10-QPeriod: Q2 FY2008

CATERPILLAR INC Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 1, 2008For Securities:CAT

Summary

Caterpillar Inc. reported strong financial results for the second quarter ended June 30, 2008, driven by robust growth in emerging markets and key industries like energy and mining. Total sales and revenues increased by 20% year-over-year to $13.624 billion, with significant contributions from both the Machinery and Engines segments. Profit per share saw a substantial increase of 40% to $1.74. The company benefited from improved price realization, higher sales volume, and favorable currency movements, particularly from a stronger Euro. Despite rising material and freight costs, Caterpillar effectively managed operating expenses, with SG&A and R&D expenses decreasing as a percentage of sales. The company raised its full-year outlook, projecting sales and revenues of approximately $50 billion and profit per share of about $6.00, reflecting confidence in continued demand, especially from developing economies and sectors like mining and energy. While acknowledging economic headwinds in North America and Europe, Caterpillar's diversified business model and strategic capacity expansions position it well for sustained growth.

Financial Highlights

27 data points
Beta

Revenue

$13.62B

173.7% Gross Margin

Net Income

$1.11B

8.1% Net Margin

EPS (Diluted)

$1.74

Cash & Equivalents

$782.00M

Free Cash Flow

$1.91B

Financial Statements
Beta
Revenue$13.62B
Cost of Revenue-$10.04B
Gross Profit$23.66B
R&D Expenses-$415.00M
SG&A Expenses-$1.07B
Operating Expenses$12.10B
Operating Income$1.52B
Net Income$1.11B
EPS (Basic)$1.80
EPS (Diluted)$1.74
Shares Outstanding (Basic)614.30M
Shares Outstanding (Diluted)635.50M

Key Highlights

  • 1Total sales and revenues increased 20% to $13.624 billion for Q2 2008 compared to Q2 2007.
  • 2Profit per share rose 40% to $1.74 for Q2 2008 compared to Q2 2007.
  • 3Machinery sales grew 17% and Engines sales increased 28% in Q2 2008 compared to Q2 2007.
  • 4Sales outside North America represented 60% of total sales and revenues in Q2 2008, up from 55% a year ago.
  • 5The company raised its full-year 2008 outlook for sales and revenues to approximately $50 billion and profit per share to about $6.00.
  • 6Inventories increased, indicating strong demand and potential capacity constraints.
  • 7Financial Products revenues increased 11% in Q2 2008, driven by growth in average earning assets.

Frequently Asked Questions

The primary drivers of Caterpillar's increased revenue in the second quarter of 2008 were a 20% rise in total sales and revenues to $13.624 billion. This growth was fueled by strong performance in the Machinery and Engines segments, improved price realization, higher sales volume, and a positive currency impact, particularly from a stronger Euro. Growth in emerging markets and sectors like energy and mining also significantly contributed.

Profitability significantly improved, with profit per share increasing by 40% to $1.74 in the second quarter of 2008, compared to $1.24 in the same period of 2007. This was largely due to higher sales volume and improved price realization, which more than offset increased material and freight costs.

Caterpillar raised its full-year outlook for 2008, now projecting sales and revenues of approximately $50 billion and profit per share of about $6.00. This updated forecast reflects continued strength in developing economies and key industries, despite challenges in North America and Europe, and signals confidence in achieving a fifth consecutive year of record profits.

The filing indicates that dealers reported higher inventories in all regions, suggesting strong demand. However, inventories in months of supply were lower than a year earlier in most regions, implying potential capacity-related challenges in manufacturing operations and the supply chain. The company is undertaking capacity expansions to meet global demand.