Caterpillar Inc. Investor update

Before we begin, we encourage those attending remotely to be mindful of your local safety protocols. Today, we'll make forward-looking statements which are subject to risks and uncertainties. For a full list of risks that could cause our actual results to vary materially from the information we're sharing with you today, please see our most recent SEC filings, including our 10-K. We also may refer to non-GAAP numbers. For a reconciliation to the appropriate US GAAP numbers, please see the appendix of our most recent earnings presentation. In addition, please note that Caterpillar policy does not allow meetings to be recorded with smartphones or other devices unless specific approvals have been granted prior to the start of this meeting. Finally, we'll post the video and a transcript on our website, investors.caterpillar.com. Now I'll turn it back to our host.

Yeah, Jerry, and thanks, and I appreciate everyone dialing in. It's great to see everybody. It's hard to believe it's been just a little under a year since we had our analyst day and launched our refresh strategy, but I couldn't be happier with how the team has rallied around it and how things are going. As you know, even in the spring, just due to some continued increased demand and discussions with our customers, we even increased our revenue guidance to 6%-9% in 2030 compared to 2024 and increased our capacity investment in our large engines to 3 times 2024 levels. From our standpoint, we're off to a great start. We had a good year in 2025, but really off to a really amazing start to the year in the first half in 2026. We think we'll see mid to high teens top-line growth.

Our OPACC growth has been tremendous, which is, we've stated to everybody, our definition of winning. Each of the segments has great tailwinds. We get a lot of attention on power and energy right now. We continue to have strong backlog growth. We're working really hard to increase capacity every single day for our customers to get as many units out as we can and better through our existing capacity. So, that's been a challenge for the team, both on the turbine side and the large engine side. Anytime you're trying to increase capacity but also increase your throughput and work the supply chain, those guys are really busy, but they're doing an amazing job getting that done.

We've also seen, in power and energy, really, really strong years, both last year, a record year even, and this year on pace to do better in oil and gas. I think power generation gets a lot of attention right now, but our oil and gas business is doing really, really well, particularly around natural gas and gas compression. All these, the increase in power generations is going to have to be fed. Most of it, a lot of it will be gas-fired in the future, and so we're going to move a lot of natural gas in the next few years, and I think that's an also very strong part of our power and energy business. Excuse me. When you look at CI, they had a really great second quarter and off to a great start this year.

We've been able to outperform the industry over the last 18 months. Last year, we instituted some merchandising programs that really boosted us and got us off to a great start. Those have continued to pay dividends. Our strategy around commercial excellence is paying off. I think there were some parts of the construction industry that were frankly, we were maybe not paying as close of attention to or underserving or our strategy maybe wasn't lined up to meet those customer needs. Particularly Cat Compact, which we launched at CONEXPO. We're really excited about being a little more retail friendly for that small customer who owns one or two pieces of equipment and buys every few years. It's a very fast growing part of the construction industry for us.

On the rental, in the last earnings call, we talked about the dealer JV on major projects. That will allow us to compete with our equipment on some of these mega projects where an individual dealer rental fleet maybe didn't have the fleet to support that type of project. We're seeing great sales to users growth this year, both retail and then rental fleet loading as well. We've been pleased with RI. The orders in RI have been really strong. I think that's going to be a little steadier growth. We're seeing great order intake on large mining trucks and then heavy construction is kind of a follow-on to CI. Across the board, in particular in our eyes, we're seeing great services growth and it started to pick up.

It kind of flattened out a little bit last year, but services is still a really important piece of our strategy and how we take care of our customers after they buy our equipment. Mining rebuilds are picking back up again, and CI seeing great services growth as well. So, when you look across the business, it's nice to see all three segments that are performing well. Our industries are in good shape, and the strategy's starting to take hold. We've been spending a lot of time on the road as well as an executive team, having regional leadership conferences. Spent, week before last was in Asia with the team and really talking about the strategy refresh and getting the teams rallied and leaders globally rallied behind it, and we're starting to see the benefits of it.

Yeah, like I said, the team's working really hard, both teams, the turbine team and the large engine team. They're doing a great job. I would say turbine's capacity additions are on plan. We announced that one a little bit later than the large engine capacity increase. Large engines, we've been able to be slightly ahead, 2 or 3 months, I would say. But it's hand-to-hand combat. As I said, you're adding capacity while we're trying to increase throughput. We're getting more through our existing assets. There's a lot of work going on in the supply base as well, which is a lot of the investment is going towards the supply base, so that we can continue to increase our capacity for large engines. But also, our services growth really depends on having large engine parts and components to support the aftermarket.

This capacity investment's really for our oil and gas and power generation and services growth objectives, as well as the other diverse uses of the large engines. I think it's not going to be a straight smooth line up and to the right, but it's also not going to be a cliff event. Like I said, we've been ahead. Things can happen. If we have a machine go down in the factory, we're handing them out every day, so there's not a lot of slack in the system. We can see some bumps in the road as we go. Having said that, we're trying every quarter to get more product out to customers. We're talking to them on their deliveries, and making sure we meet their needs.

I think we'll continue to every year, it won't be a cliff event, try to get more units out. The team's done an amazing job because there's a lot going on. I think you were able to visit, what was that, a year ago, we were in Lafayette, and we had just had the new building up, and now they are packaging units in there. We're trying to do some creative things as well. Time is of the essence here because the demand is on top of us. We talked about using, for turbine packaging, our Wamego facility, repurposing it. We were able to do that in 12 months. We're looking at our existing assets. We brought back the 10-megawatt, former MaK medium-speed engine, which is great for power generation, that we're able to start shipping units here, hopefully later this year.

We're going to look at all of our existing footprint because that's the fastest way for us to do this. One of the things we're looking at now is, we have an engine facility that does locomotive engines, and that business is not at capacity by any means. With some minor investment, can we do some large Cat engines in there, just to relieve some of the pressure. We're still working on some of those things, but those are the types of the things that the ideas that the team on the ground keeps coming up with, and I'm proud of how they've been able to react.