Key Notes
- Caterpillar’s third-quarter revenue rose 17% to $20.68 billion, while adjusted EPS increased about 45% to $7.20.
- Adjusted operating profit reached $4.26 billion, with a wider margin and $128 million in tariff recoveries included in the result.
- The order backlog hit a record $78.1 billion as management projected mid-to-high-teens revenue growth for 2026.
Caterpillar Inc. (NYSE: CAT) reported third-quarter revenue of $20.68 billion and adjusted earnings of $7.20 a share, as stronger equipment sales and demand for power-generation systems lifted profitability across its industrial businesses.
Revenue increased 17% from a year earlier, while adjusted EPS rose about 45% from $4.95. The results give CAT investors evidence of continued operating growth at a time when the company’s exposure to data-center construction has made power demand an increasingly important part of its investment story.
The October 29 release also showed a wider operating margin. Caterpillar’s accompanying presentation put its order backlog at a record $78.1 billion, up $6 billion from the previous quarter, providing visibility into future work without guaranteeing when those orders will become revenue.
Revenue and Earnings Rise Together
The main reported figures for the quarter ended September 30 were:
- Sales and revenues of $20.682 billion, compared with $17.638 billion a year earlier.
- Adjusted EPS of $7.20, compared with $4.95; reported GAAP EPS was $7.13, up from $4.88.
- Adjusted operating profit of $4.255 billion, rounded to $4.26 billion, versus $3.089 billion.
- Machinery, Power & Energy sales of $19.654 billion, up 18%.
- Consolidated Financial Products revenue of $1.028 billion, up 13%.
Higher sales volume added $2.207 billion to the revenue comparison, while favorable pricing contributed another $663 million. Caterpillar said the volume increase mainly reflected higher sales of equipment to end users, rather than price increases alone.
Adjusted operating margin reached 20.6%, against 17.5% a year earlier. The three primary equipment segments all posted higher sales, although the sources of that growth differed between customer demand and changes in dealer inventories.
Power Demand Extends Beyond Construction Equipment
Power & Energy sales rose 18% to $8.784 billion, and segment profit increased 31% to $2.143 billion. Caterpillar identified turbines, turbine-related services and large reciprocating engines used primarily in data centers as contributors to power-generation growth.
The business also benefited from demand for oil-and-gas aftermarket parts, engines used in gas compression and industrial applications. Those activities give the segment multiple sources of revenue alongside the expansion of AI infrastructure.
Construction Industries sales increased 18% to $7.983 billion, with segment profit up 33% to $1.831 billion. Higher end-user equipment sales supported North American and European, African and Middle Eastern volume growth, while dealer-inventory changes were more important in Latin America and Asia-Pacific.
Resource Industries sales rose 15% to $4.615 billion. Its profit increased a slower 14% to $622 million as higher manufacturing costs, including tariff-related material costs, offset part of the benefit from sales and pricing. International locomotive deliveries also declined.
Tariff Recoveries Matter to the Margin Comparison
Caterpillar reported GAAP operating profit of $4.214 billion, up 38%. Its adjusted figure adds back $41 million in restructuring costs, which account for the seven-cent difference between reported and adjusted EPS.
The adjusted result still includes $128 million in recoveries of tariffs imposed under the International Emergency Economic Powers Act. Those recoveries supported profitability; excluding restructuring does not remove every unusual benefit from an adjusted earnings measure.
For shareholders assessing the quarter, that makes the profit reconciliation useful alongside the headline margin. The report shows stronger operating performance, but tariff recoveries and a lower effective tax rate also affect comparisons with the previous year.
The financing figures require a similar distinction. Financial Products segment revenue was $1.177 billion, while consolidated financing revenue was $1.028 billion after corporate items and eliminations. Adding the larger segment figure directly to machinery sales would overstate consolidated revenue.
Cash Flow Supports Shareholder Returns
Enterprise operating cash flow was $4.4 billion, and Caterpillar ended September with $7.9 billion in enterprise cash. Its earnings presentation separately reported $3.8 billion in Machinery, Power & Energy free cash flow, up $600 million from a year earlier.
The company deployed approximately $2 billion to shareholders, comprising $1.2 billion in share repurchases and nearly $750 million in dividends. These are completed quarterly distributions, rather than a new buyback authorization.
Cash generation remains a useful check on industrial earnings. As we previously reported, GE Aerospace’s stronger third-quarter earnings came with a weaker quarterly free-cash-flow comparison, illustrating why profit growth and cash conversion deserve separate attention.
Record Backlog Shapes the Outlook for CAT
Caterpillar expects mid-to-high-teens revenue growth for 2026 and moderate fourth-quarter sales growth from a year earlier. It projects full-year tariff costs of around $2.2 billion, excluding recoveries, with approximately $600 million expected in the fourth quarter.
Management also expects full-year Machinery, Power & Energy free cash flow in the top half of its annual $6 billion–$15 billion target range. The $78.1 billion backlog was $38.2 billion higher than a year earlier, but deliveries, costs and customer schedules will determine how much of that work converts into profit and cash.
For CAT stock, the next operating test is whether power-generation demand and broader equipment sales sustain that conversion as tariff costs continue. Readers can follow upcoming corporate reports through our earnings calendar.
