10-QPeriod: Q1 FY2011

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 9, 2011For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a significant increase in financial performance for the first quarter of 2011 compared to the same period in 2010. Total sales and revenues surged by 57%, reaching $12.95 billion, driven by a substantial 63% rise in Machinery and Power Systems (M&PS) sales. This robust top-line growth translated into a record profit per share of $1.84, a 411% increase from the prior year's $0.36. The company benefited from higher sales volume across all segments and regions, improved price realization, and the strategic acquisition of EMD. Despite increased manufacturing, selling, general, and administrative (SG&A), and research and development (R&D) expenses due to higher volume and incentive compensation, operating profit saw a substantial improvement. The Financial Products segment experienced a slight revenue decline but improved profitability. Caterpillar ended the quarter with strong liquidity, holding $4.9 billion in cash and cash equivalents, anticipating significant acquisitions, including Bucyrus International, Inc. The company's financial health remains strong, with a debt-to-capital ratio well within target ranges.

Financial Highlights

42 data points
Beta

Revenue

$12.95B

24.9% Gross Margin

Net Income

$1.23B

9.5% Net Margin

EPS (Diluted)

$1.84

Total Assets

$66.39B

Free Cash Flow

$765.00M

Financial Statements
Beta
Revenue$12.95B
Cost of Revenue$9.06B
Gross Profit$3.22B
R&D Expenses$525.00M
SG&A Expenses$1.10B
Operating Expenses$11.12B
Operating Income$1.83B
Net Income$1.23B
EPS (Basic)$1.91
EPS (Diluted)$1.84
Shares Outstanding (Basic)641.40M
Shares Outstanding (Diluted)664.90M

Key Highlights

  • 1Reported record first-quarter profit per share of $1.84, up 411% from $0.36 in Q1 2010.
  • 2Total sales and revenues increased 57% to $12.95 billion, driven by a 63% surge in Machinery and Power Systems (M&PS) sales.
  • 3Machinery and Power Systems sales volume increased significantly across all geographic regions, with dealers increasing new machine inventory.
  • 4Operating profit increased substantially to $1.83 billion from $508 million in the prior year, fueled by higher sales volume and price realization.
  • 5The company generated $1.64 billion in operating cash flow from M&PS, demonstrating strong operational cash generation.
  • 6Ended the quarter with $4.9 billion in cash and short-term investments, providing significant financial flexibility for planned acquisitions.
  • 7The Financial Products segment saw a 1% revenue decrease but a 28% increase in profit, supported by improved net yield and fewer write-offs.

Frequently Asked Questions

The primary driver was a substantial increase in sales volume across all segments, particularly in Machinery and Power Systems, which grew by 63%. This was supported by broader economic growth, increased commodity demand, and dealers rebuilding inventory. Price realization also contributed positively, and the acquisition of EMD added to the top line.

The Financial Products segment experienced a slight revenue decrease of 1% to $730 million, primarily due to lower average earning assets and interest rates. However, segment profit increased by 28% to $136 million, driven by favorable changes in repossessed equipment, higher net yield on earning assets, and reduced write-offs compared to the prior year.

Caterpillar ended the quarter with a strong liquidity position, holding $4.9 billion in cash and short-term investments. This substantial cash balance is earmarked for significant planned acquisitions, notably Bucyrus International, Inc. The company's debt-to-capital ratio remains healthy, and it has access to substantial credit facilities to support its operations and strategic initiatives.

While performance is strong, risks include potential impacts from global economic conditions, commodity price volatility, access to liquidity for Caterpillar and its customers, geopolitical risks, and the successful integration of planned acquisitions. The company also faces ongoing environmental and legal matters, though it states these are not expected to be material.