Annual Shareholder Meeting – Chairman & CEO Remarks

Thank you, Nikki. Welcome, everyone. Thank you, again, for joining us at our meeting this morning.

I want to begin by extending my thanks to our global team for delivering the best year in our 99-year history. Throughout 2023, they worked to meet healthy customer demand while remaining focused on executing our enterprise strategy for profitable growth.

Our purpose is to help our customers build a better, more sustainable world. An independent network of 156 Cat dealers in about 2,800 locations around the world provide the expertise our customers count on. They offer the most extensive sales and service network in the industries we serve and are integral to our customer’s long-term success. They provide a clear competitive advantage.

Our Values in Action—Integrity, Excellence, Teamwork, Commitment and Sustainability—are the foundation for how we work. They represent a shared commitment to the highest ethical standards and guide our business conduct with our customers, suppliers and one another. 

We remain committed to our journey of fostering a workplace that respects and celebrates our employees’ diverse backgrounds, experiences and perspectives, and reflects the global nature of our customer base. A culture where employees feel valued and included heightens the opportunity for greater team performance and enables us to provide superior value for those we serve. You can read about our D&I framework and advancements in our fourth annual Diversity & Inclusion Report.

While Caterpillar and our dealers help customers build the world’s infrastructure, the Caterpillar Foundation focuses on building thriving communities. Caterpillar employees and retirees demonstrated remarkable generosity in 2023 with a record-breaking $14.8 million in pledges to United Way chapters across the United States, Mexico, Canada and Panama. Additionally, $10.8 million and over 109,000 hours of volunteer time were given to thousands of charities globally though the Foundation’s Matching Gifts and new Volunteer Service Match programs.

Next, I’ll recap our team’s 2023 performance, beginning with our financial results.

As I mentioned, our global team demonstrated strong performance in 2023 as they achieved the best year in our 99-year history. We generated record sales and revenues of $67.1 billion, an increase of 13% versus 2022.  We achieved a record full-year profit per share of $20.12. Our record full-year adjusted profit per share of $21.21 was a 53% increase over our previous record of $13.84 in 2022. We generated a record $10 billion in Machinery, Energy & Transportation, or ME&T, free cash flow, which enabled us to return a record $7.5 billion to shareholders through share repurchases and dividends. We’ve paid higher annual dividends for 30 consecutive years and are proud to be recognized once again as a member of the S&P 500 Dividend Aristocrats Index.

Our strategy includes operational excellence, expanded offerings, services and sustainability.

Operational excellence includes safety, quality, Lean, and a competitive and flexible cost structure. We remain committed to heightening our focus on safety so that everyone returns home safely, every day. We are striving for perfection in safety and quality in a continuous, never-ending journey. We are also committed to continuing our Lean manufacturing journey by synchronizing across our value chains, reducing lead times, optimizing working capital and increasing availability.

Through our focus on expanded offerings, we continue to grow our product line beyond our core performance products as we develop a variety of products and solutions for our wide range of customers. We are committed to creating superior customer value and to ensuring our customers are more successful using Caterpillar products than they would be with the competition.

Services include all the ways we help our customers succeed after they buy our equipment. We generated a record $23 billion of services revenue in 2023, a more than 63% increase from our 2016 baseline. We continue to execute our various service initiatives as we strive to achieve our 2026 target of $28 billion.

Now I’ll touch on a few service initiatives that are contributing to this growth.

Our connected assets grew from 1.4 million in 2022 to more than 1.5 million in 2023. By combining the data from these connected assets with our engineering expertise, advanced analytics and AI, we are helping our customers avoid unplanned downtime through intelligent leads, which we call Prioritized Service Events.

We continued to see improvement in the number of Customer Value Agreements with new equipment, which remains an important part of our services growth initiatives. These agreements help our customers to minimize downtime, improve utilization and extend the life of their Caterpillar products.

We saw strong eCommerce sales growth as we continued to enhance our digital tools to better serve our customers.

Turning to sustainability, we are contributing to a reduced carbon future. We are reducing greenhouse gas emissions in our own operations and are helping customers achieve their climate-related goals through continued investment in new products, technologies and services that facilitate fuel flexibility, increased operational efficiency and reduced emissions.

We believe the energy transition and growing global energy demand expand opportunities for long-term profitable growth through increasing demand for a variety of Caterpillar products and services. For example, we help customers meet the increasing demand for commodities required to support the growing adoption of electric vehicles and battery storage. Customers also use our products to produce the commodities needed to satisfy increasing global energy demand. The energy transition requires significant global infrastructure investment, which also expands opportunities for Caterpillar.

We’ve been a technology leader for nearly a century, 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, or AACE, support customer requirements for performance, durability, economic value and sustainability.

For example, our autonomous fleet is growing every year as customers look to automation and autonomy to drive operational consistency and improve efficiency.  There are more than 640 large mining trucks operating 24 hours-a-day, 7 days-a-week, with a combined 7.5 billion metric tons of material moved through the end of 2023.

We demonstrated our first battery electric 793 Large Mining Truck Prototype in 2022, and we are continuing to develop the Caterpillar Early Learner program, which focuses on the deployment and validation of the Cat battery electric trucks at participating customers’ sites. We have also successfully demonstrated our first battery electric prototype underground mining truck, which will complete our first fully electric underground load and haul solution when paired with the commercially available R1700 XE Battery Electric Loader. Four battery electric machine prototypes are currently in development — the 301.9 Mini Excavator, the 320 Medium Excavator, the 950 GC Medium Wheel Loader and the 906 Compact Wheel Loader. Our natural gas fueled Caterpillar engines that can operate on blends up to 100% hydrogen are being demonstrated in power generation products today, and our Solar turbines can also operate on up to 100% hydrogen.

Our 420 XE Backhoe Loader with the Cat C3.6 Engine, introduced in 2020, consumed up to 10% less fuel and produced up to 10% less tailpipe emissions than the previous model through internal testing in a typical mix of applications.

Caterpillar products are built to be rebuilt. Remanufactured products provide customers with quality equipment that can help lower the total cost of ownership. And our remanufacturing process gives materials a new life and delivers sustainability benefits by reducing waste and the need for raw materials and energy to produce new equipment.

We continue to be transparent about our goals, progress and innovations and remain committed to shareholder responsiveness. Our Task Force on Climate-related Financial Disclosures, or TCFD report, provides information about how we govern climate-related opportunities and risks as we support customers in the energy transition.

Our commitment to a reduced-carbon future extends to our public policy efforts. Our Lobbying Report outlines how we advocate for a policy and regulatory environment that supports our long-term success and provides value to shareholders.

In closing, I want to thank our Caterpillar team for their strong focus on executing our enterprise strategy as we help our customers build a better, more sustainable world. I’m optimistic about Caterpillar’s future and believe we are well-positioned to contribute to a reduced-carbon future while profitably growing our company.

Thank you for joining us today. And on behalf of our outstanding global team, thank you for your continued support of Caterpillar.