Increased Demand in U.S. Pushes Caterpillar (CAT) to Q1 Earnings Beat; Outlook Disappoints

April 25, 2012 9:16 AM EDT
Caterpillar (NYSE: CAT) shares are indicated for a lower open Wednesday morning amid a quarterly beat on the bottom line and raised fiscal 2012 guidance but a miss on the first-quarter sales. The stock last traded at $106.75, down about 1.5 per cent from Tuesday's close.

The company posted sales for the quarter ended March 31st, 2012 of $15.98 billion, up about 23 percent from the same quarter last year. Analysts were expecting quarterly sales of $16.22 billion.

Sales to Cat's Financial Products unit rose 3 percent to $693 million. Revenue to the Machinery and Power Systems segment, which made up the remainder of the company's sales, rose 25 percent to $15.29 billion.

Net profit was up 29 percent from $1.225 billion in the year-ago quarter to $1.586 billion. Earnings per share totaled $2.37, better than the $2.12 the Street had been anticipating.

Operating cash flow from the Machinery & Power Systems division was $234 million, down sharply from $1.644 billion reported in the first quarter of 2012. The decrease was due to unfavorable changes in working capital and the payment of short-term incentive compensation based on record results in 2011.

Caterpillar's Chairman and CEO Doug Oberhelman said, "These outstanding results demonstrate our continued focus on execution and controlling costs as we increase production and expand capacity to meet increasing demand from our customers. We're seeing strong global demand for most mining products and significant growth in replacement demand for products in the United States, which more than offset slowing in China and Brazil. During the quarter, I visited Caterpillar facilities, customers, suppliers and dealers around the world, and saw firsthand the progress we are making on safety, product quality, improved delivery times, factory efficiencies and customer service. These improvements have been impressive considering they've occurred while we have so much going on—we are building new facilities, expanding existing facilities, integrating acquisitions and continuing the introduction of new products."

The company reaffirmed its fiscal 2012 sales guidance of $68 billon to $72 billion and lifted its EPS guidance from about $9.25 previously to $9.50. Wall Street is looking for Caterpillar to issue fiscal 2012 sales of $71.3 billion and EPS of $9.54.

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