Caterpillar (CAT) Q4 2006 earnings summary

Executive summary

• FY 2006 marked a third consecutive year of record sales and profit; sales and revenues reached $41.517B and profit was $3.537B, or $5.17/share.

• Record Q4 sales and revenues were $11.003B; profit was $882M, or $1.32 diluted EPS.

• Higher volume and improved price realization drove growth, while higher core costs, a slowing North American housing market and weaker Q4 machinery results tempered performance.

Financial highlights

• FY sales and revenues rose 14% to $41.517B; machinery and engines sales were $38.869B, and Financial Products revenues were $2.648B.

• Operating profit increased 30% to $4.921B; consolidated profit rose to $3.537B from $2.854B.

• Diluted EPS was $5.17 versus $4.04; dividends declared were $1.15/share versus $0.96.

• Q4 sales and revenues rose 14% to $11.003B; operating profit increased 7% to $1.146B, while profit rose $36M YoY to $882M.

• Operating cash flow was $5.80B, up $2.69B; growth reflected higher profit, lower benefit-plan contributions and improved receivables timing.

Outlook and guidance

• FY 2007 sales and revenues outlook: $41.5B–$43.6B; midpoint $42.55B, up 2.5%, with Machinery and Engines volume expected to decline 2%–3%.

• 2007 profit/share outlook is $5.20–$5.70; expected benefits from price realization are partly offset by lower volume, higher core costs and a 32% effective tax rate.

• Midpoint regional Machinery and Engines outlook: North America down 8%, EAME up 13%, Latin America up 1% and Asia/Pacific up 17%; Financial Products revenue expected to rise 15%.

• 2007 capex excluding equipment leased to others is expected to be ~$1.80B; first-quarter operating profit faces an estimated ~$200M YoY headwind from truck engines and U.S. housing.