Cat reports Q3 profit, improves outlook

Caterpillar Inc. overcame flat sales and restructuring costs to post a billion dollar profit in the third quarter, capitalizing on business and geographic diversity to beat Wall Street estimates for the fourth consecutive quarter, the company announced Thursday.

Those results caused the company to improve its profit outlook for the full year despite anticipating sales to end the year flat with 2013, the company said. Its preliminary outlook for 2015 was “cautiously optimistic” as the company expects sales to remain flat to slightly up for the year.

Caterpillar reported a profit of $1.017 billion, or $1.63 a share, on sales and revenues of $13.549 billion. Despite restructuring costs taking 9 cents a share from the profit, it still was up from the third quarter of 2013, when profit was $946 million, or $1.45 a share, on sales and revenues of $12.678 billion.

For the first nine months of the year profit was $2.938 billion, or $4.73 a share, an increase from a profit of $2.786 billion, or $4.30 a share, through the first three quarters of 2013. That is despite the fact sales and revenues were down slightly, to $38.642 billion from $39.048 billion through the third quarter of 2013.

The third-quarter results beat the consensus estimate of Wall Street analysts, who predicted a profit of $1.36 a share on sales and revenues of $13.2 billion.

Because of that and the company’s improved outlook, Caterpillar stock was one of the darlings of Wall Street on Thursday. Stock closed the day at $99.27 a share, up $4.70, or 4.97 percent. More than 11.2 million shares were traded on the New York Stock Exchange, which was more than twice times the average daily volume.

In its updated outlook, the company said it now expects the full-year 2014 profit to be about $6 a share on sales and revenues of $55 billion. The previous outlook called for $5.75 a share of sales and revenues of $54 to $56 billion. Excluding restructuring costs estimated at $450 million for the year the company said 2014 profit would be about $6.50 a share.

“We’re pleased with the third-quarter profit improvement considering world economic growth remains slower than we’d like,” said Doug Oberhelman, chairman and CEO. “We’ve continued to focus on what we can control — cost management and operational execution. We continue on a Lean manufacturing journey and are focused on improving safety, quality, efficiency and inventory turns. We’re making progress and it is beginning to be reflected in our results. The diversity of the businesses we’re in and the strengthening of our operational performance have been key to helping us improve results and our competitive position in this weak economic recovery. Our broad geographic reach and manufacturing footprint help mitigate the impact of currency fluctuations. In fact, currency impacts were positive in the third quarter.

“In addition to the profit improvement, we have a strong balance sheet and through the first nine months of the year, we’ve had good cash flow.  So far this year, we’ve returned value to our stockholders by repurchasing $4.2 billion of Caterpillar stock and raising our quarterly dividend by 17 percent. We are confident that, when we see more significant economic growth around the world, our consistent focus on operational performance will have prepared us to deliver even better results,” Oberhelman added.  

“The fact that we continue to raise our profit per share outlook on relatively flat sales is a testament to our diverse portfolio of businesses, disciplined cost control and operational execution.  I’m proud of our people for what they’ve been able to accomplish in the current economic environment.  We have an exceptional team around the world and in uncertain times like these, they are especially important to us. As we move into the final quarter of 2014, we expect to build on what we’ve been working on: strategy execution, operational performance, cost management, cash flow, our healthy balance sheet and improving our market position,” Oberhelman said.  

In its preliminary 2015 sales and revenues outlook the company said it believes it likely world economic growth will improve next year. Still, it said, there are significant risks and uncertainties that could temper growth in 2015, including political conflicts and social unrest in several regions. So it expects sales and revenues to be flat to slight up from 2014.

“At this point, our view of 2015 sales and revenues isn’t significantly different than 2014.  Our order backlog was up a little in the third quarter and was slightly higher than at this point last year.  We’re hopeful that economic growth will improve in 2015, but are mindful of the uncertainties and risks.  We have continued to improve operational execution, and if we see more positive economic momentum, we believe we’re well- positioned to respond and deliver for our customers and stockholders,” Oberhelman said.

In a meeting with reporters Thursday, Group President and Chief Financial Officer Brad Halverson said the company is being “cautiously optimistic” in improving its outlook in spite of flat sales largely because it has been doing better than expected. “We try to make a very educated estimate and that’s what we tell the street,” he said.

Beating expectations, he added, speaks well for the employees at Caterpillar as well as suppliers and dealers. “The mining drop was very tough on a lot of people. But as Caterpillar people do, we got to work and we have delivered very consistent operational results,” he said, adding that restructuring the past year or so has kept the company efficient and nimble.

Saying the company has been in a period of flat sales, Halverson added that “we serve the industries that make the world grow. We believe we’re in the right industry. So, growth will come.”

Should a surge in demand happen quickly, the restructuring done throughout the Caterpillar system has the company ready to meet it, he added. “We have the capacity and we are well positioned for it,” he said.

By segment, energy and transportation performed best in the third quarter, improving by 13 percent overall. Construction equipment sales improved 9 percent in North America, but was off 2 percent overall from a year earlier.

Resource industries, which has been hit the hardest and undergone the most restructuring, continued to struggle as it was down 19 percent overall. But the company indicated it believes mining has bottomed out, that even though orders for new equipment aren’t growing mining companies are increasing production at existing mines.

Other highlights from the third-quarter report include:

• The company said incentive bonuses given to non-union employees each spring will be considerably higher next year, which officials said will be positive for the local economy.Caterpillar worldwide full-time employment was 114,352 at the end of the third quarter of 2014, compared with 121,506 at the end of the third quarter of 2013, a decrease of 7,154 full-time employees. The flexible workforce increased by 1,017 for a total decrease in the global workforce of 6,137. The decrease was primarily the result of restructuring programs.  
• Cat Financial had third-quarter revenues of $743 million, an increase of $44 million, or 6 percent, over the third quarter of 2013. Third-quarter 2014 profit after tax was $148 million, a $31 million, or 26 percent, increase from the third quarter of 2013.
• Caterpillar worldwide full-time employment was 114,352 at the end of the third quarter of 2014, compared with 121,506 at the end of the third quarter of 2013, a decrease of 7,154 full-time employees. The flexible workforce increased by 1,017 for a total decrease in the global workforce of 6,137. The decrease was primarily the result of restructuring program.
• To read Caterpillar's full report visit www.caterpillar.com.

Intersection changes have little effect on emergency response times

The movement of emergency vehicles through the intersection of Main and University streets in Peoria has not been impaired by the reconstruction that has otherwise slowed traffic, city and emergency officials said Wednesday.

Indeed, city leaders said, the intersection changes are bringing about the intended results  ̶  to reduce the number of vehicles through the intersection, making it safer and increasing pedestrian traffic.

“We want the taxpayers to know the design of that intersection is working in the way it was designed,” said Second District City Councilman Chuck Grayeb. “We made this corridor as safe as we could possibly make it.”

That intersection was reconstructed earlier in the year chiefly to make it safer for pedestrians, most of them Bradley University students and personnel. By narrowing the number of lanes from five to three, widening sidewalks, putting on-street parking in place and installing new lights that will stop all vehicular traffic while pedestrian cross diagonally, that is being accomplished, said Grayeb.

It is not, however, impeding emergency vehicles, he said.

Said Mayor Jim Ardis, “We don’t need to be concerned that there is going to be a delayed response. Clearly, the data shows our citizens are not in danger because of one intersection.”

His remarks came during a news conference at Advanced Medical Transport after a City Council-ordered study of response times, sought by Grayeb and by At-Large Councilwoman Beth Jensen to ensure those times were not being adversely affected to the point of endangering people in need of emergency medical treatment.

Erik Bush, vice president of strategy and compliance at AMT, said roughly 1,400 calls that would take ambulances through the intersection were studied and it was found there was little change. With the key number being 30 second or less, he said the average time to get through the intersection is 21 seconds; however, it is 24 seconds since construction ended.

Bush said the response times are well within National Fire Protection Association standards. “We want to stress that really isn’t a change at all because many factors can impact the response time. In aggregate, we are seeing no change,” he said.

When the new intersection first opened many complained about the time it took to get through it, particularly at peak traffic times when it would take two or more signal cycles to make it through. That was basically the intention  ̶  to get people to find alternative routes to reach Interstate 74 or other areas of the city, said City Engineer Scott Reeise.

“The goal was to make the area safer, more inviting to pedestrians. We wanted a 35 percent reduction in the traffic through that intersection and we are get very close to accomplishing that. We also wanted to see an increase in pedestrian users and we are seeing about a 60 percent increase to date, with about a quarter of those using the diagonal cross and all-way stop lights,” he said.

He added that businesses in the area are reporting increases in customers, largely because pedestrian traffic has grown.

Grayeb noted that the West Main Merchants Association, defunct for several years, is now “up and running. It is important that the commercial corridor is healthy, which helps keep the neighborhoods healthy.”

He and Jensen said they have heard positive feedback from residents of the neighborhoods surrounding that intersection and near the university.

“Safety was one of our priorities. We are hearing from residents they have a better sense of safety now,” Jensen said, referring not only to the Main and University intersection but other traffic-calming methods employed in surrounding neighborhoods.

Reiss said thorough studies will be done once the reconstruction of Sterling Avenue is completed. He said he believes more traffic will be diverted from Main and University once that happens.

Added Grayeb, “We’re not done. This is still a work in progress. We are waiting for the Sterling Avenue work to be done before we get complete metrics.”

Streight: Advice for the conference attendee

Having recently attended a tech conference dealing with cyber security, data storage, and other IT issues, I thought about some of the things I typically do at these events. I decided to prepare a list of things that can make your attendance more productive.

These tips are designed especially for job seekers, career ladder climbers, and consultants wanting more clients.

(1) Sit up front. This makes it better when Q&A time comes along. Or sit way in the back, even stand in the back, so you can bop around taking photos and getting more coffee without disturbing anybody.

(2) Have plenty of business cards, with your LinkedIn, blog, or website url, to exchange with presenters or attendees. Obtain business cards from others and send them relevant news stories, articles praising their company, your own advice, etc., as appropriate. Nobody does this kind of follow-up. Don't pester or act needy. Just keep presenting yourself as someone with expertise, authentically and honestly. It's easy to impress when most people are not self-promotional.

(3) Bop around taking photos of audience and speaker, from a variety of angles, with a fancy camera (never a cell phone camera) and people may think you're with the local media. Explain "I'm a citizen journalist. These photos will be on Facebook and GooglePlus."

(4) ALWAYS be the first to ask a question when the presenter asks if there are questions. Because they may only be able to get to two or three questions, you need to be first in line with hand waving in the air.

(5) Ask the SMARTEST question, one related to your niche expertise if possible, or at least something that makes you sound intelligent and articulate.

(6) Ask questions from the client or enterprise side whenever possible, so you'll have something to take back to your clients and colleagues that they can use immediately and fruitfully.

(7) By asking expert questions, showing off your knowledge, you'll attract the attention of presenters, event handlers, emcees, colleagues, and possible employers or clients. They may even come up and approach you after the meetings, asking for your business card. Your little performance in the conference chamber was impressive. You have become "someone it's probably good to know." You have become a little bit more marketable, easier to hire.

Be sure to tell them exactly what you do, in no uncertain terms. Don't exaggerate, but do present yourself in glowing terms that accurately represent your skills and what you can achieve for a company.

(8) ALWAYS take selfies with the famous or important people. I have never yet asked permission and got turned down. Just going up to them and saying, "Selfie?" in a mischievous or playful tone of voice, is a good way to get that photo you want.

(9) Grab as much swag (promotional novelties, advertising specialty items: pens, mouse pads, booklets, charts, white papers, etc.) to give to your clients, employer, and colleagues. Be sure to bring a briefcase, although you can usually find swag bags for free at the event.

(10) You want to become "that guy (or gal),” the one who has connections, the one who has met in person the heavy hitters in your field. The one who is curious about many aspects related to your field of expertise. When a situation arises that is not in your specific skill set, you may know someone who does that type of work, someone to whom you can ask questions or refer others.

(11) See every seminar, corporate vendor event, conference, lecture, fair, etc. as a terrific self-promotional and photo-documenting opportunity. Never go just to "enjoy" or "learn" or show up because you feel (or are) obligated. Take good notes and try to absorb as much as you can, but don't be entirely passive. Realize this event is an opportunity for you to perform and impress.

(12) As soon as the event is over, hurry and post photos with funny or wise commentary, on Facebook, Ello, G+, Tumbler, Instagram, LinkedIn, Twitter, and other communication channels. The more you spread the news about your ongoing involvement with leading edge technology and tech personalities, the better your chances of getting hired or gaining new clients.

Attitudes about wearable technology are changing

Attitudes about wearable technology are changing, according to a new study from Wearables.com and The Center for Generational Kinetics.

The national study reveals that more Americans believe wearables are here to stay. The study and report titled, The Unexpected State of Consumer Wearable Technology, exposes an untapped opportunity available for brands and technology providers to develop wearables that benefit users in both their personal and work life.

"Our study revealed that consumers are looking for smart technology that will help improve their overall lives and that they would feel comfortable sharing personal information if it offered a better user experience," said Luis Felipe Rincon, CEO of Wearables.com. "Traditional thinking is that consumers would never agree to share their information, such as location, with brands and the like, but this national research shows that consumers — especially Millennials — would share their location and much more. In fact, what we found is that wearables may be the tipping point that unlocks the next advertising opportunity for brands."

While consumers have long shown a great willingness to exchange personal information like an email address for benefits, geo-location sharing has mostly lagged behind. Since geo-location is one of the core functional benefits imbedded in many consumer wearable devices, this may be why consumers have become so much more willing to share this data.

Some of the surprising data the research study found related to privacy and wearables includes:

• Many of those surveyed would provide information to receive notifications about events or concerts (18%) or stores or restaurants near them that they'd enjoy (18%), learn the real-time location of their friends (15%), or gain entrance to an event without having to show an ID or ticket (15%).
• A majority of Americans would be comfortable divulging information about themselves anonymously to their favorite stores (60%), a product brand (56%), or an app (46%).  
• Millennials are more likely than non-millennials to feel comfortable sharing their information anonymously with the government (40% vs. 25%), anyone on the Internet (35% vs. 20%), or their employer (30% vs. 16%).

In addition to shifts in consumer privacy, the research reveals many other interesting and useful trends for consumers, OEMs, fitness and fashion brands, and retailers. Some of the findings include:

Nearly two-thirds of those surveyed have already considered purchasing a wearable item, with more men than women motivated to use wearable technology if it made them appear to be smarter or more attractive.

Of those surveyed, consumers in the millennial generation are more likely to share personal information about themselves and are more likely than non-millennials (77% vs. 54%) to considered purchasing a wearable item.

Americans would be interested in trading personal information, such as where they shop, how often they exercise, or where they are located, in exchange for benefits that could improve their shopping experience.

Nearly one in five would exchange information to earn rewards every time they walk into a store (19%), receive notifications about deals at a store they're in (19%), or get recommendations for items they'd like based on past purchases or recent searches (18%).

In addition, more than one-third of social media users would be open about their purchasing habits, such as what stores they visited (48%), or what they purchased online (34%).

The survey uncovered that innovative companies creating smartwatches and activity trackers are likely to revolutionize the way Americans receive information and think about their health and will influence the adoption of wearables.

Americans who would want a co-branded wearable device are most likely to crave Nike smart clothing (37%), Ray Ban smart sunglasses (36%), a Rolex smartwatch (33%), or a Canon wearable camera (30%), if they existed. In fact, one-third (33%) would want to wear a piece of fashionable jewelry that doubles as a device with Internet access.

To learn more about the new research and access the complete report, The Unexpected State of Consumer Wearable Technology: Surprising New Research on U.S. Consumer Attitudes Towards Wearable Technology Across Generations, visit www.wearables.com.