World's Largest Construction Equipment Manufacturer Caterpillar's Stock Tumbles, Sees Weak Economic Conditions In Europe To Continue

Caterpillar Inc CAT reported a first-quarter fiscal 2024 revenue of $15.8 billion, a slight decrease of 0.4% year-over-year, missing the consensus of $16.216 billion. 

CAT’s adjusted earnings of $5.60 per share, compared to $4.91 a year ago, topped the consensus of $5.14.

Sales dropped due to reduced equipment sales, somewhat mitigated by favorable pricing and increased Financial Products’ revenues; adverse currency impacts, mainly from the Australian dollar, also affected overall sales.

Adjusted operating profit margin was 22.2% for the quarter, compared with 21.1% for the first quarter of 2023.

Enterprise operating cash flow was $2.05 billion for the quarter, and the company ended the first quarter with $4.96 billion of enterprise cash.

Caterpillar deployed $4.5 billion of cash for repurchases of Caterpillar common stock and $0.6 billion of cash for dividends in the quarter.

Machinery, Energy & Transportation segment revenue declined 0.9% Y/Y, with Construction Industries down 5%, Resource Industries down 7%, Energy & Transportation up 7%, and Other Segments down 2%.

Financial Products revenues increased by 10% Y/Y to $839 million.

2024 Outlook: Caterpillar anticipates sales and revenues to be broadly similar to 2023.

The company sees no significant change in machine dealer inventory by the end of 2024, as compared to a build in 2023.

CAT expects 2024 adjusted operating profit margin to be in the top half of the target range relative to the expected corresponding level of sales and revenues.

For the second quarter, Caterpillar expects sales to be lower than the prior year, price realization to remain favorable, and adjusted operating profit margin to be similar to the prior year.

Caterpillar sees weak economic conditions in Europe to continue. It also sees softening economy in Asia-Pacific Ex China, the company told Bloomberg.

Price Action: CAT shares are trading lower by 7.51% at $336.22 at the last check Thursday.

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