Caterpillar(US:CAT) ZACKS·2025-10-29 17:40Core Insights - Caterpillar Inc. reported adjusted earnings per share of $4.95 for Q3 2025, exceeding the Zacks Consensus Estimate of $4.52 by 10%, but down 4% year-over-year [1][8] - The company achieved record revenues of approximately $17.6 billion, a 9.5% increase year-over-year, driven by higher sales volumes across all segments [5][8] - Operating margin decreased to 17.3% due to elevated tariff-related costs and higher expenses [8][10] Financial Performance - Caterpillar's total revenues surpassed the Zacks Consensus Estimate of $16.75 billion by 5.33% [5] - The top line growth was attributed to a $1.55 billion increase in sales volume, offset by unfavorable price realization of $191 million and a favorable currency impact of $132 million [6][9] - Cost of sales rose 16% year-over-year to approximately $11.7 billion, leading to a gross profit decline of 1.2% to $5.97 billion [9][10] Segment Analysis - Machinery and Energy & Transportation (ME&T) sales increased 10% year-over-year to around $16.7 billion [12] - Construction Industries' sales rose 7% year-over-year to $6.76 billion, while Resource Industries saw a 2% increase to $3.11 billion [12][14] - Energy & Transportation segment reported a 17% increase in sales to around $8.4 billion, driven by higher sales volumes and favorable currency impacts [15][16] Regional Performance - Revenue growth was led by North America (13%), followed by Latin America (10%), Asia Pacific (7%), and EAME (1%) [7] - The backlog grew by $2.4 billion, reaching an all-time high of $39.9 billion [7] Cash Flow and Shareholder Returns - Caterpillar generated an operating cash flow of $8.15 billion in the first nine months of 2025, compared to $8.64 billion in the prior year [19] - The company returned approximately $1.1 billion to shareholders through dividends and share repurchases [19] Future Outlook - For Q4 2025, Caterpillar anticipates solid revenue growth year-over-year, with expected headwinds from tariffs between $650-$800 million [20] - The company projects 2025 revenues to be "modestly" higher compared to 2024, with net incremental tariffs estimated at $1.6-$1.75 billion [21][22] - Adjusted operating margin is expected to be in the top half of its target range, excluding tariff impacts [22][24]