Caterpillar 2Q Profit Rises, Sales Fall

July 24, 2014

Caterpillar announced its second-quarter 2014 financial results, with a 4.1 percent increase in profit. Sales and revenues totaled $14.150 billion, slightly lower than second-quarter 2013 sales and revenues of $14.621 billion.

Caterpillar Inc.’s profit per share was $1.57, an increase from $1.45 per share in the second quarter of 2013. The second quarter of 2014 included a negative impact of $0.12 per share for previously announced restructuring activities. Excluding restructuring costs, profit per share was $1.69. Second-quarter 2014 sales and revenues were $14.150 billion, slightly lower than second-quarter 2013 sales and revenues of $14.621 billion.

“We’re pleased with our second-quarter results, particularly the improvement in profit. We increased the bottom line despite a weak quarter for our Resource Industries segment, which is principally mining,” said Caterpillar Chairman and CEO Doug Oberhelman.

“Our Construction Industries and Energy & Transportation segments continue to improve. Construction Industries had a good quarter with sales up 11 percent and operating profit up 83 percent from the second quarter of 2013. The improvement in Construction Industries, along with sales stability and record profit from Energy & Transportation, has helped us improve profit despite the downturn in the mining industry,” Oberhelman added.

The outlook for 2014 sales and revenues has been reasonably consistent with the preliminary outlook that the company provided with the third quarter financial release in October 2013. The company has updated its outlook for 2014, anticipating sales and revenues in a range of $54 to $56 billion. The previous outlook for sales and revenues was $56 billion in a range of plus or minus 5 percent ($53.2 to $58.8 billion). Most of the change in the mid-point of the range is in Construction Industries and reflects weaker sales in China, the CIS and in the Africa/Middle East region.

The company is increasing its 2014 profit per share outlook. To provide a better understanding of the company’s expectations for 2014 profit, the profit outlook is being provided with and without anticipated restructuring costs. The expectation for restructuring costs in 2014 is now about $400 million—the bottom end of the $400 to $500 million range that was previously expected. With sales and revenues at $55 billion, the mid-point of the outlook range, the revised profit outlook for 2014 including restructuring costs of about $400 million is $5.75 per share, an improvement from the previous outlook of $5.55 per share. Excluding restructuring costs, the profit outlook is $6.20 per share, an increase from the previous outlook of $6.10 per share.

Caterpillar also announced its intention to repurchase approximately $2.5 billion of Caterpillar common stock during the third quarter of 2014. This repurchase is part of the $10 billion stock repurchase authorization previously approved by the board of directors in the first quarter of 2014. The $2.5 billion repurchase expected in the third quarter is in addition to the approximately $1.7 billion that was repurchased by the company in the first quarter of 2014.

“With a strong balance sheet, positive cash flow, sufficient cash on hand and more modest needs for capital expenditures, it makes sense to continue to reward stockholders. In 2013, we repurchased $2 billion of stock and raised the dividend by 15 percent. In June of 2014, we increased the dividend an additional 17 percent, and by the end of the third quarter, we expect to have repurchased about $4.2 billion of stock in 2014,” Oberhelman said.