Caterpillar Inc. (NYSE:CAT) Q4 2022 Earnings Call Transcript

Operator: Your final question today comes from the line of Steve Volkmann with Jefferies.

Steve Volkmann: My question is on inventory. The Cat inventory on your balance sheet was up $2.2 billion or something roughly in 2022? And I’m sure some of that was price. But is there an opportunity to sort of draw that back down as supply chains improve? Or are we in sort of a new reality where we need a little bit higher inventory because of the vagaries of all the supply chains and international trade, et cetera.

James Umpleby III: We’re not running as lean as I would like us to be. And certainly, that is a consequence of the supply chain challenges we’re having. And like I mentioned in previous calls, the term decommit is one that I hadn’t been familiar with until COVID hit and where customers in a very short notice decommit and don’t give us components when we need them. And so, that’s created inefficiencies. It’s also resulted in more inventory. So, I wouldn’t say it’s a permanent condition. As the supply chain situation improves, I do expect us to become leaner again and to be able to reduce our internal inventory.

James Umpleby III: All right. And thank you all for joining us. I really do appreciate your questions. Just to summarize here, I’m very proud of our global team. They delivered one of the best years we had on record. Strong overall top line growth. Services grew 17%. We generated strong adjusted operating profit and ME&T free cash flow in the year. And we achieved an all-time record for adjusted profit per share. As we think about the year, we’re encouraged by the strong quotation activity, our $30 billion backlog, and as we mentioned, we believe 2023 will be an even better year than 2022 on both the top and bottom line. And we continue to remain focused on supporting our customers and executing our strategy for long-term profitable growth. Again, thank you for your questions.

Ryan Fiedler: Thank you, Jim, Andrew, and everyone who joined us today. A replay of our call will be available online later this morning. We’ll also post a transcript on our Investor Relations website as soon as it’s available. You’ll also find a fourth quarter results video with our CFO and an SEC filing with our sales to users data. Click on investors.caterpillar.com and then click on financials to view those materials. If you have any questions, please reach out to Rob or me. The investor relations general phone number is 309-675-4549. We hope you enjoy the rest of your day. Now I’ll turn it back to Emma to conclude the call.

Operator: Thank you so much for attending today’s call. You may now disconnect.