Now, analysts say, comes the hard part: Proving to investors that ERA Mining Machinery, the Chinese maker of hydraulic roof supports that Caterpillar purchased, really can help penetrate China’s huge underground mining market.

In January, Caterpillar took a $580 million impairment related to the ERA deal after discovering what it characterized as a “deliberate, multi-year, coordinated accounting misconduct” at Siwei, a subsidiary that handled ERA’s principal business.

Late on Thursday, Caterpillar said it reached a deal with the former controlling shareholders of ERA to cut $135 million from the $886 million purchase price – a move welcomed by analysts even if the money involved was, in the words of one, “a blip” in the U.S. company’s overall finances.

“Outside of the reduction in purchase price, the chief benefit of the settlement is to eliminate the management distraction caused by the issue and get on with realizing the potential that led Caterpillar to buy this company in the first place,” said Alex Blanton, a senior analyst at Clear Harbor Asset Management in New York.

“Whether or not it realizes the potential is another question,” he said.

The deal reduces the outstanding obligations Caterpillar has to MML, and to former ERA directors Emory Williams and John Lee, as well as MML shareholder James Thompson, to $29.5 million. Caterpillar still owed the four about $164 million.

In exchange, Caterpillar agreed to end any litigation targeting the Chinese company’s former directors or auditors related to the alleged accounting misconduct.

A Caterpillar spokesman declined to comment on the settlement on Friday, citing “pending litigation” – a reference to the shareholder lawsuits over the charge.

Eli Lustgarten, an analyst at Longbow Securities, said the dispute overshadowed ERA’s real importance to Caterpillar: giving it the product line and distribution it desperately wants in China, which produces and consumes more coal than any other country in the world.

Caterpillar, long the world’s largest maker of construction equipment, has also become the world’s largest mining equipment maker in recent years.

One question that remains is how Caterpillar will account for the $135 million, which – potentially – could lift its earnings as a noncash, nonrecurring item.

“From an economic standpoint, for Caterpillar’s business and for Caterpillar’s shareholders, it’s rather de minimus,” said Morningstar analyst Adam Fleck. “But it’s real savings.”

In its most recent quarterly earnings report, Caterpillar told investors it was gaining market share in China despite a slowdown in economic growth there. Sales of its distinctive yellow construction and mining machines were up in the first quarter of 2013 over the same period of 2012 even as its inventories there declined.

(Reporting by James B. Kelleher; editing by Matthew Lewis)

Shares of the Deere, the world’s largest maker of farm
equipment, fell 3.8 percent to $90.25 in trading before the
market opened.

The company, which also makes earth-moving equipment for
builders, slashed its forecast for sales to the construction
industry, citing concerns about the outlook for U.S. economic
growth and other factors.

Deere said it expected worldwide sales of those machines to
fall 5 percent this fiscal year. In February, it had forecast a
rise of 3 percent, boosted in part by higher international
demand.

“Farm is carrying the load, and construction is soft,” said
analyst Eli Lustgarten of Longbow Research in St. Louis.
“Construction is where the big change is.”

The Moline, Illinois-based company stuck by its full-year
forecast by raising its outlook for turf equipment sales,
Lustgarten said.

JPMorgan analyst Ann Duignan said investors had expected the
company to raise its overall outlook. “So the stock is likely to
trade down today as net income guidance was unchanged,” she
said.

Deere said it earned $1.08 billion, or $2.76 a share, in the
second quarter ended April 30, up from $1.06 billion, or $2.61 a
share, a year earlier.

Excluding a $56 million tax charge involving a German
subsidiary, the profit would have been $2.90 a share, Lustgarten
said.

Analysts on average expected earnings of $2.72 a share,
according to Thomson Reuters I/B/E/S.

Sales rose 9 percent to $10.91 billion, exceeding Wall
Street estimates of $9.85 billion.

In a statement, Chief Executive Officer Samuel Allen said
the results reflected a strong global farm economy.

But Allen added: “Deere’s near-term forecast is being
tempered by lingering economic concerns in many parts of the
world, which are restraining business confidence and growth.”

Allen also said cool, wet weather in North America had
delayed crop planting, slowed construction activity and hurt
Deere’s sales of turf-care equipment.

(Reuters) – Harley-Davidson Inc (HOG.N: Quote, Profile, Research, Stock Buzz) sounded an upbeat note about the state of the global consumer on Thursday with a 34 percent increase in quarterly profit and a big jump in shipments of its iconic motorcycles ahead of the traditional spring selling season.

The Milwaukee-based company, closely watched because of the window it provides on discretionary spending, said overall revenue from bikes, parts and accessories, and apparel rose 9.8 percent to $1.57 billion in the most recent quarter.

And it stuck to its full-year forecast for worldwide motorcycle shipments, overcoming a slow start to 2013 compared with a year ago when an unusually warm winter and spring enticed customers to buy new bikes sooner than usual.

“We feel very good about the overall business and the strength of it,” John Olin, Harley-Davidson’s chief financial officer, told Reuters in an interview.

The company, which saw its annual worldwide motorcycle shipments peak at about 350,000 units in 2006, said it believed that market grew even through the recent downturn – but that the growth was masked by a surplus of used motorcycles that flooded the market as squeezed consumers scrambled to raise cash.

With the economy growing once again, the housing market showing signs of recovery and Wall Street on a tear, the company believes retail demand for its bikes – which range in price from $8,000 for a basic Sportster model to $40,000 for a tricked-out touring bike – will rebound.

“So we’re going to be shipping more in the spring than we retail,” Olin said.

The company posted a first-quarter profit of $224.1 million, or 99 cents a share, up from $172.0 million, or 74 cents a share a year ago, lifted by continued margin growth made possible by an ongoing restructuring of its business.

Analysts, on average, expected Harley-Davidson to report a profit of 99 cents a share on sales on $1.46 billion, according to Thomson Reuters I/B/E/S.

The profit gains came even as dealer retail sales fell 12 percent in North America and 11 percent in Europe, the Middle East and Africa, regions that accounted for nearly 88 percent of sales in the quarter.

Harley-Davidson shares were up 3.4 percent at $55.03 on Thursday afternoon on the New York Stock Exchange.

Harley-Davidson’s results contained about a penny a share in restructuring charges. The company has been revamping its manufacturing operations in Wisconsin, Pennsylvania and Missouri in recent years to cut labor costs and make its production line more responsive to the ups and downs of bike demand.

Like Winnebago Industries Inc (WGO.N: Quote, Profile, Research, Stock Buzz), the motorhome manufacturer that has returned to profitability despite sharply lower production and sales volumes by slashing its workforce, closing some factories and restructuring others, Harley-Davidson’s efforts appear to be paying off.

The company said it expects gross margins to continue to grow in 2013 to 35.25 to 36.25 percent, up from 34.8 percent in 2012.

MIDDLE-AGED WHITE GUYS

Retail sales in Asia rose during the quarter, even in Japan, the company’s single-largest overseas market, where the yen’s weakness created a headwind for the company. Sales were also higher in Latin America, the company said.

The company, which now sells bikes in 84 countries, has said it wants to increase international business at a faster rate than North American sales.

As part of that effort, it has opened up 99 new dealerships since 2009 and now has more dealers outside the United States than in it.

The company said it was optimistic its effort to woo younger, nontraditional riders and increase its share of the motorcycle market would continue to boost demand for its bikes, which for years were perceived by many consumers as toys for middle-aged white guys.

While the average Harley-Davidson owner is still about 50 years old, according to UBS analyst Robin Farley, the company insists its effort to win over what it calls younger, more diverse “outreach customers” is helping drive its post-recession rebound.

According to Polk, a research firm that tracks the automotive and related industries, Harley-Davidson is now the market share leader among riders ages 18 to 34, as well as among women, African-Americans and Hispanics.

During the first quarter, Harley-Davidson said it shipped 75,222 bikes worldwide, up 17.1 percent from a year ago. It is those shipments – rather than dealer retail sales – that drive the company’s top line and provide a gauge of dealer expectations regarding future consumer demand.

Most analysts greeted the company quarterly earnings enthusiastically, despite the gap between retail sales and shipments, which they said was not unusual at this time of year.

But Harley-Davidson’s retail sales will have to start showing year-over-year improvement as well if the company is to meet its full-year forecasts, they said.

“Shipments drive their quarterly performance,” Morningstar’s Jaime Katz said. “But shipments ultimately depend on retail units moving. They can’t just keep filling the channel.”

The company said it expects to ship 259,000 to 264,000 motorcycles worldwide in 2013, sticking to the forecast it made earlier this year.

In 2012, it shipped 247,625 bikes, up from 233,117 in 2011.

(Reporting by James B. Kelleher in Chicago; editing by Gerald E. McCormick, Maureen Bavdek and Matthew Lewis)

(Reuters) – Harley-Davidson Inc (HOG.N: Quote, Profile, Research, Stock Buzz) reported profits on Thursday that were in line with expectations and kept its full-year shipment forecast unchanged as its five-year-long restructuring effort continued to boost its financial performance.

The Milwaukee-based motorcycle maker posted a first-quarter profit of $224.1 million, or 99 cents a share, up from $172.0 million, or 74 cents a share a year ago. The gains came even as dealer retail sales in several key markets showed signs of weakness.

Overall revenue from bikes, parts and accessories, and apparel rose 9.8 percent to $1.57 billion, the company said, due to sharply higher shipments to the company’s dealers and distributors.

Analysts, on average, expected Harley-Davidson to report a profit of 99 cents a share on sales on $1.46 billion, according to Thomson Reuters I/B/E/S.

The results contained about a penny a share in restructuring charges. Harley-Davidson has been revamping its manufacturing operations in recent years to cuts costs, become more efficient and introduce flexibility in its workforce.

Like Winnebago Industries (WGO.N: Quote, Profile, Research, Stock Buzz), the motorhome manufacturer that has returned to profitability despite sharply lower production and sales volumes by slashing its workforce, closing some factories and restructuring others, Harley-Davidson’s efforts to reinvent itself appear to be paying off.

Harley-Davidson said it expects its gross margins, which have widened considerably in recent years as a result of the restructuring, to continue to grow in 2013 to 35.25 to 36.25 percent, up from 34.8 percent in 2012.

Retail sales of the company’s motorcycles in the United States and Canada, its No. 1 market, fell nearly 13 percent. Sales were also down in Europe, the Middle East and Africa.

Retail sales in Asia rose during the quarter, even in Japan, the company’s single-largest overseas market, where the yen’s weakness created a headwind for the company. Sales were also higher in Latin America, the company said.

Harley-Davidson said the year-over-year sales declines in the United States were weather-related. Last year, the country experienced a mild winter and an extremely warm spring, which boosted motorcycle retail sales early in the year. The company said it was optimistic that its endeavors to woe younger, non-traditional riders and increase its share of the motorcycle market would continue as it introduces bikes and pursues outreach programs specifically targeting non-traditional riders.

Like the company’s restructuring, those efforts to win what Harley-Davidson calls “outreach customers” have helped drive its post-recession rebound.

According to Polk, a research firm that tracks the automotive and related industries, Harley-Davidson is the market share leader among riders ages 18-34, as well as women, African-Americans, Hispanics and Caucasian men 35 and older – its traditional riders.

During the first quarter, Harley-Davidson said it shipped 75,222 bikes worldwide, up 17.1 percent from a year ago. It is those shipments – rather than dealer retail sales – that drive the company’s top line and provide a gauge of dealer expectations regarding future consumer demand.

But analysts said retail sales, which were a little shy of expectations, according to Ed Aaron at RBC Capital Markets, would ultimately have to start showing year-over-year improvement as well if Harley-Davidson is to meet its full-year forecasts.

“Shipments drive their quarterly performance,” Morningstar’s Jaime Katz said. “But shipments ultimately depend on retail units moving. They can’t just keep filling the channel.”

Harley said it expects to ship 259,000 to 264,000 motorcycles worldwide in 2013, sticking to the forecast it made earlier this year.

Harley-Davidson’s shares rose about 3.5 percent, or $1.91, to $55.12 in morning New York Stock Exchange trading.

(Reporting by James B. Kelleher; Editing by Gerald E. McCormick and Maureen Bavdek)

The Milwaukee-based company on Thursday posted a
first-quarter profit of $224.1 million, or 99 cents a share, up
from $172.0 million, or 74 cents a share a year ago.

Overall revenue from bikes, parts and accessories, and
apparel rose 9.8 percent to $1.57 billion, the company said.

Analysts, on average, had expected Harley-Davidson to report
a profit of 99 cents a share on sales on $1.46 billion,
according to Thomson Reuters I/B/E/S.

The results contained restructuring charges. Harley-Davidson
has been revamping its manufacturing operations in recent years
to cuts costs, become more efficient and introduce flexibility
in its workforce.

Those efforts appear to be paying off. Harley-Davidson said
it expects its gross margins, which have widened considerably in
recent years as a result of the restructuring, to continue to
grow in 2013 to 35.25 to 36.25 percent, up from 34.8 percent in
2012.

Retail sales of the company’s motorcycles in the United
States and Canada, its No. 1 market, fell nearly 13 percent.
Sales were also down in Europe, the Middle East and Africa.

Retail sales in Asia rose during the quarter, even in Japan,
the company’s single-largest overseas market, where the yen’s
weakness created a headwind for the company. Sales were also up
in Latin America, the company said.

The improved quarterly results were helped by strong
shipments to dealers and distributors.

During the first quarter, Harley-Davidson said it shipped
75,222 bikes worldwide, up 17.1 percent from a year ago. It is
those shipments – rather than dealer retail sales – that drive
the company’s top line.

Harley said it expects to ship 259,000 to 264,000
motorcycles worldwide in 2013, sticking to the forecast it made
earlier this year.

In trading before the bell, Harley-Davidson shares were up
30 cents from Wednesday’s close of $53.50.

Its shares rallied.

When other big U.S. companies, including General Electric (GE.N: Quote, Profile, Research, Stock Buzz), International Business Machines Corp (IBM.N: Quote, Profile, Research, Stock Buzz) and Textron Inc (TXT.N: Quote, Profile, Research, Stock Buzz), have warned of slowing profit growth in recent days, the news has unnerved investors and sent their stock prices lower.

So what was different about Caterpillar?

Part of the answer, analysts said, was that its announcement was not a surprise. The company has warned repeatedly in recent months that demand from mining customers was deteriorating.

Another factor was Caterpillar’s upbeat assessment of the outlook for the construction industry, especially in the United States and China. And a share buyback always helps – this one to the tune of $1 billion in stock this year and as much as $3.8 billion by the end of 2015.

But analysts said the overly bleak assessment Caterpillar provided on Monday for its sales to the global mining industry also, ironically, helped the shares. In a nutshell, no one believes it’s really going to be quite as bad as it says, even given the recent slide in gold and copper prices on concerns about weak global growth.

Rob Wertheimer, an analyst at Vertical Research partners, said the new outlook for mining implies a downturn that would put the mining industry demand back near 2009 levels, where it bottomed out in the last downturn.

“We obviously didn’t expect that level of collapse in an otherwise mostly recovering global economy,” Wertheimer said.

Neither does Caterpillar.

The company is, after all, predicting the world economy is going to grow modestly enough to fuel demand for industrial commodities that miners wrest from the ground using Caterpillar’s yellow machines.

“It’s not a great economic climate, but it is good enough to keep commodity production going,” said Mike DeWalt, Caterpillar’s corporate controller.

In fact, Doug Oberhelman, Caterpillar’s chief executive and chairman, said on Monday the current drop-off in mining orders was as much a function of the changing focus of its mining customers as it was a function of concerns about global growth.

“There has been quite a bit of management change with some of our big customers and…the new management is much more focused on operating costs, short-term cash flow, sweating their assets a bit,” Oberhelman said during a conference call with analysts.

Caterpillar’s sales to the mining industry are more profitable than sales to construction and industrial customers.

The fatter margins were one of the reasons it made mining equipment a focus of its M&A activity in recent years, buying Bucyrus, a U.S. maker of giant excavators and shovels, for $7.6 billion in 2010 and – more notoriously – ERA Mining, a Chinese mining equipment company, for $654 million.

In January, Caterpillar said it was writing off three-quarters of the money it paid for ERA after uncovering “deliberate, multi-year, coordinated accounting misconduct” at a subsidiary of the Chinese firm.

The ERA debacle was, in the minds of many analysts, a symbol of a rash rush to double down on the notoriously cyclical business.

But even before ERA blew up, the company’s exposure to the resource industry was being questioned as many of its key mining customers, facing investor backlash over unpopular takeovers, budget overruns and falling metal prices, slashed capital spending, slowed development on some projects, shelved others entirely and postponed — or canceled new equipment orders.

Caterpillar, however, continued to hold out hope that mining orders, which began to fall during the second half of 2012, would improve as 2013 unfolded. The market was skeptical – and sent Caterpillar’s shares down as much as 30 percent from the 52-week high of $108.79 they touched last spring – as it waited to see if the trickle of bad news on the mining front became a torrent.

On Monday, Caterpillar essentially gave up on mining for 2013, saying it now expects sales of traditional mining machines — large trucks, large loaders, large bulldozers and the like — to be down 50 percent from 2012, and the excavators and shovels made by its Bucyrus unit to be down 15 percent.

And that was just what the market was waiting for, analysts said.

“The cat’s out of the bag,” said Larry De Maria at William Blair & Co. “With Monday’s report and conference call, Caterpillar confirmed what bears have been warning about: mining will drag down EPS.”

Adam Fleck, an analyst at Morningstar agreed.

Fleck said Caterpillar decision to throw in the towel on mining sales for 2013 gave investors confidence the company was no longer in denial.

“Investors knew it would be bad, but wanted some quantification from the company,” he said.

And it was that capitulation, ironically, that made Caterpillar one of the S&P’s biggest gainers on the day.

(Reporting by James B. Kelleher; Editing by Leslie Gevirtz)

Its shares rallied.

When other big U.S. companies, including General Electric (GE.N: Quote, Profile, Research, Stock Buzz), International Business Machines Corp (IBM.N: Quote, Profile, Research, Stock Buzz) and Textron Inc (TXT.N: Quote, Profile, Research, Stock Buzz), have warned of slowing profit growth in recent days, the news has unnerved investors and sent their stock prices lower.

So what was different about Caterpillar?

Part of the answer, analysts said, was that its announcement was not a surprise. The company has warned repeatedly in recent months that demand from mining customers was deteriorating.

Another factor was Caterpillar’s upbeat assessment of the outlook for the construction industry, especially in the United States and China. And a share buyback always helps – this one to the tune of $1 billion in stock this year and as much as $3.8 billion by the end of 2015.

But analysts said the overly bleak assessment Caterpillar provided on Monday for its sales to the global mining industry also, ironically, helped the shares. In a nutshell, no one believes it’s really going to be quite as bad as it says, even given the recent slide in gold and copper prices on concerns about weak global growth.

Rob Wertheimer, an analyst at Vertical Research partners, said the new outlook for mining implies a downturn that would put the mining industry demand back near 2009 levels, where it bottomed out in the last downturn.

“We obviously didn’t expect that level of collapse in an otherwise mostly recovering global economy,” Wertheimer said.

Neither does Caterpillar.

The company is, after all, predicting the world economy is going to grow modestly enough to fuel demand for industrial commodities that miners wrest from the ground using Caterpillar’s yellow machines.

“It’s not a great economic climate, but it is good enough to keep commodity production going,” said Mike DeWalt, Caterpillar’s corporate controller.

In fact, Doug Oberhelman, Caterpillar’s chief executive and chairman, said on Monday the current drop-off in mining orders was as much a function of the changing focus of its mining customers as it was a function of concerns about global growth.

“There has been quite a bit of management change with some of our big customers and…the new management is much more focused on operating costs, short-term cash flow, sweating their assets a bit,” Oberhelman said during a conference call with analysts.

Caterpillar’s sales to the mining industry are more profitable than sales to construction and industrial customers.

The fatter margins were one of the reasons it made mining equipment a focus of its M&A activity in recent years, buying Bucyrus, a U.S. maker of giant excavators and shovels, for $7.6 billion in 2010 and – more notoriously – ERA Mining, a Chinese mining equipment company, for $654 million.

In January, Caterpillar said it was writing off three-quarters of the money it paid for ERA after uncovering “deliberate, multi-year, coordinated accounting misconduct” at a subsidiary of the Chinese firm.

The ERA debacle was, in the minds of many analysts, a symbol of a rash rush to double down on the notoriously cyclical business.

But even before ERA blew up, the company’s exposure to the resource industry was being questioned as many of its key mining customers, facing investor backlash over unpopular takeovers, budget overruns and falling metal prices, slashed capital spending, slowed development on some projects, shelved others entirely and postponed — or canceled new equipment orders.

Caterpillar, however, continued to hold out hope that mining orders, which began to fall during the second half of 2012, would improve as 2013 unfolded. The market was skeptical – and sent Caterpillar’s shares down as much as 30 percent from the 52-week high of $108.79 they touched last spring – as it waited to see if the trickle of bad news on the mining front became a torrent.

On Monday, Caterpillar essentially gave up on mining for 2013, saying it now expects sales of traditional mining machines — large trucks, large loaders, large bulldozers and the like — to be down 50 percent from 2012, and the excavators and shovels made by its Bucyrus unit to be down 15 percent.

And that was just what the market was waiting for, analysts said.

“The cat’s out of the bag,” said Larry De Maria at William Blair & Co. “With Monday’s report and conference call, Caterpillar confirmed what bears have been warning about: mining will drag down EPS.”

Adam Fleck, an analyst at Morningstar agreed.

Fleck said Caterpillar decision to throw in the towel on mining sales for 2013 gave investors confidence the company was no longer in denial.

“Investors knew it would be bad, but wanted some quantification from the company,” he said.

And it was that capitulation, ironically, that made Caterpillar one of the S&P’s biggest gainers on the day.

(Reporting by James B. Kelleher; Editing by Leslie Gevirtz)

But Chairman and Chief Executive Officer Doug Oberhelman
said the mining sector has hit bottom and production was
expected to ramp up in the second quarter, based on lower
inventories in China and the United States.

The Peoria, Illinois-based company said it now expects to
report a 2013 profit of $7 per share on sales of $57 billion to
$61 billion. That was down from a previously estimated profit of
between $7 and $9 a share on sales of $60 billion to $68
billion.

“Mining is the big culprit,” said Longbow Research analyst
Eli Lustgarten. “The key question now is not 2013, but 2014 -
will it be up or down?”

The news came as Caterpillar, the world’s largest maker of
construction and mining equipment, reported a
weaker-than-expected first-quarter profit.

The company said it earned a profit of $880 million, or
$1.31 a share, down from $1.59 billion, or $2.37 a share, in the
year-ago quarter.

Analysts had expected the company to report a profit of
$1.40 per share. Sales during the period fell 17 percent to
$13.20 billion.

Alexander Blanton, a senior analyst at Clear Harbor Asset
Management, said Caterpillar’s 9 cent EPS miss was “well within
the usual plus or minus 10 percent range,” typical for the
company.

Caterpillar also said on Monday that it would resume a share
buyback for the first time in five years.

Larry De Maria, an analyst at William Blair & Co, said
Caterpillar’s decision to resume the “mothballed” repurchase
program was a “positive factor” and probably was contributing to
the market’s sanguine reaction to the disappointing results and
outlook.

Under that plan, which was approved in 2007, Caterpillar
could buy back as much as $3.7 billion of its shares before the
repurchase authorization expires in December 2015.

CEO Oberhelman said the revised 2013 outlook reflects a
sales decline of about 50 percent from 2012 for traditional Cat
machines used in mining.

However, Oberhelman suggested optimism, telling CNBC that it
was the first time in three years he has seen relative stability
around the world, noting inventories in China and the United
States have come down significantly.

“We don’t want to be overly optimistic but it certainly
feels better than the last two springs,” he said.

The decline in first-quarter sales was led by a drop in
revenue from mining products, which plummeted 23 percent. Sales
of construction equipment fell 17 percent and sales of gas and
diesel power systems declined 12 percent, the company said.

With mining orders falling because of a price slump in many
commodities, including coal, Caterpillar needed a strong rebound
from other customers, including residential construction, to
offset that weakness.

But that increased demand from builders has not materialized
fast enough, in part, because some jumped the gun last spring
when unseasonably warm weather combined with signs of the
nascent economic recovery in the United States prompted many
construction equipment customers to place orders for new
machines. In the end, the optimism proved to be a little
premature, Lustgarten said.

Clear Harbor Asset Management’s Blanton said Oberhelman’s
optimism about China seemed to be borne out by the company’s
sales there, which were higher in the first quarter of 2013 than
they were in the comparable quarter last year.

Caterpillar has warned investors about the weakness in the
mining sector several times, most recently earlier this month,
when it laid off 11 percent of its workforce at the Decatur,
Illinois, plant that makes mining equipment.

In January, the company also specifically warned that
results for the first quarter would be “well below” those posted
during the same period last year as dealers, awash in product,
tried to sell off existing inventory before placing new orders.

Robert Wertheimer, a principal at Vertical Research
Partners, said the drop in mining orders that Caterpillar was
experiencing was “in line” with what its rivals were seeing. “We
met with several competitors last week and they all seem to be
having similar experiences,” Wertheimer said. “It’s not a
(market) share issue at Caterpillar.”

In morning trading on the New York Stock Exchange,
Caterpillar’s shares turned lower, down about 1 percent, or 73
cents, at $79.70, well below its 52-week high of $108.79 but
above the low of $78.25.

The company said renewed momentum in the broader economy -
from surging stock prices to signs of recovery in the housing
market – helped push its order backlog to pre-recession levels
and its profit past market expectations for the third quarter in
a row.

The company’s top executive said demand is still below the
levels seen before the housing bubble burst – a collapse that
sent recreational vehicle demand plummeting and half dozen of
Winnebago’s rivals, including Fleetwood Enterprises and Monaco
Coach, into bankruptcy.

Winnebago, known for its large touring vehicles that provide
home-like comfort on the road, said its order backlog had nearly
tripled from a year earlier to 2,752 units as of March 2, the
fifth quarterly rise in a row.

The Forest City, Iowa-based company’s order backlog for
motor homes is now at its highest level since the fourth quarter
of 2004, said Kathryn Thompson, chief executive of equity
research firm Thompson Research Group.

Winnebago said the buyers returning to RV showrooms are
showing an appetite for products across its line, which range in
price from about from $65,000 to more than $300,000.

Most of Winnebago’s customers are either retired or
semi-retired, the company said.

The apparent rebound in the U.S. housing market may be the
most important factor of all. Motor home sales are sensitive to
a lot of factors, but tend to be most strongly influenced by the
housing market and energy prices.

Winnebago says its sales closely track the ups and downs of
the market for new homes. Earlier this month, the Commerce
Department reported that permits for future construction jumped
4.6 percent in February, the fastest pace since June 2008.

Randy Potts, the company’s CEO, cautioned that while retail
trends are positive, consumer demand is still “not even close”
to where it has been historically – before industry sales peaked
in 2004 and began their long slide in 2005.

“What we’ve gone through in recent years wasn’t a cycle, it
was a catastrophe,” Potts said in an interview with Reuters.

But pent-up demand from consumers who postponed purchases
waiting for the economy to recover may change that.

Potts said that in the 25 years before 2004 and 2005, the RV
industry would ship an average of 60,000 motorhomes annually. In
2013, even with the current rebound in demand, the industry
expects to ship about 32,000 units.

“That’s still just 50 percent of what we want to say is a
normal market,” Potts said.

“So if you believe that the RV lifestyle is alive and well
and that normal hasn’t changed … there should be a real
pent-up demand out there.”

Winnebago’s stock, which has risen about 30 percent since
the start of the year, closed down 5.6 percent at $20.64 on the
New York Stock Exchange on Thursday. The stock hit a five-year
high of $22.34 on March 14.

There has been some concern that the RV market might be hurt
by cuts in federal spending as well as rising fuel prices.

But data released late last month showed that consumer
confidence is rebounding.

Winnebago reported a profit of $6.3 million, or 22 cents per
share, in the quarter ended March 2, compared with a loss of
$9.1 million, or 3 cents per share, a year earlier. Revenue rose
35 percent to $177.2 million.

Analysts had expected earnings of 15 cents per share on
revenue of $170.9 million, according to Thomson Reuters I/B/E/S.

Rival Thor Industries Inc ‘ reported a higher
second-quarter profit earlier this month.

The closings, which the school board plans to vote on in May, would be the biggest one-time shutdown ever by a U.S. city. Wednesday’s demonstration, organized by the teacher’s union, drew parents, students and other critics of the plan.

Karen Lewis, president of the Chicago Teachers Union, encouraged parents of the roughly 30,000 children whose schools will be closed later in 2013 to simply ignore the city’s action at the end of summer vacation.

“On the first day of school, you show up at your real school,” Lewis said at the rally in Daley Plaza.

The public school district, the third largest in the United States, has said it has a $1 billion annual deficit and needs to close under-used schools to save money. It believes the plan will save $560 million over the next decade.

After the rally at Daley Plaza on Wednesday, the demonstrators marched toward district headquarters. About 100 of them were handcuffed and removed by police after they locked arms and sat down in the street, chanting “Protect our children, save our schools.”

Earlier Wednesday, a group of ministers from Chicago’s South and West Sides opposed to the closings attempted to deliver a letter to Chicago Mayor Rahm Emanuel at City Hall.

Emanuel, who supports the closings, did not meet with the group, which left their letter with a police officer.

“I think their No. 1 responsibility is a high quality education for every child and this plan simply does not deliver that,” said Reverend Marshall Hatch of the New Mt. Pilgrim Baptist Church. “It seems to, of course, be more about the budget.”

Enrollment in Chicago Public Schools has fallen 20 percent in the last decade, mainly because of population declines in poor neighborhoods.

The district has said it can accommodate 511,000 students, but only about 403,000 are enrolled and nearly 140 of its school buildings are more than half empty. The school board must approve the plan and is expected to vote on it May 22.

The closings are “not easy for our communities,” CPS head Barbara Byrd-Bennett said in a statement. “But as CEO of this district, I need to make decisions that put our children first.”

She said children at the under-used schools have been “cheated of the resources they need to succeed” for too long.

The decision to close dozens of schools follows a bitter strike by Chicago teachers last September, fought partly over the teachers union’s accusation that Mayor Emanuel was undermining schools in poor areas of the city.

Chicago’s is just one of many urban school districts around the United States grappling with declining enrollment.

Over the past decade, 70 large or mid-sized cities have closed schools, averaging 11 per district, according to the National Education Association, a labor union for teachers.

In Washington D.C., 23 schools were closed in 2008 and 15 more are expected to close over the next two years. Earlier in March, Philadelphia announced plans to close 23 schools.

An expansion of charter schools is at the heart of the school closings debate in Chicago. Charter schools are publicly funded, but mostly non-union and their numbers have increased even as neighborhood public schools are closed.

Chicago has promised a five-year moratorium on school closings after the planned shutdowns this year.

Many of the schools that would be closed are in neighborhoods that have seen frequent gun violence, leaving parents and school activists concerned the changes will endanger students who will have to cross gang boundaries.

Chicago recorded 506 murders in 2012 largely due to gang violence and nearly all of the children affected by the closings are in kindergarten through eighth grade.

(Writing by James B. Kelleher; Editing by David Bailey and Andre Grenon)