10-QPeriod: Q1 FY2018

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 2, 2018For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported robust financial performance for the first quarter of 2018, demonstrating significant year-over-year improvement across key metrics. Total sales and revenues surged by 31% to $12.86 billion, driven by a substantial increase in sales volume across all primary segments, attributed to improved end-user demand and favorable inventory adjustments by dealers. The company's profit also saw a dramatic increase, reaching $1.665 billion, or $2.74 per diluted share, a significant jump from $192 million, or $0.32 per diluted share, in the prior year's quarter. This strong performance was underpinned by broad-based economic recovery and increased demand for construction and mining equipment. While the company incurred some restructuring costs, they were significantly lower than in the prior year, contributing to the substantial profit growth. Caterpillar's financial position remains solid, with a strong cash balance and ongoing efforts to optimize its capital structure and return value to shareholders through share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$12.86B

27.9% Gross Margin

Net Income

$1.67B

12.9% Net Margin

EPS (Diluted)

$2.74

Total Assets

$78.01B

Cash & Equivalents

$7.93B

Free Cash Flow

$935.00M

Financial Statements
Beta
Revenue$12.86B
Cost of Revenue$8.57B
Gross Profit$3.58B
R&D Expenses$443.00M
SG&A Expenses$1.28B
Operating Expenses$10.75B
Operating Income$2.11B
Net Income$1.67B
EPS (Basic)$2.78
EPS (Diluted)$2.74
Shares Outstanding (Basic)598.00M
Shares Outstanding (Diluted)608.00M

Key Highlights

  • 1Total sales and revenues increased 31% to $12.86 billion, up from $9.82 billion in Q1 2017, driven by higher sales volume and improved end-user demand across all regions.
  • 2Profit per share (diluted) more than eightfold to $2.74, compared to $0.32 in Q1 2017, reflecting significantly improved operational performance.
  • 3Restructuring costs decreased substantially to $69 million in Q1 2018 from $752 million in Q1 2017, positively impacting profitability.
  • 4The Machinery, Energy & Transportation (ME&T) segment saw sales increase significantly, with Construction Industries showing the largest growth.
  • 5Financial Products segment revenues saw a modest increase of 4% to $793 million, though segment profit decreased due to a higher provision for credit losses.
  • 6The company repurchased $500 million of common stock in the first quarter of 2018, reflecting a commitment to returning capital to shareholders.
  • 7Caterpillar ended the quarter with a strong enterprise cash balance of $7.9 billion.

Frequently Asked Questions

Caterpillar's revenue growth of 31% was primarily driven by a substantial increase in sales volume, stemming from improved end-user demand across all regions and key end markets. Favorable changes in dealer inventories, with dealers increasing their stock levels in anticipation of the spring selling season, also contributed significantly to higher sales volume. Currency impacts, particularly from a stronger euro and Chinese yuan, along with favorable price realization, further boosted revenues.

The substantial reduction in restructuring costs from $752 million in Q1 2017 to $69 million in Q1 2018 had a significant positive impact on Caterpillar's profitability. This decrease, largely due to the winding down of major restructuring actions like the Gosselies, Belgium facility closure, allowed the company's operating profit and net income to increase substantially, leading to a dramatic rise in profit per share.

The company indicated strong end-user demand across its primary segments. Construction Industries and Energy & Transportation are expected to continue seeing growth. While Resource Industries benefited from strong commodity prices and increased mining investment, future demand will depend on ongoing commodity market conditions. The Financial Products segment saw a slight increase in revenue, but profit was impacted by higher credit loss provisions; its performance will be linked to overall equipment sales and economic conditions.

Caterpillar ended the quarter with a strong cash balance of $7.9 billion, providing ample liquidity. The company repurchased $500 million of its common stock in Q1 2018, signaling its commitment to returning capital to shareholders. Management also indicated plans to continue share repurchases to offset dilution and maintain flexibility for strategic growth initiatives and operational needs.