Caterpillar said the artificial intelligence boom continues to drive demand for its engines and generators, while healthy construction spending is spurring sales of its dump trucks, bulldozers and excavators.
The trends lifted the company's total sales and revenue during the latest quarter by 24%, to $20.54 billion. That marks the first time in company history Caterpillar generated over $20 billion in sales and revenues in a single quarter, Chief Executive Joe Creed said on a call with analysts.
The company also raised its full-year sales outlook on the back of the stronger-than-expected quarter, during which lower-than-expected tariff costs and a large tariff refund helped expand margins and improve profitability, he said.
Shares were trading 10% higher, at $913.47, shortly after Tuesday's opening bell. The stock is up about 50% year to date.
Sales across Caterpillar's power-and-energy division climbed 17% to $8.24 billion during the recent quarter. Growth is expected to continue throughout the remainder of the year, Creed said on a call with analysts, citing increasing energy demand to support data-center buildouts tied to cloud computing and generative AI.
The equipment maker said it will double down on its capacity-expansion plans, citing the healthy demand trends it has seen so far this year. "We expect to increase our throughput in the second half of the year," Creed said.
Caterpillar previously said it would spend $725 million at its Lafayette, Ind., plant to make more piston-driven engines for generators, marking its largest factory investment in about 15 years, The Wall Street Journal reported. Separately, it wants to more than double the production capacity for turbine engines by 2030.
Meanwhile, construction spending remains at healthy levels thanks to ongoing investments in critical infrastructure, heavy construction and data centers. Sales across Caterpillar's construction industries unit grew 35% to $8.35 billion, while the company's resource industries division posted sales of $4.65 billion, a 20% increase from last year.
The company said it now expects full-year sales and revenues growth in the mid-to-high teens range, compared with a prior forecast of low double-digit growth.
The outlook came as Caterpillar reported a second-quarter profit of $3.59 billion, or $7.77 a share, compared with $2.18 billion, or $4.62 a share, a year earlier. Adjusted earnings of $8.17 a share topped the $6.22 a share that analysts surveyed by FactSet expected.
The company's bottom line benefitted from a $392 million tariff refund during the recent period, according to Chief Financial Officer Kyle Epley. Costs tied to the levies came in at about $400 million, well below the $700 million the company had expected.
Looking ahead, Caterpillar guided for third-quarter tariff costs of about $600 million--roughly the same as last year--and said it expects cost tied to the levies to come in at the low end of its full-year outlook.
"We are continuing to monitor the environment as geopolitical conditions remain fluid and complex based on what we see today," Epley said.
The company saw some softness in the Middle East during the recent quarter, which hurt results in its EMEA division. However, the company expects ongoing demand, as well as higher sales volume and prices, to more than offset the weakness.
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