Summary
Caterpillar Inc. (CAT) reported a significant decline in sales and revenues for the first quarter of 2013, down 17% year-over-year to $13.21 billion. This was primarily driven by a substantial decrease in dealer new machine inventories, which had been built up in the prior year. Profit per share also saw a sharp decline of 45% to $1.31. The Machinery and Power Systems (M&PS) segment experienced a notable drop in operating profit, impacted by lower sales volume and increased manufacturing costs related to inventory adjustments. Conversely, the Financial Products segment showed resilience, with revenues up 4% and operating profit increasing significantly, driven by higher average earning assets and improved insurance results. The company has been actively managing its inventory levels, reducing them in line with softening demand. While this impacts short-term profitability due to cost absorption, management anticipates increased production in the second quarter of 2013. Caterpillar also announced a $1 billion accelerated stock repurchase program, signaling confidence in its long-term outlook and commitment to returning capital to shareholders.
Financial Highlights
47 data points| Revenue | $13.21B |
| Cost of Revenue | $9.64B |
| Gross Profit | $2.85B |
| R&D Expenses | $562.00M |
| SG&A Expenses | $1.39B |
| Operating Expenses | $11.99B |
| Operating Income | $1.22B |
| Net Income | $880.00M |
| EPS (Basic) | $1.34 |
| EPS (Diluted) | $1.31 |
| Shares Outstanding (Basic) | 656.20M |
| Shares Outstanding (Diluted) | 671.60M |
Key Highlights
- 1Total sales and revenues decreased by 17% to $13.21 billion compared to the first quarter of 2012, primarily due to a $2.67 billion decrease in sales volume driven by dealer inventory reductions.
- 2Profit per share (diluted) fell 45% to $1.31, down from $2.37 in the prior year's first quarter, reflecting the impact of lower sales and increased manufacturing costs.
- 3Machinery and Power Systems (M&PS) segment profit decreased significantly by 54% to $1.003 billion, impacted by lower sales, increased manufacturing costs due to inventory adjustments, and unfavorable acquisition/divestiture impacts.
- 4Financial Products segment profit increased by 45% to $282 million, driven by higher average earning assets and improved insurance claims experience.
- 5Inventories continued to decline, decreasing by $0.47 billion during the quarter, to $15.07 billion, as the company aligned stock with expected demand.
- 6The company announced an accelerated stock repurchase program for $1.0 billion of its common stock, with approximately 11.1 million shares to be delivered immediately.
- 7Operating cash flow from M&PS significantly improved, increasing to $1.09 billion from $234 million in the prior year, largely due to inventory reductions.