Caterpillar Shares Fall On Smaller-Than-Expected Q4 Profits

Caterpillar Inc CAT reported fourth-quarter earnings of $3.86 per share Tuesday, compared to $2.69 a year ago and missing the consensus estimate of $4.02. The miss comes as increasing manufacturing and freight costs pressured the heavy machinery maker's margins.

Revenues for the fourth quarter rose 20% year-over-year to $16.6 billion, marginally ahead of the consensus estimate of $16.04 billion.

The increase was due to favorable price realization and higher sales volume and was partially offset by unfavorable currency impacts.

Related Link: Caterpillar Set To Report Earnings Tuesday Before The Bell: Here's What Analysts Are Expecting

Unfavorable manufacturing costs largely reflected higher material costs, unfavorable cost absorption and increased period manufacturing costs. Cost absorption was unfavorable as inventory decreased during the fourth quarter of 2022.

During the quarter, Caterpillar took non-cash charges, including goodwill impairment of $925 million and restructuring costs of $180 million related to the rail division.

The adjusted operating profit margin was 17% for the fourth quarter of 2022, compared with 11.4% a year ago.

For FY22, enterprise operating cash flow was $7.8 billion. 

During the year, the company repurchased $4.2 billion in common stock and paid dividends of $2.4 billion. 

Liquidity remained strong, with an enterprise cash balance of $7 billion at the end of 2022.

CAT Price Action: CAT shares were down 0.97% at $258.96 in premarket trading. 

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