10-QPeriod: Q1 FY2014

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 2, 2014For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a slight increase in sales and revenues for the first quarter of 2014, reaching $13.241 billion, up marginally from $13.210 billion in the same period of 2013. The company demonstrated improved profitability, with profit per share rising to $1.44 from $1.31 year-over-year, reflecting a 5% increase in total profit to $922 million. This earnings improvement was driven by lower operating costs, including reduced selling, general, and administrative expenses, as well as research and development costs, and a favorable currency impact. Despite flat overall sales, Caterpillar saw mixed performance across its segments. Construction Industries and Energy & Transportation reported increased sales, driven by higher volumes and changes in dealer inventories. However, Resource Industries experienced a significant sales decline of 37%, primarily due to weaker demand in the mining sector. The company also incurred substantial restructuring costs of $149 million in the quarter, mainly related to workforce reductions in Belgium, which impacted earnings per share by $0.17. Significant share repurchases totaling $1.7 billion were completed in the quarter, underscoring a focus on returning capital to shareholders.

Financial Highlights

47 data points
Beta

Revenue

$13.24B

23.1% Gross Margin

Net Income

$922.00M

7.0% Net Margin

EPS (Diluted)

$1.44

Total Assets

$84.40B

Free Cash Flow

$1.90B

Financial Statements
Beta
Revenue$13.24B
Cost of Revenue$9.44B
Gross Profit$3.06B
R&D Expenses$508.00M
SG&A Expenses$1.29B
Operating Expenses$11.84B
Operating Income$1.40B
Net Income$922.00M
EPS (Basic)$1.47
EPS (Diluted)$1.44
Shares Outstanding (Basic)626.70M
Shares Outstanding (Diluted)639.30M

Key Highlights

  • 1Total sales and revenues for Q1 2014 were $13.241 billion, a slight increase from $13.210 billion in Q1 2013.
  • 2Profit per share increased by 10% to $1.44 in Q1 2014, compared to $1.31 in Q1 2013.
  • 3Operating profit increased by $180 million to $1.398 billion, driven by lower manufacturing costs, reduced SG&A and R&D, and favorable currency impacts.
  • 4Restructuring costs of $149 million were recognized in Q1 2014, primarily related to workforce reductions.
  • 5Sales in Construction Industries increased by 20% and Energy & Transportation by 8%, while Resource Industries sales decreased by 37%.
  • 6The company repurchased approximately $1.7 billion of its common stock in Q1 2014.

Frequently Asked Questions

The increase in profit per share was driven by a combination of factors including lower operating costs such as reduced manufacturing costs, decreased selling, general and administrative expenses, and R&D expenses. A favorable currency impact also contributed, along with higher sales volume in certain segments. However, this was partially offset by significant restructuring costs.

Sales in the Resource Industries segment decreased by 37%, primarily due to lower end-user demand across all geographic regions. This is attributed to customers in the mining industry reducing capital expenditures, possibly by focusing on productivity at existing mines rather than expansions or new openings. Aftermarket parts sales also declined as some companies reportedly delayed maintenance and rebuild activities.

Caterpillar incurred $149 million in restructuring costs during the first quarter of 2014, which negatively impacted profit per share by $0.17. These costs are primarily related to workforce reductions, notably at the Gosselies, Belgium facility, as part of ongoing efforts to optimize the company's cost structure and manufacturing footprint.

Caterpillar generated strong operating cash flow in the quarter, totaling $1.90 billion, an increase from the prior year. The company maintains a strong liquidity position with $5.35 billion in cash and short-term investments at the end of Q1 2014. The company actively repurchased $1.7 billion of its common stock during the quarter, indicating a commitment to returning capital to shareholders.