Caterpillar Inc. (NYSE: CAT): Q2 Earnings Preview 2011

Caterpillar Inc. (NYSE: CAT), the world's largest maker of earthmoving equipment, is scheduled to release its first quarter earnings before the openng bell on Friday, July 22, 2011. Analysts, on average, expect he company to report earnings of $1.79 a share on revenue of $13.52 billion. In the year ago quarter, the company reported earnings of $1.09 per share on revenue of $10.41 billion.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide.

In the preceding first quarter, the Peoria, Illinois-based company's net income was $1.23 billion, or $1.84 a share, up from $233 million, or 36 cents a share, in the year-earlier quarter. Revenue rose  to $12.95 billion from $8.24 billion. Analysts, on average, expecte the company to report earnings of 28 cents a share on revenue of $8.11 billion. 

The company’s order backlog was $20.8 billion, up 11%, at the end of the quarter. Capital expenditures are expected to reach $3 billion this year, with more than half of that spent in the U.S.

At its last earnings call in April, Caterpillar lifted its 2011 profit target to a range of $6.25 to $6.75 a share, from near $6 a share. The company expects full-year revenues in the range of $52 billion to $54 billionCaterpillar said it would have been even more optimistic about its outlook if its supply chain hadn’t been disrupted by the earthquake in Japan. By the end of the year, the company is expecting a negative impact on sales of about $300 million and on operating profit of about $100 million.

Companies in the farm and construction industry have been performing well recently. With the expanding markets of China, India and Latin America driving demanding for construction equipments such as cranes and positive signs out of the U.S. market, farm and construction companies such as Caterpillar Inc. could be well positioned moving forward. Analysts expect long-term factors such as growth in infrastructure and demand for commodities, especially in emerging markets, to drive Caterpillar to record profits in coming years.

Caterpillar’s strong brand name, pricing power and global dealer network enable it to take advantage of the growing need for infrastructure development worldwide. Caterpillar’s expansion plans of opening new facilities and expanding existing operations, particularly in the emerging markets, will boost its long-term potential.

The company plans to invest $5 billion by 2015 to expand its production capacity. In Asia alone, it aims to be able to produce 180,000 pieces of heavy equipment in the region by the end of 2015, up from a capacity of about 68,000 at the end of 2010.

However, growth in China has cooled off a bit in recent weeks as the government has delayed major public works programs. Tighter credit also has dampened heavy machinery sales. Stiff competition from Japanese heavy-equipment manufacturer Komatsu notwithstanding, CAT has staked a claim in China. And despite the near-term delays, China still plans to build 10 million public housing units in the next couple of years. CAT reportedly plans to spend $1 billion to increase its manufacturing capability in the country and has formed a joint venture with AVIC Liyuan Hydraulics for hydraulic pumps.

The company recently completed the biggest deal ever in its history, namely the $8.8 billion buyout of Bucyrus International Inc. The combined portfolio broadens Caterpillar's mining equipment product line, resulting in the most expansive product offering in the mining equipment industry. Caterpillar expects the deal to be accretive to its profit in the first full year, excluding 50 cents per share of one-time charges. Synergies expected from the deal include: Caterpillar remanufacturing products and services for Bucyrus equipment; sales and support from Caterpillar’s existing dealer network; use of Caterpillar’s engines and components in Bucyrus products; and cost efficiencies in purchasing, engineering and deployment of manufacturing best practices. In quantitative terms, synergy benefits are expected to noticeably add to operating profit in 2013 and exceed $400 million in 2015.

Full Disclosure: None.

Caterpillar Inc. (NYSE: CAT): Q1 Earnings Preview 2011

Caterpillar Inc. (NYSE: CAT), the world's largest maker of earthmoving equipment, is scheduled to release its first quarter earnings before the openng bell on Friday, April 29, 2011. Analysts, on average, expect he company to report earnings of 28 cents a share on revenue of $8.11 billion. In the year ago quarter, the company reported earnings of $1.08 per share on revenue of $12.92 billion.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide.

In the preceding fourth quarter, the Peoria, Illinois-based company's net income was $968 million, or $1.47 a share, compared to $232 million, or 36 cents a share, in the year-earlier quarter. Revenue rose 62% to $12.81 billion. Analysts, on average, expected the company to earn $1.27 per share on revenue of $11.72 billion.

At its last earnings call in January, the company said that it expects sales and revenues in 2011 to exceed $50 billion and profit to be near $6.00 per share. That is an increase from sales and revenues of $42.588 billion and profit of $4.15 per share in 2010.The company also stated that the ongoing growth in developing countries, improving economies in North America and Europe, strong demand for mining products and the need for inventories will contribute to higher sales in 2011. The EPS growth is expected to be driven by higher sales volume, improvement in price realization, comparatively flat material costs, somewhat offset by unfavorable product mix, higher manufacturing costs, SG&A and R&D expense, higher taxes and bridge financing costs associated with the Bucyrus acquisition.Caterpillar expects earnings of $8 to $10 per share on $55 billion to $60 billion in revenue in 2012.

Last month, Caterpillar said that its world-wide sales of machinery surged 59 percent in the three months ended February. This compares to a 49 percent increase in sales for the three months ended January.

Companies in the farm and construction industry have been performing well recently. With the expanding markets of China, India and Latin America driving demanding for construction equipments such as cranes and positive signs out of the U.S. market, farm and construction companies such as Caterpillar Inc. could be well positioned moving forward. 

Caterpillar’s strong brand name, pricing power and global dealer network enable it to take advantage of the growing need for infrastructure development worldwide. Caterpillar’s expansion plans of opening new facilities and expanding existing operations, particularly in the emerging markets, will boost its long-term potential.

The company plans to invest $5 billion by 2015 to expand its production capacity. In Asia alone, it aims to be able to produce 180,000 pieces of heavy equipment in the region by the end of 2015, up from a capacity of about 68,000 at the end of 2010.

Among other developments, th company recently said that the disruption to its supply chain in Japan could sporadically impact production at its other facilities around the world. The company also said that while its Sagami and Akashi facilities in Japan continued to operate and produce product, the current situation in Japan was having some impact on production, which has varied day to day over the last week. The Peoria, Illinois-based company noted that its three facilities in Japan at Tokyo, Sagami and Akashi were not damaged by the earthquake and are outside of the current area declared by the Japanese government as a mandatory evacuation zone.

The company's stock currently trades at a forward P/E (fye 31-Dec-12) of 13.56 and PEG ratio (5 yr expected) of 1.19. In terms of stock performance, Caterpillar shares have gained 63 percent over the past year.

Full Disclosure: None.

Caterpillar Inc. (NYSE: CAT): Q4 Earnings Preview 2009

Caterpillar Inc. (NYSE: CAT), the world's largest maker of earthmoving equipment, is scheduled to release its financial results for fourth quarter of fiscal year 2009 before the market open on Wednesday, January 27, 2010. Analysts, on average, expect he company to report earnings of 28 cents a share on revenue of $8.11 billion. In the year ago quarter, the company reported earnings of $1.08 per share on revenue of $12.92 billion.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide.

In the preceding third quarter, the Peoria, Illinois-based company reported a 53% drop in profit, hurt primarily by lower machinery and engine sales. The results for the quarter, however, exceeded Wall Street expectations. Net income for the third quarter of $404 million, or $0.64 per share, down from $868 million, or $1.39 per share, in the year-ago quarter.Analysts, on average, expected the company to earn $0.06 per share on revenue of $7.49 billion.

In October, the company tightened its earnings outlook for fiscal year 2009, saying that the third quarter was its low point in the recession and it was now seeing signs of a recovery. Caterpillar now forecasts fiscal year 2009 profit in a range of $1.10 to $1.30 per share, compared to the prior range of $0.40 to $1.50 per share, including redundancy costs of about $0.75 per share. The company reiterated its expectations for redundancy costs for the full year of about $700 million, or $0.75 per share. Excluding redundancy costs, the company now forecasts profit for the year between $1.85 and $2.05 per share, compared to the prior range of $1.15-$2.25 per share. Analysts expect the company to report earnings of $1.49 per share for the year.Sales and revenue are expected to be between $32 and $33 billion for the year.

For fiscal year 2010, the company projects sales and revenues to increase 10%-25% from the midpoint of the 2009 outlook range, partly due to the end of dealer inventory reductions that significantly impacted sales in 2009. Total sales and revenues for the third quarter were $7.30 billion, down 44% from $12.98 billion in the year-ago period, primarily due to significantly lower sales volume.

Late in November, the construction and mining equipment maker announced that it agreed to acquire South Korean seal maker JCS Co., Ltd., a subsidiary of Jinsung T.E.C. Co., Ltd. The acquisition of JCS' seal manufacturing facility will see Caterpillar have its first factory in South Korea. For the proposed acquisition would provide it proprietary technology to competitively produce highly engineered seals that will improve machine undercarriage reliability and durability. The acquisition will also complement Caterpillar's existing footprint in Asia Pacific, and will support its strategy for continued growth in key emerging markets in Asia Pacific region. Caterpillar already has manufacturing facilities in China, India, Indonesia and Australia.

Like other heavy machinery makers, Caterpillar too has felt the impact of the global economic crunch. However, it is expected to benefit immensely from the growing need for infrastructure development in both developed and developing nations. The company said in October that it is preparing for a recovery that could be "rapid" after cutting costs and equipment inventories this year to match the slide in demand for Caterpillar's earth-moving, mining and construction equipment. Caterpillar is a net exporter to China and the country is one of the Peoria, Illinois-based company’s top export markets. China’s imports climbed about 56 percent in December, the country’s customs bureau said recently. Caterpillar is also poised to benefit from government stimulus programs peaking in the first half of this year, and a recovery in commodity prices and the U.S. housing market.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 21.06 and PEG ratio (5 yr expected) of 2.79. In terms of stock performance, Caterpillar shares have gained 59 percent over the past year.

Full Disclosure: None.