CATERPILLAR INC
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
CAT$558.63+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000018230-24-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000018230-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 219 previous paragraphs and 274 current paragraphs.
129 unchanged; 63 reworded; 67 added; 24 removed; 3 previous and 15 current paragraphs rearranged.
Tables are not compared: 16 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (67)
Current report
•Total sales and revenues for the second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023. In the three primary segments, sales were lower in Construction Industries and Resource Industries and higher in Energy & Transportation.
Current report
Highlights for the six months ended June 30, 2024 include:
Current report
•Total sales and revenues were $32.488 billion for the six months ended June 30, 2024, a decrease of $692 million, or 2 percent, compared with $33.180 billion for the six months ended June 30, 2023.
Current report
For the full-year 2024, we anticipate slightly lower sales and revenues as compared to 2023. We anticipate a slight decrease in machine dealer inventories during 2024, mostly driven by Resource Industries, compared to an increase in 2023.
Current report
Second-Half 2024 Company Trends and Expectations
Current report
We expect sales and revenues in the second half of 2024 to be slightly higher than the first half of 2024, following a normal seasonal trend. We expect sales and revenues in the second half of 2024 to be slightly lower than the second half of 2023, due to lower sales volume driven by lower sales of equipment to end users for machines. Changes in machine dealer inventories are expected to have a nominal impact on second-half 2024 sales and revenues as compared to the second half of 2023. We expect the decrease in machine dealer inventory in the second half of 2024 to be similar to the decrease in the second half of 2023 which was about $1.0 billion. We anticipate the decline in second-half 2024 sales and revenues compared to second-half 2023 will be roughly similar to the decline in the first half of 2024 compared to the first half of 2023. Services revenues grew in the second quarter of 2024, and we expect growth in the second half of 2024 compared to the second half of 2023.
Current report
As compared to the second half of 2023, we expect favorable manufacturing costs in the second half of 2024. We also expect an unfavorable profit impact from lower sales volume and unfavorable price realization in the second half of 2024 compared to the second half of 2023. We anticipate the benefit from price realization in the second half of 2024 will be significantly lower as we lap favorable price trends from 2023 along with a normalizing price environment.
Current report
2024 to be about flat compared to the third quarter of 2023. We also anticipate services revenues growth in the third quarter of 2024 compared to the third quarter of 2023.
Current report
We expect an unfavorable profit impact from lower sales volume to be offset by favorable manufacturing costs in the third quarter of 2024 as compared to the third quarter of 2023.
Current report
Within Construction Industries, we expect an unfavorable profit impact from lower sales volume and slightly unfavorable price realization, partially offset by favorable manufacturing costs. In Resource Industries, we anticipate an unfavorable profit impact from lower sales volume and higher SG&A/R&D expenses. In Energy & Transportation, we expect a favorable profit impact from higher sales volume and favorable price realization.
Current report
Total sales and revenues for the second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023. The decrease was primarily due to lower sales volume of $1.206 billion, partially offset by favorable price realization of $578 million. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.
Current report
In the three primary segments, sales were lower in Construction Industries and Resource Industries and higher in Energy & Transportation.
Current report
North America sales increased 1 percent primarily due to favorable price realization, partially offset by lower sales volume. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory increased less during the second quarter of 2024 than during the second quarter of 2023.
Current report
EAME sales decreased 16 percent primarily due to lower sales volume. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.
Current report
Operating profit for the second quarter of 2024 was $3.482 billion, a decrease of $170 million, or 5 percent, compared with $3.652 billion in the second quarter of 2023. Favorable price realization of $578 million was more than offset by the profit impact of lower sales volume of $431 million, higher restructuring costs of $227 million and higher SG&A/R&D expenses of $79 million. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.
Current report
In the second quarter of 2024, restructuring costs increased primarily due to the divestiture of two non-U.S. entities.
Current report
Operating profit margin was 20.9 percent for the second quarter of 2024, compared with 21.1 percent for the second quarter of 2023.
Current report
The 2024 estimated annual tax rate excludes the impact of second-quarter losses of $228 million for the divestiture of two non-U.S. entities with no related tax benefit. In addition, a discrete tax benefit of $4 million was recorded in the second quarter of 2024 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In the second quarter of 2023, the company recorded a discrete tax benefit of $88 million due to a change in the valuation allowance for certain deferred tax assets.
Current report
▪Sales increased in Latin America mainly due to higher sales volume. Higher sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory increased during the second quarter of 2024, compared with a decrease during the second quarter of 2023.
Current report
▪In EAME, sales decreased primarily due to lower sales volume. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.
Current report
▪Sales decreased in Asia/Pacific mainly due to lower sales volume and unfavorable currency impacts primarily related to the Japanese yen. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.
Current report
Construction Industries’ segment profit was $1.741 billion in the second quarter of 2024, a decrease of $62 million, or 3 percent, compared with $1.803 billion in the second quarter of 2023. The decrease was mainly due to the profit impact of lower sales volume of $288 million and higher SG&A/R&D expenses of $30 million, partially offset by favorable price realization of $178 million, favorable manufacturing costs of $62 million and favorable other segment items of $16 million. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives. Favorable manufacturing costs largely reflected lower material costs. Favorable other segment items primarily consisted of favorable currency impacts.
Current report
Construction Industries’ segment profit as a percent of total sales was 26.1 percent in the second quarter of 2024, compared with 25.2 percent in the second quarter of 2023.
Current report
Resource Industries’ total sales were $3.206 billion in the second quarter of 2024, a decrease of $357 million, or 10 percent, compared with $3.563 billion in the second quarter of 2023. The decrease was primarily due to lower sales volume of $475 million, partially offset by favorable price realization of $133 million. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased more during the second quarter of 2024 than during the second quarter of 2023.
Current report
Resource Industries’ segment profit as a percent of total sales was 22.4 percent in the second quarter of 2024, compared with 20.8 percent in the second quarter of 2023.
Current report
Energy & Transportation’s segment profit was $1.525 billion in the second quarter of 2024, an increase of $256 million, or 20 percent, compared with $1.269 billion in the second quarter of 2023. The increase was mainly due to favorable price realization of $264 million.
Current report
Financial Products’ segment profit was $227 million in the second quarter of 2024, a decrease of $13 million, or 5 percent, compared with $240 million in the second quarter of 2023. The decrease was mainly due to higher provision for credit losses at Cat Financial of $27 million and an increase in SG&A expenses of $15 million, partially offset by the absence of prior year unfavorable currency impacts of $14 million and a favorable impact from higher average earning assets of $12 million.
Current report
Expense for corporate items and eliminations was $587 million in the second quarter of 2024, an increase of $332 million from the second quarter of 2023, primarily driven by higher restructuring costs and higher corporate costs.
Current report
In the second quarter of 2024, restructuring costs increased primarily due to the divestiture of two non-U.S. entities.
Current report
SIX MONTHS ENDED JUNE 30, 2024 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2023
Current report
CONSOLIDATED SALES AND REVENUES
Current report
The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the six months ended June 30, 2023 (at left) and the six months ended June 30, 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.
Current report
Total sales and revenues were $32.488 billion for the six months ended June 30, 2024, a decrease of $692 million, or 2 percent, compared with $33.180 billion for the six months ended June 30, 2023. The decrease was primarily due to lower sales volume of $1.890 billion, partially offset by favorable price realization of $1.153 billion. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory increased less during the six months ended June 30, 2024, than during the six months ended June 30, 2023.
Current report
In the three primary segments, sales were lower in Construction Industries and Resource Industries and higher in Energy & Transportation.
Current report
North America sales increased 4 percent primarily due to favorable price realization.
Current report
Sales increased 3 percent in Latin America mainly due to higher sales volume and favorable currency impacts primarily related to the Brazilian real. The increase in sales volume was primarily driven by higher services sales volume.
Current report
1 Includes revenues from Machinery, Energy & Transportation of $357 million and $334 million in the six months ended June 30, 2024 and 2023, respectively.
Current report
CONSOLIDATED OPERATING PROFIT
Current report
Operating profit for the six months ended June 30, 2024, was $7.001 billion, an increase of $618 million, or 10 percent, compared with $6.383 billion for the six months ended June 30, 2023. The increase was primarily due to favorable price realization of $1.153 billion and the absence of the impact of the divestiture of the company's Longwall business in 2023 of $586 million, partially offset by the profit impact of lower sales volume of $699 million, higher SG&A/R&D expenses of $220 million and higher restructuring costs of $196 million. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.
Current report
For the six months ended June 30, 2024, restructuring costs increased primarily due to the divestitures of certain non-U.S. entities.
Showing the first 40 of 67 passages. Open the source sections for the rest.
Removed paragraphs (24)
Previous report
•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.
Previous report
Overall, we expect a continuation of healthy demand across most of our end markets for our products andservices.
Previous report
For the full-year 2024, we continue to anticipate sales and revenues will be broadly similar to 2023. We do not anticipate a significant change in machine dealer inventories during 2024, compared to a $0.7 billion increase in machine dealer inventories during 2023. We expect slightly favorable price realization in 2024 as compared to 2023. Services revenues grew in the first quarter of 2024, and we expect continued growth in 2024 across each of our three primary segments.
Previous report
In Construction Industries, we expect sales of equipment to end users to be slightly lower compared to 2023 due to softer economic conditions in Europe. We expect demand in North America to remain at healthy levels in Construction Industries. Resource Industries' sales in 2024 are expected to be lower, driven by lower sales volume primarily in off-highway and articulated trucks. We also expect an unfavorable impact from changes in dealer inventories in Construction Industries and Resource Industries. Within Energy & Transportation, we expect slightly higher sales compared to 2023, including a seasonal increase throughout the year.
Previous report
In the second quarter of 2024, we expect a benefit from price realization primarily from price actions taken in the second half of 2023. We expect manufacturing costs to be about flat compared to the second quarter of 2023, as we anticipate favorable freight to be partially offset by unfavorable cost absorption. We expect an increase in SG&A/R&D expenses in the second quarter of 2024 as compared to the second quarter of 2023 due to investments in strategic initiatives, which is expected to be offset by lower short-term incentive compensation expense.
Previous report
Within Construction Industries and Resource Industries in the second quarter of 2024 as compared to the second quarter of 2023, we expect favorable price realization to be offset by the profit impact of lower sales volume. In Energy & Transportation, we anticipate favorable price realization and a favorable mix of products to be partially offset by higher manufacturing costs and SG&A/R&D expenses due to investments in strategic initiatives. Within corporate items and eliminations, we anticipate increased expenses due to timing differences in the second quarter of 2024 as compared to the second quarter of 2023.
Previous report
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 of $684 million and unfavorable currency impacts of $30 million, primarily related to the Australian dollar, were mostly offset by favorable price realization of $575 million and higher Financial Products' revenues of $76 million. 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.
Previous report
In the three primary segments, sales were higher in Energy & Transportation and lower in Construction Industries and Resource Industries.
Previous report
North America sales increased 7 percent primarily due to favorable price realization and higher sales volume. The increase in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory increased more during the first quarter of 2024 than during the first quarter of 2023.
Previous report
Operating profit for the first quarter of 2024 was $3.519 billion, an increase of $788 million, or 29 percent, compared with $2.731 billion in 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 of $586 million and favorable price realization of $575 million, partially offset by the profit impact of lower sales volume of $268 million.
Previous report
Construction Industries’ total sales were $6.424 billion in the first quarter of 2024, a decrease of $322 million, or 5 percent, compared with $6.746 billion in the first quarter of 2023. The decrease was primarily due to lower sales volume of $464 million, partially offset by favorable price realization of $199 million. The decrease in sales volume was mainly driven by lower sales of equipment to end users.
Previous report
▪In EAME, sales decreased mainly due to lower sales volume. Lower sales volume was primarily driven by lower sales of equipment to end users.
Previous report
▪Sales decreased in Asia/Pacific primarily due to lower sales volume. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2024.
Previous report
Construction Industries’ segment profit was $1.764 billion in the first quarter of 2024, a decrease of $26 million, or 1 percent, compared with $1.790 billion in the first quarter of 2023. The decrease was mainly due to the profit impact of lower sales volume of $278 million, higher SG&A/R&D expenses of $26 million and unfavorable other segment items of $7 million, partially offset by favorable price realization of $199 million and favorable manufacturing costs of $86 million. Favorable manufacturing costs largely reflected lower freight.
Previous report
Construction Industries’ segment profit as a percent of total sales was 27.5 percent in the first quarter of 2024, compared with 26.5 percent in the first quarter of 2023.
Previous report
Resource Industries’ segment profit as a percent of total sales was 22.9 percent in the first quarter of 2024, compared with 22.3 percent in the first quarter of 2023.
Previous report
Energy & Transportation’s segment profit was $1.301 billion in the first quarter of 2024, an increase of $244 million, or 23 percent, compared with $1.057 billion in the first quarter of 2023. The increase was mainly due to favorable price realization of $202 million.
Previous report
Financial Products’ segment profit was $293 million in the first quarter of 2024, an increase of $61 million, or 26 percent, compared with $232 million in the first quarter of 2023. The increase was mainly due to a $33 million insurance settlement and a $27 million favorable impact from equity securities.
Previous report
Supplemental Data for Results of Operations
Previous report
1 Elimination of Financial Products’ revenues earned from ME&T.
Previous report
3 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.
Previous report
Supplemental Data for Results of Operations
Previous report
1 Elimination of Financial Products’ revenues earned from ME&T.
Previous report
3 Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.
Reworded paragraphs (63)
Previous wording
Highlights for the first quarter of 2024 include:
Current wording
Highlights for the second quarter of 2024 include:
Previous wording
•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.
Current wording
•Operating profit margin was 20.9 percent for the second quarter of 2024, compared with 21.1 percent for the second quarter of 2023. Adjusted operating profit margin was 22.4 percent for the second quarter of 2024, compared with 21.3 percent for the second quarter of 2023.
Previous wording
•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.
Current wording
•Second-quarter 2024 profit per share was $5.48, and excluding the items in the table below, adjusted profit per share was $5.99. Second-quarter 2023 profit per share was $5.67, and excluding the items in the table below, adjusted profit per share was $5.55.
Previous wording
•Caterpillar ended the first quarter of 2024 with $5.0 billion of enterprise cash.
Current wording
•Caterpillar ended the second quarter of 2024 with $4.3 billion of enterprise cash.
Previous wording
Operating profit margin was 22.3 percent for the first quarter of 2024, compared with 17.2 percent for the first quarter of 2023.
Current wording
•Operating profit margin was 21.5 percent for the six months ended June 30, 2024, compared with 19.2 percent for the six months ended June 30, 2023. Adjusted operating profit margin was 22.3 percent for the six months ended June 30, 2024, compared with 21.2 percent for the six months ended June 30, 2023.
Previous wording
•Enterprise operating cash flow was $2.1 billion in the first quarter of 2024.
Current wording
•Enterprise operating cash flow was $5.1 billion for the six months ended June 30, 2024.
Previous wording
•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.
Current wording
•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 66-67.
Previous wording
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 indealer inventories.
Current wording
Total sales and revenues for the second quarter of 2024 were $16.689 billion, a decrease of $629 million, or 4 percent, compared with $17.318 billion in the second quarter of 2023. The decrease was primarily due to lower sales volume, partially offset by favorable price realization. The decrease in sales volume was mainly driven by the impact from changes indealer inventories. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the second quarter of 2023.
Previous wording
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.
Current wording
Second-quarter 2024 profit per share was $5.48, compared with $5.67 profit per share in the second quarter of 2023. In the second quarter of 2024 and 2023, profit per share included restructuring costs. Second-quarter 2023 profit per share also included a discrete tax benefit to adjust deferred tax balances. Profit for the second quarter of 2024 was $2.681 billion, a decrease of $241 million, or 8 percent, compared with $2.922 billion for the second quarter of 2023. Favorable price realization was more than offset by the profit impact of lower sales volume, higher restructuring costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses.
Previous wording
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.
Current wording
In Construction Industries, sales of equipment to end users in the second half of 2024 are expected to decline slightly as compared to the second half of 2023. In North America, for 2024, we anticipate lower rental fleet loading. Government-related infrastructure projects are expected to remain healthy. In Asia Pacific, outside of China, we continue to expect soft economic conditions. We anticipate demand in China will remain at a relatively low level in the excavator industry above 10-tons. In EAME, we anticipate that weak economic conditions in Europe will continue, partially offset by continued healthy 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 ourservices initiatives will positively impact Construction Industries in 2024.
Previous wording
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.
Current wording
In Resource Industries, for both mining and heavy construction and quarry and aggregates, we continue to anticipate lower sales volume in 2024 compared to strong 2023 performance, primarily in off-highway and articulated trucks. We anticipate a decrease in dealer inventory in 2024, as compared to a slight increase in 2023. We expect higher services revenues, including robust rebuild activity in 2024. 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. Customers continue to display capital discipline, however, 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.
Previous wording
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 Turbines, backlog and quoting activity remains strong for Oil & Gas and Power Generation. Industrial demand is expected to soften relative to a strong 2023. In Transportation, we anticipate high-speed marine to increase as customers continue to upgrade aging fleets.
Current wording
For Energy & Transportation, in Oil & Gas in total, we expect a stronger year overall in 2024 as compared to 2023. We expect reciprocating engines for Oil & Gas to be about flat to slightly down in 2024 after strong 2023 performance, primarily due to ongoing softness in well servicing. We expect gas compression to be up in 2024 as compared to 2023, but expect it to soften in the second half of 2024 as compared to the second half of 2023. For Solar Turbines, we continue to expect sales volume to increase in the second half of 2024 as compared to the second half of 2023, as backlog remains strong for Oil & Gas. For Power Generation, reciprocating engine and Solar Turbines demand is expected to remain strong, largely due to continued data center growth relating to cloud computing and generative artificial intelligence (AI). Industrial demand is expected to remain at a relatively low level in the second half of 2024 compared to the second half of 2023. In Transportation, we anticipate growth as the year progresses in both high-speed marine and rail services.
Previous wording
In 2024, we expect a benefit from price realization during the first half of the year. We expect manufacturing costs to be about flat compared to 2023. We anticipate favorable freight to be partially offset by unfavorable cost absorption. We also anticipate shipping a more normal mix of products, which we expect to drive a slight unfavorable impact to operating profit. Selling, general and administrative (SG&A) and research and development (R&D) expenses are expected to increase throughout the year as we continue to invest in strategic initiatives aimed at future long-term profitable growth, such as services growth and technology, including autonomy, alternative fuels, connectivity and digital and electrification. We also expect a benefit of lower short-term incentive compensation expense in 2024 as compared to 2023. In 2024, we expect restructuring costs to be between $300 million and $450 million and expect capital expenditures to be in the range of $2.0 to $2.5 billion. We expect the annual effective tax rate, excluding discrete items, to be 22.5 percent.
Current wording
In 2024, we expect restructuring costs to be around $450 million and expect capital expenditures to be in the range of $2.0 to $2.5 billion. We expect the annual effective tax rate, excluding discrete items, to be 22.5 percent.
Previous wording
Second-Quarter 2024 Company Trends and Expectations
Current wording
Third-Quarter 2024 Company Trends and Expectations
Previous wording
In the second quarter of 2024, we expect lower sales and revenues as compared to the second quarter of 2023. We anticipate an unfavorable impact from changes in machine dealer inventories, as machine dealer inventory is expected to decline during the second quarter of 2024 compared to a $0.2 billion increase during the second quarter of 2023. In the second quarter of 2024, price realization is expected to remain favorable as compared to the second quarter of 2023.
Current wording
In the third quarter of 2024, we expect slightly lower sales and revenues as compared to the third quarter of 2023. We anticipate lower sales volume driven by an unfavorable impact from changes in machine dealer inventories and lower sales of equipment to end users of machines. Machine dealer inventory is expected to be about flat or slightly down during the third quarter of 2024 compared to a $0.4 billion increase during the third quarter of 2023. We expect price realization in the third quarter of
Previous wording
We expect lower Construction Industries' sales as compared to the second quarter of 2023 due to the impact from changes in dealer inventories, partially offset by favorable price realization. Resource Industries' sales are expected to be lower driven by lower sales volume, partially offset by favorable price realization. In Energy & Transportation, we expect sales to be about flat as compared to the second quarter of 2023.
Current wording
As compared to the third quarter of 2023, we expect lower Construction Industries' sales in the third quarter of 2024 due to the impact from changes in dealer inventories. Resource Industries' sales are expected to be lower driven by lower sales of equipment to end users. In Energy & Transportation, we expect sales to be higher driven by strength in Power Generation, Oil & Gas and Transportation, partially offset by lower sales in Industrial.
Previous wording
•Glossary of terms is included on pages 47-49; first occurrence of terms shown in bold italics.
Current wording
•Glossary of terms is included on pages 60-62; first occurrence of terms shown in bold italics.
Previous wording
•Information on non-GAAP financial measures is included on pages 53-54.
Current wording
•Information on non-GAAP financial measures is included on pages 66-67.
Previous wording
The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2023 (at left) and the first quarter of 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.
Current wording
The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the second quarter of 2023 (at left) and the second quarter of 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.
Previous wording
Sales increased 2 percent in Latin America mainly due to higher sales volume. The increase in sales volume was primarily driven by higher services sales volume.
Current wording
Sales increased 5 percent in Latin America mainly due to higher sales volume and favorable price realization. The increase in sales volume was primarily driven by higher services sales volume.
Previous wording
Total dealer inventory increased by $1.4 billion during the first quarter of 2024, compared with an increase of $1.4 billion during the first quarter of 2023. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.
Current wording
Total dealer inventory decreased $200 million during the second quarter of 2024, compared with an increase of $600 million during the second quarter of 2023. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.
Previous wording
1 Includes revenues from Machinery, Energy & Transportation of $177 million and $162 million in the first quarter of 2024 and 2023, respectively.
Current wording
1 Includes revenues from Machinery, Energy & Transportation of $180 million and $172 million in the second quarter of 2024 and 2023, respectively.
Previous wording
The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2023 (at left) and the first quarter of 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation's other operating (income) expenses.
Current wording
The chart above graphically illustrates reasons for the change in consolidated operating profit between the second quarter of 2023 (at left) and the second quarter of 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation's other operating (income) expenses.
Previous wording
▪Interest expense excluding Financial Products in the first quarter of 2024 was $143 million, compared with $129 million in the first quarter of 2023. The increase was due to higher average borrowing rates.
Current wording
▪Interest expense excluding Financial Products in the second quarter of 2024 was $137 million, compared with $127 million in the second quarter of 2023. The increase was due to higher average borrowing rates.
Previous wording
▪Other income (expense) in the first quarter of 2024 was income of $156 million, compared with income of $32 million in the first quarter of 2023. The change was primarily driven by favorable impacts from foreign currency exchange.
Current wording
▪Other income (expense) in the second quarter of 2024 was income of $155 million, compared with income of $127 million in the second quarter of 2023. The change was primarily driven by favorable impacts from commodity hedges.
Previous wording
▪The effective tax rate for the first quarter of 2024 was 19.5 percent compared to 26.9 percent for the first quarter of 2023. Excluding the discrete items discussed below, the first quarter 2024 estimated annual tax rate was 22.5 percent compared with 23.0 percent for the first quarter of 2023.
Current wording
▪The effective tax rate for the second quarter of 2024 was 23.9 percent compared to 20.6 percent for the second quarter of 2023. Excluding the discrete items discussed below, the second quarter 2024 estimated annual tax rate was 22.5 percent compared with 23.0 percent for the second quarter of 2023.
Previous wording
Please see a reconciliation of GAAP to non-GAAP financial measures on pages 53-54.
Current wording
Please see a reconciliation of GAAP to non-GAAP financial measures on pages 66-67.
Previous wording
Resource Industries’ total sales were $3.193 billion in the first quarter of 2024, a decrease of $234 million, or 7 percent, compared with $3.427 billion in the first quarter of 2023. The decrease was primarily due to lower sales volume of $425 million, partially offset by favorable price realization of $173 million. The decrease in sales volume was mainly driven by lower sales of equipment to end users.
Current wording
Construction Industries’ total sales were $6.683 billion in the second quarter of 2024, a decrease of $471 million, or 7 percent, compared with $7.154 billion in the second quarter of 2023. The decrease was primarily due to lower sales volume of $588 million, partially offset by favorable price realization of $178 million. The decrease in sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory remained about flat during the second quarter of 2024, compared to an increase during the second quarter of 2023.
Previous wording
▪Sales in Latin America were about flat.
Current wording
▪Sales in North America were about flat. Lower sales volume was offset by favorable price realization. Lower sales volume was mainly driven by lower sales of equipment to end users.
Previous wording
Resource Industries’ segment profit was $730 million in the first quarter of 2024, a decrease of $34 million, or 4 percent, compared with $764 million in the first quarter of 2023. The decrease was mainly due to the profit impact of lower sales volume of $217 million and unfavorable other segment items of $24 million, partially offset by favorable price realization of $173 million and favorable manufacturing costs of $38 million. Unfavorable other segment items primarily consisted of unfavorable currency impacts. Favorable manufacturing costs largely reflected lower freight.
Current wording
Resource Industries’ segment profit was $718 million in the second quarter of 2024, a decrease of $22 million, or 3 percent, compared with $740 million in the second quarter of 2023. The decrease was mainly due to the profit impact of lower sales volume of $169 million, unfavorable other segment items of $16 million and higher SG&A/R&D expenses of $14 million, partially offset by favorable price realization of $133 million and favorable manufacturing costs of $44 million. Unfavorable other segment items primarily consisted of unfavorable currency impacts. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives. Favorable manufacturing costs largely reflected lower freight.
Previous wording
Energy & Transportation’s total sales were $6.681 billion in the first quarter of 2024, an increase of $427 million, or 7 percent, compared with $6.254 billion in the first quarter of 2023. Sales increased across all applications except Industrial. The increase in sales was primarily due to higher sales volume of $231 million and favorable price realization of $202 million.
Current wording
Energy & Transportation’s total sales were $7.337 billion in the second quarter of 2024, an increase of $118 million, or 2 percent, compared with $7.219 billion in the second quarter of 2023. Sales increased across all applications except Industrial. The increase in sales was primarily due to favorable price realization of $264 million, partially offset by lower sales volume of $129 million.
Previous wording
▪Industrial – Sales decreased primarily in EAME and North America.
Current wording
▪Industrial – Sales decreased in EAME and North America.
Previous wording
▪Transportation – Sales increased in rail services. International locomotive deliveries were also higher.
Current wording
▪Transportation – Sales increased in rail services and marine.
Previous wording
Energy & Transportation’s segment profit as a percent of total sales was 19.5 percent in the first quarter of 2024, compared with 16.9 percent in the first quarter of 2023.
Current wording
Energy & Transportation’s segment profit as a percent of total sales was 20.8 percent in the second quarter of 2024, compared with 17.6 percent in the second quarter of 2023.
Previous wording
Financial Products’ segment revenues were $991 million in the first quarter of 2024, an increase of $89 million, or 10 percent, compared with $902 million in the first quarter of 2023. The increase was primarily due to a $69 million favorable impact from higher average financing rates across all regions and a $32 million favorable impact from higher average earning assets driven by North America.
Current wording
Financial Products’ segment revenues were $1.004 billion in the second quarter of 2024, an increase of $81 million, or 9 percent, compared with $923 million in the second quarter of 2023. The increase was primarily due to a favorable impact from higher average financing rates across all regions of $50 million and a favorable impact from higher average earning assets driven by North America of $32 million.
Previous wording
At the end of the first quarter of 2024, past dues at Cat Financial were 1.78 percent, compared with 2.00 percent at the end of the first quarter of 2023. Write-offs, net of recoveries, were $55 million for the first quarter of 2024, compared with $10 million for the first quarter of 2023. As of March 31, 2024, Cat Financial's allowance for credit losses totaled $281 million, or 1.01 percent of finance receivables, compared with $331 million, or 1.18 percent of finance receivables at December 31, 2023.
Current wording
At the end of the second quarter of 2024, past dues at Cat Financial were 1.74 percent, compared with 2.15 percent at the end of the second quarter of 2023. Write-offs, net of recoveries, were $18 million for the second quarter of 2024, compared with $8 million for the second quarter of 2023. As of June 30, 2024, Cat Financial's allowance for credit losses totaled $254 million, or 0.89 percent of finance receivables, compared with $281 million, or 1.01 percent of finance receivables at March 31, 2024. The allowance for credit losses at year-end 2023 was $331 million, or 1.18 percent of finance receivables.
Previous wording
EAME sales decreased 17 percent primarily due to lower sales volume. The decrease in sales volume was primarily driven by lower sales of equipment to end users.
Current wording
EAME sales decreased 17 percent primarily due to lower sales volume. The decrease in sales volume was mainly due to lower sales of equipment to end users.
Previous wording
Asia/Pacific sales decreased 5 percent mainly due to lower sales volume. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2024.
Current wording
Asia/Pacific sales decreased 7 percent mainly due to lower sales volume. The decrease in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory decreased during the six months ended June 30, 2024, compared with an increase during the six months ended June 30, 2023.
Previous wording
The 2024 estimated annual tax rate excludes the impact of nontaxable gains of $64 million for the divestiture of a non-U.S. mining entity along with a related tax benefit of $54 million. The estimated annual tax rate in the first quarter of 2023 excluded the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business. In addition, a discrete tax benefit of $38 million was recorded in the first quarter of 2024, compared with a $32 million benefit in the first quarter of 2023, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.
Current wording
The 2024 estimated annual tax rate excludes the impact of year-to-date losses of $164 million for the divestitures of certain non-U.S. entities with a related tax benefit of $54 million. The 2023 estimated annual tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business. In addition, a discrete tax benefit of $42 million was recorded in the six months ended June 30, 2024, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense, compared with $32 million for the six months ended June 30, 2023. In the six months ended June 30, 2023, the company recorded a discrete tax benefit of $88 million due to a change in the valuation allowance for certain deferred tax assets.
Previous wording
▪In North America, sales increased primarily due to favorable price realization.
Current wording
•In North America, sales increased primarily due to favorable price realization, partially offset by lower sales volume. Lower sales volume was mainly driven by lower sales of equipment to end users.
Showing the first 40 of 63 pairs. Open the source sections for the rest.
Rearranged current paragraphs (15)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
•Profit per share for the six months ended June 30, 2024, was $11.23, and excluding the items in the table below, adjusted profit per share was $11.59. Profit per share for the six months ended June 30, 2023, was $9.41, and excluding the items in the table below, adjusted profit per share was $10.46.
Current report — wording carried from elsewhere
Asia/Pacific sales decreased 9 percent mainly due to lower sales volume. The decrease in sales volume was primarily driven by lower sales of equipment to end users.
Current report — wording carried from elsewhere
▪Oil and Gas – Sales increased for turbines and turbine-related services.
Current report — wording carried from elsewhere
▪Power Generation – Sales increased in large reciprocating engines, primarily data center applications. Turbines and turbine-related services increased as well.
Current report — wording carried from elsewhere
Dealer inventory increased about $1.2 billion during the six months ended June 30, 2024, compared with an increase of about $2.2 billion during the six months ended June 30, 2023. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers.
Current report — wording carried from elsewhere
Sales and Revenues by Geographic Region
Current report — wording carried from elsewhere
The chart above graphically illustrates reasons for the change in consolidated operating profit between the six months ended June 30, 2023 (at left) and the six months ended June 30, 2024 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Longwall Divestiture is included in total restructuring costs. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income) expenses.
Current report — wording carried from elsewhere
Other Profit/Loss and Tax Items
Current report — wording carried from elsewhere
▪The effective tax rate for the six months ended June 30, 2024 was 21.7 percent compared to 23.2 percent for the six months ended June 30, 2023. Excluding the discrete items discussed below, the estimated annual tax rate for the six months ended June 30, 2024 was 22.5 percent compared with 23.0 percent for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Please see a reconciliation of GAAP to non-GAAP financial measures on pages 66-67.
Current report — wording carried from elsewhere
•Industrial – Sales decreased in EAME and North America.
Current report — wording carried from elsewhere
•Transportation – Sales increased in rail services and marine.
Current report — wording carried from elsewhere
2 Elimination of net expenses recorded between ME&T and Financial Products.
Current report — wording carried from elsewhere
2 Elimination of net expenses recorded by ME&T paid to Financial Products.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
4 Profit attributable to common shareholders.
Previous report — wording carried elsewhere
For the Three Months Ended March 31, 2024
Previous report — wording carried elsewhere
For the Three Months Ended March 31, 2023