10-QPeriod: Q3 FY2014

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 31, 2014For Securities:CAT

Summary

Caterpillar Inc. reported flat sales and revenues of $13.55 billion for the third quarter of 2014, a slight increase from $13.42 billion in the prior year period. Diluted earnings per share saw an increase to $1.63 from $1.45 in the prior year quarter, driven by improved operating profit and a significant reduction in outstanding shares due to ongoing stock repurchases. The Machinery, Energy & Transportation (ME&T) segment experienced mixed results with higher sales in Energy & Transportation offsetting declines in Resource Industries, while Construction Industries remained stable. The company continued its aggressive share buyback program, repurchasing $2.5 billion in the third quarter. For the first nine months of 2014, total sales and revenues were $40.94 billion, a marginal decrease from $41.25 billion in the prior year. Diluted earnings per share improved to $4.64 from $4.21, reflecting strong profit growth and cost management initiatives, despite lower overall sales volume. Restructuring costs of $344 million impacted the nine-month results. The company's financial position remained robust, with significant operating cash flow generated.

Financial Highlights

48 data points
Beta

Revenue

$13.55B

23.1% Gross Margin

Net Income

$1.02B

7.5% Net Margin

EPS (Diluted)

$1.63

Total Assets

$84.49B

Free Cash Flow

$2.05B

Financial Statements
Beta
Revenue$13.55B
Cost of Revenue$9.63B
Gross Profit$3.12B
R&D Expenses$533.00M
SG&A Expenses$1.45B
Operating Expenses$12.16B
Operating Income$1.39B
Net Income$1.02B
EPS (Basic)$1.66
EPS (Diluted)$1.63
Shares Outstanding (Basic)611.50M
Shares Outstanding (Diluted)622.80M

Key Highlights

  • 1Total sales and revenues for Q3 2014 were $13.55 billion, up 1% year-over-year.
  • 2Diluted earnings per share for Q3 2014 increased to $1.63 from $1.45 in Q3 2013.
  • 3Nine-month sales and revenues were $40.94 billion, down 1% year-over-year.
  • 4Nine-month diluted earnings per share rose to $4.64 from $4.21 in the prior year period.
  • 5Significant restructuring costs of $81 million in Q3 2014 and $344 million for the nine months ended September 30, 2014, impacted earnings.
  • 6Caterpillar repurchased approximately $2.5 billion of its common stock in Q3 2014 and $4.2 billion year-to-date.
  • 7Energy & Transportation segment sales increased by 13% in Q3, while Resource Industries sales decreased by 19% due to lower mining equipment demand.

Frequently Asked Questions

Caterpillar's total sales and revenues for the third quarter of 2014 were $13.549 billion, a slight increase of 1% compared to $13.423 billion in the third quarter of 2013. This was largely driven by increased sales in the Energy & Transportation segment, which offset declines in Resource Industries and relatively flat performance in Construction Industries.

Caterpillar's profitability improved in the third quarter of 2014. Profit increased by 8% to $1.017 billion from $946 million in the prior year period. Diluted earnings per share rose by 12% to $1.63 from $1.45 in the third quarter of 2013. This improvement was supported by better operating profit and a significant increase in share repurchases.

Caterpillar incurred significant restructuring costs during the period. For the third quarter of 2014, restructuring costs were $81 million, with an after-tax impact of $0.09 per share. For the first nine months of 2014, restructuring costs totaled $344 million, impacting earnings per share by $0.39. These costs were primarily related to workforce reductions at its Gosselies, Belgium facility and other ongoing restructuring programs.

Caterpillar continued its aggressive stock repurchase program. In the third quarter of 2014, the company repurchased approximately $2.5 billion of its common stock. Year-to-date, total repurchases amounted to $4.2 billion. The company has a $10 billion authorization approved in January 2014, with $7.5 billion remaining as of the end of the third quarter.