10-QPeriod: Q2 FY2012

CATERPILLAR INC Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 6, 2012For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a strong second quarter of 2012, with record sales and revenues of $17.374 billion, a 22% increase year-over-year. This growth was driven by higher sales volume across its Machinery and Power Systems segments, bolstered by the acquisitions of Bucyrus International and Motoren-Werke Mannheim (MWM), along with favorable price realization. Profit per share reached a record $2.54, a significant increase from $1.52 in the prior year's second quarter, reflecting improved operational efficiency and cost management despite increased manufacturing, SG&A, and R&D expenses. The company's financial position remained robust, with total consolidated cash increasing to $5.1 billion. The Machinery and Power Systems segment saw a debt-to-capital ratio of 40.9%, slightly up but within the target range. The Financial Products segment also demonstrated solid performance, with profit increasing year-over-year. The overall financial health and operational performance indicate a positive trajectory for Caterpillar during this period, driven by strong demand in key markets and successful integration of acquisitions.

Financial Highlights

47 data points
Beta

Revenue

$17.37B

25.3% Gross Margin

Net Income

$1.70B

9.8% Net Margin

EPS (Diluted)

$2.54

Total Assets

$88.84B

Free Cash Flow

$1.66B

Financial Statements
Beta
Revenue$17.37B
Cost of Revenue$12.28B
Gross Profit$4.40B
R&D Expenses$632.00M
SG&A Expenses$1.52B
Operating Expenses$14.76B
Operating Income$2.62B
Net Income$1.70B
EPS (Basic)$2.60
EPS (Diluted)$2.54
Shares Outstanding (Basic)652.90M
Shares Outstanding (Diluted)669.60M

Key Highlights

  • 1Record second-quarter sales and revenues of $17.374 billion, up 22% year-over-year.
  • 2Profit per share reached a record $2.54, a 67% increase compared to $1.52 in Q2 2011.
  • 3Machinery & Power Systems (M&PS) saw sales volume increase by $1.527 billion, driven by higher end-user demand in Resource Industries, Construction Industries, and Power Systems.
  • 4Acquisitions of Bucyrus International and MWM contributed significantly to sales growth.
  • 5Consolidated operating profit increased by 63% to $2.616 billion, with an incremental operating profit rate of 32% (44% excluding acquisitions).
  • 6Total consolidated cash position strengthened to $5.1 billion.
  • 7Financial Products segment profit increased by 18%, demonstrating stable performance.

Frequently Asked Questions

The primary drivers of Caterpillar's sales growth in the second quarter of 2012 were increased sales volume across its Machinery and Power Systems segments, favorable price realization, and the contributions from recent acquisitions, notably Bucyrus International and Motoren-Werke Mannheim (MWM).

The acquisition of Bucyrus contributed $1.176 billion in sales and $97 million in operating profit (before interest and taxes) in the second quarter of 2012. The MWM acquisition added $196 million in sales and was about neutral to profit. These acquisitions significantly boosted the company's top-line growth and expanded its market presence.

The strong performance in Q2 2012, with record sales and profit per share, suggests a positive outlook driven by robust demand in key industries and successful integration of acquired businesses. However, the company also noted that construction activity in developed countries remains below prior peaks, and dealers and customers are exercising caution due to economic uncertainty, particularly for long lead-time products.

Caterpillar reported that while manufacturing costs, SG&A, and R&D expenses increased, they declined as a percentage of sales. This indicates an effective focus on cost control and efficiency, which contributed to the significant increase in operating profit as a percentage of sales.