Bulletin: Caterpillar Inc.'s Products Are In Strong Demand, But The Supply Chain Weighs On Margins

PRINCETON (S&P Global Ratings) Jan. 31, 2022--While Caterpillar Inc.'s (CAT) sales beat our expectations, as they continued to benefit from strong demand from end users, the company's operating profitability was lower than we would have expected given the level of growth primarily due to continued supply chain delays and cost increases that have plagued the industry. Still, the company's credit metrics are very strong relative to our threshold for a lower rating, with S&P Global Ratings-adjusted debt to EBITDA of less than 1x. Our long-term issuer credit rating is 'A' with a stable outlook. Its construction industries and resource industries segments both had 27% sales growth in the fourth quarter over the same period a year ago, while its energy

...January 31, 2022 PRINCETON (S&P Global Ratings) Jan. 31, 2022--While Caterpillar Inc.'s (CAT) sales beat our expectations, as they continued to benefit from strong demand from end users, the company's operating profitability was lower than we would have expected given the level of growth primarily due to continued supply chain delays and cost increases that have plagued the industry. Still, the company's credit metrics are very strong relative to our threshold for a lower rating, with S&P Global Ratings-adjusted debt to EBITDA of less than 1x. Our long-term issuer credit rating is 'A' with a stable outlook. Its construction industries and resource industries segments both had 27% sales growth in the fourth quarter over the same period a year ago, while its energy and transportation (E&T) segment wasn't far behind at 19%. EBITDA margins, however, fell approximately 250 basis points below the third quarter of 2021. Given the strength of CAT's business, we expect the company to be able to...

Bulletin