Caterpillar Inc. 4Q 2010 Earnings Release
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January 27, 2011 Caterpillar Inc. 4Q 2010 Earnings Release FOR IMMEDIATE RELEASE Fourth-Quarter Sales and Revenues Increase 62 Percent, Full Year up 31 Percent Fourth-Quarter Profit Quadruples, Full Year Triples 2011 Outlook Reflects Record Profit PEORIA, Ill.— Caterpillar Inc. (NYSE: CAT) today announced sales and revenues of $42.588 billion for 2010, an increase of 31 percent from $32.396 billion in 2009. Profit in 2010 was $2.700 billion, an increase of 202 percent from 2009 profit of $895 million. Profit per share of $4.15 was up from $1.43 in 2009. Excluding redundancy costs, profit per share in 2009 was $2.18. Fourth-quarter sales and revenues were $12.807 billion, an increase of 62 percent compared with $7.898 billion in the fourth quarter of 2009. Fourth-quarter profit of $968 million was 317 percent higher than profit of $232 million in the fourth quarter of 2009. Profit per share of $1.47 was up from $0.36 per share in the fourth quarter of 2009. Excluding redundancy costs, profit for the fourth quarter of 2009 was $0.41 per share. “As the global economy continued to improve, the demand for Caterpillar products increased substantially with fourth-quarter sales and revenues up 62 percent. 2010 was a good year, and we accomplished a great deal. We substantially ramped up production, improved factory efficiency, drove Machinery and Engines (M&E) operating cash flow to an all-time record, launched a number of capacity additions and new product programs to prepare us for the future and announced several substantial acquisitions,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman. “It was also a good year for employees, customers and stockholders. Excluding acquisitions, our workforce grew by approximately 19,000 people in 2010. Led by U.S. exports of $13.4 billion, about 7,500 of the 19,000 were added in the United States, representing a 15-percent increase in our U.S. workforce. We renewed our focus on customers with continued improvement in product quality and significantly increased production. For stockholders, we raised our dividend, and Caterpillar stock performance was the best among the companies comprising the Dow Jones Industrial Average in 2010,” Oberhelman added. (more) - 2 - Outlook We expect sales and revenues in 2011 to exceed $50 billion and profit to be near $6.00 per share. That is an increase from sales and revenues of $42.588 billion and profit of $4.15 per share in 2010. The outlook for 2011 includes the acquisition of Electro-Motive Diesel, Inc. (EMD), but does not include the acquisitions of Motoren-Werke Mannheim Holding GmbH (MWM) or Bucyrus International, Inc. (Bucyrus) because they have not yet closed. Continued growth in developing countries, improving economies in North America and Europe, strong demand for mining products and the need for our dealers to add to inventories and replenish rental fleets should all contribute to higher sales in 2011. The increases are likely to be mitigated somewhat by small declines in later cycle industries, such as turbines and marine engines. “The outlook reflects our expectation that the world economy will continue to recover and that Caterpillar is positioned to win by providing customers with products and support that are unmatched in the industry. It’s this commitment to helping our customers succeed that will drive results for Caterpillar,” Oberhelman said. “We are also investing in longer-term growth. We made a number of announcements in 2010, including three new facilities in the United States and five outside the United States, primarily related to multi-year increases in capacity for key products like mining trucks and excavators. Our 2011 outlook for capital expenditures is about $3 billion—with more than half in the United States. These investments in our future will add cost in the short term but are essential to be prepared for continued growth as the economic environment improves,” he added. “We feel good about our performance in 2010, coming off a very challenging 2009. We have updated our strategy, aligned the organization and are clearly focused on our customers. Investments are being made in new product development, additional capacity and strategic acquisitions that position us well for long-term growth and profitability,” Oberhelman said. (more) - 3 - Notes: - Glossary of terms is included on pages 33-34; first occurrence of terms shown in bold italics. - Information on non-GAAP financial measures is included on page 35. For more than 85 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2010 sales and revenues of $42.588 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. More information is available at: http://www.caterpillar.com. Caterpillar contact: Jim Dugan, Corporate Public Affairs, (309) 494-4100 (Office) or (309) 360-7311 (Mobile) FORWARD-LOOKING STATEMENTS Certain statements in this press release relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to known and unknown factors that may cause actual results of Caterpillar Inc. to be different from those expressed or implied in the forward-looking statements. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance, and Caterpillar does not undertake to update its forward-looking statements. It is important to note that actual results of the company may differ materially from those described or implied in such forward-looking statements based on a number of factors, including, but not limited to: (i) economic volatility in the global economy generally and in capital and credit markets; (ii) Caterpillar’s ability to generate cash from operations, secure external funding for operations and manage liquidity needs; (iii) adverse changes in the economic conditions of the industries or markets Caterpillar serves; (iv) government regulations or policies, including those affecting interest rates, liquidity, access to capital and government spending on infrastructure development; (v) commodity price increases and/or limited availability of raw materials and component products, including steel; (vi) compliance costs associated with environmental laws and regulations; (vii) Caterpillar’s and Cat Financial’s ability to maintain their respective credit ratings, material increases in either company’s cost of borrowing or an inability of either company to access capital markets; (viii) financial condition and credit worthiness of Cat Financial’s customers; (ix) material adverse changes in our customers’ access to liquidity and capital; (x) market acceptance of Caterpillar’s products and services; (xi) effects of changes in the competitive environment, which may include decreased market share, lack of acceptance of price increases, and/or negative changes to our geographic and product mix of sales; (xii) Caterpillar’s ability to successfully implement Caterpillar Production System or other productivity initiatives; (xiii) international trade and investment policies, such as import quotas, capital controls or tariffs; (xiv) failure of Caterpillar or Cat Financial to comply with financial covenants in their respective credit facilities; (xv) adverse changes in sourcing practices for our dealers or original equipment manufacturers; (xvi) additional tax expense or exposure; (xvii) political and economic risks associated with our global operations, including changes in laws, regulations or government policies, currency restrictions, restrictions on repatriation of earnings, burdensome tariffs or quotas, national and international conflict, including terrorist acts and political and economic instability or civil unrest in the countries in which Caterpillar operates; (xviii) currency fluctuations, particularly increases and decreases in the U.S. dollar against other currencies; (xix) increased payment obligations under our pension plans; (xx) the possibility that the acquisition by Caterpillar of Bucyrus International, Inc. does not close for any reason, including, but not limited to, a failure to obtain required regulatory approvals, (xxi) inability to successfully integrate and realize expected benefits from acquisitions; (xxii) significant legal proceedings, claims, lawsuits or investigations; (xxiii) imposition of significant costs or restrictions due to the enactment and implementation of health care reform legislation and financial regulation legislation; (xxiv) changes in accounting standards or adoption of new accounting standards; (xxv) adverse effects of natural disasters; and (xxvi) other factors described in more detail under “Item 1A. Risk Factors” in Part I of our Form 10-K filed with the SEC on February 19, 2010 for the year ended