How did Caterpillar's 2023 results compare with 2022?

Full-year 2023 sales and revenues rose 13% to $67.1 billion, and GAAP profit per share rose to $20.12 from $12.64. Adjusted EPS, which excludes restructuring costs, the Longwall divestiture loss, pension remeasurement gains and a tax valuation allowance benefit, was $21.21 versus $13.84. Much of the improvement reflected price realization and higher equipment sales to end users.

Why did Q4 profit per share jump so sharply year over year?

Q4 2022 included a $925 million goodwill impairment tied to the Rail division and $209 million of restructuring costs, which depressed that quarter's results. Q4 2023 GAAP EPS of $5.28 benefited from favorable pricing and the absence of that impairment, and was partly offset by higher SG&A and R&D spending, including incentive compensation and strategic investments.

What do the retail statistics in Exhibit 99.2 tell investors?

Retail statistics show end-user demand for machines rose 3% worldwide in Q4 2023, with North America up 11% and Asia/Pacific and Latin America down. Energy & Transportation retail sales rose 20%, led by Power Gen and Oil & Gas. Caterpillar notes this data is unaudited, dealer-reported and approximate, so it should be read as a directional indicator rather than a precise measure of results.

How is Caterpillar returning cash to shareholders and how strong is its liquidity?

In 2023 Caterpillar repurchased $5.0 billion of common stock and paid $2.6 billion in dividends. It ended the year with $7.0 billion of enterprise cash and $12.9 billion of operating cash flow, indicating the company can fund shareholder returns from internal cash generation while maintaining liquidity.

What risks should investors watch after this report?

Key risks include dealer inventory swings, which drove the Q4 sales declines in Construction and Resource Industries, weakness in Asia/Pacific and Latin America retail demand, and rising SG&A and R&D costs. The forward-looking statements also cite tariffs, interest rates, credit quality at Cat Financial (past dues improved to 1.79%), and the sustainability of price realization.

CAT 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed February 5, 2024. Cited figures are marked; the original filing is the authoritative source.

Caterpillar's Q4 and full-year 2023 results, filed via this 8-K on February 5, 2024, show a strong close to a record year.

Fourth-quarter sales and revenues rose 3% to $17.1 billion^a, and full-year sales and revenues climbed 13% to $67.1 billion, driven by favorable price realization and higher equipment sales to end users, partly offset by dealer inventory destocking. Q4 GAAP profit per share was $5.28 (adjusted $5.23), versus $2.79 a year earlier, which included a 2022 goodwill impairment. Full-year GAAP profit per share was $20.12 (adjusted $21.21), up from $12.64.

Operating margin for the year was 19.3% (adjusted 20.5%), and management described 2023 as the best year in the company's 98-year history. Cash generation and shareholder returns were also strong. Operating cash flow was $12.9 billion^b, and the company ended the year with $7.0 billion of enterprise cash.

Caterpillar repurchased $5.0 billion^c of stock and paid $2.6 billion in dividends. Segment results were mixed: Energy & Transportation was the standout, with Q4 sales up 12% and profit up 21%, supported by power generation demand from data centers and oil and gas turbines. Construction Industries and Resource Industries sales fell 5% and 6% respectively in Q4 as dealer inventories were reduced, though CI profit still rose 3%.

The filing also furnishes Regulation FD retail statistics showing Q4 2023 worldwide machine retail sales up 3%^d and combined machines and E&T retail sales up 8%, with North America strong and Asia/Pacific and Latin America weaker. For investors, the key question is how much of the 2023 strength reflects end-user demand versus a one-time inventory build or pricing, given that dealer inventory dynamics swung sharply in the quarter.

02—Key points

Key Highlights

Full-year 2023 sales and revenues rose 13% to $67.1 billion; Q4 rose 3% to $17.1 billion.
Full-year GAAP profit per share of $20.12 (adjusted $21.21) versus $12.64 in 2022; Q4 GAAP EPS of $5.28 (adjusted $5.23) versus $2.79.
Operating profit margin of 19.3% for 2023 (adjusted 20.5%), up from 13.3% (adjusted 15.4%), helped by price realization and the absence of the 2022 Rail goodwill impairment.
Operating cash flow of $12.9 billion and year-end enterprise cash of $7.0 billion.
Returned $7.5 billion to shareholders in 2023: $5.0 billion in buybacks and $2.6 billion in dividends.
Energy & Transportation Q4 sales up 12% and profit up 21%, driven by data center power generation and oil and gas turbines.
Construction Industries and Resource Industries Q4 sales fell 5% and 6% as dealers reduced inventory; Q4 dealer inventory decreased by $900 million.

03—Questions

Frequently Asked Questions

How did Caterpillar's 2023 results compare with 2022?
Full-year 2023 sales and revenues rose 13% to $67.1 billion, and GAAP profit per share rose to $20.12 from $12.64. Adjusted EPS, which excludes restructuring costs, the Longwall divestiture loss, pension remeasurement gains and a tax valuation allowance benefit, was $21.21 versus $13.84. Much of the improvement reflected price realization and higher equipment sales to end users.
Why did Q4 profit per share jump so sharply year over year?
Q4 2022 included a $925 million goodwill impairment tied to the Rail division and $209 million of restructuring costs, which depressed that quarter's results. Q4 2023 GAAP EPS of $5.28 benefited from favorable pricing and the absence of that impairment, and was partly offset by higher SG&A and R&D spending, including incentive compensation and strategic investments.
What do the retail statistics in Exhibit 99.2 tell investors?
Retail statistics show end-user demand for machines rose 3% worldwide in Q4 2023, with North America up 11% and Asia/Pacific and Latin America down. Energy & Transportation retail sales rose 20%, led by Power Gen and Oil & Gas. Caterpillar notes this data is unaudited, dealer-reported and approximate, so it should be read as a directional indicator rather than a precise measure of results.
How is Caterpillar returning cash to shareholders and how strong is its liquidity?
In 2023 Caterpillar repurchased $5.0 billion of common stock and paid $2.6 billion in dividends. It ended the year with $7.0 billion of enterprise cash and $12.9 billion of operating cash flow, indicating the company can fund shareholder returns from internal cash generation while maintaining liquidity.
What risks should investors watch after this report?
Key risks include dealer inventory swings, which drove the Q4 sales declines in Construction and Resource Industries, weakness in Asia/Pacific and Latin America retail demand, and rising SG&A and R&D costs. The forward-looking statements also cite tariffs, interest rates, credit quality at Cat Financial (past dues improved to 1.79%), and the sustainability of price realization.

04—Continue

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