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CAT
Caterpillar Inc.
Earnings
CAT | Earnings Review
Caterpillar Inc. | 2026 Q1 reported April 30, 2026 BMO | Analysis date: May 7, 2026 | Daloopa company_id 313
Revenue Beat
+6%
$17.4B vs ~$16.42B Street; +22.2% YoY — strongest growth in 2+ years; CI +38%, P&E +23%, RI +3.5%
Adj EPS Beat
+20%
$5.54 vs $4.62 Street; +30% YoY; ~$0.46 was one-time (~$0.31 tariff true-up + $0.15 tax); underlying beat ~$0.45-0.50
Backlog (record)
$62.7B (+79% YoY)
+$11.5B sequentially; all-time-record orders across all 3 segments; large recip backlog +3.5x since Jan'24
FY26 Guide RAISED
Low-double-digit growth
Revenue ~7% → low-double-digit; tariff cost $2.6B → $2.2-2.4B (post-SCOTUS IEEPA); ME&T FCF >$9.5B (vs <$9.5B prior); 2030 CAGR 5-7% → 6-9%
Across-the-board acceleration, record orders, and a guidance raise — the data-center / power-gen super-cycle is now visibly compounding through CAT's P&L. Revenue $17.4B (+22% YoY) beat ~$16.42B Street by +6%; Adj EPS $5.54 (+30%) beat $4.62 by +20% (~$0.46 was one-time: ~$0.31 favorable tariff true-up on 2025-period costs + $0.15 discrete tax benefit; underlying operational beat ~$0.45-0.50). Backlog at all-time record $62.7B (+79% YoY, +$11.5B QoQ); orders all-time record across all three primary segments. Segment detail: Construction Industries (CI) $7.10B +38% YoY (lapping weak Q1'25, dealer +$1.5B build vs flat last year, STU +7% — 5th straight Q of growth, op margin +160 bps despite ~550 bps tariff drag); Power & Energy (P&E, formerly E&T) $5.71B +22.8% YoY (Power Gen STU +48%, Oil & Gas +13%; op margin -170 bps on tariffs + capacity-expansion D&A); Resource Industries (RI, restated) $3.71B +3.5% YoY (op margin 10.0% / -700 bps YoY on ~500 bps tariff drag + autonomy investment + discount timing — the soft spot, but order intake highest since 2012 on copper/gold demand). Capacity step-change: Large recip engine capacity raised from 2x → ~3x 2024 levels; 2030 Power Gen target >3x 2024; 2030 enterprise CAGR raised 5-7% → 6-9%. Driven by 6 prime-power orders ≥1GW including new 2.1GW Pro Power deal. FY26 guidance RAISED: Sales now low-double-digit growth (vs ~7% prior); tariff cost cut $2.6B → $2.2-2.4B (post-SCOTUS IEEPA ruling); ME&T FCF now >$9.5B (vs <$9.5B prior — direct flip from Q4'25 "slightly lower"); margin still "near bottom of target range" incl. tariffs but ex-tariffs = top half of range. Tariffs Q1: $600M (vs $800M expected) — one-time true-up benefited Q1 ~$0.31. Capital return: $5.7B in Q1 incl. $4.5B ASR (up to 9 months); FY26 FCF guide raised. Tone: most confident in 4-call sequence; AI/data-center confidence stepping up each quarter; mining shifted from "capital discipline" to "highest order intake since 2012"; tariff peak appears past. CFO transition: Andrew Bonfield → Erika Epley effective May 1, 2026 (internal 20-yr veteran). Watch items: (1) RI margin recovery 2H'26 — Q1 10% the trough; (2) E&T turbine delivery pacing & Power Gen capacity execution / D&A drag through 2027-2029; (3) IIJA expiration Sept-2026; (4) tariff situation remains "fluid"; (5) Middle East "softening" newly added to risk language; (6) China low-base growth in >10t excavators.
Key Metrics Trends
| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 |
|---|---|---|---|---|---|---|---|---|---|
| Construction Industries (CI) revenue ($M) | $6.4B | $6.7B | $6.3B | $6.0B | $5.1B | $6.1B | $6.7B | $6.8B | $7.1B |
| Construction Industries (CI) revenue ($M) YoY % | - | - | - | - | -19.8% | -8.0% | +5.9% | +14.9% | +38.1% |
| Resource Industries (RI) revenue ($M, restated) | $3.9B | $3.9B | $3.7B | $3.8B | $3.6B | $3.8B | $3.9B | $4.3B | $3.7B |
| Resource Industries (RI) revenue ($M, restated) YoY % | - | - | - | - | -8.2% | -3.8% | +5.2% | +14.0% | +3.5% |
| Power & Energy (P&E) revenue ($M, restated) | $4.7B | $5.3B | $5.2B | $5.6B | $4.7B | $5.8B | $6.2B | $7.1B | $5.7B |
| Power & Energy (P&E) revenue ($M, restated) YoY % | - | - | - | - | -0.9% | +9.6% | +18.0% | +26.3% | +22.8% |
| Total Revenue ($M) | $15.8B | $16.7B | $16.1B | $16.2B | $14.2B | $16.6B | $17.6B | $19.1B | $17.4B |
| Total Revenue ($M) YoY % | - | - | - | - | -9.8% | -0.7% | +9.5% | +18.0% | +22.2% |
| Adj EPS ($) | $5.60 | $5.99 | $5.17 | $5.14 | $4.25 | $4.72 | $4.95 | $5.16 | $5.54 |
| Adj EPS ($) YoY % | - | - | - | - | -24.1% | -21.2% | -4.3% | +0.4% | +30.4% |
| Backlog ($B) | $28M | $29M | $29M | $30M | $35M | $38M | $40M | $51M | $63M |
| Backlog ($B) YoY % | - | - | - | - | +25.4% | +31.1% | +38.7% | +70.7% | +79.1% |
_Trajectory: inflection confirmed across all 3 segments simultaneously in 2025Q2-2026Q1. Revenue acceleration went from -480 bps (2025Q1) to +1,020 bps (2025Q3); EPS swung from -24% YoY to +30% YoY in 5 quarters. CI dealer destock trough at 2025Q1 (-19.3% YoY), now snapping back hard (+38% YoY at 2026Q1) on easy compares + restock + tariff pull-forward. RI mining cycle bottomed 2024Q4/2025Q1; 2026Q1 at +3.5% (restated) is the strongest order intake since 2012, supported by autonomy/rebuild cycle. P&E AI/data-center wave drove revenue from $4.7B (2025Q1) to peak $7.1B (2025Q4); 2026Q1 step-down to $5.7B is shipment-timing lumpiness, not demand — backlog $62.7B confirms. Margins bottoming: adj op margin YoY compression narrowed from -480 bps (2025Q2) to just -30 bps (2026Q1) at 18.0%. Backlog doubled from $30B (2024Q4) to $62.7B (2026Q1); +$11B sequential adds in 2025Q4 and 2026Q1 are unprecedented and lead reported revenue by ~3 quarters. Verdict: strongest trajectory in 2+ years; sustainability beyond 2H'26 hinges on E&T turbine delivery pacing and dealer restock durability._
Beat/Miss
Guidance
Catalysts
Street Q&A
Contradictions
Read-Throughs
This Quarter vs Consensus
| Metric | Consensus | Actual | Variance | Read |
|---|---|---|---|---|
| Revenue | ~$16.42B | $17.4B | +$1.0B / +6% | Beat — +22.2% YoY |
| Adj EPS | $4.62 | $5.54 | +$0.92 / +20% | Beat — ~$0.46 one-time, ~$0.45-0.50 underlying |
| Construction Industries | — | $7.10B | +38.0% YoY | Beat — dealer build resumed; STU +7% |
| Resource Industries (restated) | — | $3.71B | -39% segment profit YoY | MISS — margin 10% / -700 bps; orders +highest since 2012 |
| Power & Energy (restated) | — | $5.71B | +22.8% YoY | Beat — Power Gen STU +48% |
| ME&T FCF | — | $0.6B | +$0.4B QoQ | Beat — ahead of plan |
| Backlog | — | $62.7B | +$11.5B QoQ / +79% YoY | All-time record across 3 segments |
| Tariff cost Q1 | $800M expected | $600M actual | -$200M / -25% | Tariff peak past |
| L4Q (2025Q2-Q1'26) Revenue beat rate | — | 75% | — | Regime change from prior 4-Q miss streak |
| L4Q Adj EPS beat rate | — | 75% | — | Consistent Beater post-trough |
| L8Q Revenue beat rate | — | 38% | — | Includes 4-Q destock miss streak |
| L8Q Adj EPS beat rate | — | 63% | — | Mixed pre-2H'25 |
Pattern: clean regime change from 4-Q destock miss streak (2024Q2-2025Q1) → 3-Q beat streak (2025Q3-2026Q1) with consecutive upward guidance revisions. Q1'26 is broad-based: revenue beat, EPS beat, FCF ahead, backlog record. Quality of EPS beat: ~$0.46 one-time (tariff true-up + tax); underlying ~$0.45-0.50. Mgmt explanation: (1) tariffs $600M actual vs $800M guided; FY tariff cut $2.6B → $2.2-2.4B post-SCOTUS IEEPA; (2) AI/data-center backlog record $63B (+79% YoY); large recip backlog +3.5x since Jan'24; capacity raised 2x → 3x 2024; 2030 CAGR raised 5-7% → 6-9%; (3) dealer inventory ~$1.5B CI build (vs drawdown last year) — primary driver of CI's +38%; mgmt changing dealer-inventory disclosure to enterprise + CI-only; (4) RI weakness = production-delay timing + discount timing on price; orders themselves highest since 2012 on copper/gold.
Guidance Deep Dive
| Metric | Prior (Q4'25) | New (Q1'26) | vs Prior | Read |
|---|---|---|---|---|
| FY26 Sales Growth | ~7% (top of CAGR) | Low-double-digit | +~500 bps | Implied ~$74-76B vs ~$71B Street |
| FY26 Tariff Cost | $2.6B | $2.2-2.4B | -$200-400M | Post-SCOTUS IEEPA ruling |
| FY26 ME&T FCF | Slightly lower than 2025 ($9.5B) | >$9.5B | Direction flip | Driven by upgraded top-line |
| 2030 Long-Term CAGR | 5-7% | 6-9% | +200 bps mid | Power-gen capacity step-up |
| Large Recip Engine Capacity | 2x 2024 levels | ~3x 2024 levels | +50% | Capacity step-change |
| 2030 PowerGen Sales Target | >2x 2024 | >3x 2024 | +50% | Driven by 6 prime-power orders ≥1GW + 2.1GW Pro Power deal |
| FY26 Capex | $3.5B | $3.5B | Maintained | — |
| FY26 Adj Op Margin range | Bottom half of target range | Near bottom of target (incl tariffs); top half ex-tariffs | Stable | Margin near bottom of higher revenue band |
| Q1'26 Capital return | — | $5.7B (incl $4.5B ASR up to 9 months) | — | Aggressive ASR |
| FY26 RI margin trajectory | — | Sequential recovery from Q1 trough (10.0%) | — | Watch item — 2H ramp required |
| Services revenue | $28B FY28 target (legacy) | $30B by 2030 (replaced) | Consistent direction | Ongoing services growth |
Tone: most confident call in 4-call sequence — "AI/data-center clearly stepping up each quarter." Trajectory: cautious-on-tariffs (Q2'25) → tariff peak guidance (Q3'25) → tariff cost peaked (Q4'25) → tariffs falling, demand exploding (Q1'26). Mining narrative shifted from "capital discipline" to "highest order intake since 2012" (copper + gold). Tariff pressure peaked. Dealer inventory cycle normalizing. Margin framing nuance: still "near bottom of target range" incl. tariffs, but absolute margin is higher because the revenue tier moved up. Ex-tariffs = top half of range. Mgmt reiterated "midpoint over time" goal. Q1'26 RI margin (10.0%) is the watch-item — pressured by tariffs (500bps), autonomy/comp investments, discount timing; mgmt expects sequential recovery. Risk caveats: tariffs (volume-sensitive, situation fluid), pricing (long-dated P&E frame agreements, RI execution), Middle East "softening" newly added, PowerGen capacity execution / D&A drag through 2027-2029. CFO transition: Bonfield → Epley effective May 1, 2026 — internal 20-yr veteran, low-risk. One material contradiction across 4 transcripts: ME&T FCF FY26 direction flipped between Q4'25 ("slightly lower") and Q1'26 ("higher than $9.5B") — explicitly acknowledged as transparent revision.
Upcoming Catalysts
| # | Catalyst | Timing | What to Watch | Read |
|---|---|---|---|---|
| 1 | Capacity expansion to ~3x 2024 (large recip) | Through 2030 | Execution; 2030 PowerGen target >3x 2024; 6 prime-power orders ≥1GW + 2.1GW Pro Power deal | Most important catalyst — secular AI/data-center super-cycle |
| 2 | Backlog at $62.7B (+79% YoY) | 2026-2028 conversion | Quarterly orders cadence; large recip backlog +3.5x since Jan'24; orders extending into 2028 | Lead indicator — ~3-Q lead vs revenue |
| 3 | Hyperscaler 2026 capex $660-725B (+77% YoY) | FY26 | MSFT $190B, AMZN $200B, GOOGL $190B, META $145B+; ~75% to AI infra; MSFT $80B Azure backlog gated by power | Macro tailwind |
| 4 | FY26 sales raised to low-double-digit | FY26 | Implied ~$74-76B vs ~$71B Street | Beat-and-raise validation |
| 5 | Tariff relief: $2.6B → $2.2-2.4B | FY26 | Post-SCOTUS IEEPA ruling; CI bears 50% of tariff load | Margin tailwind |
| 6 | RI orders highest since 2012 (copper + gold) | FY26-FY27 | Sequential margin recovery from Q1 10% trough; rebuild cycle + autonomy | Margin watch — 2H ramp |
| 7 | RI margin recovery | Through FY26 | Sequential improvement from 10.0% Q1 trough; autonomy/comp investments lap | Trajectory turn |
| 8 | CI dealer inventory normalization | Through FY26 | +$1.5B CI build Q1'26 (normal seasonal); STU +7% (5th straight Q) | Cycle reset |
| 9 | IIJA infrastructure spend | Through Sept-2026 | Sept-2026 IIJA expiration risk; data-center construction (+20% in 2026) offsetting | Tail risk on expiration |
| 10 | Capital return: $5.7B Q1 incl $4.5B ASR | Multi-year | ASR completion (up to 9 months); buyback authorization | Aggressive return |
| 11 | Cat Financial: past dues -19 bps YoY | Ongoing | Lowest-ever loss reserve; new biz volume +8% (best Q1 in 15 yrs) | Customer credit pristine |
| 12 | Services growth — $30B by 2030 | Through 2030 | Aftermarket multi-year growth lever from prime-power install base | Margin-accretive mix |
| 13 | FY26 ME&T FCF >$9.5B | FY26 | Direction flip from Q4'25 "slightly lower"; capex $3.5B held flat | Cash conversion |
| 14 | CFO transition — Bonfield → Epley | Effective May 1, 2026 | Internal 20-yr veteran; low-risk | Neutral |
| 15 | Middle East softening | FY26 | Newly added to risk language | Geo watch |
| 16 | China >10t excavators low-base growth | FY26 | Low base; LBJ+ growth | Marginal |
Street Q&A
| # | Analyst (Firm) | Topic | Mgmt Response | Quality |
|---|---|---|---|---|
| 1 | Revich (analyst) | Recip prime GW number — quantify capacity expansion | Creed: directional 3x 2024 target; declined to give specific GW number. | Deflection — qualitative only |
| 2 | Dillard (analyst) | 2030 prime/backup mix | Creed: declined to specify mix breakdown. | Deflection |
| 3 | Cook (analyst) | Structural market share commitment | Creed: declined to quantify share trajectory commitment. | Deflection |
| 4 | Dobre (analyst) | RI peak margin commitment | Bonfield: declined to commit to a peak margin number for RI. | Deflection |
| 5 | Multiple analysts (Cooper, Sherman, Walmsley) | Q1 print + AI/data-center backlog | Creed: backlog $62.7B (+79% YoY); large recip up 3.5x since Jan'24; capacity 2x → 3x 2024; 6 prime-power orders ≥1GW + 2.1GW Pro Power deal. | Well Answered — quantified |
| 6 | Multiple analysts | Tariffs Q1 actual vs guide / FY26 outlook | Bonfield: $600M Q1 actual vs $800M guided; FY cut $2.6B → $2.2-2.4B post-SCOTUS IEEPA; CI bears 50%. | Well Answered — full bridge |
| 7 | Multiple analysts | FY26 margin range / Bonfield response | Bonfield: still "near bottom" incl. tariffs but absolute margin higher since revenue tier moved up; ex-tariffs = top half of range; "midpoint over time" goal. | Well Answered — nuanced |
| 8 | Multiple analysts | RI mining outlook / margin path | Creed: orders highest since 2012 (copper + gold); margin compressed by tariffs (500 bps) + autonomy investment + discount timing; sequential recovery expected. | Well Answered — trajectory framing |
| 9 | Multiple analysts | CI dealer inventory cycle | Creed: +$1.5B CI build Q1 (normal seasonal vs flat last year); STU +7% (5th straight Q); changing disclosure to enterprise + CI-only. | Well Answered — disclosure evolution |
| 10 | Multiple analysts | Capital allocation / FCF / Bonfield farewell | Creed: $5.7B Q1 return incl $4.5B ASR (up to 9 months); FY26 FCF guide raised >$9.5B. Bonfield received congratulatory tone on retirement; Epley smooth transition. | Well Answered — celebratory tone |
Contradictions
| # | Topic | Severity | Statement A | Statement B | Why it's a tension |
|---|---|---|---|---|---|
| 1 | ME&T FCF FY26 direction | Medium — same-period reversal | Q4'25 (Creed): "MP and E free cash flow is expected to be slightly lower than 2025, reflecting the increase in capital expenditures." | Q1'26 (Epley): "We now anticipate MP&E free cash flow will be higher than the $9.5 billion last year, an improvement versus our expectations last quarter." | Directly incompatible on direction for the same fiscal year. CapEx stayed flat at $3.5B in both calls; flip driven by upgraded top-line outlook (low double-digit vs ~7% prior). Mgmt acknowledged the change explicitly — transparent revision rather than hidden inconsistency. |
| 2 | Tariff cost magnitude evolution | Low — moved with policy | Q3'25: Tariff cost expected $1.5-1.8B FY | Q1'26: Tariff cost $2.2-2.4B FY (post-SCOTUS IEEPA) | Estimates moved with new tariff actions and the SCOTUS ruling — transparent revisions, not contradictions. |
| 3 | AI/data-center backlog narrative | None — coherent acceleration | Each call had stronger language than prior; capacity raised 2x → 3x 2024 | — | Coherent acceleration with order data. |
| 4 | CI dealer inventory FY25 | Low — acknowledged | Q4'24 guide: "flat" CI dealer inventory FY25 | Actual FY25: -$500M | Mgmt acknowledged miss; not hidden. |
| 5 | RI mining cycle inflection | None — coherent | Q4'25 / Q1'26: Order intake highest since 2012; copper + gold | — | Coherent across calls. |
| 6 | Margin range commentary | Low — tightened | Q4'25: "Bottom half of target range" | Q1'26: "Near bottom of target range" incl. tariffs; "top half" ex-tariffs | Tightened framing as tariffs grew. Not a contradiction. |
| 7 | Capital allocation cadence | None — consistent | Quarterly base + larger ASRs framework consistent | — | Consistent framework. |
| 8 | Services target | Low — replaced metric | Legacy $28B FY28 target (Investor Day) | Q4'25/Q1'26: $30B by 2030 (post-Investor Day) | Replaced metric, not contradicted in-transcript. |
Indirect Read-Throughs
| Name | Relationship | What CAT signaled | Read-through |
|---|---|---|---|
| Hyperscalers (MSFT, GOOGL, AMZN, META, ORCL) | Power buildout customers | 6th 1GW+ prime power agreement; recip backlog 3.5x vs Jan 2024; orders extending into 2028. Capacity raising from 2x to 3x 2024 levels (+15GW/yr) | POSITIVE — data-center thesis validated |
| Mining customers (FCX, SCCO, NEM, GOLD, BHP, RIO, VALE) | RI customers | "Highest quarter for order intake since 2012" — copper + gold-driven, mostly fleet replacement (old fleet age) | POSITIVE — mining capex inflection |
| Cummins (CMI) | Industrial peer / partial competitor | Rising tide on power gen + future competition for AI infra; Cummins also benefits | MIXED — rising tide + competitive build-out |
| Komatsu (KMTUY) | Mining-equipment OEM peer | RI orders highest since 2012 — read-across positive | POSITIVE |
| Deere (DE) / PCAR / AGCO | Industrial peers (tariff exposure) | Sector-wide tariff relief post-SCOTUS IEEPA ruling — heavy importers benefit | POSITIVE — tariff relief |
| Vulcan Materials (VMC) / Martin Marietta (MLM) / Eagle Materials (EXP) | Aggregates / construction | IIJA + data-center civil work supporting non-res construction with multi-year runway | POSITIVE — non-res construction tailwind |
| Granite (GVA) / MasTec (MTZ) / Quanta (PWR) | E&C contractors | Same — IIJA + data-center civil + power infrastructure | POSITIVE |
| United Rentals (URI) / Ashtead/Sunbelt | Equipment rental | CI sales-to-users +7% (5th straight Q); rental fleets benefiting | POSITIVE — rental cycle intact |
| Williams (WMB) / Kinder Morgan (KMI) / Energy Transfer (ET) / Targa (TRGP) / OKE / LNG | Solar Turbines customers (gas compression) | Solar Turbines backlog healthy; recip engines into gas compression growing | POSITIVE — gas compression / LNG demand |
| GE Vernova (GEV) / Siemens Energy / Wartsila / Rolls-Royce | Gas-turbine peers | Mixed — competitive industry expansion but rising tide | MIXED |
| SCOTUS / IEEPA ruling | Regulatory | FY26 tariff cost cut from $2.6B to $2.2-2.4B post-ruling | POSITIVE — sector-wide |
| Pro Power | Customer (2.1GW prime-power deal) | Named publicly; one of 6 prime-power orders ≥1GW | POSITIVE |
| Geographic — N America strong; Middle East softening; China low-base growth in >10t excavators | Macro signal | N. America better than expected; Europe stable; Middle East softening (newly added); China low-base growth | MIXED |
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