10-QPeriod: Q2 FY2018

CATERPILLAR INC Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 7, 2018For Securities:CAT

Summary

Caterpillar Inc. reported strong financial results for the second quarter of 2018, with total sales and revenues reaching $14.011 billion, a 24% increase compared to the prior year's second quarter. This growth was primarily driven by higher sales volumes across its key segments, particularly Construction Industries, and favorable currency impacts. Profit per share significantly increased to $2.82, up from $1.35 in the second quarter of 2017, benefiting from higher sales and a lower effective tax rate. For the first six months of 2018, sales and revenues also saw a substantial increase, reaching $26.870 billion, a 27% rise year-over-year. Profit per share for the period was $5.56, a marked improvement from $1.67 in the prior year. The company's operational performance was bolstered by strong demand, favorable price realization in certain segments, and a significant reduction in restructuring costs compared to the previous year. Caterpillar continues to focus on operational excellence and strategic growth initiatives while returning capital to shareholders through dividends and share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$14.01B

27.5% Gross Margin

Net Income

$1.71B

12.2% Net Margin

EPS (Diluted)

$2.82

Total Assets

$78.99B

Cash & Equivalents

$8.69B

Free Cash Flow

$2.15B

Financial Statements
Beta
Revenue$14.01B
Cost of Revenue$9.42B
Gross Profit$3.86B
R&D Expenses$462.00M
SG&A Expenses$1.44B
Operating Expenses$11.84B
Operating Income$2.17B
Net Income$1.71B
EPS (Basic)$2.86
EPS (Diluted)$2.82
Shares Outstanding (Basic)596.20M
Shares Outstanding (Diluted)604.20M

Key Highlights

  • 1Total sales and revenues increased by 24% to $14.011 billion in Q2 2018 compared to Q2 2017.
  • 2Profit per share rose to $2.82 in Q2 2018, a significant increase from $1.35 in Q2 2017.
  • 3Operating profit margin improved to 15.5% in Q2 2018, up from 10.4% in Q2 2017.
  • 4Restructuring costs decreased substantially, contributing to improved profitability.
  • 5Sales volume increased across Construction Industries, Resource Industries, and Energy & Transportation segments.
  • 6The company repurchased $750 million of common stock in the second quarter of 2018.
  • 7A new share repurchase authorization of up to $10 billion was approved, effective January 1, 2019.

Frequently Asked Questions

The primary driver of Caterpillar's revenue growth in the second quarter of 2018 was higher sales volume across its key segments, particularly in Construction Industries, supplemented by favorable currency impacts from a stronger euro and Chinese yuan.

Caterpillar's profitability saw a significant improvement in Q2 2018. Operating profit increased by 83% to $2.167 billion, and profit per share rose to $2.82 from $1.35 in the prior year's quarter. This was driven by higher sales volume, favorable price realization, and a substantial reduction in restructuring costs.

Caterpillar incurred $114 million in restructuring costs in Q2 2018 and $183 million in the first half of 2018. The company expects these costs to continue and anticipates approximately $400 million in restructuring costs for the full year 2018, a significant decrease from the $921 million incurred in the first half of 2017.

The Financial Products segment's revenues increased by 7% to $829 million in Q2 2018. However, segment profit decreased by 30% to $134 million, primarily due to an increase in the provision for credit losses at Cat Financial, which was partially offset by higher net yield on average earning assets.