Caterpillar Inc | $CAT Stock | Rising Material Costs Overshadow Q3 Solid Earnings


Caterpillar Inc (NYSE: CAT)

Caterpillar revealed a higher than expected third-quarter profit early Tuesday, but its stock got knocked more than 8% in premarket trade. The drop came after the company revealed that the impact of tariffs for material costs was approximately $40 million during the three months ended September 30, 2018.

The Dow Jones Component now plans to pass the costs to consumers by raising the prices of most of its engines and machines by 1% to 4% in 2019. Shares of the Deerfield, IL-based company have gone down 24% since the beginning of the year.

CAT Earnings & Outlook

The company reported net income of $1.73 billion, or $2.88 per share, for the quarter, compared with $1.06 billion, or $1.77 per share, in Q3 of the previous year. Earnings adjusted for non-recurring items were $2.86 per share.

Sales came in at $13.5 billion, up 18% from $11.4 billion, in the earlier-year quarter. Analysts had forecast adjusted earnings of $2.85 and sales of $13.3 billion, according to figures compiled by Refinitiv.

Sales from the North American region grew 28% from a year earlier, while Middle East sales rose 6%. Latin America sales increased 25% and Europe sales came in at 6%. Meanwhile, Asia Pacific sales jumped 23%.

Full-time workforce increased to 123,100 employees during the quarter, compared with 114,900 in the third quarter of the previous year.

The mining and construction equipment manufacturer expects 2018 earnings of between $10.65 to $11.65 per share and adjusted earnings in the range of $11 to $12 per share. Analysts expect it the company to post earnings of $12.95 per share for the full year.

Caterpillar CEO Comments

Jim Umpleby, Chief Executive Officer of Caterpillar, Inc. issued these remarks on the performance: “This was the best third-quarter profit per share in our company’s history. Our global team continues to do excellent work focusing on our customers’ success and executing our strategy for profitable growth.”

Caterpillar, Inc. Company Profile

Caterpillar, Inc. engages in the manufacture of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. It operates through the following segments: Construction Industries, Resource Industries, Energy and Transportation, Financial Products, and All Other.

The Construction Industries segment supports customers using machinery in infrastructure and building construction applications. The Resource Industries segment is responsible for supporting customers using machinery in mining and quarrying applications.

The Energy and Transportation segment supports customers in oil and gas, power generation, marine, rail, and industrial applications. The Financial Products segment offers a range of financing alternatives to customers and dealers for Caterpillar machinery and engines, solar gas turbines, as well as other equipment and marine vessels.

The All Other segments includes activities such as; the business strategy, product management and development, and manufacturing of filters and fluids, undercarriage, tires and rims, engaging tools, and fluid transfers. The company is headquartered in Deerfield, IL. – CNN Money