Cat reports improved Q2 profit despite lower sales
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- Published on 24 July 2014
- Written by Paul Gordon
Citing its ability to execute more efficient operations after reducing costs in several areas, Caterpillar Inc. on Thursday reported it made a higher profit in the second quarter despite slightly lower sales when compared with a year ago.
The company took its feeling of confidence further by improving its profit outlook for the remainder of 2014 even while slightly reducing its sales projections for the year.
The company made a profit of $999 million, or $1.57 a share, compared with a profit of $960 million, or $1.45 a share, in the second quarter of 2013. For the first six months of the year profit was $1.921 billion, or $3.00 a share, compared with a profit of $1.840 billion, or $2.76 a share, through the first half of 2013.
Those profits were despite a 3 percent dip in second quarter sales and revenues, from $14.6 billion last year to $14.15 billion. That drop in sales and revenues can mostly be attributed to continued weakness in the company’s resource industries division, which is mainly mining equipment. In fact, said Group President and Chief Financial Officer Brad Halverson, if not for the troubled mining segment the company would be in the midst of its third best year in its history.
Caterpillar Chairman Doug Oberhelman noted the weak mining industry when he said the company was pleased it could nonetheless improve its bottom line. “Three key things are contributing to the continuing strength of our financial results — the diversity of our businesses, substantial success in operational improvements through the execution of our strategy and the strength of our cash flow and balance sheet,” he said.
“Our Construction Industries and Energy & Transportation segments continue to improve. Construction Industries had a good quarter with sales up 11 percent and operating profit up 83 percent from the second quarter of 2013. The improvement in Construction Industries, along with sales stability and record profit from Energy & Transportation, has helped us improve profit despite the downturn in the mining industry,” Oberhelman added.
“We understand that we don’t control the economy or the timing of a turnaround in mining. That’s why we’ve been so focused on executing our strategy and improving our operational performance, which have helped us control costs with year-to-date manufacturing costs and SG&A and R&D expenses improving nearly $500 million. We’ve also improved our balance sheet and cash flow over the past few years, and that’s contributed to our ability to return value to our stockholders — including today’s announcement that we intend to repurchase $2.5 billion of Caterpillar stock in the third quarter,” Oberhelman said.
Caterpillar’s board of directors announced earlier that the company would repurchase $10 billion in stock this year. That coupled with a 17 percent in the dividend reported a couple weeks ago is how the company is able to reward its stockholders, while its continued strength in its cash flow enables it to reward employees in its incentive bonus program, said Halverson.
He added that the ability to improve its profit outlook to $5.75 for the year, which is up from the previous outlook of $5.55 a share, while remaining conservative about sales and revenues should please shareholders, as well. That also includes a projected $400 million in restructuring costs for the year.
Said Oberhelman, “After a sizable drop in sales and revenues in 2013, our ongoing forecasting process has, since the third quarter of last year, pegged 2014 as a roughly flat year for sales. That’s still the case. There have been plusses and minuses, but they’ve both been relatively muted in the context of our total sales and revenues. While we’d certainly like to see improvement in economies around the world, and more specifically, the mining industry, the stability that we’ve seen this year has helped. Even though sales and revenues are relatively flat compared to last year, we’ve improved the bottom line with better execution and continued focus on costs.”
Still, the investment community didn’t seem too impressed. Caterpillar’s stock was at $105.04, down $3.34, at the close of trading on the New York Stock Exchange on Thursday. Just over 8 million shares were traded and while that is more than double the daily average volume of 3.54 million shares, it is well below how the stock normally trades on the day Caterpillar announces earnings.
But the profit did beat Wall Street, if by a small amount. Analysts who cover Caterpillar estimated the profit would be $1.53 a share. It was the third consecutive quarter Caterpillar’s profit beat Wall Street estimates.
During his meeting with reporters, Halverson said that despite continued weakness in the mining industry, Caterpillar remains committed to it. He said there have been signs that the industry has bottomed out, including that producers are filling orders with excess inventory and are improving their own efficiency for when the turnaround occurs. “And it will turn around and when it does we believe it will be consistent. Look 10 to 15 years out and what the energy demands will be and there will be consistency in the market,” he said.
When asked about politics abroad, particularly with events in Russia and the Urkraine, Halverson said they are a relatively small piece of Caterpillar’s business. “But we have focused on the humanitarian issues there and our thoughts go out to the families who have suffered. We are hoping for stability,” he said.
At home, Caterpillar remains frustrated with the lack of a comprehensive infrastructure bill out of Congress that would make badly needed improvements to the country’s infrastructure and create jobs. Such a bill would help sell Caterpillar equipment, as well. “Everybody understands we need it, so why don’t we have one?”
A crumbling infrastructure, Halverson added, detracts from this country’s global competitiveness. So does another issue in Washington that is troubling to Caterpillar ̶ the belief by some in Congress that the U.S. Ex-Im bank should be abolished. “Do we really want to be the only country competing on the world stage without an Ex-Im Bank? It’s a question of what’s for the good of the country and we should not be taking unilateral action that takes jobs away from this country,” he said.
“We are proud to be a global company but we have to be able to compete outside the U.S.,” he added.
Highlights from Caterpillar’s second-quarter report, which can be read in its entirety at www.caterpillar.com, include:
- Cat Financial reported second-quarter revenues of $728 million, an increase of $34 million, or 5 percent, over the second quarter of 2013. Second-quarter 2014 profit after tax was $146 million, a $35 million, or 32 percent, increase from the second quarter of 2013.
- Construction Industries and Financial Products were the only segments to see an increase in sales in the second quarter, with Construction Industries scoring an 11 percent increase largely because of a 20 percent improvement in North America.
- Resource Industries, which is largely mining, was off by 29 percent in the second quarter.
- Caterpillar anticipates global economic growth will be about 2.5 percent in all of 2014, which would be a modest improvement from 2013.
- Caterpillar worldwide full-time employment was 115,292 at the end of the second quarter, compared with 122,402 at the end of the second quarter of 2013, a decrease of 7,110 full-time employees. The decrease was primarily the result of restructuring programs.
Wyatt Earp takes to the Apollo stage
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- Published on 23 July 2014
- Written by Paul Gordon
Peoria is a long way from Tombstone, Arizona and the OK Corral, where Wyatt Earp became famous for the shootout in which he, his brothers Virgil (the city Marshal) and Morgan and buddy Doc Holliday took down a gang of outlaws in 1881.
Relatively few people know that just nine years earlier Wyatt Earp was arrested four times, right here in or around Peoria, for hanging out in houses of prostitution.
Does that mean the legendary Earp was a hardened criminal before he helped the law take out the Clanton-McLaury gang?
“Not at all,” says James Wilhelm, the Peoria actor who will portray Earp in a one-man show called “Wyatt Earp: The Other Side,” this weekend at the Apollo Theatre. “He’ll tell the real story behind those arrests. He wasn’t really a pimp, as some called him. He does, though, admit he sometimes did protection services for some of the gals in those houses.”
Wilhelm, a long-time history buff and host of Illinois Adventure, the award-winning television program on WTVP-TV, knows as much about Earp as anyone. He has studied the man for the past year in preparation for the show and will tell about his life from his side of the story.
“Interestingly, Wyatt Earp got a lot of bad press through the years and he was never real happy with the kind of publicity he got. It seemed he was always having to refute the bad things that were being said about him. So, he now gets to tell the other side of the story. He’s pretty anxious to set the record straight on a few things,” Wilhelm said.
Wilhelm, who wrote the script for the 70-minute show, said he will portray Earp as a 66-year-old man who makes a fictitious stop at the Apollo Theatre in 1914, the year the theatre opened.
Wilhelm is a veteran of local stages and has starred in numerous plays through the years, including “Death of a Salesman,” “The Glass Menagerie,” “A Few Good Men,” “One Flew Over the Cuckoo’s Nest” and “Picnic.”
But those kind of dramatic roles have dried up the past few years as community theatres in the area do more and more musicals. What few non-musicals are performed now usually call for younger actors.
“I needed a project,” Wilhelm said in explaining why he researched and wrote the one-man show.
“I decided on Wyatt Earp because not that many people realize he had a relationship with Peoria. More people know that he was born in Monmouth but not many know he was arrested in Henry and Beardstown and twice in Peoria during his 24th year. In modern terminology he was arrested for being a john in a house of prostitution. He had an interesting life outside of the OK Corral,” Wilhelm said.
The show starts at 7:30 p.m. Friday and Saturday and at 2:30 p.m. on Sunday. Tickets are $10 and can be reserved by calling (309) 673-4343 or by emailing apollofinearts13@gmail.com. Tickets also will be sold at the door, but seating at the Apollo is limited.
New Marriott Courtyard open; downtown hotel complex complete
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- Published on 18 July 2014
- Written by Paul Gordon
The last piece of the complex that developers now call Civic Center Square opened on Friday and convention planners say the potential payoff is limitless.
The Marriott Courtyard Downtown opened at noon Friday with little fanfare but not without much excitement from the staff. Connected to the Marriott Hotel Pere Marquette and the Peoria Civic Center that new hotel and its 116 rooms ̶ bringing the total number of rooms in the complex to 402 ̶ gives the city a true convention hotel, said Joe LoMonaco, managing director of Civic Center Square.
Hired by owner/developer EM Properties, he now is an employee of First Hospitality Corp., which assumed management of the complex on Friday, as well.
With 30-plus years in the hotel business in many cities larger than Peoria, LoMonaco believes the complex concept will work well in a city the size of Peoria and he is confident Civic Center Square will be a success because of what it brings to the city.
“This allows us to compete at the same level with much larger cities that have hotels connected to the civic center-type buildings. Peoria will appeal to many because it isn’t as large but offers the same amenities,” LoMonaco said.
“It’s a Marriott hotel, which is a very strong brand, and it has first-rate management with First Hospitality, which is a certified provider to Marriott and has been for many years. We have a very strong team in place and we’re ready to go.”
The opening was the culmination of many years planning and building the $90 million-plus complex that started with the renovation of the Hotel Pere Marquette, the razing of several buildings along Main Street and the construction of the Marriott Courtyard, all started by EM Properties founder and president Gary Matthews.
Jim Wetherington, general manager of the Peoria Civic Center, said he is very enthused about the opening of the Courtyard and completion of the complex. “I can’t begin to tell you how pleased we are to have such quality hotels as the Pere and Courtyard connected to our building. That is something almost all conventions require now and this will open the door to many new clients that were not available to us before,” he said.
Wetherington said the Civic Center already has a high retention rate among its clients; the addition of a connected hotel complex brings that even higher.
Don Welch, president of the Peoria Area Convention and Visitors Bureau and former general manager of the Civic Center, has for many years been talking about the importance of having a connected hotel or hotels. “It took a long time but it’s here now and we are super excited about it. We’re now anxiously awaiting the re-opening of the 4 Points and we’ll really be in good shape,” he said, referring to the 4 Points by Sheraton hotel a block from Civic Center Square that is currently closed while undergoing a multi-million dollar renovation.
Welch said his organization already is reaping the benefits of the complex because it sells conventions a few years into the future. Being able to demonstrate that the connection to the Civic Center was really going to happen, particularly after the Pere Marquette reopened after its own multi-million dollar renovation, got Peoria into many new doors and clients, he said. “Now that the Courtyard and the skywalk connecting the hotels to the Civic Center are open, we have a really great selling tool,” he said.
Another plus, Welch said, is one the average person won’t recognize but that conventioneers will: the management of First Hospitality. “They are well known and Joe LoMonaco and his team are great. They understand the community and clientele. It’s great to have them on board,” he said.
LoMonaco is no stranger to Peoria. Part of his previous hotel experience was with the John Q. Hammons Hotels company and while with that firm he opened the Embassy Suites in East Peoria. That’s when he came to know Peoria and many of its people. “Whenever I come back here, it’s like seeing family again. I really love Peoria and its people. So when I got the call, it really was easy to say yes,” he said.
He likes the concept of “complexing” and is ready for the challenge of making it work here, he said. “It’s an experiment in a smaller metro area like Peoria. I think we’ll show it can work very well,” he said.
LoMonaco didn’t venture a guess on what the first real test for the complex will be but said the next 90 days will be crucial to work out any kinks. “It usually takes that long to really get everything into place and working smoothly. But we have people here who are already vested in making it succeed, people who want to be here. We have a full sales and catering team in place, people who know Peoria and have the experience. That is important,” he said.
Heading up the sales and marketing team for Civic Center Square is Mary Jo Schettler, who directed sales and marketing for the Par-A-Dice Hotel for many years.
The two hotels are separate entities but do share some amenities. Chief among them is the swimming pool and hot tub. Both are in the Courtyard but Pere Marquette guests are free to use them. Also, they share the parking deck and the skywalk to the Civic Center. Common areas of each are open to the other, as well.
The new Courtyard doesn’t have a full-service restaurant such as the Pere Marquette’s Table 19, but it has a Bistro, which LoMonaco described as a “deli with a bar” in that it is largely sandwiches and salads with alcohol.
The Great Room where Courtyard guests check in has free wi-fi services and a business center. It also has smaller media centers with a sofa, table, small television and computer hookups.
This hotel also has what LoMonaco said is “the centerpiece of a Courtyard.” That is a large touch-screen computer that gives a person about as much information as they need, whether it be personalized needs such as whether flights in and out of the Gen. Wayne Downing International Airport are on time or general information such as news, sports and weather headlines. It even gives information and directions to local restaurants and other places of interest around the area.
“It is more or less a computerized concierge. There’s nothing like it. Our guests will love it,” he said.
Anywhere you go around the Civic Center Square complex you will hear music ̶ even coming from the light poles outside. That, too, is part of the complex concept, he said.
As for the name Civic Center Square, it was chosen by EM Properties as a way to tie the buildings of the complex together with the Civic Center. There are still many retail spaces connected to the new 400-plus space parking deck to be leased that will further tie them together, LoMonaco said.
While he didn’t give names, he said there are a few new restaurants and retailers coming that will be announced soon. “Peoria won’t be disappointed,” he said.
Downtown venues look for more residential help
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- Published on 21 July 2014
- Written by Tim Rosenberger
The purpose in bringing the USS LST to Peoria was to increase downtown traffic and tourism. With the city failing to get the ship to move from Evansville, Ind., how will the downtown area fare?
“A downtown is a vital place,” Chris Setti, assistant city manager, said. “Our downtown is a vital place when it has a good mixture of a base economy.”
Ingredients in that mixture include Caterpillar Inc., the banking industry, the legal industry, the educational infrastructure, residential areas and a visitor’s economy.
A healthy downtown accomplishes two goals, Setti said. It offers people living in town somewhere to go and spend a day, afternoon, evening or night. Simultaneously, people who are visiting from outside the immediate area have something to do when not attending a conference at the Civic Center, a baseball game, etc.
The LST, which Peoria originally tried to obtain 10 years ago, was thought to be an added draw for downtown. Without it, though, Setti does not think the area is doomed.
Setti believes Peoria – with the Caterpillar visitor’s center, the Peoria Riverfront Museum, The Spirit of Peoria, the farmer’s market on Saturday, all the events, and the shops ̶ including Running Central, which will be opening in a couple weeks – has a great downtown.
“The LST was an opportunity to add to that, but we will continue to make improvements to the programming, to the infrastructure, to the environment of our downtown through a variety of mechanisms,” Setti said.
One of those mechanisms is increasing the number of Peorians living downtown. Mayor Jim Ardis hears people frequently ask why there aren’t more people downtown. His answer is because not many people live there.
Building more residential opportunities in the warehouse district and other areas will bring more people to that section of Peoria. But that is not all that needs to be done. Grocery stores and other businesses need to be available to help residents live downtown.
The Mayor does not think any one business, amenity or attraction is going to make downtown successful. The key will be drawing on all that is available, he said.
Shelley Lenzini, owner and head chef at Rhythm Kitchen Music Café on Water Street, is certainly optimistic about what the area has to offer. She says downtown business has made a big leap forward in the past two years, with fresh ideas and the influx of a younger demographic.
“Especially my place,” Lenzini said. “It’s for families [and] it’s for anywhere from babies on up to 90 year-olds, and I think the whole riverfront offers a little bit of something for everyone. Age-wise and ethnic-wise there’s just a variety of things that are going on down here for everyone.”
That is not to say Lenzini considers downtown to be perfect. She would like to see more ethnic restaurants, which could lead to a great hub of international restaurants up and down Water Street, and further residential growth, which she said has been making progress.
David Remington, owner of Richards on Main, thinks there are upsides and downsides to having a downtown business. The positives are a good turnout at lunch due to all the workers in the area. The Civic Center, which is only a two minute walk away from Richards, also brings in good business before and after events.
On the opposite side of coin, there are the many days and nights when there is not an event downtown. Those nights can be difficult, Remington says. He has to pay attention to what is going on to keep the doors open.
Remington believes business is difficult for others in the area, such as a Jimmy Johns on Adams Street that opens at 10:30 a.m. and closes at 3 p.m.
“There’s a reason for that,” Remington said. “Downtown is kind of a barren area after the businesses close down for the day. There’s not a whole lot of reason to come down here. Plus, you got that perception of ‘downtown is expensive, there’s no parking [and] it’s dangerous.’”
Although he gets compliments on his restaurant, he says people tend not to think about places to eat downtown unless they need to go somewhere nearby or while attending an event.
Remington said he thinks the area needs more businesses and things to do. Improved parking would be good, as well. Food cart vendors, whom he said are supposed to park down by the Riverfront, often take parking places near Remington’s business, which has been an issue since Richards opened in 2001.
The closing of Sully’s Pub in December 2013 harmed Richards, too, Remington said. The pub created good foot traffic that brought a great deal of customers to both businesses. Customers have decreased since Sully’s went out of business, he said.
Another person who has been having trouble is Travis Mohlenbrink, owner of Cracked Pepper Catering and Bakery, which has locations on Northeast Adams Street and Main Street.
The Main Street location does good business, but there has been a slowdown in the amount of downtown employees coming in. This has resulted in the bakery going from serving breakfast and lunch to just the latter. He said the regulars Pepper has attracted since its opening a few years ago have given it enough business to justify staying open.
Mohlenbrink also owns Sugar Wood-Fire Bistro & Gourmet Treats on Adams Street, in the Warehouse District. The enormous success of the Bistro has been a pleasant surprise for Mohlenbrink. He thinks it takes drive, a lot of hard work, wonderful employees and a great product to do so well in that location.
The Cracked Pepper owner is certain that what has been happening downtown has not helped his businesses. He understands that things like construction are a necessary evil, but at the same time it has not been helping to generate traffic.
“It has been a hindrance more than a help, and really nothing else has happened in the last nine months since we’ve opened [Sugar] that would bring more traffic, more people into the area,” Mohlenbrink said.
Other businesses are in the same boat, Mohlenbrink believes. Some are hanging on to see what is going to happen. Mohlenbrink fears a few will not be able to withstand the amount of time it is taking for downtown to have a resurgence. He said he does not see the climate of downtown business turning around until more people take chances and open more businesses or the creation of more residencies.
Pat Sullivan, who has been working downtown since 1986 and is co-owner of Kelleher’s Irish Pub on Water Street, has a different view on the state of downtown. Namely, he has noticed a growth in the area over the years.
Sullivan has read many studies that support the idea that the downtown area can maintain more residents. He also owns apartments and condos downtown, and he has a waiting list for ones he is currently building.
“It’s showing that people want to live here,” Sullivan said. “When more people start living here, our retail will follow, and you’ll have a vibrant downtown. Are we big and vibrant right now? No, but we’re growing slow and steady, and that’s the best clip you can have.”
Illinois jobs picture brightens; unemployment down in June
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- Published on 17 July 2014
- Written by Paul Gordon
The Illinois unemployment rate fell in June for the fourth consecutive month to 7.1 percent, its lowest in nearly six years, according to the Illinois Department of Employment Security.
Aided by the creation of approximately 6,000 jobs in June, the rate has dropped a combined 1.3 points in April, May and June, the largest three-month drop since that type of data started being measured in 1976, the IDES said.
The last time the rate was lower than the June rate was October 2008 when it was 7.0 percent.
“Today’s numbers remind us that as our economy improves, more still needs to be done,” said IDES Director Jay Rowell. “We need to continue to create job-training opportunities for the unemployed and underemployed so they can share in our growing economy.”
The significant drop in the unemployment rate so far this year reflects Illinois’ historical role of following the nation into and out of economic cycles. This pattern generally is expected to continue until global demand lifts Illinois’ manufacturing sector, which in turn would help housing and the construction industry, the report said.
The unemployment rate also is in line with other economic indicators. First time jobless claims have been trending lower for the past four years and in June were 6 percent lower than one year earlier. First time claims in June also were at the lowest monthly level since 2007. Numbers from the independent Conference Board’s Help Wanted OnLine Survey show Illinois employers in June advertised for more than 212,800 jobs (203,500 seasonally adjusted) and 86 percent sought full-time work.
In June, the number of unemployed individuals fell by 30,600 (6.2 percent) to 461,700. Total unemployed has fallen 291,800 (38.7 percent) since the rate peaked at 11.4 percent.
The Illinois unemployment rate was 7.5 percent in May and was 9.2 percent in June 2013, the IDES said.
Nationally, the U.S. unemployment rate fell from 6.3 percent in Mary to 6.1 percent, according to the Bureau of Labor Statistics. The national rate was 7.5 percent in June 2013.
The number of non-agricultural jobs grew by 6,000 during June and now are up more than 20,000 over the past year, the IDES said. Sectors leading that growth included construction, financial activities and professional and business services.
Industries who lost jobs in Illinois during June included manufacturing ̶ which is down 11,500 jobs over the past year ̶ and leisure and hospitality, the report said.
The unemployment rate identifies those who are out of work and seeking employment. A person who exhausts benefits, or is ineligible, still will be reflected in the unemployment rate if they actively seek work. Historically, the national unemployment rate is lower than the state rate. The state rate has been lower than the national rate only six times since January 2000. This includes periods of economic expansion and contraction.
On the tail of the positive unemployment report, Gov. Pat Quinn on Thursday announced a program called “Employ Illinois,” described by his office as an expansion of the governor’s efforts to provide diverse residents with training for jobs in the construction industry.
“Offered through the Illinois Department of Transportation (IDOT) and the Illinois Tollway, Employ Illinois links job seekers with training and also increases the incentive paid to contractors from $10 to $15 an hour for each program graduate they put to work,” Quinn’s announcement said.