10-QPeriod: Q2 FY2023

CATERPILLAR INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 2, 2023For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported a strong second quarter and first half of 2023, demonstrating significant growth in sales and profitability. Total sales and revenues increased by 22% year-over-year in Q2 2023 to $17.3 billion, driven by robust demand across all key segments, particularly Energy & Transportation and Construction Industries. This top-line growth, combined with favorable price realization, led to a substantial increase in operating profit, which more than doubled year-over-year to $3.65 billion. Diluted earnings per share (EPS) also saw a significant jump to $5.67 from $3.13 in the prior year's quarter. The company's outlook for the remainder of 2023 remains positive, with expectations for continued strong performance driven by ongoing infrastructure investments, healthy mining demand, and resilient energy and transportation sectors. Management anticipates a strong top line supported by price realization and higher equipment sales to end-users, though they expect some moderation in price realization in the latter half of the year. The company ended the quarter with a solid cash position of $7.4 billion, underscoring its financial strength and ability to navigate market conditions.

Financial Highlights

53 data points
Beta

Revenue

$17.32B

36.1% Gross Margin

Net Income

$2.92B

16.9% Net Margin

EPS (Diluted)

$5.67

Total Assets

$85.43B

Cash & Equivalents

$7.39B

Free Cash Flow

$2.99B

Financial Statements
Beta
Revenue$17.32B
Cost of Revenue$11.06B
Gross Profit$6.25B
R&D Expenses$528.00M
SG&A Expenses$1.53B
Operating Expenses$13.67B
Operating Income$3.65B
Net Income$2.92B
EPS (Basic)$5.70
EPS (Diluted)$5.67
Shares Outstanding (Basic)512.90M
Shares Outstanding (Diluted)515.00M

Key Highlights

  • 1Total sales and revenues increased by 22% to $17.318 billion in Q2 2023 compared to $14.247 billion in Q2 2022.
  • 2Operating profit more than doubled, increasing by 88% to $3.652 billion in Q2 2023 from $1.944 billion in Q2 2022.
  • 3Diluted earnings per share (EPS) rose significantly to $5.67 in Q2 2023 from $3.13 in Q2 2022.
  • 4The company expects continued strong performance for the full year 2023, driven by favorable price realization and higher sales of equipment to end-users.
  • 5Enterprise operating cash flow was $4.8 billion for the first six months of 2023.
  • 6Caterpillar ended the second quarter of 2023 with a strong enterprise cash position of $7.4 billion.
  • 7All three primary segments (Construction Industries, Resource Industries, and Energy & Transportation) reported higher sales and profit year-over-year.

Frequently Asked Questions

Caterpillar's revenue growth of 22% in the second quarter of 2023 was primarily driven by higher sales volume and favorable price realization. The increase in sales volume was supported by higher sales of equipment to end users and changes in dealer inventories, with dealer inventory increasing in Q2 2023 compared to a decrease in Q2 2022. Sales were higher across all three primary segments: Construction Industries, Resource Industries, and Energy & Transportation.

Profitability saw a significant improvement with operating profit increasing by 88% to $3.652 billion in Q2 2023. This was mainly due to favorable price realization and higher sales volume, which more than offset higher manufacturing costs and increased selling, general, and administrative (SG&A) and research and development (R&D) expenses. The operating profit margin expanded to 21.1% from 13.6% in the prior year's quarter.

Caterpillar anticipates a strong performance for the full year 2023, with expectations for higher sales and revenues supported by favorable price realization and increased sales of equipment to end users. While the company sees a positive environment with an improving supply chain and healthy demand, it expects some moderation in the year-over-year benefit of price realization in the second half of 2023 compared to the first half. Investments in strategic initiatives like services growth and technology (digital, electrification, autonomy) are expected to continue, leading to higher SG&A/R&D expenses.

The Financial Products segment reported a 16% increase in segment revenues to $923 million in Q2 2023, driven primarily by higher average financing rates. Segment profit increased by 11% to $240 million, mainly due to a lower provision for credit losses at Cat Financial, partially offset by increased SG&A expenses. Past due accounts and write-offs remained at manageable levels.