Image: Caterpillar.

Investors have waited patiently for heavy-equipment maker Caterpillar (NYSE:CAT) to show signs that its hard-hit business could finally be close to hitting bottom and staging a rebound. Yet economic conditions have failed to improve in many parts of the world, and coming into Thursday morning's third-quarter earnings report, the expectations that Caterpillar investors had were still modest, seemingly leaving plenty of room for a surprise to the upside.

Instead, Caterpillar's results showed more weakness than even some pessimistic investors were expecting, and that simply emphasized how much difficulty the company has had in facing awful industry environments in many of its key business segments. Let's look more closely at how Caterpillar did last quarter, and what investors can take away from its comments about its performance.

Caterpillar is still feeling the pinch from a poor global economy
Caterpillar's third-quarter results looked even uglier than those who've followed the company have seen in past quarters. Revenue plunged 19%, to $10.96 billion, which was considerably worse even than the dramatic 17% drop that most investors had expected Caterpillar to post. Net income plunged by nearly two-thirds from the year-ago quarter, to $368 million, and even after adding back just more than $100 million in charges related to restructuring costs, adjusted earnings of $0.75 per share fell $0.03 below the consensus forecast among investors.

Investors were hard-pressed to find glimmers of strength in Caterpillar's numbers, with a deeper dive into the results showing declines across the board. Geographically, sales declined in all regions, with North America falling 17% due to falling demand from the energy industry, and from construction-equipment customers.

Asia-Pacific sales fell by a fourth, with mining, energy, and construction weakness costing Caterpillar potential sales, and Latin American revenue plummeted more than 30% on weakness in Brazil. The Europe-Africa-Middle East segment fared the best with declines of only 13%, and euro weakness contributed to much of the drop, along with falling demand for mining and power-generation equipment.

Similarly, Caterpillar's business segments all saw falling sales. Energy and transportation saw a 25% cut to revenue, while construction industries sales fell 15%, and resource industries revenue dropped 17%. Even the financial products segment suffered a 12% decline in revenue, as lower financing rates and asset levels combined to weigh on the division's results.

Caterpillar CEO Doug Oberhelman kept the company's attention on moving forward. "The environment remains extremely challenging for most of the key industries we serve," Oberhelman said, but "improving how we operate is our focus amid the continued weakness in mining and oil and gas." The Caterpillar CEO notes that the company' safety record and product quality remain strong, and cost-cutting measures are having a supportive effect in slowing the pace of declines in earnings.

What's ahead for Caterpillar?
Still, the extensive new restructuring efforts that Caterpillar announced in September weighed further on the company's guidance for the remainder of 2015. Caterpillar repeated its $48 billion estimate for revenue that it gave in its restructuring announcement, which was down $1 billion from its guidance following its second-quarter report. With restructuring costs now expected to come in around $800 million, Caterpillar cut its earnings guidance to $3.70 per share for 2015, or $4.60 excluding restructuring costs. Those figures are down from $4.70 and $5 per share respectively, showing the extent to which Caterpillar has ramped up its efforts to reorganize in a way that will maximize long-term growth potential.

For now, 2016 doesn't look much better. Overall, Caterpillar expects sales to fall 5%, with construction industries revenue falling 0% to 5%, energy and transportation posting 5% to 10% declines, and resource industries seeing a 10% drop. That's consistent with pictures that Caterpillar's competitors have given, with Joy Global (NYSE:JOY) suffering many of the same difficulties with its more mining-focused business.

Nevertheless, Caterpillar hasn't hesitated to take actions perceived as being shareholder friendly. During the third quarter, the company made good on its promise to spend $1.5 billion on share repurchases, dramatically accelerating its buyback pace from past quarters.

Investors in Caterpillar actually took the news in stride, with the stock fluctuating in both directions in the opening minutes of the trading session before moving substantially higher on a strong day for the market. In the end, what Caterpillar's results boil down to is that its core business is suffering from huge cyclical headwinds, with areas like China, Japan, Brazil, and Russia all weighing on its ability to sustain past growth rates.

Until macroeconomic conditions reverse themselves, Caterpillar will have to keep working hard to ease the blow from falling sales and income, and prepare for a brighter future. Once that future comes, though, the work that Caterpillar has done should give it further advantages over Joy Global and other major players in the equipment space.