Core Viewpoint - Caterpillar's stock has experienced a decline following its fourth-quarter earnings report, which revealed a mixed performance with concerns about future revenue expectations for 2025 despite a strong performance in 2024 [1][2][5]. Financial Performance - Caterpillar's fourth-quarter revenue fell by 5% year-over-year, and the full-year revenue decreased by 3% compared to the previous year [8]. - The operating margin for the fourth quarter was reported at 18%, while the full-year margin improved to 20.2%, up from 19.3% [8]. - Earnings per share (EPS) increased by approximately 10% for both the fourth quarter and the full year [8]. - Free cash flow (FCF) from machinery, energy, and transportation (ME&T) decreased from $10 billion in 2023 to $9.4 billion in 2024, although it remained near the upper end of the company's guidance of $5 billion to $10 billion [4][8]. Segment Performance - Sales from Caterpillar's construction industries and resource industries (mining) segments declined by 8% and 9% respectively in the fourth quarter [3]. - The energy and transportation (E&T) segment showed resilience, with flat sales due to higher pricing and reported profit growth, contrasting with the declines in other segments [3]. Future Outlook - Caterpillar anticipates "slightly lower" revenue in 2025 compared to the $64.8 billion generated in 2024, with no significant changes expected in dealer inventory levels [5]. - The company cites uncertainty under the Trump administration and persistently high interest rates as factors contributing to anticipated softer sales [6]. - Despite short-term pressures on the stock, Caterpillar is viewed as a strong long-term investment due to its leadership in construction and mining equipment, financial stability, and solid earnings and dividend history [7].

Core Insights - Caterpillar Inc. reported adjusted earnings per share of $5.14 for Q4 2024, exceeding the Zacks Consensus Estimate of $4.97 by 3%, but down 2% year over year due to volume declines across segments [1] - The company's Q4 revenues were approximately $16.2 billion, missing the Zacks Consensus Estimate of $16.64 billion by 2.6%, and reflecting a 5% year-over-year decline [3] Financial Performance - Caterpillar's earnings per share including one-time items were $5.78, a 9% increase from $5.28 in the same quarter last year [2] - The cost of sales decreased 6% year over year to $10.3 billion, while gross profit fell 3% to $5.9 billion, resulting in a gross margin of 36.3% compared to 35.5% in the prior year [5] - Operating profit was around $2.92 billion, a 6.7% decline from the previous year, with an operating margin of 18% [6] Segment Performance - Machinery and Energy & Transportation (ME&T) sales decreased 6% year over year to approximately $15.3 billion [7] - Construction Industries' total sales fell 8% year over year to $6 billion, with a significant 14% decline in North America [8] - Resource Industries segment sales were down 9% year over year to $2.96 billion, with North America experiencing a 23% plunge [9] - Energy & Transportation segment sales were around $7.65 billion, a slight dip of 0.3% from the previous year, with notable growth in Power Generation [10] Annual Performance - For the full year 2024, Caterpillar reported adjusted earnings per share of $21.90, beating the Zacks Consensus Estimate of $21.71, and reflecting a 3% year-over-year increase [14] - Total revenues for 2024 were around $64.8 billion, falling short of the Zacks Consensus Estimate of $65.2 billion, and representing a 3% decline year over year [15] Cash Flow and Shareholder Returns - The company generated an operating cash flow of $12 billion in 2024, down from $12.9 billion in the prior year, and returned approximately $10.3 billion to shareholders through dividends and share repurchases [16] Future Expectations - Caterpillar anticipates a decline in revenues for Q1 2025 compared to the previous year, with adjusted operating margins expected to be lower than the prior year [17] - For 2025, revenues are projected to be slightly lower than 2024 levels, with an adjusted operating margin target in the range of 16-20% [18] Stock Performance - Over the past year, Caterpillar's stock has gained 29%, outperforming the industry's growth of 25.8% [23]

Core Viewpoint - Goldman Sachs analyst Jerry Revich maintains a Buy rating and a price forecast of $442 for Caterpillar, Inc., despite mixed fourth quarter FY24 results, with total sales declining 5% year-over-year to $16.215 billion, missing consensus expectations [1] Group 1: Financial Performance - Total sales and revenue for the fourth quarter FY24 were $16.215 billion, which is a 5% decline year-over-year and below the consensus of $16.411 billion [1] - Adjusted earnings per share (EPS) for the quarter were $5.14, exceeding the consensus estimate of $4.99 [1] - For FY25, sales are expected to decline approximately 1% due to unfavorable pricing and lower interest income [2] Group 2: Margin Outlook and Operational Highlights - The key discussion point is whether the 2025 margin outlook represents a cyclical trough, with current targets approximately 200 basis points below FactSet consensus [3] - Positive highlights include a significant increase in destocking amounting to $700 million and a book-to-bill ratio of 1.08x in orders [2] - Despite concerns over margin targets, the progress in destocking, strong bookings, and effective cost management could support multiple expansion post-earnings [3] Group 3: Future Earnings Estimates - The analyst estimates EPS of $21.68 for FY25 and $23.33 for FY26 [4] - Following the earnings report, CAT shares experienced a decline of 4.51%, trading at $375.51 [4]

Core Insights - Caterpillar (CAT) shares experienced a decline after the company's fourth-quarter revenue fell short of expectations, reporting $16.2 billion, a 5% decrease year-over-year, and below analyst consensus [1][3] - The company's earnings per share reached an all-time high of $5.78, an increase from $5.28, surpassing analysts' expectations [1] Revenue Breakdown - Revenue from the construction industries segment decreased by 8% to $6 billion [2] - Resource industries, including mining trucks, saw a revenue drop of 9% to $2.96 billion [2] - The energy and transportation segment remained flat year-over-year, generating $7.65 billion in revenue [2] - The decline in revenue was attributed to lower sales volume due to shrinking dealer inventories, which fell by $1.3 billion in the fourth quarter compared to a $900 million decrease the previous year [2] Market Reaction - Caterpillar's shares fell approximately 5% intraday following the fourth-quarter results [3] - The company is viewed as a bellwether stock, serving as a proxy for both domestic and global economic trends [3] - Over the past 12 months, Caterpillar's shares have increased by about 25% [3]

Core Insights - Caterpillar reported $16.22 billion in revenue for Q4 2024, a year-over-year decline of 5% and a surprise of -2.57% compared to the Zacks Consensus Estimate of $16.64 billion [1] - The EPS for the same period was $5.14, down from $5.23 a year ago, with an EPS surprise of +3.42% against the consensus estimate of $4.97 [1] Financial Performance Metrics - Caterpillar's shares returned +8.4% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - Total sales and revenues in the Machinery, Energy & Transportation - Construction Industries segment were $6 billion, a year-over-year change of -7.9% [4] - Total sales and revenues in the Machinery, Energy & Transportation - Resource Industries segment were $2.96 billion, reflecting a year-over-year decline of -8.6% [4] Regional Performance - Sales and revenues in Asia/Pacific for Machinery, Energy & Transportation were $2.87 billion, a year-over-year change of -3.6% [4] - Latin America saw a significant increase, with sales and revenues of $1.67 billion, representing a year-over-year change of +144.2% [4] - North America reported sales and revenues of $7.63 billion, a year-over-year decline of -7.5% [4] Sales Volume and Price Realization - Sales volume in the Construction Industries segment was -$227 million, better than the estimated -$517.21 million [4] - Price realization was -$54 million, compared to the average estimate of +$97.59 million [4]

Core Insights - Caterpillar reported mixed Q4 2024 earnings, with adjusted EPS of $5.14 exceeding expectations but revenue of $16.2 billion falling short of forecasts [1][2][3] Financial Performance - Adjusted EPS was $5.14, beating the analysts' estimate of $5.02 but down 1.7% from Q4 2023's $5.23 [3] - Revenue for Q4 2024 was $16.2 billion, below the expected $16.61 billion and down 5.3% from $17.1 billion in Q4 2023 [3] - Operating margin was 18%, slightly down from 18.4% year-over-year [3] - Operating cash flow remained stable at $12 billion, showing no change from the previous year [3] Business Overview - Caterpillar operates in three main segments: Construction Industries, Resource Industries, and Energy & Transportation, along with a Financial Products segment [4] - The company is focusing on sustainable innovation, expanding product offerings, and enhancing service delivery to maintain competitiveness [5] Segment Performance - The Construction Industries segment saw an 8% year-over-year sales decline due to unfavorable pricing and decreased dealer inventories [6] - Resource Industries experienced a 9% drop in sales, reflecting reduced market demand [6] - The Energy & Transportation segment remained stable, with a 22% increase in power generation sales despite a decline in oil and gas sales [6] Cash Management and Shareholder Returns - Caterpillar maintained an adjusted operating profit margin of 18.3%, only slightly below last year's figure [7] - The company spent $10.3 billion on share repurchases and dividends, indicating a commitment to returning value to shareholders [7] Regional Sales Trends - Regional sales showed declines: North America down 6%, Latin America down 7%, Europe, Africa, and the Middle East down 2%, and Asia/Pacific down 3% [8] - The Financial Products segment saw a 29% decrease in profit due to adverse credit loss provisions and equity impacts [8] Future Outlook - Management anticipates full-year sales for 2025 to be "slightly lower" than 2024's $64.8 billion, with analyst consensus for 2025 at just over $66 billion [9] - The company is focusing on segment diversification and sustainable innovation to address cyclical market dynamics and global economic uncertainties [9][10] - Plans include enhanced capital investments in large engine development for the Energy & Transportation segment [10] - Ongoing efforts in autonomous and electric solutions in Resource Industries are being monitored as part of future growth strategies [11]

Group 1: Earnings Performance - Caterpillar reported quarterly earnings of $5.14 per share, exceeding the Zacks Consensus Estimate of $4.97 per share, but down from $5.23 per share a year ago, representing an earnings surprise of 3.42% [1] - The company posted revenues of $16.22 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.57% and down from $17.07 billion year-over-year [2] - Over the last four quarters, Caterpillar has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Group 2: Stock Performance and Outlook - Caterpillar shares have increased approximately 8.4% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $5.01 on revenues of $15.43 billion, and for the current fiscal year, it is $21.56 on revenues of $65.45 billion [7] Group 3: Industry Context - The Manufacturing - Construction and Mining industry, to which Caterpillar belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Caterpillar's stock performance [5][6]

Fourth Quarter and Full Year 2024 Financial Review January 30, 2025 Caterpillar: Confidential Yellow 4Q 2024 EARNINGS RELEASE 4Q 2024 EARNINGS RELEASE Forward-Looking Statements Certain statements in this financial review relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "forecast," "target," "guide," "project," ...

Sales and Revenues - Fourth-quarter 2024 sales and revenues were $16.2 billion, a 5% decrease compared to $17.1 billion in the fourth quarter of 2023[4] - Full-year 2024 sales and revenues were $64.8 billion, down 3% compared to $67.1 billion in 2023[5] - Total sales and revenues for Q4 2024 were $16.215 billion, a decrease from $17.070 billion in Q4 2023[77] - Total sales and revenues for Machinery, Energy & Transportation in 2024 were $61.363 billion, with Financial Products contributing $4.212 billion, resulting in a total of $64.809 billion[99] - Total sales and revenues for Machinery, Energy & Transportation in 2023 were $63.869 billion, with Financial Products contributing $3.927 billion, resulting in a total of $67.060 billion[103] Profit and Earnings - Fourth-quarter 2024 profit per share was $5.78, compared to $5.28 in the fourth quarter of 2023[4] - Full-year 2024 profit per share was $22.05, compared to $20.12 in 2023[5] - Adjusted profit per share for Q4 2024 was $5.14, compared to $5.78 under GAAP[63] - Adjusted profit per share for 2024 was $21.90, compared to $22.05 under GAAP[63] - Profit of consolidated companies for Q4 2024 was $2.780 billion, compared to $2.662 billion in Q4 2023[77] - Profit of consolidated companies for 2024 was $10.744 billion, with Machinery, Energy & Transportation contributing $10.645 billion and Financial Products contributing $724 million[99] - Profit of consolidated companies for 2023 was $10.269 billion, with Machinery, Energy & Transportation contributing $9.928 billion and Financial Products contributing $686 million[103] - Consolidated profit of $10,788 million, with Machinery, Energy & Transportation contributing $10,689 million and Financial Products contributing $724 million[122] Operating Profit and Margins - Fourth-quarter 2024 operating profit margin was 18.0%, compared to 18.4% in the fourth quarter of 2023[4] - Full-year 2024 operating profit margin was 20.2%, compared to 19.3% in 2023[5] - Operating profit for Q4 2024 was $2.924 billion, a decrease of $210 million (7%) compared to $3.134 billion in Q4 2023, primarily due to lower sales volume[23] - Adjusted operating profit margin for Q4 2024 was 18.3%, down from 18.9% in Q4 2023[23] - Operating profit for Q4 2024 was $2.924 billion, down from $3.134 billion in Q4 2023[77] - Operating profit for 2024 was $13.072 billion, with Machinery, Energy & Transportation contributing $13.098 billion and Financial Products contributing $605 million[99] - Operating profit for 2023 was $12.966 billion, with Machinery, Energy & Transportation contributing $12.659 billion and Financial Products contributing $923 million[103] - Adjusted operating profit for Q4 2024 increased to $2,961 million, up from $2,924 million under GAAP, with a margin of 18.3%[63] - Annual adjusted operating profit for 2024 reached $13,431 million, with a margin of 20.7%, up from $13,072 million under GAAP[63] Segment Performance - Construction Industries segment sales decreased by 8% to $6.0 billion in the fourth quarter of 2024[14] - Resource Industries segment sales decreased by 9% to $2.96 billion in the fourth quarter of 2024[14] - Construction Industries' sales decreased by $516 million (8%) to $6.003 billion in Q4 2024, driven by unfavorable price realization of $300 million and lower sales volume of $227 million[34] - Resource Industries' sales decreased by $280 million (9%) to $2.962 billion in Q4 2024, primarily due to lower sales volume[40] - Energy & Transportation segment sales increased by $48 million (3%) to $1.477 billion in Q4 2024[24] - Energy & Transportation's total sales decreased by $20 million to $7.649 billion in Q4 2024 compared to $7.669 billion in Q4 2023, primarily due to lower sales volume of $301 million, partially offset by favorable price realization of $221 million and higher inter-segment sales of $52 million[43] - Energy & Transportation's segment profit increased by $48 million (3%) to $1.477 billion in Q4 2024, driven by favorable price realization of $221 million, partially offset by lower sales volume impact of $158 million and unfavorable manufacturing costs of $17 million[44] - Oil and Gas sales decreased by $320 million (14%) to $1.927 billion in Q4 2024, primarily due to lower sales in reciprocating engines and turbines[46] - Power Generation sales increased by $407 million (22%) to $2.242 billion in Q4 2024, driven by higher sales in large reciprocating engines and turbines[46] - Financial Products' segment revenues increased by $43 million (4%) to $1.024 billion in Q4 2024, primarily due to higher average earning assets of $29 million and higher average financing rates of $11 million[47] - Financial Products' segment profit decreased by $68 million (29%) to $166 million in Q4 2024, mainly due to unfavorable equity securities impact of $23 million, lower margin impact of $17 million, and higher credit loss provisions of $17 million[48] - Resource Industries' segment profit decreased by $134 million (22%) to $466 million in Q4 2024, primarily due to lower sales volume[41] Cash Flow and Financial Position - Enterprise operating cash flow for 2024 was $12.0 billion, with $6.9 billion of enterprise cash at the end of the fourth quarter[9] - The company deployed $10.3 billion of cash for share repurchases and dividends in 2024[6] - Net cash provided by operating activities for 2024 was $12.035 billion, down from $12.885 billion in 2023[84] - Capital expenditures for 2024 were $1.988 billion, up from $1.597 billion in 2023[84] - Dividends paid in 2024 totaled $2.646 billion, compared to $2.563 billion in 2023[84] - Net cash provided by operating activities was $12,035 million, with Machinery, Energy & Transportation contributing $11,437 million and Financial Products contributing $1,445 million[122] - Capital expenditures excluding equipment leased to others were $1,988 million, with Machinery, Energy & Transportation accounting for $1,952 million[122] - Additions to finance receivables totaled $15,409 million, primarily driven by Financial Products with $16,845 million[122] - Dividends paid amounted to $2,646 million, with Machinery, Energy & Transportation contributing $2,646 million and Financial Products contributing $625 million[122] - Proceeds from debt issued (original maturities greater than three months) were $10,283 million, all attributed to Financial Products[122] - Cash, cash equivalents, and restricted cash at the end of the period were $6,896 million, with Machinery, Energy & Transportation holding $6,170 million and Financial Products holding $726 million[122] - Depreciation and amortization expenses were $2,153 million, with Machinery, Energy & Transportation accounting for $1,368 million and Financial Products for $785 million[122] - Net cash used for investing activities was $2,453 million, with Machinery, Energy & Transportation providing $133 million and Financial Products using $2,787 million[122] - Net cash used for financing activities was $9,565 million, with Machinery, Energy & Transportation using $11,417 million and Financial Products providing $1,206 million[122] Taxes and Tax Benefits - The company recorded a discrete tax benefit of $224 million in Q4 2024 due to a tax law change related to currency translation[29] - Effective tax rate for Q4 2024 was 14.3%, compared to 18.1% in Q4 2023, excluding discrete items[31] - The annual effective tax rate, excluding discrete items, was 22.2% for both Q4 and full-year 2024[67][69] - Tax law changes related to currency translation in 2024 resulted in a $224 million benefit[63][69] Regional Sales Performance - North America sales decreased by $532 million (14%) to $3.157 billion in Q4 2024, driven by lower sales volume and unfavorable price realization[33] - Latin America sales increased by $36 million (6%) to $623 million in Q4 2024, driven by higher sales volume[33] Financial Products Performance - Cat Financial's past dues decreased to 1.56% at the end of 2024 from 1.79% at the end of 2023, while write-offs increased to $115 million in 2024 from $65 million in 2023[49] - Interest expense of Financial Products for 2024 was $1.286 billion, compared to $1.030 billion in 2023[99][103] Assets and Liabilities - Total assets as of December 31, 2024, were $87.764 billion, slightly up from $87.476 billion in 2023[80] - Total liabilities as of December 31, 2024, were $68.270 billion, up from $67.973 billion in 2023[80] - Total assets increased to $87.764 billion, with Machinery, Energy & Transportation (ME&T) contributing $52.642 billion and Financial Products contributing $37.129 billion[109] - Current assets totaled $45.682 billion, including $6.889 billion in cash and cash equivalents and $16.827 billion in inventories[109] - Long-term receivables for finance amounted to $13.242 billion, primarily driven by Financial Products[109] - Total liabilities stood at $68.270 billion, with current liabilities accounting for $32.272 billion[109] - Shareholders' equity was reported at $19.494 billion, with profit employed in the business at $59.352 billion[109] - Cash and cash equivalents increased to $6.978 billion, with ME&T holding $6.106 billion and Financial Products holding $872 million[115] - Receivables – trade and other increased to $9.310 billion, with ME&T contributing $3.971 billion and Financial Products contributing $570 million[115] - Total current liabilities rose to $34.728 billion, driven by short-term borrowings of $4.643 billion and accounts payable of $7.906 billion[115] - Long-term debt due after one year decreased to $24.472 billion, with ME&T holding $8.626 billion and Financial Products holding $15.893 billion[115] - Shareholders' equity slightly increased to $19.503 billion, with profit employed in the business at $51.250 billion[115] Research and Development - Research and development expenses for Q4 2024 were $519 million, down from $554 million in Q4 2023[77] - Research and development expenses for 2024 were $2.107 billion, consistent with the previous year's $2.108 billion[99][103] Corporate Items and Restructuring - Corporate Items and Eliminations expense decreased by $257 million to $227 million in Q4 2024, driven by timing differences, favorable fair value adjustments, and lower restructuring costs[50] - Restructuring costs related to divestitures of non-U.S. entities in 2024 amounted to $164 million[63] - Pension/OPEB mark-to-market losses for 2024 were $154 million, impacting both Q4 and full-year results[63][69] Adjusted Financial Metrics - Adjusted profit before taxes for Q4 2024 was $3,126 million, slightly lower than the GAAP figure of $3,243 million[63] - Adjusted profit before taxes for 2024 was $13,578 million, compared to $13,373 million under GAAP[63] Consolidated Financials - Consolidated profit before taxes for 2024 was $13.373 billion, with Machinery, Energy & Transportation contributing $13.308 billion and Financial Products contributing $690 million[99] - Consolidated profit before taxes for 2023 was $13.050 billion, with Machinery, Energy & Transportation contributing $12.488 billion and Financial Products contributing $907 million[103] Sales of Machinery, Energy & Transportation - Sales of Machinery, Energy & Transportation for Q4 2024 were $15.332 billion, down from $16.237 billion in Q4 2023[77] Shareholders' Equity - Shareholders' equity was reported at $19.494 billion, with profit employed in the business at $59.352 billion[109] - Shareholders' equity slightly increased to $19.503 billion, with profit employed in the business at $51.250 billion[115] Caterpillar's Market Position - Caterpillar's total sales and revenues for 2024 were $64.8 billion, maintaining its position as a global leader in construction and mining equipment, engines, and locomotives[54] Upcoming Events - Caterpillar will host a teleconference and webcast on January 30, 2025, to discuss its Q4 and full-year 2024 results, with accompanying slides available on the company's website[56]

Core Insights - Caterpillar Inc. reported a decrease in sales and revenues for both the fourth quarter and full year of 2024 compared to 2023, with fourth-quarter sales at $16.2 billion, down 5% from $17.1 billion, and full-year sales at $64.8 billion, down 3% from $67.1 billion [2][3][4] Financial Performance - Fourth-quarter profit per share increased to $5.78 from $5.28 in the same quarter of 2023, while adjusted profit per share decreased slightly to $5.14 from $5.23 [3][4] - Full-year profit per share rose to $22.05 from $20.12, and adjusted profit per share increased to $21.90 from $21.21 [4][12] - Operating profit margin for the fourth quarter was 18.0%, down from 18.4% in the previous year, while adjusted operating profit margin was 18.3%, down from 18.9% [3][16] Segment Performance - Sales in the Construction Industries segment decreased by 8% to $6.003 billion, primarily due to unfavorable price realization and lower sales volume [21][22] - Resource Industries segment sales fell by 9% to $2.962 billion, driven by lower sales volume [25][26] - Energy & Transportation segment sales remained relatively stable at $7.649 billion, with a slight decrease of $20 million, but segment profit increased by 3% to $1.477 billion [27][28] Cash Flow and Capital Allocation - The company generated an enterprise operating cash flow of $12.0 billion and ended the year with $6.9 billion in cash [6][12] - Caterpillar deployed $10.3 billion for share repurchases and dividends in 2024 [6][12] Geographic Performance - Sales in North America decreased by 14% in the Construction Industries segment, while Latin America saw a 6% increase due to higher sales volume [13][24] - EAME region sales slightly decreased, while Asia/Pacific experienced declines due to unfavorable price realization [13][24] Financial Products Segment - Financial Products segment revenues increased by 4% to $1.024 billion, while segment profit decreased by 29% to $166 million [28][30]