Caterpillar Inc.

What they do

Caterpillar designs, manufactures, and markets construction and mining equipment, power systems, and related services through three primary segments: Power & Energy, Construction Industries, and Resource Industries. The company also provides financing and insurance through Cat Financial and Insurance Services. In 2025, total sales and revenues were $67.589 billion.

Revenue drivers

• Power & Energy — Sales grew 17% YoY to $8.238 billion in Q2 2026, driven by data center build-out, reciprocating engines, turbines, and services. Represents the largest backlog increase in Q2 2026.
• Construction Industries — Sales grew 35% YoY to $8.346 billion in Q2 2026, driven by higher volume and favorable price realization. Demand supported by infrastructure spending and rental growth.
• Resource Industries — Sales grew 20% YoY to $4.648 billion in Q2 2026, driven by rising copper and gold demand, high fleet age, and rebuild activity.

Recent performance

In Q2 2026, Caterpillar reported record quarterly sales and revenues of $20.5 billion, up 24% YoY, and profit per share of $7.77 (adjusted $8.17). Operating profit margin was 20.9% (adjusted 21.9%). Full-year 2025 sales were $67.589 billion, up 4% from 2024, with profit per share of $18.81 (adjusted $19.06). For the six months ended June 30, 2026, profit was $6.142 billion on sales of $37.9 billion.

Strategy

In 2025, Caterpillar introduced a revised strategy built on three profitable growth pillars: Commercial Excellence, Advanced Technology Leader, and Transform How We Work, anchored by the mission 'Solving our customers' toughest challenges.' The company focuses on customer-driven innovation, including SEM brand machine offerings for developing economies, and emphasizes operational excellence. Management highlighted 'broadening momentum across all three primary segments' in Q2 2026.

Risks

• Tariff exposure — Unfavorable manufacturing costs in 2025 largely reflected the impact of higher tariffs, which pressured operating margin.
• Cyclical end markets — Construction and mining demand is cyclical; a downturn in commodity prices or construction spending could reduce equipment sales.
• Competition — Intense competition from global and regional players like Komatsu, Deere, and Sany Heavy Industry in construction machinery.
• Supply chain and cost pressures — Higher tariffs and manufacturing costs contributed to a 3.7 percentage point decline in operating margin in 2025.

Outlook

Management expects 2026 sales of equipment to end users to grow across all three segments. Construction Industries benefits from IIJA funding and data center investment; Resource Industries sees rising copper and gold demand; Power & Energy grows on data center and AI-driven power demand. Order backlog stood at $72.1 billion at end of Q2 2026, up $9.4 billion from Q1.