin America, and Asia/Pacific, with particular strength in the construction and mining sectors. The Financial Products segment also contributed positively with increased revenues. Management anticipates continued economic recovery and is well-positioned to benefit from global investments in infrastructure and mining, projecting a significant increase in full-year sales and profit. The company also highlighted its ongoing commitment to productivity gains through its Six Sigma initiative.

Key Highlights

  • 1Total sales and revenues increased by 34% to $6.47 billion in Q1 2004 compared to Q1 2003.
  • 2Operating profit more than doubled to $574 million, up from $222 million in the prior year.
  • 3Profit per diluted common share rose significantly to $1.16 from $0.37 in Q1 2003.
  • 4Machinery sales saw a substantial 41% increase, driven by higher volume and favorable currency impacts.
  • 5The absence of Non-Conformance Penalties (NCPs) favorably impacted operating profit by $49 million compared to Q1 2003.
  • 6The company provided an optimistic outlook, projecting a 20% increase in full-year sales and revenues and a 65-70% increase in profit per share.
  • 7Caterpillar's worldwide employment increased to 70,815 from 67,063 year-over-year to support higher volumes.

Frequently Asked Questions

Caterpillar's revenue growth was primarily driven by a strong global economic recovery, leading to increased demand for its Machinery and Engines. Sales volume increased significantly across all geographic regions, with particular strength in construction and mining sectors. Favorable currency exchange rates and modest price increases also contributed to the revenue uplift.

The absence of Non-Conformance Penalties (NCPs) in the first quarter of 2004 favorably impacted operating profit by $49 million. These penalties were incurred in the first quarter of 2003 related to emission standards for engines. Caterpillar had transitioned to fully compliant engine models by the end of 2003.

Caterpillar has an optimistic outlook for the remainder of 2004. They project total sales and revenues to increase by approximately 20% compared to 2003, up from a previous forecast of 12%. The company anticipates significant profit growth, with profit per share expected to be up 65-70% from 2003. This outlook is supported by continued global economic recovery, low interest rates, and increased investment in mining and construction.

The company is involved in ongoing litigation with Navistar International Transportation Corporation concerning a long-term purchase contract for fuel injectors. Additionally, International Truck and Engine Corporation has filed a lawsuit alleging breach of a long-term agreement term sheet. Caterpillar is also monitoring the impact of European Union retaliatory tariffs related to US tax code compliance, though they do not expect a material financial impact.