Caterpillar’s business has roared back from the lows seen during the financial crisis, when its revenue fell to 32.4 billion in 2009 from $51.3 billion in 2008. Revenue nearly doubled in 2011, to $60 billion. Also last year, the Peoria, Ill.-based company completed the $8.6 billion acquisition of Bucyrus using only its cash flows. Caterpillar plans to do the same with its acquisition of China’s ERA Mining Machinery, a deal that is awaiting government approval. Ed Rapp, Caterpillar’s group president since 2007 and CFO since 2010, discusses the evolving methodology the company has applied to outperform through the challenges and volatility of the last few years.
T&R: Caterpillar has maintained strong cash flow as well as its dividend and credit rating while pursuing several acquisitions. What’s the crux of the company’s success?