What is the primary reason for the significant decline in Caterpillar's sales and profit?

The primary driver for the decline in sales and profit is the significant downturn in the mining industry, which heavily impacts Caterpillar's Resource Industries segment. Reduced capital expenditures by mining companies globally have led to lower demand for Caterpillar's heavy equipment. Additionally, changes in dealer inventories, shifting from an increase in the prior year to a reduction in the current year, have further suppressed sales volume.

How is Caterpillar managing the lower sales volumes and their impact on profitability?

Caterpillar is implementing aggressive cost-reduction measures. This includes temporary plant shutdowns, significant workforce reductions, and austerity measures across the company. These actions are aimed at offsetting the impact of lower sales volumes on profitability. For instance, volume-adjusted costs for Machinery & Power Systems decreased by over $350 million in the third quarter of 2013.

Which segments are performing relatively better or worse?

The Resource Industries segment is performing significantly worse, with a 42% drop in Q3 sales, due to the mining industry downturn. Construction Industries and Power Systems also saw sales declines of 7% each. In contrast, the Financial Products segment demonstrated resilience, with revenues increasing by 4% in Q3 and 5% for the first nine months, providing some balance to the overall results.

What is the company's strategy regarding its cash position and shareholder returns?

Caterpillar ended the third quarter of 2013 with a strong cash position of $6.36 billion, an increase of $867 million from year-end 2012. Despite the challenging market conditions, the company continued to return capital to shareholders by repurchasing $1 billion of its stock in the third quarter of 2013, following $1 billion in the second quarter. This demonstrates a commitment to shareholder value even amidst an economic slowdown.

CAT 10-Q Quarterly Report Q3 FY2013 — Revenue, Net Income, EPS

Summary

Caterpillar Inc. reported a significant decline in sales and profit for the third quarter and first nine months of 2013 compared to the same periods in 2012. Total sales and revenues decreased by 18% to $13.423 billion for the third quarter and by 17% to $41.254 billion for the nine months. This downturn was largely driven by a substantial drop in the Resource Industries segment, primarily due to reduced capital expenditures in the mining sector and significant adjustments in dealer inventories. Despite the challenging sales environment, Caterpillar implemented aggressive cost-cutting measures, including workforce reductions and temporary plant shutdowns, which partially offset the impact of lower volumes on profitability.

Financial Highlights

47 data points

Beta

Revenue

$13.42B

0.2% Gross Margin

Net Income

$946.00M

0.1% Net Margin

EPS (Diluted)

$1.45

Total Assets

$87.27B

Free Cash Flow

$3.02B

Financial Statements

Beta

Revenue	$13.42B
Cost of Revenue	$9.77B
Gross Profit	$2.90B
R&D Expenses	$469.00M
SG&A Expenses	$1.32B
Operating Expenses	$12.02B
Operating Income	$1.40B
Net Income	$946.00M
EPS (Basic)	$1.48
EPS (Diluted)	$1.45
Shares Outstanding (Basic)	639.30M
Shares Outstanding (Diluted)	651.90M

Key Highlights

1Total sales and revenues decreased by 18% in Q3 2013 to $13.42 billion and by 17% for the first nine months to $41.25 billion, compared to the prior year periods.
2Profit per share declined significantly: $1.45 in Q3 2013 (down 43%) and $4.21 for the nine months (down 43%).
3Resource Industries experienced a substantial 42% drop in Q3 sales, driven by lower mining demand and dealer inventory adjustments, which accounted for nearly 80% of the total sales volume decline.
4Power Systems and Construction Industries saw sales decline by 7% each.
5Financial Products segment showed resilience with revenues increasing by 4% in Q3 and 5% for the nine months.
6Caterpillar actively managed costs through workforce reductions and operational efficiencies, with volume-adjusted costs for Machinery & Power Systems down over $350 million in Q3.
7The company repurchased $1 billion of stock in Q3 2013, following $1 billion in Q2, demonstrating continued capital return to shareholders despite the downturn.

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2013

Summary

Financial Highlights

Key Highlights

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