Club holding Caterpillar (CAT) delivered another strong quarter before the opening bell Tuesday, sparking a much-deserved rally of more than 8% to an all-time high above $287 per share. Revenue in the second quarter increased 22% year over year to $17.32 billion, exceeding estimates of $16.49 billion, according to Refinitiv. Adjusted earnings per share (EPS) surged 75% to $5.55, well ahead of estimates of $4.58. Profit margin performance was well ahead of expectations, with operating income beating across all of the company’s product segments. CAT 5Y mountain Caterpillar 5-year performance Bottom line Strong headline results at Caterpillar were met with a very bullish conference call — giving shares another jolt to the upside, thanks to positive commentary on the operating environment and growth drivers for the remainder of the year. In addition to strong quarterly sales, Caterpillar’s backlog increased to $30.7 billion. That represents a $300 million quarter-over-quarter gain and a $2.2 billion year-over-year surge. Despite strong results in the first quarter, shares sold off on concerns that the backlog, which was flat versus the fourth quarter, indicating that the strongest demand was in the rearview mirror. At the time, we never bought into that notion because there was too much infrastructure spending coming down the pipe. In Tuesday’s results, we’re starting to see that money flow through to the backlog. Indeed, management told us as much on the call that they “expect continued growth in nonresidential construction in North America due to the positive impact of government-related infrastructure investments and a healthy pipeline of construction projects.” How fast those orders come in will depend on the timeline to obtain permits, but the team does expect the order momentum to “last for some time.” Combined with commentary around dealer inventories and end market dynamics, this infrastructure potential gives us confidence in sustained demand through the end of the year and into 2024. While forward guidance wasn’t expressly given, management made clear that business has improved over the past three months, with full-year results tracking above where consensus estimates had been coming into the print. This was as good of a quarter as we could have hoped for, with plenty of conviction from management for continued momentum. That said, we told investors during Tuesday’s Morning Meeting that conviction always takes a back seat to discipline. With that view in mind, if not restricted, we would be trimming 25 shares, or a little over 7% of our position, due to the strong stock move higher. In line with that view, we’re maintaining our 2 rating , however, raising our price target to $300 per share, up from $285. Companywide Q2 results All three of Caterpillar’s physical product segments, as indicated in the table above, reported strong year-over-year revenue growth that beat estimates. While Financial Products sales missed the mark, lower credit loss provisions — an estimate on loans that won’t get repaid — helped segment operating income outpace expectations. Construction Industries sales in Q2 rose 19% to $7.15 billion. North America was up thanks to an increase in both selling prices and sales volume. On the call, management called out strong demand in both North American residential and nonresidential construction. Latin America saw a decline in sales volume, however, this was partially offset by an increase in prices. In Europe, Africa, and the Middle East, an increase in prices was compounded by higher sales volumes. Sales in Asia/Pacific were largely flat versus the year-ago period. China remains weak and that’s not expected to change much in the near term. Fortunately, China represents less than 5% of sales with weakness being more than offset by strong demand elsewhere in the Asia/Pacific region. Resource Industries sales of $3.56 billion increased by 20%. Segment sales benefited from both higher prices and an increase in sales volume, two factors that also aided segment operating income performance despite an increase in material costs. Within the segment, management expects “healthy mining demand to continue as commodity prices remain above investment thresholds.” Energy & Transportation sales increased 27% to $7.22 billion. Backlog commentary Management explained on the call that backlog levels are a function of demand (which adds to the backlog), as well as the company’s production rates and ability to ship out inventory (which decreases the backlog). With the supply chain improving and Caterpillar’s ability to more quickly turnover orders, we may see that robust backlog as of the end of Q2 decline in future quarters. If that were to occur, a declining backlog would not necessaliry be viewed negatively should it prove to be a function of shorter lead times thanks to increased product availability. Dealer inventories, another forward-looking metric to monitor, increased by about $600 million on a sequential basis and provided a $1 billion benefit to total sales. Caterpillar dealers are independent businesses and they’re not going to increase inventory levels if they aren’t seeing strong demand on the near-term horizon. Guidance As mentioned earlier in the bottom line , Caterpillar didn’t provide exact guidance numbers for every line item. But, we did get positive qualitative comments on the path ahead. The team stated plainly that they now expect their full-year 2023 to be better than they thought just three months ago. Starting with the third quarter, management noted that sales are expected to be higher on an annual basis but lower on a sequential basis (which is typical given seasonal trends). The Street was modeling a 6.8% annual increase and a 7.9% sequential decrease versus the topline results we got Tuesday (or a 2.9% sequential decline versus estimates coming into the print). How exactly that matches up versus estimates is hard to say but we would bet that it’s at least as good as analysts were looking for, probably a bit better. The adjusted operating profit margin for the third quarter is expected to have a similar dynamic, expansion versus the year-ago period and contraction on a sequential basis. That commentary is also in line with Street models coming into the print. On a full-year basis, management expects Caterpillar’s operating profit margin to “be close to the top end of our target range.” The team also noted that second-half sales will be higher versus the second half of 2022. Coming into the release, the Street had been modeling second-half sales of about $33.4 billion. In the first two quarters, Caterpillar generated sales of about $33.2 billion. Add those up and we get a blended full-year sales estimate of $66.4 billion. According to the target ranges provided by the company, we should be looking for an adjusted operating profit margin of about 19%, which if achieved would be ahead of the 18% margin the Street is currently expecting. However, that would be below the 21% in Q2. As for full-year cash flow, the team expects Machinery, Energy & Transportation (ME & T) to be “around the top” of their $4 billion to $8 billion range. That’s highly positive given that management intends to “return substantially all” ME & T free cash flow to shareholders via dividends and repurchases over time. (Jim Cramer’s Charitable Trust is long CAT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A Caterpillar (Cat) Excavator is seen working at a construction site near the New York Harbor in Brooklyn, New York, March 4, 2021.
Brendan McDermid | Reuters
Club holding Caterpillar (CAT) delivered another strong quarter before the opening bell Tuesday, sparking a much-deserved rally of more than 8% to an all-time high above $287 per share.
Solar generated 11% of EU electricity in 2024, overtaking coal which fell below 10% for the first time, according to the European Electricity Review published today by think tank Ember.
EU gas generation declined for the fifth year in a row, and total fossil generation fell to a historic low.
“Fossil fuels are losing their grip on EU energy,” said Dr Chris Rosslowe, senior analyst and lead author of the report. “At the start of the European Green Deal in 2019, few thought the EU’s energy transition could be where it is today; wind and solar are pushing coal to the margins and forcing gas into structural decline.”
The European Electricity Review published today by global energy think tank Ember provides the first comprehensive overview of the EU power system in 2024. It analyzes full-year electricity generation and demand data for 2024 in all EU-27 countries to understand the region’s progress in transitioning from fossil fuels to clean electricity.
Wind and solar continue their meteoric rise in the EU
The EU power sector is undergoing a deep transformation spurred on by the European Green Deal. Solar generation (11%) overtook coal (10%) for the first time in 2024, as wind (17%) generated more electricity than gas (16%) for the second year in a row.
Strong solar growth, combined with a recovery of hydropower, pushed the share of renewables to nearly half of EU power generation (47%). Fossil fuels generated 29% of the EU’s electricity in 2024. In 2019, before the Green Deal, fossil fuels provided 39% of EU electricity, while renewables provided 34%.
Solar is growing in every EU country and more than half now have either no coal power or a share below 5% in their power mix. Coal has fallen from being the EU’s third-largest power source in 2019 to the sixth-largest in 2024, bringing the end into sight for the dirtiest fossil fuel. EU gas generation also declined for the fifth year in a row (-6%) despite a very small rebound in power demand (+1%).
The EU is reaping the benefits of reduced fossil fuel dependency
The surge in wind and solar generation has reduced the EU’s reliance on imported fossil fuels and its exposure to volatile prices since the energy crisis. Ember’s analysis found that without new wind and solar capacity added over the last five years, the EU would have imported an additional 92 billion cubic meters of fossil gas and 55 million tonnes of coal, costing €59 billion.
“While the EU’s electricity transition has moved faster than anyone expected in the last five years, further progress cannot be taken for granted,” continued Rosslowe. “Delivery needs to be accelerated particularly in the wind sector, which has faced unique challenges and a widening delivery gap. Between now and 2030, annual wind additions need to more than double compared to 2024 levels. However, the achievements of the past five years should instil confidence that, with continued drive and commitment, challenges can be overcome and a more secure energy future be achieved.”
Walburga Hemetsberger, CEO of SolarPower Europe said: “This milestone is about more than just climate action; it is a cornerstone of European energy security and industrial competitiveness. Renewables are steadily pushing fossil fuels to the margins, with solar leading the way. We now need more flexibility to kick-in, making sure the energy system is adapting to new realities: more storage and more smart electrification in heating, transport and industries.”
If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
FTC: We use income earning auto affiliate links.More.
Elon Musk is technically a “founder” of Tesla, as per a court settlement. He deserves credit for Tesla’s succes, but it is true that he isn’t behind Tesla’s main innovation.
While I’m no fan of Elon Musk, I care more about the truth than smearing him, which is not the case for a lot of his haters. One of their go-to lies they like to repeat is that he is not a “founder” of Tesla.
It’s something they use to try to discredit his achievements: “He isn’t a founder or inventor. He just buys ideas from others.”
While there’s some truth to it, it’s not the whole truth. I felt like it would be essential to set the record straight.
The early story of Tesla
Tesla was officially incorporated on July 1, 2003, by Martin Eberhard and Marc Tarpenning with the goal of building an electric vehicle manufacturer that is also a technology company – an idea that is still core to Tesla today.
In investment materials, Eberhard and Tarpenning’s early Tesla stated a goal to develop core technologies related to “the battery, the computer software, and the proprietary motor.” These are still Tesla’s core technologies today.
But Tesla’s most important innovation was the use and packaging of cylindrical li-ion battery cells, previously mainly used in consumer electronic products, like laptops, in large battery packs for electric vehicles.
That was really a game changer and it’s an idea that precede Elon Musk’s involvement with Tesla.
While incorporated in 2003, Eberhard and Tarpenning had been working on the idea for a while. They had previously founded NuvoMedia where the two founders built of an early handheld device, the Rocketbook, an ebook reader, back in 1996.
They sold the company in 2000, but before that, they were working on the next-generation of their ebook and in sourcing the batteries, they noted some impressive improvements in the capacity and cost of li-ion battery cells.
The two engineers had serious concerns about climate change and oil import. They did the math and concluded that powering transportation with batteries using renewable energy would have a significant impact on reducing emissions and climate change.
Tesla didn’t invent electric cars. They had been around for 100 years by the time the company was founded, but they required making compromises compared to fossil fuel-powered vehicles, which prevented them for gaining in popularity.
That was Tesla’s difference-maker: making cars with the latest li-ion battery cells developed for consumer electronics, resulting in electric vehicles without compromises.
This core idea were reflected in Eberhard’s guiding principles for Tesla:
1) An electric car should not be a compromise. With the right technology choices, it is possible to build electric cars that are actually better cars than their competition.
2) Battery technology is key to a successful electric car. Lithium ion batteries are not only suitable of automotive use; they are game-changing, making decent driving range a reality.
3) If designed right, electric cars can appeal to even the most serious car enthusiast, as electric drive is capable of seriously outperforming internal combustion engines.
That has been the basis of Tesla’s success. The idea of leveraging the incredible progress with li-ion batteries in the 1990s to deliver electric vehicles with no compromise.
This was Tesla’s core innovation. It sounds simple, but it took incredible work. No battery manufacturer wanted to build li-ion cells for EVs, so Tesla had to buy off-the-shelves cells meant for laptops and package thousands of these cylindrical cells into battery modules and packs that could be viable in a car. It’s an idea that had never been done before.
And an idea is worth nothing without execution.
Tesla couldn’t have happened without Elon Musk
Musk claims that his interest in electric vehicles predates Tesla. There’s no reason not to believe him, but there’s no evidence that he had anything to do with the abovementioned concept.
In fact, before his foray into Silicon Valley’s internet startup boom, Musk went to Stanford University to study supercapacitors, which he claims he did with the hope of using them in electric vehicles. This would suggest that he thought supercapacitors would be the future of EVs rather than Li-ion batteries.
Musk and Tesla got together through a company called AC Propulsion.
AC Propulsion pioneered the resurgence of electric vehicles and built the tZero electric sports car in the 1990s.
First, it used lead-acid batteries like its predecessors, but the company converted it to lithium-ion battery cells in the early 2000s. It’s not clear who had the idea first or if it was parallel thinking, but we do know that AC Propulsion and Eberhard were in contact during the conversion.
Eberhard tried to convince AC Propulsion to commercialize the new tZero, but the company refused because it focused on another product. That’s when Eberhard and Tarpenning decided to launch Tesla.
How did Musk come into the picture?
Musk, who was working on SpaceX at the time, was contacted by JB Straubel, a young electrical engineer with a longstanding interest in electric vehicles, including building his own Porsche EV in his garage.
Fresh out of school, Straubel was working on high-altitude hydrogen-powered electric aircraft at the time—something that was of interest to Musk, so they got together. The conversion eventually pivoted to electric vehicles, and Straubel, being deeply connected in this small world, made Musk aware of AC Propulsion.
They test-drove the tZero with lithium-ion batteries, and Musk was sold. Like Eberhard, he tried to convince AC Propulsion to commercialize the product. Tom Gage, AC Propulsion’s CEO, again refused, but since they were thinking the same way, he connected Musk to Eberhard, who had just launched Tesla with Tarpenning, along with Ian Wright, who had joined the two engineers.
A few months later, in February 2004, Musk led Tesla’s series A investment round, with $6.5 million of the $7.5 million coming from his pockets.
Eberhard became CEO, and JB Straubel, who, despite his young age, had the most experience building electric cars, joined as Chief Technology Officer.
Musk was busy with SpaceX, but he was more active within Tesla than simply being an investor and board member.
As Tesla was working on the Roadster, Musk led several other rounds of financing, providing a large part of the funding himself.
Things turned for the worse in 2007. Tesla was having issues bringing the Roadster to production within its budget. The move to use the Lotus Elise chassis proved to be a mistake, and by the end, the Tesla Roadster had only shared 6% of its parts with the Elise, as most of it had to be reworked.
In the summer of 2007, the board, led by Musk, asked Eberhard to step down. Several interim CEOs followed before Musk took over himself in 2008.
Eberhard fully left the company, and in 2009, he sued both Tesla and Musk for ousting him. Both sides accused each other of being behind Tesla’s problems, and Eberhard claimed Musk was “rewriting history” as if he had founded Tesla himself.
Ultimately, a judge dismissed part of Ebarhard’s lawsuit, and then both parties settled and agreed that five people could call themselves co-founders at Tesla: Eberhard, Tarpenning, Wright, Musk, and Straubel.
Electrek’s Take
Now, in a civil case like this, the outcome is not necessarily the most just. Generally, those with the most money and the best lawyers win.
So, I’m not going to claim that there’s no value in questioning whether or not Elon is truly a Tesla founder. I get that there’s nuance here, but all parties involved have settled the matter. My main point is that it doesn’t really matter.
Tesla’s core idea was to create an electric vehicle without compromise by leveraging improvements in lithium-ion battery cell technology. However, all evidence points toward Musk’s not being involved with this core idea.
With that said, we need to give credit where credit is due. He recognized it as a good idea and put more money into making it happen than any was willing to do at the time.
Therefore, you could make the argument that Tesla wouldn’t have happened with Musk – making the founder argument moot.
After that, you also have to give some credit to Musk for Tesla’s success. He has been the CEO since 2008 and the company accomplished incredible things under his leadership. They succeeded in making EVs mainstream and pushed the industry to transition to battery-electric vehicles.
To this day, it is Musk’s original ‘Tesla Secret Master Plan’ in 2006 that convinced me Tesla would be the company to bring EVs into the mainstream. The plan made sense, and it was executed under his leadership. He took the original idea, fleshed it out, financed it, and then led the team that made it happen.
The last point is important because that’s where I start to agree with Musk’s naysayers again. Musk’s fans like to claim that he is some sort of engineering genius. Jamie Dimon just called him “our Einstein”. While I can admit that Elon is smart and has an above-average understanding of many physics and engineering principles, comparing him to one of the most impactful theoretical physicists of all time is pure madness.
While Musk has made technical contributions to Tesla, I think they are often overblown by his fanbase and Tesla’s team doesn’t get enough credit. JB Straubel, Tesla’s longtime Chief Technology Officer until 2019, and his teams should get the vast majority of the credit for the technical contributions and advancements to battery technology and power electronics that made Tesla successful.
There are too many to name them all, but I have been reporting on Tesla for more than a decade. Through my reporting, sources have praised people like Straubel, Drew Baglino, Kurt Kelty, Colin Campbell, Peter Rawlinson, Charles Kuehmann, Alan Clarke, Dan Priestley, Lars Moravy, David Zhang, Evan Small, and Franz von Holzhausen for their contributions to Tesla.
In short, yes, it’s OK to say Elon Musk co-founded Tesla. Yes, he had a critical role in the company’s survival and success, but I also think it’s fair to say that he wasn’t behind Tesla’s main innovation, and the company’s top talents don’t get nearly enough credit for delivering on the mission.
The mission to accelerate the world’s transition to sustainable energy is a beautiful one and it is what attracted much of the top talent at Tesla.
Unfortunately, Musk’s leadership over the last few years has steered Tesla away from that mission, which is my main worry about the company.
Regardless, I wanted to set the record straight on his contribution before he completely destroys his own reputation and credibility.
FTC: We use income earning auto affiliate links.More.
Nissan confirmed it is again delaying EV production at its Canton, Ohio plant. According to sources, it is also dropping plans to build an electric SUV similar in size to the Rogue Sport in the US.
Nissan cancels its smaller electric SUV for the US
Although Nissan initially planned to begin EV production at its Canton, Ohio plant this year, the company is pushing it back until at least 2028.
According to the Madison County Journal, a Nissan official confirmed the delay last week. Amanda Plecas, Senior Manager of Manufacturing and Labor Communications Nissan Group of the Americas, said the company hopes to produce five EVs starting in 2028.
“Nissan remains committed to the future of mobility and electric vehicle production,” Plecas said. The official explained that the Canton plant will “transform into a Nissan Intelligent Factory” for EV production.
In February 2022, the company announced a $500 million investment in Canton to build two new Nissan and Infiniti EV models starting in 2025.
The other three electric models were expected to be crossover or SUVs. Last May, Nissan unveiled plans to build a smaller electric SUV, expected to sit between the LEAF and Rogue, as its fifth EV in Ohio.
A separate report from Automotive News suggests that this will no longer be the case. Sources said Nissan notified suppliers that it wouldn’t be building the electric SUV in Canton. According to AutoForecast Solutions, the new EV will only be built at Nissan’s Sunderland, UK plant.
Nissan spokesperson Brian Brockman said the company is focusing on other EV projects in Canton that would sell better.
Nissan, including Infiniti, has watched its US market share dwindle to 5.8%, down 2.1% over the past five years, as per Automotive News Research & Data Center.
AutoForecast Solutions vice president Sam Fiorani said another smaller electric SUV from Nissan would only add to an already crowded market with new models arriving from Hyundai, Kia, and Volkswagen.
Electrek’s Take
The news comes as Nissan struggles to keep pace not only in the US but globally. The automaker announced plans to team up with Honda to remain relevant as EV leaders like BYD and Tesla gain market share.
Nissan sold just over 31,000 EVs in the US last year, including 19,798 Ariya electric SUVs and 11,226 LEAF models. In comparison, Honda sold over 33,000 electric Prologue SUVs in the US in 2024, and deliveries began in March.
The Ariya is already competing against top sellers like the Tesla Model Y and Hyundai IONIQ 5. With a wave of new electric SUVs gaining momentum in the US, including the Chevy Equinox EV, Honda Prologue, and Kia EV9, Nissan would be late to an increasingly crowded segment.
Nissan hopes its next-generation EVs, like the upcoming LEAF, will help turn things around. Last week, we finally caught a glimpse of the new Nissan LEAF testing in the US ahead of its official debut (Check it out here).
FTC: We use income earning auto affiliate links.More.