Caterpillar Q3 Earnings & Revenues Miss Estimates on Low Volumes

Caterpillar Inc. CAT has reported third-quarter 2024 adjusted earnings per share of $5.17, which missed the Zacks Consensus Estimate of $5.33 by a margin of 3%. The bottom-line figure was 6% lower than the year-ago quarter. This marked an end to CAT’s enviable stint of delivering improved earnings for 14 straight quarters. Improved results in the Energy & Transportation segment were offset by weaker volume performances at the Construction Industries and Resource Industries segments. The volume declines in the two segments were attributed to lower sales to end users as well as changes in dealer inventories.Including one-time items, Caterpillar’s earnings per share were $5.06, down 7% from $5.45 in the year-ago quarter.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Caterpillar Inc. Price, Consensus and EPS Surprise  Caterpillar Inc. price-consensus-eps-surprise-chart | Caterpillar Inc. QuoteCaterpillar’s Revenues Dip on Low VolumesCaterpillar reported third-quarter revenues of around $16.1 billion, which missed the Zacks Consensus Estimate of $16.35 billion by a margin of 1.5%. The top line declined 4% year over year as favorable price realization was offset by an overall decline in volumes (dragged down by the Construction Industries and Resource Industries segments).Latin America was the only region that delivered a 5% year-over-year improvement in revenues in the quarter. This was offset by a revenue decline of 7% in Asia Pacific, 6% in EMEA and 4% in North America. CAT’s Margins Contract in Q3The cost of sales decreased 5% year over year to $10.1 billion. Gross profit was down 3% to$6 billion from the prior year’s quarter due to lower sales volumes. The gross margin was 37.5% compared with 37% in the year-ago quarter.Selling, general and administrative  expenses increased 2.8% year over year to around $1.67 billion. Research and development expenses were down 3.8% to $533 million. CAT reported an operating profit of around $3.15 billion , an 8.8% decline from the year-ago quarter as favorable price realization was offset by lower volumes. The operating margin was 19.5%, down from 20.5% in the year-ago quarter.Adjusted operating profit was around $3.22 billion, down 8% from the year-ago quarter. The adjusted operating margin was 20% compared with 20.8% in the third quarter of 2023.Caterpillar’s Segment Performances in Q3Machinery and Energy & Transportation (ME&T) sales dipped 5% year over year to around $15.2 billion . Construction Industries' sales were down 9% year over year to $6.35 billion on lower sales of equipment to end users and unfavorable price realization. Sales increased 19% in Latin America but declined 15% in EAME, 12% in Asia/Pacific and 11% in North America. The segment’s total sales were lower than our estimate of $6.5 billion.Sales in the Resource Industries segment were down 10% year over year to around $3 billion. Lower volumes, due to weak end market demand, offset favorable price realization. Sales were flat in Latin America but down 17% in North America, 13% in EAME and 3% in Asia/Pacific. The segment’s third-quarter total sales were lower than our projection of $3.12 billion. Sales of the Energy & Transportation segment were around $7.2 billion, reflecting growth of 5% driven by favorable price realization and improved sales volumes. Our estimate for segmental sales was $6.97 billion.The segment reported sales growth in Power Generation (26%) and in Transportation (3%). However, sales to the Industrial sector and the Oil and Gas sector were down 16% and 1%, respectively. North America witnessed growth of 8%, followed by a 4% rise in EAME. Asia/Pacific and Latin America, however, reported declines of 5% and 2%, respectively. The ME&T segment reported an operating profit of $3.1 billion, down 9% year over year. The Energy & Transportation segment reported a 21% year-over-year increase in operating profit to $1.43 billion. The Construction Industries segment’s operating profit declined 20% year over year to $1.149 billion. The Resource Industries segment’s operating profit was down 15% year over year to $0.6 billion. Financial Products’ total revenues rose 6% from the year-ago quarter to $1 billion due to higher average financing rates across all regions and increased average earning assets in North America. The segment reported a profit of $246 million compared with $203 million in the second quarter of 2023.Caterpillar’s Cash PositionOperating cash flow was $3.6 billion for the third quarter. In the first nine-month period of 2024, the company returned around $9 billion to shareholders as dividends and share repurchases. CAT ended the quarter with cash and equivalents of around $5.6 billion, lower than the cash holding of around $7 billion at 2023-end.CAT’s Expectations for Q4 & 2024The company anticipates sales in the fourth quarter to be slightly lower than last year’s quarter. The decline in dealer inventories of machines is expected to be less than  $1.4 billion reported in the last year’s quarter. Machine sales to end users will be lower compared with a stronger fourth quarter of 2023. The fourth-quarter adjusted operating margin will be lower sequentially due to seasonality.Caterpillar expects 2024 revenues to be slightly lower than the record 2023 revenues of $67 billion. Adjusted operating profit margin is expected to be above its target range corresponding to the anticipated level of revenues. At revenues of around $64.5 billion, the projected adjusted operating profit target range is 16-20%. Both adjusted operating profit and earnings per share are likely to be higher than previous expectations. Caterpillar expects ME&T free cash flow to be in the top of its targeted range of $5-$10 billion.Caterpillar Stock’s Price PerformanceOver the past year, Caterpillar's stock has gained 71.4% compared with the industry’s 68.1% growth. Image Source: Zacks Investment Research Performance of CAT’s Peers in Q3H&E Equipment HEES reported earnings per share of 85 cents, which missed the Zacks Consensus Estimate of 97 cents. The bottom line marked a 42% decline from the year-ago quarter. Revenues dipped 4% year over year to $385 million, which missed the consensus estimate of $392 million. Rental revenues rose 2.8% from the year-ago quarter, primarily due to the ongoing expansion of HEES’ branch network.Terex Corporation TEX posted earnings of $1.46 per share, which beat the Zacks Consensus Estimate of $1.27. This was 16.6% lower than earnings per share of $1.75 in the year-ago quarter.Terex’s revenues declined 6% year over year to $1.21 billion due to lower-than-expected volumes. The top-line figure, however, surpassed the consensus estimate of $1.142 billion.CAT’s Zacks Rank & Stock to ConsiderCaterpillar carries a Zacks Rank #3 (Hold) at present.A better-ranked stock in the Industrial Products sector is Packaging Corporation of America PKG, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.Packaging Corp has an average trailing four-quarter earnings surprise of 8.6%. The Zacks Consensus Estimate for PKG’s fiscal 2024 earnings is pinned at $9.00 per share, which indicates year-over-year growth of 3.5%. Estimates have moved 3% north in the past 30 days. The company’s shares have risen 42.8% in the past year.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Caterpillar Inc. (CAT): Free Stock Analysis Report Terex Corporation (TEX): Free Stock Analysis Report Packaging Corporation of America (PKG): Free Stock Analysis Report H&E Equipment Services, Inc. (HEES): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks