Caterpillar Inc. Falls Short On Sales, Cuts Guidance

Updated on

Caterpillar released its second quarter earnings report before opening bell this morning, posting earnings of $1.27 per share, which was in line with expectations on revenue of $12.3 billion, a 13% year over year decline. Analysts had been looking for sales of $12.74 billion.

Key metrics from Caterpillar’s earnings report

Net earnings were $1.16 per share, compared to last year’s $1.57 per share. Caterpillar spent $89 million on restructuring, which had an 11 cent per share impact after taxes. ME&T’s operating cash flow was $1.638 billion, a decline from last year’s $2.064 billion. The debt-to-capital ratio for ME&T fell to 35.8% from 47.4%. Machinery, Energy, and Transportation sales fell to $11.583 billion from last year’s $13.391 billion. Financial Products revenues declined 3% to $734 million.

Caterpillar management also reduced their guidance for full year revenue to around $49 billion. The previous guidance was for sales of about $50 billion. The reason for that reduction as currency impacts from the stronger U.S. dollar. Management also noted that pricing of commodities like iron and coal suggest that things won’t get better any time soon. They continued to expect GAAP earnings of about $4.70 per share and non-GAAP earnings of about $5 per share. Caterpillar Chairman and CEO Doug Oberhelman said in a statement:

“While economic conditions in the United States are modestly positive, the global economy remains relatively stagnant.  Many of the key industries we serve remain weak, and we haven’t seen sustained signs of improvement.  Continuing economic weakness in China and Brazil, as well as uncertainty in the Eurozone and over Greece, haven’t helped confidence.”

Oberhelman also said they are committed to keeping costs under control through the global economic downturn.

Caterpillar announces more share repurchases

The company also announced plans to buy back $1.5 billion worth of shares during the third quarter. That’s on top of the about $500 million that was bought back during the first half of the year.

As of this writing, shares of Caterpillar were down 3.31% at $77.10 per share in premarket trades.

Leave a Comment