Caterpillar Expects to Let the Good Times Roll

Caterpillar Inc. (NYSE: CAT) reported fourth-quarter and full-year 2017 results before markets opened Thursday. For the quarter, the heavy equipment firm posted adjusted diluted earnings per share (EPS) of $2.16 on revenues of $12.9 billion. In the same period a year ago, the company reported adjusted EPS of $0.83 on revenues of $9.6 billion. Fourth-quarter results also compare to consensus estimates for EPS of $1.79 and $11.98 billion in revenues.

For the full year, Caterpillar reported EPS of $6.88 and revenues of $45.5 billion compared with 2016 EPS of $3.42 and revenues of $38.5 billion. Analysts had been looking for EPS of $6.47 and revenues of $44.54 billion.

The company took a $2.37 billion charge in the fourth quarter related to the recent change in U.S. tax law. Of the total, $596 million was attributed to a change in the value of deferred tax assets and the remainder related to repatriating overseas cash.

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CEO Jim Umpleby said:

After four challenging years, many key markets improved in 2017, and our global team delivered strong results. … In 2018, we expect to make additional investments in the expanded offerings and services important for Caterpillar’s long-term success. … Our focus on operational excellence will not waver as we work to develop a more competitive and flexible cost structure, including implementing lean manufacturing principles. We are positioned to capitalize on continued sales momentum or quickly adjust should conditions change

For the 2018 fiscal year, Caterpillar GAAP EPS in a range of $7.75 to $8.75 is expected. Excluding restructuring costs of about $400 million, adjusted EPS is expected in a range of $8.25 to $9.25. The company’s outlook does not include any stock buybacks, nor does it include mark-to-market gains or losses related to pension matters.

At the end of the fourth quarter, the order backlog totaled about $15.8 billion. This represents a sequential increase of about $400 million. Compared with the year-ago quarter, total backlog increased by about $3.7 billion.

Caterpillar’s shares traded up about 2.6%% in premarket trading to $174.25, above the 52-week range of $90.34 to $173.24. The 12-month consensus analyst price target was $170.87 ahead of this morning’s report.

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