Caterpillar reports record Q1 profit per share

Publish date:

Caterpillar Inc. announced first quarter sales and revenues of $13.5 billion, a 5 percent increase over $12.9 billion in the first quarter of 2018.

Its profit of $3.25 per share was a first-quarter record, the company said. This was a 19 percent increase compared with the first-quarter profit per share of $2.74 in 2018, also a record.

Profit per share in the first quarter of 2019 included a discrete tax benefit related to U.S. tax reform of $178 million, or $0.31 per share. Profit per share in the first quarter of 2018 included restructuring costs of $0.08 per share.

During the first quarter of 2019, machinery, energy and transportation operating cash flow was $860 million. In the first quarter of 2019, the company repurchased $751 million of Caterpillar common stock and paid dividends of $494 million. The enterprise cash balance at the end of the first quarter of 2019 was $7.1 billion.

“The global Caterpillar team delivered record first-quarter profit per share,” said Caterpillar chairman and CEO Jim Umpleby in a statement. “We are executing our strategy for profitable growth by investing in services, expanding our offerings and improving operational excellence.”

Operating profit for the first quarter of 2019 was $2.207 billion, compared with $2.108 billion in the first quarter of 2018.

The increase of $99 million was mostly due to favorable price realization and higher sales volume, partially offset by higher manufacturing costs and increased selling, general and administrative and research and development expenses.

The increase in manufacturing costs was primarily due to higher variable labor and burden, including freight costs, and material costs, including tariffs.

The company continues to have confidence in the “fundamentals of its diverse end markets,” and expectations for 2019 performance are unchanged.

However, due to a $0.31 per share discrete tax benefit, Caterpillar is revising its profit per share outlook to a range of $12.06 to $13.06, compared with the previous outlook range of $11.75 to $12.75.

The first-quarter discrete tax benefit of $178 million, or $0.31 per share, is related to U.S. tax reform as a result of final regulations recently issued by the U.S. Treasury. The outlook does not include a mark-to-market gain or loss for re-measurement of pension and other post-employment benefit plans, which will be excluded from adjusted profit per share in the fourth quarter of 2019 along with any other discrete items.

The 5 percent revenue increase was primarily due to higher sales volume driven by improved demand for both equipment and services, with the most significant increase in resource industries. Sales volume also increased in construction, while energy and transportation were about flat.

Sales grew in all regions except for EAME, with the largest gains in North America and Asia/Pacific. Favorable price realization, primarily in the construction and resource industries, also contributed to the sales improvement. The increase was partially offset by unfavorable currency impacts due to a stronger U.S. dollar.


The Calm Before the Storm?

Although key measures continued on an upward trajectory and unemployment numbers have fallen, the overall outlook for 2020 remains volatile.