Caterpillar Q3 2024 $CAT (+3,05 %)

Financial performance

Revenue and earnings: In the third quarter of 2024, Caterpillar generated revenue of $16.1 billion, a slight decrease compared to $16.8 billion in the third quarter of 2023.

Operating profit: Operating profit for Q3 2024 was $3.1 billion, a decrease of 9% compared to $3.4 billion in the prior year quarter.

Adjusted earnings per share: Adjusted earnings per share were $5.17 in Q3 2024, compared to $5.52 in Q3 2023.

Balance sheet overview

Total assets: As at September 30, 2024, total assets amounted to USD 86.3 billion, a slight decrease compared to USD 87.5 billion at the end of 2023.

Total liabilities: Total liabilities amounted to USD 66.9 billion as at September 30, 2024, compared to USD 68.0 billion at the end of 2023.

Details of the income statement

Operating profit margin: The operating profit margin for Q3 2024 was 19.5%, while the adjusted operating profit margin was 20.0%.

Restructuring costs: Restructuring costs impacted earnings per share by USD 0.11 in Q3 2024.

Cash flow overview

ME&T free cash flow: For Q3 2024, ME&T free cash flow amounted to USD 5.6 billion, with expectations to be at the upper end of the annual target range of USD 5 to 10 billion.

Key performance indicators and profitability metrics

Adjusted operating profit margin target: Adjusted operating profit margin target is in the range of 10-14% on $42 billion in sales and 18-22% on $72 billion.

Segment information

Construction: Sales fell by 9% to USD 7.0 billion in Q3 2024, while segment profit declined by 20%.

Raw materials industry: Sales fell by 10% to USD 3.0 billion, with a 15% decline in segment profit.

Financial Products: Total revenue increased by 6% to USD 1.034 billion and segment profit increased by 21%.

Competitive position

The results reflect the benefits of the diversity of Caterpillar's end markets, which support long-term profitable growth.

Forecasts and management commentary

Outlook 2024: Revenue and earnings are expected to be slightly below prior expectations, but guidance for adjusted operating profit margin and adjusted earnings per share remain unchanged.

Free cash flow: ME&T free cash flow for the full year is expected to be near the upper end of the $5 billion to $10 billion target range.

Risks and opportunities

Caterpillar continues to execute its strategy for long-term profitable growth and capitalizes on the diversity of its end markets

Summary of results

Caterpillar's performance in the third quarter of 2024 showed a slight decline in operating profit and adjusted earnings per share compared to the prior year, mainly due to lower sales volumes in key segments such as construction and materials handling. Nevertheless, the company maintains a strong cash flow position and expects to achieve its financial targets for the full year. The diversity of its end markets remains a strategic advantage that supports its long-term growth targets.

Positive Aspects

Growth in the Financial Products segment: The Financial Products segment reported a 6% increase in total revenues to USD 1.034 billion, while segment profit increased by 21%. This growth was boosted by higher average yield activities and financing rates.

Strong free cash flow: ME&T free cash flow for Q3 2024 amounted to USD 5.6 billion, and the company expects full-year free cash flow to be near the upper end of the target range of USD 5 to 10 billion. This indicates strong cash generation capabilities.

Adjusted operating profit margin: The company delivered a robust adjusted operating profit margin for Q3 2024, which is expected to be above the upper end of the full year target range.

Diversity of end markets: Caterpillar's results reflect the benefits of the diversity of its end markets, which supports long-term profitable growth and provides resilience to market volatility.

Stable tax rate: The effective tax rate for Q3 2024 was 20.7%, down slightly from 20.9% in the prior year, helping to maintain profitability.

Negative aspects

Decline in sales in the Construction Industry segment: The Construction Industry segment reported a 9% decline in total revenue to USD 7.0 billion, while segment profit fell by 20%. This decline was mainly due to lower sales volumes in North America and unfavorable currency developments in Latin America and the Asia-Pacific region.

Loss in the Resource Industry segment: Sales in the Resources Industry segment fell by 10% to USD 3.0 billion, with a 15% decline in segment profit, largely due to lower sales volumes.

Overall revenue decline: Total revenue for Q3 2024 was slightly below the previous year's level, indicating challenges in maintaining growth in the various segments.

Impact of restructuring costs: Restructuring costs negatively impacted earnings per share by $0.11, which could indicate ongoing adjustments and potential disruption.