Caterpillar Eyes Cautious 2024 Sales Outlook Despite Beating Q2 Expectations: Details

Caterpillar Inc. CAT stock is volatile after the company reported better-than-expected second-quarter 2024 results.

Total sales and revenue for the quarter declined 4% year-over-year to $16.69 billion, beating the consensus of $16.68 billion.

CAT’s adjusted earnings were $5.99 per share, compared to $5.55 a year ago and above the consensus of $5.54.

Sales dropped due to a lower sales volume of $1.206 billion, partially offset by a favorable price realization of $578 million. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories.

Adjusted operating profit margin was 22.4% for the quarter, compared to 21.3% a year ago.

Enterprise operating cash flow was $3 billion, and the company ended the second quarter with $4.3 billion of enterprise cash. CAT deployed $1.8 billion of cash for repurchases of common stock and $0.6 billion of cash for dividends.

Machinery, Energy & Transportation segment revenue declined 4.3% Y/Y, with Construction Industries down 7%, Resource Industries down 10%, Energy & Transportation up 2%, and Other Segments down 7%.

“Our results continue to reflect the benefit of the diversity of our end markets as well as the disciplined execution of our strategy for long-term profitable growth,” commented Chairman and CEO Jim Umpleby.

Outlook: CAT anticipates 2024 sales and revenues to be slightly lower than 2023 (prior view: sales and revenues to be broadly similar), with the year-over-year decline in the second half being roughly similar to the first half.

The company currently expects a slight reduction in machine dealer inventory in 2024 compared to an increase in 2023.

The company expects the adjusted operating profit margin to be above the top end of the target range (prior view: in the top half of the target range) relative to the expected corresponding level of sales and revenues. It also expects the adjusted operating profit and adjusted profit per share to be higher than previously anticipated.

For the third quarter, the company expects slightly lower sales and revenues year over year, with dealer inventory of machines to be flat to slightly lower in the quarter. The adjusted operating profit margin is expected to remain similar to the third quarter of 2023.

Price Action: CAT is trading lower by 1.14% at $313.19 premarket at the last check Tuesday.

Photo via Shutterstock