CAT Q4 Earnings Beat, Revenues Lag Estimates on Weak Volumes

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]