Caterpillar (CAT), Illinois (ITW) report solid revenue growth in Q3  

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Caterpillar (CAT), Illinois (ITW) report solid revenue growth in Q3  

 Caterpillar (CAT), Illinois (ITW) report solid revenue growth in Q3   
Image source: metamorworks,Shutterstock

Highlights

  • Caterpillar, Inc. (NYSE: CAT) revenue rose 25% YoY to US$12.4 billion in Q3.

  • Illinois Tool Works Inc. (NYSE: ITW) net income up 10% YoY to US$639 million.

  • Caterpillar profit per share grew 113% YoY, Illinois GAAP EPS was US$2.02, up 10% YoY.

Industrial manufacturers Caterpillar, Inc. (NYSE: CAT) and Illinois Tool Works Inc. (NYSE: ITW) on Thursday reported strong revenue growth in the third quarter of fiscal 2021.

The CAT stock was up 3.66% to US$203.31, while ITW stock rose by 1.40% to US$225.30 at 2:07 pm ET on Thursday. 

Third-quarter highlights:

Caterpillar, Inc. 

Caterpillar’s sales and revenue for the third quarter was US$12.4 billion, up 25%, compared to US$9.9 billion in Q3 of 2020. The sales increased due to higher demand for equipment and services by end-users and favorable prices.

The Construction Industries segment sales were US$5.255 billion, a 30% increase, Resource Industries segment sales were US$2.406 billion, a 32% growth YoY, Energy & Transportation sales were US$5.077 billion, a 22% growth, and Financial Products segment revenue was US$762 million, a 5% growth YoY, in Q3 2021.

The profit was US$1.43 billion, an 114% increase YoY. The operating profit margin was 13.4% for Q3, and profit per share was US$2.60, compared to US$1.22 in Q3 of 2020. 

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The adjusted profit per share was US$2.66, which was 75% higher than the previous year.

The company repurchased shares and paid dividends of US$2.0 billion to shareholders in the third quarter of 2021. Its current market cap is US$111 billion, and its dividend yield is 2.22%. The Illinois-based company manufactures locomotives, heavy equipment, and power solutions.

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Earning update: Caterpillar, Inc. (NYSE: CAT), Illinois Tool Works Inc. (NYSE: ITW)

Source – Pixabay

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Illinois Tool Works Inc. 

The company earned total revenue of US$3.6 billion, an 8% growth YoY, with 6% organic growth. The company has seven operating segments, and six delivered strong organic growth in Q3, 2021. The Welding segment was 22% up, Food Equipment 19% up, Test & Measurement and Electronics 12% up, and Specialty Products 8% up.

In addition, the Polymers and Fluids and Construction Products segments were 3% up each. Only the Automotive OEM segment declined 11%.

Its net income was US$ 639 million, up 10% YoY. The operating income grew 7% to US$845 million, and the operating margin remained unchanged at 23.8% YoY.

The GAAP EPS was US$2.02, a 10% increase compared to the previous year. Its operating cash flow was US$619 million, and free cash flow was US$548 million. 

The company repurchased shares of US$750 million YTD out of the target of US$1.0 billion and plans to buy the rest by the end of 2021. It also raised dividends by 7% in August to an annualized rate of US$4.88 apiece.

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Full-year Guidance

The company updated the guidance for full-year 2021. It expects revenue growth of 13% to 14% and organic growth between 11% and 12%. The EPS is also expected to be between US$8.30 and US$8.50 due to lower auto production levels in Q3 and Q4. The operating margin is likely to be between 23.5% and 24.5%, and free cash flow to be around 90% of net income.

Its market capitalization is US$71 billion, and its dividend yield is 2.18%. ITW was founded in 1912. The Glenview, Illinois-based company is an industrial manufacturer and produces specialized industrial equipment. 

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Bottomline

The S&P 500 Capital Goods Industry Group Index rose 16.05% year-to-date, a significant growth after one of the worst recessions in decades last year. The robust demand for goods and services has given a major boost to the sector. In addition, many sectors are expected to ramp up spending in automation amid increased demand and a tight labor market.

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