Caterpillar Reports First-Quarter 2018 Results

April 24, 2018

Caterpillar Reports First-Quarter 2018 Results
Delivered Higher Sales and Revenues and Record First-Quarter Profit Per Share; Raised Full-Year Outlook
 

• First-quarter sales and revenues up 31 percent
• Significant increase in profit per share; adjusted profit per share more than doubled
• Raised full-year profit per share outlook
• Repurchased $500 million of common stock

DEERFIELD, Ill. — Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2018 sales and revenues of $12.9 billion, compared with $9.8 billion in the first quarter of 2017. First-quarter 2018 profit of $2.74 per share was a first-quarter record. Profit was $0.32 per share in the first quarter of 2017. Adjusted profit per share in the first quarter of 2018 was $2.82, compared with first-quarter 2017 adjusted profit per share of $1.28.

Caterpillar’s financial position remains strong. During the first quarter of 2018, Machinery, Energy & Transportation (ME&T) operating cash flow was $948 million and the company repurchased $500 million of Caterpillar common stock. The company ended the first quarter of 2018 with an enterprise cash balance of $7.9 billion.

“I'd like to thank our global Caterpillar team for outstanding results. The combination of strength in many of our end markets and our team’s continued focus on operational excellence - including strong cost control - helped us deliver improved margins and a record first-quarter profit,” said Caterpillar CEO Jim Umpleby.

2018 Outlook

In January, Caterpillar provided a 2018 profit outlook range of $7.75 to $8.75 per share. The company is increasing its 2018 profit outlook by $2.00 per share to a range of $9.75 to $10.75 per share, primarily due to growing demand for products and services. The outlook includes about $400 million of restructuring costs, unchanged from the previous outlook. The revised outlook range for adjusted profit is $10.25 to $11.25 per share.

“Based on our strong first-quarter results and higher demand across all regions and most end markets, we are raising our outlook for 2018. We will continue to make targeted investments in expanded offerings and services, consistent with our strategy for long-term profitable growth,” said Umpleby.

Following is a summary of sales assumptions for 2018 as compared to 2017:

Construction Industries – The company expects broad-based growth in all regions in 2018, with the biggest drivers being continued strength for construction activity in North America and infrastructure development in China. EAME is expected to continue to grow amid high business confidence and stability in oil-producing countries. The recovery that has started in Latin America is expected to continue.

Resource Industries – The company believes global economic conditions and favorable commodity price levels will drive miners to increase capital expenditures in 2018 for both equipment replacement cycles and expansions. In addition, higher machine utilization levels should support aftermarket parts growth. Strong global demand for commodities is also expected to be a positive for heavy construction and quarry and aggregate customers.

Energy & Transportation – Sales into Oil and Gas applications are expected to increase in 2018, led by continued strong demand for reciprocating engines for well servicing and gas compression applications in North America. The current turbines backlog remains healthy in support of the midstream Oil and Gas business. Rail traffic in North America has increased, with reductions in the number of idled locomotives and railcars. As a result, the company expects an increase in Transportation sales primarily from growth in rail services. After a multi-year downturn, the company expects Power Generation sales to increase as global economic conditions improve. Sales of engines into Industrial applications are expected to be up in 2018 primarily due to projected demand in EAME.

Following are key elements of the revised 2018 profit outlook:

• Better than expected sales volume is the primary driver of the raised profit outlook, with higher volume expected across the three primary segments when compared with the prior outlook.
• Improved price realization is expected to be partially offset by material cost increases primarily driven by higher commodity prices.
• Despite the anticipated increase in volume, the company expects period costs, excluding short-term incentive compensation expense, to be in line with the prior outlook.
• Short-term incentive compensation expense is now expected to be about $1.4 billion, nearly the same as 2017.
• The outlook assumes continued global economic growth. Any potential impacts from future geopolitical risks and increased trade restrictions have not been included in the outlook.

The outlook does not include a mark-to-market gain or loss for remeasurement of pension and other postemployment benefit (OPEB) plans or changes to provisional estimates recorded in 2017 for U.S. tax reform

Notes:

• Glossary of terms is included on pages 15-16; first occurrence of terms shown in bold italics.
• Information on non-GAAP financial measures is included on page 17.
• Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Tuesday, April 24, 2018, to discuss its 2018 first-quarter financial results. The accompanying slides will be available before the webcast on the Caterpillar website at http://www.caterpillar.com/investors/events-and-presentations.

About Caterpillar:

For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2017 sales and revenues of $45.462 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.

Click here to download the full version of the Caterpillar Inc. 1Q 2018 results release.

Caterpillar contact: Corrie Scott, 224-551-4133 (Office), 808-351-3865 (Mobile) or Scott_Corrie@cat.com