What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-07 · 291 added, 292 removed, 862 unchanged (40% of the section changed)

5 unchanged sentences

Risk Factors of the 2023 Form 10-K .

Highlights for the second quarter of 2024 include:

• Total sales and revenues for the second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023.

Highlights for the third quarter of 2024 include:

• Total sales and revenues for the third quarter of 2024 were $16.106 billion, a decrease of $704 million, or 4 percent, compared with $16.810 billion in the third quarter of 2023.

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

• Operating profit margin was 20.9 percent for the second quarter of 2024, compared with 21.1 percent for the second quarter of 2023.

Adjusted operating profit margin was 22.4 percent for the second quarter of 2024, compared with 21.3 percent for the second quarter of 2023.

• Second-quarter 2024 profit per share was $5.48, and excluding the items in the table below, adjusted profit per share was $5.99.

Second-quarter 2023 profit per share was $5.67, and excluding the items in the table below, adjusted profit per share was $5.55.

• Caterpillar ended the second quarter of 2024 with $4.3 billion of enterprise cash.

Highlights for the six months ended June 30, 2024 include:

• Total sales and revenues were $32.488 billion for the six months ended June 30, 2024, a decrease of $692 million, or 2 percent, compared with $33.180 billion for the six months ended June 30, 2023.

• Operating profit margin was 21.5 percent for the six months ended June 30, 2024, compared with 19.2 percent for the six months ended June 30, 2023.

Adjusted operating profit margin was 22.3 percent for the six months ended June 30, 2024, compared with 21.2 percent for the six months ended June 30, 2023.

• Profit per share for the six months ended June 30, 2024, was $11.23, and excluding the items in the table below, adjusted profit per share was $11.59.

Profit per share for the six months ended June 30, 2023, was $9.41, and excluding the items in the table below, adjusted profit per share was $10.46.

• Enterprise operating cash flow was $5.1 billion for the six months ended June 30, 2024.

• Operating profit margin was 19.5 percent for the third quarter of 2024, compared with 20.5 percent for the third quarter of 2023.

Adjusted operating profit margin was 20.0 percent for the third quarter of 2024, compared with 20.8 percent for the third quarter of 2023.

• Third-quarter 2024 profit per share was $5.06, and excluding the items in the table below, adjusted profit per share was $5.17.

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

• Caterpillar ended the third quarter of 2024 with $5.6 billion of enterprise cash.

Highlights for the nine months ended September 30, 2024 include:

• Total sales and revenues were $48.594 billion for the nine months ended September 30, 2024, a decrease of $1.396 billion, or 3 percent, compared with $49.990 billion for the nine months ended September 30, 2023.

• Operating profit margin was 20.9 percent for the nine months ended September 30, 2024, compared with 19.7 percent for the nine months ended September 30, 2023.

Adjusted operating profit margin was 21.5 percent for the nine months ended September 30, 2024, compared with 21.0 percent for the nine months ended September 30, 2023.

• Profit per share for the nine months ended September 30, 2024, was $16.27, and excluding the items in the table below, adjusted profit per share was $16.75.

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.

• Enterprise operating cash flow was $8.6 billion for the nine months ended September 30, 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 pages 66-68.

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

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

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Restructuring (income) costs - divestitures of certain non-U.S.

entities 228 0.47 — — 164 0.22 — —

— — — — 164 0.22 — —

Other restructuring (income) costs 70 0.11 46 0.07 158 0.26 102 0.17

3 unchanged sentences

Adjusted profit $ 3,168 $ 5.17 $ 3,561 $ 5.52 $ 10,452 $ 16.75 $ 10,489 $ 15.98

Total sales and revenues for the second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023.

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

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

Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.

Second-quarter 2024 profit per share was $5.48, compared with $5.67 profit per share in the second quarter of 2023.

In the second quarter of 2024 and 2023, profit per share included restructuring costs.

Second-quarter 2023 profit per share also included a discrete tax benefit to adjust deferred tax balances.

Profit for the second quarter of 2024 was $2.681 billion, a decrease of $241 million, or 8 percent, compared with $2.922 billion for the second quarter of 2023.

Favorable price realization

was more than offset by the profit impact of lower sales volume, higher restructuring costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses.

Total sales and revenues for the third quarter of 2024 were $16.106 billion, a decrease of $704 million, or 4 percent, compared with $16.810 billion in the third quarter of 2023.

The decrease was primarily due to lower sales volume .

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

In addition, changes in dealer inventories had an unfavorable impact to sales volume.

Dealer inventory increased less during the third quarter of 2024 than during the third quarter of 2023.

Third-quarter 2024 profit per share was $5.06, compared with $5.45 profit per share in the third quarter of 2023.

In the third quarters of 2024 and 2023, profit per share included restructuring costs.

Profit for the third quarter of 2024 was $2.464 billion, a decrease of $330 million, or 12 percent, compared with $2.794 billion for the third quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume, partially offset by favorable price realization .

Trends and Economic Conditions

Outlook for Key End Markets

In Construction Industries, sales of equipment to end users in the second half of 2024 are expected to decline slightly as compared to the second half of 2023.

In North America, for 2024, we anticipate lower rental fleet loading.

Government-related infrastructure projects are expected to remain healthy.

In Asia Pacific, outside of China, we continue to expect soft economic conditions.

Our results continue to reflect the benefit of the diversity of our end markets.

In Construction Industries, we expect lower sales of equipment to end users in the fourth quarter of 2024 as compared to the fourth quarter of 2023, but remain positive about the longer-term demand outlook.

In North America, we anticipate lower sales of equipment to end users in the fourth quarter of 2024 primarily due to lower rental fleet loading, consistent with the trend in the second and third quarters of 2024.

However, dealer rental revenue continues to grow.

In addition, government-related infrastructure projects are expected to remain healthy, supported by funding yet to be spent from the Infrastructure Investment and Jobs Act (IIJA).

In Asia Pacific , outside of China, we expect soft economic conditions to continue.

We anticipate demand in China will remain at a relatively low level in the excavator industry above 10-tons.

In EAME , we anticipate that weak economic conditions in Europe will continue, partially offset by continued healthy 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, for both mining and heavy construction and quarry and aggregates, we continue to anticipate lower sales volume in 2024 compared to strong 2023 performance, primarily in off-highway and articulated trucks.

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

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

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.

In EAME , we anticipate that weak economic conditions in Europe will continue, to be partially offset by continued healthy construction demand in the Middle East.

Construction activity in Latin America remains healthy, and we are expecting modest growth to continue.

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

In Resource Industries, for both mining and heavy construction and quarry and aggregates, we continue to anticipate lower machine sales volume in the fourth quarter of 2024 as compared to a strong performance in the fourth quarter of 2023.

However, we expect the year-over-year rate of decline for sales of equipment to end users to moderate in the fourth quarter of 2024 as compared to previous quarters.

We expect higher services revenues, including robust rebuild activity.

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

Customers continue to display capital discipline, however, 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.

For Energy & Transportation, in Oil & Gas in total, we expect a stronger year overall in 2024 as compared to 2023.

We expect reciprocating engines for Oil & Gas to be about flat to slightly down in 2024 after strong 2023 performance, primarily due to ongoing softness in well servicing.

We expect gas compression to be up in 2024 as compared to 2023, but expect it to soften in the second half of 2024 as compared to the second half of 2023.

For Solar Turbines, we continue to expect sales volume to increase in the second half of 2024 as compared to the second half of 2023, as backlog remains strong for Oil & Gas.

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

Industrial demand is expected to remain at a relatively low level in the second half of 2024 compared to the second half of 2023.

In Transportation, we anticipate growth as the year progresses in both high-speed marine and rail services.

In Energy & Transportation, Power Generation demand is expected to remain strong, and we expect robust growth for reciprocating engines and for turbines and turbine-related services in the fourth quarter of 2024 and for the full-year as compared to 2023.

Overall strength in Power Generation continues to be driven by data center growth related to cloud computing and generative artificial intelligence (AI), and we expect this trend to continue.

For Oil & Gas, in total, we expect a stronger year overall in 2024 as compared to 2023.

For turbines and turbine-related services used in Oil & Gas applications, we expect a strong fourth quarter of 2024, but sales are expected to be lower than the fourth quarter of 2023 due to the timing of deliveries.

We expect the increase in sales for turbines and turbine-related services used in Power Generation will mostly offset the decrease in sales for turbines and turbine-related services used in Oil & Gas.

Overall, we expect roughly flat sales in turbines and turbine-related services in the fourth quarter of 2024 as compared to the fourth quarter of 2023.

Turbines and turbine-related services has a strong backlog as well as healthy order and inquiry activity, and we continue to expect growth for turbines and turbine-related services in Oil & Gas in 2024 as compared to 2023.

After a strong 2023, we expect reciprocating engine sales for Oil & Gas to be slightly down in 2024, primarily due to ongoing softness in well servicing.

We still expect gas compression for reciprocating engines used in Oil & Gas to be up in 2024 as compared to 2023, however, we expect it to soften in the near-term as equipment lead times have normalized.

Industrial demand is expected to remain at a relatively low level in 2024 as compared to 2023.

In Transportation, we anticipate growth in 2024 for both rail services and marine applications.

Fourth-Quarter 2024 Company Trends and Expectations

In the fourth quarter of 2024, we expect slightly lower total sales and revenues as compared to the fourth quarter of 2023, impacted by lower machine sales of equipment to end users.

Machine dealer inventory is expected to decrease less during the fourth quarter of 2024 as compared to the $1.4 billion decrease during the fourth quarter of 2023.

We expect machine dealer inventory at the end of 2024 to be around the same level as the end of 2023.

Price realization for machines is expected to trend lower with the normalizing pricing environment, partially offset by favorable price realization in Energy & Transportation.

Services revenues increased in the third quarter of 2024, and the ongoing benefit of our services initiatives are expected to positively impact sales in the fourth quarter of 2024.

In the fourth quarter of 2024 as compared to the fourth quarter of 2023, we expect favorable manufacturing costs and lower selling, general and administrative (SG&A) and research and development (R&D) expenses to be more than offset by the profit impact of lower sales volume.

Lower SG&A/R&D expenses are expected to be primarily driven by lower short-term incentive compensation in the fourth quarter of 2024 as compared to the fourth quarter of 2023.

For the three primary segments, as compared to the fourth quarter of 2023, we expect lower Construction Industries' sales in the fourth quarter of 2024 driven by lower sales of equipment to end users and unfavorable price realization.

Resource Industries' sales in the fourth quarter of 2024 are expected to be slightly lower driven by lower sales of equipment to end users as compared to a strong fourth quarter of 2023.

In Energy & Transportation, we expect sales to be slightly higher supported by strength in Power Generation.

In the fourth quarter of 2024 as compared to the fourth quarter of 2023, within Construction Industries, we expect unfavorable price realization, partially offset by favorable manufacturing costs.

In Resource Industries, we anticipate an unfavorable profit impact from lower sales volume and higher SG&A/R&D expenses as we continue to invest in strategic initiatives for future long-term profitable growth, such as services growth and technology, including autonomy, alternative fuels, connectivity and digital and electrification, to be partially offset by favorable manufacturing costs.

In Energy & Transportation, we expect favorable price realization.

Full-Year 2024 Company Trends and Expectations

For the full-year 2024, we anticipate slightly lower sales and revenues as compared to 2023.

We anticipate a slight decrease in machine dealer inventories during 2024, mostly driven by Resource Industries, compared to an increase in 2023.

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

For 2024, we expect continued services growth.

We also expect restructuring costs to be approximately $400 million and expect capital expenditures to be around $2.0 billion.

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

Second-Half 2024 Company Trends and Expectations

We expect sales and revenues in the second half of 2024 to be slightly higher than the first half of 2024, following a normal seasonal trend.

We expect sales and revenues in the second half of 2024 to be slightly lower than the second half of 2023, due to lower sales volume driven by lower sales of equipment to end users for machines.

Changes in machine dealer inventories are expected to have a nominal impact on second-half 2024 sales and revenues as compared to the second half of 2023.

We expect the decrease in machine dealer inventory in the second half of 2024 to be similar to the decrease in the second half of 2023 which was about $1.0 billion.

We anticipate the decline in second-half 2024 sales and revenues compared to second-half 2023 will be roughly similar to the decline in the first half of 2024 compared to the first half of 2023.

Services revenues grew in the second quarter of 2024, and we expect growth in the second half of 2024 compared to the second half of 2023.

As compared to the second half of 2023, we expect favorable manufacturing costs in the second half of 2024.

We also expect an unfavorable profit impact from lower sales volume and unfavorable price realization in the second half of 2024 compared to the second half of 2023.

We anticipate the benefit from price realization in the second half of 2024 will be significantly lower as we lap favorable price trends from 2023 along with a normalizing price environment.

Third-Quarter 2024 Company Trends and Expectations

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

We anticipate lower sales volume driven by an unfavorable impact from changes in machine dealer inventories and lower sales of equipment to end users of machines.

Machine dealer inventory is expected to be about flat or slightly down during the third quarter of 2024 compared to a $0.4 billion increase during the third quarter of 2023.

We expect price realization in the third quarter of

2024 to be about flat compared to the third quarter of 2023.

We also anticipate services revenues growth in the third quarter of 2024 compared to the third quarter of 2023.

As compared to the third quarter of 2023, we expect lower Construction Industries' sales in the third quarter of 2024 due to the impact from changes in dealer inventories.

Resource Industries' sales are expected to be lower driven by lower sales of equipment to end users.

In Energy & Transportation, we expect sales to be higher driven by strength in Power Generation, Oil & Gas and Transportation, partially offset by lower sales in Industrial.

We expect an unfavorable profit impact from lower sales volume to be offset by favorable manufacturing costs in the third quarter of 2024 as compared to the third quarter of 2023.

Within Construction Industries, we expect an unfavorable profit impact from lower sales volume and slightly unfavorable price realization, partially offset by favorable manufacturing costs.

In Resource Industries, we anticipate an unfavorable profit impact from lower sales volume and higher SG&A/R&D expenses.

In Energy & Transportation, we expect a favorable profit impact from higher sales volume and favorable price realization.

Global Business Conditions

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Consolidated Results of Operations

THREE MONTHS ENDED JUNE 30, 2024 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2023

THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2023

CONSOLIDATED SALES AND REVENUES

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

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the third quarter of 2023 (at left) and the third 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 second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023.

The decrease was primarily due to lower sales volume of $1.206 billion, partially offset by favorable price realization of $578 million.

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

Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.

Total sales and revenues for the third quarter of 2024 were $16.106 billion, a decrease of $704 million, or 4 percent, compared with $16.810 billion in the third quarter of 2023.

The decrease was primarily due to lower sales volume of $759 million.

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

In addition, changes in dealer inventorie s had an unfavorable impact to sales volume.

Dealer inventory increased less during the third quarter of 2024 than during the third quarter of 2023.

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

North America sales increased 1 percent primarily due to favorable price realization, partially offset by lower sales volume.

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

Dealer inventory increased less during the second quarter of 2024 than during the second quarter of 2023.

Sales increased 5 percent in Latin America mainly due to higher sales volume and favorable price realization.

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

North America sales decreased 5 percent primarily due to lower sales volume, partially offset by favorable price realization.

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

Dealer inventory increased less during the third quarter of 2024 than during the third quarter of 2023.

Sales increased 6 percent in Latin America mainly due to higher sales volume, partially offset by unfavorable currency impacts, primarily related to the Brazilian real.

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

Dealer inventory increased during the third quarter of 2024, compared with a decrease during the third quarter of 2023.

EAME sales decreased 6 percent primarily due to lower sales volume.

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

Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.

Asia/Pacific sales decreased 9 percent mainly due to lower sales volume.

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

Total dealer inventory decreased $200 million during the second quarter of 2024, compared with an increase of $600 million during the second quarter of 2023.

Asia/Pacific sales decreased 7 percent due to lower sales volume.

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

Dealer inventory decreased during the third quarter of 2024, compared with an increase during the third quarter of 2023.

Total dealer inventory increased $400 million during the third quarter of 2024, compared with an increase of $600 million during the third 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.

2 unchanged sentences

Sales and Revenues by Segment

(Millions of dollars) Second Quarter 2023 Sales

Realization Currency Inter-Segment / Other Second Quarter 2024 $

(Millions of dollars) Third Quarter 2023 Sales

Realization Currency Inter-Segment / Other Third Quarter 2024 $

Construction Industries $ 6,999 $ (458) $ (147) $ (64) $ 15 $ 6,345 $ (654) (9 %)

13 unchanged sentences

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

Second Quarter 2024

Third Quarter 2024

Construction Industries $ 3,629 (11 %) $ 658 19 % $ 1,150 (15 %) $ 875 (12 %) $ 6,312 (10 %) $ 33 83 % $ 6,345 (9 %)

9 unchanged sentences

Consolidated Sales and Revenues $ 8,545 (4 %) $ 1,678 5 % $ 3,199 (6 %) $ 2,684 (7 %) $ 16,106 (4 %) $ — — % $ 16,106 (4 %)

Second Quarter 2023

Third Quarter 2023

Construction Industries $ 4,078 $ 555 $ 1,351 $ 997 $ 6,981 $ 18 $ 6,999

8 unchanged sentences

Consolidated Sales and Revenues $ 8,927 $ 1,603 $ 3,402 $ 2,878 $ 16,810 $ — $ 16,810

1 Includes revenues from Machinery, Energy & Transportation o f $180 m illion and $172 million in the second quarter of 2024 and 2023, respectively.

1 Includes revenues from Machinery, Energy & Transportation o f $190 m illion and $181 million in the third quarter of 2024 and 2023, respectively.

CONSOLIDATED OPERATING PROFIT

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

The chart above graphically illustrates reasons for the change in consolidated operating profit between the third quarter of 2023 (at left) and the third 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 second quarter of 2024 was $3.482 billion, a decrease of $170 million, or 5 percent, compared with $3.652 billion in the second quarter of 2023.

Favorable price realization of $578 million was more than offset by the profit impact of lower sales volume of $431 million, higher restructuring costs of $227 million and higher SG&A/R&D expenses of $79 million.

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

In the second quarter of 2024, restructuring costs increased primarily due to the divestiture of two non-U.S.

Operating profit margin was 20.9 percent for the second quarter of 2024, compared with 21.1 percent for the second quarter of 2023.

Operating profit for the third quarter of 2024 was $3.147 billion, a decrease of $302 million, or 9 percent, compared with $3.449 billion in the third quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $372 million, partially offset by favorable price realization of $104 million.

Operating profit margin was 19.5 percent for the third quarter of 2024, compared with 20.5 percent for the third quarter of 2023.

Profit (Loss) by Segment

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

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

Construction Industries $ 1,486 $ 1,847 $ (361) (20 %)

10 unchanged sentences

Other Profit/Loss and Tax Items

▪ Interest expense excluding Financial Products in the second quarter of 2024 was $137 million, compared with $127 million in the second quarter of 2023.

The increase was due to higher average borrowing rates.

▪ Other income (expense) in the second quarter of 2024 was income of $155 million, compared with income of $127 million in the second quarter of 2023.

The change was primarily driven by favorable impacts from commodity hedges.

▪ The effective tax rate for the second quarter of 2024 was 23.9 percent compared to 20.6 percent for the second quarter of 2023.

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

The 2024 estimated annual tax rate excludes the impact of second-quarter losses of $228 million for the divestiture of two non-U.S.

entities with no related tax benefit.

In addition, a discrete tax benefit of $4 million was recorded in the second quarter of 2024 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

▪ Interest expense excluding Financial Products in the third quarter of 2024 was $125 million, compared with $129 million in the third quarter of 2023.

The decrease was due to lower average debt outstanding, partially offset by higher average borrowing rates.

▪ Other income (expense) in the third quarter of 2024 was income of $76 million, compared with income of $195 million in the third quarter of 2023.

The change was primarily driven by unfavorable foreign currency impacts.

▪ The effective tax rate for the third quarter of 2024 was 20.7 percent compared to 20.9 percent for the third quarter of 2023.

Excluding the discrete items discussed below, the estimated annual tax rate was 22.5 percent for the third quarters of 2024 and 2023.

In the third quarter of 2024, the company recorded discrete tax benefits of $47 million to reflect changes in estimates related to prior years.

In addition, a discrete tax benefit of $7 million was recorded in the third quarter of 2024, compared with a $22 million benefit in the third 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 second quarter of 2023, the company recorded a discrete tax benefit of $88 million due to a change in the valuation allowance for certain deferred tax assets.

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

Please see a reconciliation of GAAP to non-GAAP financial measures on pages 66-68.

Construction Industries

Construction Industries’ total sales were $6.683 billion in the second quarter of 2024, a decrease of $471 million, or 7 percent, compared with $7.154 billion in the second quarter of 2023.

The decrease was primarily due to lower sales volume of $588 million, partially offset by favorable price realization of $178 million.

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

Dealer inventory remained about flat during the second quarter of 2024, compared to an increase during the second quarter of 2023.

▪ Sales in North America were about flat.

Lower sales volume was offset by favorable price realization.

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

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

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

Dealer inventory increased during the second quarter of 2024, compared with a decrease during the second quarter of 2023.

Construction Industries’ total sales were $6.345 billion in the third quarter of 2024, a decrease of $654 million, or 9 percent, compared with $6.999 billion in the third quarter of 2023.

The decrease was primarily due to lower sales volume of $458 million and unfavorable price realization of $147 million.

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

• In North America, sales decreased primarily due to lower sales volume.

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

Dealer inventory increased less during the third quarter of 2024 than during the third quarter of 2023.

• Sales increased in Latin America mainly due to higher sales volume, partially offset by unfavorable currency impacts, primarily related to the Brazilian real, and unfavorable price realization.

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

Dealer inventory increased during the third quarter of 2024, compared with a decrease during the third quarter of 2023.

• In EAME, sales decreased primarily due to lower sales volume.

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

Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.

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

• Sales decreased in Asia/Pacific mainly due to lower sales volume and unfavorable currency impacts primarily related to the Japanese yen.

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

Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.

Construction Industries’ segment profit was $1.741 billion in the second quarter of 2024, a decrease of $62 million, or 3 percent, compared with $1.803 billion in the second quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $288 million and higher SG&A/R&D expenses of $30 million, partially offset by favorable price realization of $178 million, favorable manufacturing costs of $62 million and favorable other segment items of $16 million.

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

Favorable manufacturing costs largely reflected lower material costs.

Favorable other segment items primarily consisted of favorable currency impacts.

Construction Industries’ segment profit as a percent of total sales was 26.1 percent in the second quarter of 2024, compared with 25.2 percent in the second quarter of 2023.

Dealer inventory decreased during the third quarter of 2024, compared with an increase during the third quarter of 2023.

Construction Industries’ segment profit was $1.486 billion in the third quarter of 2024, a decrease of $361 million, or 20 percent, compared with $1.847 billion in the third quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $276 million and unfavorable price realization of $147 million.

Construction Industries’ segment profit as a percent of total sales was 23.4 percent in the third quarter of 2024, compared with 26.4 percent in the third quarter of 2023.

Resource Industries

Resource Industries’ total sales were $3.206 billion in the second quarter of 2024, a decrease of $357 million, or 10 percent, compared with $3.563 billion in the second quarter of 2023.

The decrease was primarily due to lower sales volume of $475 million, partially offset by favorable price realization of $133 million.

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

Dealer inventory decreased more during the second quarter of 2024 than during the second quarter of 2023.

Resource Industries’ segment profit was $718 million in the second quarter of 2024, a decrease of $22 million, or 3 percent, compared with $740 million in the second quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume of $169 million, unfavorable other segment items of $16 million and higher SG&A/R&D expenses of $14 million, partially offset by favorable price realization of $133 million and favorable manufacturing costs of $44 million.

Unfavorable other segment items primarily consisted of unfavorable currency impacts.

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

Favorable manufacturing costs largely reflected lower freight.

Resource Industries’ segment profit as a percent of total sales was 22.4 percent in the second quarter of 2024, compared with 20.8 percent in the second quarter of 2023.

Resource Industries’ total sales were $3.028 billion in the third quarter of 2024, a decrease of $323 million, or 10 percent, compared with $3.351 billion in the third quarter of 2023.

The decrease was primarily due to lower sales volume.

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

Resource Industries’ segment profit was $619 million in the third quarter of 2024, a decrease of $111 million, or 15 percent, compared with $730 million in the third quarter of 2023.

The decrease was mainly due to the profit impact of lower sales volume.

Resource Industries’ segment profit as a percent of total sales was 20.4 percent in the third quarter of 2024, compared with 21.8 percent in the third quarter of 2023.

Energy & Transportation

Sales by Application

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

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

Oil and Gas $ 1,656 $ 1,667 $ (11) (1 %)

5 unchanged sentences

Total Sales $ 7,187 $ 6,859 $ 328 5 %

Energy & Transportation’s total sales were $7.337 billion in the second quarter of 2024, an increase of $118 million, or 2 percent, compared with $7.219 billion in the second quarter of 2023.

Sales increased across all applications except Industrial.

The increase in sales was primarily due to favorable price realization of $264 million, partially offset by lower sales volume of $129 million.

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

Energy & Transportation’s total sales were $7.187 billion in the third quarter of 2024, an increase of $328 million, or 5 percent, compared with $6.859 billion in the third quarter of 2023.

The increase in sales was primarily due to favorable price realization of $213 million and higher sales volume of $135 million, including inter-segment sales.

• Oil and Gas – Sales decreased slightly as lower sales of reciprocating engines used in well servicing were primarily offset by higher sales for turbines and turbine-related services.

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

1 unchanged sentence

• Industrial – Sales decreased in EAME and North America.

▪ Transportation – Sales increased in rail services and marine.

Energy & Transportation’s segment profit was $1.525 billion in the second quarter of 2024, an increase of $256 million, or 20 percent, compared with $1.269 billion in the second quarter of 2023.

The increase was mainly due to favorable price realization of $264 million.

Energy & Transportation’s segment profit as a percent of total sales was 20.8 percent in the second quarter of 2024, compared with 17.6 percent in the second quarter of 2023.

• Transportation – Sales increased in marine applications, partially offset by lower deliveries of international locomotives.

Energy & Transportation’s segment profit was $1.433 billion in the third quarter of 2024, an increase of $252 million, or 21 percent, compared with $1.181 billion in the third quarter of 2023.

The increase was mainly due to favorable price realization.

Energy & Transportation’s segment profit as a percent of total sales was 19.9 percent in the third quarter of 2024, compared with 17.2 percent in the third quarter of 2023.

Financial Products Segment

Financial Products’ segment revenues were $1.004 billion in the second quarter of 2024, an increase of $81 million, or 9 percent, compared with $923 million in the second quarter of 2023.

The increase was primarily due to a favorable impact from higher average financing rates across all regions of $50 million and a favorable impact from higher average earning assets driven by North America of $32 million.

Financial Products’ segment profit was $227 million in the second quarter of 2024, a decrease of $13 million, or 5 percent, compared with $240 million in the second quarter of 2023.

The decrease was mainly due to higher provision for credit losses at Cat Financial of $27 million and an increase in SG&A expenses of $15 million, partially offset by the absence of prior year unfavorable currency impacts of $14 million and a favorable impact from higher average earning assets of $12 million.

At the end of the second quarter of 2024, past dues at Cat Financial were 1.74 percent, compared with 2.15 percent at the end of the second quarter of 2023.

Write-offs, net of recoveries, were $18 million for the second quarter of 2024, compared with $8 million for the second quarter of 2023.

As of June 30, 2024, Cat Financial's allowance for credit losses totaled $254 million, or 0.89 percent of finance receivables, compared with $281 million, or 1.01 percent of finance receivables at March 31, 2024.

Financial Products’ segment revenues were $1.034 billion in the third quarter of 2024, an increase of $55 million, or 6 percent, compared with $979 million in the third quarter of 2023.

The increase was primarily due to a favorable impact from higher average earning assets of $34 million driven by North America, and a favorable impact from higher average financing rates across all regions of $23 million.

Financial Products’ segment profit was $246 million in the third quarter of 2024, an increase of $43 million, or 21 percent, compared with $203 million in the third quarter of 2023.

The increase was mainly due to a favorable impact from equity securities of $29 million and lower provision for credit losses at Cat Financial of $16 million.

At the end of the third quarter of 2024, past dues at Cat Financial were 1.74 percent, compared with 1.96 percent at the end of the third quarter of 2023.

Write-offs, net of recoveries, were $27 million for the third quarter of 2024, compared with $9 million for the third quarter of 2023.

As of September 30, 2024, Cat Financial's allowance for credit losses totaled $255 million, or 0.87 percent of finance receivables, compared with $254 million, or 0.89 percent of finance receivables at June 30, 2024.

The allowance for credit losses at year-end 2023 was $331 million, or 1.18 percent of finance receivables.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $587 million in the second quarter of 2024, an increase of $332 million from the second quarter of 2023, primarily driven by higher restructuring costs and higher corporate costs.

In the second quarter of 2024, restructuring costs increased primarily due to the divestiture of two non-U.S.

SIX MONTHS ENDED JUNE 30, 2024 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2023

Expense for corporate items and eliminations was $457 million in the third quarter of 2024, an increase of $89 million from the third quarter of 2023.

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

NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2023

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the six months ended June 30, 2023 (at left) and the six months ended June 30, 2024 (at right).

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the nine months ended September 30, 2023 (at left) and the nine months ended September 30, 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 were $32.488 billion for the six months ended June 30, 2024, a decrease of $692 million, or 2 percent, compared with $33.180 billion for the six months ended June 30, 2023.

Total sales and revenues were $48.594 billion for the nine months ended September 30, 2024, a decrease of $1.396 billion, or 3 percent, compared with $49.990 billion for the nine months ended September 30, 2023.

The decrease was primarily due to lower sales volume of $2.684 billion, partially offset by favorable price realization of $1.292 billion.

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

Dealer inventory increased less during the six months ended June 30, 2024, than during the six months ended June 30, 2023.

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

In addition, changes in dealer inventories had an unfavorable impact to sales volume.

Dealer inventory increased less during the nine months ended September 30, 2024, than during the nine months ended September 30, 2023.

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

North America sales increased 4 percent primarily due to favorable price realization.

Sales increased 3 percent in Latin America mainly due to higher sales volume and favorable currency impacts primarily related to the Brazilian real.

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

North America sales increased 1 percent primarily due to favorable price realization, partially offset by lower sales volume.

The decrease in sales volume is mainly driven by the impact from changes in dealer inventories.

Dealer inventory increased less during the nine months ended September 30, 2024, than during the nine months ended September 30, 2023.

Sales increased 4 percent in Latin America mainly due to higher sales volume.

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

Dealer inventory increased during the nine months ended September 30, 2024, compared with a decrease during the nine months ended September 30, 2023.

EAME sales decreased 13 percent primarily due to lower sales volume.

2 unchanged sentences

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

Dealer inventory decreased during the six months ended June 30, 2024, compared with an increase during the six months ended June 30, 2023.

Dealer inventory increased about $1.2 billion during the six months ended June 30, 2024, compared with an increase of about $2.2 billion during the six months ended June 30, 2023.

Dealer inventory decreased during the nine months ended September 30, 2024, compared with an increase during the nine months ended September 30, 2023.

Total dealer inventory increased about $1.7 billion during the nine months ended September 30, 2024, compared with an increase of about $2.9 billion during the nine months ended September 30, 2023.

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

2 unchanged sentences

Sales and Revenues by Segment

(Millions of dollars) Six Months Ended June 30, 2023 Sales

Realization Currency Inter-Segment / Other Six Months Ended June 30, 2024 $

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

Realization Currency Inter-Segment / Other Nine Months Ended September 30, 2024 $

Construction Industries $ 20,899 $ (1,510) $ 230 $ (141) $ (26) $ 19,452 $ (1,447) (7 %)

11 unchanged sentences

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Construction Industries $ 11,419 (2 %) $ 1,930 12 % $ 3,193 (23 %) $ 2,843 (14 %) $ 19,385 (7 %) $ 67 (28 %) $ 19,452 (7 %)

9 unchanged sentences

Consolidated Sales and Revenues $ 26,161 1 % $ 4,956 4 % $ 9,048 (13 %) $ 8,429 (7 %) $ 48,594 (3 %) $ — — % $ 48,594 (3 %)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Construction Industries $ 11,654 $ 1,720 $ 4,125 $ 3,307 $ 20,806 $ 93 $ 20,899

8 unchanged sentences

Consolidated Sales and Revenues $ 25,799 $ 4,784 $ 10,353 $ 9,054 $ 49,990 $ — $ 49,990

1 Includes revenues from Machinery, Energy & Transportation of $357 million and $334 million in the six months ended June 30, 2024 and 2023, respectively.

1 Includes revenues from Machinery, Energy & Transportation of $547 million and $515 million in the nine months ended September 30, 2024 and 2023, respectively.

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the six months ended June 30, 2023 (at left) and the six months ended June 30, 2024 (at right).

The chart above graphically illustrates reasons for the change in consolidated operating profit between the nine months ended September 30, 2023 (at left) and the nine months ended September 30, 2024 (at right).

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

1 unchanged sentence

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

Operating profit for the six months ended June 30, 2024, was $7.001 billion, an increase of $618 million, or 10 percent, compared with $6.383 billion for the six months ended June 30, 2023.

The increase was primarily due to favorable price realization of $1.153 billion and the absence of the impact of the divestiture of the company's Longwall business in 2023 of $586 million, partially offset by the profit impact of lower sales volume of $699 million, higher SG&A/R&D expenses of $220 million and higher restructuring costs of $196 million.

Operating profit for the nine months ended September 30, 2024, was $10.148 billion, an increase of $316 million, or 3 percent, compared with $9.832 billion for the nine months ended September 30, 2023.

The increase was primarily due to favorable price realization of $1.292 billion, the absence of the impact of the divestiture of the company's Longwall business in 2023 of $586 million and favorable manufacturing costs of $247 million, partially offset by the profit impact of lower sales volume of $1.106 billion, higher SG&A/R&D expenses of $262 million, higher restructuring costs of $220 million and unfavorable currency impacts of $105 million.

Favorable manufacturing costs largely reflected lower freight.

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

For the six months ended June 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S.

Operating profit margin was 21.5 percent for the six months ended June 30, 2024, compared with 19.2 percent for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S.

Operating profit margin was 20.9 percent for the nine months ended September 30, 2024, compared with 19.7 percent for the nine months ended September 30, 2023.

Profit (Loss) by Segment

(Millions of dollars) Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 $

(Millions of dollars) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 $

Construction Industries $ 4,991 $ 5,440 $ (449) (8 %)

10 unchanged sentences

Other Profit/Loss and Tax Items

▪ Interest expense excluding Financial Products for the six months ended June 30, 2024, was $280 million, compared with $256 million for the six months ended June 30, 2023.

▪ Interest expense excluding Financial Products for the nine months ended September 30, 2024, was $405 million, compared with $385 million for the nine months ended September 30, 2023.

The increase was due to higher average borrowing rates.

▪ Other income (expense) for the six months ended June 30, 2024, was income of $311 million, compared with income of $159 million for the six months ended June 30, 2023.

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

▪ The effective tax rate for the six months ended June 30, 2024 was 21.7 percent compared to 23.2 percent for the six months ended June 30, 2023.

Excluding the discrete items discussed below, the estimated annual tax rate for the six months ended June 30, 2024 was 22.5 percent compared with 23.0 percent for the six months ended June 30, 2023.

▪ Other income (expense) for the nine months ended September 30, 2024, was income of $387 million, compared with income of $354 million for the nine months ended September 30, 2023.

Unfavorable foreign currency impacts were more than offset by favorable impacts from pension and other postemployment benefit (OPEB) plan costs and higher investment and interest income.

▪ The effective tax rate for the nine months ended September 30, 2024, was 21.4 percent compared to 22.4 percent for the nine months ended September 30, 2023.

Excluding the discrete items discussed below, the estimated annual tax rate was 22.5 percent for the nine months ended September 30, 2024, and September 30, 2023, respectively.

The 2024 estimated annual tax rate excludes the impact of year-to-date losses of $164 million for the divestitures of certain non-U.S.

entities with a related tax benefit of $54 million.

entities with related tax benefits of $54 million.

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 addition, a discrete tax benefit of $42 million was recorded in the six months ended June 30, 2024, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense, compared with $32 million for the six months ended June 30, 2023.

In the six months ended June 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 the nine months ended September 30, 2024, the company recorded discrete tax benefits of $47 million to reflect changes in estimates related to prior years.

In addition, a discrete tax benefit of $49 million was recorded in the nine months ended September 30, 2024, compared with $54 million for the nine months ended September 30, 2023, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense.

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.

Please see a reconciliation of GAAP to non-GAAP financial measures on pages 66-68.

Construction Industries

Construction Industries’ total sales were $13.107 billion for the six months ended June 30, 2024, a decrease of $793 million, or 6 percent, compared with $13.900 billion for the six months ended June 30, 2023.

The decrease was primarily due to lower sales volume of $1.052 billion, partially offset by favorable price realization of $377 million.

Construction Industries’ total sales were $19.452 billion for the nine months ended September 30, 2024, a decrease of $1.447 billion, or 7 percent, compared with $20.899 billion for the nine months ended September 30, 2023.

The decrease was primarily due to lower sales volume.

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, partially offset by lower sales volume.

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

• In North America, sales decreased primarily due to lower sales volume, partially offset by favorable price realization.

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

Dealer inventory increased less during the nine months ended September 30, 2024, than during the nine months ended September 30, 2023.

• Sales increased in Latin America mainly due to higher sales volume, partially offset by unfavorable price realization.

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

Dealer inventory increased during the six months ended June 30, 2024, compared with a decrease during the six months ended June 30, 2023.

Dealer inventory increased during the nine months ended September 30, 2024, compared with a decrease during the nine months ended September 30, 2023.

• In EAME, sales decreased primarily due to lower sales volume.

1 unchanged sentence

• Sales decreased in Asia/Pacific mainly due to lower sales volume and unfavorable currency impacts primarily related to the Japanese yen.

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

Dealer inventory decreased during the six months ended June 30, 2024, compared with an increase during the six months ended June 30, 2023.

Construction Industries’ profit was $3.505 billion for the six months ended June 30, 2024, a decrease of $88 million, or 2 percent, compared with $3.593 billion for the six months ended June 30, 2023.

The decrease was mainly due to the profit impact of lower sales volume of $566 million and higher SG&A/R&D expenses of $56 million, partially offset by favorable price realization of $377 million and favorable manufacturing costs of $148 million.

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

Dealer inventory decreased during the nine months ended September 30, 2024, compared with an increase during the nine months ended September 30, 2023.

Construction Industries’ profit was $4.991 billion for the nine months ended September 30, 2024, a decrease of $449 million, or 8 percent, compared with $5.440 billion for the nine months ended September 30, 2023.

The decrease was mainly due to the profit impact of lower sales volume of $842 million and higher SG&A/R&D expenses of $74 million, partially offset by favorable manufacturing costs of $256 million and favorable price realization of $230 million.

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

Favorable manufacturing costs were primarily driven by lower material costs.

Construction Industries’ profit as a percent of total sales was 26.7 percent for the six months ended June 30, 2024, compared with 25.8 percent for the six months ended June 30, 2023.

Construction Industries’ profit as a percent of total sales was 25.7 percent for the nine months ended September 30, 2024, compared with 26.0 percent for the nine months ended September 30, 2023.

Resource Industries

Resource Industries’ total sales were $6.399 billion for the six months ended June 30, 2024, a decrease of $591 million, or 8 percent, compared with $6.990 billion for the six months ended June 30, 2023.

The decrease was primarily due to lower sales volume of $900 million, partially offset by favorable price realization of $306 million.

Resource Industries’ total sales were $9.427 billion for the nine months ended September 30, 2024, a decrease of $914 million, or 9 percent, compared with $10.341 billion for the nine months ended September 30, 2023.

The decrease was primarily due to lower sales volume of $1.287 billion, partially offset by favorable price realization of $379 million.

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

Resource Industries’ profit was $1.448 billion for the six months ended June 30, 2024, a decrease of $56 million, or 4 percent, compared with $1.504 billion for the six months ended June 30, 2023.

The decrease was mainly due to the profit impact of lower sales volume of $386 million, unfavorable other segment items of $40 million and higher SG&A/R&D expenses of $18 million, partially offset by favorable price realization of $306 million and favorable manufacturing costs of $82 million.

Unfavorable other segment items primarily consisted of unfavorable currency impacts.

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

Favorable manufacturing costs largely reflected lower freight.

Resource Industries’ profit as a percent of total sales was 22.6 percent for the six months ended June 30, 2024, compared with 21.5 percent for the six months ended June 30, 2023.

Resource Industries’ profit was $2.067 billion for the nine months ended September 30, 2024, a decrease of $167 million, or 7 percent, compared with $2.234 billion for the nine months ended September 30, 2023.

The decrease was mainly due to the profit impact of lower sales volume of $523 million, partially offset by favorable price realization of $379 million.

Resource Industries’ profit as a percent of total sales was 21.9 percent for the nine months ended September 30, 2024, compared with 21.6 percent for the nine months ended September 30, 2023.

Energy & Transportation

Sales by Application

(Millions of dollars) Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 $

(Millions of dollars) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 $

Oil and Gas $ 5,053 $ 4,741 $ 312 7 %

5 unchanged sentences

Total Sales $ 21,205 $ 20,332 $ 873 4 %

Energy & Transportation’s total sales were $14.018 billion for the six months ended June 30, 2024, an increase of $545 million, or 4 percent, compared with $13.473 billion for the six months ended June 30, 2023.

Energy & Transportation’s total sales were $21.205 billion for the nine months ended September 30, 2024, an increase of $873 million, or 4 percent, compared with $20.332 billion for the nine months ended September 30, 2023.

Sales increased across all applications except Industrial.

The increase in sales was primarily due to favorable price realization of $466 million.

The increase in sales was primarily due to favorable price realization of $679 million and higher sales volume of $227 million, including inter-segment sales.

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

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

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

Turbines and turbine-related services increased as well.

• Industrial – Sales decreased in EAME and North America.

• Transportation – Sales increased in rail services and marine.

Energy & Transportation’s profit was $2.826 billion for the six months ended June 30, 2024, an increase of $500 million, or 21 percent, compared with $2.326 billion for the six months ended June 30, 2023.

The increase was mainly due to favorable price realization of $466 million.

Energy & Transportation’s profit as a percent of total sales was 20.2 percent for the six months ended June 30, 2024, compared with 17.3 percent for the six months ended June 30, 2023.

• Transportation – Sales increased in marine applications and rail services.

Energy & Transportation’s profit was $4.259 billion for the nine months ended September 30, 2024, an increase of $752 million, or 21 percent, compared with $3.507 billion for the nine months ended September 30, 2023.

The increase was mainly due to favorable price realization.

Energy & Transportation’s profit as a percent of total sales was 20.1 percent for the nine months ended September 30, 2024, compared with 17.2 percent for the nine months ended September 30, 2023.

Financial Products Segment

Financial Products’ segment revenues were $1.995 billion for the six months ended June 30, 2024, an increase of $170 million, or 9 percent, compared with $1.825 billion for the six months ended June 30, 2023.

The increase was primarily due to a favorable impact from higher average financing rates across all regions of $119 million and a favorable impact from higher average earning assets driven by North America of $64 million.

Financial Products’ segment profit was $520 million for the six months ended June 30, 2024, an increase of $48 million, or 10 percent, compared with $472 million for the six months ended June 30, 2023.

The increase was mainly due to an insurance

settlement of $33 million, a favorable impact from higher average earning assets of $28 million and the absence of prior year unfavorable currency impacts of $27 million, partially offset by an increase in SG&A expenses of $34 million.

Financial Products’ segment revenues were $3.029 billion for the nine months ended September 30, 2024, an increase of $225 million, or 8 percent, compared with $2.804 billion for the nine months ended September 30, 2023.

The increase was primarily due to a favorable impact from higher average financing rates across all regions of $142 million and a favorable impact from higher average earning assets of $98 million, driven by North America.

Financial Products’ segment profit was $766 million for the nine months ended September 30, 2024, an increase of $91 million, or 13 percent, compared with $675 million for the nine months ended September 30, 2023.

The increase was mainly due to a favorable impact from equity securities of $55 million, a favorable impact from higher average earning assets of $42 million, the absence of prior year unfavorable currency impacts of $34 million and an insurance settlement of $33 million, partially offset by an increase in SG&A expenses of $43 million and an unfavorable impact from returned or repossessed equipment of $36 million.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $1.027 billion for the six months ended June 30, 2024, a decrease of $211 million from the six months ended June 30, 2023, primarily driven by the absence of the impact of the divestiture of the company's Longwall business in 2023 and decreased expenses due to timing differences, partially offset by unfavorable impacts of segment reporting methodology differences and higher restructuring costs.

For the six months ended June 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S.

Expense for corporate items and eliminations was $1.484 billion for the nine months ended September 30, 2024, a decrease of $122 million from the nine months ended September 30, 2023, primarily driven by the absence of the impact of the divestiture of the company's Longwall business in 2023, partially offset by unfavorable impacts of segment reporting methodology differences and higher restructuring costs.

For the nine months ended September 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S.

RESTRUCTURING COSTS

113 unchanged sentences

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 six months of 2024 and ended the second quarter with $4.34 billion of cash, a decrease of $2.64 billion from year-end 2023.

On a consolidated basis, we had positive operating cash flow in the first nine months of 2024 and ended the third quarter with $5.64 billion of cash, a decrease of $1.34 billion from year-end 2023.

In addition, ME&T invests 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 $1.75 billion as of June 30, 2024 and are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position.

These ME&T securities were $1.77 billion as of September 30, 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 six months of 2024 was $5.07 billion, up $251 million compared to the same period a year ago.

The increase was primarily due to higher profit before taxes including reconciling adjustments, lower working capital requirements, excluding changes in accrued wages, salaries and benefits, partially offset by changes in accrued wages, salaries and benefits, and higher cash taxes paid.

Within working capital, changes in inventory and receivables favorably impacted cash flow as they both increased less in the first six months of 2024 compared to the prior year period, partially offset by unfavorable changes in accrued expenses.

Total debt as of June 30, 2024 was $37.31 billion, a decrease of $567 million from year-end 2023.

Debt related to ME&T decreased $1.02 billion in the first six months of 2024 while debt related to Financial Products increased $474 million.

As of June 30, 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 June 30, 2024 was $2.75 billion.

Consolidated operating cash flow for the first nine months of 2024 was $8.64 billion, down $240 million compared to the same period a year ago.

The decrease was primarily due to changes in accrued wages, salaries and benefits, and higher cash taxes paid, partially offset by lower working capital requirements, excluding changes in accrued wages, salaries and benefits.

Within working capital, changes in inventory, accounts payable and receivables favorably impacted cash flow in the first nine months of 2024 compared to the prior year period, partially offset by unfavorable changes in accrued expenses.

Total debt as of September 30, 2024 was $37.90 billion, an increase of $23 million from year-end 2023.

Debt related to ME&T decreased $886 million in the first nine months of 2024 while debt related to Financial Products increased $966 million.

As of September 30, 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 September 30, 2024 was $2.75 billion.

Information on our Credit Facility is as follows:

• In August 2024, 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 2025.

• 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 June 30, 2024, Caterpillar’s consolidated net worth was $17.19 billion, which was above the $9.00 billion required under the Credit Facility.

• In August 2024, 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 2027.

• In August 2024, we amended and extended the five-year facility (as amended and restated, the "five-year facility").

The five-year facility of $4.62 billion (of which $1.21 billion is available to ME&T) expires in August 2029.

At September 30, 2024, Caterpillar’s consolidated net worth was $19.46 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 June 30, 2024, Cat Financial’s covenant interest coverage ratio was 1.47 to 1.

At September 30, 2024, Cat Financial’s covenant interest coverage ratio was 1.46 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 June 30, 2024, Cat Financial’s six-month covenant leverage ratio was 6.75 to 1.

In addition, at September 30, 2024, Cat Financial’s six-month covenant leverage ratio was 6.77 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 June 30, 2024, there were no borrowings under the Credit Facility.

At September 30, 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.

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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 June 30, 2024 were:

June 30, 2024

Our total credit commitments and available credit as of September 30, 2024 were:

September 30, 2024

(Millions of dollars) Consolidated Machinery,

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Available credit $ 10,758 $ 3,367 $ 7,391

The other external consolidated credit lines with banks as of June 30, 2024 totaled $4.14 billion.

The other external consolidated credit lines with banks as of September 30, 2024 totaled $4.25 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.

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Machinery, Energy & Transportation

Net cash provided by operating activities was $4.57 billion in the first six months of 2024, compared with net cash provided of $4.67 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, and higher cash taxes paid;

partially offset by lower working capital requirements, excluding the impact of changes in accrued wages, salaries, and employee benefits.

Within working capital, changes in inventory favorably impacted cash flow as inventory increased less in the first six months of 2024 compared to the prior year period, partially offset by changes in accrued expenses.

Net cash provided by investing activities in the first six months of 2024 was $1.38 billion, compared with net cash used of $1.19 billion in the first six 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 new investments in securities compared to the same period in 2023.

Net cash used for financing activities during the first six months of 2024 was $8.57 billion, compared with net cash used of $3.19 billion in the same period of 2023.

The change was primarily due to higher payments to purchase shares and debt payments in the first six months of 2024 compared to the same period in 2023.

Net cash provided by operating activities was $7.73 billion in the first nine months of 2024, compared with net cash provided of $7.96 billion for the same period in 2023.

The decrease was primarily due to lower profit before taxes, adjusted for non-cash items, changes in accrued wages, salaries, and employee benefits, and higher cash taxes paid.

These were partially offset by lower working capital requirements, excluding the impact of changes in accrued wages, salaries, and employee benefits.

Within working capital, changes in inventory, receivables and accounts payable favorably impacted cash flow in the first nine months of 2024 compared to the prior year period, partially offset by changes in accrued expenses.

Net cash provided by investing activities in the first nine months of 2024 was $1.01 billion, compared with net cash used of $3.89 billion in the first nine months of 2023.

The change was due to lower new investments in securities and higher proceeds from maturities and sale of securities, primarily due to time deposit maturities in 2024, as compared to the same period in 2023.

Net cash used for financing activities during the first nine months of 2024 was $10.04 billion, compared with net cash used of $4.18 billion in the same period of 2023.

The change was primarily due to higher payments to repurchase shares and debt repayments in the first nine months of 2024 compared to the same period in 2023.

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 $841 million during the first six months of 2024, compared to $685 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 $172 million of contributions to our pension and other postretirement benefit plans during the first six months of 2024.

Operational excellence and commitments – Capital expenditures were $1.28 billion during the first nine months of 2024, compared to $1.11 billion for the same period in 2023.

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

We made $221 million of contributions to our pension and other postretirement benefit plans during the first nine months of 2024.

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

In comparison, we made $264 million of contributions to our pension and other postretirement benefit plans during the first six months of 2023.

In comparison, we made $320 million of contributions to our pension and other postretirement benefit plans during the first nine 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.

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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 June 2024, the Board approved a share repurchase authorization (the 2024 Authorization) of up to $20.0 billion of Caterpillar common stock, effective June 12, 2024, with no expiration.

In the first six months of 2024, we repurchased $6.28 billion of Caterpillar common stock, with $21.6 billion remaining under the 2022 and 2024 Authorizations as of June 30, 2024.

Our basic shares outstanding as of June 30, 2024 were approximately 485 million.

In June 2024, the Board approved an additional share repurchase authorization (the 2024 Authorization) of up to $20.0 billion of Caterpillar common stock, effective June 12, 2024, with no expiration.

In the first nine months of 2024, we repurchased $7.06 billion of Caterpillar common stock, with $20.8 billion remaining under the 2022 and 2024 Authorizations as of September 30, 2024.

Our basic shares outstanding as of September 30, 2024 were approximately 483 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 June 2024, the Board of Directors approved an 8 percent increase in the quarterly dividend to $1.41 per share, and we continue to expect our strong financial position to support the dividend.

Dividends paid totaled $1.28 billion in the first six months of 2024.

In October 2024, the Board of Directors approved maintaining our quarterly dividend representing $1.41 per share, and we continue to expect our strong financial position to support the dividend.

Dividends paid totaled $1.97 billion in the first nine months of 2024.

Financial Products

Net cash provided by operating activities was $715 million in the first six months of 2024, compared with $542 million for the same period in 2023.

Net cash used for investing activities was $1.35 billion in the first six months of 2024, compared with $1.01 billion for the same period in 2023.

Net cash provided by operating activities was $1.02 billion in the first nine months of 2024, compared with $905 million for the same period in 2023.

Net cash used for investing activities was $1.90 billion in the first nine months of 2024, compared with $1.25 billion for the same period in 2023.

The change was primarily due to portfolio related activity and the divestiture of a non-U.S.

Net cash provided by financing activities was $635 million in the first six months of 2024, compared with $613 million for the same period in 2023.

Net cash provided by financing activities was $890 million in the first nine months of 2024, compared with $122 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

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

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, 2024.

It is difficult to predict the December 31, 2024 adjustment amount, as it will be dependent primarily on changes in discount rates during 2024, and actual returns on plan assets differing from our expected returns for 2024.

Order Backlog

At the end of the second quarter of 2024, the dollar amount of backlog believed to be firm was approximately $28.6 billion, about $0.7 billion higher than the first quarter of 2024 due to increases in the Energy and Transportation segment.

Of the total backlog at June 30, 2024, approximately $6.5 billion was not expected to be filled in the following twelve months.

At the end of the third quarter of 2024, the dollar amount of backlog believed to be firm was approximately $28.7 billion, about $0.1 billion higher than the second quarter of 2024.

The order backlog increased in Energy & Transportation, while Construction Industries and Resource Industries decreased.

Of the total backlog at September 30, 2024, approximately $6.8 billion was not expected to be filled in the following twelve months.

NON-GAAP FINANCIAL MEASURES

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(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 June 30, 2024 - U.S.

Three Months Ended September 30, 2024 - U.S.

$ 3,147 19.5 % $ 3,098 $ 642 $ 2,464 $ 5.06

Restructuring costs - divestiture of two non-U.S.

entities 228 1.3 % 228 — 228 0.47

Other restructuring (income) costs 70 0.5 % 70 16 54 0.11

Three Months Ended June 30, 2024 - Adjusted

Three Months Ended September 30, 2024 - Adjusted

$ 3,217 20.0 % $ 3,168 $ 658 $ 2,518 $ 5.17

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

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

$ 3,449 20.5 % $ 3,515 $ 734 $ 2,794 $ 5.45

Other restructuring (income) costs 46 0.3 % 46 10 36 0.07

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

Three Months Ended June 30, 2023 - Adjusted

Three Months Ended September 30, 2023 - Adjusted

$ 3,495 20.8 % $ 3,561 $ 744 $ 2,830 $ 5.52

Six Months Ended June 30, 2024- U.S.

Nine Months Ended September 30, 2024 - U.S.

$ 10,148 20.9 % $ 10,130 $ 2,166 $ 8,001 $ 16.27

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Other restructuring (income) costs 158 0.3 % 158 36 122 0.26

Six Months Ended June 30, 2024 - Adjusted

Nine Months Ended September 30, 2024 - Adjusted

$ 10,470 21.5 % $ 10,452 $ 2,256 $ 8,233 $ 16.75

Six Months Ended June 30, 2023 - U.S.

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

$ 9,832 19.7 % $ 9,801 $ 2,194 $ 7,659 $ 14.85

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

Six Months Ended June 30, 2023 - Adjusted

Nine Months Ended September 30, 2023 - Adjusted

$ 10,520 21.0 % $ 10,489 $ 2,303 $ 8,238 $ 15.98

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These items consist of (i) restructuring income/costs related to the divestitures of certain non-U.S.

entities in 2024, (ii) restructuring costs related to the divestiture of the company's Longwall business in 2023, (iii) certain deferred tax valuation allowance adjustments in 2023 and (iv) settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense.

entities in 2024, (ii) the impact of changes in estimates related to prior years in 2024, (iii) settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S.

GAAP compensation expense, (iv) certain deferred tax valuation allowance adjustments in 2023, (v) the decrease in the annual effective tax rate in 2023 and (vi) restructuring costs related to the divestiture of the company's Longwall business in 2023.

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.

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(Millions of dollars) Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate

Three Months Ended June 30, 2024 - U.S.

Three Months Ended September 30, 2024 - U.S.

$ 3,098 $ 642 20.7 %

Restructuring costs - divestiture of two non-U.S.

entities 228 —

Changes in estimates related to prior years — 47

Excess stock-based compensation — 7

Annual effective tax rate, excluding discrete items $ 3,098 $ 696 22.5 %

Changes in estimates related to prior years — (47)

Excess stock-based compensation — (7)

Other restructuring (income) costs 70 16

Three Months Ended June 30, 2024 - Adjusted

Three Months Ended September 30, 2024 - Adjusted

$ 3,168 $ 658

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

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

$ 3,515 $ 734 20.9 %

Deferred tax valuation allowance adjustments — 88

Decrease in annual effective tax rate — 34

Excess stock-based compensation — 22

Annual effective tax rate, excluding discrete items $ 3,515 $ 790 22.5 %

Decrease in annual effective tax rate — (34)

Excess stock-based compensation — (22)

Other restructuring (income) costs 46 10

Three Months Ended June 30, 2023 - Adjusted

Three Months Ended September 30, 2023 - Adjusted

$ 3,561 $ 744

Six Months Ended June 30, 2024 - U.S.

Nine Months Ended September 30, 2024 - U.S.

$ 10,130 $ 2,166 21.4 %

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entities 164 54

Changes in estimates related to prior years — 47

Excess stock-based compensation — 49

Annual effective tax rate, excluding discrete items $ 10,294 $ 2,316 22.5 %

Changes in estimates related to prior years — (47)

Excess stock-based compensation — (49)

Other restructuring (income) costs 158 36

Six Months Ended June 30, 2024 - Adjusted

Nine Months Ended September 30, 2024 - Adjusted

$ 10,452 $ 2,256

Six Months Ended June 30, 2023 - U.S.

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

$ 9,801 $ 2,194 22.4 %

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Other restructuring (income) costs 102 21

Six Months Ended June 30, 2023 - Adjusted

Nine Months Ended September 30, 2023 - Adjusted

$ 10,489 $ 2,303

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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) Six Months Ended June 30,

(Millions of dollars) Nine Months Ended September 30,

ME&T net cash provided by operating activities 1

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Supplemental Data for Results of Operations

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

(Millions of dollars)

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

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

4 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.

2 unchanged sentences

Supplemental Data for Results of Operations

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

(Millions of dollars)

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

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

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Supplemental Data for Results of Operations

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

(Millions of dollars)

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Supplemental Data for Results of Operations

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

(Millions of dollars)

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Supplemental Data for Financial Position

At June 30, 2024

At September 30, 2024

(Millions of dollars)

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Customer advances 2,404 2,385 3 16 7

Dividends payable 684 684 — —

Other current liabilities 2,934 2,407 813 (286) 4,5,8

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4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.

5 Elimination of other intercompany assets between ME&T and Financial Products.

5 Elimination of other intercompany assets and liabilities between ME&T and Financial Products.

6 Elimination of payables between ME&T and Financial Products.

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Supplemental Data for Cash Flow

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

(Millions of dollars)

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Supplemental Data for Cash Flow

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

(Millions of dollars)

90 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