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Caterpillar Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 4 August 2026: press release. The quarter’s numbers.

Key takeaways

  • Sales rose 24% to $20.5 billion: Sales and revenues were $20.5 billion, up from $16.6 billion. Higher volume added $3.1 billion and price realization added $595 million. Source
  • Operating margin rose to 20.9%: Operating profit margin was 20.9%, against 17.3% a year earlier and 17.7% in the first quarter. Adjusted operating margin was 21.9%, against 17.6%. Operating profit was $4.295 billion. Source
  • Construction Industries sales up 35%: Sales rose 35% to $8.346 billion. Segment profit rose 57% to $1.947 billion, and segment margin was 23.3%, against 20.1%. Source
  • Data center demand lifted Power Generation: Power Generation sales rose 29% to $3.098 billion. Gains came from large reciprocating engines and turbines, primarily for data center applications. Source
  • Manufacturing costs offset Power & Energy volume: Power & Energy profit rose $473 million. Volume added $457 million and price added $212 million, while higher period manufacturing costs reduced profit by $149 million. Source
  • Enterprise operating cash flow of $4.4 billion: Enterprise cash ended the quarter at $6.7 billion, against $4.1 billion at the end of the first quarter. Source
  • Adjusted operating profit reached $4.497 billion: Adjusted operating profit was $4.497 billion, a 21.9% margin. Adjusted profit per share was $8.17. Adjusted results exclude restructuring costs for the quarter. Source

“This is the first time in company history that we have generated over $20 billion in sales and revenues in a single quarter,”

Caterpillar Chairman and CEO Joe Creed

What changed from last quarter

  • New: Divestiture of certain non-U.S. entities in the second quarter, with losses of $139 million excluded from the global estimated annual effective tax rate and from adjusted results. Source
  • New: Operating profit in the second quarter included $392 million of expected IEEPA tariff recoveries. The first-quarter release did not report a comparable item. Source
  • New: Adjusted results now separately quantify two restructuring items: the divestiture of certain non-U.S. entities and other restructuring costs. The first-quarter release quantified one item. Source

Results and growth drivers

  • Sales rose 24% to $20.5 billion: Sales and revenues were $20.5 billion, up from $16.6 billion. Higher volume added $3.1 billion and price realization added $595 million. Source
  • Operating margin rose to 20.9%: Operating profit margin was 20.9%, against 17.3% a year earlier and 17.7% in the first quarter. Adjusted operating margin was 21.9%, against 17.6%. Operating profit was $4.295 billion. Source
  • Profit per share reached $7.77: Diluted profit per share was $7.77, against $4.62 a year earlier. Adjusted profit per share was $8.17, against $4.72. Source
  • Other income climbed to $398 million: Other income was $398 million against $84 million, driven by foreign currency, total return swap contracts, and investment and interest income. Source
  • Effective tax rate and discrete benefit: The effective tax rate was 23.1%, against 23.0%. It included a discrete benefit from stock-based compensation settlements, which the company reported separately. Source

Segments and regions

  • Construction Industries sales up 35%: Sales rose 35% to $8.346 billion. Segment profit rose 57% to $1.947 billion, and segment margin was 23.3%, against 20.1%. Source
  • Power & Energy profit up 30%: Sales rose 17% to $8.238 billion. Segment profit was $2.027 billion, up 30%, and segment margin was 24.6%, against 22.1%. Source
  • Resource Industries profit up 23%: Sales rose 20% to $4.648 billion. Segment profit was $693 million, up 23%, and segment margin was 14.9%, against 14.5%. Source
  • North America drove regional sales: North America sales rose 37% to $12.094 billion. Latin America rose 10% to $1.821 billion, EAME 14% to $3.625 billion, and Asia/Pacific 4% to $3.003 billion. Source
  • Financial Products revenue up 10%: Financial Products revenues were $1.145 billion, up 10%, which the company attributed to higher average earning assets across all regions. Source

“This milestone underscores both the essential work our customers do every day and the dedication of Caterpillar employees worldwide to solving our customers’ toughest challenges.”

Caterpillar Chairman and CEO Joe Creed

Products and end markets

  • Data center demand lifted Power Generation: Power Generation sales rose 29% to $3.098 billion. Gains came from large reciprocating engines and turbines, primarily for data center applications. Source
  • Oil and gas engine sales rose: Oil and Gas sales rose 9% to $2.044 billion. Gains in gas compression engines and aftermarket parts were partly offset by lower well servicing engine sales. Source
  • Rail deliveries rose internationally: Rail sales rose on higher international locomotive deliveries, and rail services sales also increased. Rail sales totaled $883 million, up 15%. Source
  • Industrial sales rose in North America and EAME: Power & Energy industrial sales rose 9% to $1.653 billion, led by North America and EAME. Source

Costs, margins and pricing

  • Manufacturing costs offset Power & Energy volume: Power & Energy profit rose $473 million. Volume added $457 million and price added $212 million, while higher period manufacturing costs reduced profit by $149 million. Source
  • Manufacturing costs offset Resource Industries gain: Resource Industries segment profit rose $130 million. Volume added $269 million, while manufacturing costs reduced profit by $158 million. Source
  • Tariff cost reference changed from first quarter: The first-quarter release attributed unfavorable Construction Industries manufacturing costs to higher tariff costs. The second-quarter release gives no tariff attribution for manufacturing costs.
  • Price realization added across segments: Construction Industries price realization was $309 million, Power & Energy $212 million and Resource Industries $75 million, supporting segment sales increases. Source
  • SG&A and R&D expenses rose: Selling, general and administrative expenses were $2.018 billion, against $1.694 billion. Research and development expenses were $616 million, against $551 million. Source
  • Corporate items expense fell: Corporate items and eliminations expense was $518 million, down $84 million. The company attributed the decrease to timing differences and segment reporting methodology differences. Source

Demand and dealer inventories

  • End-user equipment sales drove volume: Higher sales volume came mainly from equipment sales to end users, and sales were higher across the three primary segments. Source
  • Dealer inventory effects in North America: In North America, Construction Industries sales rose 50% to $5.065 billion. Higher volume reflected end-user equipment sales and changes in dealer inventories. Source
  • Retail statistics filed separately: The company pointed to its Rolling 3 Month Retail Sales Statistics, filed in a separate Form 8-K, as the source for end-user equipment sales. Source

Financial Products and credit

  • Financial Products profit up 32%: Segment profit was $328 million, up $80 million. Higher average earning assets added $44 million and equity securities at Insurance Services added $22 million. Source
  • Cat Financial past dues fell: Cat Financial past dues were 1.31%, against 1.62% a year earlier. Write-offs, net of recoveries, were $20 million, against $18 million. Source
  • Credit loss allowance on receivables: The allowance was $294 million, or 0.84% of finance receivables, against $283 million, or 0.86%, at March 31, 2026. Source

Cash, capital and shareholder returns

  • Enterprise operating cash flow of $4.4 billion: Enterprise cash ended the quarter at $6.7 billion, against $4.1 billion at the end of the first quarter. Source
  • Buybacks and dividends deployed $2.2 billion: Repurchases used $1.5 billion and dividends used $0.7 billion in the quarter. Six-month share repurchases totaled $6.522 billion, against $4.488 billion. Source
  • Six-month operating cash flow rose: Net operating cash flow was $6.241 billion for six months, against $4.411 billion, with customer advances adding $2.576 billion. Source
  • Capital spending and leased equipment: Six-month capital expenditures excluding leased equipment were $1.315 billion. Expenditures for equipment leased to others were $847 million. Source
  • Debt issuance rose for six months: Debt issued in the six months was $7.363 billion, against $5.707 billion. Debt payments were $4.763 billion. Cash was $6.713 billion at June 30, against $9.980 billion at year-end. Source
  • Diluted share count declined: Diluted weighted-average shares were 462.5 million in the quarter, against 471.5 million a year earlier. Source

Adjusted results and restructuring

  • Adjusted operating profit reached $4.497 billion: Adjusted operating profit was $4.497 billion, a 21.9% margin. Adjusted profit per share was $8.17. Adjusted results exclude restructuring costs for the quarter. Source
  • Other restructuring costs of $63 million: Other restructuring costs were $63 million in the quarter, against $56 million in the second quarter of 2025. Source
  • Restructuring rose on divestiture: Restructuring costs rose mainly because of the divestiture of certain non-U.S. entities, which the company recorded within corporate items and eliminations. Source

Coming up, as management said on 4 August 2026

  • Adjusted profit per share discussion: The company intends to discuss adjusted profit per share for the fourth quarter and full-year 2026, excluding pension and postemployment remeasurement gains or losses. Source

Risks management discussed

  • Operational: Period manufacturing costs rose in Power & Energy, offsetting part of the volume gain in that segment. Source
  • Financial: Cat Financial recorded a higher provision for credit losses, which reduced part of the Financial Products profit gain. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.