Caterpillar Inc.

Caterpillar reported second-quarter 2026 sales and revenues of $20.5 billion, up 24% versus the prior year. Adjusted profit per share was $8.17, up 73% year over year; reported profit per share was $7.77. Adjusted operating profit was $4.5 billion and adjusted operating profit margin was 21.9%, a 430-basis-point increase versus last year. Backlog grew sequentially by $9 billion to $72 billion, up about $35 billion, or 92%, versus second quarter last year. MP&E free cash flow was a record $5.1 billion, and the company deployed $2.2 billion to shareholders. For 2026, Caterpillar now expects sales and revenues to grow in the mid- to high-teens, adjusted operating margin to be higher than previously expected, tariffs of around $2.2 billion excluding IEEPA recoveries, and MP&E free cash flow in the top half of its $6 billion to $15 billion target range.

Joe Creed said the quarter reflected broad-based strength across all three primary segments, with sales to users and backlog improving in each. He emphasized that demand remains strong despite geopolitical uncertainty, and pointed to extended customer planning horizons, including orders being taken as far out as 2030 in Power & Energy. His tone was confident and constructive, highlighting operational discipline, capacity expansion, and the ability to use existing facilities and supply chains to respond quickly to demand.

Kyle Epley focused on the mechanics behind the quarter’s stronger-than-expected results: higher sales volume, favorable price realization, and tariff items that were better than previously assumed. He said adjusted operating margin benefited from $392 million of expected IEEPA tariff recoveries and that 2Q tariff costs were about $400 million, below the $700 million estimate given in April. He also noted enterprise cash of $6.7 billion plus $1.5 billion of liquid marketable securities, CapEx of about $600 million in the quarter, and 2026 CapEx expected at about $3.5 billion. He reiterated full-year tax rate expectations of about 23% excluding discrete items and said shareholder returns remained a priority through dividends and buybacks.

Analysts pressed on whether the 10-megawatt reciprocating engine return is part of the company’s 65-gigawatt target and on confidence in AI/data center demand beyond 2027. Creed said the product was not included in that target, that customers are still asking for more units, and that Caterpillar is already taking orders into 2029 and 2030. Questions also focused on dealer inventory, CI rental loading, and the mix of backlog; management said dealer inventories should follow a more normal seasonal pattern, while rental fleet loading and Major Projects should support future growth.