Caterpillar Reports Second-Quarter 2018 Results

July 30, 2018

 

Caterpillar Reports Second-Quarter 2018 Results
Record Second-Quarter Profit Per Share; Raised Full-Year Outlook on Continued Strength in End Markets 

  • Second-quarter sales and revenues up 24 percent
  • Profit per share doubled; adjusted profit per share nearly doubled
  • Raised full-year profit per share outlook
  • Repurchased $750 million of shares; increased quarterly dividend 10 percent

DEERFIELD, Ill. — Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2018 sales and revenues of $14.0 billion, compared with $11.3 billion in the second quarter of 2017, a 24 percent increase. Second-quarter 2018 profit per share of $2.82 was a second-quarter record. Profit per share was $1.35 in the second quarter of 2017. Adjusted profit per share in the second quarter of 2018 was $2.97, compared with second-quarter 2017 adjusted profit per share of $1.49.

During the second quarter of 2018, Machinery, Energy & Transportation (ME&T) operating cash flow was $2.1 billion, and the company repurchased $750 million of Caterpillar common stock. In June 2018, the board of directors approved an increase to the quarterly dividend of 10 percent to $0.86 per share. The second quarter of 2018 ended with an enterprise cash balance of $8.7 billion.

“Caterpillar delivered record second-quarter profit per share,” said Caterpillar CEO Jim Umpleby. “Our team is doing a great job executing our strategy for profitable growth, focusing on operational excellence, expanded offerings and services.”

2018 Outlook

The company is raising its 2018 profit per share outlook to a range of $10.50 to $11.50. Excluding restructuring costs of about $400 million, the company expects adjusted profit per share to be in a range of $11.00 to $12.00. The prior profit per share outlook range was $9.75 to $10.75, and the adjusted profit per share outlook range was $10.25 to $11.25.

“Based on outstanding results in the first half of the year and continued strength in many of our end markets, Caterpillar is again raising our profit outlook for 2018. We remain focused on operational excellence, cost discipline and investing for long-term profitable growth,” said Umpleby.

Sales and revenues – Most end markets continue to improve, order rates are healthy, and the backlog remained solid in the quarter. For certain applications, particularly in oil and gas and mining, the company is seeing strong demand and taking orders for delivery well into 2019.

Operating profit – The company is raising the outlook range primarily due to the continued strength in many end markets. Recently imposed tariffs are expected to impact material costs in the second half of the year by approximately $100 million to $200 million, and the company expects supply chain challenges to continue to pressure freight costs. However, the company intends to largely offset these impacts through announced mid-year price increases and using the Operating & Execution Model to further drive operational excellence and structural cost discipline.

The outlook does not include a mark-to-market gain or loss for remeasurement of pension and other postemployment benefit (OPEB) plans, changes to provisional estimates recorded in 2017 for U.S. tax reform, or any impact from future geopolitical risks, including increased trade restrictions above those currently in place.

Share Repurchase; Authorization for New $10 Billion Share Repurchase Program

In January 2014, the board of directors authorized the repurchase of $10.0 billion of Caterpillar common stock. The current program expires at the end of this year. Under this authorization, the company repurchased $1.25 billion in common stock in the first half of 2018, of which $750 million was repurchased in the second quarter. As of June 30, 2018, $4.2 billion remained on the current authorization. The company currently expects share repurchases during the second half of 2018 to be in a similar range as the first half, but the amount could vary depending upon market conditions and investing priorities. Aligned with the cash deployment strategy, the company plans to be in the market for share repurchases on a fairly consistent basis.

In July 2018, the board of directors authorized the repurchase of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration date.

 

Notes:

-        Glossary of terms is included on pages 13-14; first occurrence of terms shown in bold italics.

-        Information on non-GAAP financial measures is included on page 15.

-        Caterpillar will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Monday, July 30, 2018, to discuss its 2018 second-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. 2Q 2018 results release.

Click here to download the Caterpillar Inc. 2Q 2018 quarterly highlights.

 

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

Interim Chief Financial Officer Joe Creed discusses the company's 2018 second-quarter financial results.