Caterpillar stock on track for record high on higher than expected earnings

Higher prices helped Caterpillar boost profit margins and offset a drop in sales volume. Higher prices helped Caterpillar boost profit margins and offset a drop in sales volume.

Caterpillar shares were on pace to close at a record high after the excavator and bulldozer builder reported a fourth-quarter profit that topped expectations.

Higher prices helped boost profit margins and offset a drop in sales volume at the construction-equipment company, as dealers reduced inventories.

Caterpillar’s construction equipment sales in North America rose 4% in the quarter, with government-funded infrastructure projects helping drive demand. The company said increased spending on computer data centers is boosting demand for its power-generating engines.

Fourth-quarter 2023 sales and revenues up 3%; full-year sales and revenues up 13%
Fourth-quarter 2023 profit per share of $5.28; adjusted profit per share of $5.23
Full-year profit per share of $20.12; adjusted profit per share of $21.21
Strong operating cash flow of $12.9 billion; ended the year with $7.0 billion of enterprise cash
Returned $7.5 billion to shareholders through share repurchases and dividends in 2023

In Q4 2023, Caterpillar’s sales and revenues increased by 3% to reach $17.1 billion, with an operating profit margin of 18.4% and adjusted profit margin of 18.9%. The company’s profit per share rose from $2.79 to $5.28 in Q4 2022, while full-year sales and revenues reached $67.1 billion, up 13% from $59.4 billion in 2022. This increase was attributed to favorable price realization and higher sales volume, driven by higher sales of equipment to end users.

The operating profit margin was 19.3% in 2023, compared to 13.3% in 2022, and adjusted profit margin was 20.5% in 2023, compared to 15.4% in 2022. Full-year profit was $20.12 per share in 2023, compared to $12.64 per share in 2022. Adjusted profit per share in 2023 was $21.21, compared to $13.84 in 2022.

Caterpillar Chairman and CEO Jim Umpleby expressed pride in the global team’s performance, stating that they achieved the best year in their 98-year history, including record full-year sales and revenues, record adjusted profit per share, and record ME&T free cash flow. Adjusted operating profit margin and profit per share excluded restructuring costs, which included the divestiture of the Longwall business and other costs.

For the full year of 2023, the company’s enterprise operating cash flow was $12.9 billion, with the company repurchasing $5.0 billion of Caterpillar common stock and paying dividends of $2.6 billion. Liquidity remained strong with an enterprise cash balance of $7.0 billion at the end of 2023.