Caterpillar Inc. (CAT - Free Report) has delivered another upbeat quarter with adjusted earnings per share of $1.49 in second-quarter 2017, logging a 37% improvement year over year and also ahead of the Zacks Consensus Estimate of $1.26. The better-than-expected results were driven by the company’s disciplined cost-control efforts. Additionally, its shares advanced 4.54% in pre-market trading, following the release.
Including one-time items such as restructuring costs and a gain on the sale of an equity investment in IronPlanet, Caterpillar reported earnings per share of $1.35 in the quarter, up 45% from 93 cents in the prior-year quarter.
Revenues improved 9.6% year over year to $11.3 billion in the quarter, surpassing the Zacks Consensus Estimate of $10.9 billion. Favorable price realization and higher sales volume, with most significant increase witnessed in Construction Industries owing to higher end-user demand for construction equipment led to the improvement.
Caterpillar witnessed a 25% rise in Asia Pacific driven by increase in construction equipment sales in China resulting from increased infrastructure and residential investment. Revenues increased 7% in North America on the back of increased demand for aftermarket parts and construction equipment, partially offset by the unfavorable impact of changes in dealer inventories. Sales in Latin America rose 20% due to stabilizing economic conditions in several countries in the region that led to improved end-user demand. Sales in EAME were flat.
Costs & Operating Profit
In the reported quarter, cost of sales increased 4.7% year over year to $7.8 billion. Gross profit rose 22% to $3.6 billion. Selling, general and administrative (SG&A) expenses increased 15% to $1.29 billion. Research and development (R&D) expenses declined 3% year over year to $453 million.
Adjusted operating profit improved 37% year over year to $1.82 billion owing to higher sales volume, favorable price realization and favorable mix of products that were offset by higher period costs.
Caterpillar, Inc. Price, Consensus and EPS Surprise