Caterpillar Q2 earnings: CEO dubs AI a ‘positive thing for business’

on Aug 1, 2023
  • Caterpillar Inc reports better-than-expected results for its fiscal Q2.
  • CEO Jim Umpleby discussed the quarterly update with CNBC today.
  • Caterpillar stock is now up more than 40% versus its recent low.

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Shares of Caterpillar Inc (NYSE: CAT) are trading at a record high this morning after the equipment manufacturer reported its financial results for the second quarter that handily topped Street estimates.

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Caterpillar’s view on the current quarter

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The stock is up even though Caterpillar said its sales and profit margin will be down sequentially in the current quarter. According to CEO Jim Umpleby:  

That’s in line with our normal seasonal pattern. That shouldn’t be a surprise. We’re still dealing with some supply chain issues; the situation has improved but we do have areas of challenge.

Wall Street currently has a consensus “overweight” rating on the industrial stock that is already up more than 40% versus its year-to-date low.

Among its notable bulls is the famed investor and Mad Money host Jim Cramer.

Caterpillar Q2 earnings snapshot

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  • Earned $2.92 billion versus the year-ago $1.67 billion
  • Per-share earnings also climbed from $3.13 to $5.67
  • Adjusted EPS printed at $5.55 as per the press release
  • Revenue jumped 21.6% year-on-year to $17.32 billion
  • Consensus was $4.57 a share on $16.46 billion in revenue

On CNBC’s “Squawk on the Street”, the Chief Executive also dubbed the rising focus on artificial intelligence a meaningful benefit for Caterpillar.

We see backup generator sets for data centres. That business is quite strong, driven by AI. It’s also increasing total energy demand which we think is a positive thing for our business.

Caterpillar noted broad-based sales growth

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Price realization and sales volume were a $1.42 billion and a $1.77 billion benefit in the recently concluded quarter.

Most importantly, thought Caterpillar noted a better-than-expected double-digit percentage growth in each of its business segments. CEO Umpleby added in his interview with CNBC:

The good news is; even with Chinese market below the 5.0% to 10% typical range, we produced record results [as] we serve a diverse set of end markets.

Caterpillar improved its operating profit margin in the second quarter by an exciting 750 basis points to 21.1%.


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