Caterpillar Reports Q4 2024 Earnings; Services Revenue Grows

Caterpillar's Q4 earnings showed strong adjusted profit per share of $5.14, reflecting a slight decrease compared to last year. The company anticipates lower sales in 2025 but aims for another year of services growth and solid free cash flow.

Date: 30-01-2025

AI Rating: 7

Earnings Per Share (EPS)
For the fourth quarter, Caterpillar reported an adjusted profit per share of $5.14, which is slightly lower than the $5.23 recorded in the fourth quarter of the previous year. However, for the entire year, adjusted profit per share reached a record of $21.90, a 3% increase from 2023.

Free Cash Flow (FCF)
Caterpillar generated ME&T free cash flow of $3 billion in Q4 and $9.4 billion for the full year, both figures hitting near the top of the target range. The strong free cash flow allowed the company to return over $10 billion to shareholders through dividends and share repurchases.

Profit Margins
The adjusted operating profit margin for Q4 was reported at 18.3%, which was below expectations due to lower sales volume and unfavorable product mix. For the full year of 2024, the adjusted operating profit margin stood at 20.7%, exceeding the top end of the target range.

The reports indicate a strong emphasis on services revenue growth despite a decrease in total sales and revenues by 5% in Q4 compared to the previous year. Services revenue alone rose by 4% to $24 billion for the year, showcasing the company's focus on maintaining steady growth in this segment. Furthermore, Caterpillar anticipates continued strength in its Energy & Transportation segment and expects service revenues to grow in 2025 as well.

Overall, while certain revenue figures (like total sales) decreased, the positive sign of increased profits and stable free cash flow indicates Caterpillar is managing well amidst challenges. Investors may view the services growth and strong free cash flow generation favorably, despite some declines in sales volume.

Stocks: CAT