Caterpillar Inc. Beats EPS Estimates, Raises Guidance

Caterpillar Inc. (NYSE:CAT) released the results from its most recently completed quarter this morning, posting earnings per share of $1.69, excluding items, on $14.15 billion in sales. Analysts had been expecting earnings of $1.51 per share on sales of $14.45 billion for the quarter.

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Reported earnings per share were $1.57, compared to earnings of $1.45 per share in the same quarter a year ago. The second quarter included a negative impact of 12 cents per share for restructuring activities.

Breaking down Caterpillar’s earnings

Caterpillar management reported weak results for its Resource Industries segment, which mostly includes mining. However, they emphasized that they were able to increase the company’s bottom line in spite of this. They cited three main contributors to Caterpillar’s continuing financial strength: business diversity, operational improvements and a strong balance sheet and cash flow.

The company saw continued improvement in its Construction Industries and Energy & Transportation divisions. Sales in Caterpillar’s Construction Industries rose 11% during the quarter, while operating profits increased 83% year over year. Improvements in this segment and record profits in the Energy & Transportation division more than offset the decline in the company’s mining business.

Caterpillar tightens sales guidance, raises EPS guidance

The equipment manufacturer also tightened its guidance for the full year, saying it now expects sales to between $54 billion and $56 billion. The previous outlook was between $53.2 billion and $58.8 billion for the full year, meaning the new guidance has a lower midpoint. The equipment manufacturer said the main reason for the change is expectations for their Construction Industries segment and weaker sales in China, the CIS and the Africa / Middle East region.

However, Caterpillar did raise its profit guidance to $5.75 per share for the full year. The company expects to spend about $400 million on restructuring costs this year, which is at the bottom end of the previous range of $400 million and $500 million. Excluding restructuring charges, Caterpillar expects earnings to be around $6.20 per share, which is an increase from management’s previous guidance of $6.10 per share.

Caterpillar also said it plans to repurchase approximately $2.5 billion worth of shares during the third quarter. The buyback is part of the company’s $10 billion share buyback authorization.