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OFFON

CATERPILLAR INC.

(CAT)
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Caterpillar Inc. : Files Form 8-K Earnings Release -2-

07/30/2021 | 09:04am EDT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the second quarter of 2020 (at left) and the second quarter of 2021 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation's other operating (income) expenses.

Operating profit for the second quarter of 2021 was USD1.789 billion, an increase of USD1.005 billion, or 128%, compared with USD784 million in the second quarter of 2020. The increase was primarily due to higher sales volume. Favorable price realization, lower restructuring expenses (included in other) and higher profit from Financial Products were mostly offset by higher selling, general and administrative (SG&A) and research and development (R&D) expenses and higher manufacturing costs.

The increase in SG&A/R&D expenses was mainly driven by higher short-term incentive compensation expense, which was reinstated in 2021.

Unfavorable manufacturing costs reflected higher period manufacturing and material costs, partially offset by favorable cost absorption. Period manufacturing costs increased primarily due to higher short-term incentive compensation expense and higher labor-related costs. Cost absorption was favorable as inventory increased during the second quarter of 2021, compared with a decrease during the second quarter of 2020.

Profit (Loss) by Segment 
                                                                               USD            % 
(Millions of dollars)              Second Quarter 2021   Second Quarter 2020 
                                                                               Change        Change 
Construction Industries            USD 1,024               USD 518                 USD 506        98    % 
Resource Industries                361                   152                   209          138   % 
Energy & Transportation            731                   624                   107          17    % 
All Other Segment                  (10)                  (3)                   (7)          (233  %) 
Corporate Items and Eliminations   (453)                 (542)                 89 
Machinery, Energy & Transportation 1,653                 749                   904          121   % 
 
Financial Products Segment         243                   148                   95           64    % 
Corporate Items and Eliminations   (29)                  (38)                  9 
Financial Products                 214                   110                   104          95    % 
 
Consolidating Adjustments          (78)                  (75)                  (3) 
 
Consolidated Operating Profit      USD 1,789               USD 784                 USD 1,005      128   % 
 

Other Profit/Loss and Tax Items 1. Other income (expense) in the second quarter of 2021 was income of USD201 million, compared with income of USD29

million in the second quarter of 2020. The change was primarily due to the absence of remeasurement losses

resulting from the settlements of pension obligations that occurred in the second quarter of 2020, as well as

favorable pension and other postemployment benefit (OPEB) costs. 2. The provision for income taxes for the second quarter of 2021 reflected a lower estimated annual tax rate of 26%,

compared with 31% for the second quarter of 2020, excluding the discrete items discussed below. The comparative tax

rate for full-year 2020 was approximately 28%. The decrease in the estimated annual tax rate from full-year 2020

was mainly related to changes in the expected geographic mix of profits from a tax perspective for 2021.

In addition, a discrete tax benefit of USD17 million was recorded in the second quarter of 2021 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. A USD21 million tax benefit was also recorded in the second quarter of 2020 related to the USD122 million of remeasurement losses resulting from the settlements of pension obligations.

CONSTRUCTION INDUSTRIES 
(Millions of 
dollars) 
Segment Sales 
                Second       Sales        Price                                      Second       USD            % 
                Quarter      Volume       Realization     Currency   Inter-Segment   Quarter 
                2020                                                                 2021          Change       Change 
Total Sales     USD 4,048      USD 1,171      USD 238           USD 162      USD 37            USD 5,656      USD 1,608      40  % 
 
Sales by Geographic Region 
                Second       Second       USD               % 
                Quarter      Quarter 
                2021         2020         Change          Change 
North America   USD 2,498      USD 1,604      USD 894           56     % 
Latin America   430          212          218             103    % 
EAME            1,291        933          358             38     % 
Asia/Pacific    1,384        1,283        101             8      % 
External        5,603        4,032        1,571           39     % 
Sales 
Inter-segment   53           16           37              231    % 
Total Sales     USD 5,656      USD 4,048      USD 1,608         40     % 
 
Segment Profit 
                Second       Second                       % 
                Quarter      Quarter 
                2021         2020         Change          Change 
Segment         USD 1,024      USD 518        USD 506           98     % 
Profit 
Segment         18.1     %   12.8     %   5.3       pts 
Profit Margin 
 

Construction Industries' total sales were USD5.656 billion in the second quarter of 2021, an increase of USD1.608 billion, or 40%, compared with USD4.048 billion in the second quarter of 2020. The increase was due to higher sales volume, favorable price realization and favorable currency impacts from the euro, Australian dollar and Chinese yuan. The increase in sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories. Overall, dealers decreased inventories more during the second quarter of 2020 than during the second quarter of 2021. 1. In North America, sales increased due to higher sales volume and favorable price realization. Higher sales volume

was driven by higher end-user demand primarily in residential construction and the impact from changes in dealer

inventories. Dealers decreased inventories more during the second quarter of 2020 than during the second quarter of

2021. 2. Sales increased in Latin America mostly due to higher sales volume driven by higher end-user demand across the

region for equipment and aftermarket parts and the impact of changes in dealer inventories. Dealers increased

inventories during the second quarter of 2021, compared with a decrease during the second quarter of 2020. 3. In EAME, sales increased due to higher sales volume and favorable currency impacts primarily from a stronger euro.

Higher sales volume was driven by higher end-user demand and the impact from changes in dealer inventories. Dealers

increased inventories during the second quarter of 2021, compared with a decrease during the second quarter of

2020. 4. Sales increased in Asia/Pacific primarily due to favorable currency impacts from a stronger Australian dollar and

Chinese yuan and favorable price realization, partially offset by lower sales volume. Lower sales volume was driven

by lower end-user demand for equipment, primarily in China, partially offset by the impacts from changes in dealer

inventories and higher end-user demand for aftermarket parts. Dealers decreased inventories more during the second

quarter of 2020 than during the second quarter of 2021.

Construction Industries' profit was USD1.024 billion in the second quarter of 2021, an increase of USD506 million, or 98%, compared with USD518 million in the second quarter of 2020. The increase was mainly due to higher sales volume and favorable price realization, partially offset by higher SG&A/R&D expenses and unfavorable manufacturing costs.

The increase in SG&A/R&D expenses was driven by higher short-term incentive compensation expense.

Increased manufacturing costs reflected higher period manufacturing and material costs partially offset by favorable impacts of cost absorption and variable labor and burden. The increase in period manufacturing costs was driven by higher short-term incentive compensation expense and higher labor costs. Cost absorption was favorable as inventory increased during the second quarter of 2021, compared with a decrease during the second quarter of 2020.

RESOURCE INDUSTRIES 
(Millions of 
dollars) 
Segment Sales 
                Second                        Price                                    Second         USD          % 
                Quarter 2020   Sales Volume   Realization   Currency   Inter-Segment   Quarter 2021 
                                                                                                       Change     Change 
Total Sales     USD 1,826        USD 712          USD (17)        USD 66       USD (8)           USD 2,579        USD 753      41  % 
 
Sales by Geographic Region 
                Second         Second         USD             % 
                Quarter 2021   Quarter 2020 
                                              Change        Change 
North America   USD 799          USD 507          USD 292         58    % 
Latin America   487            270            217           80    % 
EAME            525            379            146           39    % 
Asia/Pacific    660            554            106           19    % 
External        2,471          1,710          761           45    % 
Sales 
Inter-segment   108            116            (8)           (7    %) 
Total Sales     USD 2,579        USD 1,826        USD 753         41    % 
 
Segment Profit 

(MORE TO FOLLOW) Dow Jones Newswires

July 30, 2021 09:02 ET (13:02 GMT)

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Financials (USD)
Sales 2021 50 491 M - -
Net income 2021 5 369 M - -
Net Debt 2021 25 619 M - -
P/E ratio 2021 19,6x
Yield 2021 2,25%
Capitalization 105 B 105 B -
EV / Sales 2021 2,58x
EV / Sales 2022 2,31x
Nbr of Employees 97 300
Free-Float 67,1%
Chart CATERPILLAR INC.
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Caterpillar Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends CATERPILLAR INC.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 27
Last Close Price 191,35 $
Average target price 233,47 $
Spread / Average Target 22,0%
EPS Revisions
Managers and Directors
Donald James Umpleby Chairman & Chief Executive Officer
Andrew Robert John Bonfield Chief Financial Officer
Karl E. Weiss Chief Technology Officer
Jamie Engstrom Chief Information Officer & Vice president
Eric A. Braun Chief Compliance Officer