Caterpillar Inc., the world’s largest manufacturer of construction equipment

Founded by Benjamin Holt and C.L. Best, Caterpillar Inc. (Caterpillar) in the early 1920s, the company has since gone on to become one of the world’s most recognizable brands. It is also the leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives globally. Caterpillar is headquartered in Irving, Texas, USA, and has 113,200 global full-time employees. Additionally, there are 156 independently owned Cat® dealers serving 190 countries, 27k suppliers located in 175 countries, and Caterpillar stock is publicly traded.

Caterpillar does business on every continent, operating primarily through 3 key segments – Construction Industries, Resource Industries and Energy & Transportation.

The company has been included on Forbes’ list of World’s Best Employers (2024) in position #103, and America’s Best Employers for Tech Workers (2024), in position #154.

How Caterpillar got its name

One of Caterpillar’s most significant innovations, credited to co-founder Benjamin Holt, was the invention of the first commercially successful track-type tractor, which evolved into today’s dozer. This breakthrough not only became a cornerstone product for the company but also inspired the name “Caterpillar.”

Holt’s motivation for the invention arose from the challenges of farming in the San Joaquin River Valley, where heavy steam tractors would get stuck in the soft, peat soil. To solve this, Holt replaced the rear wheels of a steam tractor with tracks, successfully testing the first version, known as No.77, in 1904. The machine’s track-based movement prompted the name “Caterpillar,” famously coined by company photographer Charlie Clements, who likened its undulating motion to the crawling of a caterpillar.

Initially, other names like “mud turtles” and “paddle wheels” were considered, but Holt’s family, especially his nephew Pliny, convinced him that “Caterpillar” was the best fit. By 1909, the first Holt tractor branded with the Caterpillar name was produced, and in 1910, the name was officially trademarked. When Holt merged with Best in 1925, they chose “Caterpillar” for their new company, which has since grown into one of the most iconic names in earthmoving equipment worldwide.

Stock listing and market capitalisation

Caterpillar common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol “CAT” and is also a component of the Dow Jones Industrial Average. The company’s market capitalisation is at US$190.98 billion as of 18 October 2024. Revenue is valued at US$66.37.15 billion, with a net income of US$11.01 billion.

However, on 16 October 2024 Yahoo Finance did report that “Shares of Caterpillar fell sharply by 1.9% on Monday after Morgan Stanely downgraded it due to concerns over large inventories that will have to be restocked. This is a dramatic reversal from last month’s record highs, which were driven by expectations associated with the recently unveiled China’s housing market boost.”

Top institutional shareholders

As of 30 June 2024, Vanguard Group Inc. held the largest position with 46.48 million shares, representing 9.59% of the total, valued at approximately $18.31 billion. State Street Corporation followed with 36.61 million shares (7.55%), amounting to $14.42 billion, while Blackrock Inc. held 36.21 million shares (7.47%), valued at $14.26 billion. Capital World Investors and State Farm Mutual Automobile Insurance Co. held 19.29 million shares (3.98%) and 17.73 million shares (3.66%), respectively.

Other notable stakeholders included Geode Capital Management, LLC with 10.15 million shares (2.09%), Fisher Asset Management, LLC with 8.75 million shares (1.80%), and the Bill & Melinda Gates Foundation Trust with 7.35 million shares (1.52%). Morgan Stanley and Northern Trust Corporation also held significant positions, with 7.28 million (1.50%) and 6.36 million shares (1.31%), respectively.

Caterpillar reports 2^nd 2024 quarter results

On 6 August 2024, Caterpillar Inc. reported its second-quarter results for 2024, with sales and revenues totalling $16.7 billion, marking a 4% decline from the $17.3 billion recorded in the same quarter of 2023. This drop was primarily attributed to lower sales volumes, partially offset by favourable pricing. The company’s operating profit margin for the quarter stood at 20.9%, slightly lower than the 21.1% in Q2 2023, while the adjusted operating profit margin improved to 22.4% from 21.3% a year earlier. Profit per share for Q2 2024 was $5.48, compared to $5.67 in Q2 2023. However, adjusted profit per share increased to $5.99, up from $5.55 in the prior year. Both years’ adjustments excluded restructuring costs, with the 2023 figures also adjusted for a discrete tax benefit. Caterpillar’s enterprise operating cash flow for Q2 2024 was $3.0 billion, ending the quarter with $4.3 billion in enterprise cash. During the period, the company used $1.8 billion for stock repurchases and $0.6 billion for dividends.

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