Caterpillar ($CAT) disclosed a significant decline in its third-quarter results, prompting a cautious revision of its full-year revenue forecast amidst declining equipment sales. The company's revenue dropped to $16.11 billion for the quarter ended September 30, down from $16.81 billion a year earlier.
Analysts, using Capital IQ, anticipated a revenue figure of $16.24 billion. Meanwhile, adjusted earnings per share saw a decrease, falling from $5.52 last year to $5.17 this year, missing the expected $5.35 by the market. The decrease in revenue is mainly attributed to a $759 million drop in sales volume, which reflects the waning equipment sales to end users, the construction and mining equipment manufacturer stated.
Within the industry's sales, construction sectors observed a 9% year-on-year decline, totaling $6.34 billion, while resource industries faced a 10% drop to $3.03 billion. Conversely, revenue for energy and transportation increased by 5%, landing at $7.19 billion. In the energy and transportation segment, sales to users grew by 5%, as noted by Chief Executive Jim Umpleby during an analyst conference call, as transcribed by Capital IQ.
"Power generation sales to users grew strongly as market conditions remain favorable for both reciprocating engines and solar turbines and turbine-related services," he elaborated. Looking ahead to the fourth quarter, Caterpillar anticipates a "slightly" lower revenue outlook, chiefly due to softer machine sales, according to Chief Financial Officer Andrew Bonfield.
The company also foresees a reduction in machine dealer inventory, projecting that it will conclude the year at levels similar to those seen in 2023, as stated by Umpleby. Additionally, Umpleby highlighted expectations of diminished rental fleet loading in North America, tepid demand from China for the above 10-ton excavator segment, and ongoing weak economic conditions in Europe.
For the full year, the company expects revenues to be "slightly" lower than previously anticipated, Bonfield indicated. In August, during the second-quarter earnings call, management had already signaled expectations of "slightly lower" sales compared to the previous year. The consensus from Capital IQ anticipates this year’s revenue to hit $65.46 billion, in contrast to the $67.06 billion reported in 2023.
Caterpillar reaffirmed its adjusted profit per share guidance for the ongoing year. Price: 381.38, Change: -6.13, Percent Change: -1.58 $CAT.