Caterpillar Inc. (CAT) Earnings Call Transcript & Summary

All right. Well, good morning, everybody. It's great to be here with you. Thank you all for joining our 2025 Investor Day. This is an exciting day for us, one that for us and our team has much anticipated. So you all enjoy the day. For those of you who traveled here to be with us, thank you. I hope you have a chance to visit the tech tables, and we're showing off our team and the technology out there. No better way to understand it than to ask our talented team members and see it for yourself. And many of you joining online, thank you for joining us. I know many of our employees are as well. Before we get started, I just want to say how truly honored I am to have the opportunity to lead this iconic company into its next century. We have tremendous opportunities ahead, and we're going to show you that today. I've spent my entire 28 years of my career at Caterpillar and have a tremendous passion for our people, for our brand, for our products, for our dealers, for our purpose of building a more sustainable world. So this is really, really personal to me. So today is going to be a fun day. Our executive office teammates and I are excited to share our vision of Caterpillar's future. So let's go ahead and jump in. I believe the title of this chart says it all. We have a strong past, but we have an even stronger future ahead. And over the next 25 minutes, I'm going to talk to you really and break it down into to 3 areas: one, our strong foundation, we've been performing at a very high level. And then two, how we're going to build on that strong foundation by evolving our strategy for profitable growth forward. And then finally, Andrew will cover the financials in detail at the end. You'll get some KPIs through each of the group presidents presentations as well. But I'll talk to you about how we're going to raise the bar on our financial performance moving forward. So let's start with our strong foundation. We're a different company now than we were 10 years ago. We're definitely a different company than we were when I hired in with the company 28 years ago. The strategy that Jim hopefully put in place in 2017 drove a step change in how we operate and put a discipline in our business that we didn't have before. And you can see it in our results. We have consistently delivered strong TSR. And whether you look at the 3-year, 5-year or 10-year comparisons, we have outpaced the S&P 500 industrials and capital goods over those time periods. And the strategy that delivered those results is built on what we call the operating and execution model. The O&E model is how we run our company. It's how we allocate resources, and it guides all of our strategic decisions. That's what put the discipline into the financial results that you're seeing. Results have been great. Let's look at a few of them. In 2024, which is our last full year reported results, we delivered $11 billion of OPACC. As you can see, that's up 90% from 2019. Remember, our true definition of winning. Our ultimate goal through all the metrics is growing OPACC dollars. We believe that has the highest correlation to total shareholder return and I think the results over the last few years have proven that to be true. Services are a stable, a center point of our strategy for profitable growth. We set out to double services from a base of 2016. And in 2024, over that time frame, we added $10 billion of services revenue to our top line. That's up 71% from 2016. To grow services, we knew we had to be easier to do business with. So we set out to develop our own e-commerce platform. And in 2024, we delivered $18 million per business day of e-commerce revenue do the math, that's about $4.5 billion, $18 million per day is well ahead of the targeted ramp we had set out. We went on this journey. We have over 1.5 million connected assets in the field reporting data to us every single day. That is a huge competitive advantage for us today. And when you hear throughout today how we're going to lean into technology moving forward, this is going to be incredible competitive advantage for us even more so into the future. And finally, from 2019 to 2024, we delivered over $40 billion of ME&T free cash flow. And as promised, we returned 99% of that to shareholders over that time frame. So these are great metrics, metrics that we look at. What does that mean for our metrics to you all? How have we done on our commitments to you. You can see we have consistently delivered. These are the targets that we put out in our 2019 Investor Day. And you can see for the top 2 metrics, adjusted operating profit margin that go along with the corresponding sales level and the ME&T free cash flow ranges, we raised the bar on those targets in 2024. And over the last 6 years, we have consistently delivered on those metrics. And think about what's happened in the last 6 years. It's hard to believe that we've had the pandemic, we had ship shortages. We've had supply chain challenges. We've had hyperinflation. We've had some geopolitical tensions, all that going on in the world and through all of it, our team has consistently delivered. And that's due to operating at a high level and the discipline from the O&E model. But our strong foundation is more than just how we're operating, the fact that we operate differently now. All 3 of our segments operate in growing industries that have enormous opportunities for us moving forward. And here's a few of the secular trends, the megatrends that we think will impact our business and give us opportunities moving forward. Urbanization, it's expected over the next 10 years between now and 2035, over 800 million people are going to move to urban areas. That's going to drive the need for a lot of infrastructure. We all know what's happening with digitalization of the world, what's going on with data centers. I think it's easy. We sometimes forget the rapid acceleration. We were participating in it just with cloud computing and then you bring AI and Generative AI on top of it and the growth has exploded. For data centers, it's estimated that 800 terawatt hours of compute power is going to be needed in the next 10 years. That's the equivalent of 15 New York cities when it comes to power. And not only do we see a world -- well, data center CapEx, remind you also, we expect to soon approach $1 trillion a year before the end of this decade. And not only do we see a world where more electricity and energy is needed, it's going to take a growing mix of energy sources. Energy growth over the next 10 years, worldwide is expected to be 8x the U.S. annual household consumption of today. So tremendous opportunities as we move forward. So bringing that closer to home, what does that mean for Caterpillar? Looking at CI, we expect in the next 10 years, forecast show global construction spending to be up 25% and at the same time, global infrastructure spending is forecasted to be up 35%. In that 10-year time frame, we expect the demand for critical minerals to increase almost 40%. And that's what we do in. We help our customers get critical minerals. In Global Mining sector CapEx, that forecast only is published through 2030, but it's expected to be up 50% between now and 2030. And then we talked about data center growth, power demand from data centers is expected to triple in the next 10 years. And then also, not only is energy demand continuing to grow, but according to the IEA, 50% of the energy mix in 2035 is still going to come from oil and gas. Inside the oil and gas mix, natural gas becomes an ever more increasing an important fuel for our world. And you're going to hear Jason talk about that today. That's a good thing for Caterpillar. And in fact, over the next -- by the end of this decade, U.S. LNG exports expected to double. And for Caterpillar, we play in the entire value chain when it comes to natural gas. So why do I put this chart up here, right? The data center opportunity in AI, you're going to hear about that today from it's a significant opportunity for us. We're excited about it. It's real, and we have good line of sight to it. But that's not the only opportunity we have. We have opportunities in all 3 of our segments moving forward. And that's what you're going to hear about from our team today, how we're going to go get it. Even inside E&T, it's not just about power generation and data centers. We have great opportunities in our oil and gas business as well. So our foundation is strong. We're operating at extremely high levels. We've changed the way we operate the company with financial discipline. We have great end markets and opportunities for all segments. How are we going to involve our strategy to take advantage of those opportunities. That's where I want to spend the bulk of my time with you on this morning. This strategy gear in this picture represents the strategy we put in place under [ Jim ] up will be in 2017. The 1 that's delivered the results that you've seen. I was part of the 20-person team that put that strategy together, I was running our Finance and Corporate Strategy Group in 2017. On that team also were group Presidents, Bob Long and Denise Johnson, who you'll hear from today. The 3 of us along with our executive office teammates have been executing this strategy to deliver the great results and momentum that you're seeing right now. So we believe in this strategy, right? It's working. This is our foundation, and we're committed to it. We're committed to our purpose. It's still to build a better, more sustainable world. So it's time to build on that strategy. So let's talk about how we're going to build on that moving forward. The first thing we've done is added a mission statement. We have to be obsessed with our customer success if we're going to be successful moving forward. So our mission is solving our customers' toughest challenges. This is the room. It's a little bigger than this. We're getting ready for this week, but we have our leadership conference in every year. So last year, in this very stage, in this room, we have our top 250 to 270 leaders globally. Come in and they get to spend time with the executive office. We talk about the strategy, what's going well, what's not, what do we need to do moving forward. And during the 2 days, 2.5 days were together, a lot of times we'll bring dealers and customers to present to the group. Last year, we had the CEO of one of our largest and most loyal data center customers come to talk to the group. And it's an unscripted hour. We give them an hour when we say, tell us the good, the bad, the ugly of how it is going with us, why you buy Caterpillar, what do you need from us? What do you expect from us? And over that hour, he proceeded to talk about how he needed more than an equipment provider. You could go to a lot of suppliers of equipment. What he was looking for was a partner that helped them solve this problem. And in fact, the words he used the exact quote, and it's stuck with our team, I'll tell you that is solve my problems, and I'll buy it. And I believe that's true whether you're talking about our largest customers all the way down to the retail CI customer who owns 1 skid steer. They're running businesses they want a partner that can help them solve their toughest challenges. I spend as much time as I can with customers. It's hard to get to see them sometimes, but I spend as much time as I came with customers in all 3 segments. So do the group presidents. We spend time with our dealers and with customers, and we hear consistent themes from our customers when it comes to the challenges that they're running into today. Things like safety risks. Everybody wants their workforce and their job sites to be safer. Productivity challenge or labor shortages. Customers consistently talk struggling to find skilled operators today and skilled technicians to work on their equipment. We hear about productivity challenges and job overruns that prove to be costly to their bottom line. And at the same time, their job sites continue to become more complex. Customers still need help, particularly our mining customers on their sustainability challenges. They haven't abandoned their sustainability goals, and we need to support them on that journey. And then the latest one that we hear quite often is the need for reliable power. We hear that all the time. You know that's happening from data center customers, but it's spilling over into the other segments as well. So our new strategy, a refresh strategy for profitable growth is really built on 3 growth pillars to help our customers solve these challenges. And this is how we're going to do it. The first one is commercial excellence. Second, we need to be the clear leader in advanced technology, both on and off machine, and we're going to transform how we work internally to get the job done. So you're going to hear the group presidents talk to you today about all these growth pillars and bring it to life for their particular part of the business and how it applies. But I want to spend a little bit of time giving you my thoughts at a higher level, so you see the types of changes we're talking about here. So let's talk about commercial excellence. We're going to get closer than ever to our customers. If we're going to solve their toughest problems, we have to understand their operations and their job sites, and we can't do that unless we get closer to them. And one of the ways we're going to do that is driving more direct engagement with strategic accounts. Our largest customers who own large fleets that cross dealer territories, many of them want to have a relationship with Caterpillar and they do. We've done this with great success in E&T started in oil and gas, but we really have tremendous success in our data center business and power generation. We have direct relationships with most of the hyperscalers in data center customers. It allows us to plan, understand their technology needs, solve their problems, drive a level of consistency. We do it with our dealers. It doesn't mean our dealers aren't critically important, they are. The customer gets the best of both worlds here. They get a relationship with us, but they also get world-class dealer network on the ground with a local workforce, local contacts, all the technicians they need to serve their job site. We're going to replicate what we've done to great success in E&T and in data centers into mining and also into our largest construction customers moving forward. We're renewing our commitment to services. When customers buy our equipment, they rely on us and our dealers to keep them running. Downtime is incredibly costly to our customers. Services is a good our customers. It's good for our dealers, and it's good for Caterpillar. And finally, we're going to have tailored solutions for our customers around the globe. We can't be one size fits all world. Tony will talk to you a lot about this today, how we've reorganized our commercial teams internally to have more boots on the ground with our dealers regionally. Similar-sized construction customers and contractors have different requirements and different needs different challenges. When you're talking to them in the Middle East versus America versus the U.S. We need to have our teams with them and tailor the solutions that will solve their challenges. And of course, we're going to do all this by growing with our world-class dealer network. Our dealer network is our single competitive advantage, and it will continue to be. But we're going to make sure that they're investing in modernizing with technology and they're investing to keep up with our growth ambitions as we move forward. So that's a high-level commercial excellence. Second pillar, we are going to lean into technology in a heavy way moving forward. And I believe by integrating our off-machine digital solutions with our on-machine technology, we'll unlock tremendous value for our customers. So how are we planning to do that? One, we're going to accelerate our world-class and industry-leading digital solutions by continuing to add features and to drive further adoption with our customer base and having our dealers help us drive that adoption. We need to continue to be easier to do business with and get our customers into our digital ecosystem. We're going to help our customers with safety and productivity by continuing to enhance and release features on machines like operator assist, grade control, collision avoidance and task autonomy. If you have a second, if you haven't already talked to our team about grade control in one of the test station. Denise will talk to you today about driving faster adoption of autonomy and mining. There's a lot of opportunity to continue to drive mining autonomy. And then many of you may have seen our partnership with NVIDIA, our plan to deploy the latest jets and for technology on our machines and expand autonomy to other parts of our machine portfolio. One of the test stations talks about on an arm -- so you can see that in action out there today as well. And we'll move into other areas of construction that make sense and drive value for our customers. And then finally, as I mentioned, customers like our mining customer still need support on our sustainability journey. So we're going to continue to invest to make sure they have the right power trains, whether that's more efficient diesel, diesel electric, battery electric, hybrids, alternative fuels. They have the powertrain they need to meet their ability goals moving forward. We believe that leading the way in digital and technology, not only is going to be good for our customers, it will be a differentiator for us as we move forward. And you'll hear Bob talk a lot about that in his section today. So the third growth pillar, finally, transforming how we work. We're going to continue to win with our amazing people at Caterpillar. And we're going to do that by continuing to invest in their skill sets and upskilling them, making sure they have the right tools to do the job. Many of you may have seen as part of our Centennial as well on our Centennial day, April 15. Along with our 100 years, we pledged $100 million to invest in the future. And I'm proud to say we made the first investment on that pledge 2 weeks ago and what a better place to do it than the workforce in Indiana. We made that announcement at our Lafayette engine where many of you were able to visit with us earlier this year, we're trying to double capacity off of a 2024 base. We need a talented workforce there to help us grow. So that's the first of many exciting announcements of how we're investing in the workforce of the future. Second, we're going to continue to invest and modernize our manufacturing footprint. We have to do this if we're going to keep up with our growth ambitions. This is another exciting area of our partnership with NVIDIA. Last week, NVIDIA had their conference in Washington, D.C. I don't know if many of you were able to tune in. Jensen showed and mentioned on the stage, we have launched and he announced our first factory digital twin in partnership with them. That was from our large mining truck facility indicator, one of the manufacturing lines on there. This is -- we are at the tip of the spear at the very beginning of this journey, and there's tremendous opportunity to make ourselves more efficient and use this technology modernize our factories. It's exciting work, and we're just getting started. And then finally, we'll have a continuous improvement mindset inside Caterpillar and deploy technology internally to become more in everything that we do. So these growth pillars are going to be critically important. Those pillars sit on a foundation of operational excellence. And operational excellence should look very familiar to you. If you study the gear, I talked to you about at the beginning of the existing strategy that's not going away. That's what this is. We're going to continue to operate the company using the O&E model with the discipline we've instilled over the last 7 to 8 years. We're going to have a relentless focus on product quality, on lean, on having competitive costs and driving velocity through our factories to get customers the product when they need it. That's not going away. And of course, the bedrock of all of this is our values in action. We will live our values every single day, and it will guide everything that we do. This is how we're building on our existing strategy for profitable growth. You're going to hear the group presidents, talk to you and bring this to life for each of their segments throughout the rest of this morning. So we're excited today to get this launched. So we have our strategy set but we're also organizing ourselves for success. One of the things that we did this summer internally was reorganized a little bit. We moved our Chief Technology Officer and Chief Digital Officer and their teams closer together under one group president Bob De Lange. That's meant to -- the teams were working together before, but it's meant to put them even closer together and unlock innovations and bring the physical and digital world together when it comes to technology. We've already made great strides and innovations in the short amount of time of having them closer together. Bob will talk to you about some of those things today. We're going to save some of those because I think the announcement went out today. We're going to also keynote CES this year in January, where we want to unveil some of the great innovation that we're working on. So that's really exciting for us moving forward. Also effective today, we are announcing a name change for energy and transportation. We're renaming that segment to Power and Energy we believe that better reflects our largest segment and the largest growth opportunity we have right now and help people better understand what it is that segment does. And to coincide with that name change, effective January 1, we're going to move our rail division from the Power and Energy team into RI. When you think about locomotives and what they do, they're a machine that moves resources. There are a lot of synergies to this move. So there are 2 benefits of this. One, it allows Jason and his team to focus on power and energy exclusively, which is engines generator sets and industrial gas turbines. Two, it drives a lot of clarity for you all once we start reporting this way in profile and the growth opportunity and growth rates of Power and Energy. But also, there are tremendous synergies, I believe that will get unlocked by moving rail into ore. We have common customers today. Mining customers buy locomotives. There are common technology road maps when it comes to sustainability. And internally, inside Caterpillar, we already share common components and some common manufacturing footprint. So we're excited about these changes I believe these are going to really help set ourselves up for success and to execute the strategy moving forward and drive greater focus for our teams on solving our customers' problems. So we've talked about our strong foundation. We're operating at a different level than we ever have. We have tremendous opportunities in all of our end markets. We have a refreshed strategy for profitable growth. Now we've organized ourselves for success. So how does that translate to results? What does that mean for you all and how to measure us? We're going to continue to raise the bar on our financial expectations. Andrew is going to cover this in more detail in a little bit, and you'll see some KPIs -- additional KPIs from each of the segments, but I want to cover the high-level metrics and how we're going to raise the bar here before I turn it over to the team. The first thing we're going to do is invest a lot of the growth we've been able to drive has been within the capacity and the constraints that we already have. We've talked to you about starting our investment already in large engines in order for us to keep up with the growth. We're now going to have to invest in capacity moving forward. So we expect our CapEx for machinery, power and energy to be 2x when you look at the time period 2025 to 2030 when compared to 2019 to 2024. And that's on average because of the capacity, Andrew will talk to you but it will be heavier in '25 and '26 and then probably level off a little bit more in the outer years. We're also going to continue to invest in modern manufacturing. That's going to require some CapEx investment. We've talked to you about our large engine investment, no change to that previously announced capacity expansion. What we are announcing today, though, is we've started a capacity expansion for re-industrial gas turbine business to add capacity 2.5x the level of 2024 capacity. This is a really exciting time for us in Power and Energy. We're doing this based on the confidence we have, the momentum we have, the orders and backlog that we have and the tremendous interest from our customer base. And this isn't just the larger Titan 350. It's the entire product lineup that we're getting great demand for it's not just prime power for data centers. That is a new and exciting opportunity, but it's also to support our oil and gas customers. As I mentioned before, oil and gas is still going to be 50% of a growing total energy mix in 2035. We're going to move a lot of natural gas. And Jason will talk to you about that, it's really important. So this capacity expansion is really, really important for our growth ambitions. And it's exciting news. And those of you who get to go see our solar turbines Desoto facility today. I'm sure we'll have more questions for Derek York and the team when you're there. If we're going to lead the way in digital and technology, we're also going to have to increase our investments there. The same comparative time periods to invest 2.5x more in digital and technology moving forward. Bob will talk to you about a lot of the things that we're working on and what that investment is going to go towards. So what do we get for these investments? Well, I mentioned these earlier, these are the targets that we set out and commitments we made to you all in 2019. And on the top 2, the ones are the cash flow and adjusted operating profit margin, we raised the bar 2024. And as I mentioned, we have consistently delivered great results against those targets. So how are we raising the bar moving forward? Well, the first thing to do is based on the great momentum we have in the business, the backlog we have, the tremendous opportunities we see due to the trends in all the industries we serve and the confidence we have in our growth strategy that you're our team later today. We're adding a metric. From 2024 through 2030, we're targeting to grow our top line in the CAGR of 5% to 7%. That's an increase from what we've delivered from the time period 2019 to 2024, which was 4%. We have great momentum in the business. And so we feel like it's time to put this metric out. Our teams are going to show you, as we move throughout today, how we plan to that CAGR. Based on that, we're going to extend our ranges for operating profit margin and the corresponding sales level. So today, the range is from sales of $42 billion to $72 billion. inside that range, that sales range, no change to the margins. We're going to extend that from $72 million to $100 billion, and Andrew will talk to you about the details of these ranges a little bit later. But I would say 2 things for you. One, from 72 to 100, we've tried to keep the same profit to sales pull-through as we have from 42 to 72. And the second thing I would say is the ranges that you're seeing here and Andrew will share are inclusive of the investments that we talked about on the prior slide. I mentioned our doubling down and recommitting to services. Our new target for services is $30 billion by 2030. Our current machinery Power and Energy free cash flow range is $5 billion to $10 billion. We actually raised it to that in 2024. It used to be 4% to 8%. And moving forward, we're targeting a range of $6 billion to $15 billion. We have great momentum in the business and continue to generate great cash. And on the last 2, no change in our capital allocation methodology. We still plan to return substantially all M&E free cash flow to shareholders and to keep in line with our dividend aristocrat status continue to target high single-digit dividend raises high single-digit percentage dividend raises between now and 2030. We have a great momentum in the business. We believe in the strategy. That's why we're raising the bar on these targets. We're really excited about our future. So what you're going to hear for the rest of the day is from my colleagues and the executive office my teammates. You're going to hear how they're going to use the growth pillars for their particular segment and how each of them contributes to this 5% to 7% CAGR that we're targeting. In Power and Energy, Jason is going to talk to you about adding capacity to capture the historic growth that we're seeing. Tony will talk about commercial excellence, getting closer to our customers, tailoring our solutions to meet needs and Denise will talk about how we're shaping the future of mining with technology. And when Bob comes up, he'll talk about the investments in digital and technology, how we're blending the physical and digital and how we believe it's going to be differentiator for us moving forward. It is a truly incredible time at Caterpillar. Our future is so bright, and we are excited about our strategy launch. We're excited about the opportunities we have all of our businesses. I'm confident by executing the strategy, we'll continue to grow OPACC dollars. Remember, that is our ultimate goal. And when we do that, it will continue to drive strong total shareholder return as we -- we're committed to this strategy, and we're excited about our future. So we have a lot in store for you today. I'll be back up for Q&A. But right now, I'd like to turn it over to Jason Kaiser, Group President of Power and Energy. Thank you. [Presentation]

Good morning. It's great to be here with you today. So I started at Caterpillar 25 years ago, and I was an electrical engineer. I was pretty interested in power generation. And I've had the opportunity over my career to work in our Power Energy segment, really the whole time with a significant amount of my opportunity in power generation. So you can imagine with that background, how exciting it is to be here today. To share with all of you the recent success that we've had but more importantly, the great opportunities that we have ahead in Cat Power and Energy. You watched the video, you heard the new name, it's a great reflection of who we are but also where we're going to go. It talks about our unique capability to serve customers through the full power and energy value chain at a time of really incredible growth and my objective is today to share with you our plan to capture that growth that we have ahead. Power and Energy is Caterpillar's largest and fastest-growing segment. We've had good strong execution over the last 5 years, and that's led to higher sales, increasing profitability, and it's helped us be able to invest for the future. And those investments are really setting us up as we look forward to continue to deliver profitable growth. Some highlights from the last 5 years. One, we've increased sales by 30%. We've been able to increase R&D and capital spending as well, up 75%. We delivered record operating profit margin in 2024 and we've seen our power generation sales grow by more than 70%. As I go through the presentation today, there are really 3 messages that I want you to take away when you leave. The first is that we are in an incredibly supportive environment externally for growth. We're seeing strong increases in global energy demand, and we're seeing historic increases in the demand for power. The second is we are really uniquely positioned to take advantage of that growth. We participate through the full power and energy value chain and the breadth and strength of our product and services portfolio positions us very well. The third key point is we have a clear and well-established execution plan. Our execution is underway, and we have a lot of confidence in our success. We will more than double power generation sales by 2030. And in order to do that, we're making strategic investments in capacity. We will double our large engine capacity. The previously announced capacity program and excited today, as Joe mentioned, to announce we're going to increase our natural gas turbine capacity by 2.5x. We're very close with our customers. We're working to understand their future needs, and we're excited about being able to utilize this capacity to meet those needs and to deliver profitable growth for Caterpillar. So let's start and go into a little bit more detail about that external environment that really supports our growth moving forward. The world needs more energy. So a jewel is a measure of energy, pretty common one, and it's projected that the world will need 40x to jewels of additional energy by 2035. So you may not know what x to jewel is but it's a massive amount of energy. It's 8x the energy that it takes to power every household in the U.S. At the same time that we see that growth -- we're also seeing an evolving energy mix. So oil and gas will remain important. It will remain at around 50% of the total mix. But within that, natural gas will accelerate. Particularly driven by the needs of natural gas to fuel power generation. Renewables will continue to accelerate at a rapid pace. And as that happens, Renewables, they need a backstop. They need reliable, dispatchable capacity for the days where the wind doesn't blow or the sun doesn't shine, and distributed power solutions like we provide are perfect for doing that. So overall, this growth in energy, this evolving mix, it unlocks a lot of potential, a lot of growth for us, and I'll cover that as we go through the presentation today. The second big area of growth is really a historic increase in the demand for electricity. So electricity demand is objected to increase 43% by 2035 and Data centers are a huge driver of that with their demand increasing 200% over that same time period. So that creates a number of challenges for our customers and a lot of opportunities for us to help them. So the customers they need capacity, they need electrical capacity. They also need to ensure reliability. Data centers are a perfect example of that. They'll continue to need our backup power solutions to make that their data centers are always online and always available. But they're increasingly coming to us and asking us about primary power solutions. They're unable to get a connection from the utility based on constraints in capacity or distribution. And we have great products to fit those needs. Utilities also need a system they need to add capacity. They need to make sure the grid stays reliable and they need to move really fast. And again, our distributed generation solutions are great for helping them do that. And then as we've mentioned a couple of times, natural gas is going to be critical as we move forward to powering this electrical demand that's happening. And we get to participate not only in burning the gas to make electricity but through that full value chain from drilling to moving the gas all the way through. So that's a great segue. I kind of sets up the growth that we're seeing, the external environment, and so now I want to talk about how we're uniquely positioned to take advantage of that as Caterpillar. The first way is the fact that we are positioned through the full power and energy value chain. So you can see that depicted on the slide, lots of yellow product and services all the way through the value chain. So from drilling a well to moving gas down the pipeline to burning that gas to make electricity, we have products and services that customers rely on. We're very unique in that ability to serve those customers and serve them well through that full value chain. Let's go into a little bit more detail. In the upstream, our engines and our turbines power drilling, onshore and offshore. Our engines, transmissions and pumps enable well preparation, and our generator sets are key for oilfield electrification. Customers, they count on us to ensure efficiency, the lowest owning operating cost and improve sustainability. In the midstream, our engines in the oilfield, they start to gather the gas. They start to move it down the pipeline. And then as the pipelines get larger, our solar gas turbines create the compression that it takes to move the gas across the country to where it's needed. So these are really tough applications. They run 24/7 all day every day and customers rely on our product reliability, durability and our strong services support to keep their businesses running. The downstream is a newer segment for us. And our participation is really being enabled by our new Titan 350 gas turbine. It's a larger gas turbine and this larger turbine more allows us to serve customers in the downstream as their processing, refining and exporting natural gas and helps them meet growing energy demands globally. And then the last area is power generation. We have comprehensive solutions. We're really good at power generation, all the way from backup power mobile power, primary power and really a full suite of solutions around it, control switch gear, inverters, energy storage, even the ability to interface with the utility. So we have tremendous capability to help our customers ensure that power is available and it's always reliable. And think about customers like data centers, utilities and many, many other critical applications like for example. So if we zoom back out, again, take a look across the screen. You can see all the yellow iron from end to end. We're really unique in our capabilities and our strong customer relations to serve the full power and energy value chain. The second area that we're unique is by the strength and the breadth of our product and services portfolio. We have the broadest product portfolio to serve the needs of these kinds of customers. We have reciprocating engines up to 10 megawatts, natural gas turbines up to 39 megawatts that new Titan 350 turbine. We have excellent products, high-power density, high efficiency, key things for customer success. We leverage common platforms and that allows us to adapt to changes across multiple applications or industries, changes in demand and changes in customer needs. We have the scale and speed of implementation to help our customers at this time of rapid growth and we offer full solutions and those solutions help simplify design and speed commissioning for customers when they're trying to get power and get it fast. So let me talk a little bit more about this with a customer example. We're really excited to be working together with a company called [ JUUL, ] who is an infrastructure developer and they're building Utah's largest data center. This data center is going to have on-site power, no utility connection and they're going to need multiple gigawatts of power. We work together with [ JUUL ] and also our local Cat dealer Wheeler, and we came up with a power solution for them that contains the latest and Caterpillar product technology. And it helps solve a number of things for [ JUUL. ] It ensures that they can meet AI workloads, which can be difficult, but at the same time, have a system that's very efficient and very reliable. The project includes natural gas engine-based gensets for both primary and backup power, and it's a full solution. It has controls, switchgear, inverters, energy storage full Caterpillar solution for JUUL. It's also services based. We have a 10-year services agreement with a and that features on-site support and remote condition monitoring -- this is the kind of application that can't go down. We need to ensure that it's up all the time. So with that, let's hear a little bit more from JUUL directly on the project and their partnership with Caterpillar. [Presentation]

Really exciting project for us. And working closely with customers like David at JUUL, it's really key for our future growth of success. So I want to transition now. We've talked about the external environment, its support for growth. We've talked about how we're uniquely positioned. Now I want to get into some of the ways that we're executing to capture that growth. The first way is execution and advanced technology. So as we're developing products and technology, we're really focused on the intersection of improving customer economics and improving their sustainability. And when we do that, we know that we can deliver the maximum value for customers. Some examples of how we do that, first, in machine productivity. So product efficiency is a really big deal here. An example of our work is our new Gas 35,200 gen set. It's the product that they're going to use at the JUUL site. That new genset product has leading levels of efficiency, and that allows customers to lower their cost of operation and, at the same time, improve sustainability. We continue to build out our advanced power portfolio, new hybrid technologies, new battery-based technologies and we're using those with customers where those technologies best meet their business needs. And we continue to focus on automation and autonomy. And for us, that means advanced control systems. One good example is our CES control system for power generation. It's a system that allows customers to integrate multiple power sources on one site. So maybe gensets, batteries, even solar PV bring that together, interface with the utility. That control system does that seamlessly, fully automated. And at the same time, it's always looking to improve efficiency and sustainability and ensure reliability. We're also executing on commercial excellence, focused on customer needs, focused on meeting customers where they're at across a wide range of different projects and different applications. So that key account management that Joe mentioned is one really important way we get that done. We have strong direct relationships with large customers, customers that span across multiple dealer territories. And by doing that, we're able to clearly understand their needs, help develop tailored solutions for them to meet those needs and build some really strong relationships along the way. When we put that together with the local support from our cat dealers and they're great local execution, we really can bring the very best commercial experience. It's the combination of global scale from Caterpillar and strong local execution from the Caterpillar dealers. Our services are and continue to be a differentiator for us, and we remain focused on services. It allows us to ensure customer reliability, uptime and the lowest in total owning operating costs across the full life cycle. Our services capability really ensures the very best for our customers in terms of their overall experience. And I'm excited that lots of you are going to get to go to De Soto later today. De Soto is a critical part of our services portfolio and our gas turbine business, you'll get to see that in action. I want to share a video now about QTS, we're really fortunate to work together with QTS. They're a data center development company doing global data center development for hyperscalers, cloud computing and high-performance computing. And I really want to hear -- want you to hear directly from them what their partnership with Caterpillar feels like. [Presentation]

We're really fortunate to have QTS as a customer, and you heard about our relationship with David. You also heard him say it's important for him to work together with a company that can scale right now in this time of rapid growth. And we're doing just that. As Joe mentioned, we are making strategic investments in capacity. The first part of that is doubling our large engine capacity, as we previously announced. That new capacity increase that project is underway, and it will help us meet the growing needs in power generation, oil and gas and also the parts we need for our services growth moving forward. We're really excited today to also announce our capacity increase for industrial gas turbines. We're going to increase capacity by 2.5x in our turbine manufacturing. And that will help us meet the needs of gas compression customers, power generation customers, including data centers as we move forward. We have confidence to make these investments right now because we have a record backlog. We have frame agreements in place with many of our customers. And we're getting long-term forecast signals from our customers to help us understand their needs moving forward. And in my 25 years, I've never seen us have such a clear view of future demand that we have from our customers right now. These projects are well underway. We're making some initial gains. You've seen our power gen growth in 2024 and 2025 so far as evidence of that. We'll continue to add meaningful capacity year-over-year through the end of the decade. And once the programs are complete, we will have 50 gigawatts of combined capacity for large engines and turbines in place by 2030. We're also excited about how this capacity increase can help us grow in services. So we're seeing a larger number of applications that require high run hours. So things like gas compression, primary power generation, those applications, they tend to run 24/7. And when that happens, it creates significant and long-lasting services opportunity for us. A couple of examples of what that means and how that works. So if you take primary power, natural gas engine gen set, running 24/7, and you compare that to a diesel standby unit, that gas unit has 40x more services opportunity over its life cycle. And in our solar turbines business, for gas compression, for primary power generation, those units are on 24/7, and our customers use them for decades once they're installed. Our capacity increase helps us serve more and more of these customers as we see that growing demand. And in doing that, we're able to grow our services opportunity not only through 2030, but well beyond. Our customers, they really rely on us for strong services and support and again, excited to show you that at [ DeSoto ] later today. Let me share one more customer example, and I think this really brings together everything that I've talked about today. So Williams is a natural gas infrastructure company. They gather, process and move natural gas, transport natural gas. They operate 30,000 miles of pipeline in the U.S. They move about 1/3 of the gas in the U.S. They're also a longtime Cat customer. We have almost 1,000 pieces of equipment in their fleet, engines and turbines. And based on that long relationship, we've been able to show our services capability and build trust with them. Williams recently decided to expand their business into power generation. So they're looking to provide power to data centers moving forward. Based on our trusting relationship based on the breadth of our experiences, Williams came to us for help. They asked us what we could do. So we partner with them to put a power solution together for their first project. It includes both engine and turbine-based generator sets. It includes an exclusive service agreement or a very strong services agreement to keep them up and running. It's over 1 gigawatt of power. That solution allows Williams to solve a number of problems. One is how do I support the AI workloads they were expecting. Those are difficult workloads. We were able to help them do that. They needed speed of implementation. We were able to give them a large amount of power quickly, and they were looking for a full solution. And so our capability to bring both engine and turbine-based power generation was a key differentiator. Let's hear a little bit more from Williams about our relationship and the project. [Presentation]

So I think these customer examples, Williams, QTS and [ JUUL ], they really illustrate our ability to provide excellent products and services, but also the commercial excellence we can provide to customers. So I want to wrap up with those same 3 points that I started. These are the things that I really would like you to leave with today. The first is that we're in an extremely supportive external environment for growth. We're seeing strong global energy demand increases and historic increases in the need for electricity. The second key point is we, in Caterpillar Power and Energy, we're really uniquely positioned to take advantage of that, through our participation through the full power and energy value chain and the breadth and strength of our product and services portfolio. And lastly, we have a clear and well-established plan. We're off and running on execution and we really have high confidence and success. We will more than double power generation sales by 2030. And in order to do that, we're making strategic investments in capacity, both large engines and turbines. There's truly never been a more exciting time to be part of Caterpillar Power and Energy. So with that, I want to thank you for the opportunity to talk about Power and Energy today and introduce our next speaker, my colleague, Tony Fassino, who will talk about the opportunities ahead in Construction Industries.

Ladies and gentlemen, good morning. My name is Tony Fassino, I'm Group President for Construction Industries here at Caterpillar. Our purpose is clear: to build a better and more sustainable world. I'm going to talk to you today about how we're going to grow and how we're going to do it profitably. Construction Industries serves markets around the globe. You can see on this slide, we're everywhere from general construction to heavy, industrial waste, road construction, core in aggregates in addition to agriculture and landscape. Now the good thing about this slide is there's a lot of variety here. There's a variety of customers, there's a variety of applications. They need a variety of solutions. They need a variety of products to solve their toughest challenges. And again, the good news is we're here to do that. And having done that for the last several years, we've maintained a strong financial position. You can see on the left-hand side of the screen, we've taken that top line from $23 billion to $25 billion, and move that bottom line as margins have expanded from 17% to 24%. Now we've done that in a number of ways. Keep your eye on the right-hand side of the screen. We've expanded that product line, that next generation of products has served these customers very well that you saw in that previous slide. In addition, we've added an entirely new compact track loader lineup that's been very well received by the market. Also building our own telehandlers. Generally when we build it and do it our way, we tend to be the most successful. We've added that to the portfolio. Also, strength in services, an additional 400,000 connected and reporting assets and more than doubling the number of customer value agreements. We'll talk about CVA's, customer value agreements as we roll through the presentation. We wrap around that, 3D grade-ready options across much of the product portfolio and you bring that technology heavily into focus. Those elements have helped us deliver those results on the left-hand side. And the future is very bright. Joe talked about the plus 25% in global construction spend, very good news from a CI perspective. Let's dive into a little bit more detail. Let's talk about that residential construction piece of plus 25%. At residential construction, the urbanization housing needed for densification of populations, our building construction products team and those products and solutions they provide serves that very well. They're on the sites, preparing the house pads, getting things ready. Plus 51% in rental, customers don't always buy sometimes they need to rent. They just supplement their work. The products that we provide feed the dealer rental fleets as they grow that to satisfy the customer need that's out there. Moving to the right-hand side of the screen for nonresi. We talk about nonresi quite a bit. Nonresi building and civil. Nonresi building, plus 15% and civil infrastructure plus 35%. Remember that nonresi building, that's the factories, the hospitals, the schools, that long list of nonresidential project takes places that we're always right there on those big dirt jobs, hits our core larger product line very intensely. And you can't miss the bottom right, plus 35% on the civil and infrastructure. Right there with our big tractors, dozers and loaders, the roads, the bridges, the tunnels, the water ways, everything you needed to get here everything you're going to need to go home was built by that larger product line, and we're out there every day. And that's positioned us very uniquely. It's positioned us uniquely to solve our customers' toughest set of challenges. Let's talk about some of the reasons why that total cost of ownership you see on the center of the slide, TCO, a lot of times that customers or that, they need the lowest total cost of ownership that ensures their profitability success and gives them the ability to grow. That's been at the heart of Caterpillar for the last 100 years. It's going to be at the heart for the next 100 years. Also, product support down the center, 150-plus dealers around the world, basically serving every country. They're right there local. They know the people. They know the customers, the contractors, they know what's being bid led. They know what's going on. They support that with the largest service technician population in the world, educated and trained by us with the service tools and processes that we've perfected over time and continue to advance and hand them these new and different tools to do it better and faster. Also on the right-hand side of the screen, that technology suite, a technology suite we built over many years have continued to pour the resources in to 3 lead stronger with the technology piece. From the onboard technologies, whether it be autonomous, semiautonomous, some of the features to help operators and the offboard a lot of the digital technologies that I'll dive into, and you're going to hear Bob dive into a little bit later this morning. All of that built across the foundation of 300-plus models and growing along with 1.4 million connected to reported assets and again, that digital and technology innovation that we do every day. With that, I believe strongly in our 2030 goal of 1.25x sales to users. We can grow that to 1.25x from where we were in '24. And we're going to do that across a base of commercial excellence, the advanced technology leadership and the integrated solutions you see there in the bottom left-hand side. Joe and Jason touched on some of this. I'm going to dive into all 3 of those as we talk about what it means for CI. So let's start with the commercial excellence piece, how we're aligning, scaling and how we're going to use that to grow. Essentially, it's all built around the customer. The industry itself has been accused many times and still is today of being somewhat product-centric, this product, that product. We've been a little bit that way. But right now, we're dramatically reshaping the commercial organization on the left-hand side of the screen in that first box. You see a world map, you've got the gray, you got the yellow. We're going to reshape the commercial organization to focus on 2 separate areas. One is that core region in gray, the growth region in yellow. When you go into those regions of the world and you talk to a customer and you sit with them, whether I'm sitting with customers in Zambia or Southeast China or Australia, India, South America, Europe, North America, wherever it is. A lot of times, they have very unique buying, bidding, oftentimes, payment is different in core than it is in growth. It requires a unique and reshaped commercial approach to address the customers' needs. So we're creating a customer solutions core commercial organization and the customer solutions growth organization, each led by a Senior Vice President, focused exclusively on their individual regions. So they can give that intense customer focus and bring that back and be there every day together with the Cat dealers, again, solving the customers' toughest challenges as they go forward. In addition, down the center of the screen, you'll see a new customer approach. You see the rental sign. You can see basically a dealer's yard there, a lot of compact machines there. You got a customer talking to a dealer sales rep. One of the fastest-growing segments that compact construction area, right? Very positive for us. Those customers need a retail-friendly experience, and we're transforming. We're tailoring that to meet those needs. But it's not just the physical presence you see here. We are transforming that. We're also transforming that online presence. They need speed, ease of use, information. They need to be able to buy and rent it and do it fast. Very much a characteristic of they, as a customer set. And as we tailor our solutions, we're going to provide that and satisfy that. Again, a transformation of that go-to-market strategy as we bring that retail, rental, online and physical together because they need a pretty unique set of solutions from a retail perspective. And on the right-hand side of the screen, you see services commitment. Customers like predictability. Customers like commitments. It takes a pretty unique set of tools to be able to commit. Fortunately, I've talked about and I'm going to talk more about a lot of those tools and skills we have, we can't provide outcome-based commitments to our customer base. Together with our dealers, we can commit to exactly when you'll get the part. We can commit to when that machine will be up and running and provide hard time lines. So your work is more predictable over time, which is really key from a customer perspective. But it's best to walk through, well, how do you do that? Logical question you might want to ask. And this goes a little bit to the customer value agreements, this is going to build off of customer value agreements. We're going to talk about data. We're going to talk about the technology tools, but let's start with the data first. Obviously, to harness that data, the data that comes from those connected and reporting assets, our SOS analysis, that deep, rich information that comes from the analysis of every fluid compartment on a machine, we know those machines better than anybody in the world because we design them. We know the chemistry of every single piece of material in that machine. We know exactly how those machines behave and the SOS provides that information so we can add value to the customer. Along with all the inspections that take place around the world every single day through the Cat and [ spec ] app, it helps us understand the condition of the machines we've got running around the world. When you combine all that into a data set, from a value-add perspective, you can begin scaling and scale the recommendations to the customers. But that's not that easy unless you have these predictive analytics powered by a number of AI tools, as you can imagine, advancing very rapidly just in the last 6 months compared to the last 2 years, advancing very rapidly what we can predict and draw from that data set. As we hand that information over to the Cat-led condition monitoring team working together with our dealers, we can provide tremendous value out to the customer base. And the important thing is it's timely. If it's after the fact, it doesn't really matter. If it's timely and predictive and proactive in terms of how you can prevent and use maintenance to be preventative, how you can plan the rebuild or plan the repair, it's an entirely different situation and if it's after the fact. When you do that, loyalty grows, the customer gets a more consistent quality experience over time. Because again, they want predictability. They'd like to know what's going to happen today. None of us like when we don't know that. And when you do that, it's a lot easier to uphold these exceptional commitments and make these service commitments that I mentioned. Commit to when the parts there, commit to when the machine will be back up and running. Commit to an availability number of the machine. Again, so the customer knows and ultimately maximizing that total customer value. The base that has been laid here and other tools that we're working on exaggerates and scales across from left to right, ending in that customer value piece. But I'm going to pause here for a second, and I'm going to introduce a video. JP Excavating uses customer value agreements, they use them for several years. As you listen to the video, listen to some of the keywords they mentioned, listen to some of the benefits they articulate and then listen as he summarizes really what it means to them from a business perspective. Let's listen to JP Excavating. [Presentation]

We're going to hold this slide for just one second. What were those keywords he said? Better faster, over several years, 60-plus machines, more than you would expect. What was one of the most important points that he made there? When he woke up. When he woke up, he had the report, when you woke up, there was already a plan for a replacement machine to go out there to make sure he could see up and running. He wasn't doing a lot of worrying while he was asleep, that was being done for him behind the scenes in those customer value agreements. So again, tremendous value added with the CVAs. Let's move to the advanced technology piece and how we're pushing forward on that in the job sites. And it's about the job sites of the future. There is a big element of the job site today because you look across the left-hand side of the screen, top to bottom, safety, productivity and labor, most common customer pain points as I travel around the world and sit with customers, safety, productivity of labor, safety, productivity. It doesn't matter where you are, what language, what country you're in, safety, productivity, labor. We've got solutions today across safety. People detect cameras, object detect an object avoidance tools along with 360 vision systems on the machines. The productivity side, you'll see in the technologies, we've got productivity in our VisionLink. We've got the next generation of products that actually commits the productivity, fuel consumption combination does worry well from a customer perspective. A lot of operator assistant semiautonomous features that help you load the bucket, helps you dig the slope, helps you go to grade autonomously and easier. Takes that less skilled operator makes them more scale and we've been scaling this across the industry. So that safety productivity labor comes together, and these tools improve each one of those. It's about stitching together those tools, the digital and the physical world and providing that total job site solutions to the customer. As I set that up and Bob comes up a little bit later, he'll weave that together into the future and bring in some of the AI tools we're using to do that even stronger and more going forward. But again, the best way to get an example, the best way to understand is, well, exactly how do these technologies apply what happens in the field, how does it apply to the customer, the operator, is a listen to CBM talk about a unique problem they had how they use a set not on a set of customer solutions to solve their biggest problem. Let's hear from CBM. [Presentation]

So give me a said it very well there at the close, building a better, more sustainable world. What was the important point, though? They're doing it safely. They had a situation where people just couldn't be there. It wasn't a safe environment. They took our solution and put it in place. He called them cockpits, they're basically operator stations, remotely located operators doing the work from an office somewhere. It could be anywhere in the world really. Also, what they need do we scale them. There was one cockpit, one operator station after another, a row. And if you look closely, there was another role behind those operators, scaling up the number of operators they had in a safe, comfortable, air-conditioned, quiet, clean environment as opposed to what they have been challenged with. And what were they using? You saw a -- they have 3D grade running on the screen. They also were using -- you couldn't see it necessarily, but to semiautonomous features that enable remote operation from a distance, bringing a number of tools together to help them be successful. Let's talk and go a little bit deeper even of how you bring all that together. Actual customer job site, a customer had a bit of an issue, 5 different sites, 35 machines across 5 different sites, ran about 75,000 hour machine hours per year and needed help. Difficulty managing themselves and they needed a predictable cost, improved uptime across their fleet to get their work done and also reduce that total cost of ownership that I introduced earlier in the slide and they came to Caterpillar. A total site solution that we brought to them. Machine cost per hour, solution with availability commitments, like I talked about earlier, managed by Caterpillar. So this total site solution across all these machines in many hours running in a day, what did we do? A number of elements and you've got some more detail on your reading packs. Operator training and machine rebuilds a big focus on safety, rightsizing the fleet, VisionLink productivity condition monitoring, proactive maintenance repair across the entire fleet, but the most important box bottom center yellow, weekly collaboration. Us on the site with the dealer sitting with the customer, talking about the challenges how we're going to lower TCO, how we're going to optimize the fleet, maximize productivity, ensure safety is #1, doing that together, again, for a total site solution. These have been very successful around the world. And as we scale these up with our advanced service and technology capabilities, it positions us very well for that 1.25x sales to user growth I talked about earlier. Because in the end, the customer got what they needed. 88% availability, lower total cost, operator incidents reduced. And again, that predictability in the bottom right, predictability, something that customers really, really want and need. Because their toughest challenges need somebody to be solved by. We can solve those toughest challenges. We can deliver, and I'm confident we can deliver the 1.25x sales to user growth using the elements on the right-hand side of the screen. The commercial excellence piece leading with the advanced technology and those integrated solutions taking those to the customer together with our broad dealer network. But that's not the end. There's a lot more. Come see us at CONEXPO. It's a handful of months away. There's more to see. There's more products being launched. There's more services details and strategies that you're going to see us launch there. Come see AI, come see the product portfolio, come see the service technologies, come see us demonstrate that in the operator station live and on site. We love to host you. I hope you're there, talk to Alex get a time schedule. I look forward to seeing you, and I want to thank you for your time today. I'm going to turn it over to Alex as we get ready for a break.

Thanks, Tony. So we're going to take a quick break, and we'll resume our broadcast at 10:40 a.m. For those in the room, just so you know, if you walk out the doors, you can actually find a restroom on either side, probably to the right is a bit closer. You saw refreshments and things for you during the break. So see you soon. [Break]

Welcome back, everyone. Those outside there if you could come in and get settled and be receded. So I'm pleased to introduce our Group President of Resource Industries, Denise Johnson.

Okay. Well, thank you, Alex, and it's great to be here with all of you today. Again, I'm Denise Johnson, Group President for Resource Industries. Today, I'm going to discuss our plans for RI and show that by addressing the most fundamental needs of our customers that will grow. So let's get started. Most of you know, Resource Industries is a global leader, and it's made up of 3 industries: mining, heavy construction, core in aggregates and beginning January 1 rail. These are the largest machines in Caterpillar's portfolio, operating in some of the most remote locations compared with Construction Industries, relatively low volume. But the duty cycle is much higher, running 24 hours a day, 7 days a week, 365 days per year. Extreme environments from minus 40 to 120 degrees Fahrenheit, high altitude to a mile underground, underscoring their durability and reliability. We cover the full spectrum of commodities from coal to copper to iron ore to coal to critical minerals and also gravel and rock. In January, rail becomes part of the RI portfolio, and it's an exciting evolution that really allows us to capitalize on the synergies as Joe spoke, shared customers, shared component manufacturing footprint, shared suppliers and shared technology road maps. Turning to our financial performance. As you can see from this chart, it shows traditional RI sales and profitability improving, all underscored and underpinned by the O&E model. We're operating with a high-performing portfolio that delivers strong results and leads the industry in returns. Caterpillar is the industry leader in mining haulage and notably, autonomous haulage, which is poised to rapidly grow moving forward, helping our customers mine more sustainably while recognizing that every path to 0 emissions is different, is a top priority, and it certainly has been for our mining customers. We believe our pathways to sustainability program, working with customers to collaborate on a wide range of sustainability solutions is strategic, and our groundbreaking Cat dynamic energy transfer solution offers industry-first benefits, which I'll talk more about shortly. Now as Jason mentioned, the world needs more. More power, more energy. Tony talked about the need for more infrastructure. This drives demand increases of nearly 40% for critical minerals such as copper and graphite and battery materials, and a 28% increase for construction aggregates. At the same time, we see ore grades for commodities like copper continuing to decline, meaning more materials need to be moved to extract the same amount of ore. All of this drives demand for more machines, higher asset utilization and a keen focus on cost. We've talked for some time about customers continuing to be disciplined with their capital. Many of them are stretching the lives of their machines beyond previous levels. And the average age in the industry for mining and core in aggregate is about 12 years. The average age of a Caterpillar large mining truck is actually 14, over 14 years. We've seen a fivefold increase in the number of full machine rebuilds over the past 20 years. However, many aging fleets are entering a critical phase, and they are approaching almost 200,000 hours of life, and they will need to be replaced, especially if you consider technology. We're seeing similar dynamics in rail with many customers choosing to rebuild and repower but with replacement demand expected to begin. In addition, we are seeing the mining industry entering a new investment cycle. So based on the industry outlook, as you see here, we project mining capital expenditures to grow by 50% by 2030. While much of this increase will be invested in mine development, we also expect healthy investment for mobile equipment and technology. Our portfolio of machines, technology and services is aligned with these trends, and we believe reinforce our role to be a strategic partner. As we outline our strategy in our eye, we're keenly focused in 3 areas, and I'm going to speak in detail about these next. First and foremost, and you've heard this already, commercial excellence. For RI, that means delivering industry-leading performance at site and increasing our presence with the customer focused on aligning our incentives with the customers such that we win together. Second, we're doubling down on our role as an advanced technology leader with rapidly growing autonomy and expanding our technology suite with something we're calling precision mining. We're also expanding our portfolio of sustainability solutions as customers are in very different places along the sustainability continuum. Our vision, our vision is to build an ecosystem, an ecosystem of products and services enabled by technology to help our customers become safer, more productive, efficient and lower their total cost per ton. In mining, like other industries, our customers' ability to use data to drive insights and efficiencies in operations will be a key differentiator. At Caterpillar, we are uniquely positioned in our ability to integrate data from machines, from energy systems and infrastructure and especially as we move further into autonomy and precision mining to help customers be successful. So let's dig in and talk about the first of our 3 priorities: commercial excellence. I want to start with an example of how we're working with customers differently. Many of you know Suncor as an integrated energy company operating in the Canadian oil sands. Over the past few years, we've worked closely with them on a very different approach to how we collectively drive the lowest operating cost. So let's hear more about it in this video. [Presentation]

So our success at Suncor can and will be replicated with other customers as we increase our focus on providing outcome-based solutions and really being on site with customers. As you heard in the video, autonomy is one of the technology solutions that Suncor is using to support their improvement journey, and it's one that we're hearing a lot of pull from many customers. Increasingly, they really want to turn to autonomy and technology in general, which brings me to our second focus area, advanced technology. So autonomy and automation are the fastest-growing trends in mining. We projected 12% CAGR, driven by declining ore grades, rising input costs and certainly continued labor. We believe the Caterpillar Autonomy Solution is superior. And we're delivering new solutions to create even more value, such as flexible pricing and customized deal structures. We're developing a new tech stack and software enhancements to not only improve the user interface, but also improve productivity. We deliver a mixed OEM fleet solution, and we're deploying economy enabled trucks straight from the factory. We are confident with this approach that we're in, we are committed to tripling the number of autonomous trucks in operation by 2030. Now let me give you an example, demonstrating this approach in action. We had a large customer looking for an autonomy solution to help them overcome productivity and utilization challenges in 2 of the largest iron ore mine sites in South America. They also needed technology to work across their mixed fleets, which included both Cat trucks and competitive trucks on site. We worked with our dealer to design a customized proposal. And in that, we developed a mixed fleet solution, putting our autonomy on Cat and the competitive trucks, a very flexible commercial model moving from what would be traditionally a CapEx to an OpEx model and an accelerated time line for technology deployment. The solution was our differentiator, and we won the award to put our autonomy on more than 90 trucks. Deals like this position us well for future fleet replacements. Many sites around the world have mixed fleets and are looking to activate technology immediately. We're working to take our proven autonomy expertise and expanded in the quarter, and we announced this previously. Our teams are implementing a customer-backed solution, which is lighter touch and lower cost to really be viable in this industry. And there's no better way to do the development than with a customer at site, and that's what the team has been doing with Luck Stone in Virginia. And you'll see this in action with a video that Bob De Lange will show you shortly. We're meeting with [indiscernible] customers every day, and I'm confident we all will see a healthy uptick in autonomy adoption in the core space between now and 2030. So autonomy positions us to go deeper with customers at site. And going deeper positions us to go wider, and that's where precision mining comes into play. Precision mining is a technology approach to help customers mine more efficiently and productively at the total lowest cost. The competition for technology in this space is strong, but the solutions are very fragmented and they're siloed, and they don't deliver the value that our customers need. Our vision is for precision mining to be an end-to-end solution delivered by Caterpillar internal capability, combined with venture capital and acquisitions to help our customers optimize their complete value chain. And we're not waiting to work to build out the value chain solution. Today, we do have solutions primarily in the load and haul space, but we're planning to expand across the value chain that I just mentioned. The first step in that build-out, as announced, is that we have entered into an agreement to acquire a company called RPM Global. RPM has 50 years of deep mining expertise in the industry. Their technology solutions are focused on mine and financial planning, maintenance execution and simulation expertise. Many of our existing customers and dealers use RPM today. And in fact, Caterpillar uses it as part of our solution set. We plan to integrate RPM solutions with our technologies in the future to enable improved performance for our customers. Many of you may not be familiar with RPM and their technology solutions. So I thought today, I would show you a promotional video that RPM had developed so that you get a flavor for exactly what they do. [Presentation]

The transaction is expected to close in the first quarter of next year, and we look forward to the value that we'll deliver together for our mining customers. So next, I'd like to speak with you about the ways that we're integrating technology into solutions that support our customers' sustainability journeys. So Caterpillar is delivering commercially viable solutions today, solutions that balance the need to be more sustainable while also addressing immediate operational needs. I spoke earlier about rebuilds and life extension initiatives. They're very important to many of our customers. We're also working to identify alternative fuel options. We have [ HBO ] and biodiesel solutions today. And with Vale, we're working on an ethanol diesel, dual fuel solution. That's part of their plan to reduce greenhouse emissions by 33% by 2030. Our fleet management systems and our assignment engines are designed to optimize energy across complex sites. Many of you know autonomy drives fewer working assets to meet the same production requirements, thereby improving sustainability and reducing greenhouse gas emissions. Through hybrid powertrains, we deliver solutions that really stepped down the customers' carbon footprint while maintaining productivity. An example of that is the D11 XE Dozer. It's capable of reducing up to 25% fuel consumption, which is about 100 gallons per day while also delivering improved productivity. These solutions are available today and in the near future. We're going to have even more. We're very focused on solving for the entire site because what will work for each customer will be unique. In a minute, I'll talk about our groundbreaking Cat Dynamic Energy Transfer System, or DET. Next, we have our 793 diesel electric and battery electric mining trucks. They share a large percentage of the same components and support future retrofit such that if you start with a diesel 793 and you want to swap it out for a battery, powertrain instead that capability is available. Through partnerships with Cat Electric Power, we're also offering micro grids, energy storage systems and gensets to support holistic site energy management solutions. And then finally, we are in process of validating our full battery electric solutions, which we announced at the last Investor Day, 793 XE, we have 4 early learners in the field today that are being validated. So remember, these solutions are not one size fits all. They're designed to support each customer's unique pathway. So with that, I'd like to go into a little more detail with you on CAT DET. DET is expected to be commercially available in the fourth quarter of 2026. It is a versatile solution for both diesel electric and battery electric machines, offering immediate productivity gains up to 2x speed on grade and significant greenhouse gas reductions. CAT DET is comprised basically of 3 core elements, if you think about it. First, an energy transfer module that converts AC to DC to power the truck, a 3 rail transmission system that delivers energy effectively across the mine site. An onboard machine technology that interfaces seamlessly with the trucks powertrain. The rail system is mobile, and that's unique. It's not like an overhead trolley. It can be customized to the customer-specific site layout that includes high-speed or curve call roads. The connecting arm can be installed on either side of the truck and on multiple truck models. So it's a very flexible system that can be moved and expanded to allow maximum mine coverage. It integrates with autonomy. And also electrification to provide holistic site solutions. This is a breakthrough innovation, and we're super excited to get it out in the field and with customers. So to wrap things up for Resource Industries. I'm confident in our future because, because of our unique ability to integrate technology and machines. Our future isn't just about building machines. It is about building smarter, more connected operations at site for our customers. By offering outcome-based solutions and advanced technologies and by supporting our customer sustainability journeys or helping them to mine safer, more efficiently and predictably. We're investing, innovative and reaffirming our leadership as the premier provider of mining technology and solutions. And now I'd like to turn it over to my colleague, Bob De Lange. Thank you.

Thank you, Denise, and good morning. It is really exciting to be here with you today, and have an opportunity to share with you that for us, VisionLink technology is not just about tools and application we develop. But more importantly, for us, it's an engine of change. We're using it to transform Caterpillar, create even more competitive differentiation and will be a key driver for growth in the years to come. But before we dive in, let's take a minute and look back to the past few years because we've already made significant progress in the last 5 years. If I start on the left, connectivity. We have 1.5 million connected and reporting assets today, one of the largest in our industry and up from about $1.1 million when we talked to you in our last Investor Day. In the last Investor Day, we also talked about PSE's, prioritized service events, the aftermarket sales leads we generated and sent to our dealers. But going forward, we're going to zoom in on a subset of those PSE's condition monitoring PSEs where we don't just use our theoretical models, but also the full array of sensory input we get to create even more accurate PSEs to help predict issues that are going to occur in our equipment and where we then also see the highest win rates when we send them to our dealers. We didn't really have those in 2021. Last year, we achieved $1.1 billion in closed one sales based on those commission motoring PSEs. Next on e-commerce. We met at our last Investor Day, we told you we had about $10 million per business day in e-commerce sales, and we committed to grow that by 50% by 2025. In reality, we did even better than that. Last year, we already achieved $18 million per business day or about $4.5 billion for the full year in e-commerce sales. And then last, like you already heard from Denise, at the end of last year, we had 690 autonomous mining trucks in operation, traveling together about the equivalent of 3x around the world on a daily basis. So a pretty solid foundation to start building on. This is my most important message for today, which is that we see digital and technology shifting from being enablers for our business, to increasingly becoming sources of competitive differentiation. And why do I say that? It's because if you look at our traditional updates to our equipment, changes to the hydraulics, the drivetrain, the engine, we usually get incremental improvements in performance, a couple of percent. Whereas with digital and technology, they hold the promise of making transformational change, step changes in solving our customers' toughest challenges. And I'll give you some examples of that transformational change here in a minute. But the challenges are real. If you look at them that I listed here, safety, less than 5% of the U.S. labor force is employed in construction, yet it represents 20% of workplace fatalities. Skill labor shortages, like you already heard from Tony, consistently among the top 3 issues that we hear from pretty much all our customers. 30% of construction is rework. 40% of construction projects are over budget. So real challenges to which we can give real solutions. So let's dive into some examples, and I'll start with Vision. First one, our condition monitoring PSEs, like I mentioned before, highly qualified, data-driven leads we send to our dealers. Now why can we as Caterpillar be so good at it. I already mentioned, we have a very large connected fleet. But I would say our true competitive differentiation or secret sauce, if you will, probably is our data platform Helios. [ 16 terabytes ] of data that we collect from all our connected assets from inspection reports from our dealers and from customers, work order history, our theoretical models, engineering recommendations, all the dealer invoices. I mean in total, 30 different data sources, over 50 billion records, we ingest on a monthly basis, all of which gets fed into our AI engine, generating those proprietary qualified sales leads that we send straight into the dealer CRM. Now how will those help us grow? We believe it will help create customer loyalty over time because we help them avoid downtime. The one thing we do not want on our job site. And we do that by turning unplanned surprises, unplanned failures into planned events, maintenance, preventative repair and overhaul. So customers avoid downtime for Caterpillar, it creates incremental services opportunities, and we want to be proactive and quick with our customers, so we can get the work done even before our competition shows up. To give you a small example, we recently created a new digital twin for our line of Caterpillar turbochargers. They sit at about 1/3 of our total connected fleet for which we created that digital twin with our knowledge of the machine design, the engine design, all the sensory input. To date, it already allowed us to create 2,500 condition monitoring PSEs, allowing customers to avoid downtime. For us, it was an incremental $7 million sales opportunity. So that was the first example. Next one, e-commerce. And the key here, this is more than about buying parts. This is about making it easy to do business with Caterpillar. Now why can we do this better? Lots of people can create a website or you can buy parts. We make it an integrated digital experience. What do I mean with that? It starts with a customer that can scan a QR code on a machine so that afterwards you look up on the e-commerce and you look for a fuel filter. It doesn't show you 17 different fuel filters you can buy, it only shows you those parts that are guaranteed to fit on your specific serial number. Or if you are a do-it-yourself customer, and you're using our service information system, SIS to troubleshoot the your machine, trying to identify which repair you need, inside our SIS, service information system. It includes a link you can click that will then pre-populate your e-commerce card with all the necessary parts to perform that repair in a number of cases, even the tooling. For our large corporate accounts, we have a dedicated e-commerce system that integrates straight into the customer's ERP system, again, making it very easy for them to work with us. And then of course, we have an industry-leading parts distribution network, fast delivery in pretty much all corners of the world. So how will this help us grow? I believe it's just like in our personal lives. If you make it easy, customers come back. And if you look at our growth rates over the last few years, that is exactly what has been happening. Third, and my last example for digital is about VisionLink, our flagship application that help customers manage all aspects of their fleet. Now why can we do this better? I mean you can go and there's other providers that might say, well, we can do fluid sampling for you and then display the report on the website. What we do is make 1 easy-to-use solution that brings it all together in 1 place. You can monitor machine health, get fault codes, also see those SIS fuel sampling results, inspection results history from your operators from the dealer. It also includes a 2-way communication tool with our dealers or your local dealer, if you want to schedule maintenance, ask for a quote for repair, approved the repair online, get live status reports of the progress of your overhaul, a fleet manager who was interested in efficiency can manage idle time of the different machines, monthly utilization, track fuel consumption. There's also a safety module in there, which of my operators [indiscernible] seat belts yesterday, what are the high-risk areas where I had near misses on the job side I have. There's a productivity module in there as well, for those wanting to optimize productivity, where you can measure and analyze cycle times, track productivity. And so all in one single easy-to-use application. And also keep in mind, we're not just showing information or alerts. We can also give recommendations because we have access to all the data. We know our machine design. We have the domain expertise. So we can do it all in one place for the customer. How will it help us grow? We believe that by creating a very easy-to-use ecosystem of applications for the customer, that customers will want to stay in that ecosystem, again, growing loyalty for both prime product and services over time. But to make it real, let's maybe listen to an example. One of our customers, BDC Construction, a great customer of ours in the Pacific Northwest. [Presentation]

So those are some examples of the digital end. Let's now switch gears and talk about technology and how technology can help us solve our customers' stuff as challenges and unlock value at the site level. And I'll put them here in 3 main categories. First one being safety. And here, we have solutions for object detection, collision warning and mitigation. We have a system for driver fatigue detection or like on our excavators, we have a system where you can maximize the limit height for your front linkage, if you would be working on the new power lines or you can also set a maximum digging depth if you would be working, for example, above underground utilities. Second one being productivity. Here, we have systems like for our loading tools, excavators, reloaders, of a payload measurement system. If you're focused on productivity, it can help you make sure that when you're loading a truck, you fully load the truck, maximize productivity. You can, at the same time, avoid overloading the truck and avoid the risk of future damage or in some applications like in [indiscernible] you can even, in some instances, avoid the need of an extra weighing bridge that is usually used to weigh the trucks before they get back on the road because you can do it while you're loading the truck. Another example is what I've shown here in the picture is our 3D grade control. And you can think of that as autopilot for machines with the blades for excavators, motor graders, track-type tractors and to make it real, imagine a test we have done like you're seeing on the picture with an excavator, where we had to finish grade with precision, just a business of 10 meters, 30-degree grade, you can imagine the side slope of a motorway or an irrigation canal. If you do that job with no technology, first thing you will do is do your measurements, make sure you know where the 30-degree trade is. Next, you'll put some pieces of wood usually, just some visual indications of where you want the end results to be. Then to be sure most customers also have a great checker, a person that will be next to the excavated just as the work progresses, checks whether it's correct on the grade and you're, of course, introducing safety risk with that. And then you have to hope you also have a qualified experienced operator to do the work because otherwise, you still have the risk to get the right grade with the right accuracy that you'll either do another pass or if you're not careful that you're overcutting? When we did this test with an experienced operator took us 38 minutes. Then we did the same test with the excavator with 3D grade control. First thing you do is you get the engineering drawing for the job site design, with our VisionLink application, you can download it over the air straight to the machine. So the machine knows what you're trying to achieve. Next, you don't need to do measurements, machine has GPS. It knows exactly what precision where you are. So you also do not need to put visual indications. You do not need a second person doing the grade check, so we're already working safer. And then while you're working, the machine will actually help you with the autopilot, stay on grade. You also get visual indications in the cab. I mean it becomes so easy. You don't need a third year experienced operator with minimal training, even somebody like me would be able to do a job like that. In result, from 38 minutes down to 12 minutes for the exact same job. And that's what customers are telling us consistently. You use 3D grade control, you get the work done, finish [ creating ] jobs in less than half of the time. And that's a perfect example of what I mentioned before, with our traditional updates on drivetrain, hydraulics and the engine, we get incremental productivity improvements. Technology holds the promise of making transformational step change in addressing customer challenges, safety, productivity, cost. Last bucket then is on autonomy. Here, we have line of sight remote control solutions. We have non-line of sight remote control solutions like you see in the picture here. In case you want to pick the operator out of a hazardous situation or you wanted to work in a more comfortable work environment, or it also has the benefit that if an operator works in such a station, that they can actually operate multiple machines at the same time, again, improving productivity. Then we have task autonomy, for example, for drill tramming or auto compaction on a compactor. And then we have our autonomous mining hauling solution like Denise already showed, which actually is also an area where we continue to invest. Denise mentioned that we are working very hard to expand the potential reach of our autonomy solutions well beyond mining in a number of applications. And the one we're working on right now with Luck Stone is to bring autonomy also to quarries, a very large market, a very large opportunity where we're partnering with them on our 100 [indiscernible] platform, our 777. So let's listen to what Luck Stone have to say. [Presentation]

So as we are convinced that digital and technology is key to our competitive differentiation going forward, we're also stepping up our investment. Joe already mentioned it, we're planning a 2.5% increase in vigilant technology in the coming 5 years as compared to the last 5, which was already very significant. In addition to that, as a technology environment is changing very rapidly or in some cases, even by the month, we're also partnering with some of the leading companies in the world like with NVIDIA to bring AI to manufacturing and on to our machines. Microsoft has been a long-standing partner for everything related to cloud and productivity. And for organizing Helios, everything related to organizing our data, we are working with Snowflake. On top of that, to even further accelerate, as you've seen in the example with Luck Stone, we are working with some key corporate accounts around the world on early learner strategies to accelerate the development of our new technologies. Now before closing, I also wanted to take a second to reinforce once again that we are fully embracing AI to create a differentiated customer experience. Everything from a simplified engagement across our digital ecosystem, think of increasing number of onboard and offboard agents, autonomous machine features, predictive analytics for condition monitoring, as you've seen before, into manufacturing. And so as we announced this morning and Joe already mentioned, please come and join us in January at CES for our keynote so that you can hear for yourself on how we are fully embracing the power of AI. With that, and in summary, as I said, digital and technology are transforming Caterpillar. And to make that clear, we have also set some ambitious goals for us for 2030. As you can see on the screen, we want to achieve at least 2 million connected and reporting assets no later than 2030. We want to double condition monitoring PSEs closed $1. We want to increase e-commerce by yet another 50% from where we were last year. We want to achieve at least 500,000 tech-enabled machines. And with that, I mean machines that have at least one or more of our advanced technologies on board. And then we want to triple the number of autonomous trucks. So with that, I hope you now see how, in our view, VisionLink technology are increasingly becoming our key competitive differentiators while we are focused on the biggest customer challenges, making our customers safer, more productive and even more successful. So with that, I thank you for your time, and I'll turn it over to Andrew. Thank you.

Good morning, everybody. My name is Andrew Bonfield, and I'm going to wrap up the presentation part of today, talking about our financial framework. We have delivered strong performance over the last 5 years, and we're going to be investing for profitable growth to drive and to continue to drive strong shareholder returns. Let me start by going through our financial performance over the last 5 years. As you know, our focus is on profitable growth. That's at the heart of our strategy always has been and will remain there. That's not growing margins, not growing top line, it's growing profitability and our measure of profitable growth is OPACC, operating profit after capital charge. And a measure of success is to grow absolute OPACC dollars. If you look over the last 5 years, we've grown OPACC dollars by 1.9x. That's allowed us to generate total shareholder return of 22% per annum over that 5-year period. We believe OPACC is a great measure and is very correlated to shareholder return effectively it is a form of cash flow. Over this time period, we've outperformed the S&P 500 Index, the S&P 500 Capital Goods Index and the S&P 500 Industrials Index. And we have delivered on our margin and free cash flow targets. We've met or exceeded those. And we've also delivered higher margins and P&V free cash flow over that time period. We've grown services by $10 billion since 2016 and we've outpaced our competitors, both on an adjusted operating margin basis and a free cash flow margin basis. And adjusted operating margins, our performance is 420 basis points compared to the competitor group. And on free cash flow margin, some 390 basis points higher. And we've achieved structurally higher margins through this time period. You'll recall back in 2017, the company set out a goal of delivering structurally higher margins 300 to 600 basis points higher than they were in the 2010 to 2016 time frame. It was based on a range of 10% to 22% between $42 billion and $72 billion of revenues. Over that time period, we delivered average margin improvement of 480 basis points against those original margins of 2010 to 2016. So above the midpoint of the range. How we delivered that? Structural cost reductions have been a key part of it, only adding capacity were justified, and focusing on services with their attractive margins. And then free cash flow. Many of you will have heard me talk about before. I think one of the things that's most underappreciated about Caterpillar is its ability to generate strong cash flow even in periods of time with declining revenues. The consistency of our cash generation has really been one of the things that I always appreciated when looking at the financials. That strong profitability generates a lot of cash. In 2019, we introduced a free cash flow target of $4 billion to $8 billion. And in 2024, we adjusted that to $5 billion to $10 billion. We have generated $40 billion of free cash flow over the 6 years since 2019. We have averaged more free cash flow over that time period than anybody else in this S&P Industrials Index. And last year, we were #1 on performance low. Services have grown by 70% to $24 billion in 2024, a 7% CAGR. Attractive for us for a number of reasons. One, it is a more stable source of revenue than the original equipment, and it has attractive margins. It's been enabled by many of the digital offerings that we've talked about before. And obviously, continued progress will be used by the digital offerings that Bob just talked about. And we've returned 99% of free cash flow or just under $40 billion to our shareholders between 2019 and 2024. And actually, if you go through the third quarter of this year, it's now $45 billion of free cash flow, and we've returned just over 100% of that. Our dividend increases have been substantial. You'll recall back in 2019, we grew the dividend by 20% and has set a target of growing the dividend by 4 successive years at high single digits. We've managed 5 high single-digit years since then, and on average, the dividend has grown by 7.5% per annum between 2019 and 2024. We are very proud of our dividend aristocrat status and we've grown the dividend by 32 consecutive years. And then share repurchases. Back in 2019, again, we set the target of being in the market more consistently and to return substantially all free cash flow, which meant we were going to be in the market more on a consistent basis from a share repurchase perspective. We've reduced our share count between 2019 and 2024 by 18%. The average per share price we paid is $209 and benefited profit per share by $3 per share. If you take into account what we've actually done since then -- from this year, the share count reduction is now 21%. And the profit per share benefit is closer to $3.50. Our first quarter ASR this year delivered over 8 million shares at an average price of just under $375 per share, and that's just concluded. The importance about our share repurchases is to be in the market consistently. We don't try and market time. We don't try and outperform. What we do try to do, though, is to beat the volume-weighted average price on average for the year, and that's part of the way we operate using accelerating share repurchases and good structures as a way of doing that. But that consistency has really rewarded shareholders over this time. So we've delivered in the past and we are very confident about our ability to continue to deliver on our 2030 goals. We will need to continue though to make investments in the business to achieve those goals. And we'll give you a number of measures to track our progress. First, we set out and Joe showed you these our new targets. I'm going to discuss each one of those in a little bit more detail with you as we go through. So first, let's look at the top line. Sales and revenue compound annual growth rate of between 5% and 7% through 2030. 2024 will be the base share. We're assuming growth across all segments, relatively steady year-over-year growth rates. We do assume obviously stable economic conditions, that means we don't expect either an acceleration of growth, global growth or a significant deceleration of global growth. So assuming relatively stable conditions, nothing substantially changing from where we are today. And we still grow services, growing services by $30 billion by 2030, and particularly as there's much more opportunity there. And as Bob mentioned, the digital and technology priorities will continue to help us grow services. Also, longer term, by actually seeding the field population with more original equipment, we do expect longer-term services opportunities, as Jason talked about over the period beyond 2030 and beyond. So we are investing. Jason talked about the investment in large engines and behind solar capacity. We are also, as Bob mentioned, investing in digital and technology, growing that by 2.5x. Just to remind you, that spend, part of that is in SG&A, the digital spend. And part of the technology is a part of the R&D spend that we spend. So it's not the whole of R&D or the whole of the SG&A. We will invest in customer solutions and commercial excellence. So we'll be putting money behind for the field to make sure we can actually drive those customer solutions what the customers want to us drive top line growth. And we continue to invest in sustainability. That's important for many of our customers, and obviously, we've invested significant dollars behind that, and we will continue to do that in the future. Our CapEx spend should be now twice as large in the period 2025 to 2030, as it was from 2019 to 2024. Very affordable given the strength of the cash flows that we generate. In addition, some of that CapEx spend will be more front-end loaded, particularly as we look at the solar and large engine capacity investments. And as a result of the solar investment, we now expect CapEx for this year to be closer to $2.8 billion than our previous guidance of $2.5 billion. Remain all this investment is designed to help us grow absolute OPACC dollars. That is our measure of winning. And we've updated the margin target ranges. You remember the original range went from $40 billion to $72 billion, margins from 10% to 22%. We've taken the range of $60 billion to $100 billion and change in margin targets from 15% to 25%. So still progressive margins and assuming that we can continue to grow margins as we grow the top line. As Joe mentioned, the pull-through we're using for the new margin ranges, it's around the same as we did for the midpoint of the previous range. Why are we using that pull-through rate, if you may ask. Well, first of all, we are investing. So we are investing in capacity, which will have an impact on gross margins. So we will need some headroom there. So we won't get as much leverage as we would normally have done. We are investing in commercial solutions. We are investing to make sure we have digital and technology solutions for our customers. We will always continue to look for cost efficiencies. Operational excellence remains at the heart of the strategy, and we'll continue to look for opportunities to manage the cost base most effectively. But keep in mind always when you think about margins, margins are important. They're a good measure. These are targets that set there really for investors to be able to measure our performance, but ultimately at the end of the day, OPACC generation is our definition of winning and because we do believe that is more highly correlated to total shareholder return. And we need to make these investments to grow the top line. On free cash flow, the strong profitability we expect means that we actually are changing the range from $5 billion to $10 billion to $6 billion to $15 billion. That reflects the $15 billion reflects the high end of the sales range and margin range. The $6 billion really does reflect a challenged economic scenario. And the only reason we have it there is just because when we look at the dividend, our target is to only pay 60% to 65% of free cash flow out as dividends even in a challenged economic scenario. It is really there just as a low base, and we would expect to be comfortably above that, even if we are making substantial investments in CapEx over the next couple of years. So now let me talk about how this all supports shareholder value creation. Again, resource allocation framework is really the same as we've shown before. Our focus is consistent. We maintain a strong balance sheet, mid-A credit rating, which enables Cat Financial to offer competitive financing to our customers. We maintain ample debt capacity for M&A. And just to remind you, M&A is always treated as an exclusion from free cash flow for purposes of shareholder returns. The strategic growth investments will continue to be assessed using the O&E model, the operational and execution model will still be there. And we are committed to returning substantially all cash flow to shareholders through a mixture of dividends and share buybacks. And the dividend, we believe that we can grow the dividend by high single digits for the next 5 years and comfortably remain above the 60% of the low end of the cash flow -- free cash flow range. Obviously, that is always subject to Board approval, but we are confident that we will be able to continue to grow the dividend for another 5 years. On top of that, we expect to be in the market consistently on our share repurchases, and use that part as well. So effectively, you have the positive algorithm of shareholder returns, helping to drive total shareholder return across the business as a whole. And let me just give you a little bit of an idea of what we think -- how the total shareholder return will actually play out over the next 5 years. So this is an illustration. It's not exact. So don't try and measure it. It is an illustration of where we think those components that we control in total shareholder return because obviously, there's the multiple, which we don't have a control over. That's the market. But effectively, if you look at it, its cash returns to shareholders, its revenue and its margin. If you look over the last 5 years, we've achieved more performance from margins than we have done from revenue growth. That's effectively reflecting performance that we've seen. And obviously, the margin expansion has been a really big driver for us over this time period. However, as we look out, what we do expect is because we're now driving OPACC growth more from revenue rather than from margin expansion, the revenue growth will be a more important driver of our total shareholder return algorithm. And so that's just to illustrate to you why that focus and why we need to make sure we continue to invest in the business to be able to drive that because that's where we believe we're going to maximize OPACC dollars and drive returns to you. So as we get to the close, just to remind you, we will be giving you new targets, not just the financial targets, but also segment growth targets, which will help you to measure our performance against those targets. Some of those will be annual reporting, some like services will continue to be on an annual basis. Others, obviously, things like the revenue CAGR, you'll be able to see on a more quarterly basis and so forth. And obviously, growth you see quarterly. So at the end, we are committed to the plan, and we are committed to drive profitable top line growth, including services, supported by strategic investments. We've updated and expanded our margin -- extended our margin target range. We've increased our free cash flow target range. We expect to increase the dividend by high single digits, and we remain committed to return substantially all free cash flow to shareholders over time. The future is bright. And with that, I'll hand back to Alex.

All right. Thanks, everyone. We're going to now take our break before the Q&A session. So we'll promptly resume the broadcast at 12:00 Central Time. [Break]

All right. If everybody can start to make your way back in the room and close the doors here, a couple last-minute logistics before we start Q&A. So we'll take questions here in the room. [Operator Instructions] All right. Welcome back to the Caterpillar Investor Day 2025. This is now the Q&A portion of today's agenda. So if you're joining online, there is a way to submit a question through the webcast. There's a question mark icon on the top left. You can click on that and submit questions. We'll try to pull as many of those into the room here today. And with that, we'll kick off with a question. [Operator Instructions] Looks like maybe here in the front first, Jamie?

Jamie Cook from Truist Securities. I guess just my first question on Power and Energy. You talked about doubling that business by 2030. It seems like an aggressive goal, but just trying to understand how much visibility you have. I know you have backlog, but you also have uncommitted backlog. So my guess is there's more visibility than we think. And then my just follow-up on that is, how are you -- obviously, you're adding a lot of capacity. Your peers are adding a lot of capacity. Does that concern you over the long run?

Yes. Thank you for the question. we're going to more than double power generation over that period. That was what we put out here today. We have a lot of visibility. I mean, backlog is high. It doesn't take us through the whole period. But in addition to the backlog, we have frame agreements in place with key customers that give us a good line of sight. And we also have really strong forecast from customers through that period as well. So the combination of that gives us really high confidence in making the investments. The other thing we talked about in the presentation was the services impact of some of those higher run hour projects and that same capacity is going to be needed to serve the services needs, not only through 2030, but really well beyond that. So all things that make us confident in making the investments that we're making.

All right. Angela, front.

I was just wanted to go back to maybe the margin side and 2 sides to this. I guess the first is, as you think about your next kind of progression here that you provided on the operating margin, does that include the assumption for tariffs, meaning that's been a little bit of a headwind this year. So as you kind of progress, would you assume that, that kind of keeps things toward the lower end? Or does it already account for that and therefore, you can kind of be more in the middle of the range with tariffs? And then kind of second, just related to services, given how much more progression or kind of services there is with Prime Power, just curious, I guess, why -- how much of a benefit is that to the margin profile of the business? And is that time line-wise, kick in more materially at a different point in kind of the next 5 years?

So let me just remind you that the actual margin target ranges remain the same up to $72 billion. And as we're not there yet, there is no relief in that for any tariffs. As we said last week, our assumption on tariffs is that once there is more certainty and the situation stabilizes, we will take and manage the impact of tariffs as we go forward. So that will be there. But the margin ranges up to $72 billion are exactly the same as they are today. No change to that.

Yes. And I'd say the extension, just to add on to that, right, is that the similar profit sales pull-through. It takes into account the investment. I mean it's a range for a reason, right? We'll operate -- we intend to operate in the range. We'd love to get towards the higher end of the range, but some of the things will get it to move around during the time of the investment when the investments come in. We're committed to managing tariffs over time, but we really try to not have that influence what the range is for the long term.

And I think, Jason, there's maybe a question on the power gen Prime power services opportunity.

Yes. For the Prime Power, the high run hour applications that I talked about, it does take a few years to kind of ramp into those services. You see some impact initially. But as you get multiple years out, you get into overhauls and rebuilds, which are bigger drivers of the services opportunity. So we'll see some impact, some positive impact through 2030, but the exciting part of that is its opportunity well beyond 2035 as we look forward.

It looks like over here, Kyle.

Kyle Menges from Citi. A 2-part question. Thinking about understanding the op margin slope a little bit weighed down by some of the investments you're making and then also services revenue growth a little bit slower than what it's maybe been in the past. Curious what your confidence is that in that op margin range, that slope may be increasing over time and then services revenues also maybe reaccelerating as you get through more of these capacity investments.

Yes. I think -- I mean, one thing to remember, and Andrew can comment on this, from the time we set the operating target margin ranges, even at 42% to 72%, we said it wasn't -- I think the term was wasn't to Infinity and beyond, right? It wasn't going to be a straight line, particularly the higher we got in there that there would be some bend to that curve. So we're comfortable with those margin ranges. We're definitely going to have to cover some investments to grow. As I said earlier, we haven't had to make a ton of investments. Most of the growth we've had has been within our capacity that we have. So we're excited to make these capacity investments, and those have to be taken into account in the margin ranges. I'll let the team maybe make some comments on services, but we flattened services a little bit this year. We've talked about the rebuild slowing a little bit in mining, particularly confined to coal and what we're seeing in coal and some of those park but we are still committed to the services growth. I think when we set this goal at the beginning of the strategy, when Jim came in here, there was some low-hanging fruit, which allowed us to kind of make progress. And now we need to drive more adoption of the digital tools that we've seen here. I think the mix of products and the more growth we have on new equipment out there and the more prime power applications, the more mining trucks we have running, that's definitely going to drive demand for services higher. So we see this $30 billion, we think, is achievable. And so we're going to put the strategy work to go get it.

And let me just remind you on the margin targets. And those of you who are here when we did our Investor Day in 2022, the progressive margin targets were over 40% at the top end of that range. Our gross margins are around 30%. So that gives you an indication of the challenge around delivering margins at that level. And finally, just to say, our goal of profitable growth is absolute OPACC dollars. It is not margins. And so if we are able to grow OPACC dollars faster and we go above the margin ranges, there is no problem, and we have done that in the past before as well. So the margin targets are there, just to give you a guide, it's absolute OPAC dollars, which is really the most important thing that we measure.

Okay. Good. Question over here, looks like Jerry.

Jerry Revich, Wells Fargo Securities. In power and energy, you folks are in a unique position between turbines and standby generators to have a really good sense for data center plans multiple years out. Can you just talk about what you're seeing in terms of configurations? What percentage of the power are you anticipating to be behind the meter for the data centers based on the plans that the customers have shared? And if you could talk about just the range of outcomes relative to the $16 billion target for power gen, what's the range of outcomes that you're assuming for data centers within that build, please?

Yes. So as I think about the growth as we move forward in power generation, the standby will continue to be a big part of it. So data centers are going to continue to need standby power, standby generator sets when they're connected to the utility to provide power. utilities are going to need solutions to back up the grid and add capacity. Sometimes that's prime power, sometimes that's maybe a few thousand hours a year to back up the grid. Data centers, they're kind of early in the evolution of understanding the on-site power needs. We definitely see a pull from them, both engines and turbines. They're building data centers faster, they can get utility connections, and we're excited about that growth. We think that will continue. But as I think about the opportunity ahead, all parts of power generation really are seeing positive growth moving forward.

Yes. I mean this is kind of how I think about that opportunity. We're at the early stages. And I think data center customers and a lot of customers who are trying to build sites that need power are trying to figure out how they're going to get that power. And they're talking to utilities, obviously, I think that's their first. And some of them, it's kind of an evolution to what it's all going to be utility power with backup standby from us. Now you're seeing some behind-the-meter stuff, but also some saying, okay, I want temporary prime power because the utility and I have said, "Hey, we'll get to you in 4 years. And I think that -- we'll see some of that type of solution as well. And then we'll see if 4 years is really 4 years, 4 years is longer, right? I mean there's going to be a certain level of capacity and how those connections go to the utility grid, and we'll just have to see how this plays out. But I think from my standpoint, we're in the early stages of this. It's tough to quantify it right now. We have a great portfolio to support our customers whichever way they go, which is what we're really excited about.

Yes. And the data we shared on energy demands, electricity demands through 2035, you're thinking 10 years out, along with the growth of data centers in that period, I mean, that's going to support the need for of power generation solutions through that time period.

I mean there has to be transmission, too, right? If you're going to go to the utility, it's not just is there utility power available, it's got to get to the right place. So there are a lot of things that go into the equation for customers when they think about where their site is going to go, where they're going to get their power, what type of equipment do they want and what type of support do they want from us. And we have a great team. And that's one of the reasons why we started early with that group when we talk about commercial excellence and having more direct relationships with them. That's why we started with them, right, just to really help them understand what they need and figure out what part of our portfolio makes the most sense for them.

Great. Rebeca there's a question from Jairam.

Jairam Nathan with Daiwa. I just wanted to follow up on the earlier question with regard to high-voltage DC power. Like do you need to make any changes to your products or invest in your to kind of enable high-voltage DCs as data centers move to that kind of an architecture?

Yes. So far, limited customer kind of pull or customer questions around that. Certainly something that we'll continue to keep an eye on from a technology standpoint, but we're not getting a pull from data centers or utility customers at this point in time to make big investments in that space.

I think maybe you were -- I think next, you had your hand up for a while. So if you can walk up here.

Mig Dobre from Baird. Maybe we can talk a little bit about mining. And I'm curious to put a finer point on this, understand how you guys are thinking about 2030 here. You're clear as how you think about power gen, maybe you can be specific. And I'm curious as to how you think about the energy transition contributing to higher CapEx towards equipment. Is it just a function of you having the right powertrains available and have it be certified and so on and so forth before we start seeing customers really deploying capital in that regard?

Yes. No, it's a great question. And I would say it's evolved over the last few years. I think as mining companies have recognized what it takes to put zero emissions mining equipment on site, they've learned that it's much more than about mobile equipment. It's about the infrastructure that's required to stand that the mobile equipment up at site and keep it running. And so as we've talked to mining customers, without a doubt, the time line for most has moved out a bit from where it was a few years ago. There still is definitely interest, which is why we're continuing all of our development. As we look at what it's going to take to get real pull, it is going to definitely take an environment where the power and the energy to take the infrastructure, that investment is made first and then the mobile equipment comes on. And that's why we have to be ready for when that's going to happen. we see our bridging strategies, and I talked a lot about CAT DET today as a great way to get power to site, not quite have the same kind of power requirements that would be needed if you had a full battery electric fleet, but that would step you into having a diesel electric fleet that would take your emissions down considerably, start to get the infrastructure on site and step you through and into that more sustainable and better economic environment. I think until the economics switch such that all of that investment can pay off, you're not going to see a big huge pull. So it has to all match what the customers are needing. And so it's going to evolve. And I think it will be -- the solution set will be different depending on where you are in the world and what the cost of electricity is and what the cost of diesel is.

Steve...

Steve Volkmann with Jefferies. I'm curious to think about how you sort of stress tested your investment plans. And I think, Andrew, you said that you really weren't expecting much from end market growth here. But if we do have a cycle over the next few years that's a little more robust from an end market perspective, would you have to invest more? Or have you kind of covered that in your current plan?

Yes. I think we -- where we've announced the capacity, we obviously know we need more. One of the things that I'm really encouraged about and why we're leaning so heavily into modern manufacturing is I think we can get a lot more out of our assets by leaning into technology and modernizing the facilities that we have. We have some very modern plants. We have some plants that have been around a long time that probably need a little work, and we see the difference already. And that's before you put technologies like factory digital twins and that we're starting to just at the early stages of. It'd be a great problem to have. I think we have the ability to invest. And I think we're looking at a runway of -- and that's one of the reasons why in the -- even in the power and energy investments we have, right, we have made the investments based on what we know, but the runway is such that if we need to increase it, we can and still -- I think we can react. So that would be an amazing point for us to get to is where we're investing more capacity because we have line of sight to that. Right now, I think we're going to try to get more efficient. I think we have the headroom to do that.

I think Chad here.

Chad Dillard from Bernstein. So my question is on the prime power opportunity in data centers. So as you talk to your customers, what are they saying about the mix between turbines versus reciprocating engines? Is there a preference in terms of just profitability for cat? And then also, what's the role of standby power in that environment? And then lastly, as you talk about your 50 gigawatts of capacity, how does that split between solar and reciprocating?

Yes. So that's a lot of questions. Let me -- so if we think about the -- how we're serving the prime power needs, that was a big part of your question and what we're hearing from customers. I shared some examples today across the range. And right now, I think they're still, in some ways, trying to figure out what designs are really optimal for a prime powered data center. We're in the as we mentioned. [indiscernible] is a great example. They're using engine-based generator sets. That helps them get power really quickly, and we're happy to be able to help them do that. They're also doing something which is pretty unique as well as they're using some of the heat from the engines to actually cool the data center. So the overall efficiency of that site will be higher, and it's going to help their economics. So we're really excited to see how that turns out as we implement that technology with them. We have customers that are doing turbines only, and they think that's a good solution for what they're trying to accomplish. And then we have customers like Williams that I mentioned that are -- they have a combination of both. Some of it depends on the speed that they're looking for. Some of it depends on the load profiles that they're trying to serve. And so it's kind of a speed and technology and economic equation for all of them. And the good thing about our situation is we can serve all of them depending on how that turns out when they do the math. As we look forward, again, I kind of go back to the capacity increases, 2x for large engines, 2.5x for turbines, and we'll use that not only for power generation, but also a big part of that is the natural gas compression business, both with engines and turbines, and we see growth there, and we'll use the capacity to support that as well. So I think a little bit to be determined on what the best solution is, but we're really well positioned because we have the ability to provide multiple different kinds of technical solutions to help them be successful.

Rob in the front.

Sorry, also on power gen. Should we think about the [indiscernible] side capacity expansion being kind of more or less complete in '27. You mentioned that the power capacity comes online for turbines and recips through 2030. And then one thing that surprised me was the mention of downstream of refining. I don't know whether the Titan 350 is bringing you into LNG trains or what that exactly means, but it sounds new to me.

Yes. In terms of the timing, so the 50 gigawatts will be online by 2030. So kind of set the target there. The engine capacity is moving faster. We started that earlier. But also bear in mind, we upped it along the way. If you think back to the journey that we've been on, we started at a level, we got more customer feedback, and we actually upped the target for capacity along the way. We'll see some nice steps in terms of capacity increase, '26, '27. We'll still be able to continue to increase a little bit beyond that. The turbines will be a little bit more backloaded. But in combination, we'll have a meaningful capacity increase year-over-year through the decade. Your second question when it comes to downstream, those larger power blocks just really help us -- we didn't have a turbine that was big enough for some of those downstream applications, and it just helps us get in the game to be able to serve them. A lot of it's power for their facilities in the downstream.

Mike, over.

Mike Feniger, Bank of America. Just 2 questions. The first one, I realize you guys have a goal of doubling power gen revenue, which is great. But the fact that you're doubling the capacity. I'm just curious if the pricing per megawatt from the base case 2024 out to 2030, are we assuming that's unchanged? Is there any reason why Cat wouldn't also be benefiting from the pricing dynamics that we're hearing in the market out there? Because doubling power gen revenue makes sense, but is it really just units? Or is there some pricing dynamic that we should be considering that could also the fold? And does that flow in more in 2027, 2028? And the second question, just on the financial targets, Andrew, the pull-through, we talked about in line with CAT's historical 34%, 35%. Is that for the overall company? Or do you try to drive that by division? So where I'm asking is, is there a view, hey, ENT is going to have much higher flow-through, which allows maybe construction to drive OPEC dollars a little differently? Or is the goal for all divisions to kind of be marching in that range? Or is there a mix that kind of gets us overall to that 35%.

You want to start with the second part pricing? Yes. So on that, you will recall back in 2017, we did have margin targets by business segment. I think that tends to reduce the amount of flexibility that we have to operate efficiently as a company. A couple of things back to Steve's point a little bit. Not all end markets are operating in exactly the same way. And so when you're looking for a multiyear guideline, you really have to think about it in terms of there may be one business segment, which is driving faster than the other one at that point in time. So it gives you that flexibility, which is why there's the range. And also at the same time, wanting to make sure that we have sufficient capacity to invest in the appropriate areas that we need to continue to drive those OPEC dollars. So it's really about having that in that way, that's the way we've tended to look at it rather than trying to build it up segment specifically, then it becomes very complex and then becomes much, much harder to manage because obviously, the different businesses are at different stages of growth rates and so forth. So it's that way we tend to look at it.

Yes. And I think maybe just to add on that before Jason jumps in here on pricing, I think it's the wrong way to look at it to try to say, okay, each of the segments having a similar margin profile, right? I mean there's a ton of synergies we drive in our business through the 3 segments. But I would look at it more as, hey, we intend to have the best-in-class margins in Power and Energy compared to power and energy competitors and players, right, in that industry, mining and RI in there and construction and construction. So we're in different dynamics in different industries. They have different margin profiles, just frankly, in the segments and the industries that they play in. So the mix of all that, we try to manage it into the overall margin profile, but there'll be some puts and takes depending on which segment is driving some of growth. Jason, go ahead on that.

Yes. And I think when it comes to pricing, certainly, both the capacity and pricing come into the equation as we think about the future. We'll look at the market dynamics as we always do on a year-over-year basis individually within the businesses, not in aggregate, and we'll look at that in terms of power generation or power and energy in total and make those decisions. And when pricing makes sense, we'll take pricing along the way.

And we've been doing that, right, pretty regular price increases. You can see it in our results now in the segments. It's much different. Power and Energy is not seeing similar types of merchandising programs that we have going on in CI just because of the competitive nature of the business. We have escalators in our frame agreements that go out. And I think also you have to keep in mind where our margins are relative to -- we've had strong margins, right? And so we'll continue to take price where we can. But maybe where you're seeing some bigger increases, the margins quite to where our level has been. And I think once we get into '26 and we start reporting as Power and Energy, you'll see a little bit of that strength come through in those margins as well.

Let's take one question from online. So is your CI target for 1.25 SKUs growth in line with your expectations for the overall industry growth? Or is it ahead of it, behind it?

If you look at the materials there, we talked about a few minutes ago, that 1.25x sales to user growth, we said on the slide, they're outpacing the industry. So when you take the commercial piece that we're reshaping in addition to moving forward with the technology piece and those integrated solutions, I believe, is going to allow us to outpace the industry and achieve that 1.25 sales to user growth.

I think, Adam, you had your hand up for a while here.

Adam Seiden from Barclays. I wanted to start actually on mining. So you talked about expanding across the value chain. Is that limited to digital solutions? And then how do you think that CAT can play in the crushing, milling and processing parts of that area within RI? And the second part is also RI related. Within the new segment that includes transportation, are all the businesses OPACC positive?

Okay. I'll start with the vision of our precision mining. So while we are always looking at M&A opportunities physical assets. Most of what I talked about is a digital technology solution that allows insights that allows data to flow across all of those sectors of the value chain such that it provides efficiency overall in the operation. So it is primarily a technology investment. RPM is the first of the technology investments we intend to do in this space. Some will be organically developed, but we are looking at additional opportunities to connect that end-to-end value chain to help miners be more productive. So that's kind of how we're thinking of it now, but we're always assessing whether there's something physically we can do. There's a lot in the sensor technology space that we're also looking at that could help to aid then the digital space even more moving. And then as far as OPACC margins, we don't disclose that by the individual subsets of where we're at. Now you'll be able to have some visibility to that when we restate in '26 as rail moves over into RI.

The one thing I would say is -- yes, we'll recast in April next year. So you'll see the rail business move across. That will have a positive impact on Energy & Transportation, Power and Energy margins, negative on RI. But remind you that we've always used the O&E model to use a way of actually looking at what we the so-called challenged businesses, which is about assessing their ability to perform and actually achieve OPACC positivity, and that includes the present value of future parts sales. And remember, rail also includes a very strong services business. So that is something we will continue to evaluate and continue to operate. And remember, we have disposed of businesses where we don't see the ability to do that. We haven't disposed of rail.

Yes. I would just say when you're looking at profitability of RI, right, and this is a testament to Denise's leadership and her team and what they've done, look at the revenue of RI now relative to when it was in its super cycle in 2012 and look at the operating margin profile of the business. So Denise and her team have done an amazing job with profitability in that business.

Raise your hands Kristen?

Kristen Owen from Oppenheimer. I wanted to come back to the 1.25 increase in SKUs in your construction business. You highlighted a lot of white space globally or yellow space globally. So how much of that growth is coming through just geographic expansion? And when we think about the dealer network that's necessary to support that, what kind of investments do you need in the dealer network? I'll follow -- my follow-up question is related to the technology there. So we've seen a lot of competitive technologies come into the construction space, particularly on the digital side. Would you look to get more acquisitive there to help the end-to-end solution in construction?

Okay. So geographic, a little bit of the digital piece and then also kind of that technology piece. So geographic first, Obviously, with that customer back reshaping of the commercial organization, we've got those 2 individual senior vice presidents in their organizations focused on that core and the growth customer solutions region. So obviously, equal focus around the globe, customer-centric, bringing that back. Like I said earlier, in that core region and the growth region, customers have quite a few different needs in terms of how they buy, acquire, how much they rent, how much they don't rent, how they want to rent and when. Also, how they get paid is oftentimes very different and how they do the work is different. So we've got unique customer requirements within each one of those -- so we have a tremendous opportunity in both, right? The growth regions with the urbanization and housing demands, infrastructure that's needed there. Obviously, the expansion of the compact construction equipment line and further infrastructure expansion as you've seen in not just the United States, but other parts of those growth regions is very healthy. So across, we feel very good about that and both contributing to the $1.25 billion. Now the digital piece and what we're doing.

Before you go to the digital, I think the question is also -- was also do we need more investment in our dealers. I think there, the key point is our dealers are independent companies or independent from -- we have about 150 of them worldwide. Apart from the a few embargo countries where we're not allowed to do business, we are present in pretty much any country in the world already today. And our dealers have been very successful. I mean it's a key part of our competitive advantage, and we're working very closely with them to make sure they invest alongside with us to make sure we achieve the growth goals that we laid out today.

I think the changes here are going to be well received, right? I mean today, where we can give attention, like having a regional team that's more focused on dealers and have boots on the ground with them to understand their unique needs, like Tony said, really getting after the unique needs. Sometimes I think maybe we've been taking a solution that works in a lot of the world and try to use that in certain parts of the world where it's just missing the point a little bit. And so we're going to get a lot closer to our customers this way.

Yes. And technology is really the same way. One of the big benefits from a technology perspective, because I think you're hinting at that a little bit in your question is from a CA perspective, a lot of our technology solutions have taken into consideration the entire customer. We see a lot of competitors and options come to customers with point solutions and trying to sell the value of that. And more and more of the customers are saying, that's just a lot to deal with. I've got these solutions from CAD here, VisionLink as an example that Bob articulated earlier. It covers the end-to-end. It helps you manage the feet. It helps you manage productivity, fuel hours, condition of the machine. It's broad and it helps, again, manage the entire business. And that works and plays worldwide from a customer basis. So again, a very worthwhile technology to take out to the customers.

Steve Fisher, UBS. Just on the solar capacity expansion, to what extent is that really focused on the large turbines? Or will that be across the product set there? And then from a competitive perspective within this sort of power gen opportunity set, I mean, clearly, there's so much demand right now. Capacity is super constrained. I guess I'm curious to what extent there are actually competitive processes that are going on to win this work today? And then how do you see that competitive landscape evolving as the capacity comes on over the next several years?

Yes. Good question. So first on the capacity increase, biased towards the larger turbines, but not exclusively a Titan 350 across the entire Titan family. We'll see increases. The Titan 130 as an example, has been a great product for Prime Power and Prime Power data really that whole Titan family, we will respond. It's going to take a lot of work in the supply base to do that in addition to ramping up in our own facilities, and we've got really good plans in place to do that. We see that whole range of turbines really being helpful to customers, either mobile in some cases in the bridge solution that Joe mentioned or the permanent solutions that they're going to use for decades to come with the different turbine solutions. In terms of competitiveness, I mean, time will tell. Certainly, with the close relationships we have with customers, we're there with them to help them plan and meet the needs that they have. We also provide product to energy companies that are kind of there helping -- also helping those customers whenever they need power even in the short the long term.

Yes. The way we'll think about that is always competitive, right? We want to take care of our customers and not have them buy our equipment just because we have the available equipment. We want to buy our equipment because we have the best product, services solutions to meet their needs and solve their problems. And I think that's why they're going to continue to come to us. So we view it as competitive the whole time.

Yes. If you think about our legacy with solar turbines and particularly serving oil and gas customers, our strengths are durability, reliability, really strong services support, making sure that, that uptime is always there. And you couple that with the Titan 350, which has really exceptional efficiency on top of all those characteristics, and we've got a great value prop for customers and we're looking for.

Shine in the tour this afternoon, hopefully, you'll ask some questions about it.

Yes.

Tami?

This is Tami Zakari from JPMorgan. I wanted to get -- ask for some help to build our models. How should we think about the 3 segments as it relates to the 5% to 7% CAGR through 2030? Is P&E growing above that, but RI and CI growing below? And related to that, now that we have multiyear numeric targets, do you plan to give specific sales and margin guidance in terms of numbers as you think about 2026?

Yes. So we'll get to what we do on guidance in January as per our normal process. that regard. I mean, obviously, as Alex mentioned, we will go -- he will give you a more detailed modeling session. But obviously, if Power and Energy is growing faster than the 5% to 7% range, obviously, then that implies that the other segments are growing slightly lower than that. The good point about this is all the segments are growing. That's the most important thing from our perspective. And there's opportunities in all. We are not a one-shot pony just relying on power and energy or electric power. There are lots of opportunities in our other business segments. And that's that breadth of the portfolio that we continue to talk about, which actually helps Caterpillar to continue to drive and maximize shareholder.

I wouldn't expect a significant change in our quarterly type of guidance and things that we give. We gave you guys a lot more metrics today to really give you a guide for how we're thinking of the business strategically over the long term, and we'll update you though, as Andrew said in his presentation, pretty regularly, and you'll be able to see it yourselves in the results. But we're pretty confident in the strategy, and we're excited about the opportunities we have in all 3 of the segments.

Sabahat Khan from RBC. Just a question on sort of the digital side and getting more units connected over the last few years. While it's helped individual repair events, have you seen a notable uptick in rebuilds at all now that customers are more embedded in your system? And then secondly, on construction side, significant uptick in spend globally, I think you pointed out. I guess when you look outside your core markets into the more growth, or do you feel the equipment and the offering you'll have out there will be well suited for what some of those markets outside of North America might need?

I can maybe start on the first one. It's clear. If you think of turning unplanned surprises into planned events, I mean, making sure you help customers avoid downtime, we have a keen focus on helping customers identify the optimal time for an overhaul for rebuild. I mean it helps avoid a big repair that is unplanned and at a time that is not convenient while maximizing the life of the piece of equipment. So a lot of our modeling and digital models we're building are focused on exactly those rebuilds and helping customers. I mean I'm sure Denise and Tony and Jason can comment on it, but it's also been one of the key drivers of our services growth in the past years has been that focus on rebuilds.

Yes. And I would say, I mean, I mentioned it, we're seeing some customers rebuild 4, 5, 6x up to what traditionally would have been like an 80,000 hour unit retirement now is extended out to 200,000. And they've had to rebuild along the way in order to do that. The nice thing is that our machines are built to do that and that the ability to do that, depending on whether you have a lot of CapEx or you want to use OpEx, it really depends on the situation that they're in and then the life of mine also comes into play. So those decisions continue to be made depending upon the situation. The one thing that I think will be an enabler, though, for future replacement will be the advent of technology and adding a lot of technology on new machines. You certainly can retrofit technology, but there are limits to that. And so as we start to see the advent of really wanting a lot of technology on machines, you're going to have to build or buy new.

Don't assume that the -- because RI has a very strong rebuild story. CI has a very strong rebuild story, too. It's not uncommon for these machines in CI to have multiple rebuild lives, too, just as extensive as you see in RI. So RI and CI have a lot in common from a rebuild perspective and that services opportunity. Now your second question was -- just to make sure I'm clear on it, is that product readiness for the core and the growth markets and are we prepared to do that. So this goes back to the presentation material, right, getting closer to that customer, having those commercial organizations out with the customer and understanding what they want from a product services technology perspective. And we've been doing that for some time now, and the products are definitely tailored to their unique needs, in fact, fairly different needs in each one of those regions. So the XE models that we've got out there, the most technologically advanced, productive, fuel-efficient machines in the industry, generally serving the high productivity demands. That could be in either region. A lot of times, it's more core, but not always. In addition, you've got more of a mainstream, not necessarily as advanced technological capability, et cetera, more for your mainline job that can also occur in the core -- in the growth regions. So we've got that tier of products available for whatever solution those customers want. And as you've seen, we've had really good experience with that with the customer base, obviously, as recently as this year in the results.

I'm confident we have the right products and dealer reach to serve the growth markets, right? I mean if the question though is if a customer is solely making it on first cost and price of the machine, then that's probably not going to be us, right? That's not our brand. So -- but there is a significant amount of the customer base to Tony's point, that I think we have the right offerings, the right dealer support. And by listening to them and understanding what their unique challenges are, we're going to be the company of choice for them.

I think Mike up here.

Mike Shlisky of D.A. Davidson. A couple of quick resource questions. First, I wanted to clarify the video you had with Suncor. Are they paying you per barrel or per hour in the contract? Is that going to be common going forward? I just want to ask about risk, whether you're going to be taking on weather risk now or risk that there's no oil in the actual sand. Just what are the structures about on those contracts going forward? And then secondly, on RPM, could that software that they have be used across construction or other areas that Caterpillar works with in the future? Or Joe, is it an area you might want to consider making another M&A deal, helping your construction customers plan their projects?

Both really good questions. So the initial agreement with Suncor is a cost per hour agreement, but we're working towards a cost per barrel or cost per ton agreement. So it is something that's in evolution, and we're continuing to expand our relationship with Suncor. They've been a great partner to look at how do we really -- and we talked about aligned incentives, but how do you make sure that what we're doing to improve our performance at site is actually helping them be more successful. And so tying that into things that you can control, but that you still have aligned an alignment around. Moving on to your second question, which is RPM. There's quite a bit in the suite that RPM provides around asset management that we can leverage contracts that we have with customers that allow us to really have visibility into not only how much it costs from a maintenance perspective and work order management with our dealers, but also really allow us to optimize when we're replacing components. So they do have a fairly large suite of what we call asset management tools that complement, they don't duplicate what we do with our condition monitoring tools that as we continue to build out our engines for advanced analytics will really allow us to unlock the value for both mining and for construction products.

Yes. And think about that constructive -- think about that RPM video and think about the technology and AI work that Bob talked about. Take that and the planning to plan the job. That's kind of what RPM was about, right, and put that on a construction job. I was on a recent job where it was a very large job, multi-warehouse location where they had a pretty big cut and fill they had to do, soft underfoot conditions, actually over a part of it former landfill and they had shot rock, a very complex job, and they walk up to that thing, okay, how are we going to do this?

What's the key building block for precision mining?

That's the answer is how to plan that job out because that's the question they have. Every time they walk up to these bigger complex jobs, if we can help them do that, more efficient, lower TCO, more profitable, better sustainability from a customer profitability perspective.

So I think that's a key message is a key building block for precision mining, but we see a lot of opportunities to apply it in other places and as well.

Yes, because watch construction jobs, I'm sure you've watched some of the bidding things. You see more and more jobs in that $1 billion range. In fact, quite a few more jobs in that $2 billion range. Those are big jobs. Those jobs of that size require pretty detailed planning, which, again, anything that RPM can do, we can borrow from that knowledge. Of course, the tools that Bob talked about, you combine those 2 together, you got a great solution.

And just a reminder, RPM is not closed. So we're still seeking approval. So we'll wait for that to all close before we get too far into it. So I think we're right at time. I'd like to give maybe the stage to Joe to close out some final thoughts, and then we'll close the project.

Juan, I appreciate everybody that joined us online today and those of you who made the trip here to see us in person. I hope you again get a chance or had a chance to see the tech stations. I think you're going to really enjoy the tour at our DeSoto solar turbines facility. We have -- this is a really exciting time. And I know my teammates up here and I, we've been anxious to get to this date to tell our story. We've been working on this a really long time. At the same time, we have amazing momentum in the business. We have tremendous growth opportunities in all 3 of the segments. And we're going to make the investments we need to make in capacity. We're going to make it in digital and technology to differentiate ourselves, and we're going to continue to drive OPACC dollars, which we think will result in strong total shareholder moving forward. So we really appreciate your interest and you taking the time to come and see us today, and we look forward to, hopefully, we'll talk to you in our normal cadence, but hopefully see some of you at CES and then again at [indiscernible] as the guys talked about today. So thank you very much. Alex, back to you.

Thanks, Joe. Thanks to the full EO for your participation. We will have the slides at a transcript and a full replay on investors.caterpillar.com, and that concludes our broadcast for today.

Thank you, everyone.