Caterpillar (CAT) Q1 2017 earnings summary

Executive summary

• Q1 sales and revenues rose 4% YoY to $9.822B, the first same-quarter increase in ten quarters; reported diluted EPS was $0.32.

• EPS excluding restructuring doubled to $1.28 from $0.64; operating profit excluding restructuring improved $514M YoY.

Financial highlights

• Sales volume added $275M and favorable price realization added $88M to revenue; currency reduced revenue by $13M.

• Reported operating profit was $417M vs. $494M; net income attributable to common shareholders was $192M vs. $271M.

• Restructuring costs were $752M, with a $0.96 per-share after-tax impact, vs. $161M and $0.18 per share in Q1 2016.

• ME&T operating cash flow was $1.524B; cash and short-term investments ended at $9.472B.

Outlook and guidance

• FY17 sales and revenues outlook increased to $38B-$41B, midpoint $39.5B, from $36B-$39B, midpoint $37.5B.

• FY17 EPS outlook is $2.10 at the sales midpoint, or $3.75 excluding restructuring; prior outlook was $2.30 and $2.90, respectively.

• FY17 restructuring costs are expected at $1.25B, including Gosselies and Aurora actions; restructuring actions are expected to benefit operating costs by ~$450M versus 2016.

• FY segment sales outlook: Construction Industries flat to up 5%, Resource Industries up 10%-15%, and Energy & Transportation flat.

• Price realization is expected neutral to slightly positive; competitive pricing and higher material costs in H2, plus economic and commodity-price uncertainty, pose risks.