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Caterpillar Inc (NYSE: $CAT)

Caterpillar Inc (NYSE: $CAT) is a company that specializes in the manufacturing of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company operates through three primary segments: construction industries, resource industries, and energy and transportation. Additionally, it offers financial and related services through its Financial Products segment.

The Construction Industries segment is dedicated to assisting customers with machinery for use in infrastructure, forestry, and building construction. The Resource Industries segment focuses on supporting customers with machinery for applications in mining, heavy construction, quarrying, and aggregates.

In the Energy & Transportation segment, Caterpillar aids customers in industries such as oil and gas, power generation, marine, rail, and industrial applications, utilizing Caterpillar machines.

Furthermore, Caterpillar’s All Other operating segment encompasses various activities, including product management and development, manufacturing of filters and fluids, undercarriage, ground-engaging tools, and other related endeavors.

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Caterpillar Reports Third-Quarter 2023 Results

Caterpillar Inc. (NYSE: CAT) has disclosed its third-quarter 2023 sales and revenues, totaling $16.8 billion. This represents a notable 12% increase compared to the $15.0 billion reported in the third quarter of 2022. The upswing is chiefly attributed to favorable price realization and increased sales volume.

For the third quarter of 2023, the operating profit margin stood at 20.5%, a notable ascent from the 16.2% recorded in the third quarter of 2022. The adjusted operating profit margin for the same period reached 20.8%, marking a substantial rise from the 16.5% achieved in the third quarter of 2022.

Earnings per share in the third quarter of 2023 were $5.45, contrasting with the third-quarter 2022 earnings per share of $3.87. Adjusted earnings per share in the third quarter of 2023 stood at $5.52, compared to the third-quarter 2022 adjusted earnings per share of $3.95.

It’s worth noting that the adjusted operating profit margin and adjusted earnings per share for both quarters exclude restructuring costs. Further details on financial measures reconciliation between GAAP and non-GAAP can be found in the appendix on page 12.

For the nine months ending on September 30, 2023, Caterpillar reported enterprise operating cash flow of $8.9 billion, with the company concluding the third quarter holding $6.5 billion in enterprise cash. During the quarter, the company distributed dividends totaling $0.7 billion and repurchased $0.4 billion worth of Caterpillar common stock.

Jim Umpleby, Chairman and CEO, expressed his gratitude, saying, “I’d like to thank our global team for delivering another outstanding quarter, evident through double-digit revenue growth, a robust adjusted operating profit margin, and strong ME&T free cash flow. We remain dedicated to aiding our customers in achieving success and executing our strategy for sustainable long-term growth.”

Caterpillar Shares Fall on Economic Concerns, Despite Earnings Beat

Caterpillar (CAT) saw its shares decline by over 5% on Tuesday morning, despite surpassing earnings expectations. The construction equipment manufacturer adopted a cautious tone for the fourth quarter and revealed a decrease in order backlogs, raising concerns about a potential economic slowdown.

In the third quarter, revenue reached $16.81 billion, marking a 12% surge from the same period last year, propelled by increased sales volumes. Profits amounted to $2.79 billion, or an adjusted $5.52 per share, which represented a substantial increase of more than 40% compared to the year-ago quarter.

These figures comfortably exceeded the consensus estimate of $4.75. Caterpillar’s adjusted operating profit margin, standing at 20.8%, demonstrated an improvement of over four percentage points from the corresponding quarter in the previous year.

Notably, robust growth was observed in North America, Caterpillar’s domestic region, reflecting strong infrastructure investments driven by government funding alongside gains in non-residential construction. Conversely, the company anticipates ongoing challenges in China, with sales from the Chinese market expected to remain below the typical 5–10% range.

A Shrinking Backlog Raises Economic Worries

Caterpillar’s order backlog experienced a decline of $1.9 billion in the most recent quarter when compared to the same period last year, suggesting a potential slowdown in global demand for construction equipment. Furthermore, the backlog decreased by $2.6 billion from the previous quarter, while dealer inventories saw a $600 million increase.

However, despite these developments, company executives expressed their confidence in the prevailing market conditions. Chief Financial Officer (CFO) Andrew Bonfield mentioned during the quarterly earnings call that, although the company anticipates higher dealer inventory at the close of 2023 compared to the previous year, they still expect it to remain within the customary range of three to four months of sales.

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