Caterpillar, Inc. · NYSE:CAT
Caterpillar — Investor Day (September 2017)
91 slides from Caterpillar's investor day presentation, Sep 12, 2017
Slide 1: Our Solutions Help Our Customers Build a Better World
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. 2017 INVESTOR DAY CATERPILLAR
Slide 2: Forward-Looking Statements
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,” “w
Slide 3: 2017 Investor Day Agenda
2017 Investor Day Agenda: Tuesday, September 12th Management Presentations: Materials from today’s presentations can be found at Caterpillar.com, Investors, Events & Presentations Agenda and Safety Review Amy Campbell, Head of Investor Relations Strategic Plan Review Jim Umpleby, Chief Executive Off
Slide 4: Strategic Plan Review
Strategic Plan Review Jim Umpleby Chief Executive Officer
Slide 5: Our Solutions Help Our Customers Build a Better World
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. CATERPILLAR 2017 INVESTOR DAY —
Slide 6: Our Solutions Help Our Customers Build a Better World
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. CATERPILLAR 2017 INVESTOR DAY ZZ
Slide 7: Construction Industries Strategic Review
Construction Industries Strategic Review Bob De Lange, Group President Construction Industries
Slide 8: Our Industries
Our Industries GENERAL CONSTRUCTION QUARRY & AGGREGATES ROAD CONSTRUCTION AG & LANDSCAPING HEAVY CONSTRUCTION INDUSTRIAL & WASTE FORESTRY DIVERSE MARKETS, CUSTOMERS AND SOLUTIONS 8 CONSTRUCTION INDUSTRIES
Slide 9: Product Portfolio
Product Portfolio EARTHMOVING DIVISION Medium Tractor Medium Wheel Motor Paving Products Loaders Graders Products SEM Products EXCAVATION DIVISION Track Forestry Machines Wheel Work Tools Excavators Excavators BUILDING CONSTRUCTION PRODUCTS Backhoe Small Wheel Compact Wheel Small Track- Mini Hydraul
Slide 10: A Global Snapshot
A Global Snapshot $15.7 Billion 2016 Sales 100k + 300 + MODELS A legacy of New Customers 90+ years since 2014 1.4 Million in construction Active Global Producing a Construction machine every Over 46,000 Machines 5 minutes Machines Financed Annually 10 CONSTRUCTION INDUSTRIES
Slide 11: Industries with Long Term Growth Potential
We are in Industries with Long Term Growth Potential • Increasing need for global infrastructure - Roads - Housing INCREASED WORLD POPULATION - Airports TODAY: 7.5B 2040: 9B - Energy • Industry up ~15% in 2017 • Market volatility to continue URBANIZATION TODAY: 55% 2040: 65% 11 CONSTRUCTION INDUSTRI
Slide 12: Business Overview
Business Overview Key Business Metrics | 2016 Key Business Breakdown | 2013-2016 Average** Industry Mix Road Construction 7% 5% 7% 26% Heavy Construction General Construction $15.7B * 10.5% 13% Quarry and Aggregates Industrial / Waste SEGMENT 22% SALES MARGIN 21% Ag & Landscaping Forestry Sales by R
Slide 13: Financial Results
Financial Results Sales* Segment Profit and Margin % (in USD Billions) (in USD Billions) $19.8 $20.7 13.5% $17.9 10.3% 10.4% 10.5% $15.7 $16.3 6.8% $2.1 $2.2 $1.9 $1.6 $1.3 2013 2014 2015 2016 LTM 2013 2014 2015 2016 LTM * Sales information includes inter-segment sales LTM – Last 12 Months (July 201
Slide 14: Early Adopter of the O&E Model
Early Adopter of the O&E Model Sales, Segment Margin % and Segment OPACC $s • OPACC Biased Resource Allocation Index of 100% = 2013 10X • Margin Improvement • Structural Cost Reduction 8X – Competitive & Flexible Cost 6X – Lean 4X • Capital Efficiency and Improved Asset Turns 2X – Footprint Consolid
Slide 15: Early Adopter of the O&E Model
Early Adopter of the O&E Model Sales, Segment Margin % and Segment OPACC $s • OPACC Biased Resource Allocation Index of 100% = 2013 10X • Margin Improvement 10X 10X • Structural Cost Reduction 8X – Competitive & Flexible Cost 6X 5X – Lean 4X • Capital Efficiency and Improved Asset Turns 2X2X% 2X 1.5
Slide 16: Our Strategy for Profitable Growth
Our Strategy for Profitable Growth Operational • Quality • End-to-End Lean Excellence • Competitive & Flexible Cost Structure Expanded • Best Products Offerings • Lifecycle Value / Utility • Aftermarket Services • Technology 16 CONSTRUCTION INDUSTRIES
Slide 17: Driving Operational Excellence
Driving Operational Excellence OPERATIONAL EXCELLENCE QUALITY LEAN COMPETITIVE & FLEXIBLE COST STRUCTURE 40% $3.3B 7.9M IMPROVEMENT ASSET REDUCTION SQ. FT. REDUCTION Announced Footprint Consolidation: Sagami | Gosselies | Aurora | Other 17 CONSTRUCTION INDUSTRIES
Slide 18: Meeting Changing Customer Needs
Meeting Changing Customer Needs EXPANDED OFFERINGS Cost/ A P P L I C AT I O N P R O F I L E S Unit Work LIFECYCLE PERFORMANCE MEDIUM TO HEAVY APPLICATIONS LIFECYCLE VALUE LIGHT TO MEDIUM APPLICATIONS UTILITY Cost/ Hour APPLICATIONS LOW MACHINE UTILIZATION / PERFORMANCE REQUIREMENT HIGH 18 CONSTRUCTI
Slide 19: Meeting Changing Customer Needs
Meeting Changing Customer Needs EXPANDED OFFERINGS Cost/ Unit Work MEDIUM TO HEAVY CAT® XE APPLICATIONS MODELS 972M XE CAT® STANDARD MODELS 950M LIGHT TO MEDIUM APPLICATIONS CAT® GC MODELS 950 GC SEM™ UTILITY MODELS Cost/ APPLICATIONS 655D Hour LOW MACHINE UTILIZATION / PERFORMANCE REQUIREMENT HIGH
Slide 20: Helping Customers Succeed through Technology
Helping Customers Succeed through Technology SERVICES CAT ® CAT ® CAT ® COMPACT PAYLOAD DETECT Meet compaction Help reduce load Expanded view of the targets faster, more times, optimize working environment uniformly and in loading efficiency around equipment fewer passes and increase jobsite keeps p
Slide 21: Delivering Operating Performance Improvement
Delivering Operating Performance Improvement Long-Term Profitable Growth • Quality OPERATIONAL • Lean EXCELLENCE • Competitive & Flexible Cost Structure ~$21B +5-7% pts EXPANDED • Best Products OFFERINGS • Life Cycle Value / Utility ~10% Sales* Segment Margin Segment Margin • Aftermarket SERVICES •
Slide 22: We Are…
We Are… OPTIMISTIC about the industries we serve… CONFIDENT in our strategy and our global team COMMITTED to driving growth through the O&E Model 22 CONSTRUCTION INDUSTRIES
Slide 23: Resource Industries Strategic Review
Resource Industries Strategic Review Denise Johnson, Group President Resource Industries
Slide 24: Resource Industries
Resource Industries Three Machine Businesses Serving Our Customers SURFACE MINING MATERIAL HANDLING UNDERGROUND CUSTOMERS | PROFITABILITY | TECHNOLOGY | PEOPLE 24 RESOURCE INDUSTRIES
Slide 25: A Global Snapshot
A Global Snapshot LARGEST $0.3 BILLION AUTONOMOUS FLEET 2017 In one of the largest mines in the world June YTD Segment Profit More than > 80,000 500 MILLION TONS 86 MACHINES IN POPULATION Machine HAVE SAFELY Models been moved with autonomous trucks REMOTE, RUGGED, 24/7 26 LOCATIONS from Australia wi
Slide 26: Business Overview
Business Overview Key Business Metrics | 2016 Key Key Business Business Breakdown Breakdown || 2012-2016 2013-2016 Average*** Average** Industry Mix 4%5% Mining 8% Heavy Construction Quarry and Aggregates $6.0B * -17%** 13% General Construction Other SEGMENT 70% SALES MARGIN Sales by Region North Am
Slide 27: Mining Long Term Growth Prospects
Mining Long Term Growth Prospects INCREASED WORLD Iron Ore POPULATION Coal Primarily consumed Emerging markets lead in steel making. China iron demand for infrastructure and ore grades expected to electric grid expansion remain poor, driving demand for seaborne traded iron ore URBANIZATION Copper Go
Slide 28: Mining Industry is Improving
Mining Industry is Improving Commodity Machine Organic Growth Fleet Repairs Price Increase Replacements COMMODITY PRICE MINER CAPEX PARKED TRUCK % TRUCK UTILIZATION 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017F 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Source: Standa
Slide 29: Financial Results
Financial Results Sales* Segment Profit and Margin % (in USD Billions) 21.0% (in USD Billions) $4.3 13.5% $20.4 5.9% $1.7 0.0% $12.4 $0.6 -8.1% $9.6 $0.0 -17.4% $8.1 $6.6 $6.0 $(0.5) $(1.0) 2012 2013 2014 2015 2016 LTM 2012 2013 2014 2015 2016 ** LTM ** LTM – Last 12 Months (July 2016 – June 2017) *
Slide 30: Our Strategy for Profitable Growth
Our Strategy for Profitable Growth • Lean Operational • Competitive & Flexible Cost Structure Excellence • Reshape Manufacturing Footprint • Targeted Product Initiatives Expanded • Machine Electrification Offerings • Market Specific Offerings • Autonomy • Retrofits and Upgrades Services • Site Solut
Slide 31: Lowered Breakeven Point through Restructuring and O&E Model
Lowered Breakeven point through Restructuring and O&E Model Resource Industries Breakeven Point * • Lowered breakeven point every year since 2012… and continuing • Completed closure / restructuring of 25 mining facilities since 2012 • Exited three product lines 2012 2013 2014 2015 2016 *Operating pr
Slide 32: Lean Execution Across the Enterprise
Lean Execution Across the Enterprise OPERATIONAL EXCELLENCE • Customer back approach Engineered • Reduces waste Value Chain • Synchronizes value chain • Reaches beyond manufacturing to Cat Production Systems (CPS) & 6 Sigma high-impact processes ENTERPRISE PRIORITY 32 RESOURCE INDUSTRIES
Slide 33: Our Focus on Best Products – Large Mining Trucks
Our Focus on Best Products – Large Mining Trucks EXPANDED OFFERINGS • Mechanical and electric drive offerings optimized based on size class • Application and infrastructure determine customer pull • Deep vertical integration for both Cat drive systems • Broadest, differentiated offerings 33 RESOURCE
Slide 34: Our Focus on Best Products – Machine Electrification
Our Focus on Best Products – Machine Electrification EXPANDED OFFERINGS 794 / 795 AC 988 XE UG LHD ELECTRIC DRIVE ELECTRIC DRIVE OPTION ENERGY STORAGE 34 RESOURCE INDUSTRIES
Slide 35: Ensuring our Customers' Success – Autonomy
Ensuring our Customers’ Success – Autonomy SERVICES • Largest autonomous fleet in the world with 500 million tons safely hauled • 100+ active mine site opportunities UG LW LMT Drill LTTT UG LHD • Developing scalable solutions to expand autonomy to large construction / smaller mine sites 35 RESOURCE
Slide 36: Ensuring our Customers' Success – Site Solutions
Ensuring our Customers’ Success – Site Solutions SERVICES Our solutions help customers achieve lower cost per ton production • Expanding value chain offerings to provide comprehensive solutions • Competitive advantage leveraging domain expertise and mining equipment design knowledge • Demonstrated >
Slide 37: Ensuring our Customers' Success – Aftermarket
Ensuring our Customers’ Success – Aftermarket SERVICES • Large mining installed base, long life • Growing aftermarket through: - Increased offerings - Customer support agreements - Site management and solutions - “Plan for every serial number” • Critically important to O&E improvement 37 RESOURCE IN
Slide 38: Delivering Operating Performance Improvement
Delivering Operating Performance Improvement Long-Term Profitable Growth • Lean • Competitive & Flexible Cost Structure OPERATIONAL EXCELLENCE • Reshape Manufacturing Footprint • Targeted Product Initiatives ~$10B - 12B • Machine Electrification EXPANDED OFFERINGS • Market specific offerings +2-6% p
Slide 39: We Are…
We Are… Partnering with CUSTOMERS at the site Accelerating SERVICES Focusing on achieving segment leading PERFORMANCE 39 RESOURCE INDUSTRIES
Slide 40: Energy & Transportation Strategic Review
Energy & Transportation Strategic Review Tom Pellette, Group President Energy & Transportation
Slide 41: Energy & Transportation
Energy & Transportation TRANSPORTATION POWER GENERATION OIL & GAS INDUSTRIAL CAT MACHINES DIVERSE MARKETS, CUSTOMERS AND SOLUTIONS 41 E N E R GY & T R A N SPORTATION
Slide 42: Diverse & Global Portfolio
Diverse & Global Portfolio 42 E N E R GY & T R A N SPORTATION
Slide 43: A World Leader in Reciprocating Solutions
A World Leader in Reciprocating Solutions MaK C280/3600 M32-46 MWM C0.5-1.7 TCG 2032 C2.2 C2.8/3.6 MaK M20/M25 C4.4 C175 C7.1 3500 C9.3 MWM C13 TCG 2020 4000 Series MWM C27/C32 C15/C18 TCG 2016 43 E N E R GY & T R A N SPORTATION
Slide 44: A World Leader in Turbines and Compressors
A World Leader in Turbines and Compressors Power Oil & Gas Generation Titan 250 C16V C33E C40M Titan 130 C41 C50 C51 C61 Mars 90 & 100 Taurus 70 Taurus 60 Centaur 40 & 50 C85 Saturn 20 C40P C45 C65 C75 44 E N E R GY & T R A N SPORTATION
Slide 45: A World Leader in Rail Rolling Stock and Infrastructure
A World Leader in Rail Rolling Stock and Infrastructure Transportation Freight Locomotives Transit Locomotives Infrastructure Products & Services Rolling Stock Products Rolling Stock Services 45 E N E R GY & T R A N SPORTATION
Slide 46: A Global Snapshot
A Global Snapshot 6M + Tons More than Recycled since 2010 2 billion 750,000 Caterpillar generator sets gas turbine 30,000 Locomotives operating hours installed worldwide Worldwide Producing an engine every 2 minutes A legacy of Over 20 million 90+ years engines built of engines in the field 46 E N E
Slide 47: Business Overview
Business Overview Key Business Metrics | 2016 Key Business Breakdown | 2013-2016 Average** $17B* 13% SEGMENT SALES MARGIN * Sales information includes inter-segment sales ** External Sales 47 E N E R GY & T R A N SPORTATION
Slide 48: Financial Results
Financial Results Sales* Segment Profit and Margin % (in USD Billions) (in USD Billions) $25.7 16.7% $23.7 15.1% 15.8% 13.1% 14.0% $21.4 $4.3 $17.0 $17.5 $3.6 $3.4 $2.2 $2.5 2013 2014 2015 2016 LTM 2013 2014 2015 2016 LTM * Sales information includes inter-segment sales LTM – Last 12 Months (July 20
Slide 49: Global Energy Demand Favors Our Business
Global Energy Demand Favors Our Business 20000 18000 7% Nuclear 16000 19% 14000 Renewables 20% Energy Demand (Mtoe) 12000 24% 10000 Natural Gas ABSOLUTE 8000 Increase in Fossil Fuel 6000 81% 74% 27% Oil Energy 4000 Fossil Fossil Usage 2000 Fuels Fuels 23% Coal 0 2015 2020 2025 2030 2035 2040 Source:
Slide 50: Turning Upward – Oil & Gas
Turning Upward – Oil & Gas Old Cost Paradigm New Cost $500 Paradigm $400 OVERALL OFFSHORE Nominal $ Billions E&P capex SPENDING $300 is expected is expected to rise To continue its 20% $200 DECLINE in 2017 $100 from 2016 – 2018 0 2010 2012 2013 2014 2015 2016 2017 2018 2011 Source: IHS Markit May 20
Slide 51: Our Strategy for Profitable Growth
Our Strategy for Profitable Growth Operational • Quality • Lean Excellence • Competitive & Flexible Cost Structure • Expand Product Range Expanded • Increase Power Density Offerings • Solutions Beyond Core • Expand Service Solutions Services • Provide Digital Solutions 51 E N E R GY & T R A N SPORTA
Slide 52: Well Positioned for Profitable Growth
Well positioned for Profitable Growth OPERATIONAL EXCELLENCE FOOTPRINT ASSETS COST 4.5M $1.3B Significant Manufacturing Square Footage Reduction in Assets since 2013 Material Cost Savings and Reduction since 2013 Period Cost Reductions since 2013 52 E N E R GY & T R A N SPORTATION
Slide 53: Significant Investment in New Products
Significant Investment in New Products EXPANDED OFFERINGS CONSTRUCTION ELECTRIC POWER AGRICULTURE MATERIAL HANDLING NEW C2.8 AND 3.6 NEW C9.3B 53 E N E R GY & T R A N SPORTATION
Slide 54: Significant Investment in Power Density
Significant Investment in Power Density EXPANDED OFFERINGS New 3516E Upgraded C32 LOWER INSTALLED COST LIGHTER WEIGHT | EASIER HANDLING | SMALLER FOOTPRINT 54 E N E R GY & T R A N SPORTATION
Slide 55: Beyond the Core Engine Solutions
Beyond the Core Engine Solutions EXPANDED OFFERINGS ENGINE PUMP TRANSMISSION Pumps and Transmissions FLOW IRON Unions, Valves, Joints, and Manifold Trailers GENERATOR Oil & Gas High Pressure Flow Iron SET Well Servicing Solution Oil & Gas High Pressure Flow Iron 55 E N E R GY & T R A N SPORTATION
Slide 56: Delivering Integrated Solutions
Delivering Integrated Solutions EXPANDED OFFERINGS Thrusters, Controllable Pitch Propellers, Controls and PODS CONTROLS BATTERIES ENERGY MANAGEMENT SYSTEM GENSET ENGINE MOTOR-GENERATOR PROPULSION Marine Vessel Solution Marine Propulsion Systems 56 E N E R GY & T R A N SPORTATION
Slide 57: Significant Investment in New Product
Significant Investment in New Product EXPANDED OFFERINGS TRANSIT MARKET ENTRY FAST | EFFICIENT | TIER 4 57 E N E R GY & T R A N SPORTATION
Slide 58: Leading in the World of Digital
Leading in the World of Digital SERVICES 10101010101010101010101010101010 10101010101010101010101010101010 10101010101010101010101010101010 10101010101010101010101010101010 10101010101010101010101010101010 DIGITAL 10101010101010101010101010101010 Low Cost 10101010101010101010101010101010 10101010101
Slide 59: Growing Solar Turbines' Service Success
Growing Solar Turbines’ Service Success SERVICES Total Life Cycle Support Technical Support Service Parts Technical Training Overhaul Compressor Restage Package Upgrades Controls Retrofits Package Refurbishment Insight System Equipment Health Management Fleet Assessment Services Commissioning 59 E N
Slide 60: Expanding Our Service Presence in Rail
Expanding Our Service Presence in Rail SERVICES ROLLING STOCK SERVICES Service Agreements Locomotive Rebuilds PR Uptime Aftermarket Parts Locomotive Repowers Freight Car Repair New Parts Running Maintenance Freight Car Leasing INFRASTRUCTURE SERVICES Rail Welding Maintenance and Leasing Mobile Rail
Slide 61: Sustainability through Remanufacturing
Sustainability through Remanufacturing SERVICES COMPONENTS MATURATION TEST REPLACE RE-ENTERS BEFORE SUPPLY FAILURE CHAIN Global Market Access REGULAR Salvage Processes ENGINES MAINTENANCE Product Reman ASSEMBLE Lifecycle Process Competitive Repair CORE Options RETURNS TO CAT TURBINES SALVAGE P
Slide 62: Delivering Operating Performance Improvement
Delivering Operating Performance Improvement Long-Term Profitable Growth • Quality OPERATIONAL • Lean EXCELLENCE • Competitive & Flexible Cost Structure ~$23B +1-3% pts • Expand Product Range ~15% EXPANDED • Increase Power Density OFFERINGS • Solutions Beyond Core Sales* Segment Margin Segment Margi
Slide 63: We Are…
We Are… Serving industries that are both DIVERSE AND ATTRACTIVE A MARKET LEADER INVESTING to provide competitive solutions 63 E N E R GY & T R A N SPORTATION
Slide 64: Customer & Dealer Support Strategic Review
Customer & Dealer Support Strategic Review Rob Charter, Group President Customer & Dealer Support
Slide 65: Servicing Our Customers
Servicing Our Customers What our Customers are telling us… Operational “Leading parts availability at a proper value proposition” Excellence “Be easy to do business by offering E-Commerce solutions” “Improve uptime by anticipating needs and Expanded Offerings leveraging digital insights” “Provide co
Slide 66: Improving Our Customer Service Capabilities
Improving Our Customer Service Capabilities… a Continuous Journey 2010 2014 2017 DEVELOPING DRIVING CONSISTENT TODAY’S INDUSTRY EXPERTISE BEST PRACTICES Key Service Requirements Foundational Capabilities DISCUSSION FOCUS ON: Evolution of Our Global Service Network 66 CUSTOMER & DEALER SUPPORT
Slide 67: Provide Consistent Local Services Across the Globe
“Provide Consistent Local Services Across the Globe” SERVICES 592 Cat Dealers Employees 54 157,335 North 46 America Dealers 52,182 172 642 EAME* 41,168 Branches 2,163 Asia Pacific 29,898 32 South America Cat Dealer Employees 40 34,087 Cat Dealers 280 Branches 649 *EAME: Europe, Africa, Middle East,
Slide 68: Offer a Full Suite of Products and Services – Full Product Line
“Offer a Full Suite of Products and Services – Full Product Line” SERVICES RESOURCE ENERGY & CONSTRUCTION INDUSTRIES TRANSPORTATION INDUSTRIES Cat Financial 68 CUSTOMER & DEALER SUPPORT
Slide 69: Offer a Full Suite of Products and Services – Financing and Rental
“Offer a Full Suite of Products and Services – Financing and Rental” SERVICES 69 CUSTOMER & DEALER SUPPORT
Slide 70: Offer a Full Suite of Products and Services – In-Field Support
“Offer a Full Suite of Products and Services – In-Field Support” SERVICES RESOURCE ENERGY & CONSTRUCTION INDUSTRIES TRANSPORTATION INDUSTRIES 70 CUSTOMER & DEALER SUPPORT
Slide 71: Offer a Full Suite of Products and Services – Rebuild Capabilities
“Offer a Full Suite of Products and Services – Rebuild Capabilities” SERVICES 71 CUSTOMER & DEALER SUPPORT
Slide 72: Leading Parts Availability at a Proper Value Proposition
“Leading Parts Availability at a Proper Value Proposition” OPERATIONAL EXCELLENCE Moscow Lean and Machine Data Engineered Analytics to Better Denver Morton Value Chain Plan Availability Spokane St. Paul Clayton Grimbergen California York Sagami Waco Atlanta Miami Shanghai San Luis Potosi Dubai Singa
Slide 73: Be Easy to do Business by Offering e-Commerce Solutions
“Be Easy to do Business by Offering e-Commerce Solutions” OPERATIONAL EXCELLENCE Customer Relationship Payment Terms Delivery Options Experience Regular payment Personalized Established Frequently interact process with dealer Multiple locations, shopping Customer with the dealer on a customer tailor
Slide 74: Unique, Tailored Services that Address Specific Customer Needs
“Unique, Tailored Services that Address Specific Customer Needs” SERVICES Samples of tailored solutions delivered by Caterpillar and Dealers Condition Monitoring Custom Track Service • e.g. Repair recommendations • e.g. Maximize undercarriage life Repair Options Customer Support Agreement • e.g. Par
Slide 75: Improve Uptime by Anticipating Needs and Leveraging Digital Insights
“Improve Uptime by Anticipating Needs and Leveraging Digital Insights” EXPANDED OFFERINGS Fleet Monitoring Center 2M+ FIELD POPULATION* ~550K CONNECTED ASSETS* *Cat Branded Equipment 75 CUSTOMER & DEALER SUPPORT
Slide 76: Profitable Growth for Our Customers… How it Fits Together
Profitable Growth for Our Customers… How it Fits Together KNOWLEDGE & EXPERTISE LEVERAGING SCALE WHAT THE TAILORED CUSTOMER CONNECTIVITY DATA INSIGHTS SOLUTIONS EXPERIENCES Health Repair History Domain Repair Before Lower Owning CONSTRUCTION Knowledge Failure and Operating INDUSTRIES Costs Hours Pro
Slide 77: We Are…
We Are… Committed to the DEALER DISTRIBUTION network Leveraging GLOBAL SCALE to more efficiently serve our customers needs Improving UPTIME by connecting assets and using digital technologies Offering TAILORED SOLUTIONS focused on specific customer requirements Becoming EASIER to do business with by
Slide 78: Financial Review
Financial Review Brad Halverson, Chief Financial Officer Corporate Services
Slide 79: Recent Past Has Been A Significant Challenge
Recent Past Has Been A Significant Challenge Sales & Revenues (in billions) $ 65.9 – Most Prolonged Downturn in Our History $ 55.7 $ 55.2 – Four Consecutive Years of Downturn $ 47.0 – Our Industries Were Impacted by: $ 43.0 * $ 38.5 • Falling Commodity Prices / Demand • Inconsistent Investment in In
Slide 80: Despite our Past Challenges, We Delivered
Despite our Past Challenges, We Delivered Reducing Reduced Managed our Manufacturing Period Cost Decremental Footprint… Structure Margins over 20 million sq. ft. Maintained Delivered Solid Consistently Strong Balance Cash Flow… Invested R&D… Sheet… Consolidated Cash 4%-5% of Sales ME&T Debt to Cap B
Slide 81: Great Markets… Positioned for Profitable Growth
Great Markets… Positioned for Profitable Growth Increasing Sustainability Growing Urbanization Energy Demand Population 81 C O R P O R ATE S ERVIC ES
Slide 82: Great Strengths… Positioned for Profitable Growth
Great Strengths… Positioned for Profitable Growth Largest Superior Unrivaled Manufacturing Great Installed Base Products Dealer Network Footprint People 82 C O R P O R ATE S ERVIC ES
Slide 83: The Operating & Execution Model
The Operating & Execution Model – It’s how we will run the company – Clear definition of winning – profitable growth – Business strategies based on granular understanding of end markets and focused reinvestment – Aligned beliefs and behaviors around value creation; disciplined governance 83 C O R P
Slide 84: How does the O&E Model Work?
How does the O&E Model Work? Using FACTS and We DEVELOP We ALLOCATE We have a disciplined DATA, we create a STRATEGIES RESOURCES to GOVERNANCE detailed understanding of to expand and improve strategies that have PROCESS that which markets are most our competitive position the best potential proactiv
Slide 85: Enterprise Goals
Enterprise Goals Services Growth Long-term OPACC Growth Quality Defects Per Unit # of Assets # of Active with Connectivity Customer Support Agreements Safety Free Cash Flow (FCF) 85 C O R P O R ATE S ERVIC ES
Slide 86: Long Term Profitable Growth for Caterpillar Inc.
Long Term Profitable Growth for Caterpillar Inc. Long-Term Profitable Growth ~$55B +2-5% pts ~12% 2 3 1 1 Sales & Revenues ($Billions) Demonstrated Performance Demonstrated Performance Expected Performance 1 Adjusted Op Margin % 1 Excludes restructuring costs, mark-to-market gain/losses related to p
Slide 87: Generates More Cash for a Reinvestment Advantage
Generates More Cash for a “Reinvestment Advantage” We are Investing for the Future in … – Connectivity, e-commerce, & Digital Services for Installed Base – Expanding Product Offerings for Superior Products – Services and Capabilities for Unrivaled Dealer Network – Improving Operating Leverage of Man
Slide 88: Cash Deployment Prioritized Toward Growth
Cash Deployment Prioritized Toward Growth 2012 – 2016 Cash Deployment Cash Priorities 2012-2016 (Average) Priorities going forward Growth Investment ~ 30-45% ME&T Debt-to-Cap ~ 40% ME&T Debt-to-Cap Capex and M&A 30-45% 10-15% Credit Rating “Mid/Low-A” Metrics “Mid-A” Stable Metrics Funding E
Slide 89: Caterpillar is Positioned for Profitable Growth
Caterpillar is Positioned for Profitable Growth WE ARE… CONFIDENT in our strategy… CONTINUING to focus on executing… COMMITTED to deliver profitable growth. 89 C O R P O R ATE S ERVIC ES
Slide 90: Appendix
OUR SOLUTIONS HELP OUR CUSTOMERS BUILD A BETTER WORLD. 2017 INVESTOR DAY Appendix CATERPILLAR
Slide 91: Caterpillar Inc. – Appendix of Reconciliation to US GAAP
Caterpillar Inc. – Appendix of Reconciliation to US GAAP Demonstrated Performance 2017 2013 2014 2015 2016 Outlook1 Operating margin % 17.7% 6.0% 8.1% 1.3% 8.2% Operating margin % restructuring costs 0.4% 0.8% 1.9% 2.6% 2.7% Operating margin % mark-to-market gains or losses -6.2% 4.7% 0.3% 2.6% Oper