Core Insights - The CEO of Caterpillar stated that the situation is still evolving and the company will continue to monitor it closely [1] Group 1 - Caterpillar is actively observing changes in the market environment [1]

分组1 - Caterpillar reported quarterly earnings of $4.25 per share, missing the Zacks Consensus Estimate of $4.30 per share, and down from $5.60 per share a year ago, representing an earnings surprise of -1.16% [1] - The company posted revenues of $14.25 billion for the quarter, missing the Zacks Consensus Estimate by 2.01%, and down from $15.8 billion year-over-year [2] - Caterpillar shares have declined approximately 15.3% since the beginning of the year, compared to a decline of -5.5% for the S&P 500 [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $5.03 on revenues of $15.62 billion, and for the current fiscal year, it is $18.94 on revenues of $61.48 billion [7] - The Manufacturing - Construction and Mining industry is currently in the top 6% of over 250 Zacks industries, indicating a strong outlook for the sector [8] - The estimate revisions trend for Caterpillar is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Group 1 - Caterpillar Inc. reported Q1 sales and revenue of approximately $14.2 billion, a year-over-year decline of about 10%, falling short of analyst expectations of $14.66 billion [1] - Adjusted earnings per share decreased to $4.25, below the analyst average estimate of $4.35 [1] - The decline in sales was primarily attributed to changes in dealer inventory levels [1] Group 2 - Caterpillar provided a performance outlook consistent with previous expectations, indicating that if tariffs persist and the economy enters a recession in the second half of the year, annual sales are expected to decline slightly but remain in line with prior forecasts [1][4] - The company anticipates an additional cost pressure of $250 million to $350 million related to tariffs in Q2 [4] - Despite a decline in quarterly sales across all business segments, the segment serving oil, gas, and marine customers saw a slight revenue increase due to pricing strategies, becoming the largest business segment for the company [4] Group 3 - The company highlighted the challenges posed by the uncertainty of U.S. trade restrictions under President Trump's tariff policies, complicating market demand predictions for the remainder of the year [3] - Caterpillar's performance is seen as a barometer of global economic health, with its equipment widely used across construction, mining, energy, and transportation sectors [1] - The slowdown in project initiation and cautious private sector investment due to high interest rates and inflation has begun to dampen the growth momentum previously supported by the $1 trillion infrastructure spending plan introduced by President Biden in 2021 [4]

Financial Data and Key Metrics Changes - For Q1 2025, sales and revenues decreased by 10% year-over-year to $14.2 billion, primarily due to lower sales volume and unfavorable price realization [10][30] - Adjusted operating profit was $2.6 billion with an adjusted operating profit margin of 18.3%, slightly better than expectations [11][30] - Adjusted profit per share was $4.25, down from $5.60 in the previous year [31] Business Line Data and Key Metrics Changes - Construction Industries sales decreased by 19% to $5.2 billion, with a profit of $1 billion, a 42% decrease year-over-year [34][36] - Resource Industries sales decreased by 10% to $2.9 billion, with a profit of $599 million, an 18% decrease [38] - Energy and Transportation sales decreased by 2% to $6.6 billion, with a profit of $1.3 billion, a slight increase of 1% [40] Market Data and Key Metrics Changes - In North America, sales to users were slightly higher than the prior year, driven by residential construction [12] - Sales to users in Latin America continued to grow at a higher rate than anticipated [13] - Sales to users in Asia Pacific declined in line with expectations, while sales in Africa and the Middle East showed better-than-expected performance [12][13] Company Strategy and Development Direction - The company is focused on long-term profitable growth through disciplined execution of its strategy and leveraging its diverse end markets [8] - Strong order rates led to a record backlog growth of $5 billion, indicating robust demand across segments [8][15] - The company is evaluating a range of longer-term mitigation actions in response to tariff impacts, emphasizing the need for clarity in the tariff environment [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the full year, expecting sales and revenues to be flat in a pre-tariff scenario [22][45] - The potential impact of tariffs is estimated to be a cost headwind of $250 million to $350 million for Q2 2025 [19][51] - The company remains confident in its ability to navigate the evolving economic conditions and maintain strong performance [20][55] Other Important Information - The company deployed $4.3 billion to shareholders through share repurchases and dividends in Q1 2025 [16][44] - The company maintains a strong balance sheet with ample liquidity, including $3.6 billion in cash [44] Q&A Session Summary Question: Cost headwind of $250 million to $350 million in Q2 - Management is evaluating short-term cost reductions and overhead cuts, while also considering longer-term mitigation actions [57][58] Question: Construction industry dynamics and dealer inventory - Management noted that better-than-expected sales to users have resulted in minimal dealer inventory build, indicating positive customer sentiment [68][70] Question: Tariff impact and pricing strategy - Management clarified that not all tariffs will impact the full quarter and that they are exploring mitigation strategies [74][76] Question: Pricing within Construction and Resource Industries - Management indicated that pricing decisions will depend on market conditions and competitive positioning, with no immediate price increases assumed [80][82] Question: Backlog pricing protection - Management confirmed that there is flexibility in pricing for the backlog, and they have not seen evidence of widespread pre-buying [90][91]

Financial Data and Key Metrics Changes - For the first quarter, sales and revenues decreased by 10% year-over-year to $14.2 billion, primarily due to lower sales volume and unfavorable price realization [11][31] - Adjusted operating profit margin was 18.3%, slightly above expectations, primarily due to favorable manufacturing costs [12][35] - Adjusted profit per share was $4.25, down from $5.60 in the previous year [32] Business Line Data and Key Metrics Changes - Construction Industries sales decreased by 19% to $5.2 billion, impacted by unfavorable price realization and currency effects [36] - Resource Industries sales decreased by 10% to $2.9 billion, slightly better than expected due to stronger sales to users [39] - Energy and Transportation sales decreased by 2% to $6.6 billion, with power generation sales increasing by 23% [40] Market Data and Key Metrics Changes - In North America, sales to users were slightly higher than the prior year, driven by residential construction [13] - Sales in Latin America continued to grow at a higher rate than anticipated [14] - Sales to users in Asia Pacific declined in line with expectations, while EAME faced weak economic conditions [26] Company Strategy and Development Direction - The company is focused on long-term profitable growth and has a strong balance sheet, allowing for significant shareholder returns through share repurchases and dividends [10][17] - Caterpillar is evaluating a range of scenarios regarding the impact of tariffs and is confident in its ability to navigate the evolving economic environment [20][21] - The company aims to dampen cyclicality through a focus on services and operational improvements [97] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism based on positive momentum from the first quarter, despite potential tariff impacts creating uncertainty [18][22] - The company anticipates second-quarter sales to be similar to the prior year, with growth in Energy and Transportation offset by declines in Construction and Resource Industries [19][51] - Management highlighted the importance of monitoring economic conditions and adjusting strategies accordingly [47][50] Other Important Information - Caterpillar's backlog increased by $5 billion or 17%, reaching a record of $35 billion, driven by strong order rates across all segments [9][16] - The company has maintained its dividend aristocrat status, having paid higher annual dividends for 31 consecutive years [17] Q&A Session All Questions and Answers Question: What are the mitigation strategies for the $250 million to $350 million cost headwind in Q2? - Management discussed short-term actions such as cost reductions and slowing inbound shipments to manage the situation, while also considering longer-term strategies that require more time to implement [58][60][64] Question: How is the company managing construction amidst dealer inventory and pricing challenges? - Management noted that merchandising programs have yielded positive results, leading to better-than-expected sales to users and a stable dealer inventory [70][72] Question: How should the tariff impact be viewed for the remainder of the year? - Management indicated that not all tariffs would impact the full quarter and that ongoing mitigation efforts could help offset some of the tariff costs [76][78] Question: Is the company price protecting the backlog? - Management clarified that while there is flexibility in pricing for the backlog, they have not seen evidence of widespread pre-buying, indicating genuine demand [92][94]

Financial Performance - Sales and Revenues decreased by $1550 million, a 10% decrease, from $15799 million in 1Q 2024 to $14249 million in 1Q 2025[23, 24] - Operating Profit decreased by $940 million, a 27% decrease, from $3519 million in 1Q 2024 to $2579 million in 1Q 2025[27, 28, 29] - Adjusted Profit per Share decreased from $560 in 1Q 2024 to $425 in 1Q 2025[10, 19] - ME&T Free Cash Flow for 1Q 2025 was $02 billion, a decrease compared to 1Q 2024, primarily driven by lower profit[13, 14, 47, 48] Segment Performance - Construction Industries total sales decreased by $1240 million, a 19% decrease, and segment profit decreased by $740 million, a 42% decrease[32, 33] - Resource Industries total sales decreased by $309 million, a 10% decrease, and segment profit decreased by $131 million, an 18% decrease[35, 36] - Energy & Transportation total sales decreased by $113 million, a 2% decrease, while segment profit increased by $13 million, a 1% increase[38, 39, 40] - Financial Products total revenues increased by $16 million, a 2% increase, while segment profit decreased by $78 million, a 27% decrease[42, 43, 44] Future Outlook - The company expects 2025 full-year sales and revenues to be about flat compared to 2024, an improvement from previous expectations of a slight decrease[51] - The company expects 2Q 2025 sales and revenues to be similar to 2Q 2024[52]

Exhibit 99.1 Caterpillar Inc. 1Q 2025 Earnings Release FOR IMMEDIATE RELEASE | Caterpillar | Reports | First-Quarter | 2025 Results | | --- | --- | --- | --- | | | First Quarter | | | | ($ in billions except profit per share) | 2025 | 2024 | | | Sales and Revenues | $14.2 | $15.8 | ● First-quarter 2025 profit per share of $4.20; adjusted profit per share of $4.25 | | | | | ● Enterprise operating cash flow was $1.3 | | Profit Per Share | $4.20 | $5.75 | billion in the first quarter of 2025 | | Adjusted Profi ...

Core Insights - Caterpillar Inc. reported a 10% decrease in sales and revenues for the first quarter of 2025, totaling $14.2 billion compared to $15.8 billion in the same period of 2024, primarily due to lower sales volume and unfavorable price realization [2][8][12] - The company's profit per share also declined, with reported figures of $4.20 for Q1 2025 compared to $5.75 in Q1 2024 [3][12] Financial Performance - Sales and revenues for Q1 2025 were $14.249 billion, a decrease of $1.550 billion, or 10%, from $15.799 billion in Q1 2024, driven by lower sales volume of $1.1 billion and unfavorable price realization of $250 million [8][12] - Operating profit margin fell to 18.1% in Q1 2025 from 22.3% in Q1 2024, while adjusted operating profit margin was 18.3% compared to 22.2% [3][12] - The enterprise operating cash flow for Q1 2025 was $1.3 billion, with the company ending the quarter with $3.6 billion in cash [4][12] Segment Analysis - Construction Industries reported total sales of $5.184 billion in Q1 2025, a decrease of $1.240 billion, or 19%, compared to $6.424 billion in Q1 2024, primarily due to lower sales volume and unfavorable price realization [20][23] - Resource Industries saw total sales of $2.884 billion, down 10% from $3.193 billion, attributed to lower sales volume and unfavorable currency impacts [24][25] - Energy & Transportation's total sales were $6.568 billion, a slight decrease of 2% from $6.681 billion, with an increase in segment profit to $1.314 billion [26][29] Geographic Performance - Sales in North America decreased by 24% in the Construction Industries segment, while Latin America and EAME also experienced declines due to unfavorable currency impacts and lower sales volume [11][27] - In Asia/Pacific, sales decreased due to lower sales volume and unfavorable price realization, primarily related to the Japanese yen [11][27] Shareholder Returns - The company deployed $3.7 billion for share repurchases and $0.7 billion for dividends in Q1 2025, totaling over $4 billion returned to shareholders [4][5][12] - The strong balance sheet facilitated these shareholder returns despite the decline in sales and profits [5]

Industry Overview - The Zacks Manufacturing - Construction and Mining industry is positioned to benefit from increased infrastructure investment in the U.S. and strong demand from the mining sector driven by the energy transition trend [1][5] - The industry includes companies that manufacture and sell construction, mining, and utility equipment, supporting various sectors such as oil and gas, power generation, and industrial applications [3] Current Trends - The U.S. manufacturing sector showed resilience in early 2025, with a manufacturing index reading of 50.9% in January and 50.3% in February, indicating expansion, although it dipped to 49% in March due to tariff concerns [4] - Industrial production increased at an annual rate of 5.5% in Q1 2025, despite a 0.3% decline in March [4] - The energy transition trend is expected to drive demand for mining equipment as the shift from fossil fuels to zero emissions requires more commodities [5] Financial Performance - The Manufacturing - Construction and Mining industry has underperformed compared to the Zacks S&P 500 composite, declining 12.8% over the past year, while the S&P 500 rose 8.2% [10] - The industry is currently trading at a forward 12-month EV/EBITDA ratio of 10.11, lower than the S&P 500's 12.88 and the Industrial Products sector's 19.30 [11] Company Highlights - **Komatsu**: Reported a 6.2% increase in fiscal 2024 consolidated net sales, driven by higher demand for mining equipment, and targets business growth above industry levels with a return on equity (ROE) target of over 10% [18][19] - **Hitachi Construction Machinery**: Achieved a fiscal 2025 revenue target of 300 billion JPY from the Americas, focusing on value-chain businesses and digital technologies [22][23] - **Caterpillar**: Holds a substantial backlog of $30 billion, with long-term demand supported by increased infrastructure spending and a shift toward clean energy, despite a 19.6% decline in shares over the past six months [26][27]

Core Viewpoint - Caterpillar Inc. is expected to report year-over-year declines in both earnings and revenues for the first quarter of 2025, with earnings estimated at $4.30 per share, reflecting a 23% decline from the previous year, and revenues projected at $14.54 billion, indicating an 8% decrease [1]. Financial Estimates - The Zacks Consensus Estimate for Q1 2025 earnings has decreased by 0.46% over the past 60 days [2]. - The current earnings estimate for Q1 is $4.30, down from $4.33 30 days ago, and the revenue estimate is $14.54 billion [2]. - The operating income is projected to decrease by 25% year-over-year to $2.55 billion, with an operating margin of 18.8%, down from 22.8% in Q4 2024 [10]. Segment Performance - The Resource Industries segment is expected to report external sales of $2.72 billion, a 12% decline year-over-year, with an operating profit of $621 million, down 15% [11]. - The Construction segment's external sales are projected at $5.38 billion, reflecting a 16% decline, with an operating profit of $1.39 billion, indicating a 21% decrease [12]. - The Energy and Transportation segment is expected to see external sales of $5.5 billion, a slight increase of 0.5%, with an operating profit of $1.3 billion, down 0.3% year-over-year [14][15]. Market Conditions - The manufacturing sector showed initial signs of recovery in early 2025 but lost momentum, as indicated by the Institute for Supply Management's manufacturing index, which fell to 49% in March [6]. - The New Orders Index declined sharply from 55.1% in January to 45.2% in March, reflecting reduced customer orders due to rising tariff concerns [7]. Price Performance and Valuation - Caterpillar's stock has decreased by 12.4% over the past year, underperforming its industry and the broader market [16]. - The stock is currently trading at a forward P/E of 15.64, which is higher than the industry average of 14.79 [20]. - Compared to peers like Komatsu, Terex, and Manitowoc, Caterpillar's valuation is relatively high, with competitors trading at lower P/E ratios [21]. Strategic Outlook - Long-term demand prospects for Caterpillar are supported by increased infrastructure spending and a shift toward clean energy [25]. - The company has a strong balance sheet, allowing for investments in growth, share repurchases, and dividends [25]. - The upcoming leadership change with COO Joseph Creed succeeding James Umpleby as CEO will be closely monitored for its impact on navigating current challenges [25].