Caterpillar reported a quarterly profit that soared past Wall Street expectations on Thursday, with the CEO attributing that strength to internal operational efficiencies such as lean manufacturing and cost reductions from the supply base.
Shortly after the earnings release, Cat boss Doug Oberhelman told CNBC that “in a flat sales environment for two years” his team focused on operational improvements, “day-to-day blocking and tackling.”
The heavy equipment giant posted third-quarter earnings of $1.72 a share, compared to $1.45 in the year-earlier period. Revenue for the quarter came in at $13.55 billion, against the comparable year-ago number of $13.42 billion.
“We’ve had steady sales. Steady production through our lines,” Oberhelman said on “Squawk Box.”
Analysts had expected earnings of $1.36 a share on $13.19 billion in revenue, according to a consensus estimate from Thomson Reuters.
Looking ahead, Oberhelman described the world economic recovery as slow going, compared to past upturns that “come out of the blocks fast.” He does not see the world economy growing any faster than 3 percent to 4 percent for the next couple of years.
Against that backdrop, he said he’s focused on maintaining a strong balance sheet by keeping the debt ratio as low as possible. “You have to keep your eye on the ball every single day.”
Left over cash has been used to buyback stock, he said, but stressed that share repurchases were not being made at the expense of investing back into the business lines.
Caterpillar had previously announced the repurchase of an additional $2.5 billion of its stock for the third quarter. Year-to-date, the total return of capital to stockholders through buybacks and dividends has been about $5.4 billion.
In its earnings press release, the company said it expects 2014 sales and revenues to be about $55 billion, the middle of the previous outlook range. As a result, the profit outlook was revised to $6 or $6.50 a share for the year, excluding $450 million of restructuring costs.
Caterpillar, which is based in Illinois, is often regarded as a global bellwether because its sales indicate levels of global construction and mining.
—CNBC’s Terri Cullen and Everett Rosenfeld, and wire services, contributed reporting.