Caterpillar, Inc. · NYSE:CAT
Caterpillar — Investor Day (May 2022)
101 slides from Caterpillar's investor day presentation, May 17, 2022
Slide 1: We help our customers build a better, more sustainable world
We help our customers build a better, more sustainable world.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this financial review 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,” “a
Slide 3: Agenda
AGENDA Welcome | Ryan Fiedler Strategy, Services, Technology & Sustainability | Jim Umpleby Energy & Transportation | Joe Creed Construction Industries | Tony Fassino Resource Industries | Denise Johnson Lunch Digital | Bob De Lange Sustainability | Julie Lagacy Financial Framework | Andrew Bonfield
Slide 4: Strategy, Services, Technology & Sustainability
Strategy, Services, Technology & Sustainability Jim Umpleby, Chairman & CEO
Slide 5: Key Messages
KEY MESSAGES • Executing strategy through operational excellence, expanded offerings, services and sustainability • Achieved Investor Day targets for adjusted operating profit margin1 and generated strong ME&T free cash flow2 • Expecting higher long-term sales growth as energy transition expands our
Slide 6: Leadership Team with Deep Expertise
Leadership Team with Deep Expertise Jim Umpleby Chairman & CEO Joe Creed Bob De Lange Tony Fassino Denise Johnson Group President Group President Group President Group President Energy & Transportation Services, Distribution Construction Industries Resource Industries & Digital Andrew Bonfield Chery
Slide 7: Caterpillar Today
Caterpillar Today Global Leader for Nearly 100 Years 38% 62% Sales & Revenues: $51B in 2021 CONSTRUCTION RESOURCE ENERGY & CAT INDUSTRIES INDUSTRIES TRANSPORTATION FINANCIAL % Sales Inside the United States $22B $10B $20B $3B 1 1 1 1 % Sales Outside the United States 1 Includes inter-segment sales.
Slide 8: Cat Dealer Network
Cat® Dealer Network EAME 45 Dealers North America 160 47 Dealers Dealers 193 Countries Served 166,000 Total Employees ~2,700 Asia/Pacific 37 Dealers Dealer Facilities Latin America 31 Dealers Caterpillar: Confidential Green
Slide 9: 2017 Strategy
2017 Strategy Caterpillar: Confidential Green
Slide 10: Achieved Higher Adjusted Operating Profit Margins
70000Achieved Higher Adjusted Operating Profit Margins1 Historical and Sales ME&T Free Cash Flow0.32 and Revenues $66B 60000 $60B 0.25 $56B $55B $55B $54B 50000 $51B $47B $45B 0.2 Sales & 40000 Revenues $43B $42B $39B 30000 16% 16% 15% 0.15 14% 13% 13% 20000 12% Adj. Operating 10% 11% 11% Profit Mar
Slide 11: 2017 and 2019 Investor Day Targets: We Delivered
2017 and 2019 Investor Day Targets: We Delivered 1 1 2017 Targets 2017 2018 2019 Targets 2019 2020 2021 Adjusted 200-500 bps 300-600 bps Operating 12.5% 15.9% 15.8% 11.8% 13.7% Profit Margin 2 higher higher ME&T Free Cash $4-8B $5.3B $3.1B $6.0B 3 Flow Return Capital substantially all Allocation ME&
Slide 12: Leveraging Technology for Services Growth
Leveraging Technology for Services Growth • Connected Assets: Critical mass of >1.2M connected • eCommerce: Online dealer parts sales up ~20% in 2021 • Customer Value Agreements: >50% of equipment delivered with a CVA • Prioritized Service Events: Won 2x dealer parts sales in 2021 • Data-Driven Part
Slide 13: Strong Momentum to Achieve Services Target
Strong Momentum to Achieve Services Target 1 $28B • Increasing customer value including improved asset utilization 2x $19B • Reducing cyclicality $14B of sales and revenues • Improving profitability through the cycles 2016 2021 2026 1 ME&T services revenues include, but are not limited to, aftermark
Slide 14: 2022 Updated Strategy
2022 Updated Strategy Added Sustainability as Focus Area SUSTAINABILITY Caterpillar: Confidential Green
Slide 15: The Energy Transition is a Significant Opportunity for Profitable Growth
The Energy Transition is a Significant Opportunity for Profitable Growth Accelerating mining commodity demand Profitable Growing global energy demand Growth Opportunities Increasing infrastructure investment Expanding services opportunities Caterpillar: Confidential Green
Slide 16: Energy Transition Accelerates Demand for Key Commodities
Energy Transition Accelerates Demand for Key Commodities 16,000 14,000 12,000 Minerals Usage Increasing: kilotonnes (kt) 10,000 8,000 Electric vehicles 6,000 Battery storage Wind and solar power 4,000 Grid modernization/stability 2,000 - 2020 2030 2040 ACTUAL STEPSIEA STATED POLICIES SCENARIO STEPS
Slide 17: Electric Vehicle Growth Accelerating Key Commodity Demand
Electric Vehicle Growth Accelerating Key Commodity Demand Conventional Car 6x 8x Electric Vehicle EVs Global EV Use More Stated Policies Minerals Scenario: 0 50 100 150 200 250 Today 2030 vs. 2020 kilograms (kg) per vehicle Copper Lithium Nickel Manganese Cobalt Graphite Zinc Rare Earths Others Sour
Slide 18: Increasing Global Energy Demand: Renewables
Increasing Global Energy Demand: Renewables (IEA Stated Policies Scenario) +16% Total Energy 5000 Demand Oil +6% 4500 Natural Gas Accelerating Renewables: +19% 4000 Renewables Mined commodities Energy Demand (Mtoe) 3500 +102% Infrastructure investments Coal 3000 -18% Grid stabilization 2500 2000 Cat
Slide 19: Increasing Global Energy Demand: Oil & Natural Gas
Increasing Global Energy Demand: Oil & Natural Gas (IEA Stated Policies Scenario) +16% Total Energy 5000 Demand Oil 4500 +6% Increasing Oil & Natural Gas: Natural Gas 4000 +19% Customer carbon footprint reduction Renewables Liquified natural gas exports Energy Demand (Mtoe) 3500 +102% Coal 3000 -18%
Slide 20: Energy Transition-Related Infrastructure Investment
Energy Transition-Related Infrastructure Investment ~$5T 1 potential incremental global spending, 2021-2040 Infrastructure growth related to grid transmission lines, solar power and wind farms, EV charging stations, and other applications Source: 1) International Energy Agency (IEA), data based on S
Slide 21: Caterpillar's Total Addressable Market is Increasing
Caterpillar’s Total Addressable Market is Increasing Resource Industries Mining, heavy construction, quarry and aggregates; increasing demand Accelerating mining for autonomous solutions commodity demand Profitable Energy & Transportation Growth Distributed Power Generation: Increasing Growing Recip
Slide 22: Expanding Services Opportunities
Urban Location Remote Location Expanding Services Opportunities • New services in adjacent areas, such as site power management and distributed generation solutions • Many existing services opportunities unchanged, such as wear components, digital and remanufacturing Whether in an urban • Transition
Slide 23: Investing for the Future Through Innovative R&D
Investing for the Future Through Innovative R&D Reaffirming adjusted operating profit margin targets while investing for long-term profitable growth Increased R&D investment: Recent Higher spend Autonomy, Alternative Fuels, 1 history next 5 years2 Connectivity, Digital and Electrification (AACE) 3 A
Slide 24: Caterpillar Technologies Will Lead in the Energy Transition
Caterpillar Technologies Will Lead in the Energy Transition Leveraged Decades of Industry-Leading Innovative R&D and Technology-Related Investments Across Caterpillar VisionLink®/MineStar™/ Launched Cat App/ > 1.2 million Digital & Connectivity Solar Insight parts.cat.com connected assets Electric d
Slide 25: Key Takeaways
KEY TAKEAWAYS • Executing strategy through operational excellence, expanded offerings, services and sustainability • Achieved Investor Day targets for adjusted operating profit margin1 and generated strong ME&T free cash flow2 • Expecting higher long-term sales growth as energy transition expands ou
Slide 26: Energy & Transportation
Energy & Transportation Joe Creed, Group President
Slide 27: Serving Diverse Industries and Customers Globally
Serving Diverse Industries and Customers Globally INNOVATIVE PRODUCTS, SOLUTIONS AND SERVICES Caterpillar: Confidential Green
Slide 28: Products Designed to be Serviced Throughout Their Lifecycle
Products Designed to be Serviced Throughout Their Lifecycle ~30M engines built 6K+ 25K+ average annual engine volume 200K+ 12K 350K New or overhauled Locomotives Caterpillar® generator Cat® engines gas turbines sold worldwide sets delivered in the remanufactured In the last 5 years last 5 years per
Slide 29: Generating Decades of Services Growth
Generating Decades of Services Growth ENGINES | TURBINES | LOCOMOTIVES 20-60+ YEAR1 LIFECYCLE CUSTOMER VALUE CONNECTIVITY AGREEMENTS REMANUFACTURING | REBUILDS | OVERHAULS 1Representative assets; will vary by specific model and application Caterpillar: Confidential Green
Slide 30: Energy Transition Increases Caterpillar's Total Addressable Market
Energy Transition Increases Caterpillar’s Total Addressable Market Resource Industries Mining, heavy construction, quarry and aggregates; increasing demand Accelerating mining for autonomous solutions commodity demand Profitable Energy & Transportation Growth Distributed Power Generation: Increasing
Slide 31: Distributed Power to Support Renewables
Distributed Power to Support Renewables Rapidly Increasing | Higher Variability Increasing Renewables | Intermittency Capacity & Reliability Challenges | Higher Cost Grid Capacity | Reliability | Lower Cost Caterpillar: Confidential Green
Slide 32: Energy Transition Increases Caterpillar's Total Addressable Market
Energy Transition Increases Caterpillar’s Total Addressable Market Resource Industries Mining, heavy construction, quarry and aggregates; increasing demand Accelerating mining for autonomous solutions commodity demand Profitable Energy & Transportation Growth Distributed Power Generation: Increasing
Slide 33: Lower Carbon Footprint for Oil & Gas Customers
Lower Carbon Footprint for Oil & Gas Customers HYBRID GAS DRILLING ELECTRIC FRAC CONVENTIONAL FRAC NATURAL GAS COMPRESSION Gathering Downstream Processing and Transmission Cat products/services in yellow
Slide 34: Lower Carbon Footprint for Oil & Gas Customers
Lower Carbon Footprint for Oil & Gas Customers HYBRID GAS DRILLING ELECTRIC FRAC CONVENTIONAL FRAC • 100% natural gas solution • Energy storage • Fuel flexibility • Reduced flaring NATURAL GAS COMPRESSION Gathering Downstream Processing and Transmission Cat products/services in yellow
Slide 35: Lower Carbon Footprint for Oil & Gas Customers
Lower Carbon Footprint for Oil & Gas Customers HYBRID GAS DRILLING ELECTRIC FRAC CONVENTIONAL FRAC • Natural gas generator sets and e-frac pump • Fuel flexibility with DGBTM engines • System integration • Digital solutions • Operating efficiency NATURAL GAS COMPRESSION Gathering Downstream Processin
Slide 36: Lower Carbon Footprint for Oil & Gas Customers
Lower Carbon Footprint for Oil & Gas Customers HYBRID GAS DRILLING ELECTRIC FRAC CONVENTIONAL FRAC • Solar gas turbines and compressors • Natural gas engines • Carbon capture NATURAL GAS COMPRESSION Gathering Downstream Processing and Transmission Cat products/services in yellow
Slide 37: Lower Carbon Footprint for Oil & Gas Customers
Lower Carbon Footprint for Oil & Gas Customers Caterpillar: Confidential Green
Slide 38: Investing in Lower-Carbon Advanced Power Technology
Investing in Lower-Carbon Advanced Power Technology Established power sources Replacing established More efficient and fuel-flexible coupled with new technologies power sources Low-Carbon Intensity Fuels Electric and Hybrid Powertrains Batteries Increased use of reduced-carbon Electric drive transmi
Slide 39: Battery Electric Equipment
Battery Electric Equipment PRODUCTS INTRODUCED IN HIGH POWER APPLICATIONS Caterpillar: Confidential Green
Slide 40: Caterpillar Battery Solutions
Caterpillar Battery Solutions CELL MODULE PACK RACK BATTERY ELECTRIC POWERTRAIN Caterpillar: Confidential Green
Slide 41: Electrifying the Product Portfolio
Electrifying the Product Portfolio LOCOMOTIVES LARGE CAT MACHINES SMALL STATIONARY BATTERY POWER CHARGERS Caterpillar: Confidential Green
Slide 42: Investing in Lower Carbon Technology and Services
Investing in Lower Carbon Technology and Services Collaborations / Equity Investments Acquisitions Partnerships Fuel Conditioning & Carbon Capture Alternative Power & Services Power Management Logos are registered trademarks of the companies listed. Used here with permission. Caterpillar: Confidenti
Slide 43: Whatever the Challenge, There's Caterpillar
WHATEVER THE CHALLENGE Services | Operational Efficiency | Fuel Flexibility Electrification | Methane Abatement | Carbon Reduction THERE’S CATERPILLAR Solar Mobile Turbomachinery SMT Caterpillar: Confidential Green
Slide 44: Construction Industries
Construction Industries Tony Fassino, Group President
Slide 45: Construction Industries
Construction Industries GENERAL CONSTRUCTION QUARRY & AGGREGATES HEAVY CONSTRUCTION INDUSTRIAL & WASTE ROAD CONSTRUCTION AGRICULTURE & LANDSCAPING Caterpillar: Confidential Green
Slide 46: Cumulative Incremental Construction Growth Opportunity 2021-2040
Cumulative Incremental Construction Growth Opportunity 2021-2040 1 POTENTIAL INCREMENTAL GLOBAL SPENDING 2 Residential 2X $45-55T Equivalent to 180-220 million SPEND BY 2040 homes built worldwide per year 3 Traditional Infrastructure 2X $20-25T Equivalent to funding an Infrastructure SPEND BY 2040 I
Slide 47: Increasing Customer Value and Delivering Profitable Growth
Increasing Customer Value and Delivering Profitable Growth SERVICES • TECHNOLOGY • SUSTAINABILITY Caterpillar: Confidential Green
Slide 48: Construction Industries – Growing Services
Construction Industries – Growing Services Delivering an Easy-to-Buy / Easy-to-Own Customer Experience 1.9M 1M+ 11.3 150K >60% Active Connected Average Cat® Annual Machines Sold Construction Assets Construction Machine Machine with a Customer Machines and Growing Age (Years) Sales Value Agreement CV
Slide 49: Services Growth Through the Machine Lifecycle
Services Growth Through the Machine Lifecycle CUSTOMER VALUE AGREEMENTS REPAIR OPTIONS & REBUILDS Build customer Extend the Offer services relationships relationship to further extend at the point of sale in the aftermarket machine life/value MACHINE AGE 1 TO 3 YEARS 4 TO 10 YEARS 10+ Caterpillar: C
Slide 50: Built to be Rebuilt
Services Growth BUILT TO BE REBUILT Returning Entire Machines to Like-new Condition 1 • 25-50% the cost of a new machine • Choices for customer economics from components to full machine • Up to 7,000 parts inspected, reconditioned or replaced • Integrated services offerings – extended protection pla
Slide 51: Construction Technology Delivering Value
Construction Technology Delivering Value Helping Fill Labor Gaps, Reduce Costs, Enhance Safety and Make Jobsites More Efficient CAT GRADE CAT COMPACT CAT PAYLOAD CAT DETECT Automate grading, boost Meet compaction targets Help reduce load times, Expanded view of the working precision, speed and effic
Slide 52: Cat Grade Technology
Cat® Grade Technology Automation Technology1 Delivering up to 35% more operator efficiency Helping operators get to design plan up to 39% faster with up to 82% fewer inputs 1Actual results can vary based on application, environment and human factors. Caterpillar: Confidential Green
Slide 53: Cat Command Technology
Cat® Command Technology Remote Control Technology1 Helping customers DOUBLE operator efficiency 1 Geographic exceptions apply for select technologies based on local restrictions Caterpillar: Confidential Green
Slide 54: Delivering Services, Technology and Machines for the Energy Transition
Delivering Services, Technology and Machines for the Energy Transition PAST, PRESENT AND FUTURE Caterpillar: Confidential Green
Slide 55: Decades of Experience
Decades of Experience Providing Construction Industries Customers Options from Diesel-electric to Hybrid to Fully Electric Tunneling Tethered Electric Excavator Tethered Electric Excavator D6 XE Elevated Sprocket Electric Drive 1990s 2000s 2010s 2020s D7E Electric Drive Mini Excavator Electric Hybri
Slide 56: Up to 85% Lower CO2 Today, 100% Reduction in the Future
Up to 85% Lower CO2 Today, 100% Reduction in the Future Low Carbon Intensity Fuels Electric & Hybrid Powertrain Batteries Fuel Cells HVO + BRADLEY DEMOLITION D6 XE + GOODFELLOW BROS PRODUCTS IN DEVELOPMENT • Cat fleet running Hydrotreated Vegetable • Advanced electric drive technology • Battery and
Slide 57: Whatever the Challenge, There's Caterpillar
WHATEVER THE CHALLENGE Services | Integrated Technology Carbon Reduction | Autonomy | Safety THERE’S CATERPILLAR Caterpillar: Confidential Green
Slide 58: Investor Leave Behinds
Investor Leave Behinds 58 Caterpillar: Confidential Yellow
Slide 59: A Global Snapshot
A GLOBAL SNAPSHOT A legacy of 95+ years 125k + Nearly in construction New Customers 300 MODELS since 2018 Producing a machine approximately every Over 60,000 1.9 Million active global 5 minutes machines financed annually construction machines 59 Caterpillar: Confidential Yellow Caterpillar: Confiden
Slide 60: Industry Leading Product Portfolio
Industry Leading Product Portfolio Building Construction Products Backhoe Loaders Compact Track Loaders Compact Wheel Loaders Small Wheel Loaders Small Track-Type Mini Hydraulic Skid Steer Loaders Telehandlers Tractors Excavators Earthmoving Medium Tractor Products Medium Motor Graders Paving Produc
Slide 61: Resource Industries
Resource Industries Denise Johnson, Group President
Slide 62: Resource Industries
Resource Industries MINING HEAVY CONSTRUCTION Surface & Underground QUARRY & AGGREGATES Caterpillar: Confidential Green
Slide 63: Energy Transition Accelerates Demand for Key Commodities
Energy Transition Accelerates Demand for Key Commodities 16,000 14,000 12,000 Minerals Usage Increasing: kilotonnes (kt) 10,000 8,000 Electric vehicles 6,000 Battery storage Wind and solar power 4,000 Grid modernization/stability 2,000 - 2020 2030 2040 ACTUAL STEPSIEA STATED POLICIES SCENARIO STEPS
Slide 64: Lower Ore Grades Will Drive Incremental Machines and Higher Utilization
Lower Ore Grades Will Drive Incremental Machines and Higher Utilization ~30% more material will be Copper Ore Grades (Surface) required to deliver an equal amount 0.60 of copper Copper Grade (%) 0.55 0.50 0.45 2010 2015 2020 2025 2030 Source: AME, formerly Australian Metals Economics Caterpillar: Co
Slide 65: Fleet Age will Drive Replacement Demand and Services Growth
Fleet Age will Drive Replacement Demand and Services Growth Average mining Global Mining Machine Age machine age 25,000 11.7 years Number of Machines 20,000 15,000 10,000 5,000 0 <5 Yrs 5-10 Yrs 11-15 Yrs 16-20 Yrs 21-60+ Yrs Caterpillar Competitor 1 Competitors 2-30 Source: Parker Bay Caterpillar:
Slide 66: Mining Capital Expenditures Expected to Increase
Mining Capital Expenditures Expected to Increase Mining Capital Expenditures Trend 1 200 150 (Index 2009 = 100) 100 50 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+ 1 Data based on the 60 mining companies with the largest market cap in 2022 Source: S&P Capital IQ Pro
Slide 67: Resource Industries Services Growth
Resource Industries Services Growth Caterpillar’s Aftermarket Service Offerings and Rebuild Advantage Drive Customer Value 24/7 OPERATIONS, RUGGED AND REMOTE UP TO 2.5X 12.6 78,000+ 70%+ >60% MINING MACHINE AVERAGE CONNECTED ASSETS REMAN MACHINES SOLD PRICE CAT® MINING AND GROWING UTILIZATION WITH A
Slide 68: Caterpillar Large Mining Truck Autonomy
67 Caterpillar Large Mining Truck Autonomy 24/7 operations >25 11 20 Caterpillar on three continents: 0 ~30% has invested North and South in autonomous America, development YEARS Australia CUSTOMERS SITES INJURIES PRODUCTIVITY IMPROVEMENT 4B+ TONNES MOVED SAFELY Commodity applications: Our trucks ha
Slide 69: Caterpillar Autonomous Truck Adoption
Caterpillar Autonomous Truck Adoption Active and In-Progress Large Mining Truck Autonomy 1000 Cumulative Autonomous Trucks 900 800 • Field population growing rapidly 700 • Shifting from retrofit to factory 600 autonomy on new machines 500 • Since 2019, Caterpillar has 400 won 7 out of 8 greenfield 3
Slide 70: Economic Viability at Smaller Mines Increases Autonomous Opportunity
Economic Viability at Smaller Mines Increases Autonomous Opportunity Number of Mine Sites Based on Fleet Size Large Mining Truck Fleet Size ≤ 20 2022+ • Early Caterpillar autonomy deployed at largest mine sites 21 - 40 2020+ • Economic viability now at <20 trucks • Significant increase in industry 4
Slide 71: Caterpillar Autonomy is a Differentiator in Mining
Caterpillar Autonomy is a Differentiator in Mining • Caterpillar led, site services growth focus • Autonomy business model: hardware, software and annual license fee • Autonomy = machines + service contracts + technology • Caterpillar advantages: productivity/speed, scalability, deep machine integra
Slide 72: Beyond Trucks: Technology and Services Span the Caterpillar Portfolio
Beyond Trucks: Technology and Services Span the Caterpillar Portfolio FLEET TERRAIN DETECT HEALTH COMMAND EDGE Caterpillar: Confidential Green
Slide 73: Caterpillar Uniquely Positioned to Support Mining Sustainability
Caterpillar Uniquely Positioned to Support Mining Sustainability • Caterpillar power generation capabilities • Collaboration with customers at mine sites • Autonomy to include integrated power optimization Caterpillar: Confidential Green
Slide 74: Mining Customer Electrification Agreements
Mining Customer Electrification Agreements June 22, 2021 August 31, 2021 September 14, 2021 2015-019 working in Germany Nouveau Monde Graphite Zero-emission mine site Close collaboration on battery Fleet of zero-emissions with Cat® machines powered mining trucks autonomous haul trucks November 10, 2
Slide 75: Battery Electric Mining Truck Accelerated Development Strategy
Battery Electric Mining Truck Accelerated Development Strategy Close Collaboration with Customers 2022 2024 2025 2027+ • Machine technical • Product and technology • Fleet optimization • Full production feasibility validation • Validate production capabilities • Validate technical • Refine requireme
Slide 76: Caterpillar Offerings Enable Integrated Solutions to Support Miners
Caterpillar Offerings Enable Integrated Solutions to Support Miners E&T and RI: Power Generation and Autonomy Play a Critical Role in Site Energy Management Recip or Gas Turbine Utility Energy Generation Renewable Energy Storage Solutions Generation Cable Reel Static Opportunity Crusher Charging Rai
Slide 77: Whatever the Challenge, There's Caterpillar
WHATEVER THE CHALLENGE Services | Integrated Technology | Carbon Reduction Autonomy | Site Solutions | Safety | Productivity THERE’S CATERPILLAR Caterpillar: Confidential Green
Slide 78: Digital
Digital Bob De Lange, Group President Services, Distribution & Digital (SD&D)
Slide 79: Value Creation Through Connected Assets
Value Creation Through Connected Assets Digital Platform + Analytics + Domain Expertise = Powerful Services Total Connected Assets 1.2M CONDITION MONITORING 1.1M 1.0M 850K Telematics 600K & PRIORITIZED SERVICE EVENTS (PSEs) Machine Learning eCOMMERCE 2017 2018 2019 2020 2021 MORE DATA BETTER INSIGHT
Slide 80: Condition Monitoring
Condition Monitoring Analytics-Based, Proactive Asset Health Recommendations 980 Wheel Loader $15K enrolled in a CVA IN A PLANNED OVERHAUL » DECREASING DOWNTIME » AVOIDING UNPLANNED FAILURE » SAVING CUSTOMER 2X THE COST Integrated sensors detecting clutch slip CUSTOMER VALUE ENTERPRISE VALUE Reduced
Slide 81: Prioritized Service Events (PSEs)
Prioritized Service Events (PSEs) Using Data Science to Generate Qualified Services Leads 20+ Data Sources Won PSE Leads 1.2M Connected Assets ● Invoices ● Customer & Dealer Data Dealer Parts Sales to Users (STUs) Go-To-Market Plans ● Service & Inspection History ● Lost Opportunity ADVANCED ANALYTIC
Slide 82: eCommerce
eCommerce Seamlessly Integrated Digital Buying Experience for Aftermarket Parts EXPECTED Bob’s Tractor Company + 50% GROWTH NEXT 3 YEARS1 Ogi’s 1st Machine + 24% P A R T S . C A T. C O M 1 I N C R E M E N TA L I T Y B Y O N B O A R D I N G C U S T O M E R S O N C AT e C O M M E R C E CUSTOMER VALUE
Slide 83: Digital Transforming Distribution
Digital Transforming Distribution Amplifying the Competitive Advantage of our Global Dealer Network C O N N E C T I V I T Y x160DEALERS with ~2,700 locations around the world Caterpillar: Confidential Green
Slide 84: Sustainability is a Driver for Long-Term Profitable Growth
Sustainability is a Driver for Long-Term Profitable Growth Julie Lagacy, Chief Sustainability & Strategy Officer
Slide 85: Caterpillar: Confidential Green
Caterpillar: Confidential Green
Slide 86: Financial Framework
Financial Framework Andrew Bonfield, Chief Financial Officer
Slide 87: We Achieved Our Financial Targets
We Achieved Our Financial Targets 2019 Targets1 Our Performance 2019-2021 Adjusted Operating 2019 2020 2021 300-600 bps higher Profit Margin2 15.8% 11.8% 13.7% ME&T Free 2019 2020 2021 $4-8B Cash Flow3 $5.3B $3.1B $6.0B Returned Total Dividends: 101% $6.7B Return substantially of ME&T all ME&T free
Slide 88: Achieved Adjusted Operating Profit Margin Targets
Achieved Adjusted Operating Profit Margin1 Targets Adjusted Operating Profit Margin1 15.8% 13.7% 11.8% Key Highlights • Achieved 2019 Investor Day adjusted operating profit margin1 targets in each year • Managed through a challenging environment 1 Achieved Adj. Operating Profit Margin Targets 2019 2
Slide 89: Strong ME&T Free Cash Flow Generation
Strong ME&T Free Cash Flow1 Generation ME&T Free Cash Flow1 $6.0B $5.3B Key Highlights • Generated over $14 billion in ME&T free cash flow1 in 2019-2021 $3.1B • Returned ~$15 billion to shareholders in 2019-2021 Target $4-8B 2019 2020 2021 1 ME&T free cash flow represents ME&T operating cash flow le
Slide 90: Commitment to Strong Financial Targets
Commitment to Strong Financial Targets Targets Adjusted Operating 300 to 600 basis point improvement 1 • 10-13% at $39B sales & revenues to 18-21% at $66B sales & revenues Profit Margin vs. historical performance2 ME&T Free $4-8B 3 3 • Strong ME&T free cash flow over time Cash Flow • Expect dividend
Slide 91: Adjusted Operating Profit Margin Targets Are Unchanged
Adjusted Operating Profit Margin Targets Are Unchanged 1 25% Target 300–600 bps 21.0% improvement Adjusted Operating Profit Margin1 20% 16.3% 17.7% 19.2% 18.0% ] vs. 2010–2016 14.8% 16.2% 15% 13.0% Key Highlights 14.7% 2012 13.3% 2011 11.8% 10% 10.0% 2014 2013 1 2010 2015 • Deliver strong adjusted o
Slide 92: Adjusted Operating Profit Margin Targets Are Unchanged
Adjusted Operating Profit Margin Targets Are Unchanged 1 25% Target 300–600 bps 21.0% improvement Adjusted Operating Profit Margin1 20% 18.0% ] vs. 2010–2016 2019 2018 15% 13.0% Key Highlights 2021 2012 2017 2020 2011 10% 10.0% 2014 2013 1 2010 2015 • Deliver strong adjusted operating profit margins
Slide 93: Commitment to Strong Financial Targets
Commitment to Strong Financial Targets Targets Adjusted Operating 300 to 600 basis point improvement 1 • 10-13% at $39B sales & revenues to 18-21% at $66B sales & revenues Profit Margin vs. historical performance2 ME&T Free $4-8B 3 3 • Strong ME&T free cash flow over time Cash Flow • Expect dividend
Slide 94: Capital Allocation Framework
Capital Allocation Framework • Increased investment in services, technology and sustainability Organic Growth • Ongoing investment in new products • Targeted acquisitions Inorganic Growth • Focused on services, technology and sustainability Shareholder Return • Return substantially all ME&T free cas
Slide 95: The Operating & Execution Model
The Operating & Execution Model Caterpillar: Confidential Green
Slide 96: Caterpillar's Focus on Profitable Growth
Caterpillar’s Focus on Profitable Growth ~2x Higher 1 OPACC since 2017 and strong TSR performance Total Shareholder Return $300 $200 $100 $0 2016 2017 2018 2019 2020 2021 Caterpillar Inc. S&P 500 Machinery Index S&P 500 Industrials Index S&P 500 Index This graph shows the cumulative shareholder retu
Slide 97: Appendix A of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix A of Reconciliation to U.S. GAAP Operating Margin % to Adjusted Operating Margin % 70000 0.3 60000 $66B 0.25 $60B 50000 $56B $55B $55B $54B $51B 0.2 40000 $47B $45B $43B $42B 0.15 14% $39B 15% 15% 30000 13% 13% 11% 11% 10% 10% 10% 0.1 20000 8% 10000 0.05 3% 0 0 2010 2011
Slide 98: Appendix B of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix B of Reconciliation to U.S. GAAP ME&T Cash Flow from Operations to ME&T Free Cash Flow 70000 20 $66B 18 60000 $60B 16 50000 $56B $55B $55B $54B 14 $51B 40000 $47B $45B 12 $43B $42B $39B 10 30000 $8B $9B 8 $7B $7B 20000 $6B $6B 6 $5B $5B $5B $4B $4B $4B 4 10000 2 0 0 2010
Slide 99: Appendix C of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix C of Reconciliation to U.S. GAAP Profit Per Share to Adjusted Profit Per Share 70000 19.85 60000 $66B $60B $56B $55B 14.85 50000 $55B $54B $51B $47B $45B 40000 $10.74 $42B $11.83 $43B $39B $10.26 9.85 $9.95 30000 $8.06 20000 $4.48 $5.46 4.85 $4.15 $3.90 $4.18 10000 ($0.11
Slide 100: Appendix D of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix D of Reconciliation to U.S. GAAP Operating Profit to Operating Profit after Capital Charges (OPACC): 2017-2021 At December 31 For the Years Ended December 31, (Dollars in millions) 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Consolidated Assets $ 76,962 $ 78,509 $ 7
Slide 101: Appendix D of Reconciliation to U.S. GAAP
Caterpillar Inc. – Appendix D of Reconciliation to U.S. GAAP Operating Profit to Operating Profit after Capital Charges (OPACC): 2012-2016 At December 31 For the Years Ended December 31, (Dollars in millions) 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Consolidated Assets $ 88,970 $ 84,896 $ 8