Item 2. Management’s Discussion and Analysis
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 2024 Form 10-K .
Highlights for the first quarter of 2025 include:
• Total sales and revenues for the first quarter of 2025 were $14.249 billion, a decrease of $1.550 billion, or 10 percent, compared with $15.799 billion in the first quarter of 2024. Sales were lower across the three primary segments.
• Operating profit margin was 18.1 percent for the first quarter of 2025, compared with 22.3 percent for the first quarter of 2024. Adjusted operating profit margin was 18.3 percent for the first quarter of 2025, compared with 22.2 percent for the first quarter of 2024.
• First-quarter 2025 profit per share was $4.20, and excluding the items in the table below, adjusted profit per share was $4.25. First-quarter 2024 profit per share was $5.75, and excluding the items in the table below, adjusted profit per share was $5.60.
• Caterpillar ended the first quarter of 2025 with $3.6 billion of enterprise cash.
In order for our results to be more meaningful to our readers, we have separately quantified the impact of significant items.
Three Months Ended March 31, 2025 Three Months Ended March 31, 2024
(Dollars in millions except per share data) Profit Before Taxes Profit
Per Share Profit Before Taxes Profit
Per Share
Profit $ 2,570 $ 4.20 $ 3,532 $ 5.75
Other restructuring (income) costs 33 0.05 58 0.09
Restructuring (income) - non-U.S. mining entity divestiture — — (64) (0.24)
Adjusted profit $ 2,603 $ 4.25 $ 3,526 $ 5.60
A detailed reconciliation of GAAP to non-GAAP financial measures is included on pages 57-59.
Overview
Total sales and revenues for the first quarter of 2025 were $14.249 billion, a decrease of $1.550 billion, or 10 percent, compared with $15.799 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume and unfavorable price realization . Lower sales volume was mainly driven by the impact from changes in dealer inventories .
First-quarter 2025 profit per share was $4.20, compared with $5.75 profit per share in the first quarter of 2024. In the first quarter of 2025 and 2024, profit per share included restructuring income/costs . Profit for the first quarter of 2025 was $2.003 billion, a decrease of $853 million, or 30 percent, compared with $2.856 billion for the first quarter of 2024. The decrease was mainly due to the profit impact of lower sales volume and unfavorable price realization.
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 are encouraged by another quarter of better-than-expected sales of equipment to end users and strong order rates across many of our regions as customers are responding to the attractiveness of our sales merchandising programs. Construction spend in North America remains at healthy levels, and infrastructure projects funded by the Infrastructure Investment and Jobs Act (IIJA) continue to be awarded. In Asia Pacific, outside of China, economic conditions continue to be soft. China has shown positive momentum in the excavator industry above 10-tons, but from a very low level of activity. In EAME , weak economic conditions in Europe remain, while conditions are supportive of investment in Africa and the Middle East. Construction activity in Latin America is expected to moderately decline in 2025 as compared to 2024.
In Resource Industries , we are starting the year with strong order rates and backlog growth, particularly for large mining trucks. Rebuild activity is expected to remain healthy. Although most key commodities remain above investment thresholds, customers continue to display capital discipline. Customer product utilization remains high, the age of the fleet remains
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elevated, and we continue to see growing customer acceptance of our autonomous solutions. We believe the evolving energy landscape will support increased commodity demand over time, providing further opportunities for long-term profitable growth.
In Energy & Transportation , the growth in backlog was driven by robust order activity in both Oil and Gas and Power Generation. Demand remains strong in Power Generation for both reciprocating engines and turbines and turbine-related services in 2025. The strength of our backlog gives us confidence in our long-term outlook. For Oil and Gas reciprocating engines and services, we expect continuing softness in well servicing due to ongoing capital discipline by our customers, industry consolidation and efficiency improvements in our customers’ operations. Also within Oil and Gas reciprocating engines and services, we see positive momentum in gas compression. For turbines and turbine-related services used in Oil and Gas applications, backlog remains strong, and we continue to see healthy orders. Demand for products in Industrial applications is expected to remain at a relatively low level. Transportation is expected to remain stable.
Full-Year 2025 Company Trends and Expectations
We are closely monitoring the evolving economic conditions. Due to the tariff announcements and increasing economic uncertainty, we have evaluated a variety of scenarios to estimate the potential impact of tariffs on our results for the remainder of the year.
Demand signals were stronger than we expected in the first quarter of 2025, including backlog growth across our three primary segments and stronger than expected sales of equipment to end users in Construction Industries and Resource Industries. These indicators boost our confidence in the resilience of our sales and revenues this year.
For the full-year 2025, in a pre-tariff scenario, which does not include any impact from tariffs, we expect sales and revenues to be about flat compared to 2024.
In our alternative scenario, which assumes negative economic growth in the second half of 2025, we expect full-year sales and revenues to only be down slightly in 2025 as compared to 2024. This expectation is a reflection of the diversity of our end markets and the strength of our record backlog, especially for large reciprocating engines and for turbines and turbine-related services.
We expect the year over year impact of unfavorable price realization to be greater in the first and second quarters of 2025 and expect it to moderate in the second half of 2025. In addition, we also do not expect a significant decrease in machine dealer inventory as we saw in the fourth quarter of 2024, and we still expect dealers to hold inventories about flat for the full year.
We have assessed potential cost impacts from the current tariffs which have been announced and implemented for the full-year 2025 before any additional mitigation actions; however, given the uncertainty of what the tariff rates could be and the timing of any additional mitigation actions, it is not possible to derive an accurate estimate of the net full-year 2025 impact of tariffs.
In 2025, we continue to expect restructuring costs of approximately $150 million to $200 million and expect capital expenditures of about $2.5 billion. We anticipate the annual effective tax rate, excluding discrete items, to be 23.0 percent in 2025.
Second-Quarter 2025 Company Trends and Expectations
In the second quarter of 2025, we expect sales and revenues to be similar to the second quarter of 2024. Sales growth in Energy & Transportation is expected to be offset by lower sales in Construction Industries and Resource Industries, primarily driven by unfavorable price realization. Machine sales volume is expected to be about flat.
In the second quarter of 2025 as compared to the second quarter of 2024, we anticipate lower sales in Construction Industries primarily due to unfavorable price realization, partially offset by slightly higher sales volume. In Resource Industries, we expect lower sales primarily due to unfavorable price realization and slightly lower sales volume. In Energy & Transportation, we anticipate higher sales in the second quarter of 2025 as compared to the second quarter of 2024, primarily driven by strength in Power Generation and Oil and Gas. The strength in Oil and Gas is driven by turbines and turbine-related services. We expect favorable price realization for Energy & Transportation in the second quarter of 2025.
In the second quarter of 2025 as compared to the second quarter of 2024, we expect unfavorable price realization, unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses. We anticipate $250 million to $350 million of estimated cost in the second quarter of 2025 related to the tariffs which have been announced and implemented in 2025. This estimate is net of initial mitigation efforts and cost controls which represent limited, short-term actions that we were able to implement quickly.
In Construction Industries, we expect unfavorable price realization in the second quarter of 2025 as compared to the second quarter of 2024. We expect about 50 percent of the $250 million to $350 million of estimated cost related to tariffs to be incurred in Construction Industries. In Resource Industries, we expect unfavorable price realization and higher SG&A/R&D expenses in the second quarter of 2025 as compared to the second quarter of 2024. We expect about 25 percent of the $250
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million to $350 million of estimated cost related to tariffs to be incurred in Resource Industries. In Energy & Transportation, we expect the profit impact of higher sales volume and favorable price realization to be partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. We expect about 25 percent of the $250 million to $350 million of estimated cost related to tariffs to be incurred in Energy & Transportation.
Global Business Conditions
We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary cost, labor pressures and the impact of trade policies. 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 2024 Form 10-K.
Notes:
• Glossary of terms is included on pages 52-54; first occurrence of terms shown in bold italics.
• Information on non-GAAP financial measures is included on pages 57-59.
• Certain amounts may not add due to rounding.
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Consolidated Results of Operations
THREE MONTHS ENDED MARCH 31, 2025 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2024
CONSOLIDATED SALES AND REVENUES
The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2024 (at left) and the first quarter of 2025 (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 first quarter of 2025 were $14.249 billion, a decrease of $1.550 billion, or 10 percent, compared with $15.799 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume of $1.1 billion and unfavorable price realization of $250 million. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory increased by $100 million during the first quarter of 2025, compared with an increase of $1.4 billion during the first quarter of 2024.
Sales were lower across the three primary segments.
North America sales decreased 11 percent primarily due to lower sales volume. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory increased less during the first quarter of 2025 than during the first quarter of 2024.
Sales decreased 3 percent in Latin America mainly due to unfavorable currency impacts primarily related to the Brazilian real, partially offset by higher sales volume. The increase in sales volume was primarily driven by higher sales of equipment to end users.
EAME sales decreased 13 percent primarily due to lower sales volume and unfavorable price realization. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory decreased during the first quarter of 2025, compared with an increase during the first quarter of 2024.
Asia/Pacific sales decreased 12 percent mainly due to lower sales volume and unfavorable currency impacts primarily related to the Australian dollar. The decrease in sales volume was primarily driven by lower sales of equipment to end users.
Total dealer inventory increased $100 million during the first quarter of 2025, compared with an increase of $1.4 billion during the first quarter of 2024. Machine dealer inventory was about flat during the first quarter of 2025, compared with an increase of $1.1 billion during the first quarter of 2024. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.
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Sales and Revenues by Segment
(Millions of dollars) First Quarter 2024 Sales
Volume Price
Realization Currency Inter-Segment / Other First Quarter 2025 $
Change %
Change
Construction Industries $ 6,424 $ (820) $ (355) $ (98) $ 33 $ 5,184 $ (1,240) (19 %)
Resource Industries 3,193 (179) (50) (46) (34) 2,884 (309) (10 %)
Energy & Transportation 6,681 (175) 155 (69) (24) 6,568 (113) (2 %)
All Other Segment 109 (2) — (1) (15) 91 (18) (17 %)
Corporate Items and Eliminations (1,447) 66 — (8) 40 (1,349) 98
Machinery, Energy & Transportation Sales
14,960 (1,110) (250) (222) — 13,378 (1,582) (11 %)
Financial Products Segment 991 — — — 16 1,007 16 2 %
Corporate Items and Eliminations (152) — — — 16 (136) 16
Financial Products Revenues
839 — — — 32 871 32 4 %
Consolidated Sales and Revenues $ 15,799 $ (1,110) $ (250) $ (222) $ 32 $ 14,249 $ (1,550) (10 %)
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
First Quarter 2025
Construction Industries $ 2,904 (24 %) $ 504 (15 %) $ 867 (13 %) $ 869 (12 %) $ 5,144 (20 %) $ 40 471 % $ 5,184 (19 %)
Resource Industries 1,084 (14 %) 561 18 % 406 (13 %) 770 (14 %) 2,821 (9 %) 63 (35 %) 2,884 (10 %)
Energy & Transportation 3,142 6 % 370 (9 %) 1,130 (13 %) 756 (9 %) 5,398 (2 %) 1,170 (2 %) 6,568 (2 %)
All Other Segment 17 (6 %) — 100 % 2 (50 %) 12 (8 %) 31 (9 %) 60 (20 %) 91 (17 %)
Corporate Items and Eliminations (11) — (2) (3) (16) (1,333) (1,349)
Machinery, Energy & Transportation Sales 7,136 (11 %) 1,435 (3 %) 2,403 (13 %) 2,404 (12 %) 13,378 (11 %) — — % 13,378 (11 %)
Financial Products Segment 682 3 % 99 (2 %) 122 (1 %) 104 (4 %) 1,007 1
2 % — — % 1,007 2 %
Corporate Items and Eliminations (80) (19) (19) (18) (136) — (136)
Financial Products Revenues 602 7 % 80 (4 %) 103 (1 %) 86 (1 %) 871 4 % — — % 871 4 %
Consolidated Sales and Revenues $ 7,738 (10 %) $ 1,515 (3 %) $ 2,506 (12 %) $ 2,490 (12 %) $ 14,249 (10 %) $ — — % $ 14,249 (10 %)
First Quarter 2024
Construction Industries $ 3,833 $ 595 $ 996 $ 993 $ 6,417 $ 7 $ 6,424
Resource Industries 1,264 476 465 891 3,096 97 3,193
Energy & Transportation 2,951 408 1,294 834 5,487 1,194 6,681
All Other Segment 18 (1) 4 13 34 75 109
Corporate Items and Eliminations (58) (2) (11) (3) (74) (1,373) (1,447)
Machinery, Energy & Transportation Sales 8,008 1,476 2,748 2,728 14,960 — 14,960
Financial Products Segment 659 101 123 108 991 1
— 991
Corporate Items and Eliminations (94) (18) (19) (21) (152) — (152)
Financial Products Revenues 565 83 104 87 839 — 839
Consolidated Sales and Revenues $ 8,573 $ 1,559 $ 2,852 $ 2,815 $ 15,799 $ — $ 15,799
1 Includes revenues from Machinery, Energy & Transportation o f $163 m illion and $177 million in the first quarter of 2025 and 2024, respectively.
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CONSOLIDATED OPERATING PROFIT
The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2024 (at left) and the first quarter of 2025 (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 first quarter of 2025 was $2.579 billion, a decrease of $940 million, or 27 percent, compared with $3.519 billion in the first quarter of 2024. The decrease was mainly due to the profit impact of lower sales volume of $652 million and unfavorable price realization of $250 million.
Operating profit margin was 18.1 percent for the first quarter of 2025, compared with 22.3 percent for the first quarter of 2024.
Profit (Loss) by Segment
(Millions of dollars) First Quarter 2025 First Quarter 2024 $
Change %
Change
Construction Industries $ 1,024 $ 1,764 $ (740) (42 %)
Resource Industries 599 730 (131) (18 %)
Energy & Transportation 1,314 1,301 13 1 %
All Other Segment (21) 24 (45) (188 %)
Corporate Items and Eliminations (401) (415) 14
Machinery, Energy & Transportation 2,515 3,404 (889) (26 %)
Financial Products Segment 215 293 (78) (27 %)
Corporate Items and Eliminations (14) (25) 11
Financial Products 201 268 (67) (25 %)
Consolidating Adjustments (137) (153) 16
Consolidated Operating Profit $ 2,579 $ 3,519 $ (940) (27 %)
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Other Profit/Loss and Tax Items
▪ Interest expense excluding Financial Products in the first quarter of 2025 was $116 million, compared with $143 million in the first quarter of 2024. The decrease was due to lower average debt outstanding and lower average borrowing rates.
▪ Other income (expense) in the first quarter of 2025 was income of $107 million, compared with income of $156 million in the first quarter of 2024. The change was primarily driven by unfavorable foreign currency impacts.
▪ The effective tax rate for the first quarter of 2025 was 22.3 percent compared to 19.5 percent for the first quarter of 2024. Excluding the discrete items discussed below, the first-quarter 2025 estimated annual effective tax rate was 23.0 percent compared with 22.5 percent for the first quarter of 2024.
A discrete tax benefit of $17 million was recorded in the first quarter of 2025, compared with a $38 million benefit in the first quarter of 2024, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In addition, the estimated annual effective tax rate in the first quarter of 2024 excluded the impact of nontaxable gains of $64 million for the divestiture of a non-U.S. mining entity along with a related tax benefit of $54 million.
Please see a reconciliation of GAAP to non-GAAP financial measures on pages 57-59.
Construction Industries
Construction Industries’ total sales were $5.184 billion in the first quarter of 2025, a decrease of $1.240 billion, or 19 percent, compared with $6.424 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume of $820 million and unfavorable price realization of $355 million. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased slightly during the first quarter of 2025, compared with an increase during the first quarter of 2024.
• In North America, sales decreased due to lower sales volume and unfavorable price realization. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the first quarter of 2025, compared with an increase during the first quarter of 2024.
• Sales decreased in Latin America due to unfavorable currency impacts primarily related to the Brazilian real, unfavorable price realization and lower sales volume. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the first quarter of 2025, compared with an increase during the first quarter of 2024.
• In EAME, sales decreased primarily due to unfavorable price realization and lower sales volume. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory increased less during the first quarter of 2025 than during the first quarter of 2024.
• Sales decreased in Asia/Pacific due to lower sales volume, unfavorable price realization and unfavorable currency impacts primarily related to the Japanese yen. Lower sales volume was mainly driven by lower sales of equipment to end users.
Construction Industries’ segment profit was $1.024 billion in the first quarter of 2025, a decrease of $740 million, or 42 percent, compared with $1.764 billion in the first quarter of 2024. The decrease was mainly due to the profit impact of lower sales volume of $371 million and unfavorable price realization of $355 million.
Construction Industries’ segment profit as a percentage of total sales was 19.8 percent in the first quarter of 2025, compared with 27.5 percent in the first quarter of 2024.
Resource Industries
Resource Industries’ total sales were $2.884 billion in the first quarter of 2025, a decrease of $309 million, or 10 percent, compared with $3.193 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume of $179 million, unfavorable price realization of $50 million and unfavorable currency impacts of $46 million, primarily related to the Australian dollar. The decrease in sales volume was mainly driven by lower sales of equipment to end users.
Resource Industries’ segment profit was $599 million in the first quarter of 2025, a decrease of $131 million, or 18 percent, compared with $730 million in the first quarter of 2024. The decrease was mainly due to the profit impact of lower sales volume.
Resource Industries’ segment profit as a percentage of total sales was 20.8 percent in the first quarter of 2025, compared with 22.9 percent in the first quarter of 2024.
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Energy & Transportation
Sales by Application
(Millions of dollars) First Quarter 2025 First Quarter 2024 $
Change %
Change
Oil and Gas $ 1,258 $ 1,568 $ (310) (20 %)
Power Generation 1,996 1,618 378 23 %
Industrial 967 989 (22) (2 %)
Transportation 1,177 1,312 (135) (10 %)
External Sales 5,398 5,487 (89) (2 %)
Inter-segment 1,170 1,194 (24) (2 %)
Total Sales $ 6,568 $ 6,681 $ (113) (2 %)
Energy & Transportation’s total sales were $6.568 billion in the first quarter of 2025, a decrease of $113 million, or 2 percent, compared with $6.681 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume of $175 million, unfavorable currency impacts of $69 million primarily related to the euro, and lower inter-segment sales of $24 million, partially offset by favorable price realization of $155 million.
• Oil and Gas – Sales decreased in reciprocating engines used in gas compression and well servicing applications. Sales also decreased for turbines and turbine-related services.
• Power Generation – Sales increased in large reciprocating engines, primarily data center applications.
• Industrial – Sales decreased primarily in North America and Asia/Pacific, partially offset by increased sales in EAME.
• Transportation – Sales decreased in marine. International locomotive deliveries were also lower.
Energy & Transportation’s segment profit was $1.314 billion in the first quarter of 2025, an increase of $13 million, or 1 percent, compared with $1.301 billion in the first quarter of 2024. The increase was primarily due to favorable price realization of $155 million, mostly offset by the profit impact of lower sales volume of $114 million and unfavorable manufacturing costs of $40 million. Unfavorable manufacturing costs largely reflected increased period manufacturing costs.
Energy & Transportation’s segment profit as a percentage of total sales was 20.0 percent in the first quarter of 2025, compared with 19.5 percent in the first quarter of 2024.
Financial Products Segment
Financial Products’ segment revenues were $1.007 billion in the first quarter of 2025, an increase of $16 million, or 2 percent, compared with $991 million in the first quarter of 2024. The increase was primarily due to a favorable impact from higher average earning assets of $28 million driven by North America, partially offset by an unfavorable impact from lower average financing rates of $15 million primarily in North America.
Financial Products’ segment profit was $215 million in the first quarter of 2025, a decrease of $78 million, or 27 percent, compared with $293 million in the first quarter of 2024. The decrease was mainly due to the absence of an insurance settlement of $33 million in the first quarter of 2024, higher provision for credit losses at Cat Financial of $22 million, an unfavorable impact from lower net yield on average earning assets of $14 million and an unfavorable impact from equity securities of $14 million.
At the end of the first quarter of 2025, past dues at Cat Financial were 1.58 percent, compared with 1.78 percent at the end of the first quarter of 2024. Write-offs, net of recoveries, were $20 million for the first quarter of 2025, compared with $55 million for the first quarter of 2024. As of March 31, 2025, Cat Financial's allowance for credit losses totaled $282 million, or 0.95 percent of finance receivables, compared with $267 million, or 0.91 percent of finance receivables at December 31, 2024.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $415 million in the first quarter of 2025, a decrease of $25 million from the first quarter of 2024, driven by a favorable change in fair value adjustments related to deferred compensation plans and decreased expenses due to timing differences, partially offset by unfavorable impacts of segment reporting methodology differences, unfavorable restructuring income/costs and higher corporate costs.
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RESTRUCTURING COSTS
In 2025, we expect to incur about $150 million to $200 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 $30 million in 2025 compared with 2024.
Additional information related to restructuring costs is included in Note 20 – "Restructuring income/costs" of Part I, Item 1 "Financial Statements."
GLOSSARY OF TERMS
1. Adjusted Operating Profit Margin – Operating profit excluding restructuring income/costs as a percentage of sales and revenues.
2. Adjusted Profit Per Share – Profit per share excluding restructuring income/costs.
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.
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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 and hybrid 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.
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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 – Machinery, Energy & Transportation services revenues include, but are not limited to, aftermarket parts and other service-related revenues and exclude most Financial Products revenues, discontinued products and captive dealer services.
LIQUIDITY AND CAPITAL RESOURCES
Sources of funds
We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. 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 three months of 2025 and ended the first quarter with $3.562 billion of cash, a decrease of $3.327 billion from year-end 2024. 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 $1.215 billion as of March 31, 2025 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 three months of 2025 was $1.289 billion, down $763 million compared to the same period a year ago. The decrease was primarily due to lower profit before taxes adjusted for non-cash items.
Total debt as of March 31, 2025 was $38.588 billion, an increase of $179 million from year-end 2024. Debt related to ME&T increased $63 million in the first three months of 2025, while debt related to Financial Products increased $142 million.
As of March 31, 2025, we had three global credit facilities with a syndicate of banks totaling $10.500 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of March 31, 2025 was $2.750 billion. Information on our Credit Facility is as follows:
• The 364-day facility of $3.150 billion (of which $825 million is available to ME&T) expires in August 2025.
• The three-year facility, as amended in August 2024, of $2.730 billion (of which $715 million is available to ME&T) expires in August 2027.
• The five-year facility, as amended in August 2024, of $4.620 billion (of which $1.210 billion is available to ME&T) expires in August 2029.
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At March 31, 2025, Caterpillar’s consolidated net worth was $18.132 billion, which was above the $9.000 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as Caterpillar's consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).
At March 31, 2025, Cat Financial’s covenant interest coverage ratio was 1.36 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 March 31, 2025, Cat Financial’s six-month covenant leverage ratio was 7.42 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 March 31, 2025, 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 March 31, 2025 were:
March 31, 2025
(Millions of dollars) Consolidated Machinery,
Energy &
Transportation Financial
Products
Credit lines available:
Global credit facilities $ 10,500 $ 2,750 $ 7,750
Other external 3,944 612 3,332
Total credit lines available 14,444 3,362 11,082
Less: Commercial paper outstanding (2,990) — (2,990)
Less: Utilized credit (716) — (716)
Available credit $ 10,738 $ 3,362 $ 7,376
The other external consolidated credit lines with banks as of March 31, 2025 totaled $3.944 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.
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.
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We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. We account for the payments made under the Programs, the same as 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 $926 million in the first three months of 2025, compared with net cash provided of $1.771 billion for the same period in 2024. The decrease was primarily due to lower profit before taxes, adjusted for non-cash items, and higher working capital requirements. Within working capital, changes in inventories unfavorably impacted cash flow, but were partially offset by changes in customer advances.
Net cash provided by investing activities in the first three months of 2025 was $30 million, compared with net cash provided of $1.225 billion in the first three months of 2024. The change was primarily due to lower proceeds from maturities and sale of securities, primarily due to time deposit maturities in 2024.
Net cash used for financing activities during the first three months of 2025 was $4.432 billion, compared with net cash used of $5.120 billion in the same period of 2024. The change was primarily due to lower payments to purchase common stock in the first three months of 2025 compared to the same period in 2024.
While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our long-term cash deployment strategy is focused on the following priorities. 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 $704 million during the first three months of 2025, compared to $502 million for the same period in 2024. We expect ME&T’s capital expenditures in 2025 to be about $2.5 billion. We made $211 million of contributions to our pension and other postretirement benefit plans during the first three months of 2025. We currently anticipate full-year 2025 contributions of approximately $354 million. In comparison, we made $113 million of contributions to our pension and other postretirement benefit plans during the first three months of 2024.
Fund strategic growth initiatives and return capital to shareholders – We intend to utilize our liquidity and debt capacity to fund targeted investments that drive long-term profitable growth focused in the areas of expanded offerings, services and sustainability, including acquisitions.
As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases. We define ME&T free cash flow as cash from ME&T operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions. A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating.
Each quarter, our Board of Directors reviews the company’s dividend for the applicable quarter. 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 April 2025, 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 $674 million in the first three months of 2025.
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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 three months of 2025, we repurchased $3.660 billion of Caterpillar common stock. As of March 31, 2025, the 2022 Authorization was fully utilized and $16.468 billion remained available under the 2024 Authorization. Our basic shares outstanding as of March 31, 2025 were approximately 471 million.
Financial Products
Net cash provided by operating activities was $297 million in the first three months of 2025, compared with $308 million for the same period in 2024. Net cash used for investing activities was $132 million in the first three months of 2025, compared with $291 million for the same period in 2024. The change was primarily due to portfolio related activity and an increase in proceeds from maturities and sale of securities. Net cash used for financing activities was $71 million in the first three months of 2025, compared with net cash provided of $117 million for the same period in 2024. The change was due to external borrowing activity.
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 2024 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our 2024 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.”
Order Backlog
At the end of the first quarter of 2025, the dollar amount of backlog believed to be firm was approximately $35.0 billion, about $5.0 billion higher than the fourth quarter of 2024. The order backlog increased across the primary segments, with the largest increase in Energy & Transportation. Of the total backlog at March 31, 2025, approximately $9.2 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 two significant items in order for the company’s results to be meaningful to readers. These items consist of (i) other restructuring income/costs and (ii) restructuring income related to the divestiture of a non-U.S. mining entity in 2024. 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 the company’s period-over-period results.
Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows:
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(Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Profit Profit per Share
Three Months Ended March 31, 2025 - U.S. GAAP
$ 2,579 18.1 % $ 2,570 $ 574 $ 2,003 $ 4.20
Other restructuring (income) costs 32 0.2 % 33 8 25 0.05
Three Months Ended March 31, 2025 - Adjusted
$ 2,611 18.3 % $ 2,603 $ 582 $ 2,028 $ 4.25
Three Months Ended March 31, 2024 - U.S. GAAP
$ 3,519 22.3 % $ 3,532 $ 688 $ 2,856 $ 5.75
Restructuring (income) - non-U.S. mining entity divestiture (64) (0.5) % (64) 54 (118) (0.24)
Other restructuring (income) costs 58 0.4 % 58 14 44 0.09
Three Months Ended March 31, 2024 - Adjusted
$ 3,513 22.2 % $ 3,526 $ 756 $ 2,782 $ 5.60
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. For the three months ended March 31, 2025, and 2024, these items consist of (i) the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense and (ii) restructuring income related to the divestiture of a non-U.S. mining entity in 2024. We believe the non-GAAP measures will provide investors with useful perspective on underlying business results and trends and aids with assessing the company's period-over-period results.
A reconciliation of our effective tax rate to annual effective tax rate, excluding discrete items is below:
(Millions of dollars) Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate
Three Months Ended March 31, 2025 - U.S. GAAP
$ 2,570 $ 574 22.3 %
Excess stock-based compensation — 17
Annual effective tax rate, excluding discrete items $ 2,570 $ 591 23.0 %
Excess stock-based compensation — (17)
Other restructuring (income) costs 33 8
Three Months Ended March 31, 2025 - Adjusted
$ 2,603 $ 582
Three Months Ended March 31, 2024 - U.S. GAAP
$ 3,532 $ 688 19.5 %
Restructuring (income) - non-US mining entity divestiture (64) 54
Excess stock-based compensation — 38
Annual effective tax rate, excluding discrete items $ 3,468 $ 780 22.5 %
Excess stock-based compensation — (38)
Other restructuring (income) costs 58 14
Three Months Ended March 31, 2024 - Adjusted
$ 3,526 $ 756
In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases.
Reconciliations of ME&T free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities are as follows:
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(Millions of dollars) Three Months Ended March 31,
2025 2024
ME&T net cash provided by operating activities 1
$ 926 $ 1,771
ME&T capital expenditures (704) (502)
ME&T free cash flow $ 222 $ 1,269
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 64 - 65.
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 60 to 65 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information.
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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2025
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Consolidated Machinery, Energy & Transportation Financial
Products Consolidating
Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation $ 13,378 $ 13,378 $ — $ —
Revenues of Financial Products 871 — 1,048 (177) 1
Total sales and revenues 14,249 13,378 1,048 (177)
Operating costs:
Cost of goods sold 8,965 8,967 — (2) 2
Selling, general and administrative expenses 1,593 1,408 196 (11) 2
Research and development expenses 480 480 — —
Interest expense of Financial Products 326 — 326 —
Other operating (income) expenses 306 8 325 (27) 2
Total operating costs 11,670 10,863 847 (40)
Operating profit 2,579 2,515 201 (137)
Interest expense excluding Financial Products 116 119 — (3) 3
Other income (expense) 107 (45) 18 134 4
Consolidated profit before taxes 2,570 2,351 219 —
Provision (benefit) for income taxes 574 520 54 —
Profit of consolidated companies 1,996 1,831 165 —
Equity in profit (loss) of unconsolidated affiliated companies 7 7 — —
Profit of consolidated and affiliated companies 2,003 1,838 165 —
Profit 5
$ 2,003 $ 1,838 $ 165 $ —
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.
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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended March 31, 2024
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Consolidated Machinery,
Energy &
Transportation Financial
Products Consolidating
Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation $ 14,960 $ 14,960 $ — $ —
Revenues of Financial Products 839 — 1,029 (190) 1
Total sales and revenues 15,799 14,960 1,029 (190)
Operating costs:
Cost of goods sold 9,662 9,664 — (2) 2
Selling, general and administrative expenses 1,577 1,413 178 (14) 2
Research and development expenses 520 520 — —
Interest expense of Financial Products 298 — 298 —
Other operating (income) expenses 223 (41) 285 (21) 2
Total operating costs 12,280 11,556 761 (37)
Operating profit 3,519 3,404 268 (153)
Interest expense excluding Financial Products 143 143 — —
Other income (expense) 156 (20) 23 153 3
Consolidated profit before taxes 3,532 3,241 291 —
Provision (benefit) for income taxes 688 615 73 —
Profit of consolidated companies 2,844 2,626 218 —
Equity in profit (loss) of unconsolidated affiliated companies 10 10 — —
Profit of consolidated and affiliated companies 2,854 2,636 218 —
Less: Profit (loss) attributable to noncontrolling interests (2) (3) 1 —
Profit 4
$ 2,856 $ 2,639 $ 217 $ —
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 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.
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Caterpillar Inc.
Supplemental Data for Financial Position
At March 31, 2025
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Consolidated Machinery,
Energy &
Transportation Financial
Products Consolidating
Adjustments
Assets
Current assets:
Cash and cash equivalents $ 3,562 $ 2,741 $ 821 $ —
Receivables – trade and other 9,116 3,321 551 5,244 1,2
Receivables – finance 9,655 — 15,168 (5,513) 2
Prepaid expenses and other current assets 2,824 2,413 448 (37) 3
Inventories 17,862 17,862 — —
Total current assets 43,019 26,337 16,988 (306)
Property, plant and equipment – net 13,432 9,655 3,777 —
Long-term receivables – trade and other 1,261 532 94 635 1,2
Long-term receivables – finance 13,452 — 14,274 (822) 2
Noncurrent deferred and refundable income taxes 3,334 3,614 119 (399) 4
Intangible assets 361 361 — —
Goodwill 5,270 5,270 — —
Other assets 4,845 3,567 2,299 (1,021) 5
Total assets $ 84,974 $ 49,336 $ 37,551 $ (1,913)
Liabilities
Current liabilities:
Short-term borrowings $ 3,454 $ — $ 3,454 $ —
Accounts payable 7,792 7,726 345 (279) 6,7
Accrued expenses 4,990 4,304 686 —
Accrued wages, salaries and employee benefits 1,259 1,230 29 —
Customer advances 2,951 2,932 3 16 7
Other current liabilities 2,834 2,162 733 (61) 4,5,8
Long-term debt due within one year 9,315 29 9,286 —
Total current liabilities 32,595 18,383 14,536 (324)
Long-term debt due after one year 25,819 8,811 17,201 (193) 9
Liability for postemployment benefits 3,575 3,575 — —
Other liabilities 4,915 4,033 1,306 (424) 4,5
Total liabilities 66,904 34,802 33,043 (941)
Commitments and contingencies
Shareholders’ equity
Common stock 6,043 6,043 905 (905) 10
Treasury stock (47,127) (47,127) — —
Profit employed in the business 61,356 56,626 4,720 10 10
Accumulated other comprehensive income (loss) (2,205) (1,013) (1,192) —
Noncontrolling interests 3 5 75 (77) 10
Total shareholders’ equity 18,070 14,534 4,508 (972)
Total liabilities and shareholders’ equity $ 84,974 $ 49,336 $ 37,551 $ (1,913)
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.
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Caterpillar Inc.
Supplemental Data for Financial Position
At December 31, 2024
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Consolidated Machinery,
Energy &
Transportation Financial
Products Consolidating
Adjustments
Assets
Current assets:
Cash and cash equivalents $ 6,889 $ 6,165 $ 724 $ —
Receivables – trade and other 9,282 3,463 688 5,131 1,2
Receivables – finance 9,565 — 14,957 (5,392) 2
Prepaid expenses and other current assets 3,119 2,872 401 (154) 3
Inventories 16,827 16,827 — —
Total current assets 45,682 29,327 16,770 (415)
Property, plant and equipment – net 13,361 9,531 3,830 —
Long-term receivables – trade and other 1,225 500 86 639 1,2
Long-term receivables – finance 13,242 — 14,048 (806) 2
Noncurrent deferred and refundable income taxes 3,312 3,594 118 (400) 4
Intangible assets 399 399 — —
Goodwill 5,241 5,241 — —
Other assets 5,302 4,050 2,277 (1,025) 5
Total assets $ 87,764 $ 52,642 $ 37,129 $ (2,007)
Liabilities
Current liabilities:
Short-term borrowings $ 4,393 $ — $ 4,393 $ —
Accounts payable 7,675 7,619 331 (275) 6,7
Accrued expenses 5,243 4,589 654 —
Accrued wages, salaries and employee benefits 2,391 2,335 56 —
Customer advances 2,322 2,305 3 14 7
Dividends payable 674 674 — —
Other current liabilities 2,909 2,388 696 (175) 4,8
Long-term debt due within one year 6,665 46 6,619 —
Total current liabilities 32,272 19,956 12,752 (436)
Long-term debt due after one year 27,351 8,731 18,787 (167) 9
Liability for postemployment benefits 3,757 3,757 — —
Other liabilities 4,890 3,977 1,344 (431) 4
Total liabilities 68,270 36,421 32,883 (1,034)
Commitments and contingencies
Shareholders’ equity
Common stock 6,941 6,941 905 (905) 10
Treasury stock (44,331) (44,331) — —
Profit employed in the business 59,352 54,787 4,555 10 10
Accumulated other comprehensive income (loss) (2,471) (1,182) (1,289) —
Noncontrolling interests 3 6 75 (78) 10
Total shareholders’ equity 19,494 16,221 4,246 (973)
Total liabilities and shareholders’ equity $ 87,764 $ 52,642 $ 37,129 $ (2,007)
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.
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Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 2025
(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 $ 2,003 $ 1,838 $ 165 $ —
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation and amortization 540 351 189 —
Provision (benefit) for deferred income taxes (38) (34) (4) —
Other 78 76 (123) 125 1
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other 155 215 (19) (41) 1,2
Inventories (990) (990) — —
Accounts payable 401 343 60 (2) 1
Accrued expenses (198) (211) 13 —
Accrued wages, salaries and employee benefits (1,144) (1,117) (27) —
Customer advances 713 713 — —
Other assets – net 69 224 (12) (143) 1
Other liabilities – net (300) (482) 55 127 1
Net cash provided by (used for) operating activities 1,289 926 297 66
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others (710) (700) (11) 1 1
Expenditures for equipment leased to others (208) (4) (205) 1 1
Proceeds from disposals of leased assets and property, plant and equipment 149 14 137 (2) 1
Additions to finance receivables (3,209) — (3,549) 340 2
Collections of finance receivables 3,049 — 3,458 (409) 2
Net intercompany purchased receivables — — (3) 3 2
Proceeds from sale of finance receivables 7 — 7 —
Net intercompany borrowings — — 7 (7) 3
Investments and acquisitions (net of cash acquired) (2) (2) — —
Proceeds from sale of businesses and investments (net of cash sold) 12 12 — —
Proceeds from maturities and sale of securities 923 782 141 —
Investments in securities (177) (28) (149) —
Other – net (9) (44) 35 —
Net cash provided by (used for) investing activities (175) 30 (132) (73)
Cash flow from financing activities:
Dividends paid (674) (674) — —
Common stock issued, including treasury shares reissued (64) (64) — —
Payments to purchase common stock (3,660) (3,660) — —
Net intercompany borrowings — (7) — 7 3
Proceeds from debt issued (original maturities greater than three months) 2,633 — 2,633 —
Payments on debt (original maturities greater than three months) (1,797) (27) (1,770) —
Short-term borrowings – net (original maturities three months or less) (934) — (934) —
Net cash provided by (used for) financing activities (4,496) (4,432) (71) 7
Effect of exchange rate changes on cash 54 49 5 —
Increase (decrease) in cash, cash equivalents and restricted cash (3,328) (3,427) 99 —
Cash, cash equivalents and restricted cash at beginning of period 6,896 6,170 726 —
Cash, cash equivalents and restricted cash at end of period $ 3,568 $ 2,743 $ 825 $ —
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.
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Caterpillar Inc.
Supplemental Data for Cash Flow
For the Three Months Ended March 31, 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 $ 2,854 $ 2,636 $ 218 $ —
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation and amortization 524 328 196 —
Provision (benefit) for deferred income taxes (54) (23) (31) —
(Gain) loss on divestiture (64) (64) — —
Other (5) (16) (120) 131 1
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other (81) 111 (40) (152) 1.2
Inventories (439) (434) — (5) 1
Accounts payable 203 179 30 (6) 1
Accrued expenses (38) (47) 9 —
Accrued wages, salaries and employee benefits (1,454) (1,422) (32) —
Customer advances 279 279 — —
Other assets – net 60 102 3 (45) 1
Other liabilities – net 267 142 75 50 1
Net cash provided by (used for) operating activities 2,052 1,771 308 (27)
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others (500) (493) (8) 1 1
Expenditures for equipment leased to others (236) (9) (233) 6 1
Proceeds from disposals of leased assets and property, plant and equipment 155 5 152 (2) 1
Additions to finance receivables (3,256) — (3,573) 317 2
Collections of finance receivables 3,140 — 3,572 (432) 2
Net intercompany purchased receivables — — (137) 137 2
Proceeds from sale of finance receivables 13 — 13 —
Net intercompany borrowings — — 3 (3) 3
Proceeds from sale of businesses and investments (net of cash sold) 42 42 — —
Proceeds from maturities and sale of securities 1,867 1,797 70 —
Investments in securities (275) (148) (127) —
Other – net 8 31 (23) —
Net cash provided by (used for) investing activities 958 1,225 (291) 24
Cash flow from financing activities:
Dividends paid (648) (648) — —
Common stock issued, including treasury shares reissued (8) (8) — —
Payments to purchase common stock (4,455) (4,455) — —
Net intercompany borrowings — (3) — 3 3
Proceeds from debt issued (original maturities greater than three months) 2,731 — 2,731 —
Payments on debt (original maturities greater than three months) (1,570) (6) (1,564) —
Short-term borrowings – net (original maturities three months or less) (1,050) — (1,050) —
Net cash provided by (used for) financing activities (5,000) (5,120) 117 3
Effect of exchange rate changes on cash (30) (20) (10) —
Increase (decrease) in cash, cash equivalents and restricted cash (2,020) (2,144) 124 —
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 $ 4,965 $ 3,967 $ 998 $ —
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.
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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, 2024, 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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.