PresentationStephen Goddard Good morning, everyone, and welcome to the JB Hi-Fi 2025 Annual General Meeting. My name is Stephen Goddard. I'm Chair of the JB Hi-Fi Group, and I'm your Chair for today's meeting. We have a quorum, and I'm pleased to declare the meeting open. Can everyone hear me there? Do you want just a bit more volume? How does that sound? Do you want my name again? Stephen. As in recent years, we are holding a hybrid AGM, and I'm delighted to be able to extend a warm welcome to our shareho ...

Group 1 - The event is attended by 163 registered shareholders along with staff and friends, indicating strong shareholder engagement [1] - The meeting will include presentations from the Non-Executive Chair and co-CEOs, followed by a formal meeting and facility tour [2] - The co-CEOs, Leandro and Sam, have extensive experience with the company, with tenures of 24 years and 16 years respectively [3]

Federal Reserve Meeting - The Federal Reserve lowered interest rates by a quarter percentage point, which was widely anticipated, but the meeting revealed a divided stance among members regarding future policy directions [4][5] - There were two dissenting votes: one member advocated for a half percentage point cut, while another opposed any rate cut, highlighting internal conflicts within the Fed [5] - Inflation remains a concern, hovering around 3%, above the Fed's target of 2%, while signs of economic slowdown, particularly in the labor market, are emerging [5][6] Amazon and Layoff Concerns - Amazon announced it would cut 14,000 corporate jobs, with reports suggesting this number could rise to 30,000, raising concerns about the overall economy [6] - The layoffs reflect both short-term economic uncertainty and long-term structural changes due to AI potentially replacing human jobs [10][12] Earnings Reports - Meta reported strong earnings but faced a $16 billion tax charge, leading to an 11% drop in stock price, raising investor concerns about increased spending, particularly in R&D, which grew 36% year-over-year [21][23] - In contrast, Alphabet (Google) saw a 2.5% increase in stock price post-earnings, attributed to greater investor confidence in its spending strategies compared to Meta [25][26] Apple and Caterpillar - Apple is in a wait-and-see position, with its stock remaining flat after earnings, as investors anticipate the impact of the upcoming holiday season and new iPhone rollout [28] - Caterpillar reported a 17% growth in its energy and transportation equipment sector, driven by demand for components used in AI data centers, leading to a 12% increase in stock price post-earnings [31][30] Upcoming Earnings and Economic Indicators - Palantir and AMD are set to report earnings next week, with Palantir being highlighted as a significant AI play [34] - The government shutdown has resulted in the absence of the traditional jobs report, creating uncertainty in economic indicators [35] NVIDIA Milestone - NVIDIA became the first company to reach a market capitalization of $5 trillion, achieving this milestone in just 110 days, indicating rapid growth in the tech sector [37][38]

Group 1 - Jim Cramer highlighted Caterpillar Inc. (NYSE:CAT) as a company successfully pivoting towards the AI data center construction boom, crediting former CEO Jim Umpleby for this strategic shift [1] - Cramer emphasized that Caterpillar has moved away from reliance on episodic growth in China and housing, instead focusing on data centers and its strong engine and resource businesses [1] - The stock was previously downgraded by Goldman Sachs when it was at $69, indicating a volatile history, but Cramer believes the current strategy positions Caterpillar favorably for future growth [1] Group 2 - While acknowledging Caterpillar's potential, there is a belief that other AI stocks may offer higher returns with limited downside risk [1] - The article suggests that there are extremely cheap AI stocks that could benefit from Trump tariffs and onshoring, indicating a broader investment opportunity in the AI sector [1]

Core Viewpoint - The analyst has been bearish on Caterpillar Inc. (CAT) this year but acknowledges that the stock has rallied approximately 40% since the initial bearish stance [1]. Group 1 - The analyst's focus is primarily on the tech sector, indicating a potential lack of alignment with Caterpillar's core business, which is in heavy machinery [1]. - The analyst holds a Bachelor of Commerce Degree with Distinction, majoring in Finance, which adds credibility to their analysis [1]. - The analyst emphasizes core values of Excellence, Integrity, Transparency, and Respect, suggesting a commitment to ethical analysis and reporting [1].

Core Viewpoint - Morgan Stanley warns that the market valuation multiples for Caterpillar's power generation business have significantly exceeded those of industry leaders like Nvidia and GE Vernova, indicating a potential overvaluation that could lead to a sharp correction if market conditions change [1][4]. Valuation Comparison - Caterpillar's power generation business is currently valued at an EV/EBITDA multiple between 58x and 103x, while GE Vernova and Nvidia are valued at approximately 28x and 25x, respectively [1][4]. - This suggests that the market perceives Caterpillar's power generation business as more valuable than the related businesses of top technology and energy companies [4]. Business Segment Analysis - The projected EBITDA for Caterpillar's segments in 2026 is as follows: - Construction Industries: $3,664 million at a 13.0x multiple, resulting in an EV of $47,628 million - Resource Industries: $2,118 million at a 13.0x multiple, resulting in an EV of $27,538 million - Power Generation: $1,508 million at a 103.0x multiple, resulting in an EV of $155,369 million - Other Energy & Transportation: $7,132 million at a 13.0x multiple, resulting in an EV of $92,713 million [5]. Market Expectations - To justify Caterpillar's current stock price of $585, the market must accept one of two extreme scenarios: 1. The valuation of Caterpillar's traditional cyclical businesses (like construction and resource extraction) is pushed to "absurd levels" far beyond historical norms. 2. Even with optimistic assumptions for the power generation business, the implied valuation for cyclical businesses remains high at 28x, despite declining operating margins [6][7]. - Morgan Stanley estimates that even with aggressive growth projections for the power generation business, it is unlikely to meet bullish expectations of $20 billion in sales by 2027 [7]. Price Target and EPS Forecast - Morgan Stanley maintains a 2026 EPS forecast for Caterpillar at $19.24, with a target price of $380 based on a 20x P/E ratio, indicating a potential downside of 35% from the current stock price [7].

U.S. Machinery Data Center Power Gen: How big is the onsite and standby TAM and what's different about CAT and CMI? Chad Dillard +1 917 344 8469 chad.dillard@bernsteinsg.com Miguel Marques, CFA +1 917 344 8432 miguel.marques@bernsteinsg.com Specialist Sales Steve Song +1 917 344 8401 steve.song@bernsteinsg.com This note sizes the onsite and standby data center power generation TAM and compares strategic positioning of Caterpillar & Cummins. We draw on our proprietary data center power gen model (available i ...

Core Viewpoint - Caterpillar Inc. demonstrates strong financial performance with a positive outlook for future growth, despite slight fluctuations in stock price. Financial Performance - Caterpillar's third-quarter sales and revenues increased by 10% year over year to $17.64 billion, surpassing the expected $16.77 billion [2] - Adjusted earnings per share were $4.95, exceeding the $4.52 estimate but slightly below the previous year's $5.17 [3] - GAAP profit per share was $4.88, compared to $5.06 a year ago [3] Stock Performance - Truist Financial set a new price target for Caterpillar at $729, indicating a potential 24.51% increase from the current trading price of $585.49 [2] - Despite the positive earnings report, Caterpillar shares experienced a slight decline of 0.1%, trading at $585.02 [4] - The stock has fluctuated between a low of $575.77 and a high of $593.77 on the day of reporting [4] Market Position - Caterpillar's market capitalization stands at approximately $274.45 billion, with a trading volume of 1,527,198 shares on the NYSE [5] - Over the past year, CAT has reached a high of $596.21 and a low of $267.30 [5] Future Outlook - Caterpillar expects its 2025 full-year sales and revenues to be modestly higher than those in 2024, with full-year services revenues remaining approximately flat [5]

Core Viewpoint - Caterpillar Inc. is transitioning towards AI and digital infrastructure, particularly focusing on data centers and power generation, which is attracting attention from Wall Street [1][2]. Group 1: Company Performance - Caterpillar reported a third-quarter adjusted EPS of $4.95, exceeding expectations of $4.51, with retail sales increasing by 12% and backlog reaching a record $39.8 billion [3]. - The strong performance in power generation and oil and gas segments contributed significantly, with year-over-year increases of 31% and 20%, respectively [3]. Group 2: Analyst Insights - Bank of America Securities analyst Michael Feniger maintained a Buy rating on Caterpillar, raising the price target to $650 from $594, citing the company's improving EPS power [2][4]. - The convergence of power generation, oil and gas, and AI-driven data center demand positions Caterpillar favorably in the industrial and energy sectors, with a price objective based on 27x 2026 EPS [4]. Group 3: Future Outlook - Despite acknowledging risks such as tariffs and inventory normalization, the analyst remains optimistic about Caterpillar's operational discipline and exposure to infrastructure and technology demand [5]. - Upcoming commentary at the company's Investor Day may indicate a potential for higher peak EPS, suggesting that Caterpillar's growth story is just beginning [5].

Core Insights - Caterpillar Inc reported better-than-expected third-quarter financial results, with sales and revenues climbing 10% year over year to $17.64 billion, surpassing analyst estimates of $16.77 billion [1] - Adjusted earnings per share were $4.95, exceeding the estimate of $4.52, although slightly below the $5.17 from the prior-year quarter [1] - The company anticipates modestly higher full-year sales and revenues for 2025 compared to 2024, with services revenues expected to remain approximately flat year-over-year [2] Financial Performance - Sales and revenues increased to $17.64 billion from $16.1 billion in the same quarter last year, marking a 10% year-over-year growth [1] - Adjusted earnings per share were reported at $4.95, compared to $4.52 estimates and $5.17 in the same quarter last year [1] - GAAP profit per share was $4.88, down from $5.06 a year ago [1] Market Reaction - Following the earnings announcement, Caterpillar shares fell 0.1% to trade at $585.02 [2] Analyst Ratings and Price Targets - B of A Securities analyst Michael Feniger maintained a Buy rating and raised the price target from $594 to $650 [6] - Truist Securities analyst Jamie Cook reiterated a Buy rating and increased the price target from $582 to $729 [6] - Barclays analyst Adam Seiden maintained an Equal-Weight rating and raised the price target from $485 to $555 [6] - Bernstein analyst Chad Dillard maintained a Market Perform rating and boosted the price target from $502 to $557 [6]