Caterpillar (CAT) Q4 2018 earnings summary

Executive summary

• FY 2018 sales and revenues rose 20% to $54.722B; adjusted profit per share reached a record $11.22, up 63%.

• 2019 profit per share guidance is $11.75–$12.75, with modest sales growth assumed.

Financial highlights

• Q4 sales and revenues rose 11% to $14.342B; adjusted profit per share increased 18% to $2.55, while reported profit per share was $1.78.

• Q4 operating profit rose 36% to $1.883B; FY operating profit rose 86% to $8.293B, as higher volume and pricing outweighed higher costs.

• FY reported profit per share was $10.26, versus $1.26 in 2017; FY adjusted profit per share was $11.22, versus $6.88.

• FY ME&T operating cash flow was $6.3B; total FY operating cash flow was $6.558B.

Outlook and guidance

• 2019 guidance assumes a 26% tax rate, modest sales growth and normalized restructuring costs; adjusted profit per share excludes pension/OPEB mark-to-market gains or losses and changes to U.S. tax reform estimates.

• Tailwinds include favorable price realization, lower short-term incentive compensation expense, Financial Products profit and share repurchases; higher costs are a headwind.

• Priorities include cost discipline, operational excellence, expanded offerings and services, and investment for long-term profitable growth.

• Dealer inventory was expected to be flat in 2019; Q1 stock repurchases were expected to be ~$750M.