Caterpillar inc

Here is a presentation I did with other classmates on Caterpillar Inc in September 2011

1. Caterpillar Inc. Kyle Abbey Nigel Jordan Ken Ratliff Scott Spencer Kyle Zaunbrecher

2. Company Overview World’s largest manufacturer of heavy equipment Markets include construction, mining, agriculture, forestry, and many others Recent acquisition of Bucyrus Competitors Deere & Co., Komatsu Ltd., Joy Mining, CNH Global

3. Additional Brands CAT Logistics World-class supply chain management Serves more than 60 global firms Aerospace, oil and gas, industrial, and high tech CAT Financial Provide customers with a means of financing equipment purchases Insurance provided as well

4. Financial Analysis   3 Months Ending June 30 Fiscal Year Ending In Millions (Except EPS) 2011 2010 % Change 2010 2009 % Change Total Assets $ 73,611 $ 58,793 25% $ 64,020 $ 60,038 7% Total Stockholder's Equity $ 13,436 $ 9,185 46% $ 10,864 $ 8,823 23% Total Debt $ 60,175 $ 49,608 21% $ 53,156 $ 51,215 4% Sales $ 14,230 $ 10,409 37% $ 42,588 $ 32,396 31% Cost of Goods Sold $ 10,303 $ 7,372 40% $ 30,367 $ 23,886 27% Gross Margin (%) 28% 29% -5% 29% 26% 9% EBIT $ 1,601 $ 977 64% $ 3,963 $ 577 587% Interest Expense $ 299 $ 315 -5% $ 343 $ 389 -12% Net Income $ 1,015 $ 707 44% $ 2,700 $ 895 202% EPS (Undiluted) $ 1.57 $ 1.12 40% $ 4.28 $ 1.45 195% Strong recovery in 2010 from 2009. Surpassed 2010 2 nd quarter figures for 2011. Growth of company continues.

5. Financial Analysis Ratio Category Ratios 2010 2009 % Change Efficiency Total Asset Turnover 0.69 0.51 35% Fixed Asset Turnover 3.42 2.60 31% Inventory Turnover 3.17 3.76 -16% Days Receivable 60.44 84.55 -29% Liquidity Current Ratio 1.44 1.39 4% Profitability Return on Assets 0.04 0.01 211% Return on Equity 0.28 0.12 129% Return on Sales 0.09 0.02 422% Increased efficiency of assets. Exceptional profitability increase after 2009 economic downturn.

6. Financial Analysis

7. SWOT Analysis Strengths Operational Efficiency Wide Product Base Extensive Distributorship Research and Design Weaknesses Legal Proceedings

8. SWOT Analysis Opportunities Emerging Markets Inorganic Growth Facility Expansion Threats Environmental Regulations Currency Rates

9. Strategy Execute the Business Model Execute at Product Development Simplify and attack cost structure Achieve profit and cash pull through Win in China… grow to leadership in India, ASEAN and CIS Achieve profitable global machine leadership Expand leadership in Mining and Quarry & Aggregates Aggressively grow Power Systems “Big 8” Imperatives

10. Vision Caterpillar is the recognized leader everywhere it does business Our Products , services and solutions help the customer succeed Our distribution system is the competitive advantage Our supply chain is world class

11. Vision Our business model drives superior results Our people are talented and live Our Values in Action Our work today helps our customers create a more sustainable world Our financial performance consistently rewards our stockholders

12. Values Integrity The Power of Honesty Excellence The Power of Quality Teamwork The Power of Working Together Commitment The Power of Responsibility

13. Goals Delivering Superior Results EPS, OPACC, Cash Flow Delivering the Best Team of People World class safety and inclusion Global Leader Everywhere We Do Business Product Quality, PINS, aftermarket parts growth

14. Porter’s Generic Strategies – Construction/Farming/Mining Equipment Market Share ROI     

15. Porter Generic Strategy Differentiation Strategy Michael Porter uses Caterpillar as an example for this strategy Vast Dealer Network - 3,500 Dealers Worldwide in more than 180 Countries Spare-Parts Availability Brand Identity- Quality/Durable Products

16. Worldwide Coverage

17. Porter’s “Five Forces” Strategy Low to Moderate Low to Moderate Low Low to Moderate Moderate

18. Collins’ Analysis Level 5 Leadership Doug Oberhelman Millikin University (Finance) Positions in South America, Japan, Florida, Canada, Illinois First Who, Then What Picked top team of 16 people prior to taking over Examined company’s strategy & strengths

19. Collins’ Analysis Confront the Brutal Facts Forced managers to model worst periods in history Threat from Komatsu Hedgehog Concept “Ensure that customers make more money using Caterpillar equipment than using competitors’ equipment”

20. Collins’ Analysis Technology Accelerators Electro-Motive Diesel MWM Bucyrus Opportunities in China The Flywheel Large dealers help company sell most of their machines.

21. Strategy Recommendations Increased emphasis on mining Emerging markets will require coal and other resources Strong positioning in BRIC countries Firm grasp on US and China markets

22. Questions for the CEO With the recent acquisition of Bucyrus, do you see Caterpillar continuing to pursue further mining acquisitions to increase its market coverage? Caterpillar has acknowledged that their competitor Komatsu is beating them in price.  What are some of the ways the Caterpillar is looking at to lower total ownership costs, to better position the company to compete with Komatsu on a cost basis?