Caterpillar Inc HQ Visit Hosted by JPMorgan Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tami Zakaria - JPMorgan - Analyst : So with that, welcome, Bob and Ogi. So let's start on services. Bob, I'll start with you. Caterpillar speaks to OPEC dollars as a guiding tool for improving profitability of the overall business. So let's start there. Could you speak to whether and how this applies to your services division? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 21, 2025 / 4:00PM, JPM.N - Caterpillar Inc HQ Visit Hosted by JPMorgan

Question: Tami Zakaria - JPMorgan - Analyst : That's fantastic to hear, and I think that's a great start to this conversation. Just wanted to look back a little bit. So Caterpillar ended 2024 with $61 billion of ME&T sales with record margins and EPS, and as you said, growing the services portion has been a focus in recent. So just to set the stage, can you remind investors what the mix of parts and services revenue was for Caterpillar in 2024 and then how that mix evolved over the last 5, 10 years? And more importantly, is there a target mixed percentage of services as a percentage of ME&T sales over the next 5, 10 years?

Question: Tami Zakaria - JPMorgan - Analyst : A simple question: are you satisfied with the progress you've made this far?

Question: Tami Zakaria - JPMorgan - Analyst : Got it. I agree with you. Complacency is never good for businesses. So let me ask you this: how confident are you that you will achieve the $28 billion target? And more importantly, do you expect services growth this year despite lower total sales and revenue growth that you guided when you hosted the fourth-quarter earnings call in February?

Question: Tami Zakaria - JPMorgan - Analyst : That's great to hear. And by segment, because you mentioned the three segments, which among construction industries, resource industries, and E&T currently has the highest versus lowest parts or services penetration? In other words, where is the most near-term opportunity amongst these three segments?

Question: Tami Zakaria - JPMorgan - Analyst : Absolutely. Thank you so much. So let's move to digital. So Ogi, the spotlight is on you. On the digital space, machine connectivity is increasingly a big focus to make sound decisions based on data, machine health, usage, maintenance, and other insights that help customers manage their fleets better. How is Caterpillar innovating in this space to differentiate itself from competition, and is there a total cost of ownership benefit?

Question: Tami Zakaria - JPMorgan - Analyst : Great. So a follow-up on that, Ogi, does Caterpillar have any cloud-based services or data platform to connect machines in the field to the back office for data analysis and insights? Or are there any partnerships, for example, with third parties to provide this service to customers? And also related to that question, is that platform brand agnostic, meaning can other branded machinery be connected to that common platform if you have one?

Question: Tami Zakaria - JPMorgan - Analyst : Got it. So Bob, let me switch to you for a minute. We have heard about CVAs that are driving growth in services revenue. Can you remind us in the audience what a CVA is and what's the uptake or adoption rate now amongst customers and what benefits they offer to customers and how does Caterpillar's CVA differ from, let's say, some of your competitors out there?

Question: Tami Zakaria - JPMorgan - Analyst : Perfect. So Ogi, you mentioned AI. Let's talk about AI. Where is AI supporting your digital solutions for customers? And also internally, Bob, how is the AI making Caterpillar more efficient and productive internally?

Question: Tami Zakaria - JPMorgan - Analyst : So what about e-commerce, Ogi? I know you had some growth targets there. Are you achieving your expectations?

Question: Tami Zakaria - JPMorgan - Analyst : And Bob, you mentioned the importance of customer uptime and that you'd make it easy for customers with your apps. Can you tell us about the Cat Inspect app?

Question: Tami Zakaria - JPMorgan - Analyst : Great. Thanks, Bob. So Ogi, what are some of the digital solutions that are resonating with your customers?

Question: Tami Zakaria - JPMorgan - Analyst : Well, that's an impressive array of solutions. So Bob, are you seeing the payoff for the investments you've made here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 21, 2025 / 4:00PM, JPM.N - Caterpillar Inc HQ Visit Hosted by JPMorgan

Question: Tami Zakaria - JPMorgan - Analyst : Perfect. So Bob, let's switch gears a bit. I know you have responsibility for your distribution network. To start off, can you explain why the dealer network is such an advantage for Caterpillar?

Question: Tami Zakaria - JPMorgan - Analyst : Got it. So it's a win-win situation for you. So what about your approach with global customers that may cross numerous dealer territories or regions? For instance, with large hyperscalers, what is your approach to serve them and why wouldn't a direct sale model work better?

Question: Tami Zakaria - JPMorgan - Analyst : Got it. That's very helpful. And we've talked in the past about Caterpillar's remanufacturing process, but I think many investors may not be aware of the full scale of opportunities there. Can you talk about how Caterpillar equipment is built to be rebuilt and explain the opportunities for you and the CAT dealers there?

Question: Tami Zakaria - JPMorgan - Analyst : Thanks, Bob. I think we're almost up on time, so I want to ask one final question to close to both of you, actually. What is your top priority today and then specifically also for Ogi, what is your vision for the future of your division?

Question: Tami Zakaria - JPMorgan - Analyst : Wonderful. That's all the time we had for today. Thank you, Bob and Ogi, for your time and to everyone else that joined. Thank you and have a wonderful weekend.