What were the primary drivers of Caterpillar's sales growth in Q1 2007?

Sales growth was primarily driven by strong performance in regions outside of North America, particularly Europe, Africa/Middle East (EAME), Latin America, and Asia/Pacific, where economies were growing and construction spending increased. The acquisition of Progress Rail also contributed significantly to the top line, along with favorable currency exchange rates and improved price realization.

What challenges did Caterpillar face in the first quarter of 2007?

The company encountered significant headwinds in North America, specifically a sharp decline in the U.S. housing construction market and a substantial drop in demand for on-highway truck engines. These factors led to a decrease in machinery volume in North America. Additionally, increased core operating costs, including manufacturing inefficiencies and higher material costs, impacted profitability.

How did Caterpillar manage its stock repurchase program during the quarter?

Caterpillar continued its active stock repurchase program. In the first quarter of 2007, the company spent $511 million to repurchase 8.1 million shares. The 2003 stock repurchase program was completed in April 2007, and a new $7.5 billion program was authorized in February 2007.

What is Caterpillar's outlook for the full year 2007?

Caterpillar raised its full-year 2007 outlook. They now expect sales and revenues in the range of $42 to $44 billion, and profit per share between $5.30 and $5.80. This updated outlook reflects continued global economic growth, strength in diversified service businesses, and disciplined execution, partially offset by expected challenges in certain North American markets.

CAT 10-Q Quarterly Report Q1 FY2007 — Revenue, Net Income, EPS

Summary

Caterpillar Inc. reported solid first-quarter 2007 results, demonstrating resilience despite headwinds in certain North American industries. Total sales and revenues reached a record $10.016 billion, a 7% increase year-over-year, driven by strong performance outside North America and contributions from the acquired Progress Rail business. Profit per share saw a slight increase to $1.23, up from $1.20 in the prior year, primarily due to a reduced share count from ongoing stock repurchases. The company's global diversification proved beneficial, with significant sales growth in regions like EAME, Latin America, and Asia/Pacific offsetting a notable decline in North America. This decline was largely attributed to weak construction activity, particularly in the U.S. housing market, and a sharp drop in demand for on-highway truck engines. Despite these challenges, Caterpillar successfully implemented price increases and benefited from favorable currency effects.

Key Highlights

1Record first-quarter sales and revenues of $10.016 billion, up 7% from $9.392 billion in Q1 2006.
2Profit per share increased to $1.23 from $1.20 in Q1 2006, aided by stock repurchases reducing the share count.
3Significant sales growth in EAME (44%), Latin America (19%), and Asia/Pacific (23%) compensated for a 10% decline in North America.
4North American sales were impacted by a sharp drop in housing construction and on-highway truck engine demand.
5Acquisition of Progress Rail contributed $389 million in sales.
6The company raised its full-year 2007 outlook for sales and revenues to $42-$44 billion and profit per share to $5.30-$5.80.
7Machinery and Engines operating profit decreased 14% due to higher operating costs and lower volume, while Engines operating profit increased 18%.

CATERPILLAR INC Quarterly Report (Amendment) for Q1 Ended Mar 31, 2007

Summary

Key Highlights

Frequently Asked Questions