Caterpillar Inc. (NYSE: CAT) reported its most recent quarterly results before the markets opened on Wednesday. The company said that it had $2.66 in earnings per share (EPS) and $12.8 billion in revenue, which fell short of consensus estimates of $2.88 in EPS and $13.57 billion in revenue. The second quarter of last year reportedly had EPS of $2.88 on $13.51 billion in revenue.

The primary driver of the decline in sales and revenues was a $1.2 billion movement in dealers’ inventories. Dealers decreased their inventories about $400 million during this quarter, after increasing their inventories about $800 million during the third quarter of 2018.

In terms of its segments, Caterpillar reported as follows:

• Construction Industries sales decreased 7% year over year to $5.29 billion.
• Resource Industries sales decreased 12% to $2.31 billion.
• Energy & Transportation sales decreased 2% to $5.45 billion.

Looking ahead to the 2019 full year, the company lowered its previous guidance. Caterpillar now expects EPS in the range of $10.90 to $11.40, down from the previous range of $12.06 to $13.06. Consensus estimates call for $11.70 in EPS and $55.58 billion in revenue for the year.

Jim Umpleby, Caterpillar’s board chair and chief executive, commented:

Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations. We remain focused on executing our strategy and continuing to achieve our Investor Day targets for margin improvement and free cash flow.

Shares of Caterpillar closed Tuesday at $133.69, in a 52-week range of $111.75 to $144.77. The consensus price target is $139.35. Following the announcement, the stock was down less than 1% at $132.70 in early trading indications Wednesday.

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