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Caterpillar reports second-quarter 2021 results

By Divya on Jul 30, 2021 | 02:30 AM IST

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DEERFIELD, Ill. – Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2021 sales and revenues of $12.9 billion, a 29% increase compared with $10.0 billion in the second quarter of 2020. The increase was primarily due to higher sales volume driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased their inventories more during the second quarter of 2020 than during the second quarter of 2021.

Operating profit margin was 13.9% for the second quarter of 2021, compared with 7.8% for the second quarter of 2020. Second-quarter 2021 profit per share was $2.56, compared with $0.84 profit per share in the second quarter of 2020. Adjusted profit per share in the second quarter of 2021 was $2.60, compared with second-quarter 2020 adjusted profit per share of $1.27. Adjusted profit per share for both quarters excluded restructuring costs, while the second quarter of 2020 also excluded remeasurement losses of $0.19 per share, resulting from the settlements of pension obligations. Please see a reconciliation of GAAP to non-GAAP financial measures in the appendix on page 13.

For the first half of 2021, enterprise operating cash flow was $4.0 billion. In total, the company returned $0.8 billion to shareholders in the quarter, after increasing the dividend and reinstating share repurchases. The company ended the period with $10.8 billion of enterprise cash.

“Our dedicated global team remains focused on serving our customers, executing our strategy and investing for future profitable growth,” said Caterpillar Chairman and CEO Jim Umpleby. “We’re encouraged by higher sales and revenues across all regions and in our three primary segments, which reflect continued improvement in our end markets.”

Total sales and revenues for the second quarter of 2021 were $12.889 billion, an increase of $2.892 billion, or 29%, compared with $9.997 billion in the second quarter of 2020. The increase was primarily due to higher sales volume driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased inventories by $1.4 billion during the second quarter of 2020, compared with a decrease of $400 million during the second quarter of 2021. Favorable currency impacts were related to the Australian dollar, euro and Chinese yuan. Favorable price realization also contributed to the sales improvement.

Sales were higher across all regions and in the three primary segments. Operating profit for the second quarter of 2021 was $1.789 billion, an increase of $1.005 billion, or 128%, compared with $784 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.Other Profit/Loss and Tax Items

•Other income (expense) in the second quarter of 2021 was income of $201 million, compared with income of $29 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.

•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 $17 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 $21 million tax benefit was also recorded in the second quarter of 2020 related to the $122 million of remeasurement losses resulting from the settlements of pension obligations .Construction Industries’ total sales were $5.656 billion in the second quarter of 2021, an increase of $1.608 billion, or 40%, compared with $4.048 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.

▪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.

▪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.

▪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.

▪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.

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