Caterpillar Inc.'s (CAT) management commentary could be particularly pertinent on Monday.
Chief Financial Officer Brad Halverson said on a conference call in April 2018 that adjusted profit per share in the first quarter of last year would represent the "high-water mark" for the year.
"Price versus material cost, very favorable in the first quarter, we expect to be favorable for the full year," Director of Investor Relations Amy Campbell clarified on the call. "But for the balance of the year, we would expect material cost increases to be greater than price realization."
That outlook turned out to be true as tariffs that prompted a significant slowdown in Chinese markets and higher business costs hampered results for the remainder of the year and appear to still be harming results judging by the company's prepared statements.
$CAT had rising costs due to steel tariffs. What a surprise! And revenues lower due to trade tensions with China. Shocked, simply shocked! As with $GM and other domestic car makers, Trump's steel tariffs are a dead weight loss to US manufacturers and little help to domestic steel— David Baskin (@DavidBaskinBWM) January 28, 2019
The forecast from Halverson almost one year ago was also important as it was in contrast to historical trends for the company.
"Caterpillar put the market on pause after they said on its earnings conference call that first-quarter earnings results will be the high-water mark for the year," the Action Alerts PLUS portfolio team noted on the announcement last year. "Caterpillar's earnings typically strengthen as the year progresses, and an earnings apex in the first quarter is going to cause many downward revisions by analysts for the rest of 2018."
The stock slumped by over 6% on the earnings release after those comments, marking a similar percentage decline to the stock's move early Monday morning. The move in the overall market was similar as well, as the April 2018 forecast helped shock the market downward by over 400 points on that day, an ominous signal on this Monday morning as the market slumps over 300 points shortly after the open.
Commentary from Halverson's successor Andrew Bonfield will play a pivotal role in the stock's performance on Monday given this historical precedent.
Bonfield, who joined the Caterpillar C-Suite in September 2018, will be zeroed in on by investors as the report will encompass his first full quarter with the construction conglomerate.
Bonfield joined Caterpillar after years spent at top posts in a diverse array of industries. He previously held CFO roles at British electric and gas utility National Grid (NGG) , Birmingham, U.K.-based confectionary leader Cadbury plc, and pharmaceutical giant Bristol-Myers Squibb (BMY) .
Given the disappointing print on Monday morning, the South African CFO will need to utilize all of these experiences to calm the market's frayed nerves, as Caterpillar has historically been a bellwether for the overall market.
"Honestly, [the conference call] wrecked the whole cyclical move and now they're kind of walking it back," AAP portfolio manager Jim Cramer said on CNBC last year as the company attempted to soften its original comments. "They're not [just] walking it back, they're running it back...CAT defined this earnings period."
Comments from Bonfield and the broader executive team are scheduled for 11 a.m. on Monday morning and they could serve to pacify rather than petrify the market this time around.
Tune into the results as they come through here.