Caterpillar(US:CAT) ZACKS·2025-08-05 17:26Core Insights - Caterpillar Inc. reported adjusted earnings per share of $4.72 for Q2 2025, missing the Zacks Consensus Estimate of $4.88 by 3.3% and reflecting a 21% decline year over year due to lower revenues and increased costs from tariffs [1][10] - Revenues for Q2 were approximately $16.57 billion, exceeding the Zacks Consensus Estimate of $16.35 billion by 1.3%, but down 1% year over year due to unfavorable pricing [2][10] Financial Performance - The cost of sales increased by 6.5% year over year to around $10.8 billion, leading to a gross profit decline of 12% to $5.76 billion, with a gross margin of 34.8% compared to 39.2% in the previous year [4] - Selling, general and administrative expenses rose by 2.5% year over year to approximately $1.69 billion, while research and development expenses increased by 3% to $551 million [5] - Operating profit was reported at $2.86 billion, an 18% decline from the previous year, with an operating margin of 17.3%, down 360 basis points [5][6] Segment Performance - Machinery and Energy & Transportation (ME&T) sales decreased by 1% year over year to around $15.67 billion [7] - Construction Industries' total sales fell by 7% year over year to $6.19 billion, with significant declines in North America (15%) and Latin America (20)%, offset by growth in EAME (13%) and Asia/Pacific (6%) [8] - Resource Industries segment sales were down 4% year over year to $3.09 billion, with mixed regional performance [9] - Energy & Transportation segment reported sales of approximately $7.84 billion, a 7% increase year over year, driven by higher sales volumes and favorable currency impacts [11] Cash Flow and Backlog - Caterpillar generated an operating cash flow of $4.4 billion in the first half of 2025, down from $5.07 billion in the same period last year, and returned around $1.5 billion to shareholders [15] - The company reported a record sequential backlog growth of $2.5 billion in the quarter, with total backlog reaching $37.5 billion [3][10] Future Outlook - For Q3 2025, Caterpillar anticipates moderate revenue growth year over year, with expected headwinds from tariffs between $400-$500 million [16] - The company expects 2025 revenues to be slightly higher compared to 2024, improving from previous projections of flat revenues [17] - Adjusted operating margin is expected to be in the top half of its target range excluding tariffs, while including tariffs, it is anticipated to be in the bottom half of the target range [18]