CATERPILLAR INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide information that will assist the reader in understanding the company’s Consolidated Financial Statements, the changes in certain key items in those financial statements between select periods and the primary factors that accounted for those changes. In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations as well as a discussion of the many factors that we believe may have an impact on our business on an ongoing basis. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Part I, Item 1A. Risk Factors of the 2023 Form 10-K . 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 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 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 Per Share Profit Before Taxes Profit Per Share Profit Before Taxes Profit Per Share Profit Before Taxes Profit Per Share Profit $ 3,098 $ 5.06 $ 3,515 $ 5.45 $ 10,130 $ 16.27 $ 9,801 $ 14.85 Restructuring (income) costs - divestitures of certain non-U.S. entities — — — — 164 0.22 — — Other restructuring (income) costs 70 0.11 46 0.07 158 0.26 102 0.17 Restructuring costs - Longwall divestiture — — — — — — 586 1.13 Deferred tax valuation allowance adjustments — — — — — — — (0.17) Adjusted profit $ 3,168 $ 5.17 $ 3,561 $ 5.52 $ 10,452 $ 16.75 $ 10,489 $ 15.98 Overview 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 . 47 Table of Contents Trends and Economic Conditions Outlook for Key End Markets 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, 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. 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. 48 Table of Contents 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 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. Global Business Conditions We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary cost and labor pressures. Areas of particular focus include transportation, certain components and raw materials. We continue to work to minimize supply chain challenges that may impact our ability to meet customer demand. We continue to assess the environment to determine if additional actions need to be taken. Risk Factors Risk factors are disclosed within Item 1A. Risk Factors of the 2023 Form 10-K. Notes: • Glossary of terms is included on pages 60-62; first occurrence of terms shown in bold italics. • Information on non-GAAP financial measures is included on pages 66-68. • Certain amounts may not add due to rounding. 49 Table of Contents Consolidated Results of Operations 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 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 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 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 lower sales of equipment to end users. 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. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. 50 Table of Contents Sales and Revenues by Segment (Millions of dollars) Third Quarter 2023 Sales Volume Price Realization Currency Inter-Segment / Other Third Quarter 2024 $ Change % Change Construction Industries $ 6,999 $ (458) $ (147) $ (64) $ 15 $ 6,345 $ (654) (9 %) Resource Industries 3,351 (352) 38 (11) 2 3,028 (323) (10 %) Energy & Transportation 6,859 57 213 (20) 78 7,187 328 5 % All Other Segment 106 (2) 1 — (13) 92 (14) (13 %) Corporate Items and Eliminations (1,327) (4) (1) (7) (82) (1,421) (94) Machinery, Energy & Transportation Sales 15,988 (759) 104 (102) — 15,231 (757) (5 %) Financial Products Segment 979 — — — 55 1,034 55 6 % Corporate Items and Eliminations (157) — — — (2) (159) (2) Financial Products Revenues 822 — — — 53 875 53 6 % Consolidated Sales and Revenues $ 16,810 $ (759) $ 104 $ (102) $ 53 $ 16,106 $ (704) (4 %) Sales and Revenues by Geographic Region North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues (Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg Third Quarter 2024 Construction Industries $ 3,629 (11 %) $ 658 19 % $ 1,150 (15 %) $ 875 (12 %) $ 6,312 (10 %) $ 33 83 % $ 6,345 (9 %) Resource Industries 1,131 (17 %) 498 — % 442 (13 %) 863 (3 %) 2,934 (10 %) 94 2 % 3,028 (10 %) Energy & Transportation 3,214 8 % 449 (2 %) 1,486 4 % 856 (5 %) 6,005 4 % 1,182 7 % 7,187 5 % All Other Segment 12 (25 %) — 100 % 3 (40 %) 14 40 % 29 (3 %) 63 (17 %) 92 (13 %) Corporate Items and Eliminations (43) (3) 9 (12) (49) (1,372) (1,421) Machinery, Energy & Transportation Sales 7,943 (5 %) 1,602 6 % 3,090 (6 %) 2,596 (7 %) 15,231 (5 %) — — % 15,231 (5 %) Financial Products Segment 695 11 % 97 (12 %) 130 (2 %) 112 2 % 1,034 1 6 % — — % 1,034 6 % Corporate Items and Eliminations (93) (21) (21) (24) (159) — (159) Financial Products Revenues 602 12 % 76 (15 %) 109 (1 %) 88 1 % 875 6 % — — % 875 6 % Consolidated Sales and Revenues $ 8,545 (4 %) $ 1,678 5 % $ 3,199 (6 %) $ 2,684 (7 %) $ 16,106 (4 %) $ — — % $ 16,106 (4 %) Third Quarter 2023 Construction Industries $ 4,078 $ 555 $ 1,351 $ 997 $ 6,981 $ 18 $ 6,999 Resource Industries 1,366 499 508 886 3,259 92 3,351 Energy & Transportation 2,966 460 1,428 901 5,755 1,104 6,859 All Other Segment 16 (1) 5 10 30 76 106 Corporate Items and Eliminations (35) 1 — (3) (37) (1,290) (1,327) Machinery, Energy & Transportation Sales 8,391 1,514 3,292 2,791 15,988 — 15,988 Financial Products Segment 627 110 132 110 979 1 — 979 Corporate Items and Eliminations (91) (21) (22) (23) (157) — (157) Financial Products Revenues 536 89 110 87 822 — 822 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 $190 m illion and $181 million in the third quarter of 2024 and 2023, respectively. 51 Table of Contents CONSOLIDATED OPERATING PROFIT 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 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) Third Quarter 2024 Third Quarter 2023 $ Change % Change Construction Industries $ 1,486 $ 1,847 $ (361) (20 %) Resource Industries 619 730 (111) (15 %) Energy & Transportation 1,433 1,181 252 21 % All Other Segment (13) 21 (34) (162 %) Corporate Items and Eliminations (427) (386) (41) Machinery, Energy & Transportation 3,098 3,393 (295) (9 %) Financial Products Segment 246 203 43 21 % Corporate Items and Eliminations (30) 18 (48) Financial Products 216 221 (5) (2 %) Consolidating Adjustments (167) (165) (2) Consolidated Operating Profit $ 3,147 $ 3,449 $ (302) (9 %) 52 Table of Contents Other Profit/Loss and Tax Items ▪ 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. 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 $6.345 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 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 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 $3.028 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. 53 Table of Contents Energy & Transportation Sales by Application (Millions of dollars) Third Quarter 2024 Third Quarter 2023 $ Change % Change Oil and Gas $ 1,656 $ 1,667 $ (11) (1 %) Power Generation 2,011 1,598 413 26 % Industrial 1,028 1,220 (192) (16 %) Transportation 1,310 1,270 40 3 % External Sales 6,005 5,755 250 4 % Inter-segment 1,182 1,104 78 7 % Total Sales $ 7,187 $ 6,859 $ 328 5 % 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. Turbines and turbine-related services increased as well. • Industrial – Sales decreased in EAME and North America. • 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 $1.034 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 $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. 54 Table of Contents 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 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 $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 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 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. The decrease in sales volume was mainly due to lower sales of equipment to end users. Asia/Pacific sales decreased 7 percent mainly due to lower sales volume. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory 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. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. 55 Table of Contents Sales and Revenues by Segment (Millions of dollars) Nine Months Ended September 30, 2023 Sales Volume Price Realization Currency Inter-Segment / Other Nine Months Ended September 30, 2024 $ Change % Change Construction Industries $ 20,899 $ (1,510) $ 230 $ (141) $ (26) $ 19,452 $ (1,447) (7 %) Resource Industries 10,341 (1,287) 379 (31) 25 9,427 (914) (9 %) Energy & Transportation 20,332 159 679 (33) 68 21,205 873 4 % All Other Segment 333 (10) 4 (1) (17) 309 (24) (7 %) Corporate Items and Eliminations (4,273) (36) — (3) (50) (4,362) (89) Machinery, Energy & Transportation Sales 47,632 (2,684) 1,292 (209) — 46,031 (1,601) (3 %) Financial Products Segment 2,804 — — — 225 3,029 225 8 % Corporate Items and Eliminations (446) — — — (20) (466) (20) Financial Products Revenues 2,358 — — — 205 2,563 205 9 % Consolidated Sales and Revenues $ 49,990 $ (2,684) $ 1,292 $ (209) $ 205 $ 48,594 $ (1,396) (3 %) Sales and Revenues by Geographic Region North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues (Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg Nine Months Ended September 30, 2024 Construction Industries $ 11,419 (2 %) $ 1,930 12 % $ 3,193 (23 %) $ 2,843 (14 %) $ 19,385 (7 %) $ 67 (28 %) $ 19,452 (7 %) Resource Industries 3,601 (10 %) 1,498 (1 %) 1,349 (17 %) 2,704 (8 %) 9,152 (9 %) 275 10 % 9,427 (9 %) Energy & Transportation 9,473 9 % 1,296 — % 4,201 (2 %) 2,602 3 % 17,572 5 % 3,633 2 % 21,205 4 % All Other Segment 43 (14 %) (1) — % 11 (15 %) 39 5 % 92 (7 %) 217 (7 %) 309 (7 %) Corporate Items and Eliminations (121) (6) (23) (20) (170) (4,192) (4,362) Machinery, Energy & Transportation Sales 24,415 1 % 4,717 4 % 8,731 (13 %) 8,168 (7 %) 46,031 (3 %) — — % 46,031 (3 %) Financial Products Segment 2,022 13 % 299 (5 %) 377 4 % 331 1 % 3,029 1 8 % — — % 3,029 8 % Corporate Items and Eliminations (276) (60) (60) (70) (466) — (466) Financial Products Revenues 1,746 14 % 239 (7 %) 317 5 % 261 (1 %) 2,563 9 % — — % 2,563 9 % Consolidated Sales and Revenues $ 26,161 1 % $ 4,956 4 % $ 9,048 (13 %) $ 8,429 (7 %) $ 48,594 (3 %) $ — — % $ 48,594 (3 %) Nine Months Ended September 30, 2023 Construction Industries $ 11,654 $ 1,720 $ 4,125 $ 3,307 $ 20,806 $ 93 $ 20,899 Resource Industries 4,016 1,511 1,624 2,940 10,091 250 10,341 Energy & Transportation 8,658 1,299 4,291 2,519 16,767 3,565 20,332 All Other Segment 50 (1) 13 37 99 234 333 Corporate Items and Eliminations (115) (1) (3) (12) (131) (4,142) (4,273) Machinery, Energy & Transportation Sales 24,263 4,528 10,050 8,791 47,632 — 47,632 Financial Products Segment 1,795 316 364 329 2,804 1 — 2,804 Corporate Items and Eliminations (259) (60) (61) (66) (446) — (446) Financial Products Revenues 1,536 256 303 263 2,358 — 2,358 Consolidated Sales and Revenues $ 25,799 $ 4,784 $ 10,353 $ 9,054 $ 49,990 $ — $ 49,990 1 Includes revenues from Machinery, Energy & Transportation of $547 million and $515 million in the nine months ended September 30, 2024 and 2023, respectively. 56 Table of Contents CONSOLIDATED OPERATING PROFIT 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. The bar titled Longwall Divestiture is included in total restructuring costs. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income) expenses. Operating profit for the nine months ended September 30, 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 nine months ended September 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S. entities. 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) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 $ Change % Change Construction Industries $ 4,991 $ 5,440 $ (449) (8 %) Resource Industries 2,067 2,234 (167) (7 %) Energy & Transportation 4,259 3,507 752 21 % All Other Segment 32 42 (10) (24 %) Corporate Items and Eliminations (1,186) (1,666) 480 Machinery, Energy & Transportation 10,163 9,557 606 6 % Financial Products Segment 766 675 91 13 % Corporate Items and Eliminations (298) 60 (358) Financial Products 468 735 (267) (36 %) Consolidating Adjustments (483) (460) (23) Consolidated Operating Profit $ 10,148 $ 9,832 $ 316 3 % 57 Table of Contents Other Profit/Loss and Tax Items ▪ 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 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 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 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 $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 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 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. Lower sales volume was mainly due to 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 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 25.7 percent for the nine months ended September 30, 2024, compared with 26.0 percent for the nine months ended September 30, 2023. 58 Table of Contents Resource Industries 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 $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) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 $ Change % Change Oil and Gas $ 5,053 $ 4,741 $ 312 7 % Power Generation 5,514 4,527 987 22 % Industrial 3,062 3,793 (731) (19 %) Transportation 3,943 3,706 237 6 % External Sales 17,572 16,767 805 5 % Inter-Segment 3,633 3,565 68 2 % Total Sales $ 21,205 $ 20,332 $ 873 4 % 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 $679 million and higher sales volume of $227 million, including inter-segment sales. • Oil and Gas – Sales increased for turbines and turbine-related services. • 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 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 $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. 59 Table of Contents Corporate Items and Eliminations 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. entities. RESTRUCTURING COSTS In 2024, we expect to incur about $400 million of restructuring costs. We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold and SG&A expenses, of about $40 million in 2024 compared with 2023. Additional information related to restructuring costs is included in Note 20 – "Restructuring costs" of Part I, Item 1 "Financial Statements." GLOSSARY OF TERMS 1. Adjusted Operating Profit Margin – Operating profit excluding restructuring income/costs as a percent of sales and revenues. 2. Adjusted Profit Per Share – Profit per share excluding restructuring income/costs and a discrete tax benefit to adjust deferred tax balances. 3. All Other Segment – Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of wear and maintenance components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. 4. Consolidating Adjustments – Elimination of transactions between Machinery, Energy & Transportation and Financial Products. 5. Construction Industries – A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes asphalt pavers; backhoe loaders; cold planers; compactors; compact track loaders; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; track-type loaders; track-type tractors (small, medium); track excavators (mini, small, medium, large); wheel excavators; wheel loaders (compact, small, medium); and related parts and work tools. 6. Corporate Items and Eliminations – Includes corporate-level expenses, timing differences (as some expenses are reported in segment profit on a cash basis), methodology differences between segment and consolidated external reporting, certain restructuring costs and inter-segment eliminations. 7. Currency – With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency only includes the impact on sales and operating profit for the Machinery, Energy & Transportation line of business; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates (hedging) and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results (translation). 8. Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts. 9. EAME – A geographic region including Europe, Africa, the Middle East and Eurasia. 10. Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases net of accumulated depreciation at Cat Financial. 60 Table of Contents 11. Energy & Transportation – A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses as well as product support of on-highway engines. Responsibilities include business strategy, product design, product management, development and testing, manufacturing, marketing and sales and product support. The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions supplied to the industrial industry as well as Caterpillar machines; electrified powertrain and zero-emission power sources and service solutions development; and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing. Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies. 12. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. 13. Financial Products Segment – Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, revolving charge accounts, installment sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans, extended service coverage and maintenance plans for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from Machinery, Energy & Transportation, but the related costs are not allocated to operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/expense items. 14. Latin America – A geographic region including Central and South American countries and Mexico. 15. Machinery, Energy & Transportation (ME&T) – The company defines ME&T as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of its products. 16. Machinery, Energy & Transportation Other Operating (Income) Expenses – Comprised primarily of gains/losses on disposal of long-lived assets, gains/losses on divestitures and legal settlements and accruals. 17. Manufacturing Costs – Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume, such as freight, power to operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management. 18. Mark-to-market gains/losses – Represents the net gain or loss of actual results differing from the company’s assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and losses are immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement. 19. Pension and Other Postemployment Benefits (OPEB) – The company’s defined-benefit pension and postretirement benefit plans. 20. Price Realization – The impact of net price changes excluding currency and new product introductions. Price realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between geographic regions. 61 Table of Contents 21. Resource Industries – A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; wide-body trucks; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Caterpillar machines and engines. 22. Restructuring income/costs – May include costs for employee separation, long-lived asset impairments, contract terminations and (gains)/losses on divestitures. These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense). Restructuring costs also include other exit-related costs, which may consist of accelerated depreciation, inventory write-downs, building demolition, equipment relocation and project management costs and LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. 23. Sales Volume – With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation as well as the incremental sales impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation combined with product mix as well as the net operating profit impact of new product introductions, including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Energy & Transportation sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales. 24. Services – Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and other service-related revenues. Machinery, Energy & Transportation segments exclude most Financial Products revenues. LIQUIDITY AND CAPITAL RESOURCES Sources of funds We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. Funding for these businesses is also available from commercial paper and long-term debt issuances. Financial Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. On a consolidated basis, we had positive operating cash flow in the first nine months of 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 $1.77 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 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. 62 Table of Contents • 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 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 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. In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At September 30, 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. GAAP. Please refer to the credit agreements governing the Credit Facility filed as an exhibit to our periodic reports for further information related to the calculation thereof. For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor "Restrictive covenants in our debt agreements could limit our financial and operating flexibility" set forth in Part I, Item 1A of our most recent annual report on Form 10-K. Our total credit commitments and available credit as of September 30, 2024 were: September 30, 2024 (Millions of dollars) Consolidated Machinery, Energy & Transportation Financial Products Credit lines available: Global credit facilities $ 10,500 $ 2,750 $ 7,750 Other external 4,253 617 3,636 Total credit lines available 14,753 3,367 11,386 Less: Commercial paper outstanding (3,214) — (3,214) Less: Utilized credit (781) — (781) Available credit $ 10,758 $ 3,367 $ 7,391 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. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines. 63 Table of Contents We receive debt ratings from the major credit rating agencies. Fitch maintains a "high-A" debt rating, while Moody’s and S&P maintain a “mid-A” debt rating. A downgrade of our credit ratings by any of the major credit rating agencies could result in increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, ME&T’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities. Our Financial Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our committed credit facilities and other credit line facilities of Cat Financial, and potential borrowings from Caterpillar. In addition, we maintain a support agreement with Cat Financial, which requires Caterpillar to remain the sole owner of Cat Financial and may, under certain circumstances, require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios. We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. We account for the payments made under the Programs, the same as other accounts payable, as a reduction to our cash flows from operations. We do not believe that changes in the availability of the programs will have a significant impact on our liquidity. Additional information related to the programs is included in Note 21 – "Supplier finance programs" of Part I, Item 1 "Financial Statements." Machinery, Energy & Transportation 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. Our top priority is to maintain a strong financial position in support of a mid-A rating. Next, we intend to fund operational requirements and commitments. Then, we intend to fund priorities that profitably grow the company and return capital to shareholders through dividend growth and share repurchases. Additional information on cash deployment is as follows: Strong financial position – Our top priority is to maintain a strong financial position in support of a mid-A rating. We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our cash deployment actions and the various methodologies used by the major credit rating agencies. Operational excellence and commitments – Capital expenditures were $1.28 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 $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. 64 Table of Contents As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases. We define ME&T free cash flow as cash from ME&T operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions. A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating. Our share repurchase plans are subject to the company’s cash deployment priorities and are evaluated on an ongoing basis considering the financial condition of the company, corporate cash flow, the company’s liquidity needs, the economic outlook, and the health and stability of global credit markets. The timing and amount of future repurchases may vary depending on market conditions and investing priorities. In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. 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 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 $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. entity. 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 For a discussion of recent accounting pronouncements, see Note 2 – “New accounting guidance” of Part I, Item 1 "Financial Statements." CRITICAL ACCOUNTING ESTIMATES For a discussion of the company’s critical accounting estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our 2023 Annual Report on Form 10-K. OTHER MATTERS 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. 65 Table of Contents Order Backlog 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 We provide the following definitions for the non-GAAP financial measures used in this report. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. We believe it is important to separately quantify the profit impact of four significant items in order for our results to be meaningful to our readers. These items consist of (i) restructuring income/costs related to the divestitures of certain non-U.S. entities in 2024, (ii) other restructuring income/costs, (iii) restructuring costs related to the divestiture of the company's Longwall business in 2023 and (iv) certain deferred tax valuation allowance adjustments in 2023. We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results. Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows: (Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Profit Profit per Share Three Months Ended September 30, 2024 - U.S. GAAP $ 3,147 19.5 % $ 3,098 $ 642 $ 2,464 $ 5.06 Other restructuring (income) costs 70 0.5 % 70 16 54 0.11 Three Months Ended September 30, 2024 - Adjusted $ 3,217 20.0 % $ 3,168 $ 658 $ 2,518 $ 5.17 Three Months Ended September 30, 2023 - U.S. GAAP $ 3,449 20.5 % $ 3,515 $ 734 $ 2,794 $ 5.45 Other restructuring (income) costs 46 0.3 % 46 10 36 0.07 Three Months Ended September 30, 2023 - Adjusted $ 3,495 20.8 % $ 3,561 $ 744 $ 2,830 $ 5.52 Nine Months Ended September 30, 2024 - U.S. GAAP $ 10,148 20.9 % $ 10,130 $ 2,166 $ 8,001 $ 16.27 Restructuring (income) costs - divestitures of certain non-U.S. entities 164 0.3 % 164 54 110 0.22 Other restructuring (income) costs 158 0.3 % 158 36 122 0.26 Nine Months Ended September 30, 2024 - Adjusted $ 10,470 21.5 % $ 10,452 $ 2,256 $ 8,233 $ 16.75 Nine Months Ended September 30, 2023 - U.S. GAAP $ 9,832 19.7 % $ 9,801 $ 2,194 $ 7,659 $ 14.85 Restructuring costs - Longwall divestiture 586 1.2 % 586 — 586 1.13 Other restructuring (income) costs 102 0.1 % 102 21 81 0.17 Deferred tax valuation allowance adjustments — — % — 88 (88) (0.17) Nine Months Ended September 30, 2023 - Adjusted $ 10,520 21.0 % $ 10,489 $ 2,303 $ 8,238 $ 15.98 We believe it is important to separately disclose our annual effective tax rate, excluding discrete items for our results to be meaningful to our readers. The annual effective tax rate is discussed using non-GAAP financial measures that exclude the effects of amounts associated with discrete items recorded fully in the quarter they occur. These items consist of (i) restructuring income/costs related to the divestitures of certain non-U.S. 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. 66 Table of Contents A reconciliation of our effective tax rate to annual effective tax rate, excluding discrete items is below: (Millions of dollars) Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate Three Months Ended September 30, 2024 - U.S. GAAP $ 3,098 $ 642 20.7 % 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 September 30, 2024 - Adjusted $ 3,168 $ 658 Three Months Ended September 30, 2023 - U.S. GAAP $ 3,515 $ 734 20.9 % 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 September 30, 2023 - Adjusted $ 3,561 $ 744 Nine Months Ended September 30, 2024 - U.S. GAAP $ 10,130 $ 2,166 21.4 % Restructuring (income) costs - divestitures of certain non-U.S. 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 Nine Months Ended September 30, 2024 - Adjusted $ 10,452 $ 2,256 Nine Months Ended September 30, 2023 - U.S. GAAP $ 9,801 $ 2,194 22.4 % Restructuring costs - Longwall divestiture 586 — Deferred tax valuation allowance adjustments — 88 Excess stock-based compensation — 54 Annual effective tax rate, excluding discrete items $ 10,387 $ 2,336 22.5 % Excess stock-based compensation — (54) Other restructuring (income) costs 102 21 Nine Months Ended September 30, 2023 - Adjusted $ 10,489 $ 2,303 In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases. 67 Table of Contents Reconciliations of ME&T free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities are as follows: (Millions of dollars) Nine Months Ended September 30, 2024 2023 ME&T net cash provided by operating activities 1 $ 7,726 $ 7,955 ME&T capital expenditures (1,284) (1,108) ME&T free cash flow $ 6,442 $ 6,847 1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 75 - 76. Supplemental Consolidating Data We are providing supplemental consolidating data for the purpose of additional analysis. The data has been grouped as follows: Consolidated – Caterpillar Inc. and its subsidiaries. Machinery, Energy & Transportation – We define ME&T as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of our products. Financial Products – We define Financial Products as it is presented in the supplemental data as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. Consolidating Adjustments – Eliminations of transactions between ME&T and Financial Products. The nature of the ME&T and Financial Products businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. We believe this presentation will assist readers in understanding our business. Pages 69 to 76 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information. Certain amounts for prior periods have been reclassified to conform to the current period presentation. 68 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Three Months Ended September 30, 2024 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Energy & Transportation $ 15,231 $ 15,231 $ — $ — Revenues of Financial Products 875 — 1,078 (203) 1 Total sales and revenues 16,106 15,231 1,078 (203) Operating costs: Cost of goods sold 10,066 10,067 — (1) 2 Selling, general and administrative expenses 1,669 1,484 197 (12) 2 Research and development expenses 533 533 — — Interest expense of Financial Products 336 — 336 — Other operating (income) expenses 355 49 329 (23) 2 Total operating costs 12,959 12,133 862 (36) Operating profit 3,147 3,098 216 (167) Interest expense excluding Financial Products 125 127 — (2) 3 Other income (expense) 76 (122) 33 165 4 Consolidated profit before taxes 3,098 2,849 249 — Provision (benefit) for income taxes 642 582 60 — Profit of consolidated companies 2,456 2,267 189 — Equity in profit (loss) of unconsolidated affiliated companies 7 7 — — Profit of consolidated and affiliated companies 2,463 2,274 189 — Less: Profit (loss) attributable to noncontrolling interests (1) (1) — — Profit 5 $ 2,464 $ 2,275 $ 189 $ — 1 Elimination of Financial Products’ revenues earned from ME&T. 2 Elimination of net expenses recorded between ME&T and Financial Products. 3 Elimination of interest expense recorded between Financial Products and ME&T. 4 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 5 Profit attributable to common shareholders. 69 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Nine Months Ended September 30, 2024 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Energy & Transportation $ 46,031 $ 46,031 $ — $ — Revenues of Financial Products 2,563 — 3,150 (587) 1 Total sales and revenues 48,594 46,031 3,150 (587) Operating costs: Cost of goods sold 29,878 29,883 — (5) 2 Selling, general and administrative expenses 4,898 4,346 560 (8) 2 Research and development expenses 1,588 1,588 — — Interest expense of Financial Products 948 — 948 — Other operating (income) expenses 1,134 51 1,174 (91) 2 Total operating costs 38,446 35,868 2,682 (104) Operating profit 10,148 10,163 468 (483) Interest expense excluding Financial Products 405 407 — (2) 3 Other income (expense) 387 (163) 69 481 4 Consolidated profit before taxes 10,130 9,593 537 — Provision (benefit) for income taxes 2,166 1,983 183 — Profit of consolidated companies 7,964 7,610 354 — Equity in profit (loss) of unconsolidated affiliated companies 34 34 — — Profit of consolidated and affiliated companies 7,998 7,644 354 — Less: Profit (loss) attributable to noncontrolling interests (3) (4) 1 — Profit 5 $ 8,001 $ 7,648 $ 353 $ — 1 Elimination of Financial Products’ revenues earned from ME&T. 2 Elimination of net expenses recorded between ME&T and Financial Products. 3 Elimination of interest expense recorded between Financial Products and ME&T. 4 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 5 Profit attributable to common shareholders. 70 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Three Months Ended September 30, 2023 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Energy & Transportation $ 15,988 $ 15,988 $ — $ — Revenues of Financial Products 822 — 1,017 (195) 1 Total sales and revenues 16,810 15,988 1,017 (195) Operating costs: Cost of goods sold 10,583 10,586 — (3) 2 Selling, general and administrative expenses 1,624 1,430 206 (12) 2 Research and development expenses 554 554 — — Interest expense of Financial Products 280 — 280 — Other operating (income) expenses 320 25 310 (15) 2 Total operating costs 13,361 12,595 796 (30) Operating profit 3,449 3,393 221 (165) Interest expense excluding Financial Products 129 129 — — Other income (expense) 195 42 (12) 165 3 Consolidated profit before taxes 3,515 3,306 209 — Provision (benefit) for income taxes 734 654 80 — Profit of consolidated companies 2,781 2,652 129 — Equity in profit (loss) of unconsolidated affiliated companies 12 12 — — Profit of consolidated and affiliated companies 2,793 2,664 129 — Less: Profit (loss) attributable to noncontrolling interests (1) (1) — — Profit 4 $ 2,794 $ 2,665 $ 129 $ — 1 Elimination of Financial Products’ revenues earned from ME&T. 2 Elimination of net expenses recorded by ME&T paid to Financial Products. 3 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 4 Profit attributable to common shareholders. 71 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Nine Months Ended September 30, 2023 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Energy & Transportation $ 47,632 $ 47,632 $ — $ — Revenues of Financial Products 2,358 — 2,907 (549) 1 Total sales and revenues 49,990 47,632 2,907 (549) Operating costs: Cost of goods sold 31,751 31,758 — (7) 2 Selling, general and administrative expenses 4,615 4,139 507 (31) 2 Research and development expenses 1,554 1,554 — — Interest expense of Financial Products 742 — 742 — Other operating (income) expenses 1,496 624 923 (51) 2 Total operating costs 40,158 38,075 2,172 (89) Operating profit 9,832 9,557 735 (460) Interest expense excluding Financial Products 385 385 — — Other income (expense) 354 18 (49) 385 3 Consolidated profit before taxes 9,801 9,190 686 (75) Provision (benefit) for income taxes 2,194 1,993 201 — Profit of consolidated companies 7,607 7,197 485 (75) Equity in profit (loss) of unconsolidated affiliated companies 52 55 — (3) 4 Profit of consolidated and affiliated companies 7,659 7,252 485 (78) Less: Profit (loss) attributable to noncontrolling interests — (2) 5 (3) 5 Profit 6 $ 7,659 $ 7,254 $ 480 $ (75) 1 Elimination of Financial Products’ revenues earned from ME&T. 2 Elimination of net expenses recorded by ME&T paid to Financial Products. 3 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T. 4 Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries. 5 Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries. 6 Profit attributable to common shareholders. 72 Table of Contents Caterpillar Inc. Supplemental Data for Financial Position At September 30, 2024 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Assets Current assets: Cash and cash equivalents $ 5,638 $ 4,760 $ 878 $ — Receivables – trade and other 9,086 3,421 489 5,176 1,2 Receivables – finance 9,816 — 15,188 (5,372) 2 Prepaid expenses and other current assets 3,094 2,941 417 (264) 3 Inventories 17,312 17,312 — — Total current assets 44,946 28,434 16,972 (460) Property, plant and equipment – net 12,837 8,943 3,894 — Long-term receivables – trade and other 1,346 582 128 636 1,2 Long-term receivables – finance 13,263 — 14,003 (740) 2 Noncurrent deferred and refundable income taxes 3,050 3,553 112 (615) 4 Intangible assets 448 448 — — Goodwill 5,317 5,317 — — Other assets 5,066 3,828 2,271 (1,033) 5 Total assets $ 86,273 $ 51,105 $ 37,380 $ (2,212) Liabilities Current liabilities: Short-term borrowings $ 3,725 $ — $ 3,725 $ — Accounts payable 7,705 7,630 287 (212) 6,7 Accrued expenses 4,980 4,351 629 — Accrued wages, salaries and employee benefits 2,078 2,028 50 — Customer advances 2,404 2,385 3 16 7 Other current liabilities 2,934 2,407 813 (286) 4,5,8 Long-term debt due within one year 8,392 46 8,346 — Total current liabilities 32,218 18,847 13,853 (482) Long-term debt due after one year 25,784 8,738 17,150 (104) 9 Liability for postemployment benefits 4,029 4,029 — — Other liabilities 4,839 3,970 1,522 (653) 4,5 Total liabilities 66,870 35,584 32,525 (1,239) Commitments and contingencies Shareholders’ equity Common stock 5,584 5,584 905 (905) 10 Treasury stock (42,390) (42,390) — — Profit employed in the business 57,920 53,100 4,810 10 10 Accumulated other comprehensive income (loss) (1,717) (781) (936) — Noncontrolling interests 6 8 76 (78) 10 Total shareholders’ equity 19,403 15,521 4,855 (973) Total liabilities and shareholders’ equity $ 86,273 $ 51,105 $ 37,380 $ (2,212) 1 Elimination of receivables between ME&T and Financial Products. 2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of ME&T’s insurance premiums that are prepaid to Financial Products. 4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 5 Elimination of other intercompany assets and liabilities between ME&T and Financial Products. 6 Elimination of payables between ME&T and Financial Products. 7 Reclassification of Financial Products' payables to customer advances. 8 Elimination of prepaid insurance in Financial Products’ other liabilities. 9 Elimination of debt between ME&T and Financial Products. 10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries. 73 Table of Contents Caterpillar Inc. Supplemental Data for Financial Position At December 31, 2023 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Assets Current assets: Cash and cash equivalents $ 6,978 $ 6,106 $ 872 $ — Receivables – trade and other 9,310 3,971 570 4,769 1,2 Receivables – finance 9,510 — 14,499 (4,989) 2 Prepaid expenses and other current assets 4,586 4,327 341 (82) 3 Inventories 16,565 16,565 — — Total current assets 46,949 30,969 16,282 (302) Property, plant and equipment – net 12,680 8,694 3,986 — Long-term receivables – trade and other 1,238 565 85 588 1,2 Long-term receivables – finance 12,664 — 13,299 (635) 2 Noncurrent deferred and refundable income taxes 2,816 3,360 148 (692) 4 Intangible assets 564 564 — — Goodwill 5,308 5,308 — — Other assets 5,257 4,218 2,082 (1,043) 5 Total assets $ 87,476 $ 53,678 $ 35,882 $ (2,084) Liabilities Current liabilities: Short-term borrowings $ 4,643 $ — $ 4,643 $ — Accounts payable 7,906 7,827 314 (235) 6,7 Accrued expenses 4,958 4,361 597 — Accrued wages, salaries and employee benefits 2,757 2,696 61 — Customer advances 1,929 1,912 2 15 7 Dividends payable 649 649 — — Other current liabilities 3,123 2,583 647 (107) 4,8 Long-term debt due within one year 8,763 1,044 7,719 — Total current liabilities 34,728 21,072 13,983 (327) Long-term debt due after one year 24,472 8,626 15,893 (47) 9 Liability for postemployment benefits 4,098 4,098 — — Other liabilities 4,675 3,806 1,607 (738) 4 Total liabilities 67,973 37,602 31,483 (1,112) Commitments and contingencies Shareholders’ equity Common stock 6,403 6,403 905 (905) 10 Treasury stock (36,339) (36,339) — — Profit employed in the business 51,250 46,783 4,457 10 10 Accumulated other comprehensive income (loss) (1,820) (783) (1,037) — Noncontrolling interests 9 12 74 (77) 10 Total shareholders’ equity 19,503 16,076 4,399 (972) Total liabilities and shareholders’ equity $ 87,476 $ 53,678 $ 35,882 $ (2,084) 1 Elimination of receivables between ME&T and Financial Products. 2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of ME&T’s insurance premiums that are prepaid to Financial Products. 4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 5 Elimination of other intercompany assets between ME&T and Financial Products. 6 Elimination of payables between ME&T and Financial Products. 7 Reclassification of Financial Products' payables to customer advances. 8 Elimination of prepaid insurance in Financial Products' other liabilities. 9 Elimination of debt between ME&T and Financial Products. 10 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries. 74 Table of Contents Caterpillar Inc. Supplemental Data for Cash Flow For the Nine Months Ended September 30, 2024 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Cash flow from operating activities: Profit of consolidated and affiliated companies $ 7,998 $ 7,644 $ 354 $ — Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortization 1,598 1,010 588 — Provision (benefit) for deferred income taxes (329) (277) (52) — (Gain) loss on divestiture 164 (46) 210 — Other 221 236 (447) 432 1 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables – trade and other (30) 554 (17) (567) 1,2 Inventories (781) (770) — (11) 1 Accounts payable (96) (79) (40) 23 1 Accrued expenses 9 — 9 — Accrued wages, salaries and employee benefits (671) (660) (11) — Customer advances 476 475 1 — Other assets – net 120 (226) 191 155 1 Other liabilities – net (37) (135) 232 (134) 1 Net cash provided by (used for) operating activities 8,642 7,726 1,018 (102) Cash flow from investing activities: Capital expenditures – excluding equipment leased to others (1,285) (1,264) (25) 4 1 Expenditures for equipment leased to others (893) (20) (889) 16 1 Proceeds from disposals of leased assets and property, plant and equipment 541 25 525 (9) 1 Additions to finance receivables (11,457) — (12,271) 814 2 Collections of finance receivables 10,234 — 10,889 (655) 2 Net intercompany purchased receivables — — 68 (68) 2 Proceeds from sale of finance receivables 69 — 69 — Net intercompany borrowings — — 15 (15) 3 Investments and acquisitions (net of cash acquired) (32) (32) — — Proceeds from sale of businesses and investments (net of cash sold) (67) 86 (153) — Proceeds from maturities and sale of securities 2,841 2,565 276 — Investments in securities (892) (469) (423) — Other – net 137 118 19 — Net cash provided by (used for) investing activities (804) 1,009 (1,900) 87 Cash flow from financing activities: Dividends paid (1,966) (1,966) — — Common stock issued, including treasury shares reissued 15 15 — — Payments to purchase common stock (7,057) (7,057) — — Net intercompany borrowings — (15) — 15 3 Proceeds from debt issued (original maturities greater than three months) 7,579 — 7,579 — Payments on debt (original maturities greater than three months) (6,862) (1,021) (5,841) — Short-term borrowings – net (original maturities three months or less) (848) — (848) — Net cash provided by (used for) financing activities (9,139) (10,044) 890 15 Effect of exchange rate changes on cash (39) (37) (2) — Increase (decrease) in cash, cash equivalents and restricted cash (1,340) (1,346) 6 — Cash, cash equivalents and restricted cash at beginning of period 6,985 6,111 874 — Cash, cash equivalents and restricted cash at end of period $ 5,645 $ 4,765 $ 880 $ — 1 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 2 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 3 Elimination of net proceeds and payments to/from ME&T and Financial Products. 75 Table of Contents Caterpillar Inc. Supplemental Data for Cash Flow For the Nine Months Ended September 30, 2023 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Energy & Transportation Financial Products Consolidating Adjustments Cash flow from operating activities: Profit of consolidated and affiliated companies $ 7,659 $ 7,252 $ 485 $ (78) 1,5 Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortization 1,599 1,015 584 — Provision (benefit) for deferred income taxes (448) (456) 8 — (Gain) loss on divestiture 572 572 — — Other 205 309 (463) 359 2 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables – trade and other (319) (46) 70 (343) 2,3 Inventories (1,424) (1,420) — (4) 2 Accounts payable (532) (628) 26 70 2 Accrued expenses 588 557 31 — Accrued wages, salaries and employee benefits — 1 (1) — Customer advances 516 515 1 — Other assets – net 128 107 17 4 2 Other liabilities – net 338 177 147 14 2 Net cash provided by (used for) operating activities 8,882 7,955 905 22 Cash flow from investing activities: Capital expenditures – excluding equipment leased to others (1,061) (1,088) (16) 43 2 Expenditures for equipment leased to others (1,177) (20) (1,165) 8 2 Proceeds from disposals of leased assets and property, plant and equipment 563 46 564 (47) 2 Additions to finance receivables (11,082) — (12,493) 1,411 3 Collections of finance receivables 10,391 — 11,554 (1,163) 3 Net intercompany purchased receivables — — 429 (429) 3 Proceeds from sale of finance receivables 40 — 40 — Net intercompany borrowings — — 7 (7) 4 Investments and acquisitions (net of cash acquired) (67) (67) — — Proceeds from sale of businesses and investments (net of cash sold) (14) (14) — — Proceeds from sale of securities 747 553 194 — Investments in securities (3,689) (3,340) (349) — Other – net 32 43 (11) — Net cash provided by (used for) investing activities (5,317) (3,887) (1,246) (184) Cash flow from financing activities: Dividends paid (1,901) (1,901) (155) 155 5 Common stock issued, including treasury shares reissued 36 36 — — Payments to purchase common stock (2,209) (2,209) — — Net intercompany borrowings — (7) — 7 4 Proceeds from debt issued (original maturities greater than three months) 6,360 — 6,360 — Payments on debt (original maturities greater than three months) (4,459) (99) (4,360) — Short-term borrowings – net (original maturities three months or less) (1,726) (3) (1,723) — Net cash provided by (used for) financing activities (3,899) (4,183) 122 162 Effect of exchange rate changes on cash (119) (55) (64) — Increase (decrease) in cash, cash equivalents and restricted cash (453) (170) (283) — Cash, cash equivalents and restricted cash at beginning of period 7,013 6,049 964 — Cash, cash equivalents and restricted cash at end of period $ 6,560 $ 5,879 $ 681 $ — 1 Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries. 2 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 3 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 4 Elimination of net proceeds and payments to/from ME&T and Financial Products. 5 Elimination of dividend activity between Financial Products and ME&T. 76 Table of Contents Forward-looking Statements Certain statements in this Form 10-Q relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements. Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) catastrophic events, including global pandemics such as the COVID-19 pandemic; and (xxvii) other factors described in more detail under the section entitled "Part I - Item 1A. Risk Factors" of Caterpillar's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as such factors may be updated from time to time in Caterpillar's periodic filings with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures About Market Risk The information required by this Item is incorporated by reference from Note 5 – “Derivative financial instruments and risk management” included in Part I, Item 1 and Management’s Discussion and Analysis included in Part I, Item 2 of this Form 10-Q.