10-QPeriod: Q3 FY2011

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 4, 2011For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a strong third quarter and nine-month performance for 2011, driven by significant growth in sales and revenues across its Machinery and Power Systems segment, largely fueled by robust demand in mining and construction, particularly in developing economies. The acquisition of Bucyrus International significantly boosted sales, though it also incurred integration costs and negatively impacted profit per share on a reported basis. Excluding the Bucyrus impact, profitability showed substantial year-over-year improvement, demonstrating underlying operational strength. The company's financial position remains solid, supported by healthy operating cash flow and manageable debt levels. Investors should note the company's strategic investments in capacity expansion and the ongoing integration of recent acquisitions, which are expected to support future growth.

Financial Highlights

44 data points
Beta

Revenue

$15.72B

22.7% Gross Margin

Net Income

$1.14B

7.3% Net Margin

EPS (Diluted)

$1.71

Total Assets

$77.77B

Free Cash Flow

$2.22B

Financial Statements
Beta
Revenue$15.72B
Cost of Revenue$11.46B
Gross Profit$3.57B
R&D Expenses$584.00M
SG&A Expenses$1.36B
Operating Expenses$13.96B
Operating Income$1.76B
Net Income$1.14B
EPS (Basic)$1.76
EPS (Diluted)$1.71
Shares Outstanding (Basic)646.60M
Shares Outstanding (Diluted)666.00M

Key Highlights

  • 1Total sales and revenues increased by 41% to $15.716 billion for the third quarter of 2011 compared to the prior year period.
  • 2Profit per share for the third quarter was $1.71, a 40% increase from $1.22 in the same period last year, or $1.93 excluding the impact of the Bucyrus acquisition.
  • 3The acquisition of Bucyrus International, Inc. contributed $1.135 billion in sales for the third quarter, though it incurred $200 million in pretax loss including deal-related and integration costs.
  • 4Machinery and Power Systems operating cash flow significantly improved, reaching $6.148 billion for the first nine months of 2011, up 85% from the prior year.
  • 5The debt-to-capital ratio for Machinery and Power Systems was 41.1% at the end of the third quarter, remaining within the company's target range.
  • 6Resource Industries sales saw a substantial 103% increase, driven by the Bucyrus acquisition and higher sales volume for mining equipment.
  • 7Power Systems sales increased by 21%, supported by demand in energy, rail, and industrial applications, as well as the acquisition of EMD.

Frequently Asked Questions

The acquisition of Bucyrus International, Inc. in July 2011 significantly boosted Caterpillar's sales and revenues, contributing $1.135 billion in the third quarter. However, it also resulted in deal-related and integration costs, including amortisation of intangibles and interest expense, leading to a negative impact of $0.22 per share on reported third-quarter earnings. Excluding these impacts, profit per share showed a 58% improvement year-over-year.

Caterpillar demonstrated strong top-line growth, with consolidated sales and revenues up 41% in the third quarter of 2011. Profitability also saw significant improvement, with a 40% increase in profit per share. This growth was broad-based across most geographic regions and segments, driven by increased customer demand, particularly in mining and construction sectors, and favorable pricing and currency impacts. The underlying operational performance, excluding acquisition-related costs, indicates robust profitability.

Caterpillar maintained a strong financial position, with a debt-to-capital ratio for Machinery and Power Systems at 41.1%, within its target range. Operating cash flow for the first nine months of 2011 was robust at $5.52 billion, significantly up from the previous year. The company has access to substantial credit facilities to support its operations and funding needs, and it expects to meet its U.S. funding needs without repatriating non-U.S. cash and incurring additional U.S. taxes.

The Resource Industries segment saw the most significant growth in sales, increasing by 103%, largely due to the Bucyrus acquisition and strong demand in mining. Power Systems also performed well with a 21% sales increase, driven by energy, rail, and industrial applications. Construction Industries reported a 41% sales increase, benefiting from higher volume in developing countries and upgrades in developed markets.