10-QPeriod: Q1 FY2019

CATERPILLAR INC Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 6, 2019For Securities:CAT

Summary

Caterpillar Inc. reported a solid first quarter of 2019, with total sales and revenues increasing by 5% year-over-year to $13.466 billion. This growth was primarily driven by higher sales volume, particularly in the Resource Industries and Construction Industries segments, and favorable price realization. The company also saw an increase in operating profit, rising by 5% to $2.207 billion, which contributed to a significant rise in diluted profit per share to $3.25, up from $2.74 in the prior year period. This profit per share figure was positively impacted by a discrete tax benefit of $0.31 per share related to U.S. tax reform. Cash flow from operating activities improved to $1.121 billion. Caterpillar continued its commitment to returning capital to shareholders, repurchasing $751 million of common stock and declaring a dividend. The company's financial position remains strong, with a substantial cash balance and ample credit facilities. Despite some headwinds from unfavorable currency impacts and increased manufacturing costs, Caterpillar demonstrated resilience and growth, positioning itself for continued performance.

Financial Highlights

51 data points
Beta

Revenue

$13.47B

27.6% Gross Margin

Net Income

$1.88B

14.0% Net Margin

EPS (Diluted)

$3.25

Total Assets

$78.73B

Cash & Equivalents

$7.16B

Free Cash Flow

$843.00M

Financial Statements
Beta
Revenue$13.47B
Cost of Revenue$9.00B
Gross Profit$3.72B
R&D Expenses$435.00M
SG&A Expenses$1.32B
Operating Expenses$11.26B
Operating Income$2.21B
Net Income$1.88B
EPS (Basic)$3.29
EPS (Diluted)$3.25
Shares Outstanding (Basic)572.40M
Shares Outstanding (Diluted)578.80M

Key Highlights

  • 1Total sales and revenues increased 5% to $13.466 billion in Q1 2019 compared to Q1 2018.
  • 2Operating profit rose 5% to $2.207 billion in Q1 2019.
  • 3Diluted profit per share increased to $3.25 from $2.74 in the prior year quarter, benefiting from a $0.31 per share discrete tax benefit.
  • 4Resource Industries and Construction Industries segments showed significant sales growth.
  • 5Operating cash flow improved to $1.121 billion in Q1 2019.
  • 6The company repurchased $751 million of common stock and paid $494 million in dividends.
  • 7Caterpillar maintained a strong financial position with $7.1 billion in cash and short-term investments.

Frequently Asked Questions

The primary driver for the increase in Caterpillar's sales was higher sales volume, driven by improved demand for both equipment and services, with the most significant increase noted in the Resource Industries segment. Favorable price realization also contributed to the sales improvement.

Diluted profit per share increased to $3.25 in the first quarter of 2019, up from $2.74 in the first quarter of 2018. This increase was influenced by favorable price realization, higher sales volume, and lower tax expense. Notably, the first quarter of 2019 included a discrete tax benefit of $178 million ($0.31 per share) related to U.S. tax reform, which positively impacted profit per share. In contrast, the first quarter of 2018 included restructuring costs of $0.08 per share.

Caterpillar maintained a strong liquidity position with $7.13 billion in cash and short-term investments at the end of the first quarter of 2019. Operating cash flow increased to $1.121 billion. The company deployed capital through share repurchases of $751 million and dividend payments of $494 million, demonstrating a commitment to returning capital to shareholders while maintaining a strong financial position and ample credit facilities.

Caterpillar is involved in ongoing investigations and legal matters, including a grand jury subpoena related to financial information and export activities, and an anti-competitive bid activity investigation in Brazil. However, the company currently believes these matters will not have a material adverse effect on its consolidated results of operations, financial position, or liquidity. Environmental remediation costs are also considered not material.