CAT Caterpillar 10-Q 2026-09-30 section summaries

Caterpillar — Q3 and first nine months of 2026

Consolidated results

Revenue grew 17.3% in Q3 and 21.0% in 9M; operating profit grew faster, lifting operating margin to 20.4% from 17.3% in Q3 and 19.8% from 17.5% in 9M. Higher other operating expenses partly offset growth: $359M versus $190M in Q3 and $1.156B versus $817M in 9M. Weighted-average diluted shares declined to 460.9M from 470.8M in Q3 and 463.2M from 473.4M in 9M, supporting per-share growth.

Segments

Construction Industries’ growth accelerated year to date: 9M revenue was $23.490B versus $18.134B and segment profit $5.313B versus $3.645B, increases of 29.5% and 45.8%, respectively. Resource Industries’ 9M revenue increased to $13.060B from $11.546B, while profit fell to $1.693B from $1.730B. Power & Energy’s largest Q3 external-sales applications included power generation ($3.421B versus $2.634B), oil and gas ($2.236B versus $1.979B), and industrial ($1.631B versus $1.568B). Resource Industries’ mining-related sales were $3.697B versus $3.036B; rail sales were $832M versus $879M.

Reportable-segment profit was $4.860B in Q3 versus $3.795B. Reconciliation items included corporate costs of $333M versus $308M, restructuring of $41M versus $37M, and other methodology differences of $(214)M versus $(89)M. Segment profit excludes stock-based compensation and uses methods that differ from consolidated reporting. Rail products and services moved from Power & Energy to Resource Industries effective January 2026; prior-year segment figures were adjusted.

Balance sheet and cash flow

Other intangible assets comprise customer relationships of $146M, intellectual property of $238M and other intangibles of $25M. Goodwill increased mainly with acquisitions, including $600M from acquisitions, primarily RPMGlobal; no goodwill impairment was recorded in 9M. Tangible equity, after deducting goodwill and other intangibles, was approximately $15.168B. Inventories rose to $22.214B from $18.135B, including raw materials of $9.460B, work-in-process of $2.319B, finished goods of $9.988B and supplies of $447M.

Cash flow included larger uses for receivables ($3.761B versus $788M) and inventory ($4.118B versus $2.015B), partly offset by customer advances ($4.002B versus $1.649B) and accounts payable growth ($1.752B versus $1.086B). Caterpillar repurchased 9.147M shares in 9M and paid $7.745B for common stock versus $4.850B; dividends were $2.148B versus $2.043B. Customer contract liabilities rose to $8.706B from $4.678B; $1.886B of 9M revenue was recognized from the opening liability, versus $1.496B a year earlier. Unsatisfied performance obligations on contracts longer than one year were $49.4B, about one-third expected to be recognized within 12 months.

Key developments, exposures and risks

Following the February 2026 Supreme Court ruling that IEEPA tariffs were unauthorized, Caterpillar reported approximately $1.0B of related tariff costs incurred before collections ceased. It recorded $128M of recoveries in Q3 and $520M in 9M as reductions to cost of goods sold. Further recoveries and timing remained uncertain; receivables for import-related recoveries included $1.0B long-term and $195M current at September 30, with collection subject to CBP review and processing.

Cat Financial’s finance receivables were $25.731B, including $24.203B customer and $1.528B dealer, versus $24.533B a year earlier. The credit-loss allowance rose to $324M from $278M; 9M provision was $125M versus $86M, and write-offs were $134M versus $109M. Customer past-due receivables totaled $479M of $24.203B; dealer receivables were current, and the company made no adjustment to historical dealer loss rates.

Caterpillar acquired mining-software provider RPMGlobal in February for approximately $733M net of acquired cash, funded with cash. The acquisition included $200M of finite-lived intangibles and preliminary goodwill of $546M, of which $523M is expected to be tax-deductible. On October 31, it completed the acquisition of John Fabick Tractor Company for $1.24B cash at closing, with an estimated additional $165M subject to holdbacks and adjustments; purchase accounting was not yet available.

Supplier-finance obligations included in accounts payable increased to $1.19B from $936M. Product warranty liability rose to $1.794B from $1.626B as 9M accruals of $808M exceeded payments of $640M.###.

Caterpillar (CAT) — Q3 and first nine months of 2026

Consolidated results

Q3 revenue rose 17%, driven mainly by $2.207B of higher sales volume and $663M of favorable price realization. For 9M, revenue rose 21%, with $7.638B from volume, $1.684B from pricing and $608M from currency. Adjusted results exclude restructuring costs, including $41M in Q3 2026 versus $37M a year earlier, and $145M of other restructuring costs in 9M 2026 versus $125M in 9M 2025; 9M 2026 also included $139M of costs related to divestiture of certain non-U.S. entities.

Q3 segment performance

Power & Energy growth was led by Power Generation, up 30% to $3.421B from $2.634B, including turbines, related services and large reciprocating engines for data centers. Oil & Gas sales increased 13% to $2.236B from $1.979B. Construction Industries benefited from higher end-user equipment sales and pricing; $252M of unfavorable manufacturing costs, including freight, partly offset those gains. Resource Industries’ mining, heavy construction, quarry and aggregates sales rose to $3.697B from $3.036B, while rail sales declined to $832M from $879M. Higher materials costs, including tariffs, weighed on Resource Industries’ profit.

Financial Products’ revenue benefited from higher average earning assets, partly offset by lower average financing rates. Profit also reflected a $34M increase in Cat Financial’s credit-loss provision. Past dues improved to 1.31% from 1.47%, and net write-offs declined to $28M from $40M. Corporate-items-and-eliminations expense decreased by $131M, primarily due to favorable fair-value adjustments on deferred compensation plans.

Cash flow and capital spending

Higher pretax profit adjusted for noncash items supported operating cash flow. Working-capital outflows included receivables of $3.761B versus $788M and inventories of $4.118B versus $2.015B, partly offset by customer advances of $4.002B versus $1.649B. Caterpillar expects approximately $3.3B of capital expenditures for FY2026. Cash and equivalents were $7.929B at September 30, down from $9.980B at year-end 2025.

Balance sheet

Total debt was $45.201B, up $1.871B from year-end 2025, mainly because Financial Products debt increased $2.434B. Consolidated credit lines totaled $15.789B, with $10.197B available after commercial paper and other utilization. The $11.500B global facilities were renewed or extended in August 2026; none was drawn at quarter-end. Covenant net worth was $21.551B against a $9.000B minimum. Cat Financial’s interest-coverage ratio was 1.53:1 against a 1.15:1 minimum, and leverage was 8.01:1 against a 10:1 maximum.

Demand, outlook and risks

Firm order backlog was approximately $78.1B at Q3 end, up about $6.0B from Q2; $32.6B was not expected to be filled within 12 months. Dealer inventory rose $800M in Q3, versus $600M a year earlier, and increased $3.5B over 9M, versus $900M in the prior-year period. The inventory build—particularly in Construction Industries—makes end-user demand an important consideration, since dealer inventory also reflects delivery timing and demand expectations.

Management expects moderate year-over-year consolidated sales growth in Q4 and FY2026 growth in the mid-to-high teens, with healthy end markets, orders and backlog supporting the primary segments. Power & Energy demand is strong, especially for data-center power generation, and capacity is being expanded. Construction Industries expects Q4 sales similar to the prior-year quarter and a seasonal dealer inventory drawdown of about $1.6B, versus $600M a year earlier. Resource Industries cites robust orders, high customer utilization and elevated fleet age.

FY2026 tariff costs are estimated at about $2.2B, excluding approximately $520M of IEEPA recoveries recorded through September; Q4 tariff costs are expected to be about $600M, with no additional recoveries included in the outlook. Further recovery claims remain uncertain. Manufacturing costs, labor, transportation, materials, supply-chain disruption, inflation and trade-policy changes remain risks. Management expects approximately $300M of FY2026 restructuring costs and a 23.0% effective tax rate excluding discrete items.

Capital allocation and other developments

Caterpillar repurchased $7.745B of common stock in 9M 2026 under its $20.0B 2024 authorization, leaving $7.192B available at September 30. Dividends paid were $2.148B; the October quarterly dividend was maintained at $1.63 per share. The company aims to return substantially all MP&E free cash flow to shareholders over time while maintaining a mid-A credit rating. On October 31, 2026, Caterpillar completed its acquisition of 100% of Fabick for $1.24B cash at closing, with an estimated additional $165M after holdback periods, subject to adjustments.

Item 3 incorporates by reference the market-risk disclosures in Note 5, “Derivative Financial Instruments and Risk Management,” and in Management’s Discussion and Analysis, both in Part I of the Form 10-Q. No separate market-risk figures or analysis are presented here.

Controls and Procedures

As of the end of Q3 2026, Caterpillar’s CEO and CFO concluded that its disclosure controls and procedures were effective. No changes during the quarter materially affected, or were reasonably likely to materially affect, internal control over financial reporting. This section reported no financial results or business developments.

Caterpillar reported no material changes to the risk factors previously disclosed in its Form 10-K for the year ended December 31, 2025. This section identifies no new or updated risks.

• On August 13, 2026, Group President Jason E. Kaiser adopted a Rule 10b5-1 sales plan scheduled to end on the earlier of August 13, 2027, or the sale of 14,497 common shares plus all shares vested as of December 31, 2026, under a PSU grant.
• On August 26, 2026, Group President Bob De Lange adopted a Rule 10b5-1 sales plan scheduled to end on the earlier of May 25, 2027, or the sale of 44,403 common shares.

Both plans are intended to qualify for the affirmative defense under Rule 10b5-1(c).