Caterpillar

     Mike DeWalt
     Director of Investor Relations




MAKING PROGRESS POSSIBLE
2
   SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
             LITIGATION REFORM ACT OF 1995


Certain statements co...
3

What I’ll Cover Today


• A quick overview of Caterpillar and recent history

• Our view of 2008

• A broader look forw...
4

                                                  36% EPS CAGR 2002 to 2007
5 Years of Growth
   Sales and Revenues    ...
5
                                    Synergistic growth &
Sales and Revenues               improved earnings stability


...
6

Product Range                                                                Machines




  About 300 Models in a broad...
7

End markets                                                   Machines
                                       Infrastru...
8

Product Range                                                                                   Engines

 Turbines     ...
9

End markets                           Engines




                                    Petroleum
                     Ca...
10

Geographic Diversity                                      The Global Leader


                                        ...
11
                                                 Sales and Costs
 Caterpillar Overview

                               ...
12
                                                             Capacity and Product
Investing in the future              ...
13

    Most Recent Results

                                      1st Qtr 2008            Change from 1st Qtr 2007
     S...
14




2008 Outlook
15
                                                               Sales patterns
                                         ...
16
                                                   By Geographic
2008 Sales and Revenues                               ...
17
                             Expect a record year
2008 Outlook                despite U.S. weakness




               ...
18
                                      Long-Term Positive
Key Longer-term Trends                  for Caterpillar



   ...
19
                                                    Years of
Factors Driving Construction                      construc...
20

Mining & Energy                             A Very Positive Future




         • Growing world demand
         • Prol...
21
                                                                                        Generally positive
Commodity Pr...
22
                                                                                    Continued low
Spare Oil Production ...
23
                                                                                Fast Growing Asian Economies
Regional M...
24
                                                               Replacement opportunity
Worldwide Mining Fleets
        ...
25

China / Emerging Markets
 Development of the complete Caterpillar business model in China is
 progressing rapidly :
  ...
26

Our goals for 2010 Sales and Profit
                               Last Year            Today

2010 Sales & Revenues  ...
27


2010 EPS Goal                                        The Road Map
                                 Goal
             ...
28
                                                 The positive
2012 – Five Years Out                          story cont...
6.6
                                                                                                                      ...
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Caterpillar Inc. at Merrill Lynch Conference - London

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Caterpillar Inc. at Merrill Lynch Conference - London

  1. 1. Caterpillar Mike DeWalt Director of Investor Relations MAKING PROGRESS POSSIBLE
  2. 2. 2 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained in this presentation are forward-looking and involve risks, assumptions and uncertainties that cause actual results of Caterpillar to be materially different from those projected or implied in the forward looking statements. In this context, words such as quot;willquot;, “believes,” “expects,” “estimates,” “anticipates,” “will be,” “should” and similar words or expressions identify forward- looking statements made on behalf of Caterpillar. It is important to note that actual results of Caterpillar may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, changes in economic conditions; currency exchange or interest rates; political stability; market acceptance of Caterpillar's products and services; significant changes in the competitive environment; changes in law, regulations and tax rates; and other general economic, business and financing conditions and factors. A more complete summary of risks and uncertainties is described in more detail in Caterpillar's Form 10-K filed with the Securities and Exchange Commission on February 22, 2008. Caterpillar undertakes no obligation to update these forward- looking statements.
  3. 3. 3 What I’ll Cover Today • A quick overview of Caterpillar and recent history • Our view of 2008 • A broader look forward – Prospects for the world economy – Continued need for, and robust investment in, the world’s infrastructure – Caterpillar … in 2010 and beyond
  4. 4. 4 36% EPS CAGR 2002 to 2007 5 Years of Growth Sales and Revenues Earnings Per Share $5.37 $5.17 $41.5 $45.0 $43 $41 $36.3 $36 $4.04 $30.3 $30 $2.88 $22.8 $23 $20.2 $20 $1.56 $1.15 2007 2005 2004 2006 2003 2002 2007 2005 2004 2006 2003 2002
  5. 5. 5 Synergistic growth & Sales and Revenues improved earnings stability Genuine Cat 2007 Actual Replacement Parts Products 64% $29 Billion Integrated Services 36% Solar Customer Services $16 Billion
  6. 6. 6 Product Range Machines About 300 Models in a broad range of product categories … Backhoe Loaders Skid Steer Loaders Multi Terrain Loaders Integrated Tool Carriers Wheel Loaders Excavators Wheel Excavators Track-Type Tractors Track Loaders Pipelayers Landfill Compactors Soil Compactors Wheel Dozers Motor Graders Wheel Tractor Scrapers Articulated Trucks Off Highway Trucks Underground Trucks Underground Loaders Track Skidders Wheel Skidders Feller Bunchers Vibratory Compactors Asphalt Compactors Asphalt Pavers Pneumatic Compactors Cold Planers Rotary Mixers
  7. 7. 7 End markets Machines Infrastructure Residential Road Construction Building Paving Site Prep Military Lawn Care Civil Sewer & Water Tie-in Aggregate Recycling Nonresidential Industrial Building Industrial Processing Site Prep Demolition Landscaping Scrap Underground Utilities Ports Energy Forestry Coal Logging Oil Sands Mill Yard Petroleum Waste Mining & Quarrying Landfill Operations Metals Waste Handling Non-metals Specialized Waste Quarrying
  8. 8. 8 Product Range Engines Turbines Saturn, Centaur, Mercury, Taurus, Mars, Titan M20/25, M32, M43 Medium Speed 3600 C175 C175 3500 3500 4000 4000 Vees C27/32, C43 C11, C13, C15, C18 Heavy Duty 1300 - 2800 1300, 2300, 2500, 2800 Solar MaK Mid-Range C7,C9 Cat 1100 1100 Perkins Small 400, 800 100 200 300 500 750 1500 2500 4000 6000 10000 16000 22000 KW
  9. 9. 9 End markets Engines Petroleum Cat Machines Electric Power Industrial On-Highway Marine Truck
  10. 10. 10 Geographic Diversity The Global Leader Geographic Mix - Sales and Revenues Caterpillar • Broadest footprint in the industry Outside Outside • About 101,000 Employees North North North North America America America America • 278 Facilities 44% 43% 56% 57% • In about 50 countries 1997 2007 Caterpillar Dealers • 181 Cat dealers • 3,000+ branches & rental stores • Over 120,000 employees
  11. 11. 11 Sales and Costs Caterpillar Overview Machinery & Engines Sales & Revenues 2007 Operating Costs Up over 8% in 2007 Machines Factory Up 9% Labor & Material Burden Costs 63% 56% 31% 30% 7% Engines 9% 4% Up 6% Financial Products SG & A R&D Up 13%
  12. 12. 12 Capacity and Product Investing in the future Development Capital Expenditures Research & Development Up $2.3B 15-20% $1.3B $1.4B $1.7B $1.6B $1.1B $928M $1.2B $926M $669M $682M 08* 03 04 05 06 07 08* 03 04 05 06 07 Excluding Equipment Leased to Others * Outlook
  13. 13. 13 Most Recent Results 1st Qtr 2008 Change from 1st Qtr 2007 Sales and Revenues $11.8 Billion $1.8B 18% EPS $1.45 $0.22 18% Profit Sales and Revenues • Asset gains in Q1-2008 and Q1-2007. • Up 37% in Asia Pacific region, up 30% in EAME, up 24% in Latin America … and • Currency impact negative about $100M up 4% in North America • Sales mix negative, particularly for • Of the $1.8B increase … volume was Machinery. $1.1B, currency translation was $310M, • Material costs up about 1% price realization was $261M, and • Incremental margin slightly over 20% Financial Products revenues were up excluding currency impact and sales mix. $122M
  14. 14. 14 2008 Outlook
  15. 15. 15 Sales patterns Sales patterns Worldwide Machine Industry diverging diverging 350 Machine Industry Unit Index 18% 2002 = 100 300 Outside 28% North America 250 200 -11% -10% 150 North America 100 50 2002 2003 2004 2005 2006 2007 2008 Caterpillar Estimate
  16. 16. 16 By Geographic 2008 Sales and Revenues Region Worldwide up 5 to 10% North America +/- 2% EAME Up 7 to 12% Asia Pacific Up 15 to 20% Latin America Up 15 to 20%
  17. 17. 17 Expect a record year 2008 Outlook despite U.S. weakness 2007 2008 Actual Outlook Sales and Revenues $45 B Up 5 - 10% Earnings Per Share $5.37 Up 5 - 15%
  18. 18. 18 Long-Term Positive Key Longer-term Trends for Caterpillar We expect continued strong growth in worldwide infrastructure spending over the next decade Significant growth in the developing world … and they have the money! Significant need to improve and rebuild infrastructure in the developed world … after years of under investment
  19. 19. 19 Years of Factors Driving Construction construction underinvestment Developed Economies Developing Economies • Old, outdated buildings • Large, rapidly growing populations • Insufficient infrastructure • Inadequate infrastructure • Modest economic growth • Rapid economic growth We expect continued good growth in construction
  20. 20. 20 Mining & Energy A Very Positive Future • Growing world demand • Prolonged underinvestment • Insufficient shipping capacity • Low inventories & tight spare capacity
  21. 21. 21 Generally positive Commodity Prices Are Favorable for investment 2006 Average Price Dollars per Market Unit 2007 Average Price 2008 Forecast Average Price 7.00 6.98 Estimated Threshold for investment 6.74 81 72 66 63 4.50 50 47 3.23 3.05 41 3.00 40 1.30 HH Natural Gas Copper WTI Crude Oil CA Coal Source: Haver Analytics, Business Economics
  22. 22. 22 Continued low Spare Oil Production Capacity spare capacity Millions of barrels per day 5 Safety Zone 4.1 4 3.1 3 2.2 1.9 2 1.5 1.3 1.0 1 0 2001 2002 2003 2004 2005 2006 2007 Source: Spare capacity from EIA, Reserves from BP 2007 Statistical Review
  23. 23. 23 Fast Growing Asian Economies Regional Metals Demand are Largest Users of Metals 69 Percent Share of Worldwide Demand 53 53 52 49 36 30 29 25 22 18 16 11 10 6 6 5 4 4 2 Aluminum Copper Nickel Zinc Iron Ore North America Europe/AME/CIS Latin America Asia/Pacific Source: Barclays Capital, AME
  24. 24. 24 Replacement opportunity Worldwide Mining Fleets % of Machines More Than 10 Years Old (2007) 657 Units 1,160 1,075 10,254 907 7,838 69% 65% 57% 56% 54% 50% Coal Mines Metals Mines Source: Parker Bay. Crawlers Trucks Wheel Loaders
  25. 25. 25 China / Emerging Markets Development of the complete Caterpillar business model in China is progressing rapidly : New engine factory under construction Wheel loader factory under construction Hydraulic component facility under construction Completed the acquisition of SEM … China domestic wheel loader manufacturer – Cat now owns 100% Product strategy being executed with a growing array of products in China Cat Logistics, Cat Financial, and Cat Remanufacturing are all in place and growing in China The dealer strategy is in place and dealers are expanding Ownership change at SCM could help accelerate growth Sales in China in 2008 are expected to be close to $2 billion With the China strategy in full swing, it’s time to broaden the focus to include other emerging markets – there’s been significant growth, and a big opportunity in India and the CIS.
  26. 26. 26 Our goals for 2010 Sales and Profit Last Year Today 2010 Sales & Revenues Approaching $50 billion “plus” $60 billion In a plausible range of $45 to $60 billion EPS Growth No Change EPS CAGR of 15% to 20% from a 2005 base That means EPS in a range of about $8 to $10 per share
  27. 27. 27 2010 EPS Goal The Road Map Goal $8 to $10 Per Share Share repurchase $0.70-$1.10 Profitability – Improved after- $.83 - $1.78 tax ROS Sales growth – at our • Pull through on higher volume $1.10 - $1.75 2007 after tax profit rate, • Modest price realization plus Financial Products expectations profit growth • Operational improvement – CPS 2007 Actual $5.37
  28. 28. 28 The positive 2012 – Five Years Out story continues We expect continued growth in the world economy and a positive environment for most of our end markets … notably Mining, Energy, Power Generation, and Infrastructure. We expect Caterpillar Sales and Revenues to continue growing at an attractive rate … largely organically. We are investing heavily in new products and capacity. We are focused on execution in the areas of Safety, Quality,Velocity, and Cost … and we expect to be able to continue our compound annual EPS growth of 15 to 20% through 2012!
  29. 29. 6.6 6.4 6.1 29 3.6 3.4 3.2 3.2 3.1 3.0 2.9 2.8 2.8 2.6 2.6 2.5 1.6 1.5 1.3 World North America EAME Latin America Asia Pacific Japan 1990 - 1999 2000 - 2008 2009 - 2017 World Economic Growth Global infrastructure needs Our customers “Make Progress Possible” No company is better positioned than Caterpillar Broadest product line On a foundation of a large population of machines & engines Unparalleled global dealer network Global manufacturing footprint
  30. 30. Questions?

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