Caterpillar 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-768

CATERPILLAR INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (972) 891-7700

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act:

¹ In addition to the New York Stock Exchange, Caterpillar common stock is also listed on stock exchanges in France and Switzerland.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At March 31, 2024, 489,272,920 shares of common stock of the registrant were outstanding.

Table of Contents

• Item omitted because no answer is called for or item is not applicable.

Part I. FINANCIAL INFORMATION

Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)

1 Profit attributable to common shareholders.

2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

See accompanying notes to Consolidated Financial Statements.

Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)

See accompanying notes to Consolidated Financial Statements.

Caterpillar Inc.

Consolidated Statement of Financial Position

(Unaudited)

(Dollars in millions)

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide information that will assist the reader in understanding the company’s Consolidated Financial Statements, the changes in certain key items in those financial statements between select periods and the primary factors that accounted for those changes. In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations as well as a discussion of the many factors that we believe may have an impact on our business on an ongoing basis. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Part I, Item 1A. Risk Factors of the 2023 Form 10-K.

Highlights for the first quarter of 2024 include:

• Total sales and revenues for the first quarter of 2024 were $15.799 billion, a decrease of $63 million, or about flat, compared with $15.862 billion in the first quarter of 2023. In the three primary segments, sales were higher in Energy & Transportation and lower in Construction Industries and Resource Industries.

• Operating profit margin was 22.3 percent for the first quarter of 2024, compared with 17.2 percent for the first quarter of 2023. Adjusted operating profit margin was 22.2 percent for the first quarter of 2024, compared with 21.1 percent for the first quarter of 2023.

• First-quarter 2024 profit per share was $5.75, and excluding the items in the table below, adjusted profit per share was $5.60. First-quarter 2023 profit per share was $3.74, and excluding the items in the table below, adjusted profit per share was $4.91.

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

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

• In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on pages 53-54.

Overview

Total sales and revenues for the first quarter of 2024 were $15.799 billion, a decrease of $63 million, or about flat, compared with $15.862 billion in the first quarter of 2023. Lower sales volume and unfavorable currency impacts, primarily related to the Australian dollar, were mostly offset by favorable price realization and higher Financial Products' revenues. The decrease in sales volume was primarily driven by lower sales of equipment to end users; there was not a significant impact from changes in dealer inventories.

First-quarter 2024 profit per share was $5.75, compared with $3.74 profit per share in the first quarter of 2023. In the first quarter of 2024 and 2023, profit per share included restructuring income/costs. Profit for the first quarter of 2024 was $2.856 billion, an increase of $913 million, or 47 percent, compared with $1.943 billion for the first quarter of 2023. The increase was primarily due to the absence of the impact of the divestiture of the company's Longwall business in 2023 and favorable price realization, partially offset by the profit impact of lower sales volume.

Trends and Economic Conditions

Outlook for Key End Markets

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

In Construction Industries, we continue to expect North America to remain healthy in 2024 for both non-residential and residential construction after a strong 2023. We anticipate non-residential construction in North America to remain at similar to slightly higher demand levels to 2023 due to government-related infrastructure and construction projects. Residential construction demand is expected to be flat to slightly down compared to 2023, which remains strong relative to historical levels. In Asia Pacific, outside of China, we expect some softening in economic conditions. We anticipate China will remain at a

relatively low level in the excavator industry above 10-tons. In EAME, we anticipate that economic weakness in Europe will continue, partially offset by strong construction demand in the Middle East. Construction activity in Latin America remains mixed, but overall, we are expecting modest growth. In addition, we anticipate the ongoing benefit of our services initiatives will positively impact Construction Industries in 2024.

In Resource Industries, in 2024, for both mining and heavy construction and quarry and aggregates, we anticipate lower sales volume compared to strong 2023 performance, primarily in off-highway and articulated trucks. We anticipate a small decrease in dealer inventory in 2024, as compared to a slight increase in 2023. While we continue to see a high level of quoting activity overall, we anticipate lower order rates as customers display capital discipline. Customer product utilization remains high, the number of parked trucks remains low, the age of the fleet remains elevated, and our autonomous solutions continue to have strong customer acceptance. We expect higher services revenues, including robust rebuild activity in 2024. We continue to believe the energy transition will support increased commodity demand over time, expanding our total addressable market and providing further opportunities for long-term profitable growth.

In Energy & Transportation, we expect reciprocating engines and services for Oil & Gas to be about flat in 2024 after strong 2023 performance. We expect reciprocating gas compression demand to be higher in 2024 than it was in 2023. Well servicing for reciprocating engines in North America is expected to soften. Power Generation reciprocating engine demand is expected to remain strong, largely due to continued data center growth relating to cloud computing and generative artificial intelligence (AI). For Solar Turb

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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.

Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this quarterly report. Based on that evaluation, the CEO and CFO concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in internal control over financial reporting

During the first quarter of 2024, there has been no change in the company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Item is incorporated by reference from Note 14 – “Environmental and legal matters” included in Part I, Item 1 of this Form 10-Q.

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Non-U.S. Employee Stock Purchase Plans

As of March 31, 2024, we had 32 employee stock purchase plans (the “EIP Plans”) that are administered outside the United States for our non-U.S. employees, which had approximately 15,000 active participants in the aggregate. During the first quarter of 2024, approximately 54,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.

On February 29, 2024, Cheryl Johnson, the Company's Chief Human Resources Officer, entered into a Rule 10b5-1 sales plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The sales plan will be in effect until the earlier of (1) August 29, 2024 and (2) the date on which an aggregate of 3,016 shares of our common stock have been sold under the plan.

*Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 6 of this report.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.