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. 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 2021 Form 10-K.

Highlights for the first quarter of 2022 include:

• Total sales and revenues for the first quarter of 2022 were $13.589 billion, an increase of $1.702 billion, or 14 percent, compared with $11.887 billion in the first quarter of 2021. Sales were higher across the three primary segments.

• Operating profit margin was 13.7 percent for the first quarter of 2022, compared with 15.3 percent for the first quarter of 2021. Adjusted operating profit margin was 13.7 percent for the first quarter of 2022, compared with 15.8 percent for the first quarter of 2021.

• First-quarter 2022 profit per share was $2.86, and excluding the items in the table below, adjusted profit per share was $2.88. First-quarter 2021 profit per share was $2.77, and excluding the items in the table below, adjusted profit per share was $2.87.

• In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on page 53.

			Three Months Ended March 31, 2022									Three Months Ended March 31, 2021
(Dollars in millions except per share data)			Profit Before Taxes			Profit Per Share						Profit Before Taxes			Profit Per Share
Profit			$	1,999		$	2.86					$	1,997		$	2.77
Restructuring costs			13			0.02						64			0.10
Adjusted profit			$	2,012		$	2.88					$	2,061		$	2.87

• Enterprise operating cash flow was $0.3 billion in the first quarter of 2022. Caterpillar ended the first quarter of 2022 with $6.5 billion of enterprise cash.

Overview

Total sales and revenues for the first quarter of 2022 were $13.589 billion, an increase of $1.702 billion, or 14 percent, compared with $11.887 billion in the first quarter of 2021. The increase was due to higher sales volume and favorable price realization, partially offset by unfavorable currency impacts primarily related to the euro, Australian dollar and Japanese yen. The increase in sales volume was driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers increased inventories by $1.3 billion during the first quarter of 2022, compared with an increase of $700 million during the first quarter of 2021. Sales were higher across the three primary segments.

First-quarter 2022 profit per share was $2.86, compared with $2.77 profit per share in the first quarter of 2021. Profit per share for both quarters included restructuring costs. Profit for the first quarter of 2022 was $1.537 billion, which was about flat compared with $1.530 billion for the first quarter of 2021. Unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses were offset by favorable price realization and higher sales volume. Unfavorable manufacturing costs primarily reflected higher material and freight costs. The increase in SG&A/R&D expenses was mainly driven by investments aligned with the company's strategy for profitable growth.

Global Business Conditions**:**

We continue to monitor a variety of external factors including the ongoing impact of the COVID-19 pandemic around the world, supply chain disruptions and associated cost and labor pressures. Areas of particular focus include certain components, transportation and raw materials. Transportation shortages have resulted in delays and increased costs. In addition, our suppliers are dealing with availability issues and freight delays, which leads to pressure on production in our facilities. Contingency plans have been developed and continue to be modified to minimize supply chain challenges that may impact our ability to meet increasing customer demand. We continue to assess the environment and are taking appropriate price actions in response to rising costs. We will continue to monitor the situation as conditions remain fluid and evolve throughout the year.

Notes:

• Glossary of terms is included on pages 47 - 49; first occurrence of terms shown in bold italics.

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

• Certain amounts may not add due to rounding.

Consolidated Results of Operations

THREE MONTHS ENDED MARCH 31, 2022 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2021

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2021 (at left) and the first quarter of 2022 (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 2022 were $13.589 billion, an increase of $1.702 billion, or 14 percent, compared with $11.887 billion in the first quarter of 2021. The increase was due to higher sales volume and favorable price realization, partially offset by unfavorable currency impacts primarily related to the euro, Australian dollar and Japanese yen. The increase in sales volume was driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers increased inventories by $1.3 billion during the first quarter of 2022, compared with an increase of $700 million during the first quarter of 2021.

Sales were higher across the three primary segments.

North America sales increased 25 percent due to higher end-user demand for equipment and services, favorable price realization and the impact of changes in dealer inventories. Dealers increased inventories more during the first quarter of 2022 than during the first quarter of 2021.

Sales increased 27 percent in Latin America due to the impact of changes in dealer inventories, favorable price realization and higher end-user demand for equipment and services across most of the region. Dealers increased inventories during the first quarter of 2022, compared with a decrease during the first quarter of 2021.

EAME sales increased 15 percent due to higher end-user demand for equipment and services, the impact of changes in dealer inventories and favorable price realization, partially offset by unfavorable currency impacts primarily related to the euro. Dealers increased inventories more during the first quarter of 2022 than during the first quarter of 2021.

Asia/Pacific sales decreased 4 percent driven by lower end-user demand for equipment and services and unfavorable currency impacts related to the Australian dollar and Japanese yen, partially offset by favorable price realization and the impact of changes in dealer inventories. Dealers increased inventories more during the first quarter of 2022 than during the first quarter of 2021. Lower sales in China were partially offset by increased sales across the majority of the region.

Dealers increased inventories by $1.3 billion during the first quarter of 2022, compared with an increase of $700 million during the first quarter of 2021. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. We do not expect a significant increase in dealer inventory in 2022.

Sales and Revenues by Segment
(Millions of dollars)			First Quarter 2021						Sales Volume						Price Realization						Currency						Inter-Segment / Other						First Quarter 2022						$ Change						% Change
Construction Industries			$	5,459					$	325					$	421					$	(101)					$	11					$	6,115					$	656					12		%
Resource Industries			2,178						527						169						(34)						(10)						2,830						652						30		%
Energy & Transportation			4,507						333						115						(74)						157						5,038						531						12		%
All Other Segment			130						2						—						(1)						(13)						118						(12)						(9		%)
Corporate Items and Eliminations			(1,083)						15						(1)						(1)						(145)						(1,215)						(132)
Machinery, Energy & Transportation Sales			11,191						1,202						704						(211)						—						12,886						1,695						15		%
Financial Products Segment			761						—						—						—						22						783						22						3		%
Corporate Items and Eliminations			(65)						—						—						—						(15)						(80)						(15)
Financial Products Revenues			696						—						—						—						7						703						7						1		%
Consolidated Sales and Revenues			$	11,887					$	1,202					$	704					$	(211)					$	7					$	13,589					$	1,702					14		%

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 2022
Construction Industries			$	2,720					28		%				$	627					60		%				$	1,277					18		%				$	1,462					(21		%)				$	6,086					12		%				$	29					61		%				$	6,115					12		%
Resource Industries			1,018						55		%				399						(1		%)				594						25		%				748						33		%				2,759						32		%				71						(12		%)				2,830						30		%
Energy & Transportation			1,938						9		%				310						21		%				1,184						8		%				600						14		%				4,032						10		%				1,006						18		%				5,038						12		%
All Other Segment			18						38		%				—						—		%				5						67		%				16						(27		%)				39						3		%				79						(14		%)				118						(9		%)
Corporate Items and Eliminations			(24)												1												(2)												(5)												(30)												(1,185)												(1,215)
Machinery, Energy & Transportation Sales			5,670						25		%				1,337						27		%				3,058						15		%				2,821						(4		%)				12,886						15		%				—						—						12,886						15		%
Financial Products Segment			503						6		%				73						18		%				96						(4		%)				111						(10		%)				783			1			3		%				—						—						783						3		%
Corporate Items and Eliminations			(36)												(17)												(9)												(18)												(80)												—												(80)
Financial Products Revenues			467						3		%				56						10		%				87						(5		%)				93						(8		%)				703						1		%				—						—						703						1		%
Consolidated Sales and Revenues			$	6,137					23		%				$	1,393					26		%				$	3,145					15		%				$	2,914					(4		%)				$	13,589					14		%				$	—					—						$	13,589					14		%
First Quarter 2021
Construction Industries			$	2,126											$	392											$	1,081											$	1,842											$	5,441											$	18											$	5,459
Resource Industries			657												405												474												561												2,097												81												2,178
Energy & Transportation			1,782												256												1,093												527												3,658												849												4,507
All Other Segment			13												—												3												22												38												92												130
Corporate Items and Eliminations			(39)												—												—												(4)												(43)												(1,040)												(1,083)
Machinery, Energy & Transportation Sales			4,539												1,053												2,651												2,948												11,191												—												11,191
Financial Products Segment			476												62												100												123												761			1									—												761
Corporate Items and Eliminations			(24)												(11)												(8)												(22)												(65)												—												(65)
Financial Products Revenues			452												51												92												101												696												—												696
Consolidated Sales and Revenues			$	4,991											$	1,104											$	2,743											$	3,049											$	11,887											$	—											$	11,887

1 Includes revenues from Machinery, Energy & Transportation of $100 million and $84 million in the first quarter of 2022 and 2021, respectively.

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2021 (at left) and the first quarter of 2022 (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 other operating (income) expenses.

Operating profit for the first quarter of 2022 was $1.855 billion, an increase of $41 million, or 2 percent, compared with $1.814 billion in the first quarter of 2021. Unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses were more than offset by favorable price realization and higher sales volume. For 2022, price realization is expected to more than offset manufacturing cost increases.

Unfavorable manufacturing costs primarily reflected higher material and freight costs. The increase in SG&A/R&D expenses was mainly driven by investments aligned with the company's strategy for profitable growth.

Short-term incentive compensation expense was about $340 million in the first quarter of 2022, compared to about $300 million in the first quarter of 2021. For 2022, short-term incentive compensation expense is expected to be about $1.3 billion, about flat compared to 2021.

Operating profit margin was 13.7 percent for the first quarter of 2022, compared with 15.3 percent for the first quarter of 2021.

Profit by Segment
(Millions of dollars)			First Quarter 2022						First Quarter 2021						$ Change						% Change
Construction Industries			$	1,057					$	1,042					$	15					1		%
Resource Industries			361						312						49						16		%
Energy & Transportation			538						675						(137)						(20		%)
All Other Segment			3						3						—						—		%
Corporate Items and Eliminations			(244)						(368)						124
Machinery, Energy & Transportation			1,715						1,664						51						3		%
Financial Products Segment			238						244						(6)						(2		%)
Corporate Items and Eliminations			(17)						(19)						2
Financial Products			221						225						(4)						(2		%)
Consolidating Adjustments			(81)						(75)						(6)
Consolidated Operating Profit			$	1,855					$	1,814					$	41					2		%

Other Profit/Loss and Tax Items

▪Interest expense excluding Financial Products in the first quarter of 2022 was $109 million, compared with $142 million in the first quarter of 2021. The decrease was due to lower average debt outstanding during the first quarter of 2022, compared with the first quarter of 2021.

▪Other income (expense) in the first quarter of 2022 was income of $253 million, compared with income of $325 million in the first quarter of 2021. Favorable impacts from higher gains on commodity hedges were more than offset by the unfavorable impacts from lower foreign currency exchange net gains, lower pension and other postemployment benefit (OPEB) plan income and the unfavorable impacts from unrealized gains (losses) on marketable securities.

▪The provision for income taxes for the first quarter of 2022 reflected an estimated annual tax rate of 24 percent, compared with 26 percent for the first quarter of 2021, excluding the discrete items discussed below. The comparative tax rate for full-year 2021 was approximately 23 percent. The increase in the estimated annual tax rate from full-year 2021 was primarily related to changes in the expected geographic mix of profits from a tax perspective for 2022.

In addition, a discrete tax benefit of $12 million was recorded in the first quarter of 2022, compared with a $43 million benefit in the first quarter of 2021, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.

Construction Industries

Construction Industries’ total sales were $6.115 billion in the first quarter of 2022, an increase of $656 million, or 12 percent, compared with $5.459 billion in the first quarter of 2021. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts related to the euro, Japanese yen and Australian dollar. The increase in sales volume was driven by the impact from changes in dealer inventories and higher end-user demand for aftermarket parts. Across all regions, dealers increased inventories more during the first quarter of 2022 than during the first quarter of 2021.

▪In North America, sales increased due to higher sales volume and favorable price realization. Higher sales volume was driven by higher end-user demand for equipment and aftermarket parts from improving non-residential construction, as well as continued strength in residential construction and the impact from changes in dealer inventories.

▪Sales increased in Latin America primarily due to higher sales volume, led by higher end-user demand across the region and the impact from changes in dealer inventories, as well as favorable price realization.

▪In EAME, sales increased due to higher sales volume and favorable price realization, partially offset by unfavorable currency impacts related to a weaker euro. Higher sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories.

▪Sales decreased in Asia/Pacific mainly due to lower sales volume and unfavorable currency impacts driven by a weaker Japanese yen and Australian dollar, partially offset by favorable price realization. Lower sales volume was driven by lower end-user demand, partially offset by the impact from changes in dealer inventories. Lower sales in China primarily driven by lower end-user demand were partially offset by increased sales across the majority of the region.

Construction Industries’ profit was $1.057 billion in the first quarter of 2022, an increase of $15 million, or 1 percent, compared with $1.042 billion in the first quarter of 2021. Unfavorable manufacturing costs were more than offset by favorable price realization and higher sales volume. Unfavorable manufacturing costs largely reflected higher material and freight costs.

Construction Industries’ profit as a percent of total sales was 17.3 percent in the first quarter of 2022, compared with 19.1 percent in the first quarter of 2021.

Resource Industries

Resource Industries’ total sales were $2.830 billion in the first quarter of 2022, an increase of $652 million, or 30 percent, compared with $2.178 billion in the first quarter of 2021. The increase was primarily due to higher sales volume and favorable price realization. The increase in sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories. End-user demand was higher in heavy construction and quarry and aggregates as well as mining. Dealers increased inventories during the first quarter of 2022, compared to remaining about flat during the first quarter of 2021.

Resource Industries’ profit was $361 million in the first quarter of 2022, an increase of $49 million, or 16 percent, compared with $312 million in the first quarter of 2021. Unfavorable manufacturing costs and higher SG&A/R&D expenses were more than offset by higher sales volume and favorable price realization. Unfavorable manufacturing costs largely reflected higher freight and material costs. The increase in SG&A/R&D expenses was driven by investments aligned with growth initiatives.

Resource Industries’ profit as a percent of total sales was 12.8 percent in the first quarter of 2022, compared with 14.3 percent in the first quarter of 2021.

Energy & Transportation

Sales by Application
(Millions of dollars)						First Quarter 2022						First Quarter 2021						$ Change						% Change
Oil and Gas						$	948					$	915					$	33					4		%
Power Generation						1,012						963						49						5		%
Industrial						1,020						813						207						25		%
Transportation						1,052						967						85						9		%
External Sales						4,032						3,658						374						10		%
Inter-segment						1,006						849						157						18		%
Total Sales						$	5,038					$	4,507					$	531					12		%

Energy & Transportation’s total sales were $5.038 billion in the first quarter of 2022, an increase of $531 million, or 12 percent, compared with $4.507 billion in the first quarter of 2021. Sales increased across all applications and inter-segment sales.

• Oil and Gas – Sales increased for reciprocating engines, primarily aftermarket parts, partially offset by lower sales for turbines and turbine-related services.

• Power Generation – Sales rose due to higher sales volume in small reciprocating engine applications, partially offset by lower sales in turbines and turbine-related services.

• Industrial – Sales were up due to higher demand across all regions.

• Transportation – Sales increased in reciprocating engines, primarily aftermarket parts and marine applications.

Energy & Transportation’s profit was $538 million in the first quarter of 2022, a decrease of $137 million, or 20 percent, compared with $675 million in the first quarter of 2021. The decrease was mainly due to unfavorable manufacturing costs and higher SG&A/R&D expenses, partially offset by higher sales volume and favorable price realization. Unfavorable manufacturing costs largely reflected higher freight and material costs. The increase in SG&A/R&D expenses was driven by investments aligned with growth initiatives.

Energy & Transportation’s profit as a percent of total sales was 10.7 percent in the first quarter of 2022, compared with 15.0 percent in the first quarter of 2021.

Financial Products Segment

Financial Products’ segment revenues were $783 million in the first quarter of 2022, an increase of $22 million, or 3 percent, from the first quarter of 2021. The increase was mostly in North America, driven by a favorable impact from returned or repossessed equipment and higher average earning assets, partially offset by lower average financing rates.

Financial Products’ segment profit was $238 million in the first quarter of 2022, a decrease of $6 million, or 2 percent, compared with $244 million in the first quarter of 2021. The decrease was mainly due to higher provision for credit losses at Cat Financial and an increase in SG&A expenses, partially offset by a favorable impact from returned or repossessed equipment. The impact of lower average financing rates was mostly offset by lower interest expense.

At the end of the first quarter of 2022, past dues at Cat Financial were 2.05 percent, compared with 2.90 percent at the end of the first quarter of 2021. The decrease in past dues was mostly driven by the North America, Caterpillar Power Finance and EAME portfolios. Write-offs, net of recoveries, were $8 million for the first quarter of 2022, compared with $24 million for the first quarter of 2021. As of March 31, 2022, Cat Financial's allowance for credit losses totaled $357 million, or 1.29 percent of finance receivables, compared with $337 million, or 1.22 percent of finance receivables at December 31, 2021. The increase in allowance for credit losses included a higher reserve for the Russia and Ukraine portfolios.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $261 million in the first quarter of 2022, a decrease of $126 million from the first quarter of 2021, primarily due to favorable impacts of segment reporting methodology differences and a favorable change in fair value adjustments related to deferred compensation plans.

RESTRUCTURING COSTS

In 2022, we expect to incur about $600 million of restructuring costs primarily related to strategic actions to address a small number of products. 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 $75 million in 2022 compared with 2021.

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 costs as a percent of sales and revenues.

2.Adjusted Profit Per Share – Profit per share excluding restructuring costs.

3.All Other Segment – Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience.

4.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; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; wheel excavators; compact, small and medium wheel loaders; 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 the Commonwealth of Independent States (CIS).

10.Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.

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. 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 Cat machinery; 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; and product support of on-highway vocational trucks for North America.

12.Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). 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 vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, 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.

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; longwall miners; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Cat machines and engines.

22.Restructuring Costs – May include costs for employee separation, long-lived asset impairments and contract terminations. 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 three months of 2022 and ended the first quarter with $6.53 billion of cash, a decrease of $2.72 billion from year-end 2021. In addition, ME&T has invested in available-for-sale debt securities and bank time deposits with varying maturity dates within one year that are considered highly liquid and are available for current operations. These securities are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position and were $1.73 billion at the end of March 31, 2022. We intend to maintain a strong cash and liquidity position.

Consolidated operating cash flow for the first three months of 2022 was $313 million, down $1.62 billion compared to the same period a year ago. The decrease was primarily due to payments for short-term incentive compensation in the first quarter of 2022. In addition, there were increased working capital requirements during the first three months of 2022 compared to the same period last year. Within working capital, changes in inventory, accounts payable and accrued expenses unfavorably impacted cash flow but were partially offset by favorable changes in customer advances and accounts receivable.

Total debt as of March 31, 2022 was $37.58 billion, a decrease of $205 million from year-end 2021. Debt related to ME&T decreased $35 million in the first three months of 2022 while debt related to Financial Products decreased $168 million.

As of March 31, 2022, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of March 31, 2022 was $2.75 billion. Information on our Credit Facility is as follows:

• The 364-day facility of $3.15 billion (of which $825 million is available to ME&T) expires on September 1, 2022.

• The three-year facility, as amended and restated in September 2021, of $2.73 billion (of which $715 million is available to ME&T) expires in September 2024.

• The five-year facility, as amended and restated in September 2021, of $4.62 billion (of which $1.21 billion is available to ME&T) expires in September 2026.

At March 31, 2022, Caterpillar’s consolidated net worth was $17.16 billion, which was above the $9.00 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At March 31, 2022, Cat Financial’s covenant interest coverage ratio was 2.56 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 calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility.

In addition, at March 31, 2022, Cat Financial’s six-month covenant leverage ratio was 7.53 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, 2022, there were no borrowings under the Credit Facility.

Our total credit commitments and available credit as of March 31, 2022 were:

			March 31, 2022
(Millions of dollars)			Consolidated						Machinery, Energy & Transportation						Financial Products
Credit lines available:
Global credit facilities			$	10,500					$	2,750					$	7,750
Other external			3,376						182						3,194
Total credit lines available			13,876						2,932						10,944
Less: Commercial paper outstanding			(4,044)						—						(4,044)
Less: Utilized credit			(666)						—						(666)
Available credit			$	9,166					$	2,932					$	6,234

The other external consolidated credit lines with banks as of March 31, 2022 totaled $3.38 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. Moody’s, Fitch and S&P maintain a “mid-A” debt rating. A downgrade of our credit ratings by any of the major credit rating agencies would 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 supply chain finance programs (the “Programs”) through participating financial institutions. The Programs are available to a wide range of suppliers and allows them the option to manage their cash flow. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs. The amounts payable to participating financial institutions for suppliers who voluntarily participate in the Programs and included in accounts payable in the Consolidated Statement of Financial Position were $942 million and $822 million at March 31, 2022 and December 31, 2021, respectively. The amounts settled through the Programs and paid to participating financial institutions were $1.2 billion and $845 million during the first three months of 2022 and 2021, respectively. We account for payments made under the Programs, the same as our other accounts payable, as a reduction to our cash flows from operations. We do not believe that changes in the availability of supply chain financing will have a significant impact on our liquidity.

Machinery, Energy & Transportation

Net cash used by operating activities was $78 million in the first three months of 2022, compared with net cash provided of $1.92 billion for the same period in 2021. The decrease was primarily due to payments for short-term incentive compensation in the first quarter of 2022. In addition, there were increased working capital requirements during the first three months of 2022 compared to the same period last year. Within working capital, changes in inventory, accounts payable, accounts receivable and accrued expenses unfavorably impacted cash flow but were partially offset by favorable changes in customer advances.

Net cash used by investing activities in the first three months of 2022 was $1.09 billion, compared with net cash provided of $427 million in the first three months of 2021. The change was primarily due to decreased activity related to intercompany lending with Financial Products and increases in investment activity. During the first quarter of 2022, we had net investment activity of $796 million which included $944 million of investments in debt securities and proceeds related to maturing time deposits of $150 million.

Net cash used for financing activities during the first three months of 2022 was $1.57 billion, compared with net cash used of $659 million in the same period of 2021. The change was primarily due to the repurchase of $820 million of Caterpillar common stock during the first three months of 2022.

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 $348 million during the first three months of 2022, compared to $255 million for the same period in 2021. We expect ME&T’s capital expenditures in 2022 to be about $1.5 billion. We made $210 million of contributions to our pension and other postretirement benefit plans during the first three months of 2022. We currently anticipate full-year 2022 contributions of approximately $357 million. In comparison, we made $106 million of contributions to our pension and other postretirement benefit plans during the first three months of 2021.

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 and services, 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 excluding discretionary pension and other postretirement benefit plan contributions less capital expenditures. 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 and the economic outlook, corporate cash flow, the company’s liquidity needs, 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 July 2018, the Board of Directors approved an authorization to repurchase up to $10 billion of Caterpillar common stock (the 2018 Authorization) effective January 1, 2019, with no expiration. In the first three months of 2022, we repurchased $0.82 billion of Caterpillar common stock, with $1.37 billion remaining under the 2018 Authorization as of March 31, 2022. Our basic shares outstanding as of March 31, 2022 were approximately 533 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 the economic outlook, corporate cash flow, the company’s liquidity needs, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend. In April 2022, the Board of Directors approved maintaining our quarterly dividend at $1.11 per share and we continue to expect our strong financial position to support the dividend. Dividends paid totaled $595 million in the first three months of 2022.

Financial Products

Financial Products operating cash flow was $393 million in the first three months of 2022, compared with $369 million for the same period a year ago. Net cash used for investing activities was $221 million for the first three months of 2022, compared with net cash used of $261 million for the same period in 2021. The change was primarily due to portfolio related activity. Net cash used for financing activities was $142 million for the first three months of 2022 compared with net cash provided of $205 million for the same period in 2021. The change was primarily due to lower portfolio funding requirements related to net intercompany purchased receivables.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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 2021 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our 2021 Annual Report on Form 10-K.

OTHER MATTERS

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

Order Backlog

At the end of the first quarter of 2022, the dollar amount of backlog believed to be firm was approximately $26.5 billion, about $3.4 billion higher than the fourth quarter of 2021. The order backlog increased across the three primary segments, with the largest increase in Energy & Transportation. Of the total backlog at March 31, 2022, approximately $4.5 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 one significant item in order for our results to be meaningful to our readers. This item consists of (i) restructuring costs, which were incurred to generate longer-term benefits. We do not consider this item indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results. In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases.

Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows:

(Dollars in millions except per share data)						Operating Profit						Operating Profit Margin						Profit Before Taxes						Provision (Benefit) for Income Taxes						Effective Tax Rate						Profit						Profit per Share
Three Months Ended March 31, 2022 - U.S. GAAP						$	1,855					13.7		%				$	1,999					$	469					23.4		%				$	1,537					$	2.86
Restructuring costs						13						0.1		%				13						2						13.0		%				11						$	0.02
Three Months Ended March 31, 2022 - Adjusted						$	1,868					13.7		%				$	2,012					$	471					23.4		%				$	1,548					$	2.88
Three Months Ended March 31, 2021 - U.S. GAAP						$	1,814					15.3		%				$	1,997					$	475					23.8		%				$	1,530					$	2.77
Restructuring costs						64						0.5		%				64						10						15.0		%				54						$	0.10
Three Months Ended March 31, 2021 - Adjusted						$	1,878					15.8		%				$	2,061					$	485					23.5		%				$	1,584					$	2.87

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)						Three Months Ended March 31
												2022						2021
ME&T net cash provided by operating activities 1												$	(78)					$	1,916
ME&T capital expenditures												(348)						(255)
ME&T free cash flow												$	(426)					$	1,661
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 59 - 60.

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 55 to 60 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.

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended March 31, 2022

(Unaudited)

(Millions of dollars)

									Supplemental Consolidating Data
			Consolidated						Machinery, Energy & Transportation						Financial Products						Consolidating Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation			$	12,886					$	12,886					$	—					$	—
Revenues of Financial Products			703						—						813						(110)			1
Total sales and revenues			13,589						12,886						813						(110)
Operating costs:
Cost of goods sold			9,559						9,560						—						(1)			2
Selling, general and administrative expenses			1,346						1,182						172						(8)			2
Research and development expenses			457						457						—						—
Interest expense of Financial Products			106						—						106						—
Other operating (income) expenses			266						(28)						314						(20)			2
Total operating costs			11,734						11,171						592						(29)
Operating profit			1,855						1,715						221						(81)
Interest expense excluding Financial Products			109						109						—						—
Other income (expense)			253						157						15						81			3
Consolidated profit before taxes			1,999						1,763						236						—
Provision (benefit) for income taxes			469						412						57						—
Profit of consolidated companies			1,530						1,351						179						—
Equity in profit (loss) of unconsolidated affiliated companies			7						8						—						(1)			4
Profit of consolidated and affiliated companies			1,537						1,359						179						(1)
Less: Profit (loss) attributable to noncontrolling interests			—						—						1						(1)			5
Profit 6			$	1,537					$	1,359					$	178					$	—

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

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

3Elimination 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.

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

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

6Profit attributable to common shareholders.

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended March 31, 2021

(Unaudited)

(Millions of dollars)

									Supplemental Consolidating Data
			Consolidated						Machinery, Energy & Transportation						Financial Products						Consolidating Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation			$	11,191					$	11,191					$	—					$	—
Revenues of Financial Products			696						—						788						(92)			1
Total sales and revenues			11,887						11,191						788						(92)
Operating costs:
Cost of goods sold			8,012						8,013						—						(1)			2
Selling, general and administrative expenses			1,239						1,114						124						1			2
Research and development expenses			374						374						—						—
Interest expense of Financial Products			125						—						125						—
Other operating (income) expenses			323						26						314						(17)			2
Total operating costs			10,073						9,527						563						(17)
Operating profit			1,814						1,664						225						(75)
Interest expense excluding Financial Products			142						142						—						—
Other income (expense)			325						231						19						75			3
Consolidated profit before taxes			1,997						1,753						244						—
Provision (benefit) for income taxes			475						412						63						—
Profit of consolidated companies			1,522						1,341						181						—
Equity in profit (loss) of unconsolidated affiliated companies			9						12						—						(3)			4
Profit of consolidated and affiliated companies			1,531						1,353						181						(3)
Less: Profit (loss) attributable to noncontrolling interests			1						1						3						(3)			5
Profit 6			$	1,530					$	1,352					$	178					$	—

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

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

3Elimination 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.

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

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

6Profit attributable to common shareholders.

Caterpillar Inc.

Supplemental Data for Financial Position

At March 31, 2022

(Unaudited)

(Millions of dollars)

									Supplemental Consolidating Data
			Consolidated						Machinery, Energy & Transportation						Financial Products						Consolidating Adjustments
Assets
Current assets:
Cash and cash equivalents			$	6,526					$	5,662					$	864					$	—
Receivables – trade and other			9,135						3,734						435						4,966			1,2
Receivables – finance			9,003						—						14,117						(5,114)			2
Prepaid expenses and other current assets			2,868						2,626						345						(103)			3
Inventories			15,038						15,038						—						—
Total current assets			42,570						27,060						15,761						(251)
Property, plant and equipment – net			11,932						8,010						3,922						—
Long-term receivables – trade and other			1,204						434						216						554			1,2
Long-term receivables – finance			12,665						—						13,247						(582)			2
Noncurrent deferred and refundable income taxes			1,973						2,506						111						(644)			4
Intangible assets			967						967						—						—
Goodwill			6,293						6,293						—						—
Other assets			4,672						3,919						1,960						(1,207)			5
Total assets			$	82,276					$	49,189					$	35,217					$	(2,130)
Liabilities
Current liabilities:
Short-term borrowings			$	4,501					$	—					$	4,501					$	—
Accounts payable			8,361						8,238						271						(148)			6
Accrued expenses			3,846						3,403						443						—
Accrued wages, salaries and employee benefits			1,275						1,247						28						—
Customer advances			1,388						1,387						1						—
Other current liabilities			2,355						1,780						701						(126)			4,7
Long-term debt due within one year			7,806						127						7,679						—
Total current liabilities			29,532						16,182						13,624						(274)
Long-term debt due after one year			25,277						9,664						15,641						(28)			8
Liability for postemployment benefits			5,363						5,363						—						—
Other liabilities			5,007						4,169						1,542						(704)			4
Total liabilities			65,179						35,378						30,807						(1,006)
Commitments and contingencies
Shareholders’ equity
Common stock			6,281						6,281						919						(919)			9
Treasury stock			(28,326)						(28,326)						—						—
Profit employed in the business			40,820						36,750						4,059						11			9
Accumulated other comprehensive income (loss)			(1,710)						(928)						(782)						—
Noncontrolling interests			32						34						214						(216)			9
Total shareholders’ equity			17,097						13,811						4,410						(1,124)
Total liabilities and shareholders’ equity			$	82,276					$	49,189					$	35,217					$	(2,130)

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 Elimination of prepaid insurance in Financial Products’ other liabilities.

8 Elimination of debt between ME&T and Financial Products.

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

Caterpillar Inc.

Supplemental Data for Financial Position

At December 31, 2021

(Unaudited)

(Millions of dollars)

									Supplemental Consolidating Data
			Consolidated						Machinery, Energy & Transportation						Financial Products						Consolidating Adjustments
Assets
Current assets:
Cash and cash equivalents			$	9,254					$	8,428					$	826					$	—
Receivables – trade and other			8,477						3,279						435						4,763			1,2
Receivables – finance			8,898						—						13,828						(4,930)			2
Prepaid expenses and other current assets			2,788						2,567						358						(137)			3
Inventories			14,038						14,038						—						—
Total current assets			43,455						28,312						15,447						(304)
Property, plant and equipment – net			12,090						8,172						3,918						—
Long-term receivables – trade and other			1,204						375						204						625			1,2
Long-term receivables – finance			12,707						—						13,358						(651)			2
Noncurrent deferred and refundable income taxes			1,840						2,396						105						(661)			4
Intangible assets			1,042						1,042						—						—
Goodwill			6,324						6,324						—						—
Other assets			4,131						3,388						1,952						(1,209)			5
Total assets			$	82,793					$	50,009					$	34,984					$	(2,200)
Liabilities
Current liabilities:
Short-term borrowings			$	5,404					$	9					$	5,395					$	—
Accounts payable			8,154						8,079						242						(167)			6
Accrued expenses			3,757						3,385						372						—
Accrued wages, salaries and employee benefits			2,242						2,186						56						—
Customer advances			1,087						1,086						1						—
Dividends payable			595						595						—						—
Other current liabilities			2,256						1,773						642						(159)			4,7
Long-term debt due within one year			6,352						45						6,307						—
Total current liabilities			29,847						17,158						13,015						(326)
Long-term debt due after one year			26,033						9,772						16,287						(26)			8
Liability for postemployment benefits			5,592						5,592						—						—
Other liabilities			4,805						4,106						1,425						(726)			4
Total liabilities			66,277						36,628						30,727						(1,078)
Commitments and contingencies
Shareholders’ equity
Common stock			6,398						6,398						919						(919)			9
Treasury stock			(27,643)						(27,643)						—						—
Profit employed in the business			39,282						35,390						3,881						11			9
Accumulated other comprehensive income (loss)			(1,553)						(799)						(754)						—
Noncontrolling interests			32						35						211						(214)			9
Total shareholders’ equity			16,516						13,381						4,257						(1,122)
Total liabilities and shareholders’ equity			$	82,793					$	50,009					$	34,984					$	(2,200)

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 Elimination of prepaid insurance in Financial Products' other liabilities.

8 Elimination of debt between ME&T and Financial Products.

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

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Three Months Ended March 31, 2022

(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			$	1,537					$	1,359					$	179					$	(1)		1
Adjustments for non-cash items:
Depreciation and amortization			557						358						199						—
Provision (benefit) for deferred income taxes			(99)						(83)						(16)						—
Other			(52)						(46)						(89)						83			2
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other			(372)						(257)						(7)						(108)			2,3
Inventories			(1,032)						(1,030)						—						(2)			2
Accounts payable			452						393						40						19			2
Accrued expenses			(74)						(1)						(73)						—
Accrued wages, salaries and employee benefits			(965)						(940)						(25)						—
Customer advances			311						311						—						—
Other assets – net			99						137						(17)						(21)			2
Other liabilities – net			(49)						(279)						202						28			2
Net cash provided by (used for) operating activities			313						(78)						393						(2)
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others			(346)						(344)						(3)						1			2
Expenditures for equipment leased to others			(333)						(4)						(335)						6			2
Proceeds from disposals of leased assets and property, plant and equipment			269						33						241						(5)			2
Additions to finance receivables			(2,988)						—						(3,139)						151			3
Collections of finance receivables			2,966						—						3,159						(193)			3
Net intercompany purchased receivables			—						—						(42)						42			3
Proceeds from sale of finance receivables			9						—						9						—
Net intercompany borrowings			—						—						1						(1)			4
Investments and acquisitions (net of cash acquired)			(8)						(8)						—						—
Proceeds from sale of securities			571						478						93						—
Investments in securities			(1,438)						(1,266)						(172)						—
Other – net			(15)						18						(33)						—
Net cash provided by (used for) investing activities			(1,313)						(1,093)						(221)						1
Cash flow from financing activities:
Dividends paid			(595)						(595)						—						—
Common stock issued, including treasury shares reissued			(28)						(28)						—						—
Common shares repurchased			(820)						(820)						—						—
Net intercompany borrowings			—						(1)						—						1			4
Proceeds from debt issued (original maturities greater than three months)			2,131						—						2,131						—
Payments on debt (original maturities greater than three months)			(1,387)						(6)						(1,381)						—
Short-term borrowings – net (original maturities three months or less)			(1,016)						(124)						(892)						—
Net cash provided by (used for) financing activities			(1,715)						(1,574)						(142)						1
Effect of exchange rate changes on cash			(16)						(21)						5						—
Increase (decrease) in cash, cash equivalents and restricted cash			(2,731)						(2,766)						35						—
Cash, cash equivalents and restricted cash at beginning of period			9,263						8,433						830						—
Cash, cash equivalents and restricted cash at end of period			$	6,532					$	5,667					$	865					$	—

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.

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Three Months Ended March 31, 2021

(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			$	1,531					$	1,353					$	181					$	(3)		1
Adjustments for non-cash items:
Depreciation and amortization			586						383						203						—
Provision (benefit) for deferred income taxes			109						127						(18)						—
Other			(104)						(52)						(83)						31			2
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other			(543)						(104)						(32)						(407)			2,3
Inventories			(657)						(657)						—						—
Accounts payable			733						706						13						14			2
Accrued expenses			84						58						26						—
Accrued wages, salaries and employee benefits			191						179						12						—
Customer advances			58						58						—						—
Other assets – net			56						(4)						(12)						72			2
Other liabilities – net			(116)						(131)						79						(64)			2
Net cash provided by (used for) operating activities			1,928						1,916						369						(357)
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others			(252)						(251)						(4)						3			2
Expenditures for equipment leased to others			(252)						(4)						(249)						1			2
Proceeds from disposals of leased assets and property, plant and equipment			309						27						286						(4)			2
Additions to finance receivables			(2,629)						—						(2,867)						238			3
Collections of finance receivables			2,770						—						3,062						(292)			3
Net intercompany purchased receivables			—						—						(411)						411			3
Proceeds from sale of finance receivables			5						—						5						—
Net intercompany borrowings			—						1,000						—						(1,000)			4
Investments and acquisitions (net of cash acquired)			(386)						(386)						—						—
Proceeds from sale of businesses and investments (net of cash sold)			28						28						—						—
Proceeds from sale of securities			126						11						115						—
Investments in securities			(148)						—						(148)						—
Other – net			(48)						2						(50)						—
Net cash provided by (used for) investing activities			(477)						427						(261)						(643)
Cash flow from financing activities:
Dividends paid			(562)						(562)						—						—
Common stock issued, including treasury shares reissued			65						65						—						—
Net intercompany borrowings			—						—						(1,000)						1,000			4
Proceeds from debt issued (original maturities greater than three months)			2,273						494						1,779						—
Payments on debt (original maturities greater than three months)			(2,887)						(644)						(2,243)						—
Short-term borrowings – net (original maturities three months or less)			1,659						(10)						1,669						—
Other – net			(2)						(2)						—						—
Net cash provided by (used for) financing activities			546						(659)						205						1,000
Effect of exchange rate changes on cash			(12)						(14)						2						—
Increase (decrease) in cash, cash equivalents and restricted cash			1,985						1,670						315						—
Cash, cash equivalents and restricted cash at beginning of period			9,366						8,822						544						—
Cash, cash equivalents and restricted cash at end of period			$	11,351					$	10,492					$	859					$	—

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.

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) the duration and geographic spread of, business disruptions caused by, and the overall global economic impact of, 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, 2021, as such factors may be updated from time to time in Caterpillar's periodic filings with the Securities and Exchange Commission.