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Item 2. Management’s Discussion and Analysis

2024-05-01 compared with 2023-11-01 · 263 added, 506 removed, 608 unchanged (56% of the section changed)

5 unchanged sentences

Risk Factors of the 2023 Form 10-K .

Highlights for the third quarter of 2023 include:

• Total sales and revenues for the third quarter of 2023 were $16.810 billion, an increase of $1.816 billion, or 12 percent, compared with $14.994 billion in the third quarter of 2022.

Sales were higher across the three primary segments.

• Operating profit margin was 20.5 percent for the third quarter of 2023, compared with 16.2 percent for the third quarter of 2022.

Adjusted operating profit margin was 20.8 percent for the third quarter of 2023, compared with 16.5 percent for the third quarter of 2022.

• Third-quarter 2023 profit per share was $5.45, and excluding the items in the table below, adjusted profit per share was $5.52.

Third-quarter 2022 profit per share was $3.87, and excluding the items in the table below, adjusted profit per share was $3.95.

• Caterpillar ended the third quarter of 2023 with $6.5 billion of enterprise cash.

Highlights for the nine months ended September 30, 2023 include:

• Total sales and revenues were $49.990 billion for the nine months ended September 30, 2023, an increase of $7.160 billion, or 17 percent, compared with $42.830 billion for the nine months ended September 30, 2022.

• Operating profit margin was 19.7 percent for the nine months ended September 30, 2023, compared with 14.5 percent for the nine months ended September 30, 2022.

Adjusted operating profit margin was 21.0 percent for the nine months ended September 30, 2023, compared with 14.7 percent for the nine months ended September 30, 2022.

• Profit per share for the nine months ended September 30, 2023, was $14.85, and excluding the items in the table below, adjusted profit per share was $15.98.

Profit per share for the nine months ended September 30, 2022, was $9.85, and excluding the items in the table below, adjusted profit per share was $9.99.

• Enterprise operating cash flow was $8.9 billion for the nine months ended September 30, 2023.

Highlights for the first quarter of 2024 include:

• Total sales and revenues for the first quarter of 2024 were $15.799 billion, a decrease of $63 million, or about flat, compared with $15.862 billion in the first quarter of 2023.

In the three primary segments, sales were higher in Energy & Transportation and lower in Construction Industries and Resource Industries .

• Operating profit margin was 22.3 percent for the first quarter of 2024, compared with 17.2 percent for the first quarter of 2023.

Adjusted operating profit margin was 22.2 percent for the first quarter of 2024, compared with 21.1 percent for the first quarter of 2023.

• First-quarter 2024 profit per share was $5.75, and excluding the items in the table below, adjusted profit per share was $5.60.

First-quarter 2023 profit per share was $3.74, and excluding the items in the table below, adjusted profit per share was $4.91.

• Caterpillar ended the first quarter of 2024 with $5.0 billion of enterprise cash.

• Enterprise operating cash flow was $2.1 billion in the first quarter of 2024.

• 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 65.

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

A detailed reconciliation of GAAP to non-GAAP financial measures is included on pages 53-54.

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

(Dollars in millions except per share data) Profit Before Taxes Profit

Per Share Profit Before Taxes Profit

Profit $ 3,532 $ 5.75 $ 2,634 $ 3.74

Restructuring (income) - non-US mining entity divestiture (64) (0.24) — —

Other restructuring (income) costs 58 0.09 25 0.04

Restructuring costs - Longwall divestiture

— — — — 586 1.13 — —

Other restructuring costs 46 0.07 49 0.08 102 0.17 90 0.14

Deferred tax valuation allowance adjustments — — — — — (0.17) — —

Adjusted profit $ 3,526 $ 5.60 $ 3,245 $ 4.91

Total sales and revenues for the third quarter of 2023 were $16.810 billion, an increase of $1.816 billion, or 12 percent, compared with $14.994 billion in the third quarter of 2022.

The increase was due to favorable price realization and higher sales volume .

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 and lower services sales volume.

Dealer inventory increased more during the third quarter of 2022 than during the third quarter of 2023.

Third-quarter 2023 profit per share was $5.45, compared with $3.87 profit per share in the third quarter of 2022.

Profit per share for both quarters included restructuring costs.

Profit fo r the third quarter of 2023 was $2.794 billion, an increase of $753 million, or 37 percent, compared with $2.041 billion for the third quarter of 2022.

The increase was primarily due to favorable price realization and higher sales volume, partially offset by higher selling, general and administrative (SG&A) and research and development (R&D) expenses, higher manufacturing costs and unfavorable impacts from foreign currency exchange.

Table of Conte n t s

Total sales and revenues for the first quarter of 2024 were $15.799 billion, a decrease of $63 million, or about flat, compared with $15.862 billion in the first quarter of 2023.

Lower sales volume and unfavorable currency impacts, primarily related to the Australian dollar, were mostly offset by favorable price realization and higher Financial Products' revenues.

The decrease in sales volume was primarily driven by lower sales of equipment to end users;

there was not a significant impact from changes in dealer inventories .

First-quarter 2024 profit per share was $5.75, compared with $3.74 profit per share in the first quarter of 2023.

In the first quarter of 2024 and 2023, profit per share included restructuring income/costs.

Profit for the first quarter of 2024 was $2.856 billion, an increase of $913 million, or 47 percent, compared with $1.943 billion for the first quarter of 2023.

The increase was primarily due to the absence of the impact of the divestiture of the company's Longwall business in 2023 and favorable price realization, partially offse t by the profit impact of lower sales volume.

Trends and Economic Conditions

Outlook for Key End Markets

In Construction Industries , we continue to see positive momentum for North America.

We expect continued growth in non-residential construction in North America due to the positive impact of government-related infrastructure investments and a healthy pipeline of construction projects.

Although residential construction growth has moderated, we expect it to remain healthy.

In Asia Pacific, excluding China, we expect growth due to public infrastructure spending and supportive commodity prices.

We expect continued weakness in China.

In EAME , we anticipate the region will be slightly down.

Continued weakness in Europe is expected to be partially offset by strong construction demand in the Middle East.

Construction activity in Latin America is expected to be about flat versus a strong 2022 performance.

In Resource Industries , within mining, customer product utilization remains high, the number of parked trucks remains low and the age of the fleet remains high, which supports future demand for our equipment and services.

Order rates are slightly lower than we expected at this time, reflecting capital discipline by customers.

The energy transition is expected to support increased commodity demand over time, expanding our total addressable market and providing further opportunities for long-term profitable growth.

We expect heavy construction and quarry and aggregates to remain at healthy levels due to major infrastructure and non-residential construction projects.

In Energy & Transportation , in Oil & Gas reciprocating engines, although customers remain disciplined, we are encouraged by continued strength in demand for gas compression.

Power Generation reciprocating engine demand is expected to remain strong, primarily driven by data center growth.

New equipment turbines and turbine-related services in both Oil & Gas and Power Generation remain robust.

Industrial demand is expected to soften slightly from the recent high levels.

In Transportation, we anticipate strength in high-speed marine as customers continue to upgrade aging fleets.

Company Trends and Expectations

For the full-year 2023, we expect a strong top line supported by price realization and higher sales of equipment to end users.

The environment remains positive with an improving supply chain, a strong backlog and healthy demand across most end markets.

In the fourth quarter of 2023, we expect slightly higher sales and revenues compared to the fourth quarter of 2022.

In the fourth quarter of 2023, price realization is expected to remain favorable as compared to the fourth quarter of 2022.

We expect sales of equipment to end users to remain positive.

We also expect an unfavorable impact from the changes in dealer inventories.

We expect dealer inventory to decrease in the fourth quarter of 2023, compared to an increase in the fourth quarter of 2022.

We continue to expect operating profit to increase in 2023, compared to 2022.

While we expect price realization to remain positive, the magnitude of the year-over-year benefit is expected to moderate in the fourth quarter of 2023 as we continue to lap prior year price increases.

Incentive compensation is expected to be higher in the fourth quarter of 2023 compared to the fourth quarter of 2022.

Within other income (expense), we do not expect the significant, unfavorable impacts from foreign currency exchange that occurred in the fourth quarter of 2022 to re-occur in the fourth quarter of 2023.

We continue to anticipate higher pension expense in 2023, compared to 2022, due to higher interest costs from higher interest rates.

The change is estimated to be just over $300 million for the full year as compared to 2022, or about $80 million per quarter.

For the full-year 2024, we expect continued strength in most of our key end markets as supported by our strong backlog, resulting in another good year.

Overall, we expect a continuation of healthy demand across most of our end markets for our products and services .

In Construction Industries, we continue to expect North America to remain healthy in 2024 for both non-residential and residential construction after a strong 2023.

We anticipate non-residential construction in North America to remain at similar to slightly higher demand levels to 2023 due to government-related infrastructure and construction projects.

Residential construction demand is expected to be flat to slightly down compared to 2023, which remains strong relative to historical levels.

In Asia Pacific, outside of China, we expect some softening in economic conditions.

We anticipate China will remain at a

relatively low level in the excavator industry above 10-tons.

In EAME , we anticipate that economic weakness in Europe will continue, partially offset by strong construction demand in the Middle East.

Construction activity in Latin America remains mixed, but overall, we are expecting modest growth.

In addition, we anticipate the ongoing benefit of our services initiatives will positively impact Construction Industries in 2024.

In Resource Industries, in 2024, for both mining and heavy construction and quarry and aggregates, we anticipate lower sales volume compared to strong 2023 performance, primarily in off-highway and articulated trucks.

We anticipate a small decrease in dealer inventory in 2024, as compared to a slight increase in 2023.

While we continue to see a high level of quoting activity overall, we anticipate lower order rates as customers display capital discipline.

Customer product utilization remains high, the number of parked trucks remains low, the age of the fleet remains elevated, and our autonomous solutions continue to have strong customer acceptance.

We expect higher services revenues, including robust rebuild activity in 2024.

We continue to believe the energy transition will support increased commodity demand over time, expanding our total addressable market and providing further opportunities for long-term profitable growth.

In Energy & Transportation, we expect reciprocating engines and services for Oil & Gas to be about flat in 2024 after strong 2023 performance.

We expect reciprocating gas compression demand to be higher in 2024 than it was in 2023.

Well servicing for reciprocating engines in North America is expected to soften.

Power Generation reciprocating engine demand is expected to remain strong, largely due to continued data center growth relating to cloud computing and generative artificial intelligence (AI).

For Solar Turbines, backlog and quoting activity remains strong for Oil & Gas and Power Generation.

Industrial demand is expected to soften relative to a strong 2023.

In Transportation, we anticipate high-speed marine to increase as customers continue to upgrade aging fleets.

Full-Year 2024 Company Trends and Expectations

For the full-year 2024, we continue to anticipate sales and revenues will be broadly similar to 2023.

We do not anticipate a significant change in machine dealer inventories during 2024, compared to a $0.7 billion increase in machine dealer inventories during 2023.

We expect slightly favorable price realization in 2024 as compared to 2023.

Services revenues grew in the first quarter of 2024, and we expect continued growth in 2024 across each of our three primary segments.

In Construction Industries, we expect sales of equipment to end users to be slightly lower compared to 2023 due to softer economic conditions in Europe.

We expect demand in North America to remain at healthy levels in Construction Industries.

Resource Industries' sales in 2024 are expected to be lower, driven by lower sales volume primarily in off-highway and articulated trucks.

We also expect an unfavorable impact from changes in dealer inventories in Construction Industries and Resource Industries.

Within Energy & Transportation, we expect slightly higher sales compared to 2023, including a seasonal increase throughout the year.

In 2024, we expect a benefit from price realization during the first half of the year.

We expect manufacturing costs to be about flat compared to 2023.

We anticipate favorable freight to be partially offset by unfavorable cost absorption.

We also anticipate shipping a more normal mix of products, which we expect to drive a slight unfavorable impact to operating profit.

Selling, general and administrative (SG&A) and research and development (R&D) expenses are expected to increase throughout the year as we continue to invest in strategic initiatives aimed at future long-term profitable growth, such as services growth and technology, including autonomy, alternative fuels, connectivity and digital and electrification.

We also expect a benefit of lower short-term incentive compensation expense in 2024 as compared to 2023.

In 2024, we expect restructuring costs to be between $300 million and $450 million and expect capital expenditures to be in the range of $2.0 to $2.5 billion.

We expect the annual effective tax rate, excluding discrete items, to be 22.5 percent.

Second-Quarter 2024 Company Trends and Expectations

In the second quarter of 2024, we expect lower sales and revenues as compared to the second quarter of 2023.

We anticipate an unfavorable impact from changes in machine dealer inventories, as machine dealer inventory is expected to decline during the second quarter of 2024 compared to a $0.2 billion increase during the second quarter of 2023.

In the second quarter of 2024, price realization is expected to remain favorable as compared to the second quarter of 2023.

We expect lower Construction Industries' sales as compared to the second quarter of 2023 due to the impact from changes in dealer inventories, partially offset by favorable price realization.

Resource Industries' sales are expected to be lower driven by lower sales volume, partially offset by favorable price realization.

In Energy & Transportation, we expect sales to be about flat as compared to the second quarter of 2023.

In the second quarter of 2024, we expect a benefit from price realization primarily from price actions taken in the second half of 2023.

We expect manufacturing costs to be about flat compared to the second quarter of 2023, as we anticipate favorable freight to be partially offset by unfavorable cost absorption.

We expect an increase in SG&A/R&D expenses in the second quarter of 2024 as compared to the second quarter of 2023 due to investments in strategic initiatives, which is expected to be offset by lower short-term incentive compensation expense.

Within Construction Industries and Resource Industries in the second quarter of 2024 as compared to the second quarter of 2023, we expect favorable price realization to be offset by the profit impact of lower sales volume.

In Energy & Transportation, we anticipate favorable price realization and a favorable mix of products to be partially offset by higher manufacturing costs and SG&A/R&D expenses due to investments in strategic initiatives.

Within corporate items and eliminations , we anticipate increased expenses due to timing differences in the second quarter of 2024 as compared to the second quarter of 2023.

Global Business Conditions

We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary cost and labor pressures.

Areas of particular focus include certain components, transportation and raw materials.

Contingency plans have been developed and continue to be modified to minimize supply chain challenges that may impact our ability to meet increasing customer demand.

Areas of particular focus include transportation, certain components and raw materials.

We continue to work to minimize supply chain challenges that may impact our ability to meet customer demand.

We continue to assess the environment to determine if additional actions need to be taken.

3 unchanged sentences

first occurrence of terms shown in bold italics.

• Information on non-GAAP financial measures is included on page 65.

• Information on non-GAAP financial measures is included on pages 53-54.

• Certain amounts may not add due to rounding.

Table of Conte n t s

Consolidated Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2022

THREE MONTHS ENDED MARCH 31, 2024 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2023

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the third quarter of 2022 (at left) and the third quarter of 2023 (at right).

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2023 (at left) and the first quarter of 2024 (at right).

Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.

Total sales and revenues for the third quarter of 2023 were $16.810 billion, an increase of $1.816 billion, or 12 percent, compared with $14.994 billion in the third quarter of 2022.

The increase was due to favorable price realization and higher sales volume.

The increase in sales volume was driven by higher sales of equipment to end users, partially offset by the impact from changes in dealer inventor ies and lower services sales volume.

Dealer inventory increased more during the third quarter of 2022 than during the third quarter of 2023.

Sales were higher across the three primary segments.

North America sales increased 26 percent due to higher sales of equipment to end users and favorable price realization.

Sales decreased 13 percent in Latin America due to the impact from changes in dealer inventories.

Dealer inventory increased during the third quarter of 2022, compared with a decrease during the third quarter of 2023.

EAME sales increased 8 percent due to favorable price realization.

Asia/Pacific sales were about flat.

Favorable price realization and the impact from changes in dealer inventories were offset by lower sales of equipment to end users, unfavorable currency impacts, primarily related to the Australian dollar and Japanese yen, and lower services sales volume.

Dealer inventory increased more during the third quarter of 2023 than during the third quarter of 2022.

Dealer inventory increased by $600 million during the third quarter of 2023, compared with an increase of $700 million during the third quarter of 2022.

Total sales and revenues for the first quarter of 2024 were $15.799 billion, a decrease of $63 million, or about flat, compared with $15.862 billion in the first quarter of 2023.

Lower sales volume of $684 million and unfavorable currency impacts of $30 million, primarily related to the Australian dollar, were mostly offset by favorable price realization of $575 million and higher Financial Products' revenues of $76 million.

The decrease in sales volume was primarily driven by lower sales of equipment to end users;

there was not a significant impact from changes in dealer inventories.

In the three primary segments, sales were higher in Energy & Transportation and lower in Construction Industries and Resource Industries.

North America sales increased 7 percent primarily due to favorable price realization and higher sales volume.

The increase in sales volume was primarily driven by the impact from changes in dealer inventories.

Dealer inventory increased more during the first quarter of 2024 than during the first quarter of 2023.

Sales increased 2 percent in Latin America mainly due to higher sales volume.

The increase in sales volume was primarily driven by higher services sales volume.

EAME sales decreased 17 percent primarily due to lower sales volume.

The decrease in sales volume was primarily driven by lower sales of equipment to end users.

Asia/Pacific sales decreased 5 percent mainly due to lower sales volume.

The decrease in sales volume was primarily driven by the impact from changes in dealer inventories.

Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2024.

Total dealer inventory increased by $1.4 billion during the first quarter of 2024, compared with an increase of $1.4 billion during the first quarter of 2023.

Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times.

1 unchanged sentence

Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.

Table of Conte n t s

Sales and Revenues by Segment

(Millions of dollars) Third Quarter 2022 Sales

Realization Currency Inter-Segment / Other Third Quarter 2023 $

(Millions of dollars) First Quarter 2023 Sales

Realization Currency Inter-Segment / Other First Quarter 2024 $

Construction Industries $ 6,746 $ (464) $ 199 $ (22) $ (35) $ 6,424 $ (322) (5 %)

8 unchanged sentences

Financial Products Revenues 763 — — — 76 839 76 10 %

716 — — — 106 822 106 15 %

Consolidated Sales and Revenues $ 15,862 $ (684) $ 575 $ (30) $ 76 $ 15,799 $ (63) — %

2 unchanged sentences

(Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg

Third Quarter 2023

First Quarter 2024

Construction Industries $ 3,833 6 % $ 595 (1 %) $ 996 (25 %) $ 993 (14 %) $ 6,417 (4 %) $ 7 (83 %) $ 6,424 (5 %)

9 unchanged sentences

Consolidated Sales and Revenues $ 8,573 8 % $ 1,559 1 % $ 2,852 (17 %) $ 2,815 (5 %) $ 15,799 — % $ — — % $ 15,799 — %

Third Quarter 2022

First Quarter 2023

Construction Industries $ 3,608 $ 599 $ 1,336 $ 1,161 $ 6,704 $ 42 $ 6,746

8 unchanged sentences

Consolidated Sales and Revenues $ 7,950 $ 1,539 $ 3,418 $ 2,955 $ 15,862 $ — $ 15,862

1 Includes revenues from Machinery, Energy & Transportation of $181 million and $124 million in the third quarter of 2023 and 2022, respectively.

Table of Conte n t s

1 Includes revenues from Machinery, Energy & Transportation of $177 million and $162 million in the first quarter of 2024 and 2023, respectively.

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the third quarter of 2022 (at left) and the third quarter of 2023 (at right).

The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2023 (at left) and the first quarter of 2024 (at right).

Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.

The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation's other operating (income) expenses .

Operating profit for the third quarter of 2023 was $3.449 billion, an increase of $1.024 billion, or 42 percent, compared with $2.425 billion in the third quarter of 2022.

The increase was primarily due to favorable price realization, including a favorable geographic mix of sales, and higher sales volume, partially offset by higher SG&A/R&D expenses and higher manufacturing costs.

The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives, higher short-term incentive compensation expense and an unfavorable change in fair value adjustments related to deferred compensation plans.

Unfavorable manufacturing costs were driven by lower freight being more than offset by higher material costs, unfavorable cost absorption, increased period manufacturing costs and the impact of manufacturing inefficiencies.

Cost absorption was unfavorable as inventory increased during the third quarter of 2022, compared with a decrease in the third quarter of 2023.

Operating profit margin was 20.5 percent for the third quarter of 2023, compared with 16.2 percen t for the third quarter of 2022.

Operating profit for the first quarter of 2024 was $3.519 billion, an increase of $788 million, or 29 percent, compared with $2.731 billion in the first quarter of 2023.

The increase was primarily due to the absence of the impact of the divestiture of the company's Longwall business in 2023 of $586 million and favorable price realization of $575 million, partially offset by the profit impact of lower sales volume of $268 million.

Operating profit margin was 22.3 percent for the first quarter of 2024, compared with 17.2 percen t for the first quarter of 2023.

Profit (Loss) by Segment

(Millions of dollars) Third Quarter 2023 Third Quarter 2022 $

(Millions of dollars) First Quarter 2024 First Quarter 2023 $

Construction Industries $ 1,764 $ 1,790 $ (26) (1 %)

9 unchanged sentences

Consolidated Operating Profit $ 3,519 $ 2,731 $ 788 29 %

Table of Conte n t s

Other Profit/Loss and Tax Items

▪ Interest expense excluding Financial Products in the third quarter of 2023 was $129 million, compared with $109 million in the third quarter of 2022.

▪ Interest expense excluding Financial Products in the first quarter of 2024 was $143 million, compared with $129 million in the first quarter of 2023.

The increase was due to higher average borrowing rates.

▪ Other income (expense) in the third quarter of 2023 was income of $195 million, compared with income of $242 million in the third quarter of 2022.

The change was primarily driven by unfavorable impacts from foreign currency exchange and pension and other postemployment benefit (OPEB) plan costs, partially offset by higher investment and interest income and favorable impacts from commodity hedges and unrealized gains on marketable securities.

▪ The provision for income taxes for the third quarter of 2023 reflected an estimated annual tax rate of 22.5 percent, compared with 23 percent for the third quarter of 2022, excluding the discrete items discussed below.

The comparative tax rate for full-year 2022 was 23.2 percent.

The company recorded a $34 million benefit in the third quarter of 2023 compared to a $20 million benefit in the third quarter of 2022 due to a decrease from the second-quarter estimated annual tax rate.

In the third quarter of 2023, the company also recorded a discrete tax benefit of $22 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

▪ Other income (expense) in the first quarter of 2024 was income of $156 million, compared with income of $32 million in the first quarter of 2023.

The change was primarily driven by favorable impacts from foreign currency exchange.

▪ The effective tax rate for the first quarter of 2024 was 19.5 percent compared to 26.9 percent for the first quarter of 2023.

Excluding the discrete items discussed below, the first quarter 2024 estimated annual tax rate was 22.5 percent compared with 23.0 percent for the first quarter of 2023.

The 2024 estimated annual tax rate excludes the impact of nontaxable gains of $64 million for the divestiture of a non-U.S.

mining entity along with a related tax benefit of $54 million.

The estimated annual tax rate in the first quarter of 2023 excluded the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business.

In addition, a discrete tax benefit of $38 million was recorded in the first quarter of 2024, compared with a $32 million benefit in the first quarter of 2023, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense.

In the third quarter of 2022, the company also recorded a discrete benefit of $41 million to reflect changes in estimates related to prior years.

Please see a reconciliation of GAAP to non-GAAP financial measures on pages 53-54.

Construction Industries

Construction Industries’ total sales were $6.999 billion in the third quarter of 2023, an increase of $723 million, or 12 percent, compar ed with $6.276 billion in the third quarter of 2022.

The increase was primarily due to favorable price realization.

▪ In North America, sales increased due to higher sales volume and favorable price realization.

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 the third quarter of 2023 than during the third quarter of 2022.

▪ Sales decreased in Latin America primarily due to lower sales volume, partially offset by favorable price realization.

Lower sales volume was driven by the impact from changes in dealer inventories and lower sales of equipment to end users.

Dealer inventory increased during the third quarter of 2022, compared with a decrease during the third quarter of 2023.

▪ In EAME, sales increased mainly due to favorable price realization and favorable currency impacts primarily related to the euro.

Construction Industries’ total sales were $6.424 billion in the first quarter of 2024, a decrease of $322 million, or 5 percent, compared with $6.746 billion in the first quarter of 2023.

The decrease was primarily due to lower sales volume of $464 million, partially offset by favorable price realization of $199 million.

The decrease in sales volume was mainly driven by lower sales of equipment to end users.

▪ In North America, sales increased primarily due to favorable price realization.

▪ Sales in Latin America were about flat.

▪ In EAME, sales decreased mainly due to lower sales volume.

Lower sales volume was primarily driven by lower sales of equipment to end users.

▪ Sales decreased in Asia/Pacific primarily due to lower sales volume.

Lower sales volume was driven by lower sales of equipment to end users, partially offset by the impact from changes in dealer inventories.

Dealer inventory increased during the third quarter of 2023, compared with a decrease during the third quarter of 2022.

Construction Industries’ profit was $1.847 billion in the third quarter of 2023, an increase of $638 million, or 53 percent, compared with $1.209 billion in the third quarter of 2022.

The increase was mainly due to favorable price realization.

Construction Industries’ profit as a percent of total sales was 26.4 percent in the third quarter of 2023, compared with 19.3 percent in the third quarter of 2022.

Lower sales volume was mainly driven by the impact from changes in dealer inventories.

Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2024.

Construction Industries’ segment profit was $1.764 billion in the first quarter of 2024, a decrease of $26 million, or 1 percent, compared with $1.790 billion in the first quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $278 million, higher SG&A/R&D expenses of $26 million and unfavorable other segment items of $7 million, partially offset by favorable price realization of $199 million and favorable manufacturing costs of $86 million.

Favorable manufacturing costs largely reflected lower freight.

Construction Industries’ segment profit as a percent of total sales was 27.5 percent in the first quarter of 2024, compared with 26.5 percent in the first quarter of 2023.

Resource Industries

Resource Industries’ total sales were $3.351 billion in the third quarter of 2023, an increase of $264 million, or 9 percent, compared with $3.087 billion in the third quarter of 2022.

The increase was primarily due to favorable price realization, partially offset by lower sales volume.

Sales volume decreased as higher sales of equipment to end users were more than offset by lower aftermarket parts sales volume and the impact from changes in dealer inventories.

Dealer inventory increased during the third quarter of 2022, while remaining about flat during the third quarter of 2023.

Resource Industries’ profit was $730 million in the third quarter of 2023, an increase of $224 million, or 44 percent, compared with $506 million in the third quarter of 2022.

The increase was mainly due to favorable price realization, partially offset by lower sales volume, including an unfavorable mix of products.

Resource Industries’ profit as a percent of total sales was 21.8 percent in the third quarter of 2023, compared with 16.4 percent in the third quarter of 2022.

Table of Conte n t s

Resource Industries’ total sales were $3.193 billion in the first quarter of 2024, a decrease of $234 million, or 7 percent, compared with $3.427 billion in the first quarter of 2023.

The decrease was primarily due to lower sales volume of $425 million, partially offset by favorable price realization of $173 million.

The decrease in sales volume was mainly driven by lower sales of equipment to end users.

Resource Industries’ segment profit was $730 million in the first quarter of 2024, a decrease of $34 million, or 4 percent, compared with $764 million in the first quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $217 million and unfavorable other segment items of $24 million, partially offset by favorable price realization of $173 million and favorable manufacturing costs of $38 million.

Unfavorable other segment items primarily consisted of unfavorable currency impacts.

Favorable manufacturing costs largely reflected lower freight.

Resource Industries’ segment profit as a percent of total sales was 22.9 percent in the first quarter of 2024, compared with 22.3 percent in the first quarter of 2023.

Energy & Transportation

Sales by Application

(Millions of dollars) Third Quarter 2023 Third Quarter 2022 $

(Millions of dollars) First Quarter 2024 First Quarter 2023 $

Oil and Gas $ 1,568 $ 1,314 $ 254 19 %

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Total Sales $ 6,681 $ 6,254 $ 427 7 %

Energy & Transportation’s total sales were $6.859 billion in the third quarter of 2023, an increase of $673 million, or 11 percent, compar ed with $6.186 billion in the third quarter of 2022.

Sales increased across all applications.

The increase in sales was primarily due to higher sales volume and favorable price realization.

Energy & Transportation’s total sales were $6.681 billion in the first quarter of 2024, an increase of $427 million, or 7 percent, compared with $6.254 billion in the first quarter of 2023.

Sales increased across all applications except Industrial.

The increase in sales was primarily due to higher sales volume of $231 million and favorable price realization of $202 million.

▪ Oil and Gas – Sales increased for turbines and turbine-related services.

Sales also increased in reciprocating engines used in well servicing applications.

Sales also increased in reciprocating engines used in gas compression applications.

▪ Power Generation – Sales increased in large reciprocating engines, primarily data center applications.

▪ Industrial – Sales increased primarily in EAME and Latin America.

▪ Industrial – Sales decreased primarily in EAME and North America.

▪ Transportation – Sales increased in rail services.

Energy & Transportation’s profit was $1.181 billion in the third quarter of 2023, an increase of $246 million, or 26 percent, compared with $935 million in the third quarter of 2022.

The increase was mainly due to favorable price realization and higher sales volume, partially offset by higher SG&A/R&D expenses, unfavorable manufacturing costs and currency impacts.

The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives and higher short-term incentive compensation expense.

Unfavorable manufacturing costs reflected lower freight being more than offset by higher material costs, increased period manufacturing costs, the impact of manufacturing inefficiencies and the unfavorable impact from inventory write-downs.

Energy & Transportation’s profit as a percent of total sales was 17.2 percent in the third quarter of 2023, compared with 15.1 percent in the third quarter of 2022.

Financial Products Segment

Financial Products' segment revenues were $979 million in the third quarter of 2023, an increase of $160 million, or 20 percent, compared with $819 million in the third quarter of 2022.

The increase was primarily due to higher average financing rates across all regions.

Financial Products’ segment profit was $203 million in the third quarter of 2023, a decrease of $17 million, or 8 percent, compared with $220 million in the third quarter of 2022.

The decrease was mainly due to the absence of prior year reserve releases for credit losses at Cat Financial, partially offset by a favorable impact from mark-to-market adjustments on derivative contracts.

At the end of the third quarter of 2023, past dues at Cat Financial were 1.96 percent, compared with 2.00 percent at the end of the third quarter of 2022.

Write-offs, net of recoveries, were $9 million for the third quarter of 2023, compared with $13 million for the third quarter of 2022.

As of September 30, 2023, Cat Financial's allowance for credit losses totaled $340 million, or 1.23 percent of finance receivables, compared with $320 million, or 1.15 percent of finance receivables at June 30, 2023.

The allowance for credit losses at year-end 2022 was $346 million, or 1.29 percent of finance receivables.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $368 million in the third quarter of 2023, an increase of $25 million from the third quarter of 2022.

Decreased expenses due to timing differences were more than offset by higher corporate costs, unfavorable impacts of segment reporting methodology differences and an unfavorable change in fair value adjustments related to deferred compensation plans.

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NINE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2022

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the nine months ended September 30, 2022 (at left) and the nine months ended September 30, 2023 (at right).

Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.

Total sales and revenues were $49.990 billion for the nine months ended September 30, 2023, an increase of $7.160 billion, or 17 percent, compared with $42.830 billion for the nine months ended September 30, 2022.

The increase was primarily due to favorable price realization and higher sales volume.

The increase in 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 the nine months ended September 30, 2023, than the during the nine months ended September 30, 2022.

Sales were higher in the three primary segments.

North America sales increased 30 percent driven by higher sales of equipment to end users, favorable price realization and the impact from changes in dealer inventories.

Dealer inventory increased more during the nine months ended September 30, 2023, than during the nine months ended September 30, 2022.

Sales were about flat in Latin America.

Favorable price realization was offset by the impact from changes in dealer inventories and lower services sales volume.

Dealer inventory increased during the nine months ended September 30, 2022, compared to a decrease during the nine months ended September 30, 2023.

EAME sales increased 11 percent due to favorable price realization and higher sales of equipment to end users.

Asia/Pacific sales increased 4 percent driven by favorable price realization and the impact from changes in dealer inventories, partially offset by unfavorable currency impacts, primarily related to the Australian dollar and Japanese yen, and lower sales of equipment to end users.

Dealer inventory increased more during the nine months ended September 30, 2023, than during the nine months ended September 30, 2022.

Dealer inventory increased about $2.9 billion during the nine months ended September 30, 2023, compared with an increase of about $1.6 billion during the nine months ended September 30, 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 rentals and other factors.

Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.

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Sales and Revenues by Segment

(Millions of dollars) Nine Months Ended September 30, 2022 Sales

Realization Currency Inter-Segment / Other Nine Months Ended September 30, 2023 $

Construction Industries $ 18,424 $ 495 $ 2,233 $ (235) $ (18) $ 20,899 $ 2,475 13 %

Resource Industries 8,878 326 1,183 (85) 39 10,341 1,463 16 %

Energy & Transportation 16,929 1,968 1,195 (65) 305 20,332 3,403 20 %

All Other Segment 339 (13) 2 (2) 7 333 (6) (2 %)

Corporate Items and Eliminations (3,867) (77) 1 3 (333) (4,273) (406)

Machinery, Energy & Transportation Sales 40,703 2,699 4,614 (384) — 47,632 6,929 17 %

Financial Products Segment 2,400 — — — 404 2,804 404 17 %

Corporate Items and Eliminations (273) — — — (173) (446) (173)

Financial Products Revenues 2,127 — — — 231 2,358 231 11 %

Consolidated Sales and Revenues $ 42,830 $ 2,699 $ 4,614 $ (384) $ 231 $ 49,990 $ 7,160 17 %

Sales and Revenues by Geographic Region

North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues

(Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg

Nine Months Ended September 30, 2023

Construction Industries $ 11,654 32 % $ 1,720 (17 %) $ 4,125 11 % $ 3,307 (10 %) $ 20,806 14 % $ 93 (16 %) $ 20,899 13 %

Resource Industries 4,016 27 % 1,511 13 % 1,624 1 % 2,940 15 % 10,091 16 % 250 18 % 10,341 16 %

Energy & Transportation 8,658 30 % 1,299 12 % 4,291 17 % 2,519 15 % 16,767 23 % 3,565 9 % 20,332 20 %

All Other Segment 50 (4 %) (1) — % 13 (7 %) 37 (20 %) 99 (12 %) 234 3 % 333 (2 %)

Corporate Items and Eliminations (115) (1) (3) (12) (131) (4,142) (4,273)

Machinery, Energy & Transportation Sales 24,263 30 % 4,528 (1 %) 10,050 11 % 8,791 4 % 47,632 17 % — — % 47,632 17 %

Financial Products Segment 1,795 17 % 316 26 % 364 24 % 329 1 % 2,804 1

17 % — — % 2,804 17 %

Corporate Items and Eliminations (259) (60) (61) (66) (446) — (446)

Financial Products Revenues 1,536 10 % 256 33 % 303 16 % 263 (4 %) 2,358 11 % — — % 2,358 11 %

Consolidated Sales and Revenues $ 25,799 29 % $ 4,784 1 % $ 10,353 11 % $ 9,054 3 % $ 49,990 17 % $ — — % $ 49,990 17 %

Nine Months Ended September 30, 2022

Construction Industries $ 8,832 $ 2,061 $ 3,726 $ 3,694 $ 18,313 $ 111 $ 18,424

Resource Industries 3,167 1,337 1,609 2,554 8,667 211 8,878

Energy & Transportation 6,637 1,160 3,679 2,193 13,669 3,260 16,929

All Other Segment 52 — 14 46 112 227 339

Corporate Items and Eliminations (43) (1) (2) (12) (58) (3,809) (3,867)

Machinery, Energy & Transportation Sales 18,645 4,557 9,026 8,475 40,703 — 40,703

Financial Products Segment 1,530 250 293 327 2,400 1

Corporate Items and Eliminations (132) (58) (31) (52) (273) — (273)

Financial Products Revenues 1,398 192 262 275 2,127 — 2,127

Consolidated Sales and Revenues $ 20,043 $ 4,749 $ 9,288 $ 8,750 $ 42,830 $ — $ 42,830

1 Includes revenues from Machinery, Energy & Transportation of $515 million and $332 million in the nine months ended September 30, 2023 and 2022, respectively.

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CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the nine months ended September 30, 2022 (at left) and the nine months ended September 30, 2023 (at right).

Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.

The bar titled Longwall Divestiture is included in total restructuring costs.

The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income) expenses.

Operating profit for the nine months ended September 30, 2023, was $9.832 billion, an increase of $3.608 billion, or 58 percent, compared with $6.224 billion for the nine months ended September 30, 2022.

The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs, higher SG&A/R&D expenses and the impact of the divestiture of the company's Longwall business.

Unfavorable manufacturing costs largely reflected higher material costs, increased period manufacturing costs, the impact of manufacturing inefficiencies and unfavorable cost absorption, partially offset by lower freight.

Cost absorption was unfavorable as inventory increased more during the nine months ended September 30, 2022 than during the nine months ended September 30, 2023.

The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives and an unfavorable change in fair value adjustments related to deferred compensation plans.

In the first quarter of 2023, the divestiture of the company’s Longwall business was finalized, resulting in an unfavorable impact to operating profit of $586 million, primarily a non-cash item driven by the release of accumulated foreign currency translation.

Operating profit margin was 19.7 percent for the nine months ended September 30, 2023, compared with 14.5 percent for the nine months ended September 30, 2022.

Profit (Loss) by Segment

(Millions of dollars) Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 $

Construction Industries $ 5,440 $ 3,255 $ 2,185 67 %

Resource Industries 2,234 1,222 1,012 83 %

Energy & Transportation 3,507 2,132 1,375 64 %

All Other Segment 42 42 — — %

Corporate Items and Eliminations (1,666) (847) (819)

Machinery, Energy & Transportation 9,557 5,804 3,753 65 %

Financial Products Segment 675 675 — — %

Corporate Items and Eliminations 60 30 30

Financial Products 735 705 30 4 %

Consolidating Adjustments (460) (285) (175)

Consolidated Operating Profit $ 9,832 $ 6,224 $ 3,608 58 %

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Other Profit/Loss and Tax Items

▪ Interest expense excluding Financial Products for the nine months ended September 30, 2023, was $385 million, compared with $326 million for the nine months ended September 30, 2022.

The increase was due to higher average borrowing rates.

▪ Other income (expense) for the nine months ended September 30, 2023, was income of $354 million, compared with income of $755 million for the nine months September 30, 2022.

The change was primarily driven by unfavorable impacts from foreign currency exchange and pension and OPEB plan costs, partially offset by higher investment and interest income.

▪ The provision for income taxes for the nine months ended September 30, 2023, reflected an estimated annual tax rate of 22.5 percent, compared with 23 percent for the nine months ended September 30, 2022, excluding the discrete items discussed below.

The comparative tax rate for full-year 2022 was 23.2 percent.

The 2023 estimated annual tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business.

In the nine months ended September 30, 2023, the company recorded a discrete tax benefit of $88 million due to a change in the valuation allowance for certain deferred tax assets.

In addition, the company recorded a discrete tax benefit of $54 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense, compared with a $18 million benefit for the nine months ended September 30, 2022.

In the nine months ended September 30, 2022, the company also recorded discrete benefits of $90 million to reflect changes in estimates related to prior years.

Construction Industries

Construction Industries’ total sales were $20.899 billion for the nine months ended September 30, 2023, an increase of $2.475 billion, or 13 percent, compared with $18.424 billion for the nine months ended September 30, 2022.

The increase was primarily due to favorable price realization.

• In North America, sales increased due to favorable price realization and higher sales volume.

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 the nine months ended September 30, 2023, than during the nine months ended September 30, 2022.

• Sales decreased in Latin America primarily due to lower sales volume, partially offset by favorable price realization.

Lower sales volume was driven by the impact from changes in dealer inventories and lower sales of equipment to end users.

Dealer inventory increased during the nine months ended September 30, 2022, compared with a decrease during the nine months ended September 30, 2023.

• In EAME, sales increased primarily due to favorable price realization and higher sales volume.

Higher sales volume was due to the impact from changes in dealer inventories, partially offset by lower sales of equipment to end users.

Dealer inventory increased more during the nine months ended September 30, 2023, than during the nine months ended September 30, 2022.

• 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, partially offset by the impact from changes in dealer inventories.

Dealer inventory increased more during the nine months ended September 30, 2023, than during the nine months ended September 30, 2022.

Construction Industries’ profit was $5.440 billion for the nine months ended September 30, 2023, an increase of $2.185 billion, or 67 percent, compared with $3.255 billion for the nine months ended September 30, 2022.

The increase was mainly due to favorable price realization.

Construction Industries’ profit as a percent of total sales was 26.0 percent for the nine months ended September 30, 2023, compared with 17.7 percent for the nine months ended September 30, 2022.

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Resource Industries

Resource Industries’ total sales were $10.341 billion for the nine months ended September 30, 2023, an increase of $1.463 billion, or 16 percent, compared with $8.878 billion for the nine months ended September 30, 2022.

The increase was primarily due to favorable price realization and higher sales volume.

The increase in sales volume was driven by higher sales of equipment to end users, partially offset by lower aftermarket parts sales volume and the impact from changes in dealer inventories.

Dealer inventory increased more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2023.

Resource Industries’ profit was $2.234 billion for the nine months ended September 30, 2023, an increase of $1.012 billion, or 83 percent, compared with $1.222 billion for the nine months ended September 30, 2022.

The increase was mainly due to favorable price realization, partially offset by unfavorable manufacturing costs.

Unfavorable manufacturing costs were driven by higher materials costs, the impact of manufacturing inefficiencies and unfavorable cost absorption, partially offset by lower freight.

Cost absorption was unfavorable as inventory increased more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2023.

Resource Industries’ profit as a percent of total sales was 21.6 percent for the nine months ended September 30, 2023, compared with 13.8 percent for the nine months ended September 30, 2022.

Energy & Transportation

Sales by Application

(Millions of dollars) Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 $

Oil and Gas $ 4,741 $ 3,503 $ 1,238 35 %

Power Generation 4,527 3,518 1,009 29 %

Industrial 3,793 3,295 498 15 %

Transportation 3,706 3,353 353 11 %

External Sales 16,767 13,669 3,098 23 %

Inter-Segment 3,565 3,260 305 9 %

Total Sales $ 20,332 $ 16,929 $ 3,403 20 %

Energy & Transportation’s total sales were $20.332 billion for the nine months ended September 30, 2023, an increase of $3.403 billion, or 20 percent, compared with $16.929 billion for the nine months ended September 30, 2022.

Sales increased across all applications and inter-segment sales.

The increase in sales was primarily due to higher sales volume and favorable price realization.

• Oil and Gas – Sales increased for turbines and turbine-related services.

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.

Energy & Transportation’s profit was $3.507 billion for the nine months ended September 30, 2023, an increase of $1.375 billion, or 64 percent, compared with $2.132 billion for the nine months ended September 30, 2022.

The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses.

Unfavorable manufacturing costs were driven by higher material costs.

The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.

Energy & Transportation’s profit as a percent of total sales was 17.2 percent for the nine months ended September 30, 2023, compared with 12.6 percent for the nine months ended September 30, 2022.

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International locomotive deliveries were also higher.

Energy & Transportation’s segment profit was $1.301 billion in the first quarter of 2024, an increase of $244 million, or 23 percent, compared with $1.057 billion in the first quarter of 2023.

The increase was mainly due to favorable price realization of $202 million.

Energy & Transportation’s segment profit as a percent of total sales was 19.5 percent in the first quarter of 2024, compared with 16.9 percent in the first quarter of 2023.

Financial Products Segment

Financial Products’ segment revenues were $2.804 billion for the nine months ended September 30, 2023, an increase of $404 million, or 17 percent, compared with $2.400 billion for the nine months ended September 30, 2022.

The increase was primarily due to higher average financing rates across all regions.

Financial Products’ segment profit was $675 million for both the nine months ended September 30, 2023 and 2022, primarily driven by a favorable impact from higher net yield on average earning assets , offset by an unfavorable impact from an increase in SG&A expenses.

Financial Products’ segment revenues were $991 million in the first quarter of 2024, an increase of $89 million, or 10 percent, compared with $902 million in the first quarter of 2023.

The increase was primarily due to a $69 million favorable impact from higher average financing rates across all regions and a $32 million favorable impact from higher average earning assets driven by North America.

Financial Products’ segment profit was $293 million in the first quarter of 2024, an increase of $61 million, or 26 percent, compared with $232 million in the first quarter of 2023.

The increase was mainly due to a $33 million insurance settlement and a $27 million favorable impact from equity securities.

At the end of the first quarter of 2024, past dues at Cat Financial were 1.78 percent, compared with 2.00 percent at the end of the first quarter of 2023.

Write-offs, net of recoveries, were $55 million for the first quarter of 2024, compared with $10 million for the first quarter of 2023.

As of March 31, 2024, Cat Financial's allowance for credit losses totaled $281 million, or 1.01 percent of finance receivables, compared with $331 million, or 1.18 percent of finance receivables at December 31, 2023.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $1.606 billion for the nine months ended September 30, 2023, an increase of $789 million from the nine months ended September 30, 2022, primarily driven by the impact of the divestiture of the company's Longwall business and an unfavorable change in fair value adjustments related to deferred compensation plans.

This impact was included in total restructuring costs.

Expense for corporate items and eliminations was $440 million in the first quarter of 2024, a decrease of $543 million from the first quarter of 2023, primarily driven by the absence of the impact of the divestiture of the company's Longwall business in 2023.

RESTRUCTURING COSTS

In 2023, we expect to incur about $700 million of restructuring costs, which includes a pre-tax loss of approximately $586 million from the divestiture of our Longwall business within Resource Industries on February 1, 2023.

In addition, we expect to incur about $100 million of restructuring costs this year primarily related to strategic actions to address a small number of products.

In 2024, we expect to incur about $300 million to $450 million of restructuring costs.

We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold and SG&A expenses, of about $25 million in 2024 compared with 2023.

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GLOSSARY OF TERMS

Adjusted Operating Profit Margin – Operating profit excluding restructuring costs, which include the divestiture of the company’s Longwall business, as a percent of sales and revenues.

Adjusted Profit Per Share – Profit per share excluding restructuring costs, which include the divestiture of the company’s Longwall business, and a discrete tax benefit to adjust deferred tax balances.

Adjusted Operating Profit Margin – Operating profit excluding restructuring income/costs as a percent of sales and revenues.

Adjusted Profit Per Share – Profit per share excluding restructuring income/costs.

All Other Segment – Primarily includes activities such as:

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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;

manufacturing and sourcing of wear and maintenance components primarily for Cat® products;

parts distribution;

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Currency – With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S.

With respect to operating profit, currency represents the net

Table of Conte n t s

translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S.

With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S.

Currency only includes the impact on sales and operating profit for the Machinery, Energy & Transportation line of business;

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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.

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.

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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 Cat machinery;

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;

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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.

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.

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Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management.

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Mark-to-market gains/losses – Represents the net gain or loss of actual results differing from the company’s assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans.

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soil compactors;

wide-body trucks;

select work tools;

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In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions.

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.

Restructuring Costs – May include costs for employee separation, long-lived asset impairments, contract terminations and divestiture impacts.

Restructuring 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).

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Financial Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio.

On a consolidated basis, we had positive operating cash flow in the first nine months of 2023 and ended the third quarter with $6.55 billion of cash, a decrease of $459 million from year-end 2022.

In addition, ME&T has invested in bank time deposits with varying maturity dates within one year and available-for-sale debt securities that are considered highly liquid and are available for current operations.

These ME&T securities were $4.27 billion as of September 30, 2023 and are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position.

On a consolidated basis, we had positive operating cash flow in the first three months of 2024 and ended the first quarter with $4.96 billion of cash, a decrease of $2.02 billion from year-end 2023.

In addition, ME&T has invested in available-for-sale debt securities and bank time deposits that are considered highly liquid and are available for current operations.

These ME&T securities were $2.19 billion as of March 31, 2024 and are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position.

We intend to maintain a strong cash and liquidity position.

Consolidated operating cash flow for the first nine months of 2023 was $8.88 billion, up $3.86 billion compared to the same period a year ago.

The increase was primarily due to higher profit before taxes adjusted for non-cash items, including the loss on divestiture of the company's Longwall business.

Total debt as of September 30, 2023 was $37.14 billion, an increase of $146 million from year-end 2022.

Debt related to ME&T decreased $99 million in the first nine months of 2023 while debt related to Financial Products increased $254 million.

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As of September 30, 2023, 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.

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 September 30, 2023 was $2.75 billion.

Consolidated operating cash flow for the first three months of 2024 was $2.05 billion, up $479 million compared to the same period a year ago.

The increase was primarily due to higher profit before taxes including reconciling adjustments and lower working capital requirements, excluding changes in accrued wages, salaries and benefits, which were a partial offset due to higher payments for short-term incentive compensation.

Within working capital, changes in inventory favorably impacted cash flow as inventory increased less in the first quarter of 2024 compared to the prior year period, partially offset by unfavorable changes in accounts payable.

Total debt as of March 31, 2024 was $37.85 billion, a decrease of $25 million from year-end 2023.

Debt related to ME&T decreased $31 million in the first three months of 2024 while debt related to Financial Products increased $14 million.

As of March 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.

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 March 31, 2024 was $2.75 billion.

Information on our Credit Facility is as follows:

• In August 2023, we entered into a new 364-day facility.

• The 364-day facility of $3.15 billion (of which $825 million is available to ME&T) expires in August 2024.

• In August 2023, we amended and extended the three-year facility (as amended and restated, the "three-year facility").

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.

At September 30, 2023, Caterpillar’s consolidated net worth was $20.55 billion, which was above the $9.00 billion required under the Credit Facility.

The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At September 30, 2023, Cat Financial’s covenant interest coverage ratio was 1.78 to 1.

• The three-year facility, as amended in August 2023, of $2.73 billion (of which $715 million is available to ME&T) expires in August 2026.

• The five-year facility, as amended in August 2023, of $4.62 billion (of which $1.21 billion is available to ME&T) expires in August 2028.

At March 31, 2024, Caterpillar’s consolidated net worth was $17.70 billion, which was above the $9.00 billion required under the Credit Facility.

The consolidated net worth is defined in the Credit Facility as Caterpillar's consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At March 31, 2024, Cat Financial’s covenant interest coverage ratio was 1.70 to 1.

This was above the 1.15 to 1 minimum 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, required by the Credit Facility.

In addition, at September 30, 2023, Cat Financial’s six-month covenant leverage ratio was 6.80 to 1.

In addition, at March 31, 2024, Cat Financial’s six-month covenant leverage ratio was 6.90 to 1.

This was below the maximum ratio of debt to net worth of 10 to 1, 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, required by the Credit Facility.

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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 September 30, 2023, there were no borrowings under the Credit Facility.

Our total credit commitments and available credit as of September 30, 2023 were:

September 30, 2023

At March 31, 2024, there were no borrowings under the Credit Facility.

The aforementioned financial covenants are being reported as calculated under the Credit Facility and not pursuant to U.S.

Please refer to the credit agreements governing the Credit Facility filed as an exhibit to our periodic reports for further information related to the calculation thereof.

For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor "Restrictive covenants in our debt agreements could limit our financial and operating flexibility" set forth in Part I, Item 1A of our most recent annual report on Form 10-K.

Our total credit commitments and available credit as of March 31, 2024 were:

March 31, 2024

(Millions of dollars) Consolidated Machinery,

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Available credit $ 10,863 $ 3,376 $ 7,487

The other external consolidated credit lines with banks as of September 30, 2023 totaled $4.08 billion.

The other external consolidated credit lines with banks as of March 31, 2024 totaled $4.14 billion.

These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements.

Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.

Table of Conte n t s

We receive debt ratings from the major credit rating agencies.

Fitch maintains a "high-A" debt rating, while Moody’s and S&P maintain a “mid-A” debt rating.

A downgrade of our credit ratings by any of the major credit rating agencies could result in increased borrowing costs and could make access to credit in certain markets more difficult.

A downgrade of our credit ratings by any of the major credit rating agencies could result in increased borrowing costs and could make access to certain credit markets more difficult.

In the event economic conditions deteriorate such that access to debt markets becomes unavailable, ME&T’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities.

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We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions.

We account for the payments made under the Programs, the same as our other accounts payable, as a reduction to our cash flows from operations.

We account for the payments made under the Programs, the same as other accounts payable, as a reduction to our cash flows from operations.

We do not believe that changes in the availability of the programs will have a significant impact on our liquidity.

Additional information related to the Programs is included in Note 2 - "New accounting guidance" of Part I, Item 1 "Financial Statements".

Additional information related to the programs is included in Note 21 – "Supplier finance programs" of Part I, Item 1 "Financial Statements."

Machinery, Energy & Transportation

Net cash provided by operating activities was $7.96 billion in the first nine months of 2023, compared with net cash provided of $3.19 billion for the same period in 2022.

The increase was primarily due to higher profit before taxes, adjusted for non-cash items, including the loss on divestiture of the company's Longwall business and lower working capital requirements.

Within working capital, changes in inventories and accrued expenses favorably impacted cash flow but were partially offset by changes in accounts payable, customer advances and accounts receivable.

Net cash used for investing activities in the first nine months of 2023 was $3.89 billion, compared with net cash used of $881 million in the first nine months of 2022.

The increase was due to higher investment in securities, net of proceeds from sale of securities, and an increase in capital spend.

Net cash used for financing activities during the first nine months of 2023 was $4.18 billion, compared with net cash used of $5.29 billion in the same period of 2022.

The change was primarily due to lower share repurchases in the first nine months of 2023 along with favorable impacts from borrowing activity, partially offset by increased dividends paid.

Net cash provided by operating activities was $1.77 billion in the first three months of 2024, compared with net cash provided of $1.78 billion for the same period in 2023.

The decrease was primarily due to changes in accrued wages, salaries, and employee benefits mostly due to higher payments for short term incentive compensation in 2024, partially offset by lower working capital requirements, excluding the impact of changes in accrued wages, salaries, and employee benefits.

Within working capital, changes in inventories favorably impacted cash flow but were partially offset by changes in accounts payable, accounts receivable and customer advances.

Net cash provided by investing activities in the first three months of 2024 was $1.23 billion, compared with net cash used of $670 million in the first three months of 2023.

The change was due to higher proceeds from maturities and sale of securities, primarily due to time deposit maturities in 2024, and lower investments in securities.

Net cash used for financing activities during the first three months of 2024 was $5.12 billion, compared with net cash used of $1.14 billion in the same period of 2023.

The change was primarily due to higher share repurchases in the first three months of 2024.

While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our long-term cash deployment strategy is focused on the following priorities.

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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 $1.11 billion during the first nine months of 2023, compared to $880 million for the same period in 2022.

We expect ME&T’s capital expenditures in 2023 to be about $1.50 billion.

We made $320 million of contributions to our pension and other postretirement benefit plans during the first nine months of 2023.

Operational excellence and commitments – Capital expenditures were $502 million during the first three months of 2024, compared to $414 million for the same period in 2023.

We expect ME&T’s capital expenditures in 2024 to be about $2.0 billion to $2.5 billion.

We made $113 million of contributions to our pension and other postretirement benefit plans during the first three months of 2024.

We currently anticipate full-year 2024 contributions of approximately $273 million.

In comparison, we made $299 million of contributions to our pension and other postretirement benefit plans during the first nine months of 2022.

In comparison, we made $208 million of contributions to our pension and other postretirement benefit plans during the first three months of 2023.

Fund strategic growth initiatives and return capital to shareholders – We intend to utilize our liquidity and debt capacity to fund targeted investments that drive long-term profitable growth focused in the areas of expanded offerings, services and sustainability, including acquisitions.

As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases.

We define ME&T free cash flow as cash from ME&T operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions and cash payments related to settlements with the U.S.

Internal Revenue Service.

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 a mid-A rating.

Table of Conte n t s

We define ME&T free cash flow as cash from ME&T operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions.

Our share repurchase plans are subject to the company’s cash deployment priorities and are evaluated on an ongoing basis considering the financial condition of the company, corporate cash flow, the company’s liquidity needs, the economic outlook, and the health and stability of global credit markets.

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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.

In the first nine months of 2023, we repurchased $2.21 billion of Caterpillar common stock, with $10.59 billion remaining under the 2022 Authorization as of September 30, 2023.

Our basic shares outstanding as of September 30, 2023 were approximately 509 million.

In the first three months of 2024, we repurchased $4.46 billion of Caterpillar common stock, with $3.37 billion remaining under the 2022 Authorization as of March 31, 2024.

Our basic shares outstanding as of March 31, 2024 were approximately 489 million.

Each quarter, our Board of Directors reviews the company’s dividend for the applicable quarter.

The Board evaluates the financial condition of the company and considers corporate cash flow, the company’s liquidity needs, the economic outlook, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend.

In October 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 $1.90 billion in the first nine months of 2023.

In April 2024, 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 $648 million in the first three months of 2024.

Financial Products

Net cash provided by operating activities was $905 million in the first nine months of 2023, compared with $1.25 billion for the same period in 2022.

Net cash used for investing activities was $1.25 billion for the first nine months of 2023, compared with net cash used of $228 million for the same period in 2022.

Net cash provided by operating activities was $308 million in the first three months of 2024, compared with $302 million for the same period in 2023.

Net cash used for investing activities was $291 million in the first three months of 2024, compared with net cash used of $444 million for the same period in 2023.

The change was primarily due to portfolio related activity.

Net cash provided by financing activities was $122 million in the first nine months of 2023 compared with net cash used of $872 million for the same period in 2022.

The change was primarily due to higher portfolio funding requirements.

Net cash provided by financing activities was $117 million in the first three months of 2024, compared with net cash used of $43 million for the same period in 2023.

The change was due to a higher net inflow from external borrowings and the absence of dividends paid to Caterpillar.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Part I, Item 1.

Note 2 - “New accounting guidance”.

For a discussion of recent accounting pronouncements, see Note 2 – “New accounting guidance” of Part I, Item 1 "Financial Statements."

CRITICAL ACCOUNTING ESTIMATES

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OTHER MATTERS

Information related to legal proceedings appears in Note 14—Environmental and Legal Matters of Part II, Item 8 “Financial Statements and Supplementary Data.”

Retirement Benefits

We recognize mark-to-market gains and losses immediately through earnings upon the remeasurement of our pension and OPEB plans.

Mark-to-market gains and losses represent the effects of actual results differing from our assumptions and the effects of changing assumptions.

We will record the annual mark-to-market adjustment as of the measurement date, December 31, 2023.

It is difficult to predict the December 31, 2023 adjustment amount, as it will be dependent primarily on changes in discount rates during 2023, and actual returns on plan assets differing from our expected returns for 2023.

Information related to legal proceedings appears in Note 14 – "Environmental and legal matters" of Part I, Item 1 “Financial Statements.”

Order Backlog

At the end of the third quarter of 2023, the dollar amount of backlog believed to be firm was approximately $28.1 billion, about $2.6 billion lower than the second quarter of 2023.

The order backlog decreased across the three primary segments.

Of the total backlog at September 30, 2023, approximately $6.1 billion was not expected to be filled in the following twelve months.

Table of Conte n t s

At the end of the first quarter of 2024, the dollar amount of backlog believed to be firm was approximately $27.9 billion, about $0.4 billion higher than the fourth quarter of 2023.

The order backlog increased primarily within the Energy and Transportation segment.

Of the total backlog at March 31, 2024, approximately $6.0 billion was not expected to be filled in the following twelve months.

NON-GAAP FINANCIAL MEASURES

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We believe it is important to separately quantify the profit impact of three significant items in order for our results to be meaningful to our readers.

These items consist of (i) restructuring costs related to the divestiture of the company's Longwall business, (ii) other restructuring costs and (iii) certain deferred tax valuation allowance adjustments.

These items consist of (i) restructuring income related to the divestiture of a non-US mining entity, (ii) other restructuring income/costs and (iii) restructuring costs related to the divestiture of the company's Longwall business in 2023.

We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results.

In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases.

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

Three Months Ended September 30, 2023 - U.S.

(Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Profit Profit per Share

Three Months Ended March 31, 2024 - U.S.

$ 3,519 22.3 % $ 3,532 $ 688 $ 2,856 $ 5.75

Restructuring costs 46 0.3 % 46 10 20.0 % 36 0.07

Three Months Ended September 30, 2023 - Adjusted

Restructuring (income) - non-US mining entity divestiture (64) (0.5) % (64) 54 (118) (0.24)

Other restructuring (income) costs 58 0.4 % 58 14 44 0.09

Three Months Ended March 31, 2024 - Adjusted

$ 3,513 22.2 % $ 3,526 $ 756 $ 2,782 $ 5.60

Three Months Ended September 30, 2022 - U.S.

Three Months Ended March 31, 2023 - U.S.

$ 2,731 17.2 % $ 2,634 $ 708 $ 1,943 $ 3.74

Restructuring costs 49 0.3 % 49 9 18.4 % 40 0.08

Three Months Ended September 30, 2022 - Adjusted

Restructuring costs - Longwall divestiture 586 3.7 % 586 — 586 1.13

Other restructuring (income) costs 25 0.2 % 25 5 20 0.04

Three Months Ended March 31, 2023 - Adjusted

$ 3,342 21.1 % $ 3,245 $ 713 $ 2,549 $ 4.91

Nine Months Ended September 30, 2023- U.S.

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.

The annual effective tax rate, excluding discrete items for the three months ended March 31, 2024, and 2023 is discussed using non-GAAP financial measures that exclude the effects of amounts associated with discrete items recorded fully in the quarter they occur.

These items consist of (i) restructuring income related to the divestiture of a non-US mining entity, (ii) restructuring costs related to the divestiture of the company's Longwall business in 2023 and (iii) settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense.

We believe the non-GAAP measures will provide investors with useful perspective on underlying business results and trends and aids with assessing the company's period-over-period results.

A reconciliation of our effective tax rate to annual effective tax rate, excluding discrete items is below:

(Dollars in millions) Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate

Three Months Ended March 31, 2024 - U.S.

$ 3,532 $ 688 19.5 %

Restructuring costs - Longwall divestiture 586 1.2 % 586 — — % 586 1.13

Other restructuring costs 102 0.1 % 102 21 20.0 % 81 0.17

Deferred tax valuation allowance adjustments — — % — 88 — % (88) (0.17)

Nine Months Ended September 30, 2023 - Adjusted

Restructuring (income) - non-US mining entity divestiture (64) 54

Excess stock-based compensation — 38

Annual effective tax rate, excluding discrete items $ 3,468 $ 780 22.5 %

Excess stock-based compensation — (38)

Other restructuring (income) costs 58 14

Three Months Ended March 31, 2024 - Adjusted

$ 3,526 $ 756

Nine Months Ended September 30, 2022 - U.S.

Three Months Ended March 31, 2023 - U.S.

$ 2,634 $ 708 26.9 %

Restructuring costs 90 0.2 % 90 13 14.0 % 77 0.14

Nine Months Ended September 30, 2022 - Adjusted

Restructuring costs - Longwall divestiture 586 —

Excess stock-based compensation — 32

Annual effective tax rate, excluding discrete items $ 3,220 $ 740 23.0 %

Excess stock-based compensation — (32)

Other restructuring (income) costs 25 5

Three Months Ended March 31, 2023 - Adjusted

$ 3,245 $ 713

Reconciliations of ME&T free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities are as follows:

(Millions of dollars) Nine Months Ended September 30,

(Millions of dollars) Three Months Ended March 31,

ME&T net cash provided by operating activities 1

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ME&T capital expenditures (502) (414)

Cash payments related to settlements with the U.S.

Internal Revenue Service — 467

ME&T free cash flow $ 1,269 $ 1,365

1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 60 - 61.

Table of Conte n t s

Supplemental Consolidating Data

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Certain amounts for prior periods have been reclassified to conform to the current period presentation.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended September 30, 2023

(Millions of dollars)

Supplemental Consolidating Data

Consolidated Machinery,

Transportation Financial

Products Consolidating

Sales and revenues:

Sales of Machinery, Energy & Transportation $ 15,988 $ 15,988 $ — $ —

Revenues of Financial Products 822 — 1,017 (195) 1

Total sales and revenues 16,810 15,988 1,017 (195)

Operating costs:

Cost of goods sold 10,583 10,586 — (3) 2

Selling, general and administrative expenses 1,624 1,430 206 (12) 2

Research and development expenses 554 554 — —

Interest expense of Financial Products 280 — 280 —

Other operating (income) expenses 320 25 310 (15) 2

Total operating costs 13,361 12,595 796 (30)

Operating profit 3,449 3,393 221 (165)

Interest expense excluding Financial Products 129 129 — —

Other income (expense) 195 42 (12) 165 3

Consolidated profit before taxes 3,515 3,306 209 —

Provision (benefit) for income taxes 734 654 80 —

Profit of consolidated companies 2,781 2,652 129 —

Equity in profit (loss) of unconsolidated affiliated companies 12 12 — —

Profit of consolidated and affiliated companies 2,793 2,664 129 —

Profit (loss) attributable to noncontrolling interests (1) (1) — —

$ 2,794 $ 2,665 $ 129 $ —

1 Elimination of Financial Products’ revenues earned from ME&T.

2 Elimination of net expenses recorded by ME&T paid to Financial Products.

3 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.

4 Profit attributable to common shareholders.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

(Millions of dollars)

24 unchanged sentences

1 Elimination of Financial Products’ revenues earned from ME&T.

2 Elimination of net expenses recorded by ME&T paid to Financial Products.

4 Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.

5 Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.

6 Profit attributable to common shareholders.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended September 30, 2022

(Millions of dollars)

Supplemental Consolidating Data

Consolidated Machinery,

Transportation Financial

Products Consolidating

Sales and revenues:

Sales of Machinery, Energy & Transportation $ 14,278 $ 14,278 $ — $ —

Revenues of Financial Products 716 — 852 (136) 1

Total sales and revenues 14,994 14,278 852 (136)

Operating costs:

Cost of goods sold 10,202 10,203 — (1) 2

Selling, general and administrative expenses 1,401 1,271 136 (6) 2

Research and development expenses 476 476 — —

Interest expense of Financial Products 151 — 151 —

Other operating (income) expenses 339 43 315 (19) 2

Total operating costs 12,569 11,993 602 (26)

Operating profit 2,425 2,285 250 (110)

Interest expense excluding Financial Products 109 110 — (1) 3

Other income (expense) 242 160 (27) 109 4

Consolidated profit before taxes 2,558 2,335 223 —

Provision (benefit) for income taxes 527 464 63 —

Profit of consolidated companies 2,031 1,871 160 —

Equity in profit (loss) of unconsolidated affiliated companies 9 11 — (2) 5

Profit of consolidated and affiliated companies 2,040 1,882 160 (2)

Profit (loss) attributable to noncontrolling interests (1) (1) 2 (2) 6

$ 2,041 $ 1,883 $ 158 $ —

1 Elimination of Financial Products’ revenues earned from ME&T.

2 Elimination of net expenses recorded by ME&T paid to Financial Products.

3 Elimination of interest expense recorded between Financial Products and ME&T.

2 Elimination of net expenses recorded between ME&T and Financial Products.

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.

4 Profit attributable to common shareholders.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

(Millions of dollars)

26 unchanged sentences

2 Elimination of net expenses recorded by ME&T paid to Financial Products.

3 Elimination of interest expense recorded between Financial Products and ME&T.

2 unchanged sentences

6 Profit attributable to common shareholders.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Financial Position

At September 30, 2023

At March 31, 2024

(Millions of dollars)

50 unchanged sentences

10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

Table of Conte n t s

Caterpillar Inc.

50 unchanged sentences

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.

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10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

(Millions of dollars)

5 unchanged sentences

Profit of consolidated and affiliated companies $ 2,854 $ 2,636 $ 218 $ —

Adjustments for non-cash items:

Adjustments to reconcile profit to net cash provided by operating activities:

Depreciation and amortization 524 328 196 —

Provision (benefit) for deferred income taxes (54) (23) (31) —

Loss on divestiture 572 572 — —

(Gain) loss on divestiture (64) (64) — —

Other (5) (16) (120) 131 1

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Net intercompany borrowings — — 3 (3) 3

Investments and acquisitions (net of cash acquired) (67) (67) — —

Proceeds from sale of businesses and investments (net of cash sold) 42 42 — —

Proceeds from sale of securities 747 553 194 —

Proceeds from maturities and sale of securities 1,867 1,797 70 —

Investments in securities (275) (148) (127) —

14 unchanged sentences

Cash, cash equivalents and restricted cash at end of period $ 4,965 $ 3,967 $ 998 $ —

1 Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.

1 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

1 unchanged sentence

3 Elimination of net proceeds and payments to/from ME&T and Financial Products.

5 Elimination of dividend activity between Financial Products and ME&T.

Table of Conte n t s

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

(Millions of dollars)

5 unchanged sentences

Profit of consolidated and affiliated companies $ 1,942 $ 1,842 $ 178 $ (78) 1,5

Adjustments for non-cash items:

Adjustments to reconcile profit to net cash provided by operating activities:

Depreciation and amortization 532 342 190 —

Provision (benefit) for deferred income taxes (191) (169) (22) —

(Gain) loss on divestiture 572 572 — —

Other 117 124 (143) 136 2

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Short-term borrowings – net (original maturities three months or less) (103) (3) (100) —

Other – net (1) (1) — —

Net cash provided by (used for) financing activities (1,106) (1,140) (43) 77

7 unchanged sentences

4 Elimination of net proceeds and payments to/from ME&T and Financial Products.

Table of Conte n t s

5 Elimination of dividend activity between Financial Products and ME&T.

Forward-looking Statements

35 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis