Caterpillar (CAT) Q4 2021 earnings summary

Executive summary

• FY21 sales and revenues rose 22% YoY to $50.971B; operating profit increased 51% to $6.878B, with stronger demand and pricing partly offset by manufacturing cost inflation.

• Q4 sales and revenues increased 23% YoY to $13.798B; operating profit rose 17% to $1.611B, while operating margin declined to 11.7% from 12.3%.

• ME&T adjusted operating profit margin was 13.7% and ME&T free cash flow was $6.0B, meeting 2019 Investor Day targets; $5B was returned to shareholders in 2021.

Financial highlights

• FY21 profit was $6.489B versus $2.998B in FY20; diluted EPS was $11.83 versus $5.46, while adjusted EPS was $10.81 versus $6.56.

• Q4 profit was $2.120B and diluted EPS $3.91, versus $780M and $1.42 in Q4 2020; adjusted EPS was $2.69 versus $2.12.

• FY21 operating profit was $6.878B versus $4.553B; reported operating margin was 13.5% versus 10.9%, while adjusted operating margin was 13.7%.

• Other income was $1.814B in FY21, mainly reflecting $833M of pension and OPEB mark-to-market gains; the effective tax rate was 22.9% excluding discrete items, versus 27.8% in FY20.

• Operating cash flow was $7.198B, enterprise cash ended at $9.3B, and inventory increased to $14.038B from $11.402B.

Outlook and guidance

• Dealer inventories are expected to be about flat in 2022 versus 2021; supply chain, transportation, labor and cost pressures were expected to continue through 2022.

• 2022 short-term incentive compensation expense was expected to be about $1.0B; restructuring costs about $600M, primarily for strategic actions addressing a small number of products.

• Prior restructuring actions were expected to lower operating costs by about $75M in 2022 versus 2021; ME&T 2022 capital expenditures were expected to be around $1.4B.

• 2022 pension and OPEB contributions were expected to total approximately $357M; services sales carried an aspirational goal of $28B by 2026.