Dear Fellow Shareholders,
I am proud of our global team’s strong performance in 2023, delivering the best year in our 98-year history. Throughout the year, they worked to meet healthy customer demand while remaining focused on executing our enterprise strategy and profitably growing our business.
The team achieved outstanding full-year financial results, including record sales and revenues, record adjusted operating profit1, record adjusted profit per share1 and record Machinery, Energy and Transportation (ME&T) free cash flow2. We finished the year with record profit per share of $20.12 and record adjusted profit per share1 of $21.21.
We returned a record $7.5 billion to shareholders through share repurchases and dividends. Caterpillar has paid higher annual dividends to shareholders for 30 consecutive years and has again been recognized as a member of the S&P 500 Dividend Aristocrats Index.
Advancing Our Enterprise Strategy
We have made great strides in executing our strategy and investing for long-term profitable growth. In 2023, we continued to focus on operational excellence and making our customers more successful with expanded offerings and value-added services.
Services sales3 grew to a record $23 billion in 2023, and we continue to implement service initiatives to achieve our 2026 target of $28 billion. Services include everything we do to help our customers succeed after they buy our equipment. Our more than 1.5 million connected assets provide insights that help customers operate their fleets more productively and profitably. We continue to invest in our digital capabilities to improve the value our products and services provide to customers.
In addition to services, we believe the energy transition and growing global energy demand expand opportunities for long-term profitable growth through increasing demand for Caterpillar products and services. For example, demand for commodities is expected to increase due to the growing adoption of electric vehicles, battery storage, and wind and solar power. Customers also use our products and services to satisfy increasing global energy demand in a variety of ways. Additionally, the energy transition requires significant global infrastructure investment, which expands opportunities for Caterpillar.
From our earliest days, Caterpillar has been a technology leader, and we continue to invest in technology to meet the needs of our diverse global customers. Our increasing investments in the core technologies of autonomy, alternative fuels, connectivity and digital, and electrification (AACE) support customer requirements for performance, durability and economic value. We are developing an expanded portfolio of fully electric, fuel-flexible and increasingly fuel-efficient products to help customers achieve their climate-related objectives.
You can read more about how we are contributing to a lower- carbon future in our 2023 Sustainability Report.
Guided by Our Values in Action
As an active participant in the public policy process, Caterpillar advocates for key issues that align with our purpose and the execution of our strategy. We value shareholder input and have provided greater transparency on our work with trade associations, our governance process and disclosures in our 2023 Lobbying Report: The Purpose of Engagement.
The Caterpillar Foundation continued to help build resilient communities throughout 2023, granting more than $43 million to community partners for causes such as disaster relief, workforce development, STEM education and natural infrastructure.
Caterpillar’s future is bright. Our global team’s diverse backgrounds, experiences and perspectives are a source of innovation and competitive advantage, while Our Values in Action guide us in making sound, ethical decisions that shape our company and reputation. Our business is well- positioned to help our customers build a better, more sustainable world. I am confident Caterpillar’s best days are ahead.
Jim Umpleby
Chairman & CEO
1Adjusted profit per share and adjusted operating profit are non-GAAP measures, and a reconciliation to the most directly comparable GAAP measures are included in our 2023 10-K SEC filing.
2ME&T free cash flow is a non-GAAP measure, and a reconciliation to the most directly comparable GAAP measure is included in our 2023 10-K SEC filing.
3ME&T 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.
