Dear Fellow Shareholders,
I am proud of our dedicated global team for delivering one of the best years in our nearly 100-year history in 2022.
Despite ongoing supply chain challenges, the team achieved double-digit top-line growth for the second consecutive year and generated strong Machinery, Energy & Transportation (ME&T) free cash flow, which was firmly in our target range. We finished the year with profit per share of $12.64 while achieving a record full-year adjusted profit per share1 of $13.84.
Our strong ME&T free cash flow enabled us to return $6.7 billion to shareholders through dividends and share repurchases. Caterpillar has paid higher annual dividends to shareholders for 29 consecutive years, and we are proud to be recognized once again as a member of the S&P 500 Dividend Aristocrats Index.
Executing Our Enterprise Strategy
We have made great progress executing our strategy as we continue to invest for long-term profitable growth — building operational excellence, providing differentiated solutions to meet customer needs, making our customers more successful with our services, and furthering our sustainability journey.
Ongoing initiatives and investments contributed to services sales2 growth of 17% to $22 billion compared to 2021. Our confidence is increasing that we will achieve our $28 billion services target by 2026. Through tools like the new Cat® Central and SIS2GO apps and insights from data on our more than 1.4 million connected assets, we are creating a superior customer experience as we help customers minimize downtime, improve utilization and extend product life.
Expanding Opportunities For Long‑Term Profitable Growth
We believe the energy transition and growing global energy demand will increase Caterpillar’s total addressable market and represent a significant opportunity for long-term profitable growth through increasing demand for a wide variety of Caterpillar products and services.
For example, demand for commodities is expected to increase due to the growing adoption of electric vehicles, battery storage, and wind and solar power. Rising global energy demand will require investments in renewables and many traditional forms of energy, as well as grid modernization. The energy transition will also require significant global infrastructure investments, which expand opportunities for Caterpillar. The opportunities presented by the energy transition and our work to help our customers achieve their climate-related objectives led us to add sustainability as a focus area of our enterprise strategy in 2022.
You can see how we are working with our customers and Cat dealers to contribute to a lower-carbon future in the Caterpillar's Role in the Energy Transition section of this report. You can also read more about our accomplishments in our 2022 Sustainability Report.
Caterpillar has been a technology leader for nearly a century, and we continue to invest to meet the needs of our diverse global customer base. We are increasing our investments in autonomy, alternative fuels, connectivity and digital, and electrification (AACE). We have also made strategic acquisitions, such as CarbonPoint Solutions, which provides customers with carbon-capture technology, and Tangent Energy Solutions, which monitors grid patterns and helps our customers with reliable, sustainable and connected power solutions.
DEMONSTRATING OUR VALUES‑BASED CULTURE
As a responsible corporate citizen, Caterpillar participates in the public policy process, advocating for a broad range of issues that advance our strategy and purpose while providing value to shareholders and other stakeholders. We value shareholder input, and in response to their interest in more transparency of our political engagement, we issued our inaugural 2022 Lobbying Report: The Purpose of Engagement in early 2023.
The Caterpillar Foundation celebrated 70 years of global corporate citizenship in 2022. The spirit of giving has been part of Caterpillar’s DNA since the beginning. This was illustrated in the Foundation’s record-breaking giving through Matching Gifts, the United Way campaign and its support of both urgent and long-term needs of the Ukraine humanitarian crisis.
We are continuing our journey to create a more diverse and inclusive workplace that respects and celebrates our employees’ diverse backgrounds, experiences and perspectives and encourages a culture where employees feel valued and included.
With Our Values in Action as our guide, our Caterpillar team around the world is creating the products, services and solutions that help our customers build a better, more sustainable world. I am excited about our future opportunities and confident that Caterpillar’s best days are ahead.
Jim Umpleby
Chairman & CEO
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1 Adjusted profit per share is a non-GAAP measure, and a reconciliation to the most directly comparable GAAP measure is included in our 2022 10-K SEC filing.
2 ME&T Services Revenues include, but are not limited to, aftermarket parts and other service-related revenues and exclude most Financial Products’ revenues, discontinued products and captive dealer services.