Caterpillar Inc. is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, with 2023 sales and revenues totaling $67.060 billion **[0000018230-24-000009_cat-20231231.htm:3]** **[0000018230-24-000023_a2024conflictmineralsrepor.htm:0]**. The company operates primarily through three main segments: Construction Industries, Resource Industries, and Energy & Transportation, and also provides financing and related services through its Financial Products segment **[0000018230-24-000009_cat-20231231.htm:3]** **[0000018230-24-000023_a2024conflictmineralsrepor.htm:0]**. Caterpillar sells a wide range of machinery and engines, including asphalt pavers, large mining trucks, and diesel-electric locomotives, while also offering technology products and services for fleet management and autonomous machine capabilities **[0000018230-24-000053_cat-20240930.htm:26]** **[0000018230-24-000045_cat-20240630.htm:26]** **[0000018230-24-000009_cat-20231231.htm:152]**.

1. **Energy & Transportation** - Serves industries like Oil and Gas, Power Generation, and Transportation by providing reciprocating engines, turbines, and diesel-electric locomotives, contributing significantly to Caterpillar's revenue **[0000018230-24-000053_cat-20240930.htm:26]** **[0000018230-24-000045_cat-20240630.htm:26]** **[0000018230-24-000009_cat-20231231.htm:152]**.
2. **Construction Industries** - Focuses on machinery for infrastructure and building construction, including products like asphalt pavers, backhoe loaders, and wheel loaders, generating revenue through both direct sales and inter-segment sales **[0000018230-24-000053_cat-20240930.htm:26]** **[0000018230-24-000045_cat-20240630.htm:26]** **[0000018230-24-000009_cat-20231231.htm:152]**.
3. **Resource Industries** - Supports customers in mining and heavy construction with products such as large mining trucks and hydraulic shovels, and offers technology products and services for fleet management and autonomous machine capabilities **[0000018230-24-000053_cat-20240930.htm:26]** **[0000018230-24-000045_cat-20240630.htm:26]** **[0000018230-24-000009_cat-20231231.htm:152]**.
4. **Financial Products** - Offers financing and insurance services to support the purchase and lease of Caterpillar equipment, enhancing the company's revenue streams **[0000018230-24-000009_cat-20231231.htm:153]** **[0000018230-24-000009_cat-20231231.htm:55]**.

dc947f1dfe74ddadeb7ef417749ddcdf81daa2984b2095697c3a80aaf3edd5df

| Segment / Quarter                     | Q4 2022  **[0000018230-23-000005_cat_exx991x4qx2022xearning.htm:2]** **[0000018230-23-000005_cat_exx991x4qx2022xearning.htm:6]** **[0000018230-23-000005_cat_exx991x4qx2022xearning.htm:7]**  | Q1 2023  **[0000018230-23-000017_ex991toformcat1q2023earnin.htm:1]** **[0000018230-23-000022_cat-20230331.htm:47]**  | Q2 2023  **[CAT_3385275_5]**  | Q3 2023  **[0000018230-23-000054_ex991toformcat3q2023earnin.htm:1]**  | Q4 2023  **[0000018230-24-000005_cat_exx991x4qx2023xearning.htm:1]**  | Q1 2024  **[0000018230-24-000016_ex991toformcat1q2024earnin.htm:2]** **[0000018230-24-000016_ex991toformcat1q2024earnin.htm:1]**  | Q2 2024  **[0000018230-24-000042_ex991toformcat2q2024earnin.htm:2]** **[0000018230-24-000042_ex991toformcat2q2024earnin.htm:1]**  | Q3 2024  **[0000018230-24-000050_ex991toformcat3q2024earnin.htm:1]**  |
|---------------------------------------|-----------------------------|----------------------|----------------|----------------|----------------|----------------------|------------------|----------------|
| **Construction Industries (USD Billion)** | **6.845**                   | **6.746**            | **7.2**        | **6.999**      | **6.519**      | **6.424**            | **6.683**        | **6.345**      |
| **Resource Industries (USD Billion)**     | **3.436**                   | **3.427**            | **3.6**        | **3.351**      | **3.242**      | **3.193**            | **3.206**        | **3.028**      |
| **Energy & Transportation (USD Billion)** | **6.823**                   | **6.254**            | **7.2**        | **6.859**      | **7.669**      | **6.681**            | **7.337**        | **7.187**      |
| **All Other Segment (USD Million)**       | N/A                         | **111**              | N/A            | **106**        | **116**        | **109**              | N/A              | **92**         |
| **Financial Products Segment (USD Million)** | **853**                     | **902**              | **923**        | **979**        | **981**        | **991**              | **1.004**        | **1.034**      |

9ac3fb6c1c6fda64d8b660329d165c4035b13f2fb2d92200d1ee79c12acbf7f6

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

b2c2a41590310b7a2632a67111b07fb61630531f01ef81e97818f7658069c16d

Construction Industries

Resource Industries

Energy & Transportation

- Oil and Gas

- Power Generation

- Industrial

- Transportation

Financial Products

All Other

Corporate Items and Eliminations

Total Revenue

5775c5f672a385718fbff06af6cf50b296a2d6fff38fc062fe19a5ed34843d90

31046716d1ac30af36d027a5741ab3b4d06651b4dc7cbb2e37d3a69b9bf7b760

| Metric / Quarter                                                                 | Q4 2022 | Q2 2023 | Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------------------------------------------------------------------|---------|---------|---------|---------|---------|---------|
| Amortized Cost Basis of Finance Receivables Modified ($ million)                 | **64**  **[0000018230-23-000011_cat-20221231.htm:122]**  | **22**  **[0000018230-23-000047_cat-20230630.htm:38]**  | **13**  **[0000018230-23-000056_cat-20230930.htm:39]**  | **3**  **[0000018230-24-000020_cat-20240331.htm:34]**  | **3**  **[0000018230-24-000045_cat-20240630.htm:38]**  | **6**  **[0000018230-24-000053_cat-20240930.htm:38]**  |
| Weighted Average of Term Extensions (months)                                     | **18**  **[0000018230-23-000047_cat-20230630.htm:38]**  | **8**  **[0000018230-23-000056_cat-20230930.htm:39]**  | **10**  **[0000018230-24-000020_cat-20240331.htm:34]**  | **13**  **[0000018230-24-000045_cat-20240630.htm:38]**  | **5**  **[0000018230-24-000053_cat-20240930.htm:38]**  |
| Weighted Average Payment Deferrals and/or Interest-Only Payment Periods (months) | **7**  **[0000018230-23-000047_cat-20230630.htm:38]**  | **6**  **[0000018230-23-000056_cat-20230930.htm:39]**  | **9**  **[0000018230-24-000020_cat-20240331.htm:34]**  | **6**  **[0000018230-24-000045_cat-20240630.htm:38]**  | **4**  **[0000018230-24-000053_cat-20240930.htm:38]**  |

02f6fc917b5e0fc0ec6e0f8600aac359b03fb69485653c638ebd7ebb751c6a1d

1. Given your substantial investments to increase large engine capacity by over 125% compared to 2023  **[CAT_3404636_4]** , how are you mitigating the risk of overcapacity if demand projections, particularly from data centers and distributed power generation, do not materialize as expected?

2. With heightened competitive pressures in Construction Industries due to currency fluctuations like the depreciation of the yen and challenges in China  **[CAT_3404636_17]** , how do you plan to maintain market share and pricing without adversely impacting margins, especially considering that dealer inventories are already at the higher end of your target range?

3. Considering your significant margin outperformance this year relative to long-term targets  **[CAT_3404636_1]** , can you elaborate on how sustainable these margins are in the face of potential pricing headwinds and the balance between profitability and market share?

4. Regarding the introduction of the Cat Dynamic Energy Transfer system for mining applications  **[CAT_3404636_5]** , can you provide specifics on the expected commercialization timeline and how you plan to achieve competitive differentiation to ensure a strong return on this investment?

5. With the acceleration in power generation sales and existing capacity constraints on larger products  **[CAT_3404636_18]** , what strategies are you implementing to prevent bottlenecks, and should we anticipate fluctuations in power generation growth due to capacity limitations and the reallocation of engines between segments?

10c8b7affa56ae01a311bfaccf45382aa73f24534018d321aa0945acd82ecf4f

- **Cummins Inc.** - Competitor in reciprocating engines for marine, oil and gas, industrial, and electric power generation systems  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Deutz AG** - Competitor in reciprocating engines for marine, oil and gas, industrial, and electric power generation systems  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Rolls-Royce Power Systems** - Competitor in reciprocating engines for marine, oil and gas, industrial, and electric power generation systems  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Siemens Energy Global GmbH** - Competitor in reciprocating engines for marine, oil and gas, industrial, and electric power generation systems  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Volvo Penta AB** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **FPT Industrial (Iveco Group)** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **INNIO** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **GE Vernova** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Kawasaki Heavy Industries Energy Solution & Marine Engineering** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **MAN Energy Solutions (VW)** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Weichai Power Co., Ltd.** - Competitor in certain markets  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Aggreko plc** - Primarily a packager sourcing engines and components  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Generac Holdings** - Primarily a packager sourcing engines and components  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Kohler Energy** - Primarily a packager sourcing engines and components  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Baker Hughes Co.** - Primarily a packager sourcing engines and components  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Wabtec Freight** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **The Greenbrier Companies** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Voestalpine AG** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Vossloh AG** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Alstom SA** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **Siemens Mobility** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **CRRC Corp., LTD.** - Competitor in rail-related businesses  **[0000018230-24-000009_cat-20231231.htm:6]** .
- **CASE (part of CNH Industrial N.V.)** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Deere Construction & Forestry (part of Deere & Company)** - Competitor in construction machinery and resource industries  **[0000018230-24-000009_cat-20231231.htm:4]** **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Doosan Bobcat (Part of Doosan Group)** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Hitachi Construction Machinery Co., Ltd.** - Competitor in construction machinery and resource industries  **[0000018230-24-000009_cat-20231231.htm:4]** **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Hyundai Construction Equipment Co., Ltd.** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Hyundai Doosan Infracore Co., Ltd. (part of Hyundai Heavy Industries Group)** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **J.C. Bamford Excavators Ltd.** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Kobelco Construction Machinery (part of Kobe Steel, Ltd)** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Komatsu Ltd.** - Competitor in construction machinery and resource industries  **[0000018230-24-000009_cat-20231231.htm:4]** **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Kubota Farm & Industrial Machinery (part of Kubota Corporation)** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Sany Heavy Industry Co., Ltd.** - Competitor in construction machinery  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Volvo Construction Equipment (part of the Volvo Group)** - Competitor in construction machinery and resource industries  **[0000018230-24-000009_cat-20231231.htm:4]** **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Guangxi LiuGong Machinery Co., Ltd.** - Regional competitor in China  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Longking Holdings Ltd.** - Regional competitor in China  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **XCMG Construction Machinery Co., Ltd.** - Regional competitor in China  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Shandong Lingong Construction Machinery Co., Ltd. (SDLG, JV with Volvo Construction Equipment)** - Regional competitor in China  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Shantui Construction Machinery Co., Ltd. (part of Shandong Heavy Industry Group Co.)** - Regional competitor in China  **[0000018230-24-000009_cat-20231231.htm:4]** .
- **Epiroc AB** - Competitor in resource industries  **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Liebherr-International AG** - Competitor in resource industries  **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Sandvik AB** - Competitor in resource industries  **[0000018230-24-000009_cat-20231231.htm:5]** .
- **Wells Fargo Equipment Finance Inc.** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Banc of America Leasing & Capital LLC** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **BNP Paribas Leasing Solutions Limited** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Australia and New Zealand Banking Group Limited** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Société Générale S.A.** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **John Deere Capital Corporation** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Komatsu Financial L.P.** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Volvo Financial Services** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .
- **Kubota Credit Corporation** - Competitor in financial products  **[0000018230-24-000009_cat-20231231.htm:8]** .

f025a4379054f815d0e7b7e9e98b9a6debc22cde288f00aa42eeb3ba38df7bd9

North America

Latin America

EAME

Asia/Pacific

853e912387c3e76b03f78b0e8cbb3d5bbca18767cce8ccd9dae58e05adce899f

2ba6b0029d7198c8839a2b3ba15b3558e4fc3f43b0a8364ce1b2781c3c08371c

69776e567fd4a321100c9c361661d76ad79a0d21bca3923b8116ddb4dbcafca7

Amortized Cost Basis of Finance Receivables Modified ($ million)

Weighted Average of Term Extensions (months)

Weighted Average Payment Deferrals and/or Interest-Only Payment Periods (months)

9df98e6eed49ba679a1ff2a55a3f17ef8c05eba1f02956d462e94310682a1569

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Adjusted Operating Profit Margin**: Expected to be above the top end of the target range for the full year.
  2. **ME&T Free Cash Flow**: Anticipated to be near the top of the $5 billion to $10 billion target range.
  3. **Sales and Revenues**: Slightly lower than previous expectations due to lower-than-expected third-quarter sales.
  4. **CapEx**: Around $2 billion for the full year.
  5. **Restructuring Costs**: Approximately $400 million for the full year.
  6. **Global Annual Effective Tax Rate**: 22.5%, excluding discrete items.
  7. **Fourth Quarter Sales**: Slightly lower compared to the prior year.
  8. **Segment-Specific Guidance**:
     - **Construction Industries**: Lower sales to users in the fourth quarter.
     - **Resource Industries**: Slightly lower sales in the fourth quarter.
     - **Energy & Transportation**: Slightly higher sales in the fourth quarter.
  9. **Enterprise Margin**: Expected to trend lower in the fourth quarter.
  10. **Price Realization**: Expected to trend lower with a headwind from merchandising programs  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales and Revenues**: Slightly lower than the record levels of 2023.
  2. **Adjusted Operating Profit Margin**: Above the top end of the target range for the full year.
  3. **Adjusted Profit Per Share**: Higher than previously anticipated.
  4. **ME&T Free Cash Flow**: In the top half of the $7.5 billion to $10 billion range.
  5. **Restructuring Costs**: Around $450 million for the full year.
  6. **Annual Effective Tax Rate**: 22.5%, excluding discrete items.
  7. **Capital Expenditures (CapEx)**: Between $2 billion and $2.5 billion.
  8. **Segment-Specific Guidance**:
     - **Construction Industries**: Slight decline in sales to users in the second half.
     - **Resource Industries**: Decrease in dealer inventories and higher services revenues.
     - **Energy & Transportation**: Stronger year overall with growth in power generation and oil and gas  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024 and FY 2024
- **Guidance**:
  1. **Sales and Revenues**: Broadly similar to the record 2023 level.
  2. **Adjusted Operating Profit Margin**: In the top half of the target range.
  3. **ME&T Free Cash Flow**: In the top half of the $7.5 billion to $10 billion range.
  4. **Segment Expectations**:
     - **Energy & Transportation**: Slightly stronger top line.
     - **Construction Industries**: Slightly lower sales to users.
     - **Resource Industries**: Lower sales due to lower machine volume.
  5. **Dealer Inventory**: No significant change expected.
  6. **Services Revenue**: Continued growth anticipated.
  7. **Manufacturing Costs**: Expected to be flat.
  8. **SG&A and R&D Expenses**: Expected to ramp up.
  9. **Restructuring Costs**: Between $300 million and $450 million.
  10. **Tax Rate**: 22.5%, excluding discrete items.
  11. **Second Quarter Expectations**: Lower sales and similar adjusted operating profit margin compared to the prior year  **[CAT_3380741_10]** **[CAT_3380741_1]** **[CAT_3380741_7]** **[CAT_3380741_8]** **[CAT_3380741_3]** **[CAT_3380741_9]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales and Revenues**: Broadly similar to the record 2023 level.
  2. **Adjusted Operating Profit Margin**: In the top half of the updated margin target range.
  3. **ME&T Free Cash Flow**: Within the top half of the $5 billion to $10 billion range.
  4. **Price and Manufacturing Costs**: Price expected to modestly exceed manufacturing costs.
  5. **Dealer Inventory**: No significant change expected.
  6. **Segment-Specific Sales**:
     - **Construction Industries**: Similar sales to end users as 2023.
     - **Resource Industries**: Lower sales due to lower machine volume.
     - **Energy & Transportation**: Slightly higher sales.
  7. **Short-term Incentive Compensation Expense**: About $1.2 billion.
  8. **SG&A and R&D Expenses**: Expected to increase.
  9. **Restructuring Charges**: Between $300 million to $450 million.
  10. **Global Effective Tax Rate**: 22.5% to 23.5%  **[CAT_3371876_10]** **[CAT_3371876_9]** **[CAT_3371876_19]** **[CAT_3371876_2]** **[CAT_3371876_8]** .

56c0e240d4088c078dfc2d01542aadfda995b5058a6860793f0bd4f979b826e5

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD]

EPS - Diluted [USD]

ef7107979882d647ce563eaaee68dcc0cbc7d8a9fe0930b2d6660f720d3a1eac

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

83b770b5ac8af4f55ffd861c38580afb8289008ee9b324ffc62aadd5bb839a75

| Name                  | Position                                      | Start Date | Short Bio                                                                                                                                                                                                 |
|-----------------------|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| D. James Umpleby III  | Chairman and CEO                              | 2017 (CEO), 2018 (Chairman) | D. James Umpleby III has been the CEO since **2017** and Chairman since **2018**. He joined a subsidiary of Caterpillar in **1980** and has held various senior roles, including Group President for Energy & Transportation  **[0000018230-24-000009_cat-20231231.htm:37]** **[0001308179-24-000623_lcat2024_def14a.htm:15]** **[0001308179-23-000830_lcat2023_def14a.htm:18]** . |
| Andrew R.J. Bonfield  | Chief Financial Officer                       | 2018       | Andrew R.J. Bonfield has been the CFO since **2018**. Before joining Caterpillar, he was the Group CFO for a multinational electricity and gas utility company from **2010 to 2018**  **[0000018230-24-000009_cat-20231231.htm:37]** **[0000018230-23-000011_cat-20221231.htm:35]** .                                                   |
| Bob De Lange          | Group President                               | 2017       | Bob De Lange has been a Group President since **2017**. He was previously a Vice President from **2015 to 2016** and Worldwide Product Manager for Medium Wheel Loaders from **2013 to 2014**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                             |
| Denise C. Johnson     | Group President                               | 2016       | Denise C. Johnson has been a Group President since **2016**. She served as a Vice President from **2012 to 2016**  **[0000018230-24-000009_cat-20231231.htm:37]** **[0000018230-23-000011_cat-20221231.htm:35]** .                                                                                                                     |
| Joseph E. Creed       | Chief Operating Officer                       | 2023       | Joseph E. Creed has been the COO since **2023**. He was a Group President from **2021 to 2023** and held various other roles, including Interim CFO in **2018**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                                                            |
| Anthony D. Fassino    | Group President                               | 2021       | Anthony D. Fassino has been a Group President since **2021**. He was Vice President of Building Construction Products from **2018 to 2020**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                                                                                |
| Derek R. Owens        | Chief Legal Officer and General Counsel       | 2023       | Derek R. Owens has been the Chief Legal Officer and General Counsel since **2023**. He was previously Deputy General Counsel from **2021 to 2023**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                                                                        |
| Cheryl H. Johnson     | Chief Human Resources Officer                 | 2017       | Cheryl H. Johnson has been the Chief Human Resources Officer since **2017**. Before joining Caterpillar, she was the Executive Vice President of Human Resources for a global company from **2012 to 2017**  **[0000018230-24-000009_cat-20231231.htm:37]** **[0000018230-23-000011_cat-20221231.htm:35]** .                            |
| William E. Schaupp    | Vice President and Chief Accounting Officer   | 2022       | William E. Schaupp has been the Vice President and Chief Accounting Officer since **2022**. He was the Finance Director for the Global Finance Services Division from **2021 to 2022**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                                    |
| Jason E. Kaiser       | Group President                               | 2024       | Jason E. Kaiser is expected to start as Group President in **2024**. He was Senior Vice President of the Electric Power Division from **2021 to 2023**  **[0000018230-24-000009_cat-20231231.htm:37]** .                                                                                    |

8b8f9e74e128395a281e442f1be0326e58c3bd4ebeb75932e39b512c71bb8723

| Program Details          | Program 1          | Program 2          |
|--------------------------|--------------------|--------------------|
| Approval Date            | May 2022  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]**     | June 2024  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]**    |
| End Date/Duration        | No expiration  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]** | No expiration  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]** |
| Total additional amount  | $15.0 billion  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]** | $20.0 billion  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]** |
| Remaining authorization amount | $0 billion  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]**  | $20.8 billion  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000053_cat-20240930.htm:90]**  |
| Details                  | Part of cash deployment priorities  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000045_cat-20240630.htm:71]**  | Part of cash deployment priorities  **[0000018230-24-000053_cat-20240930.htm:72]** **[0000018230-24-000045_cat-20240630.htm:71]**  |

4a8cede04b0310b940f08c253d66920e637d2c885b42104ee814cc0b643669ea

**Quarterly guidance for Q4 2024:**
- **Fourth Quarter Sales**: Slightly lower compared to the prior year  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  
- **Construction Industries**: Lower sales to users in the fourth quarter  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  
- **Resource Industries**: Slightly lower sales in the fourth quarter  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  
- **Energy & Transportation**: Slightly higher sales in the fourth quarter  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  
- **Enterprise Margin**: Expected to trend lower in the fourth quarter  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  
- **Price Realization**: Expected to trend lower with a headwind from merchandising programs  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no prior guidance)  

**Annual guidance for FY 2024:**
- **Sales and Revenues**: Slightly lower than previous expectations due to lower-than-expected third-quarter sales  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (lowered from “Slightly lower than the record levels of 2023”  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  
- **Adjusted Operating Profit Margin**: Expected to be above the top end of the target range for the full year  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no change from prior guidance  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  
- **ME&T Free Cash Flow**: Near the top of the $5 billion to $10 billion range  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no change from “In the top half of the $7.5 billion to $10 billion range”  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  
- **CapEx**: Around $2 billion  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (lowered from “Between $2 billion and $2.5 billion”  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  
- **Restructuring Costs**: Approximately $400 million  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (lowered from around $450 million  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  
- **Global Annual Effective Tax Rate**: 22.5%, excluding discrete items  **[CAT_3404636_10]** **[CAT_3404636_8]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_9]**  (no change from 22.5%, excluding discrete items  **[CAT_3396574_1]** **[CAT_3396574_7]** **[CAT_3396574_2]** **[CAT_3396574_6]** **[CAT_3396574_3]** )  

221c861ba41cbcb20e8d7f93342e9ab9173adb772e0f5474a6829a726139527e

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1925  **[0000018230-24-000009_cat-20231231.htm:91]**  | Present  | Current auditor   |

b360d02dd93d61d951f32d5092532657377886002e827712f306fe9ab47dbe13

d38ccf45783a116bc5688bcd50e4b59c29844076d15ab9e68cfc3a14642b52d5

- Total Revenue: $16.106B (-4% YoY)  **[0000018230-24-000053_cat-20240930.htm:51]** **[0000018230-23-000056_cat-20230930.htm:50]**   
- Net Income: $2.463B (‑12% YoY)  **[0000018230-24-000053_cat-20240930.htm:2]** **[0000018230-23-000056_cat-20230930.htm:2]**   
- EPS (Diluted): $5.04 (‑7% YoY)  **[0000018230-24-000053_cat-20240930.htm:2]** **[0000018230-23-000056_cat-20230930.htm:2]**   
- Construction Industries: $6.345B (‑9% YoY)  **[0000018230-24-000053_cat-20240930.htm:51]** **[0000018230-23-000056_cat-20230930.htm:50]**   
- Resource Industries: $3.028B (‑10% YoY)  **[0000018230-24-000053_cat-20240930.htm:51]** **[0000018230-23-000056_cat-20230930.htm:50]**   
- Financial Products: $1.034B (**+6%** YoY)  **[0000018230-24-000053_cat-20240930.htm:51]** **[0000018230-23-000056_cat-20230930.htm:50]**   
- EAME Revenue: $3.199B (‑6% YoY)  **[0000018230-24-000053_cat-20240930.htm:52]** **[0000018230-23-000056_cat-20230930.htm:30]**   
- Asia/Pacific Revenue: $2.684B (‑7% YoY)  **[0000018230-24-000053_cat-20240930.htm:52]** **[0000018230-23-000056_cat-20230930.htm:30]**   
- Share Repurchases: $782M vs. $4,438M in prior year (‑82% YoY)  **[0000018230-24-000053_cat-20240930.htm:6]** **[0000018230-23-000056_cat-20230930.htm:6]**   

f56d9a6f32cc7a70de8555f0794712d3de7d49eaa3bb096bbb556288e2811cdd

- **Strong demand in the Energy & Transportation segment, particularly driven by data center growth, is leading to increased orders for reciprocating engines and gas turbines.** The company is expanding capacity in large reciprocating engines by **about 125% over 2023** to meet this demand.  **[CAT_3413721_9]**
- **Resource Industries is experiencing high product utilization, low number of parked trucks, and an elevated fleet age**, indicating strong market conditions and potential for increased equipment demand. The company's autonomous solutions are seeing **strong customer acceptance**.  **[CAT_3413721_22]**
- **Healthy backlog and order activity for solar turbines, especially in oil and gas applications like gas compression and transmission**, are expected to drive growth in 2025. The business is described as **quite strong** with a lot of quotation activity.  **[CAT_3413721_11]**

2097473d83448e52999dc19e482009eeb290e2f7c4cad51548a99a7977f76bdb

- **Caterpillar anticipates lower sales in Construction Industries and Resource Industries in 2025, which may negatively impact overall revenues.**  **[CAT_3413721_6]**
- **Unfavorable price realization from post-sales merchandising programs is expected to pressure profit margins in 2025, particularly in the first half of the year.**  **[CAT_3413721_14]**
- **Capacity constraints in the Energy & Transportation segment limit Caterpillar's ability to meet strong demand, as investments to expand capacity will not significantly impact output until after 2025.**  **[CAT_3413721_15]**

fd2f4a0d8f8c93e59e11c61b8b2b9455a092f0f978549c140393bcee291827fd

1. **Margin Outlook**  
   **Q:** What could cause margins to shift from top-end guidance?  
   **A:** Caterpillar expects to be in the **top half** of the target margin range for 2025.  **[CAT_3413721_14]** **[CAT_3413721_20]**  Their key measure is growing absolute operating profit dollars.  **[CAT_3413721_14]**  While price-cost will be negative in the first half, they anticipate returning to normal price-cost evolution after the third quarter.  **[CAT_3413721_14]** 

2. **Price-Cost Dynamics**  
   **Q:** How will price-cost trends impact 2025 margins?  
   **A:** Material costs are expected to decline in 2025, but manufacturing costs will offset this benefit due to factors like negative absorption from reduced volumes.  **[CAT_3413721_12]** **[CAT_3413721_14]** **[CAT_3413721_18]**  Price realization impacts will be negative in the first half, with a **$300 million** impact in Q1 for Construction Industries.  **[CAT_3413721_16]**  After Q3, comparisons become easier, and price-cost should neutralize.  **[CAT_3413721_14]** 

3. **Construction Industries Outlook**  
   **Q:** How will Construction Industries' revenue and margins progress?  
   **A:** Underlying sales to users in Construction Industries are expected to be aligned throughout the year, down slightly for the full year.  **[CAT_3413721_16]**  Dealer inventory builds will be significantly less in Q1 compared to previous years.  **[CAT_3413721_16]**  Price impacts and negative absorption will affect margins in the first half, but demand remains stable.  **[CAT_3413721_16]** 

4. **Resource Industries Demand**  
   **Q:** What is the outlook for Resource Industries and orders?  
   **A:** Customers are showing capital discipline, but key commodities remain above investment thresholds.  **[CAT_3413721_22]**  High product utilization, low parked trucks, and an elevated fleet age indicate potential demand.  **[CAT_3413721_22]**  Caterpillar continues to invest in autonomous solutions with strong customer acceptance.  **[CAT_3413721_22]**  Marginally negative price impacts are expected in Q1 due to merchandising programs.  **[CAT_3413721_22]** 

5. **Energy & Transportation Growth**  
   **Q:** How is Energy & Transportation performing and expanding capacity?  
   **A:** Strong demand is seen in Energy & Transportation, particularly for solar turbines and reciprocating engines.  **[CAT_3413721_9]** **[CAT_3413721_11]**  Caterpillar is expanding capacity in large reciprocating engines by about **125% over 2023** levels over several years.  **[CAT_3413721_9]** **[CAT_3413721_15]**  Despite capacity constraints, they expect **moderate growth** in oil and gas in 2025 and overall E&T sales growth.  **[CAT_3413721_11]** **[CAT_3413721_15]** 

6. **Data Center Demand**  
   **Q:** What is the outlook for data center-related demand?  
   **A:** Data center demand remains strong, driving orders for reciprocating engines and gas turbines.  **[CAT_3413721_9]**  Customers are asking how quickly Caterpillar can increase capacity, and the new **Titan 350** gas turbine has been well received.  **[CAT_3413721_9]** 

7. **Dealer Inventories Impact**  
   **Q:** How will dealer inventory levels affect sales and production?  
   **A:** Dealer inventories are expected to remain stable in 2025, with no material reductions anticipated.  **[CAT_3413721_10]**  In Construction Industries, dealer inventory builds will be significantly less in Q1, affecting absorption rates.  **[CAT_3413721_16]**  Negative absorption due to inventory reductions will be a margin headwind.  **[CAT_3413721_12]** **[CAT_3413721_16]** **[CAT_3413721_18]** 

8. **Competitive Environment & Pricing**  
   **Q:** How is competition affecting pricing strategies?  
   **A:** Caterpillar is using merchandising programs to manage the competitive environment without significantly changing them.  **[CAT_3413721_19]**  They believe they can maintain pricing without worsening competition.  **[CAT_3413721_19]**  Lower interest rates may reduce the impact of financing offers.  **[CAT_3413721_19]** 

9. **Tariffs and Manufacturing Strategy**  
   **Q:** How is Caterpillar managing potential tariffs on China imports?  
   **A:** Caterpillar is monitoring tariff discussions and will adapt as necessary.  **[CAT_3413721_21]**  With the largest U.S. manufacturing presence and being a net exporter, they are well-positioned.  **[CAT_3413721_21]**  They aim to produce in-region for the region, though some components move globally.  **[CAT_3413721_21]** 

10. **Order Growth in Q4**  
    **Q:** How did Construction and Resource Industries orders fare in Q4?  
    **A:** Energy & Transportation was the main driver of order growth in Q4.  **[CAT_3413721_17]**  Resource Industries saw some improvement due to large contracts previously announced.  **[CAT_3413721_17]**  Construction Industries orders were broadly flat year-over-year.  **[CAT_3413721_17]** 

8ef6cc2134de3bb45040be45694dffb72dce313d5ffc457cdbf235af6b9367df

CAT expands large engine capacity by 125% over 2023 to meet data center demand, driving Energy & Transportation growth. But 2025 sees weaker Construction/Resource sales & negative margin impacts from price-cost in 1H. Management still aims for top-half margin guidance.

550243e959cd7cf2b28a147995052b57ee4c25c8d930516422175426f8e6dce5

**Annual guidance for FY 2025:**  
- **Sales and Revenues**: Slightly lower compared to 2024  **[CAT_3413721_2]**  (no change from “slightly lower”  **[CAT_3404636_2]** **[CAT_3404636_8]** )  
- **Adjusted Operating Profit Margin**: In the top half of the target range, though lower than 2024  **[CAT_3413721_2]**  (lowered from “above the top end of the target range”  **[CAT_3404636_10]** **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_8]** )  
- **ME&T Free Cash Flow**: In the top half of the $5B to $10B range  **[CAT_3413721_2]**  (no change from “near the top of the $5B to $10B target range”  **[CAT_3404636_2]** **[CAT_3404636_6]** **[CAT_3404636_8]** )  
- **Capital Expenditures (CapEx)**: $2.5B  **[CAT_3413721_7]**  (raised from $2B  **[CAT_3404636_8]** )  
- **Price Realization**: 1% decrease  **[CAT_3413721_6]**  (no prior guidance)  
- **Global Annual Effective Tax Rate**: 23%  **[CAT_3413721_6]**  (raised from 22.5%  **[CAT_3404636_6]** **[CAT_3404636_8]** )  
- **Restructuring Costs**: $150M to $200M  **[CAT_3413721_6]**  (lowered from $400M  **[CAT_3404636_8]** )  
- **Services Revenues**: Expected to grow  **[CAT_3413721_2]**  (no change from “continued growth”  **[CAT_3404636_8]** )  
- **Dealer Inventory**: Expected to end 2025 at similar levels to year-end 2024  **[CAT_3413721_2]**  (no prior guidance)  

044add9a55770ce26a9ca852eea6fb48544d9635e50e61a2c1922e54c9416163

1. **Margins Remain Flat Despite Lower Sales**  
   **Q:** How will margins stay flat if sales drop?  
   **A:** Margins are expected to remain flat year-over-year in Q2 despite lower sales due to **positive pricing** and **lower freight costs** offsetting lower volumes and increased investments. Overall, margins are projected to be **about flat compared to Q2 2023**.  **[CAT_3380741_11]** 

2. **E&T Capacity Expansion and Margin Outlook**  
   **Q:** Will E&T margins improve with capacity expansion?  
   **A:** Investments in **large engine capacity**, expected to ramp over the next **4 years**, aim to capture growth in data centers and other markets. While E&T margins currently absorb costs of strategic investments like electrification, margins may improve over time due to these **profitable growth opportunities**.  **[CAT_3380741_13]** **[CAT_3380741_16]** 

3. **Sales Guidance and Second Half Pickup**  
   **Q:** What's driving second-half sales improvement?  
   **A:** Second-half sales are expected to pick up, driven by strength in Energy & Transportation (E&T) orders. About **80%** of the total Caterpillar backlog, which increased year-over-year, is expected to be sold within **12 months**, supporting confidence in the full-year guidance of **broadly flat sales** compared to 2023.  **[CAT_3380741_12]** **[CAT_3380741_14]** 

4. **Dealer Inventory Levels and Impact**  
   **Q:** Are rising dealer inventories a concern?  
   **A:** Dealer inventory increased more than expected due to European construction softness but remains within a **typical range**. Over **70%** of machine inventory has firm customer orders, and full-year inventory levels are expected to be **flat**, so there's no significant concern impacting future sales.  **[CAT_3380741_18]** **[CAT_3380741_22]** 

5. **Softness in Resource Industries**  
   **Q:** Is mining demand weakening in Resource Industries?  
   **A:** While a decline in dealer deliveries occurred in Resource Industries, particularly in mining, this was **anticipated**. Key indicators like **low parked trucks**, **high equipment utilization**, and an **aging fleet** suggest continued demand, with **large mining trucks still growing** and robust rebuild activity expected.  **[CAT_3380741_19]** 

6. **Data Center Growth Opportunities**  
   **Q:** How is Caterpillar positioned in data centers?  
   **A:** Caterpillar sees a **secular growth opportunity** in data centers due to rising AI demands, offering both **reciprocating engines** and **gas turbines** for prime and backup power. This positions them uniquely as data center power needs evolve and expand.  **[CAT_3380741_15]** 

7. **Price-Cost Dynamics in Construction**  
   **Q:** Will favorable price-cost benefits continue?  
   **A:** Favorable pricing has boosted margins in Construction Industries, but the benefit is expected to **moderate** as the year progresses, making further margin expansion more challenging in the second half.  **[CAT_3380741_17]** 

8. **Capital Allocation Strategy**  
   **Q:** How should we view share buybacks vs dividends?  
   **A:** Caterpillar maintains both dividend and share buyback policies. While the dividend policy aims to pay out **no more than 60–65%** of free cash flow in a low environment, share buybacks are executed **consistently without market timing**, even at current high stock prices, to return cash to shareholders.  **[CAT_3380741_21]** 

9. **Construction Industries Outlook**  
   **Q:** What's the outlook for CI amid European weakness?  
   **A:** Despite European construction softness impacting dealer inventories, **North America remains strong** for Construction Industries, underpinned by **government infrastructure projects**. Overall, CI sales to users are expected to be **slightly negative** for the full year, aligning with previous forecasts.  **[CAT_3380741_20]** **[CAT_3380741_22]** 

cfef43233beb882b1cde9b95500e41b39ddc535bad2cc4bf615678729a0a718c

b8c8b614f130ff1c08cf26eba3049e367592eade32c6ac9a0615d359364e6ea8

- **Caterpillar's strategic investments in high-growth areas like large engines for data centers and electrification position the company for future profitable growth**.  **[CAT_3380741_13]**
- **The company is uniquely positioned to capitalize on the secular growth opportunity in data center power needs with its combined capabilities in gas turbines and reciprocating engines**.  **[CAT_3380741_15]**
- **Strong margin management allows Caterpillar to maintain margins through positive pricing and cost control despite anticipated lower volumes, demonstrating operational efficiency**.  **[CAT_3380741_11]**

4bdbc2c8c9f9e08056004a51452651549d1bc96a3c333c1486260d21ab268038

1. **Margin Outlook**  
   **Q:** Is the strong margin performance sustainable?  
   **A:** Management emphasized that their primary measure of profitable growth is increasing absolute OPACC dollars. They are focused on remaining competitive across diverse markets and aim to increase absolute OPACC dollars. Investors can use their margin target ranges to gauge future expectations.  **[CAT_3404636_11]** 

2. **Pricing Pressure in Construction**  
   **Q:** When will we feel the max pricing pressure in Construction Industries?  
   **A:** The company is already experiencing pricing pressure due to increased merchandising programs in Construction Industries, impacting the P&L immediately. The lag impact on reserves will affect the next several quarters.  **[CAT_3404636_20]**  They are seeing merchandising programs return to normal levels, but this creates a headwind on price.  **[CAT_3404636_15]** 

3. **Resource Industries Outlook**  
   **Q:** What is the outlook for the Resource Industries segment?  
   **A:** The decline is primarily due to products like articulated trucks and off-highway trucks. While not providing 2025 guidance yet, management is bullish on mining's long-term prospects due to demand for commodities like **copper** needed for the energy transition. They expect higher services revenue given high utilization, elevated fleet age, and low parked trucks, with increased orders for large mining trucks.  **[CAT_3404636_12]** 

4. **Construction Demand into 2025**  
   **Q:** What are dealers and customers saying about Construction Industries demand into 2025?  
   **A:** The decline was due to lower rental fleet loading by dealers, despite increasing dealer rental revenue. A prior large pipeline deal didn't recur. Positively, government-related infrastructure remains healthy, with only **27%** of the **$348 billion** IIJA funding spent as of August 2024, indicating strong future activity.  **[CAT_3404636_13]** 

5. **Large Engine Capacity Expansion**  
   **Q:** What's the outlook for large engine capacity expansion and impact on margins?  
   **A:** The company expects to increase large engine output capacity to more than **125%** of 2023 levels over four years but hasn't detailed annual figures. Demand is driven by data centers and opportunities in distributed generation. Margins in Energy & Transportation have increased due to mix and volume, and there's potential for further margin improvement.  **[CAT_3404636_14]** 

6. **Oil and Gas Segment Outlook**  
   **Q:** What is the outlook for the oil and gas segment into 2025?  
   **A:** Well servicing remains weak, but gas compression in reciprocating engines is expected to be up for the year, with some softening in Q4. Solar Turbines' oil and gas business is strong with robust bookings and quotations. Potential resumption of LNG export permitting could be a positive medium- to long-term factor.  **[CAT_3404636_16]** 

7. **Competitive Dynamics and Currency**  
   **Q:** Are you seeing increased competition due to yen depreciation and China weakness?  
   **A:** Management remains focused on competitiveness, investing in technology and services. While yen depreciation can temporarily aid competitors, currency effects fluctuate over time. They are confident in delivering long-term value to customers.  **[CAT_3404636_17]** 

8. **Backlog and Order Insights**  
   **Q:** What drove the strong backlog and what's the delivery timeline?  
   **A:** The robust backlog in Energy & Transportation, driven by power generation for reciprocating engines and strong Solar Turbines orders, offset a decline in machines. Typically, **75%** of the backlog is expected to be sold within 12 months, though some large engine orders extend beyond that.  **[CAT_3404636_21]** **[CAT_3404636_22]** 

9. **Dealer and Used Inventories**  
   **Q:** Are you comfortable with dealer and used inventory levels heading into next year?  
   **A:** Used inventory levels remain historically low, with slight increases but acceptable pricing. The planned Q4 dealer inventory reduction should bring inventories to about flat year-over-year, aligning with dealer expectations, and no significant further reductions are anticipated.  **[CAT_3404636_19]** 

10. **China Market Position**  
    **Q:** What is your current market position in China amid potential stimulus?  
    **A:** China accounts for less than **5%** of consolidated sales as the market remains weak, especially in excavators above 10-ton. They have not seen any impact from potential stimulus and note it's too early to assess effects.  **[CAT_3404636_23]** 

11. **Power Generation Growth Drivers**  
    **Q:** What drove the acceleration in power generation growth?  
    **A:** Growth stems from reallocating engines between oil and gas and power generation based on demand. Solar Turbines' power generation business is also increasing. Efforts are underway to boost throughput in reciprocating engine facilities ahead of major capacity investments.  **[CAT_3404636_18]** 

12. **Opportunities with Solar Turbines**  
    **Q:** What's the opportunity in power generation for Solar Turbines?  
    **A:** There's increased business in power generation, including trailerized units for rental fleets meeting North American electricity demand. Solar is introducing the **Titan 350**, their largest gas turbine, enabling competition in new areas. Customer interest in this new product is strong.  **[CAT_3404636_24]** 

057e785c96c3ef697c8547fbf075f4ad3441c4f23786aeb0f6ad3d0d6e8ed327

1. **Free Cash Flow Outlook**  
   **Q:** What's driving the stronger free cash flow guidance?  
   **A:** Caterpillar has transformed its business to consistently generate higher free cash flows by focusing on **operating profit after capital charge (OPACC)** and reducing structural costs.  **[CAT_3371876_17]**  From 2019 to 2022, they produced **$5–$6 billion** in free cash flow annually, even generating **$3 billion** in 2020 despite a **22%** revenue decline.  **[CAT_3371876_17]**  They're confident that OPACC will continue to drive cash flow, allowing them to raise the lower end of their free cash flow target range.  **[CAT_3371876_17]** 

2. **Sales Guidance and Backlog**  
   **Q:** Why is sales guidance flat despite a large backlog?  
   **A:** Not all elements of the backlog will convert in 2024; some extend into **2025 and beyond**.  **[CAT_3371876_14]**  This timing affects sales guidance, explaining flat sales despite a significant backlog.  **[CAT_3371876_14]** 

3. **Operating Margin Outlook**  
   **Q:** Do you expect operating margins to be flat, up, or down?  
   **A:** They aim to maintain strong operating margins by focusing on performance.  **[CAT_3371876_14]**  Caterpillar expects margins in the top half of their target range, considering factors like product mix and investment in services growth.  **[CAT_3371876_16]** 

4. **Services Growth Target**  
   **Q:** How will you accelerate services growth to hit the $28B target?  
   **A:** They're investing in digital capabilities, e-commerce, and working closely with dealers to drive services growth.  **[CAT_3371876_13]**  While services grew **5%** in 2023, they aim to accelerate growth regardless of industry conditions to reach the **$28 billion** target.  **[CAT_3371876_13]** 

5. **Inventory Levels and Supply Chain**  
   **Q:** What's the status of inventory and supply chain constraints?  
   **A:** Internal inventory is **15%–20%** higher than historic levels due to supply chain inefficiencies.  **[CAT_3371876_11]**  While constraints have eased, challenges remain; they plan to reduce inventory and improve operations over the next several years.  **[CAT_3371876_11]** 

6. **Market Opportunities**  
   **Q:** Are there areas where business isn't at peak levels?  
   **A:** Yes, opportunities exist in mining as the energy transition increases commodity demand.  **[CAT_3371876_12]**  Growth in large engines for data centers driven by cloud computing and AI is another area.  **[CAT_3371876_12]**  The China market remains weak—historically **5%–10%** of sales—but is expected to recover, offering future potential.  **[CAT_3371876_12]** 

7. **Parts Sales and Services**  
   **Q:** Why did parts sales decline, and what's the outlook?  
   **A:** Parts sales in Resource Industries declined due to dealer buying patterns as availability improved.  **[CAT_3371876_15]**  Dealer parts inventories are now normalized.  **[CAT_3371876_15]**  They expect services revenue growth in 2024 to potentially accelerate from 2023 levels.  **[CAT_3371876_15]** 

8. **Price-Cost Dynamics**  
   **Q:** Will price exceed manufacturing costs this year?  
   **A:** Yes, they expect price to exceed manufacturing costs for the full year, with more benefit in the first half due to carryover pricing.  **[CAT_3371876_19]**  Geographic mix may offset some benefits in the second half.  **[CAT_3371876_19]** 

9. **Supply Chain and Productivity**  
   **Q:** Will supply chain normalization improve productivity?  
   **A:** As constraints ease, especially in large engines, they aim to operate more efficiently and reduce inventory.  **[CAT_3371876_20]**  Achieving better lean operations is a priority.  **[CAT_3371876_20]** 

10. **Hydrogen Fuel Cell Commercialization**  
    **Q:** How quickly can you commercialize hydrogen fuel cells?  
    **A:** Capital investments focus on large engines, parts, and new engines.  **[CAT_3371876_21]**  There's opportunity in distributed generation and services related to grid stability, suggesting future potential in hydrogen fuel cells.  **[CAT_3371876_21]** 

d9fba0873a68cd0567621a59e40628ddd2d3bf2ffbf6cfa68e742b1e7c8ec054

- Caterpillar expects China's market to remain relatively weak, with declines in 2022 and 2023 expected to continue, which could negatively impact sales in that region.  **[CAT_3371876_12]**
- Anticipated lower machine volume in Resource Industries, mainly due to decreased demand for off-highway and articulated trucks and an unfavorable change in dealer inventories, may result in reduced sales for this segment.  **[CAT_3371876_3]** **[CAT_3371876_2]**
- Increased SG&A and R&D expenses related to strategic investment spending, along with potential negative impacts from geographic mix and moderating pricing benefits in the second half of the year, could pressure margins and earnings growth.  **[CAT_3371876_19]** **[CAT_3371876_9]**

3f121ace7c59423cccf2da92364bee3c17967b18ec8de31752a46d74ad7dd91c

- Caterpillar expects the **energy transition** to **increase demand for commodities**, thereby **expanding their total addressable market** and creating growth opportunities in mining over the next few years.  **[CAT_3371876_12]**
- The company is **investing in large engine capacity** to capitalize on the **secular growth trend in data centers** related to **cloud computing and generative AI**, further expanding their market.  **[CAT_3371876_12]**
- Despite record sales and earnings, Caterpillar is **not yet operating at peak levels in all regions and products**; **markets like China and Europe** offer additional growth opportunities as they recover, providing potential for further sales and earnings growth beyond current record levels.  **[CAT_3371876_12]**

4c6eb1e7f6407d8688c8e1ea249c59a3b29bb042871506e09223b280b9f97fa6

1. **Margin Outlook in Second Half**  
   **Q:** Will price-cost dynamics support margins in H2?  
   **A:** Management expects that for the full year, **price will exceed manufacturing cost increases**. In the second half, they anticipate pricing to moderate but foresee favorable manufacturing costs continuing. Price is expected to be positive in Energy & Transportation (E&T), offsetting any weakness in Construction Industries (CI). Overall, favorable manufacturing costs should **offset expected volume declines** impacting margins in Q3.  **[CAT_3396574_8]** 

2. **E&T Margin Expansion Potential**  
   **Q:** How will E&T margins evolve with capacity investments?  
   **A:** Demand for large engines and solar turbines remains strong, reflecting **higher volumes, better price, and improved mix**. While capacity expansion is a multiyear project, there is potential for **margin expansion over time** in E&T, depending on mix and increased capacity in large engines. The power generation market is robust, and the opportunity for **distributed generation** offers exciting prospects. A strong backlog in E&T, including solar turbines and large engines, supports this outlook.  **[CAT_3396574_9]** 

3. **Rental Fleet Loading Decline**  
   **Q:** Why is rental fleet loading lower than expected?  
   **A:** Dealer rental revenue is up, but dealers are loading their fleets less quickly, managing their fleets based on factors like **interest rates** and demand. They are independent businesses making decisions on fleet size. CAT remains bullish on rental opportunities and is working with dealers to grow their rental business over time.  **[CAT_3396574_10]** **[CAT_3396574_17]** 

4. **Mining Equipment Demand Outlook**  
   **Q:** When will mining equipment demand reaccelerate?  
   **A:** While customers exhibit capital discipline, mining equipment **utilization is high**, and the number of parked trucks is low. Areas of strength include **large mining trucks**, driven by interest in commodities like copper. Despite a backlog adjustment affecting comparisons, management remains bullish on mining over the medium and long term, considering the **energy transition's demand for commodities**.  **[CAT_3396574_14]** 

5. **Impact of Data Center Growth**  
   **Q:** How does data center build-out benefit CAT?  
   **A:** Data center expansion creates opportunities across CAT's business, including **backup generators**, construction machinery, and power generation products like reciprocating engines and gas turbines for **distributed power** applications. Increased electricity demand, both in developed and developing markets, drives demand for commodities produced with CAT's equipment, benefiting multiple segments. CAT also provides **microgrid solutions**, leveraging its product portfolio.  **[CAT_3396574_15]** **[CAT_3396574_11]** 

6. **Construction Pricing and Used Equipment**  
   **Q:** What is the outlook for construction pricing and used equipment?  
   **A:** Management does not expect significant price erosion in construction; any pricing adjustments will be **customer-specific** rather than list price changes. Used equipment prices have seen some erosion but remain **relatively high compared to historical levels**, with low inventories. CAT does not expect this to materially impact their business. Higher interest rates and used prices may affect rental fleet loading but are not significant concerns.  **[CAT_3396574_16]** 

7. **Gas Compression Outlook**  
   **Q:** What are gas compression sales expectations?  
   **A:** Gas compression sales are expected to be **higher in 2024** compared to 2023, despite some softening anticipated in the second half. There is a **strong backlog** in large engines and gas turbines within E&T. The softening relates to reciprocating engines in oil and gas, but overall, E&T shows significant strength.  **[CAT_3396574_18]** 

8. **Dealer Inventories and Retail Sales**  
   **Q:** What is the outlook for dealer inventories and retail sales?  
   **A:** Retail sales were affected by lower rental fleet loading and **softness in Europe**. Dealers are expected to load their fleets less than originally anticipated. Dealer inventory is projected to see a **small reduction**, mainly in Resource Industries, with CI dealer inventory remaining flat and within the typical **3 to 4 months** range. Inventory assumptions are based on forward-looking retail sales expectations.  **[CAT_3396574_12]** **[CAT_3396574_13]** 

9. **Interest Rates Impact on Segments**  
   **Q:** Which segments benefit from lower interest rates?  
   **A:** Segments less sensitive to interest rates include data center power generation, oil and gas, and government infrastructure. Interest rate-sensitive areas include general construction equipment sales, such as for warehouse building. A **lower interest rate environment** could improve demand in these areas.  **[CAT_3396574_13]** 

10. **Balancing Market Share and Pricing**  
    **Q:** How does CAT balance market share and pricing?  
    **A:** **PINS** (Products in Service) are important for future services growth. CAT makes pricing decisions based on input costs and competitive situations, aiming to add value for customers. Investments in **technology and services** enhance competitiveness. The **dealer network** is a significant advantage, aiding in maintaining market share while managing pricing effectively.  **[CAT_3396574_20]** 

11. **Latin America and Europe Performance**  
    **Q:** What drove CI growth in Latin America and what's the outlook for Europe?  
    **A:** Strength in Latin America was driven by a **strong market in Brazil**, which is expected to continue. Europe remains weak, though there are indicators of potential improvement, such as **ECB rate cuts** and recent growth in UK construction. However, CAT does not expect a quick pickup in Europe for the remainder of the year.  **[CAT_3396574_21]** 

111c619483d4fb4217582adfaaf47abe0b6ed8d38547b5964d7652ec72431d88

- **Sales and revenues declined 4%** in Q3 due to lower-than-expected sales in Construction Industries and timing of deliveries in Resource Industries and Energy & Transportation, with **sales to users in Construction Industries down 7%** and **Resource Industries down 18%**, indicating weakening demand in key segments.  **[CAT_3404636_2]** **[CAT_3404636_1]**
- The company is facing **increased competitive pressure in North America**, especially in Construction Industries, partly due to the **depreciation of the yen**, leading to competition from international players and potential pricing pressures. Additionally, the company is at the **higher end of the inventory range**, which could impact future sales.  **[CAT_3404636_17]**
- Management expressed concerns over the **sustainability of current high margins**, acknowledging potential **pricing headwinds** and the need to **balance margins and market share**, suggesting that future profitability may be under pressure.  **[CAT_3404636_11]** **[CAT_3404636_20]**

1f063d1f21dee953c60dba87b667b8467b74368d1ff8b2751a6bb4bf6f3dcc3d

- Caterpillar remains **bullish on the mining segment** due to high equipment utilization rates, low number of parked trucks, expected robust service activity, and strong interest in commodities like copper driven by the energy transition. They are optimistic about medium and long-term prospects in mining.  **[CAT_3396574_14]**
- The company sees significant **growth opportunities in the Energy & Transportation segment**, particularly in power generation for data centers, with increasing demand for their engines capable of running on various fuels, including natural gas, biofuels, and hydrogen blends. They view distributed power generation as a secular growth trend.  **[CAT_3396574_11]**
- Caterpillar's **strong dealer network and continued investments in technology** enhance their competitive advantages, enabling them to add more value to customers and support future growth in market share and services.  **[CAT_3396574_17]**

b1348b09d23bfa074aa39e0da143f9fac003250cbd47dbfff4dbab3a554e74c0

- **Weakness in European Construction Industries (CI) segment:** Caterpillar is experiencing construction weakness in Europe, which is being referred to as a "problem child," with risks that the situation could worsen and negatively impact sales volumes in the CI segment.  **[CAT_3380741_22]** ,  **[CAT_3380741_11]**
- **Increased dealer inventories raising concerns:** Dealer inventories increased by **$1.4 billion** in the first quarter, more than expected, primarily due to softness in European construction. This unexpected build-up raises concerns about potential overstocking and future demand challenges.  **[CAT_3380741_22]** ,  **[CAT_3380741_18]**
- **Expected lower sales and volumes in Q2 2024:** Caterpillar expects sales in the second quarter to be **lower year-over-year**, with volumes down, particularly due to lower dealer inventory movements and softer demand in Europe, which may pressure margins and overall financial performance.  **[CAT_3380741_8]** ,  **[CAT_3380741_11]**

6ce631f79caede9c76bb9dc954d990321923dee6ca604d89cbe98033726ac9f1

- **Europe has been a problem in the Construction Industries segment**, and the company does not expect conditions in Europe to pick up quickly for the remainder of the year.  **[CAT_3396574_21]**
- **Price realization is expected to moderate in the second half**, particularly in Construction Industries, due to normalization of the pricing environment and improved availability, which may impact margins.  **[CAT_3396574_5]**
- **Lower-than-expected rental fleet loading in North America** impacted sales in Construction Industries, with dealers cautious about adding to rental fleets due to factors like interest rates.  **[CAT_3396574_3]**

347bd9700c425c26d42a84ccb8e70d40df184c609b45db485b998301109f967d

- Caterpillar is expanding its **large engine output capacity by over 125% compared to 2023** to meet strong demand from data centers and distributed power generation. This investment positions the company to capitalize on growth in data centers, increased grid demand, and the shift towards alternative fuels like biofuels and hydrogen blends.  **[CAT_3404636_14]**
- The **Solar Turbines** business in oil and gas is experiencing robust growth, with **strong booking and quotation activity** for gas compression and international projects. This indicates sustained demand and potential revenue growth in this segment.  **[CAT_3404636_16]**
- The company remains **bullish on long-term mining prospects** due to the global energy transition driving increased commodity demand. Caterpillar anticipates higher services revenues supported by **high utilization of its products, elevated fleet age, low number of parked trucks**, and increased inquiry and order activity for large mining trucks.  **[CAT_3404636_12]**

c172098307368b97cf80fbe2c29268ccf6e49ab7e029ce2d86ca22be643ed597

Caterpillar Inc (CAT)

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