Caterpillar (CAT) Q1 2018 earnings summary

Executive summary

• Q1 sales and revenues rose 31% YoY to $12.859B; diluted profit per share reached a first-quarter record of $2.74, versus $0.32 a year earlier.

• Adjusted profit per share was $2.82 versus $1.28; higher volume, favorable pricing and lower restructuring costs drove profit growth.

Financial highlights

• Consolidated operating profit was $2.108B versus $380M; profit attributable to common shareholders was $1.665B versus $192M.

• Sales growth included $2.526B of volume gains, $186M of price realization and $308M of currency benefit.

• Manufacturing costs were about flat on 31% higher sales and revenues; Q1 restructuring costs were $69M versus $723M in Q1 2017.

• Consolidated operating cash flow was $935M versus $1.542B, as higher incentive payments and working-capital needs outweighed higher profit.

Outlook and guidance

• FY 2018 profit-per-share outlook rose $2 to $9.75–$10.75; adjusted outlook is $10.25–$11.25, excluding $0.50 per share of restructuring costs.

• Outlook includes ~$400M in restructuring costs and ~$1.4B in short-term incentive compensation expense.

• Higher-than-expected sales volume across the primary segments is the main outlook driver; improved price realization is expected to be partly offset by higher material costs.

• Price realization is expected to more than offset full-year material cost increases; Q1 adjusted profit per share is expected to be the year's high-water mark.