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What changed in Caterpillar Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Caterpillar Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+237 added−236 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in Caterpillar Inc.'s 2024 10-K

237 paragraphs added · 236 removed · 192 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThey also engage our employees, helping contribute to development and retention. 7 Table of Contents Our ERGs provide many contributions, such as mentoring programs that connect diverse employees with senior leaders who can support their career goals, partnerships with recruiters and diverse early career and professional organizations that can assist in strengthening the diverse talent pipeline and programs that educate and inform on the richness of the global cultures that we share.
Biggest changeOur ERGs provide many contributions to help further our business strategy including partnerships with recruiters and early career and professional organizations that can assist in strengthening the talent pipeline and programs that educate and inform on the richness of the global cultures that we share. 7 Table of Contents Compensation, Benefits and Employee Insights Providing competitive benefits and compensation underpins our commitment to our engaged and productive employees.
The Construction Industries portfolio includes the following product families as well as related parts and work tools: · asphalt pavers · motor graders · track-type tractors (small, medium) · backhoe loaders · pipelayers · track excavators (mini, small · cold planers · road reclaimers medium, large) · compactors · skid steer loaders · wheel excavators · compact track loaders · telehandlers · wheel loaders (compact, small, · forestry machines · track-type loaders medium) · material handlers Resource Industries The Resource Industries segment is primarily responsible for supporting customers using machinery in mining and heavy construction and quarry and aggregates.
The Construction Industries portfolio includes the following product families as well as related parts and work tools: · asphalt pavers · motor graders · track-type tractors (small, medium) · backhoe loaders · pipelayers · track excavators (mini, small · cold planers · road reclaimers medium, large) · compactors · skid steer loaders · wheel excavators · compact track loaders · telehandlers · wheel loaders (compact, small, · forestry machines · track-type loaders medium) · material handlers Resource Industries The Resource Industries segment is primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates.
While the large majority of our worldwide dealers are independently owned and operated, we own and operate a dealership in Japan that covers approximately 80% of the Japanese market: Nippon Caterpillar Division. We are currently operating this Japanese dealer directly and we report its results in the All Other operating segment.
While the large majority of our worldwide dealers are independently owned and operated, we own and operate a dealership in Japan that covers approximately 80% of the Japanese market: Nippon Caterpillar Division. We are currently operating this Japanese dealer directly and we report its results in the All Other Segment.
Costs are accrued 8 based on consideration of currently available data and information with respect to each individual site, including available technologies, current applicable laws and regulations, and prior remediation experience. Where no amount within a range of estimates is more likely, we accrue the minimum.
Costs are accrued based on consideration of currently available data and information with respect to each individual site, including available technologies, current applicable laws and regulations, and prior remediation experience. Where no amount within a range of estimates is more likely, we accrue the minimum.
Where multiple potentially responsible parties are involved, we consider our proportionate share of the probable costs. In formulating the estimate of probable costs, we do not consider amounts expected to be recovered from insurance companies or others. We reassess these accrued amounts on a quarterly basis.
Where multiple potentially responsible parties are involved, we consider our proportionate share of the probable costs. In formulating the estimate of probable costs, we do not consider amounts expected 8 to be recovered from insurance companies or others. We reassess these accrued amounts on a quarterly basis.
Cat Financial is a wholly owned finance subsidiary of Caterpillar Inc. and it provides retail and wholesale financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for vehicles and power generation facilities that, in most cases, incorporate Caterpillar products.
Cat Financial is a wholly owned finance subsidiary of Caterpillar Inc., and it provides retail and wholesale financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that, in most cases, incorporate Caterpillar products.
The Resource Industries product portfolio includes the following machines and related parts and services: · electric rope shovels · large wheel loaders · soil compactors · draglines · off-highway trucks · machinery components · hydraulic shovels · articulated trucks · autonomous ready vehicles and solutions · rotary drills · wheel tractor scrapers · select work tools · hard rock vehicles · wheel dozers · safety services and mining performance · large track-type tractors · fleet management solutions · large mining trucks · landfill compactors 2 Table of Contents Energy & Transportation Our Energy & Transportation segment supports customers in oil and gas, power generation, marine, rail and industrial applications, including Caterpillar machines.
The Resource Industries product portfolio includes the following machines and related parts and services: · electric rope shovels · large wheel loaders · landfill compactors · draglines · off-highway trucks · soil compactors · hydraulic shovels · wide-body trucks · machinery components · rotary drills · articulated trucks · autonomous ready vehicles and solutions · hard rock vehicles · wheel tractor scrapers · select work tools · large track-type tractors · wheel dozers · safety services and mining performance · large mining trucks · fleet management solutions 2 Table of Contents Energy & Transportation Our Energy & Transportation segment supports customers in oil and gas, power generation, marine, rail and industrial applications, including Caterpillar machines.
The majority of machine sales in this segment are made in the heavy and general construction, rental, quarry and aggregates and mining. The nature of customer demand for construction machinery varies around the world.
The majority of machine sales in this segment are made in the heavy and general construction, rental, quarry and aggregates and mining industries. The nature of customer demand for construction machinery varies around the world.
The majority of Construction Industries' research and development spending in 2023 focused on the next generation of construction machines. 1 Table of Contents The competitive environment for construction machinery is characterized by some global competitors and many regional and specialized local competitors.
The majority of Construction Industries' research and development spending in 2024 focused on the next generation of construction machines. 1 Table of Contents The competitive environment for construction machinery is characterized by some global competitors and many regional and specialized local competitors.
These sales and service agreements are terminable at will by either party primarily upon 90 days written notice. Human Capital Core Values Caterpillar’s global workforce is united by Our Values In Action, Caterpillar’s Code of Conduct. Integrity, Excellence, Teamwork, Commitment and Sustainability provide the foundation for our values-based culture. Our diversity and inclusion principles are embedded in our values.
These sales and service agreements are terminable at will by either party primarily upon 90 days written notice. Human Capital Core Values Caterpillar’s global workforce is united by Our Values In Action, Caterpillar’s Code of Conduct. Integrity, Excellence, Teamwork, Commitment and Sustainability provide the foundation for our values-based culture. Our human capital management principles are embedded in our values.
Our leadership development programs focus on encouraging a variety of experiences to help employees broaden understanding and increase perspective. Our leadership curriculums include managing for inclusion and building resilient and high performing teams as core development principles. Additionally, skill-based programs to upskill our manufacturing employees are developed locally and tailored to the specific needs of the business.
Our leadership development programs focus on encouraging a variety of experiences to help employees broaden understanding and increase perspective. Our leadership curriculums include building resilient and high performing teams as core development principles. Additionally, skill-based programs to upskill our manufacturing employees are developed locally and tailored to the specific needs of the business.
This policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between the assets and liabilities, and exchange rate risk associated with future transactions denominated in foreign currencies. 4 Table of Contents Cat Financial provides financing only when certain criteria are met.
This policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between the assets and liabilities, and exchange rate risk associated with future transactions denominated in foreign currencies. Cat Financial provides financing only when certain criteria are met.
Other information about our operations in 2023, including certain risks associated with our operations, is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Construction Industries Our Construction Industries segment is primarily responsible for supporting customers using machinery in infrastructure and building construction.
Other information about our operations in 2024, including certain risks associated with our operations, is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Construction Industries Our Construction Industries segment is primarily responsible for supporting customers using machinery in infrastructure and building construction applications.
An additional set of competitors, including Aggreko plc, Generac Holdings, Kohler Energy, Baker Hughes Co., and others, are primarily packagers who source engines and/or other components from domestic and international suppliers and market products regionally and internationally through a variety of distribution channels.
An additional set of competitors, including Aggreko plc, Generac Holdings Inc., Rehlko Energy, Baker Hughes Co., and others, are primarily packagers who source engines and/or other components from domestic and international suppliers and market products regionally and internationally through a variety of distribution channels.
For more information regarding match funding, please see Note 4 — “Derivative financial instruments and risk management” of Part II, Item 8 "Financial Statements and Supplementary Data." See also the risk factors associated with our financial products business included in Item 1 A. of this Form 10-K.
For more information regarding match funding, please see Note 4 — “Derivative financial instruments and risk management” of Part II, Item 8 "Financial Statements and Supplementary Data." See also the risk factors associated with our financial products business included in Item 1A. of this Form 10-K.
Retail financing is primarily comprised of installment sale contracts and other equipment-related loans, working capital loans, finance leases and operating leases. Wholesale financing to Caterpillar dealers consists primarily of inventory and rental fleet financing. In addition, Cat Financial purchases short-term wholesale trade receivables from Caterpillar.
Retail financing is primarily comprised of installment sale contracts and other equipment-related loans, working capital loans, finance leases, operating leases, and revolving charge accounts. Wholesale financing to Caterpillar dealers consists primarily of inventory and rental fleet financing. In addition, Cat Financial purchases short-term wholesale trade receivables from Caterpillar.
In the United States, we employed approximately 50,800 full-time persons, most of whom are at-will employees and, therefore, not subject to any type of employment contract or agreement. At select business units, we have hired certain highly specialized employees under employment contracts that specify a term of employment, pay and other benefits.
In the United States, we employed approximately 51,500 full-time persons, most of whom are at-will employees and, therefore, not subject to any type of employment contract or agreement. At select business units, we have hired certain highly specialized employees under employment contracts that specify a term of employment, pay and other benefits.
These patents and trademarks are generally considered beneficial to our business. We do not regard our business as being dependent upon any single patent or group of patents. Order Backlog The dollar amount of backlog believed to be firm was approximately $27.5 billion at December 31, 2023 and $30.4 billion at December 31, 2022.
These patents and trademarks are generally considered beneficial to our business. We do not regard our business as being dependent upon any single patent or group of patents. Order Backlog The dollar amount of backlog believed to be firm was approximately $30.0 billion at December 31, 2024 and $27.5 billion at December 31, 2023.
Caterpillar’s insurance group provides protection and service for claims under the following programs: • Contractual Liability Insurance to insure certain service contract obligations of Caterpillar and its affiliates, Caterpillar dealers and original equipment manufacturers (OEMs). • Cargo reinsurance for the worldwide cargo risks of Caterpillar products. • Contractors’ Equipment Physical Damage Insurance for equipment manufactured by Caterpillar or OEMs, which is leased, rented or sold by third party dealers to customers. • General liability, employer’s liability, auto liability and property insurance for Caterpillar. • Life, disability, medical and accident reinsurance for Caterpillar's international employee benefits program (non-U.S.). 5 Table of Contents • Reinsurance to cover VEBA Trust for medical claims of certain Caterpillar retirees and dependents. • Brokerage and insurance services for property and casualty and life and health business.
Caterpillar’s insurance group provides protection and service for claims under the following programs: • Contractual Liability Insurance to insure certain service contract obligations of Caterpillar and its affiliates, Caterpillar dealers and original equipment manufacturers (OEMs). • Cargo reinsurance for the worldwide cargo risks of Caterpillar products. • Contractors’ Equipment Physical Damage Insurance for equipment manufactured by Caterpillar or OEMs, which is leased, rented or sold by third party dealers to customers. • General liability, employer’s liability, auto liability and property insurance for Caterpillar. • Life, disability, medical and accident reinsurance for Caterpillar's international employee benefits program (non-U.S.). • Reinsurance to cover VEBA Trust for medical claims of certain Caterpillar retirees and dependents. • Brokerage and insurance services for property and casualty and life and health business. 5 Table of Contents Competitive Environment Caterpillar products and services are sold worldwide into a variety of highly competitive markets.
We also sell some of the reciprocating engines manufactured by our subsidiary Perkins Engines Company Limited through its worldwide network of 88 distributors covering 185 countries. We sell the FG Wilson branded electric power generation systems through its worldwide network of 110 distributors covering 109 countries.
We also sell some of the reciprocating engines manufactured by our subsidiary Perkins Engines Company Limited through its worldwide network of 88 distributors covering 185 countries. We sell the FG Wilson branded electric power generation systems through its worldwide network of 108 distributors covering 158 countries.
Principal global competitors include Cummins Inc., Deutz AG, Rolls-Royce Power Systems and Siemens Energy Global GmbH. Other competitors, such as Volvo Penta AB, FPT Industrial (Iveco Group), INNIO, GE Vernova, Kawasaki Heavy Industries Energy Solution & Marine Engineering, MAN Energy Solutions (VW), Weichai Power Co., Ltd., and other emerging market competitors compete in certain markets in which Caterpillar competes.
Principal global competitors include Cummins Inc., Deutz AG, Rolls-Royce Power Systems AG and Siemens Energy AG. Other competitors, such as Volvo Penta AB, FPT Industrial SpA (Iveco Group), INNIO Group, GE Vernova Inc., Kawasaki Heavy Industries Ltd., MAN Energy Solutions SE (VW), Weichai Power Co., Ltd., and other emerging market competitors compete in certain markets in which Caterpillar competes.
The product and services portfolio includes reciprocating engines, generator sets, integrated systems and solutions, turbines and turbine-related services, electrified powertrain and zero-emission power sources and service solutions development, the remanufacturing of Caterpillar engines and components, remanufacturing services for other companies, diesel-electric locomotives and other rail-related products and services and product support of on-highway vocational trucks for North America.
The product and services portfolio includes reciprocating engines, generator sets, integrated systems and solutions, turbines and turbine-related services, electrified powertrain and zero-emission power sources and service solutions development, the remanufacturing of Caterpillar engines and components, remanufacturing services for other companies, diesel-electric locomotives and other rail-related products and services as well as product support of on-highway engines.
In rail-related businesses, our global competitors include Wabtec Freight, The Greenbrier Companies, Voestalpine AG, and Vossloh AG, Alstom SA, Siemens Mobility, and CRRC Corp., LTD. We also compete with other companies on a more limited range of products, services and/or geographic regions.
In rail-related businesses, our global competitors include Wabtec Corp, Greenbrier Companies, Inc., Voestalpine AG, Vossloh AG, Alstom SA, and Siemens Mobility A/S. We also compete with other companies on a more limited range of products, services and/or geographic regions.
Dealers and Distributors We distribute our machines principally through a worldwide organization of dealers (dealer network), 43 located in the United States and 113 located outside the United States, serving 191 countries. We sell reciprocating engines principally through the dealer network and to other manufacturers for use in products.
Dealers and Distributors We distribute our machines principally through a worldwide organization of dealers (dealer network), 41 located in the United States and 111 located outside the United States, serving 187 countries. We sell reciprocating engines principally through the dealer network and to other manufacturers for use in products.
Full-Time Employees at Year-End 2023 2022 Inside U.S. 50,800 48,200 Outside U.S. 62,400 60,900 Total 113,200 109,100 By Region: North America 51,200 48,700 EAME 16,600 16,900 Latin America 20,300 19,100 Asia/Pacific 25,100 24,400 Total 113,200 109,100 As of December 31, 2023, there were 7,973 hourly production employees in the United States who were covered by collective bargaining agreements with various labor unions, including The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), The International Association of Machinists and The United Steelworkers.
Full-Time Employees at Year-End 2024 2023 Inside U.S. 51,500 50,800 Outside U.S. 61,400 62,400 Total 112,900 113,200 By Region: North America 52,000 51,200 EAME 15,900 16,600 Latin America 19,700 20,300 Asia/Pacific 25,300 25,100 Total 112,900 113,200 As of December 31, 2024, there were 7,386 hourly production employees in the United States who were covered by collective bargaining agreements with various labor unions, including The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), The International Association of Machinists and The United Steelworkers.
Overview With 2023 sales and revenues of $67.060 billion, Caterpillar 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.
Overview With 2024 sales and revenues of $64.809 billion, Caterpillar 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.
We believe we have the appropriate human capital resources to successfully operate and deliver our enterprise strategy. As of December 31, 2023, we employed about 113,200 full-time persons of whom approximately 62,400 were located outside the United States.
We believe we have the appropriate human capital resources to successfully operate and deliver our enterprise strategy. As of December 31, 2024, we employed about 112,900 full-time persons of whom approximately 61,400 were located outside the United States.
Our 14 Employee Resource Groups (ERGs), which are sponsored and supported by leadership, help ensure different voices and perspectives contribute to our strategy for long-term profitable growth.
Our 14 Employee Resource Groups (ERGs), which are sponsored and supported by leadership, help ensure different voices and perspectives contribute to our strategy for long-term profitable growth. They also engage our employees, helping contribute to development and retention.
Such price discounting puts pressure on margins and can negatively impact operating profit. Outside the United States, certain competitors enjoy competitive advantages inherent to operating in their home countries or regions. Raw Materials and Component Products We source our raw materials and manufactured components from suppliers both domestically and internationally. These purchases include unformed materials and rough and finished parts.
Outside the United States, certain competitors enjoy competitive advantages inherent to operating in their home countries or regions. Raw Materials and Component Products We source our raw materials and manufactured components from suppliers both domestically and internationally. These purchases include unformed materials and rough and finished parts.
For over 40 years, Cat Financial has been providing financing for Caterpillar products, contributing to our knowledge of asset values, industry trends, financing structures and customer needs. 3 Table of Contents In certain instances, Cat Financial’s operations are subject to supervision and regulation by state, federal and various foreign governmental authorities, and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions which, among other things, (i) regulate credit granting activities and the administration of loans, (ii) establish maximum interest rates, finance charges and other charges, (iii) require disclosures to customers, (iv) govern secured transactions, (v) set collection, foreclosure, repossession and other trade practices and (vi) regulate the use and reporting of information related to a borrower’s credit experience.
In certain instances, Cat Financial’s operations are subject to supervision and regulation by state, federal and various foreign governmental authorities, and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions which, among other things, (i) regulate credit granting activities and the administration of loans, (ii) establish maximum interest rates, finance charges and other charges, (iii) require disclosures to customers, (iv) govern secured transactions, (v) set collection, foreclosure, repossession and other trade practices and (vi) regulate the use and reporting of information related to a borrower’s credit experience.
In exchange for these rights, the agreement obligates the dealer to develop and promote the sale of the company’s products to current and prospective customers in the dealer’s service territory.
In some instances, a separate trademark agreement exists between the company and a dealer. In exchange for these rights, the agreement obligates the dealer to develop and promote the sale of the company’s products to current and prospective customers in the dealer’s service territory.
Compensation, Benefits and Employee Insights Providing competitive benefits and compensation underpins our commitment to our engaged and productive employees. Our pay-for-performance philosophy aligns employee’s individual contributions, behaviors and business results with individual rewards. Our comprehensive Total Health programs focus on purpose, as well as physical and mental health, emotional and social support, and financial wellness.
Our pay-for-performance philosophy aligns employee’s individual contributions, behaviors and business results with individual rewards. Our comprehensive Total Health programs focus on purpose, as well as physical and mental health, emotional and social support, and financial wellness.
Cat Financial’s retail loans include: • Loans that allow customers and dealers to use their Caterpillar equipment or other assets as collateral to obtain financing. • Installment sale contracts, which are equipment loans that enable customers to purchase equipment with structured payments over time.
Cat Financial’s ability to comply with these and other governmental and legal requirements and restrictions affects its operations. 3 Table of Contents Cat Financial’s retail loans include: • Loans that allow customers and dealers to use their Caterpillar equipment or other assets as collateral to obtain financing. • Installment sale contracts, which are equipment loans that enable customers to purchase equipment with structured payments over time.
Under these programs, Caterpillar, or the dealer, funds an amount at the outset of the transaction, which Cat Financial then recognizes as revenue over the term of the financing. We believe that these marketing programs provide Cat Financial a significant competitive advantage in financing Caterpillar products.
Under these programs, Caterpillar, or the dealer, funds an amount at the outset of the transaction, which Cat Financial then recognizes as revenue over the term of the financing.
Caterpillar Insurance Company, a wholly owned subsidiary of Caterpillar Insurance Holdings Inc., is a U.S. insurance company domiciled in Missouri and primarily regulated by the Missouri Department of Insurance. Caterpillar Insurance Company is licensed to conduct property and casualty insurance business in 50 states, the District of Columbia and Guam, and as such, is also regulated in those jurisdictions.
Caterpillar Insurance Company is licensed to conduct property and casualty insurance business in 50 states, the District of Columbia and Guam and, as such, is also regulated in those jurisdictions.
There are also three independent dealers in the Southern Region of Japan. 6 Table of Contents For Caterpillar-branded products, the company’s relationship with each of its independent dealers is memorialized in standard sales and service agreements.
There are also three independent dealers in the Southern Region of Japan. For Caterpillar-branded products, the company’s relationship with each of its independent dealers is memorialized in standard sales and service agreements. Pursuant to these agreements, the company grants the dealer the right to purchase and sell its products and to service the products in a specified geographic service territory.
Our global internships, engineering co-ops, and career programs for engineering, marketing, and manufacturing provide development opportunities for early career employees. We also have a continual focus on strengthening technical, professional and leadership capabilities at every level using contemporary learning strategies to foster high performance. Strategic talent reviews and succession planning occur at a minimum, annually, across our businesses.
We also have a continual focus on strengthening technical, professional and leadership capabilities at every level using contemporary learning strategies to foster high performance. Strategic talent reviews and succession planning occur at a minimum, annually, across our businesses. Mentoring programs connect participants with senior leaders and peers who can support their career goals and development.
Compared with year-end 2022, the order backlog decreased across the three primary segments. Of the total backlog at December 31, 2023, approximately $5.8 billion was not expected to be filled in 2024.
Compared with year-end 2023, the order backlog increased in Energy & Transportation, while Construction Industries and Resource Industries decreased. Of the total backlog at December 31, 2024, approximately $8.0 billion was not expected to be filled in 2025.
The company also agrees to defend its intellectual property and to provide warranty and technical support to the dealer. The agreement further grants the dealer a non-exclusive license to use the company’s trademarks, service marks and brand names. In some instances, a separate trademark agreement exists between the company and a dealer.
The company establishes prices to dealers after 6 Table of Contents receiving input from dealers on transactional pricing in the marketplace. The company also agrees to defend its intellectual property and to provide warranty and technical support to the dealer. The agreement further grants the dealer a non-exclusive license to use the company’s trademarks, service marks and brand names.
Competitive Environment Caterpillar products and services are sold worldwide into a variety of highly competitive markets. In all markets, we compete on the basis of product performance, customer service, quality and price. From time to time, the intensity of competition results in price discounting in a particular industry or region.
In all markets, we compete on the basis of product performance, customer service, quality and price. From time to time, the intensity of competition results in price discounting in a particular industry or region. Such price discounting puts pressure on margins and can negatively impact operating profit.
Talent Development and Training In addition to our focus on values and safety, we strive to continually attract, develop, engage, and retain a high-performing diverse global team that executes our enterprise strategy of long-term profitable growth. We are committed to employee development and helping individuals reach their full potential, by making on-going investments in our team.
Talent and Leadership Development In addition to our focus on values and safety, we strive to continually attract, develop, engage, and retain a high-performing global team that executes our enterprise strategy of long-term profitable growth. We are committed to fostering an inclusive environment and a workforce that is representative of the diverse customers and communities we serve around the globe.
Our values unite us, and reflect our diverse cultures, languages, geographies, and businesses, as one Caterpillar team. Health and Safety The health and safety of our employees is an important focus at Caterpillar, and we strive to continually reduce our recordable injuries utilizing programs that amplify our safety culture, globally.
Our values unite us, and reflect our diverse cultures, languages, geographies, and businesses, as one Caterpillar team. Health and Safety The health and safety of our employees is an important focus at Caterpillar. Our safety driven strategy is focused on preventing serious injuries and learning from those closest to the work.
In 2023, the Company achieved a recordable injury frequency rate of 0.40, compared to the 2022 recordable injury frequency rate of 0.44. In addition, Caterpillar has refreshed our safety strategy to enhance our focus on preventing serious injuries and to encourage learning from those closest to the work.
In 2024, the Company achieved a recordable injury frequency rate of 0.43, compared to the 2023 recordable injury frequency rate of 0.40. We strive to continually reduce our recordable injuries utilizing programs that amplify our safety culture globally.
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Cat Financial’s ability to comply with these and other governmental and legal requirements and restrictions affects its operations.
Added
For over 40 years, Cat Financial has been providing financing for Caterpillar products, contributing to our knowledge of asset values, industry trends, financing structures and customer needs.
Removed
Pursuant to these agreements, the company grants the dealer the right to purchase and sell its products and to service the products in a specified geographic service territory. The company establishes prices to dealers after receiving input from dealers on transactional pricing in the marketplace.
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We believe that these marketing programs provide Cat Financial a significant competitive advantage in financing Caterpillar products. 4 Table of Contents Caterpillar Insurance Company, a wholly owned subsidiary of Caterpillar Insurance Holdings Inc., is a U.S. insurance company domiciled in Missouri and primarily regulated by the Missouri Department of Insurance.
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Diversity and Inclusion We are committed to fostering a diverse workforce and an inclusive environment that is representative of the many customers and communities we serve around the globe. Our strategic approach weaves diversity and inclusion seamlessly into the business, ensuring that the principles guide us in our daily operating rhythm.
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Our Values In Action enable every individual to achieve their fullest potential and every team to help drive business success. These principles guide us in our daily operating rhythm. In addition, we make on-going investments in our team to develop employees and help individuals reach their full potential.
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All employees have access to mentoring programs that connect participants with senior leaders and peers who can support their career goals and development. Our global internships, engineering co-ops, and career programs for engineering, marketing, and manufacturing provide development opportunities for early career employees.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event. 10 Table of Contents Commodity price changes, material price increases, fluctuations in demand for our products and services, significant disruptions to our supply chains or significant shortages of labor and material may adversely impact our financial results or our ability to meet commitments to customers.
Biggest changeCommodity price changes, material price increases, fluctuations in demand for our products and services, significant disruptions to our supply chains or significant shortages of labor and material may adversely impact our financial results or our ability to meet commitments to customers. We are a significant user of steel and many other commodities required for the manufacture of our products.
Furthermore, changes in global economic conditions, including material cost increases and decreases in economic activity in key markets we serve, and the success of plans to manage cost increases, inventory and other important elements of our business may significantly impact our ability to generate funds from operations. 14 Table of Contents In addition, demand for our products generally depends on customers’ ability to pay for our products, which, in turn, depends on their access to funds.
Furthermore, changes in global economic conditions, including material cost increases and decreases in key markets we serve, and the success of plans to manage cost increases, inventory and other important elements of our business may significantly impact our ability to generate funds from operations. 14 Table of Contents In addition, demand for our products generally depends on customers’ ability to pay for our products, which, in turn, depends on their access to funds.
Operating these information technology systems and networks and processing and maintaining this data in a secure manner, is critical to our business operations and strategy. Information technology security threats -- from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data -- are increasing in frequency and sophistication.
Operating these information technology systems and networks and processing and maintaining this data in a secure manner are critical to our business operations and strategy. Information technology security threats -- from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data -- are increasing in frequency and sophistication.
Cat Financial has also agreed under certain of these agreements not to exceed a certain leverage ratio (consolidated debt to consolidated net worth, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31), to maintain a minimum interest coverage ratio (calculated as (1) profit excluding income taxes, interest expense and net gain (loss) from interest rate derivatives to (2) interest expense calculated at the end of each fiscal quarter for the prior four consecutive fiscal quarter period and not to terminate, amend or modify its support agreement with us.
Cat Financial has also agreed under certain of these agreements 16 Table of Contents not to exceed a certain leverage ratio (consolidated debt to consolidated net worth, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31), to maintain a minimum interest coverage ratio (calculated as (1) profit excluding income taxes, interest expense and net gain (loss) from interest rate derivatives to (2) interest expense calculated at the end of each fiscal quarter for the prior four consecutive fiscal quarter period) and not to terminate, amend or modify its support agreement with us.
Economic uncertainties could continue to affect customer demand for the Company’s products and services, the value of the equipment financed or leased, the demand for financing and the financial condition and credit risk of our dealers and customers.
Economic uncertainties could affect customer demand for the Company’s products and services, the value of the equipment financed or leased, the demand for financing and the financial condition and credit risk of our dealers and customers.
You should, however, consult any subsequent disclosures we make in our filings with the SEC on Form 10-Q or Form 8-K. 9 Table of Contents The following is a cautionary discussion of risks, uncertainties and assumptions that we believe are material to our business.
You should, however, consult any subsequent disclosures we make in our filings with the SEC on Form 10-Q or Form 8-K. The following is a cautionary discussion of risks, uncertainties and assumptions that we believe are material to our business.
Increases in the prices of such commodities would increase our costs, negatively impacting our business, results of operations and financial condition if we are unable to fully offset the effect of these increased costs through price increases, productivity improvements, cost reduction programs or hedging programs.
Increases in the prices of such commodities would increase our costs, negatively impacting our business, results of operations and financial 10 Table of Contents condition if we are unable to fully offset the effect of these increased costs through price increases, productivity improvements, cost reduction programs or hedging programs.
In addition to the factors discussed elsewhere in this report, the following are some of the important factors that, individually or in the aggregate, we believe could make our actual results differ materially from those described in any forward-looking statements.
In addition to the factors discussed elsewhere in this report, the following are some of the important factors that, individually or in the aggregate, we believe could make our actual results differ materially from those described in any forward-looking 9 Table of Contents statements.
Current material and component shortages, logistics constraints and labor inefficiencies limited and or could continue to limit our ability to meet customer demand, which could have a material adverse effect on our business, results of operations and/or financial condition.
Material and component shortages, logistics constraints and labor inefficiencies could limit our ability to meet customer demand, which could have a material adverse effect on our business, results of operations and/or financial condition.
Pandemics can significantly increase economic and customer demand uncertainty, cause inflationary pressure in the U.S. and elsewhere and lead to volatility in customer demand for the Company’s products and services and cause supply chain disruptions.
These catastrophic events can significantly increase economic and customer demand uncertainty, cause inflationary pressure in the U.S. and elsewhere and lead to volatility in customer demand for the Company’s products and services and cause supply chain disruptions.
Operating in different regions and countries exposes us to numerous risks, including: • multiple and potentially conflicting laws, regulations and policies that are subject to change; • imposition of currency restrictions, restrictions on repatriation of earnings or other restraints; • imposition of new or additional tariffs or quotas; 11 Table of Contents • withdrawal from or modification of trade agreements or the negotiation of new trade agreements; • imposition of new or additional trade and economic sanctions laws imposed by the U.S. or foreign governments; • war or acts of terrorism; and • political and economic instability or civil unrest that may severely disrupt economic activity in affected countries.
Operating in different regions and countries exposes us to numerous risks, including: • multiple and potentially conflicting laws, regulations and policies that are subject to change; • imposition of currency restrictions, restrictions on repatriation of earnings or other restraints; • imposition of new or additional tariffs or quotas; • withdrawal from or modification of trade agreements or the negotiation of new trade agreements; • imposition of new or additional trade and economic sanctions laws imposed by the U.S. or foreign governments; • war or acts of terrorism; and • political and economic instability or civil unrest that may severely disrupt economic activity in affected countries. 11 Table of Contents The occurrence of one or more of these events may negatively impact our business, results of operations and financial condition.
Catastrophic events, including global pandemics, could materially adversely affect our business, results of operations and/or financial condition.
Catastrophic events could materially adversely affect our business, results of operations and/or financial condition.
These covenants include maintaining a minimum consolidated net worth (defined as the consolidated shareholder’s equity including 16 Table of Contents preferred stock but excluding the pension and other post-retirement benefits balance within accumulated other comprehensive income (loss)), limitations on the incurrence of liens and certain restrictions on consolidation and merger.
These covenants include maintaining a minimum consolidated net worth (defined as the consolidated shareholder’s equity including preferred stock but excluding the pension and other post-retirement benefits balance within accumulated other comprehensive income (loss)), limitations on the incurrence of liens and sales and leaseback transactions, restrictions on the transfer of certain property and certain restrictions on consolidation and merger.
For example, a pandemic had a significant impact around the world, prompting governments and businesses to take unprecedented measures in response. Such measures included travel bans and restrictions, quarantines, shelter in place orders and shutdowns. Those measures impacted or could again impact all or portions of our workforce and operations and the operations of our customers, dealers and suppliers.
Pandemics can have a significant impact around the world, prompting governments and businesses to take unprecedented measures in response. Such measures could include travel bans and restrictions, quarantines, shelter in place orders and shutdowns. Those measures could impact all or portions of our workforce and operations and the operations of our customers, dealers and suppliers.
Certain loans made by Cat Financial and various financing extended to Cat Financial are made at variable rates that use floating reference rates or indices, including the Secured Overnight Financing Rate, or SOFR, an index calculated by short-term repurchase agreements, backed by Treasury securities,as a benchmark for establishing the interest rate.
Certain loans made by Cat Financial and various financing extended to Cat Financial are made at variable rates that use floating reference rates or indices, including the Secured Overnight Financing Rate (SOFR) as a benchmark for establishing the interest rate.
The occurrence of one or more of these events may negatively impact our business, results of operations and financial condition. OPERATIONAL RISKS The success of our business depends on our ability to develop, produce and market quality products that meet our customers’ needs. Our business relies on continued global demand for our brands and products.
OPERATIONAL RISKS The success of our business depends on our ability to develop, produce and market quality products that meet our customers’ needs. Our business relies on continued global demand for our brands and products. To achieve business goals, we must develop and sell products that appeal to our dealers, OEMs and end-user customers.
Significant adverse changes in credit or capital markets could result in actual rates of return on pension investments being materially lower than projected and result in increased contribution requirements. These factors could significantly increase our payment obligations under the plans, and as a result, adversely affect our business and overall financial condition.
These factors could significantly increase our payment obligations under the plans and, as a result, adversely affect our business and overall financial condition.
Removed
We are a significant user of steel and many other commodities required for the manufacture of our products.
Added
The adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event.
Removed
To achieve business goals, we must develop and sell products that appeal to our dealers, OEMs and end-user customers.
Added
We employ a liability-driven investment strategy, where the interest rate sensitivity of the pension investments and pension obligations are aligned to reduce funded status volatility. Significant adverse changes in credit or capital markets could result in actual rates of return on pension investments being materially lower than projected and result in increased contribution requirements.
Removed
Together with Cat Financial we created a cross-functional team that assesses risk across multiple categories as it relates to the use of floating reference rates or indices, such as SOFR, in securities, loans, derivatives, and other financial obligations or extensions of credit held by or due to us.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed23 unchanged
Biggest changeOur cybersecurity program is overseen by our CIO, who has been a Caterpillar employee for nearly twenty-five years. Prior to her current appointment as our CIO in September 2020, she was the Chief Information Officer for the Company’s Financial Products Division.
Biggest changeOur cybersecurity program is overseen by our CIO, who has been a Caterpillar employee for over twenty-five years. Prior to her current appointment as our CIO in September 2020, she was the Chief Information Officer for the Company’s Financial Products Division.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed10 unchanged
Biggest changeConstruction Industries Arkansas: North Little Rock Brazil: Campo Largo, Piracicaba Georgia: Athens China: Suzhou, Wujiang, Xuzhou, Qingzhou Illinois: Decatur, East Peoria France: Grenoble, Echirolles Kansas: Wamego Hungary: Godollo Minnesota: Brooklyn Park India: Hosur, Thiruvallur North Carolina: Clayton, Sanford Italy: Minerbio, Cattolica Texas: Victoria Japan: Akashi Mexico: Torreon Netherlands: Den Bosch Poland: Janow, Sosnowiec Thailand: Rayong United Kingdom: Desford, Stockton Resource Industries Illinois: Decatur, East Peoria China: Qingzhou, Wuxi South Carolina: Sumter Germany: Lunen Texas: Denison India: Thiruvallur Wisconsin: South Milwaukee Indonesia: Batam Mexico: Acuna, Monterrey, Reynosa Thailand: Rayong United Kingdom: Peterlee Energy & Transportation Alabama: Albertville, Montgomery Australia: Cardiff, Perth, Redbank, Revesby California: San Diego Brazil: Curitiba, Hortolandia, Piracicaba, Sete Lagoas Georgia: Griffin, Patterson China : Tianjin, Wuxi Illinois: East Peoria, Mossville, Mapleton, Pontiac Czech Republic: Zatec, Zebrak Indiana: Lafayette, Muncie Germany: Kiel, Mannheim, Rostock Kentucky: Decoursey, Mayfield India: Aurangabad, Hosur Oklahoma: Broken Arrow Italy : Pistoria North Carolina: Winston-Salem Mexico: San Luis Potosi, Tijuana Texas: Channelview, DeSoto, Fort Worth, Mabank, San Antonio, Schertz, Seguin, Sherman United Kingdom: Larne, Peterborough, Sandiacre, South Queensferry, Springvale, Stafford, Wimborne 23 Table of Contents
Biggest changeConstruction Industries Arkansas: North Little Rock Brazil: Campo Largo, Piracicaba Georgia: Athens China: Suzhou, Wujiang, Xuzhou, Qingzhou Illinois: Decatur, East Peoria France: Grenoble, Echirolles Kansas: Wamego Hungary: Godollo Minnesota: Brooklyn Park India: Hosur, Thiruvallur North Carolina: Clayton, Sanford Italy: Minerbio, Cattolica Texas: Victoria Japan: Akashi Mexico: Torreon Netherlands: Den Bosch Poland: Janow, Sosnowiec Thailand: Rayong United Kingdom: Desford, Stockton Resource Industries Illinois: Decatur, East Peoria China: Qingzhou, Wuxi South Carolina: Sumter India: Thiruvallur Texas: Denison Indonesia: Batam Wisconsin: South Milwaukee Mexico: Acuna, Monterrey, Reynosa Thailand: Rayong United Kingdom: Peterlee Energy & Transportation Alabama: Albertville, Montgomery Australia: Cardiff, Perth, Redbank, Revesby California: San Diego Brazil: Curitiba, Piracicaba, Sete Lagoas Georgia: Griffin, Patterson China : Tianjin, Wuxi Illinois: East Peoria, Mossville, Mapleton, Pontiac Czech Republic: Zatec, Zebrak Indiana: Lafayette, Muncie Germany: Kiel, Mannheim, Rostock Kentucky: Decoursey, Mayfield India: Aurangabad, Hosur Oklahoma: Broken Arrow Italy : Pistoia North Carolina: Winston-Salem Mexico: San Luis Potosi, Tijuana Texas: Channelview, DeSoto, Fort Worth, Mabank, San Antonio, Schertz, Seguin, Sherman United Kingdom: Larne, Peterborough, Sandiacre, South Queensferry, Springvale, Stafford, Wimborne 23 Table of Contents
Headquarters and Other Key Offices Our corporate headquarters is in a leased office located in Irving, Texas. Our Financial Products business is headquartered in offices in Nashville, Tennessee. Additional key offices are located inside and outside the United States.
Headquarters and Other Key Offices Our corporate headquarters is in a leased office located in Irving, Texas. Our Financial Products business is headquartered in Nashville, Tennessee. Additional key offices are located inside and outside the United States.
Paul, Minnesota; Clayton, Ohio; York, Pennsylvania; Waco, Texas; Spokane, Washington; Melbourne, Australia; Queensland, Australia; Grimbergen, Belgium; Piracicaba, Brazil; Shanghai, China; Sagami, Japan; San Luis Potosi, Mexico; Singapore, Republic of Singapore; Moscow, Russia; Johannesburg, South Africa; and Dubai, United Arab Emirates. We also own or lease other facilities that support our distribution activities.
Paul, Minnesota; Clayton, Ohio; York, Pennsylvania; Waco, Texas; Spokane, Washington; Melbourne, Australia; Queensland, Australia; Grimbergen, Belgium; Piracicaba, Brazil; Shanghai, China; Sagami, Japan; San Luis Potosi, Mexico; Singapore, Republic of Singapore; Johannesburg, South Africa; and Dubai, United Arab Emirates. We also own or lease other facilities that support our distribution activities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−0 removed0 unchanged
Biggest changeNumber of Shareholders: Shareholders of record at the end of 2023 totaled 21,217, compared with 21,935 at the end of 2022. 24 Table of Contents Performance Graph: Total Cumulative Shareholder Return for Five-Year Period Ending December 31, 2023 The graph below shows the cumulative shareholder return assuming an investment of $100 on December 31, 2018, and reinvestment of dividends issued thereafter. 2018 2019 2020 2021 2022 2023 Caterpillar Inc. $ 100.00 $ 119.51 $ 151.74 $ 175.95 $ 208.67 $ 262.82 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Machinery $ 100.00 $ 130.29 $ 160.81 $ 193.23 $ 195.93 $ 235.49 25 Table of Contents Non-U.S.
Biggest changeNumber of Shareholders: Shareholders of record at the end of 2024 totaled 20,191, compared with 21,217 at the end of 2023. 24 Table of Contents Performance Graph: Total Cumulative Shareholder Return for Five-Year Period Ending December 31, 2024 The graph below shows the cumulative shareholder return assuming an investment of $100 on December 31, 2019, and reinvestment of dividends issued thereafter. 2019 2020 2021 2022 2023 2024 Caterpillar Inc. $ 100.00 $ 126.97 $ 147.22 $ 174.60 $ 219.91 $ 274.14 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 Machinery $ 100.00 $ 123.42 $ 148.30 $ 150.38 $ 180.74 $ 210.36 S&P 500 Capital Goods $ 100.00 $ 106.78 $ 127.01 $ 126.73 $ 151.22 $ 185.50 25 Table of Contents Non-U.S.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock (NYSE: CAT) Listing Information: Caterpillar common stock is listed on the New York Stock Exchange in the United States, and on stock exchanges in France and Switzerland.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock (NYSE: CAT) Listing Information: Caterpillar common stock is listed on the New York Stock Exchange in the United States.
Employee Stock Purchase Plans As of December 31, 2023, we had 28 employee stock purchase plans (the “EIP Plans”) administered outside the United States for our non-U.S. employees, which had approximately 14,000 active participants in the aggregate.
Employee Stock Purchase Plans As of December 31, 2024, we had 38 employee stock purchase plans (the “EIP Plans”) administered outside the United States for our non-U.S. employees, which had approximately 16,000 active participants in the aggregate.
During the fourth quarter of 2023, approximately 78,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.
During the fourth quarter of 2024, approximately 57,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.
As of December 31, 2023, approximately $7.8 billion remained available under the 2022 Authorization. 2 Includes shares acquired pursuant to the accelerated share repurchase agreement entered into during the fourth quarter of 2023. Item 6. [Reserved] 26 Table of Contents
As of December 31, 2024, approximately $20.1 billion remained available under the 2024 and 2022 Authorizations. 2 Includes shares acquired pursuant to the accelerated share repurchase agreements entered into during the first and second quarters of 2024, each of which settled in October 2024. Item 6. [Reserved] 26 Table of Contents
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased under the Program (in billions) 1 October 1-31, 2023 965,566 $ 260.01 965,566 $ 10.340 November 1-30, 2023 7,250,965 $ 239.97 7,250,965 2 $ 8.300 December 1-31, 2023 1,749,834 $ 271.45 1,749,834 $ 7.825 Total 9,966,365 $ 247.44 9,966,365 1 In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased under the Program (in billions) 1 October 1-31, 2024 4,152,554 $ 344.55 4,152,554 2 $ 20.538 November 1-30, 2024 510,721 $ 391.52 510,721 $ 20.338 December 1-31, 2024 549,782 $ 381.95 549,782 $ 20.128 Total 5,213,057 $ 353.10 5,213,057 1 In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration.
Added
In June 2024, the Board approved an additional share repurchase authorization (the 2024 Authorization) of up to $20.0 billion of Caterpillar common stock, effective June 12, 2024, with no expiration.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

121 edited+38 added−38 removed103 unchanged
Biggest changeCertain amounts for prior periods have been reclassified to conform to current year presentation. 48 Table of Contents Supplemental Data for Results of Operations For The Years Ended December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 Sales and revenues: Sales of Machinery, Energy & Transportation $ 63,869 $ 56,574 $ 48,188 $ 63,869 $ 56,574 $ 48,188 $ — $ — $ — $ — $ — $ — Revenues of Financial Products 3,191 2,853 2,783 — — — 3,927 3,376 3,172 (736) 1 (523) 1 (389) 1 Total sales and revenues 67,060 59,427 50,971 63,869 56,574 48,188 3,927 3,376 3,172 (736) (523) (389) Operating costs: Cost of goods sold 42,767 41,350 35,513 42,776 41,356 35,521 — — — (9) 2 (6) 2 (8) 2 Selling, general and administrative expenses 6,371 5,651 5,365 5,696 4,999 4,724 704 672 654 (29) 2 (20) 2 (13) 2 Research and development expenses 2,108 1,814 1,686 2,108 1,814 1,686 — — — — — — Interest expense of Financial Products 1,030 565 455 — — — 1,032 565 455 (2) 2 — — Goodwill impairment charge — 925 — — 925 — — — — — — — Other operating (income) expenses 1,818 1,218 1,074 630 47 (106) 1,268 1,249 1,247 (80) 2 (78) 2 (67) 2 Total operating costs 54,094 51,523 44,093 51,210 49,141 41,825 3,004 2,486 2,356 (120) (104) (88) Operating profit 12,966 7,904 6,878 12,659 7,433 6,363 923 890 816 (616) (419) (301) Interest expense excluding Financial Products 511 443 488 511 444 488 — — — — (1) 3 — Other income (expense) 595 1,291 1,814 340 1,374 2,276 (16) (26) 87 271 4 (57) 4 (549) 4 Consolidated profit before taxes 13,050 8,752 8,204 12,488 8,363 8,151 907 864 903 (345) (475) (850) Provision (benefit) for income taxes 2,781 2,067 1,742 2,560 1,858 1,517 221 209 225 — — — Profit of consolidated companies 10,269 6,685 6,462 9,928 6,505 6,634 686 655 678 (345) (475) (850) Equity in profit (loss) of unconsolidated affiliated companies 63 19 31 67 26 42 — — — (4) 5 (7) 5 (11) 5 Profit of consolidated and affiliated companies 10,332 6,704 6,493 9,995 6,531 6,676 686 655 678 (349) (482) (861) Less: Profit (loss) attributable to noncontrolling interests (3) (1) 4 (4) (1) 3 5 7 12 (4) 6 (7) 6 (11) 6 Profit 7 $ 10,335 $ 6,705 $ 6,489 $ 9,999 $ 6,532 $ 6,673 $ 681 $ 648 $ 666 $ (345) $ (475) $ (850) 1 Elimination of Financial Products' revenues earned from ME&T. 2 Elimination of net expenses recorded between ME&T and Financial Products. 3 Elimination of interest expense recorded between Financial Products and ME&T. 4 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 5 Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries. 6 Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries. 7 Profit attributable to common shareholders. 49 Table of Contents Supplemental Data for Financial Position At December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2023 2022 2023 2022 2023 2022 2023 2022 Assets Current assets: Cash and cash equivalents $ 6,978 $ 7,004 $ 6,106 $ 6,042 $ 872 $ 962 $ — $ — Receivables - trade and other 9,310 8,856 3,971 3,710 570 519 4,769 1,2 4,627 1,2 Receivables - finance 9,510 9,013 — — 14,499 13,902 (4,989) 2 (4,889) 2 Prepaid expenses and other current assets 4,586 2,642 4,327 2,488 341 290 (82) 3 (136) 3 Inventories 16,565 16,270 16,565 16,270 — — — — Total current assets 46,949 43,785 30,969 28,510 16,282 15,673 (302) (398) Property, plant and equipment - net 12,680 12,028 8,694 8,186 3,986 3,842 — — Long-term receivables - trade and other 1,238 1,265 565 418 85 339 588 1,2 508 1,2 Long-term receivables - finance 12,664 12,013 — — 13,299 12,552 (635) 2 (539) 2 Noncurrent deferred and refundable income taxes 2,816 2,213 3,360 2,755 148 115 (692) 4 (657) 4 Intangible assets 564 758 564 758 — — — — Goodwill 5,308 5,288 5,308 5,288 — — — — Other assets 5,257 4,593 4,218 3,882 2,082 1,892 (1,043) 5 (1,181) 5 Total assets $ 87,476 $ 81,943 $ 53,678 $ 49,797 $ 35,882 $ 34,413 $ (2,084) $ (2,267) Liabilities Current liabilities: Short-term borrowings $ 4,643 $ 5,957 $ — $ 3 $ 4,643 $ 5,954 $ — $ — Accounts payable 7,906 8,689 7,827 8,657 314 294 (235) 6,7 (262) 6 Accrued expenses 4,958 4,080 4,361 3,687 597 393 — — Accrued wages, salaries and employee benefits 2,757 2,313 2,696 2,264 61 49 — — Customer advances 1,929 1,860 1,912 1,860 2 — 15 7 — Dividends payable 649 620 649 620 — — — — Other current liabilities 3,123 2,690 2,583 2,215 647 635 (107) 4,8 (160) 4,8 Long-term debt due within one year 8,763 5,322 1,044 120 7,719 5,202 — — Total current liabilities 34,728 31,531 21,072 19,426 13,983 12,527 (327) (422) Long-term debt due after one year 24,472 25,714 8,626 9,529 15,893 16,216 (47) 9 (31) 9 Liability for postemployment benefits 4,098 4,203 4,098 4,203 — — — — Other liabilities 4,675 4,604 3,806 3,677 1,607 1,638 (738) 4 (711) 4 Total liabilities 67,973 66,052 37,602 36,835 31,483 30,381 (1,112) (1,164) Commitments and contingencies Shareholders’ equity Common stock 6,403 6,560 6,403 6,560 905 905 (905) 10 (905) 10 Treasury stock (36,339) (31,748) (36,339) (31,748) — — — — Profit employed in the business 51,250 43,514 46,783 39,435 4,457 4,068 10 10 11 10 Accumulated other comprehensive income (loss) (1,820) (2,457) (783) (1,310) (1,037) (1,147) — — Noncontrolling interests 9 22 12 25 74 206 (77) 10 (209) 10 Total shareholders’ equity 19,503 15,891 16,076 12,962 4,399 4,032 (972) (1,103) Total liabilities and shareholders’ equity $ 87,476 $ 81,943 $ 53,678 $ 49,797 $ 35,882 $ 34,413 $ (2,084) $ (2,267) 1 Elimination of receivables between ME&T and Financial Products. 2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of ME&T's insurance premiums that are prepaid to Financial Products. 4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 5 Elimination of other intercompany assets between ME&T and Financial Products. 6 Elimination of payables between ME&T and Financial Products. 7 Reclassification of Financial Products' payables to accrued expenses or customer advances. 8 Elimination of prepaid insurance in Financial Products’ other liabilities. 9 Elimination of debt between ME&T and Financial Products. 10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries. 50 Table of Contents Supplemental Data for Statement of Cash Flow For the Years Ended December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2023 2022 2023 2022 2023 2022 2023 2022 Cash flow from operating activities: Profit of consolidated and affiliated companies $ 10,332 $ 6,704 $ 9,995 $ 6,531 $ 686 $ 655 $ (349) 1,5 $ (482) 1,5 Adjustments for non-cash items: Depreciation and amortization 2,144 2,219 1,361 1,439 783 780 — — Actuarial (gain) loss on pension and postretirement benefits (97) (606) (97) (606) — — — — Provision (benefit) for deferred income taxes (592) (377) (576) (368) (16) (9) — — Loss on divestiture 572 — 572 — — — — — Goodwill impairment charge — 925 — 925 — — — — Other 375 701 444 452 (577) (205) 508 2 454 2 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables - trade and other (437) (220) (367) (390) 61 143 (131) 2,3 27 2,3 Inventories (364) (2,589) (360) (2,572) — — (4) 2 (17) 2 Accounts payable (754) 798 (836) 811 41 82 41 2 (95) 2 Accrued expenses 796 317 690 274 106 43 — — Accrued wages, salaries and employee benefits 486 90 474 97 12 (7) — — Customer advances 80 768 78 769 2 (1) — — Other assets—net (95) (210) 94 (183) (110) (35) (79) 2 8 2 Other liabilities—net 439 (754) 216 (821) 118 71 105 2 (4) 2 Net cash provided by (used for) operating activities 12,885 7,766 11,688 6,358 1,106 1,517 91 (109) Cash flow from investing activities: Capital expenditures—excluding equipment leased to others (1,597) (1,296) (1,624) (1,279) (22) (20) 49 2 3 2 Expenditures for equipment leased to others (1,495) (1,303) (39) (19) (1,466) (1,310) 10 2 26 2 Proceeds from disposals of leased assets and property, plant and equipment 781 830 55 78 781 764 (55) 2 (12) 2 Additions to finance receivables (15,161) (13,239) — — (17,321) (14,223) 2,160 3 984 3 Collections of finance receivables 14,034 13,177 — — 15,634 14,052 (1,600) 3 (875) 3 Net intercompany purchased receivables — — — — 1,080 492 (1,080) 3 (492) 3 Proceeds from sale of finance receivables 63 57 — — 63 57 — — Net intercompany borrowings — — — — 10 9 (10) 4 (9) 4 Investments and acquisitions (net of cash acquired) (75) (88) (75) (88) — — — — Proceeds from sale of businesses and investments (net of cash sold) (4) 1 (4) 1 — — — — Proceeds from maturities and sale of securities 1,891 2,383 1,642 1,948 249 435 — — Investments in securities (4,405) (3,077) (3,982) (2,549) (423) (528) — — Other—net 97 14 106 98 (9) (84) — — Net cash provided by (used for) investing activities (5,871) (2,541) (3,921) (1,810) (1,424) (356) (526) (375) Cash flow from financing activities: Dividends paid (2,563) (2,440) (2,563) (2,440) (425) (475) 425 5 475 5 Common stock issued, including treasury shares reissued 12 51 12 51 — — — — Common shares repurchased (4,975) (4,230) (4,975) (4,230) — — — — Net intercompany borrowings — — (10) (9) — — 10 4 9 4 Proceeds from debt issued (original maturities greater than three months) 8,257 6,674 — — 8,257 6,674 — — Payments on debt (original maturities greater than three months) (6,318) (7,728) (106) (25) (6,212) (7,703) — — Short-term borrowings - net (original maturities three months or less) (1,345) 402 (3) (138) (1,342) 540 — — Other—net — (10) — (10) — — — — Net cash provided by (used for) financing activities (6,932) (7,281) (7,645) (6,801) 278 (964) 435 484 Effect of exchange rate changes on cash (110) (194) (60) (131) (50) (63) — — Increase (decrease) in cash, cash equivalents and restricted cash (28) (2,250) 62 (2,384) (90) 134 — — Cash, cash equivalents and restricted cash at beginning of period 7,013 9,263 6,049 8,433 964 830 — — Cash, cash equivalents and restricted cash at end of period $ 6,985 $ 7,013 $ 6,111 $ 6,049 $ 874 $ 964 $ — $ — 1 Elimination of equity profit earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries. 2 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 3 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 4 Elimination of net proceeds and payments to/from ME&T and Financial Products. 5 Elimination of dividend activity between Financial Products and ME&T. 51 Table of Contents
Biggest changePages 50 to 52 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information. 49 Table of Contents Supplemental Data for Results of Operations For The Years Ended December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2024 2023 2022 2024 2023 2022 2024 2023 2022 2024 2023 2022 Sales and revenues: Sales of Machinery, Energy & Transportation $ 61,363 $ 63,869 $ 56,574 $ 61,363 $ 63,869 $ 56,574 $ — $ — $ — $ — $ — $ — Revenues of Financial Products 3,446 3,191 2,853 — — — 4,212 3,927 3,376 (766) 1 (736) 1 (523) 1 Total sales and revenues 64,809 67,060 59,427 61,363 63,869 56,574 4,212 3,927 3,376 (766) (736) (523) Operating costs: Cost of goods sold 40,199 42,767 41,350 40,206 42,776 41,356 — — — (7) 2 (9) 2 (6) 2 Selling, general and administrative expenses 6,667 6,371 5,651 5,881 5,696 4,999 786 704 672 — (29) 2 (20) 2 Research and development expenses 2,107 2,108 1,814 2,107 2,108 1,814 — — — — — — Interest expense of Financial Products 1,286 1,030 565 — — — 1,286 1,032 565 — (2) 2 — Goodwill impairment charge — — 925 — — 925 — — — — — — Other operating (income) expenses 1,478 1,818 1,218 71 630 47 1,535 1,268 1,249 (128) 2 (80) 2 (78) 2 Total operating costs 51,737 54,094 51,523 48,265 51,210 49,141 3,607 3,004 2,486 (135) (120) (104) Operating profit 13,072 12,966 7,904 13,098 12,659 7,433 605 923 890 (631) (616) (419) Interest expense excluding Financial Products 512 511 443 518 511 444 — — — (6) 3 — (1) 3 Other income (expense) 813 595 1,291 728 340 1,374 85 (16) (26) — 271 4 (57) 4 Consolidated profit before taxes 13,373 13,050 8,752 13,308 12,488 8,363 690 907 864 (625) (345) (475) Provision (benefit) for income taxes 2,629 2,781 2,067 2,663 2,560 1,858 (34) 221 209 — — — Profit of consolidated companies 10,744 10,269 6,685 10,645 9,928 6,505 724 686 655 (625) (345) (475) Equity in profit (loss) of unconsolidated affiliated companies 44 63 19 44 67 26 — — — — (4) 5 (7) 5 Profit of consolidated and affiliated companies 10,788 10,332 6,704 10,689 9,995 6,531 724 686 655 (625) (349) (482) Less: Profit (loss) attributable to noncontrolling interests (4) (3) (1) (5) (4) (1) 1 5 7 — (4) 6 (7) 6 Profit 7 $ 10,792 $ 10,335 $ 6,705 $ 10,694 $ 9,999 $ 6,532 $ 723 $ 681 $ 648 $ (625) $ (345) $ (475) 1 Elimination of Financial Products' revenues earned from ME&T. 2 Elimination of net expenses recorded between ME&T and Financial Products. 3 Elimination of interest expense recorded between Financial Products and ME&T. 4 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 5 Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries. 6 Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries. 7 Profit attributable to common shareholders. 50 Table of Contents Supplemental Data for Financial Position At December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2024 2023 2024 2023 2024 2023 2024 2023 Assets Current assets: Cash and cash equivalents $ 6,889 $ 6,978 $ 6,165 $ 6,106 $ 724 $ 872 $ — $ — Receivables - trade and other 9,282 9,310 3,463 3,971 688 570 5,131 1,2 4,769 1,2 Receivables - finance 9,565 9,510 — — 14,957 14,499 (5,392) 2 (4,989) 2 Prepaid expenses and other current assets 3,119 4,586 2,872 4,327 401 341 (154) 3 (82) 3 Inventories 16,827 16,565 16,827 16,565 — — — — Total current assets 45,682 46,949 29,327 30,969 16,770 16,282 (415) (302) Property, plant and equipment - net 13,361 12,680 9,531 8,694 3,830 3,986 — — Long-term receivables - trade and other 1,225 1,238 500 565 86 85 639 1,2 588 1,2 Long-term receivables - finance 13,242 12,664 — — 14,048 13,299 (806) 2 (635) 2 Noncurrent deferred and refundable income taxes 3,312 2,816 3,594 3,360 118 148 (400) 4 (692) 4 Intangible assets 399 564 399 564 — — — — Goodwill 5,241 5,308 5,241 5,308 — — — — Other assets 5,302 5,257 4,050 4,218 2,277 2,082 (1,025) 5 (1,043) 5 Total assets $ 87,764 $ 87,476 $ 52,642 $ 53,678 $ 37,129 $ 35,882 $ (2,007) $ (2,084) Liabilities Current liabilities: Short-term borrowings $ 4,393 $ 4,643 $ — $ — $ 4,393 $ 4,643 $ — $ — Accounts payable 7,675 7,906 7,619 7,827 331 314 (275) 6,7 (235) 6,7 Accrued expenses 5,243 4,958 4,589 4,361 654 597 — — Accrued wages, salaries and employee benefits 2,391 2,757 2,335 2,696 56 61 — — Customer advances 2,322 1,929 2,305 1,912 3 2 14 7 15 7 Dividends payable 674 649 674 649 — — — — Other current liabilities 2,909 3,123 2,388 2,583 696 647 (175) 4,8 (107) 4,8 Long-term debt due within one year 6,665 8,763 46 1,044 6,619 7,719 — — Total current liabilities 32,272 34,728 19,956 21,072 12,752 13,983 (436) (327) Long-term debt due after one year 27,351 24,472 8,731 8,626 18,787 15,893 (167) 9 (47) 9 Liability for postemployment benefits 3,757 4,098 3,757 4,098 — — — — Other liabilities 4,890 4,675 3,977 3,806 1,344 1,607 (431) 4 (738) 4 Total liabilities 68,270 67,973 36,421 37,602 32,883 31,483 (1,034) (1,112) Commitments and contingencies Shareholders’ equity Common stock 6,941 6,403 6,941 6,403 905 905 (905) 10 (905) 10 Treasury stock (44,331) (36,339) (44,331) (36,339) — — — — Profit employed in the business 59,352 51,250 54,787 46,783 4,555 4,457 10 10 10 10 Accumulated other comprehensive income (loss) (2,471) (1,820) (1,182) (783) (1,289) (1,037) — — Noncontrolling interests 3 9 6 12 75 74 (78) 10 (77) 10 Total shareholders’ equity 19,494 19,503 16,221 16,076 4,246 4,399 (973) (972) Total liabilities and shareholders’ equity $ 87,764 $ 87,476 $ 52,642 $ 53,678 $ 37,129 $ 35,882 $ (2,007) $ (2,084) 1 Elimination of receivables between ME&T and Financial Products. 2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of ME&T's insurance premiums that are prepaid to Financial Products. 4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 5 Elimination of other intercompany assets and liabilities between ME&T and Financial Products. 6 Elimination of payables between ME&T and Financial Products. 7 Reclassification of Financial Products’ payables to customer advances. 8 Elimination of prepaid insurance in Financial Products’ other liabilities. 9 Elimination of debt between ME&T and Financial Products. 10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries. 51 Table of Contents Supplemental Data for Statement of Cash Flow For the Years Ended December 31, Supplemental consolidating data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments (Millions of dollars) 2024 2023 2024 2023 2024 2023 2024 2023 Cash flow from operating activities: Profit of consolidated and affiliated companies $ 10,788 $ 10,332 $ 10,689 $ 9,995 $ 724 $ 686 $ (625) 1,5 $ (349) 1,5 Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortization 2,153 2,144 1,368 1,361 785 783 — — Actuarial (gain) loss on pension and postretirement benefits (154) (97) (154) (97) — — — — Provision (benefit) for deferred income taxes (621) (592) (327) (576) (294) (16) — — (Gain) loss on divestiture 164 572 (46) 572 210 — — — Other 564 375 355 444 (388) (577) 597 2 508 2 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables - trade and other (160) (437) 413 (367) 207 61 (780) 2,3 (131) 2,3 Inventories (414) (364) (400) (360) — — (14) 2 (4) 2 Accounts payable (282) (754) (200) (836) (41) 41 (41) 2 41 2 Accrued expenses 191 796 78 690 113 106 — — Accrued wages, salaries and employee benefits (363) 486 (358) 474 (5) 12 — — Customer advances 370 80 369 78 1 2 — — Other assets—net (97) (95) (188) 94 48 (110) 43 2 (79) 2 Other liabilities—net (104) 439 (162) 216 85 118 (27) 2 105 2 Net cash provided by (used for) operating activities 12,035 12,885 11,437 11,688 1,445 1,106 (847) 91 Cash flow from investing activities: Capital expenditures—excluding equipment leased to others (1,988) (1,597) (1,952) (1,624) (41) (22) 5 2 49 2 Expenditures for equipment leased to others (1,227) (1,495) (36) (39) (1,211) (1,466) 20 2 10 2 Proceeds from disposals of leased assets and property, plant and equipment 722 781 35 55 698 781 (11) 2 (55) 2 Additions to finance receivables (15,409) (15,161) — — (16,845) (17,321) 1,436 3 2,160 3 Collections of finance receivables 13,608 14,034 — — 14,707 15,634 (1,099) 3 (1,600) 3 Net intercompany purchased receivables — — — — 129 1,080 (129) 3 (1,080) 3 Proceeds from sale of finance receivables 83 63 — — 83 63 — — Net intercompany borrowings — — — — 21 10 (21) 4 (10) 4 Investments and acquisitions (net of cash acquired) (34) (75) (34) (75) — — — — Proceeds from sale of businesses and investments (net of cash sold) (61) (4) 92 (4) (153) — — — Proceeds from maturities and sale of securities 3,155 1,891 2,795 1,642 360 249 — — Investments in securities (1,495) (4,405) (909) (3,982) (586) (423) — — Other—net 193 97 142 106 51 (9) — — Net cash provided by (used for) investing activities (2,453) (5,871) 133 (3,921) (2,787) (1,424) 201 (526) Cash flow from financing activities: Dividends paid (2,646) (2,563) (2,646) (2,563) (625) (425) 625 5 425 5 Common stock issued, including treasury shares reissued 20 12 20 12 — — — — Payments to purchase common stock (7,697) (4,975) (7,697) (4,975) — — — — Excise tax paid on purchases of common stock (40) — (40) — — — — — Net intercompany borrowings — — (21) (10) — — 21 4 10 4 Proceeds from debt issued (original maturities greater than three months) 10,283 8,257 — — 10,283 8,257 — — Payments on debt (original maturities greater than three months) (9,316) (6,318) (1,032) (106) (8,284) (6,212) — — Short-term borrowings - net (original maturities three months or less) (168) (1,345) — (3) (168) (1,342) — — Other—net (1) — (1) — — — — — Net cash provided by (used for) financing activities (9,565) (6,932) (11,417) (7,645) 1,206 278 646 435 Effect of exchange rate changes on cash (106) (110) (94) (60) (12) (50) — — Increase (decrease) in cash, cash equivalents and restricted cash (89) (28) 59 62 (148) (90) — — Cash, cash equivalents and restricted cash at beginning of period 6,985 7,013 6,111 6,049 874 964 — — Cash, cash equivalents and restricted cash at end of period $ 6,896 $ 6,985 $ 6,170 $ 6,111 $ 726 $ 874 $ — $ — 1 Elimination of equity profit earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries. 2 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 3 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 4 Elimination of net proceeds and payments to/from ME&T and Financial Products. 5 Elimination of dividend activity between Financial Products and ME&T. 52 Table of Contents
The timing and amount of future repurchases may vary depending on market conditions and investing priorities. In May 2022, the Board approved a new share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022 with no expiration.
The timing and amount of future repurchases may vary depending on market conditions and investing priorities. In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022 with no expiration.
Changes in our projections of future health care costs due to general economic conditions and those specific to health care (e.g., technology driven cost changes) will impact this trend rate. • We use the mortality assumption to estimate the life expectancy of plan participants. 42 Table of Contents Postretirement Benefit Plan Actuarial Assumptions Sensitivity The effects of a one percentage-point change in certain actuarial assumptions on 2023 pension and OPEB costs and obligations are as follows: 2023 Benefit Cost Increase (Decrease) Year-end Benefit Obligation Increase (Decrease) (Millions of dollars) One percentage- point increase One percentage- point decrease One percentage- point increase One percentage- point decrease U.S.
Changes in our projections of future health care costs due to general economic conditions and those specific to health care (e.g., technology driven cost changes) will impact this trend rate. • We use the mortality assumption to estimate the life expectancy of plan participants. 42 Table of Contents Postretirement Benefit Plan Actuarial Assumptions Sensitivity The effects of a one percentage-point change in certain actuarial assumptions on 2024 pension and OPEB costs and obligations are as follows: 2024 Benefit Cost Increase (Decrease) Year-end Benefit Obligation Increase (Decrease) (Millions of dollars) One percentage- point increase One percentage- point decrease One percentage- point increase One percentage- point decrease U.S.
In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Item 1A. Risk Factors of the 2023 Form 10-K.
In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Item 1A. Risk Factors of the 2024 Form 10-K.
Pension Benefits Other Postretirement Benefits 2023 2022 2021 2023 2022 2021 2023 2022 2021 Weighted-average assumptions used to determine benefit obligation, end of year: Discount rate 5.0 % 5.4 % 2.8 % 3.9 % 4.3 % 1.8 % 5.1 % 5.4 % 2.7 % Rate of compensation increase 1 — % — % — % 2.3 % 2.3 % 2.0 % 4.0 % 4.0 % 4.0 % Weighted-average assumptions used to determine net periodic benefit cost: Discount rate used to measure service cost 1 — % — % — % 3.8 % 1.7 % 1.4 % 5.4 % 2.8 % 2.5 % Discount rate used to measure interest cost 5.2 % 2.3 % 1.8 % 4.2 % 1.7 % 1.2 % 5.3 % 2.2 % 1.6 % Expected rate of return on plan assets 5.8 % 4.0 % 4.2 % 5.2 % 3.1 % 2.9 % 7.4 % 6.9 % 6.5 % Rate of compensation increase 1 — % — % — % 2.3 % 2.0 % 2.0 % 4.0 % 4.0 % 4.0 % Health care cost trend rates at year-end: Health care trend rate assumed for next year 6.2 % 6.5 % 5.6 % Rate that the cost trend rate gradually declines to 4.7 % 4.7 % 5.0 % Year that the cost trend rate reaches ultimate rate 2030 2030 2025 1 Effective December 31, 2019, all U.S. pension benefits were frozen, and accordingly this assumption is no longer applicable.
Pension Benefits Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 2024 2023 2022 Weighted-average assumptions used to determine benefit obligation, end of year: Discount rate 5.6 % 5.0 % 5.4 % 4.1 % 3.9 % 4.3 % 5.6 % 5.1 % 5.4 % Rate of compensation increase 1 — % — % — % 2.2 % 2.3 % 2.3 % 4.0 % 4.0 % 4.0 % Weighted-average assumptions used to determine net periodic benefit cost: Discount rate used to measure service cost 1 — % — % — % 3.6 % 3.8 % 1.7 % 5.1 % 5.4 % 2.8 % Discount rate used to measure interest cost 5.0 % 5.2 % 2.3 % 3.9 % 4.2 % 1.7 % 5.0 % 5.3 % 2.2 % Expected rate of return on plan assets 5.7 % 5.8 % 4.0 % 5.1 % 5.2 % 3.1 % 7.4 % 7.4 % 6.9 % Rate of compensation increase 1 — % — % — % 2.3 % 2.3 % 2.0 % 4.0 % 4.0 % 4.0 % Health care cost trend rates at year-end: Health care trend rate assumed for next year 6.0 % 6.2 % 6.5 % Rate that the cost trend rate gradually declines to 4.7 % 4.7 % 4.7 % Year that the cost trend rate reaches ultimate rate 2030 2030 2030 1 Effective December 31, 2019, all U.S. pension benefits were frozen, and accordingly this assumption is no longer applicable.
Additionally, in such event, certain of Cat Financial's other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At December 31, 2023, there were no borrowings under the Credit Facility.
Additionally, in such event, certain of Cat Financial's other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At December 31, 2024, there were no borrowings under the Credit Facility.
Without consideration of other factors such as third-party residual guarantees or contractual customer purchase options, a 10 percent non-temporary decrease in the market value of our equipment subject to operating leases would reduce residual value estimates and result in the recognition of approximately $75 million of additional annual depreciation expense.
Without consideration of other factors such as third-party residual guarantees or contractual customer purchase options, a 10 percent non-temporary decrease in the market value of our equipment subject to operating leases would reduce residual value estimates and result in the recognition of approximately $70 million of additional annual depreciation expense.
The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts.
The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; wide-body trucks; select work tools; machinery components; electronics and control systems and related parts.
In addition, the sum of the components reported across periods may not equal the total amount reported year-to-date due to rounding. 29 Table of Contents 2023 COMPARED WITH 2022 CONSOLIDATED SALES AND REVENUES The chart above graphically illustrates reasons for the change in consolidated sales and revenues between 2022 (at left) and 2023 (at right).
In addition, the sum of the components reported across periods may not equal the total amount reported year-to-date due to rounding. 29 Table of Contents 2024 COMPARED WITH 2023 CONSOLIDATED SALES AND REVENUES The chart above graphically illustrates reasons for the change in consolidated sales and revenues between 2023 (at left) and 2024 (at right).
Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of December 31, 2023 was $2.75 billion. Information on our Credit Facility is as follows: • In August 2023, we entered into a new 364-day facility.
Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of December 31, 2024 was $2.75 billion. Information on our Credit Facility is as follows: • In August 2024, we entered into a new 364-day facility.
An analysis of the December 31, 2023 balance sheet, using these assumptions, estimates the impact of a 100 basis point immediate and sustained adverse change in interest rates to have a minimal impact on 2024 pre-tax earnings. Last year, similar assumptions and calculations yielded a minimal impact to 2023 pre-tax earnings.
An analysis of the December 31, 2024 balance sheet, using these assumptions, estimates the impact of a 100 basis point immediate and sustained adverse change in interest rates to have a minimal impact on 2025 pre-tax earnings. Last year, similar assumptions and calculations yielded a minimal impact to 2024 pre-tax earnings.
A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would have a minimal impact to the 2024 pre-tax earnings of ME&T. Last year, similar assumptions and calculations yielded a minimal impact to 2023 pre-tax earnings.
A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would have a minimal impact to the 2025 pre-tax earnings of ME&T. Last year, similar assumptions and calculations yielded a minimal impact to 2024 pre-tax earnings.
We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measures will provide investors with useful perspective on underlying business results and trends and aid with assessing our period-over-period results.
We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measures will provide investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results.
The majority of the balance in both 2023 and 2022 consisted of unearned insurance premiums. Postretirement benefits — We sponsor defined benefit pension plans and/or other postretirement benefit plans (retirement healthcare and life insurance) to employees in many of our locations throughout the world.
The majority of the balance in both 2024 and 2023 consisted of unearned insurance premiums. Postretirement benefits — We sponsor defined benefit pension plans and/or other postretirement benefit plans (retirement healthcare and life insurance) to employees in many of our locations throughout the world.
The most common dealer programs provide a discount when the dealer sells a product to a targeted end user. The amount of accrued post-sale discounts was $2.1 billion and $1.6 billion at December 31, 2023 and 2022, respectively. The reserve represents discounts that we expect to pay on previously sold units and is reviewed at least quarterly.
The most common dealer programs provide a discount when the dealer sells a product to a targeted end user. The amount of accrued post-sale discounts was $2.2 billion and $2.1 billion at December 31, 2024 and 2023, respectively. The reserve represents discounts that we expect to pay on previously sold units and is reviewed at least quarterly.
Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts. 9. EAME – A geographic region including Europe, Africa, the Middle East and Eurasia. 35 Table of Contents 10. Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases net of accumulated depreciation at Cat Financial. 11.
Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts. 9. EAME – A geographic region including Europe, Africa, the Middle East and Eurasia. 10. Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases net of accumulated depreciation at Cat Financial. 11.
We completed our annual assessment of goodwill in the fourth quarter of 2023 and determined that there was no impairment of goodwill. Caterpillar's market capitalization has remained significantly above the net book value of the Company.
We completed our annual assessment of goodwill in the fourth quarter of 2024 and determined that there was no impairment of goodwill. Caterpillar's market capitalization has remained significantly above the net book value of the Company.
The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions supplied to the industrial industry as well as Caterpillar machines; electrified powertrain and zero-emission power sources and service solutions development; and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing.
The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems 35 Table of Contents and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions supplied to the industrial industry as well as Caterpillar machines; electrified powertrain and zero-emission power sources and service solutions development; and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing.
Based on the anticipated and firmly committed cash inflow and outflow for our ME&T operations for the next 12 months and the foreign currency derivative instruments in place at year-end, a hypothetical 10 percent weakening of the U.S. dollar relative to all other currencies would adversely affect our expected 2024 cash flow for our ME&T operations by approximately $200 million.
Based on the anticipated and firmly committed cash inflow and outflow for our ME&T operations for the next 12 months and the foreign currency derivative instruments in place at year-end, a hypothetical 10 percent weakening of the U.S. dollar relative to all other currencies would adversely affect our expected 2025 cash flow for our ME&T operations by approximately $77 million.
We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our cash deployment actions and the various methodologies used by the major credit rating agencies. Operational excellence and commitments — Capital expenditures were $1.66 billion during 2023, compared to $1.30 billion in 2022.
We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our cash deployment actions and the various methodologies used by the major credit rating agencies. Operational excellence and commitments — Capital expenditures were $1.99 billion during 2024, compared to $1.66 billion in 2023.
We believe it is important to separately quantify the profit impact of five significant items in order for our results to be meaningful to our readers.
We believe it is important to separately quantify the profit impact of six significant items in order for our results to be meaningful to our readers.
Loss reserves, including incurred but not reported reserves, are based on estimates and ultimate settlements may vary significantly from such estimates due to increased claims frequency or severity over historical levels. The amount of these reserves totaled $1.4 billion and $1.3 billion at December 31, 2023 and 2022, respectively.
Loss reserves, including incurred but not reported reserves, are based on estimates, and ultimate settlements may vary significantly from such estimates due to increased claims frequency or severity over historical levels. The amount of these reserves totaled $1.5 billion and $1.4 billion at December 31, 2024 and 2023, respectively.
Last year similar assumptions and calculations yielded a potential $98 million adverse impact on 2023 cash flow. We determine our net exposures by calculating the difference in cash inflow and outflow by currency and adding or subtracting outstanding foreign currency derivative instruments. We multiply these net amounts by 10 percent to determine the sensitivity.
Last year, similar assumptions and calculations yielded a potential $200 million adverse impact on 2024 cash flow. We determine our net exposures by calculating the difference in cash inflow and outflow by currency and adding or subtracting outstanding foreign currency derivative instruments. We multiply these net amounts by 10 percent to determine the sensitivity.
We estimate the residual value of leased equipment at the inception of the lease based on a number of factors, including historical wholesale market sales prices, past remarketing experience and any known significant market/product trends.
We estimate the residual value of leased equipment at the inception of the lease based on a number of factors, including historical wholesale market sales prices, past remarketing experience and any known significant 40 Table of Contents market/product trends.
We would report a goodwill impairment as a non-cash charge to earnings. Product warranty liability — At the time we recognize a sale, we record estimated future warranty costs. We determine the product warranty liability by applying historical claim rate experience to the current field population and dealer inventory.
We would report a goodwill impairment as a non-cash charge to earnings. 41 Table of Contents Product warranty liability — At the time we recognize a sale, we record estimated future warranty costs. We determine the product warranty liability by applying historical claim rate experience to the current field population and dealer inventory.
Generally, we base historical claim rates on actual warranty experience for each product by machine model/engine 41 Table of Contents size by customer or dealer location (inside or outside North America). We develop specific rates for each product shipment month and update them monthly based on actual warranty claim experience.
Generally, we base historical claim rates on actual warranty experience for each product by machine model/engine size by customer or dealer location (inside or outside North America). We develop specific rates for each product shipment month and update them monthly based on actual warranty claim experience.
Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows: (Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate Profit Profit per Share Twelve Months Ended December 31, 2023 - U.S.
Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows: (Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Profit Profit per Share Twelve Months Ended December 31, 2024 - U.S.
The table below summarizes the amounts of net periodic benefit cost recognized for 2023, 2022 and 2021, respectively, and includes expected cost for 2024. (Millions of dollars) 2024 Expected 2023 2022 2021 U.S. Pension Benefits $ (74) $ (33) $ (268) $ (388) Non-U.S.
The table below summarizes the amounts of net periodic benefit cost recognized for 2024, 2023 and 2022, respectively, and includes expected cost for 2025. (Millions of dollars) 2025 Expected 2024 2023 2022 U.S. Pension Benefits $ (108) $ (74) $ (33) $ (268) Non-U.S.
This was partially offset by various assumption changes and a lower actual return on plan assets compared to the expected return on plan assets (U.S. pension plans had an actual rate of return of 3.6 percent compared to an expected rate of return of 4.2 percent). 45 Table of Contents SENSITIVITY Foreign Exchange Rate Sensitivity ME&T operations use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow.
This was partially offset by a lower actual return on plan assets compared to the expected return on plan assets (U.S. pension plans had an actual loss rate of (22.6) percent compared to an expected rate of return of 4.0 percent). 45 Table of Contents SENSITIVITY Foreign Exchange Rate Sensitivity ME&T operations use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow.
The 364-day facility of $3.15 billion (of which $825 million is available to ME&T) expires in August 2024. 37 Table of Contents • In August 2023, we amended and extended the three-year facility (as amended and restated, the "three-year facility").
The 364-day facility of $3.15 billion (of which $825 million is available to ME&T) expires in August 2025. • In August 2024, we amended and extended the three-year facility (as amended and restated, the "three-year facility").
Our primary exposure (excluding competitive risk) is to exchange rate movements in the Chinese yuan, Australian dollar, Euro, British pound and Mexican peso.
Our primary exposure (excluding competitive risk) is to exchange rate movements in the Australian dollar, Chinese yuan, Euro, Indian rupee and Mexican peso.
The three-year facility of $2.73 billion (of which $715 million is available to ME&T) expires in August 2026. • In August 2023, we amended and extended the five-year facility (as amended and restated, the "five-year facility"). The five-year facility of $4.62 billion (of which $1.21 billion is available to ME&T) expires in August 2028.
The three-year facility of $2.73 billion (of which $715 million is available to ME&T) expires in August 2027. • In August 2024, we amended and extended the five-year facility (as amended and restated, the "five-year facility"). The five-year facility of $4.62 billion (of which $1.21 billion is available to ME&T) expires in August 2029.
These consist of invoices received and recorded as liabilities as of December 31, 2023, but scheduled for payment in 2024 of $7.91 billion. In addition, we have contractual obligations for material and services on order at December 31, 2023, but not yet invoiced or delivered, of $7.22 billion.
These consist of invoices received and recorded as liabilities as of December 31, 2024, but scheduled for payment in 2025 of $7.68 billion. In addition, we have contractual obligations for material and services on order at December 31, 2024, but not yet invoiced or delivered, of $6.69 billion.
Material cash requirements for contractual obligations We believe our balances of cash and cash equivalents of $6.98 billion and available-for-sale debt securities and bank time deposits of $3.85 billion as of December 31, 2023, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
Material cash requirements for contractual obligations We believe our balances of cash and cash equivalents of $6.89 billion and available-for-sale debt securities of $1.98 billion as of December 31, 2024, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
All Other Segment – Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. 4.
All Other Segment – Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of wear and maintenance components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. 4.
Profit per share for 2022 was $12.64, and excluding the items in the table below, adjusted profit per share was $13.84. • In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on page 47.
Profit per share for 2023 was $20.12, and excluding the items in the table below, adjusted profit per share was $21.21. • In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on pages 47 - 48.
Dealer inventory increased about $2.1 billion during 2023, compared to an increase of about $2.4 billion during 2022. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors.
Machine dealer inventory decreased about $700 million during 2024, compared to an increase of $700 million during 2023. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors.
Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies; and product support of on-highway vocational trucks for North America. 12. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services).
Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies. 12. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services).
We expect ME&T’s capital expenditures in 2024 to be around $2.0 billion to $2.5 billion. We made $361 million of contributions to our pension and OPEB plans during 2023. In comparison, we made $346 million of contributions to our pension and OPEB plans in 2022.
We expect ME&T’s capital expenditures in 2025 to be about $2.5 billion. We made $271 million of contributions to our pension and OPEB plans during 2024. In comparison, we made $361 million of contributions to our pension and OPEB plans in 2023.
Risk Factors of the 2023 Form 10-K. 28 Table of Contents Notes: • Glossary of terms included on pages 35-37; first occurrence of terms shown in bold italics. • Information on non-GAAP financial measures is included on page 47. • Some amounts within this report are rounded to the millions or billions and may not add.
Notes: • Glossary of terms included on pages 35 - 37; first occurrence of terms shown in bold italics. • Information on non-GAAP financial measures is included on pages 47 - 48. • Some amounts within this report are rounded to the millions or billions and may not add.
A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating.
A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating. Each quarter, our Board of Directors reviews the company's dividend for the applicable quarter.
Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar entitled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses . Operating profit was $12.966 billion in 2023, an increase of $5.062 billion, or 64 percent, compared with $7.904 billion in 2022.
Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar entitled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses . Operating profit was $13.072 billion in 2024, an increase of $106 million, or 1 percent, compared with $12.966 billion in 2023.
Responsibilities include business strategy, product design, product management 36 Table of Contents and development, manufacturing, marketing and sales and product support.
Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support.
We also have long-term contractual obligations primarily for logistics services agreements; systems support, software licenses and development contracts; information technology consulting contracts and outsourcing contracts for benefit plan administration. These obligations total $1.49 billion, with $704 million due in the next 12 months.
We also have long-term contractual obligations primarily for logistics services agreements; systems support, software licenses and development contracts; information technology consulting contracts; outsourcing contracts for benefit plan administration and long-term commitments entered into with key suppliers for minimum purchase quantities. These obligations total $1.63 billion, with $762 million due in the next 12 months.
Within working capital, changes in inventories and accrued expenses favorably impacted cash flow partially offset by changes in accounts payable and customer advances. Net cash used for investing activities in 2023 was $3.92 billion, compared with net cash used of $1.81 billion in 2022.
Within working capital, changes in receivables, accounts payable, and customer advances favorably impacted cash flow partially offset by changes in accrued expenses. Net cash provided by investing activities in 2024 was $133 million, compared with net cash used of $3.92 billion in 2023.
Additional information related to the Programs is included in Note 1J — "New accounting guidance" of Part II, Item 8 "Financial Statements and Supplementary Data".
Additional information related to the Programs is included in Note 19 — "Supplier finance programs" of Part II, Item 8 "Financial Statements and Supplementary Data".
Pension Benefits (3) 2 (10) (19) Other Postretirement Benefits 178 188 161 118 Mark-to-market loss (gain) — 1 (97) (606) (833) Total net periodic benefit cost (benefit) $ 101 $ 60 $ (723) $ (1,122) 1 Expected net periodic benefit cost (benefit) does not include an estimate for mark-to-market gains or losses. • Expected decrease in expense in 2024 compared to 2023 — Excluding the impact of mark-to-market gains and losses, our net periodic benefit cost is expected to decrease $56 million in 2024.
Pension Benefits (2) (4) 2 (10) Other Postretirement Benefits 173 177 188 161 Mark-to-market loss (gain) — 1 (154) (97) (606) Total net periodic benefit cost (benefit) $ 63 $ (55) $ 60 $ (723) 1 Expected net periodic benefit cost (benefit) does not include an estimate for mark-to-market gains or losses. • Expected decrease in expense in 2025 compared to 2024 — Excluding the impact of mark-to-market gains and losses, our net periodic benefit cost is expected to decrease $36 million in 2025.
Adjusted operating profit margin was 20.5 percent in 2023, compared with 15.4 percent in 2022. • Profit per share for 2023 was $20.12, and excluding the items in the table below, adjusted profit per share was $21.21.
Adjusted operating profit margin was 20.7 percent in 2024, compared with 20.5 percent in 2023. • Profit per share for 2024 was $22.05, and excluding the items in the table below, adjusted profit per share was $21.90.
We include the net mark-to-market losses (gains) in Other income (expense) in the Results of Operations. • 2023 net mark-to-market gain of $97 million — Primarily due to higher actual return on plan assets compared to the expected return on plan assets (U.S. pension plans had an actual rate of return of 10.4 percent compared to an expected rate of return of 5.8 percent) and favorable claims experience related to our other postretirement benefit plans.
This was partially offset by a lower actual return on plan assets compared to the expected return on plan assets (U.S. pension plans had an actual rate of return of 0.7 percent compared to an expected rate of return of 5.7 percent). • 2023 net mark-to-market gain of $97 million — Primarily due to higher actual return on plan assets compared to the expected return on plan assets (U.S. pension plans had an actual rate of return of 10.4 percent compared to an expected rate of return of 5.8 percent) and favorable claims experience related to our other postretirement benefit plans.
In addition, at December 31, 2023, Cat Financial’s six-month covenant leverage ratio was 6.88 to 1 and year-end covenant leverage ratio was 6.95 to 1.
In addition, at December 31, 2024, Cat Financial’s six-month covenant leverage ratio was 7.25 to 1 and year-end covenant leverage ratio was 7.37 to 1.
GAAP $ 12,966 19.3 % $ 13,050 $ 2,781 21.3 % $ 10,335 $ 20.12 Restructuring costs - Longwall divestiture 586 0.9 % 586 — — % 586 1.14 Other restructuring costs 194 0.3 % 194 48 25.0 % 146 0.30 Pension/OPEB mark-to-market (gains) losses — — % (97) (26) 26.8 % (71) (0.14) Deferred tax valuation allowance adjustments — — % — 106 — % (106) (0.21) Twelve Months Ended December 31, 2023 - Adjusted $ 13,746 20.5 % $ 13,733 $ 2,909 21.2 % $ 10,890 $ 21.21 Twelve Months Ended December 31, 2022 - U.S.
GAAP $ 12,966 19.3 % $ 13,050 $ 2,781 $ 10,335 $ 20.12 Restructuring costs - Longwall divestiture 586 0.9 % 586 — 586 1.14 Other restructuring (income) costs 194 0.3 % 194 48 146 0.30 Pension/OPEB mark-to-market (gains) losses — — % (97) (26) (71) (0.14) Deferred tax valuation allowance adjustments — — % — 106 (106) (0.21) Twelve Months Ended December 31, 2023 - Adjusted $ 13,746 20.5 % $ 13,733 $ 2,909 $ 10,890 $ 21.21 We believe it is important to separately disclose our annual effective tax rate, excluding discrete items for our results to be meaningful to our readers.
This expected decrease is primarily due to lower interest cost in 2024 as a result of lower discount rates at year-end 2023 (U.S. pension plans discount rate for 2024 interest cost is 5.0 percent compared to 5.2 percent for 2023) and a higher expected return on assets due to a higher world-wide asset base at year-end 2023 ($16.3 billion) compared to year-end 2022 ($15.8 billion). • Increase in expense in 2023 compared to 2022 — Primarily due to lower mark-to-market gains in 2023 compared to 2022 and higher interest cost in 2023 as a result of higher discount rates at year-end 2022. • Increase in expense in 2022 compared to 2021 — Primarily due to lower mark-to-market gains in 2022 compared to 2021 and higher interest cost in 2022 as a result of higher discount rates at year-end 2021.
This expected decrease is primarily due to lower interest cost in 2025 as a result of higher discount rates at the end of 2024 creating a lower obligation base (U.S. pension plans year-end 2024 obligation was $12.2 billion compared to a year-end 2023 obligation of $13.1 billion) and a higher expected return on assets in 2025 (U.S. pension plans expected rate of return on plans assets is 6.3 percent for 2025 compared to 5.7 percent for 2024; however, this increase is muted due to a lower asset base at year-end 2024 of $11.9 billion compared to $12.7 billion at year-end 2023). • Decrease in expense in 2024 compared to 2023 — Primarily due to higher mark-to-market gains in 2024 compared to 2023, lower interest cost in 2024 as a result of lower discount rates at year-end 2023 and a higher expected return on plan assets due to a higher asset base at year-end 2023 compared to year-end 2022. • Increase in expense in 2023 compared to 2022 — Primarily due to lower mark-to-market gains in 2023 compared to 2022 and higher interest cost in 2023 as a result of higher discount rates at year-end 2022.
Dealer inventory increased during 2022, compared with a decrease during 2023. • Sales decreased in Asia/Pacific due to lower sales volume and unfavorable currency impacts, primarily related to the Japanese yen, Australian dollar and Chinese yuan, partially offset by favorable price realization. Lower sales volume was driven by lower sales of equipment to end users.
Dealer inventory increased during 2024, compared with a decrease during 2023. • In EAME, sales decreased primarily due to lower sales volume. Lower sales volume was mainly due to lower sales of equipment to end users. • Sales decreased in Asia/Pacific primarily due to lower sales volume and unfavorable currency impacts, primarily related to the Japanese yen.
During the term of our leases, we monitor residual values. For operating leases, we record adjustments to depreciation expense reflecting changes in residual value estimates prospectively on a straight-line basis. For finance leases, we recognize residual value adjustments through a reduction of finance revenue over the remaining lease term.
For operating leases, we record adjustments to depreciation expense reflecting changes in residual value estimates prospectively on a straight-line basis. For finance leases, we recognize residual value adjustments through a reduction of finance revenue over the remaining lease term. We evaluate the carrying value of equipment on operating leases for potential impairment when we determine a triggering event has occurred.
Energy & Transportation – A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses. Responsibilities include business strategy, product design, product management, development and testing manufacturing, marketing and sales and product support.
Energy & Transportation – A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses as well as product support of on-highway engines.
Pension Benefits: Assumed discount rate 7 (9) (353) 435 Expected rate of compensation increase 4 (3) 31 (25) Expected long-term rate of return on plan assets (32) 32 — — Other Postretirement Benefits: Assumed discount rate 6 (7) (215) 252 Expected rate of compensation increase — — 1 (1) Expected long-term rate of return on plan assets (2) 2 — — 1 Effective December 31, 2019, all U.S. pension benefits were frozen, and accordingly the expected rate of compensation increase assumption is no longer applicable.
Pension Benefits: Assumed discount rate 8 (11) (315) 387 Expected rate of compensation increase 4 (4) 28 (24) Expected long-term rate of return on plan assets (32) 32 — — Other Postretirement Benefits: Assumed discount rate 5 (6) (184) 213 Expected rate of compensation increase — — 1 (1) Expected long-term rate of return on plan assets (1) 1 — — 1 Effective December 31, 2019, all U.S. pension benefits were frozen, and accordingly the expected rate of compensation increase assumption is no longer applicable.
The company also recorded a tax charge of $26 million related to $97 million of pension and OPEB mark-to-market gains in the fourth quarter of 2023, compared to a tax charge of $124 million related to $606 million of mark-to-market gains in the fourth quarter of 2022.
The company also recorded a tax charge of $43 million related to $154 million of mark-to-market gains for remeasurement of pension and OPEB plans in 2024, compared to a tax charge of $26 million related to $97 million of mark-to-market gains in 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the United States Securities and Exchange Commission on February 15, 2023 and hereby incorporated by reference.
Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the United States Securities and Exchange Commission on February 16, 2024 and hereby incorporated by reference. 34 Table of Contents RESTRUCTURING COSTS In 2025, we expect to incur about $150 million to $200 million of restructuring costs.
Lower sales volume was due to the impact from changes in dealer inventories and lower sales of equipment to end users.
The decrease in sales volume was mainly driven by lower sales of equipment to end users. • In North America, sales decreased due to lower sales volume. Lower sales volume was primarily driven by the impact from changes in dealer inventories.
Our total credit commitments and available credit as of December 31, 2023 were: December 31, 2023 (Millions of dollars) Consolidated Machinery, Energy & Transportation Financial Products Credit lines available: Global credit facilities $ 10,500 $ 2,750 $ 7,750 Other external 4,164 625 3,539 Total credit lines available 14,664 3,375 11,289 Less: Commercial paper outstanding (4,069) — (4,069) Less: Utilized credit (853) — (853) Available credit $ 9,742 $ 3,375 $ 6,367 The other consolidated credit lines with banks as of December 31, 2023 totaled $4.16 billion.
Our total credit commitments and available credit as of December 31, 2024 were: December 31, 2024 (Millions of dollars) Consolidated Machinery, Energy & Transportation Financial Products Credit lines available: Global credit facilities $ 10,500 $ 2,750 $ 7,750 Other external 4,062 610 3,452 Total credit lines available 14,562 3,360 11,202 Less: Commercial paper outstanding (3,946) — (3,946) Less: Utilized credit (687) — (687) Available credit $ 9,929 $ 3,360 $ 6,569 The other consolidated credit lines with banks as of December 31, 2024 totaled $4.06 billion.
In addition, the company recorded a discrete tax benefit of $57 million in 2023 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense, compared with a $33 million benefit for 2022.
In 2024, the company recorded discrete tax benefits of $47 million to reflect changes in estimates related to prior years. In addition, a discrete tax benefit of $57 million was recorded in 2024 and 2023 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.
These items consist of (i) restructuring costs related to the divestiture of the company's Longwall business, (ii) other restructuring costs, (iii) pension and OPEB mark-to-market gains/losses resulting from plan remeasurements, (iv) certain deferred tax valuation allowance adjustments and (v) goodwill impairment in 2022.
These items consist of (i) restructuring income/costs related to the divestitures of certain non-U.S. entities in 2024, (ii) other restructuring income/costs, (iii) pension and OPEB mark-to-market gains/losses resulting from plan remeasurements, (iv) a discrete tax benefit for a tax law change related to currency translation in 2024, (v) restructuring costs related to the divestiture of the company's Longwall business in 2023 and (vi) certain deferred tax valuation allowance adjustments in 2023.
In December 2023, the Board of Directors approved maintaining our quarterly dividend representing $1.30 per share, and we continue to expect our strong financial position to support the dividend. Dividends paid totaled $2.56 billion in 2023. Financial Products Financial Products operating cash flow was $1.11 billion in 2023, compared with $1.52 billion in 2022.
In December 2024, the Board of Directors approved maintaining our quarterly dividend representing $1.41 per share, and we continue to expect our strong financial position to support the dividend. Dividends paid totaled $2.65 billion in 2024.
We evaluate the carrying value of equipment on operating leases for potential impairment when we determine a triggering event has occurred. When a triggering event occurs, we perform a test for recoverability by comparing projected undiscounted future cash flows to the carrying value of the equipment on operating leases.
When a triggering event occurs, we perform a test for recoverability by comparing projected undiscounted future cash flows to the carrying value of the equipment on operating leases. If the test for recoverability identifies a possible impairment, we measure the fair value of the equipment on operating leases in accordance with the fair value measurement framework.
Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Cat machines and engines. 22. Restructuring Costs – May include costs for employee separation, long-lived asset impairments, contract terminations and divestiture impacts.
Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Caterpillar machines and engines. 36 Table of Contents 22.
Debt related to Financial Products increased by $883 million due to portfolio funding requirements. We have three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes.
As of December 31, 2024, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes.
Pension Benefits: 1 Assumed discount rate $ 52 $ (66) $ (1,162) $ 1,375 Expected long-term rate of return on plan assets (120) 120 — — Non-U.S.
Pension Benefits: 1 Assumed discount rate $ 56 $ (70) $ (1,011) $ 1,187 Expected long-term rate of return on plan assets (123) 123 — — Non-U.S.
Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Energy & Transportation sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales. 24. Services – Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and other service-related revenues.
Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Energy & Transportation sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales. 24.
Sales decreased 2 percent in Latin America due to the impact from changes in dealer inventories and lower services sales volume, partially offset by favorable price realization and favorable currency impacts primarily related to the Brazilian real. Dealer inventory increased during 2022, compared to a decrease during 2023.
Dealer inventory increased less during 2024 than during 2023. • Sales increased in Latin America primarily due to higher sales volume, partially offset by unfavorable price realization and unfavorable currency impacts primarily related to the Brazilian real. Higher sales volume was mainly driven by the impact from changes in dealer inventories.
The decrease from 2022 was primarily related to changes in the geographic mix of profits from a tax perspective. The 2023 annual effective tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business.
The 2023 annual effective tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business.
These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense).
Restructuring income/costs – May include costs for employee separation, long-lived asset impairments, contract terminations and (gains)/losses on divestitures. These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense).
Sales also increased in reciprocating engines used in well servicing and gas compression applications. • Power Generation – Sales increased in large reciprocating engines, primarily data center applications, and small reciprocating engines. Turbines and turbine-related services increased as well. • Industrial – Sales were up across all regions. • Transportation – Sales increased in rail services and marine.
Decreased sales in reciprocating engines used in well servicing applications were offset by increased sales in reciprocating engines used in gas compression applications and increased sales for turbines and turbine-related services. • Power Generation – Sales increased in large reciprocating engines, primarily data center applications.
Resource Industries Resource Industries’ total sales were $13.583 billion in 2023, an increase of $1.269 billion, or 10 percent, compared with $12.314 billion in 2022. The increase was due to favorable price realization, partially offset by lower sales volume.
Construction Industries’ profit as a percent of total sales was 24.2 percent in 2024, compared with 25.4 percent in 2023. Resource Industries Resource Industries’ total sales were $12.389 billion in 2024, a decrease of $1.194 billion, or 9 percent, compared with $13.583 billion in 2023. The decrease was primarily due to lower sales volume, partially offset by favorable price realization.
Energy & Transportation’s profit as a percent of total sales was 17.6 percent in 2023, compared with 13.9 percent in 2022. Financial Products Segment Financial Products’ segment revenues were $3.785 billion in 2023, an increase of $532 million, or 16 percent, compared with $3.253 billion in 2022. The increase was primarily due to higher average financing rates across all regions.
The increase was mainly due to favorable price realization. Energy & Transportation’s profit as a percent of total sales was 19.9 percent in 2024, compared with 17.6 percent in 2023. Financial Products Segment Financial Products’ segment revenues were $4.053 billion in 2024, an increase of $268 million, or 7 percent, compared with $3.785 billion in 2023.
We also consider the following critical factors in our residual value estimates: lease term, market size and demand, total expected hours of usage, machine configuration, application, location, model changes, quantities, third-party residual guarantees and contractual customer purchase options. 40 Table of Contents Upon termination of the lease, the equipment is either purchased by the lessee or sold to a third-party, in which case we may record a gain or a loss for the difference between the estimated residual value and the sale proceeds.
We also consider the following critical factors in our residual value estimates: lease term, market size and demand, total expected hours of usage, machine configuration, application, location, model changes, quantities, third-party residual guarantees and contractual customer purchase options.
Higher sales volume was driven by higher sales of equipment to end users and the impact from changes in dealer inventories. Dealer inventory increased more during 2023 than during 2022. • Sales decreased in Latin America primarily due to lower sales volume, partially offset by favorable price realization.
Dealer inventory increased less during 2024 than during 2023. Sales increased 1 percent in Latin America. Unfavorable currency impacts related to the Brazilian real were more than offset by higher sales volume and favorable price realization. The increase in sales volume was primarily due to the impact from changes in dealer inventories.
The increase in sales volume was driven by higher sales of equipment to end users, partially offset by the impact from changes in dealer inventories. Dealer inventory increased about $2.4 billion during 2022, compared to an increase of about $2.1 billion during 2023. Sales were higher in the three primary segments.
The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased in 2024, compared to an increase in 2023. Total dealer inventory increased about $400 million during 2024, compared to an increase of about $2.1 billion during 2023.
Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. Total sales and revenues for 2023 were $67.060 billion, an increase of $7.633 billion, or 13 percent, compared with $59.427 billion in 2022. The increase was primarily due to favorable price realization and higher sales volume.
Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. Total sales and revenues for 2024 were $64.809 billion, a decrease of $2.251 billion, or 3 percent, compared with $67.060 billion in 2023.
Machinery, Energy & Transportation segments exclude most Financial Products revenues. LIQUIDITY AND CAPITAL RESOURCES Sources of funds We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. Funding for these businesses is also available from commercial paper and long-term debt issuances.
Services – Machinery, Energy & Transportation services revenues include, but are not limited to, aftermarket parts and other service-related revenues and exclude most Financial Products revenues, discontinued products and captive dealer services. LIQUIDITY AND CAPITAL RESOURCES Sources of funds We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations.
The decrease in sales volume was driven by the impact from changes in dealer inventories, partially offset by higher sales of equipment to end users. Dealer inventory increased more during 2022 than during 2023. • In North America, sales increased due to favorable price realization and higher sales volume.
The decrease was primarily driven by lower sales volume of $3.543 billion, partially offset by favorable price realization of $1.238 billion. The decrease in sales volume was mainly driven by lower sales of equipment to end users. In addition, changes in dealer inventories had an unfavorable impact to sales volume. Dealer inventory increased less during 2024 than during 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInformation required by Item 7A appears in Note 1 — “Operations and summary of significant accounting policies,” Note 4 — “Derivative financial instruments and risk management,” Note 18 — “Fair value disclosures” and Note 19 — “Concentration of credit risk” of Part II, Item 8 “Financial Statements and Supplementary Data.” Other information required by Item 7A is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 52 Table of Contents
Biggest changeInformation required by Item 7A appears in Note 1 — “Operations and summary of significant accounting policies,” Note 2 — "Sales and revenue recognition," Note 4 — “Derivative financial instruments and risk management,” Note 7 — "Cat Financial financing activities," Note 11 — "Investments in debt and equity securities," and Note 18 — “Fair value disclosures” of Part II, Item 8 “Financial Statements and Supplementary Data.” Other information required by Item 7A is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 53 Table of Contents

Other CAT 10-K year-over-year comparisons