Let's bring in Tammy Zakaria, executive director and head of machinery engineering and construction research at JP Morgan. Who would have thought machinery engineering and construction was the sexiest stock of uh 2025. Why why do you think Caterpillar gained so much.>> First of all, thank you for having me. uh we we did think about it and it Caterpillar was one of our top picks for this year and what you're really seeing is a change in narrative for Caterpillar. Historically, if you look at Caterpillar, it ...

Financial Data and Key Metrics Changes - Adjusted EBITDA rose to $1,210 million, reflecting a 170 basis point year-over-year improvement in margins, driven by structural cost actions and stronger operational execution [7][36] - GAAP diluted earnings per share were $0.71, while adjusted earnings per share were $0.63, up 11% year-over-year [37] - Free cash flow generated was $239 million, with a total of $423 million returned to shareholders, including $196 million in share repurchases [10][38] Business Line Data and Key Metrics Changes - Oilfield Services and Equipment (OFSE) revenue was $3,600 million, up 3% sequentially, with EBITDA margins expanding 90 basis points to 18.7% [41] - Industrial and Energy Technology (IET) revenue increased by 5% year-over-year to $3,300 million, with a 190 basis point margin expansion to 17.8% [40] - IET orders totaled $3,500 million in the quarter, with a year-to-date total of $6,700 million, indicating strong momentum [39][72] Market Data and Key Metrics Changes - The company booked $1 billion in new energy orders during the quarter, bringing year-to-date bookings to $1.25 billion, matching the total for the previous year [22] - Gas infrastructure equipment orders totaled $2.9 billion over the past six quarters, reflecting strong demand for natural gas solutions [24][25] - LNG demand increased by 5% year-over-year, with significant contracting activity expected to continue [26] Company Strategy and Development Direction - The company announced three strategic transactions to enhance portfolio optimization, including a joint venture and acquisitions aimed at higher growth opportunities [11][44] - Focus remains on executing a disciplined capital allocation strategy to maximize long-term shareholder value while advancing in new energy and industrial markets [12][45] - The company is positioned to capitalize on emerging trends in distributed power solutions, particularly for data centers, with a target of $1.5 billion in data center-related awards [30][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year order guidance range of $12.5 billion to $14.5 billion for IET, supported by strong momentum in power solutions and new energy [10][72] - The macro environment remains uncertain, but long-term fundamentals for energy demand are strong, driven by population growth and urbanization [20][21] - The company anticipates continued growth in natural gas demand, with expectations for a 20% increase by 2040 [24] Other Important Information - The company ended the quarter with cash of $3.1 billion and a net debt to EBITDA ratio of 0.6 times, indicating a strong balance sheet [38] - The company is committed to returning 60% to 80% of free cash flow to shareholders, reinforcing its focus on shareholder returns [38] Q&A Session Summary Question: Can you unpack the drivers of the margin performance? - Management highlighted that OFSE EBITDA margins expanded by 90 basis points due to stronger revenue and cost efficiency initiatives, while IET margins increased by 190 basis points despite tariff-related headwinds [62][65] Question: Can you expand on the IET order performance this quarter? - Management noted that IET bookings reached $3.5 billion, driven by strength in non-LNG markets, gas infrastructure, and data centers, with expectations for continued strength in LNG orders in the second half [70][72] Question: What is the net impact from the three transactions announced? - The transactions are expected to have a modest benefit to segment margins, with a net EBITDA impact of just over $100 million anticipated for 2026 [80][82]

Financial Data and Key Metrics Changes - Revenue for the first quarter decreased by 12% compared to the first quarter of 2024, primarily due to the roll-off of a large contract and planned downtime with a major marine customer [12] - GAAP net loss was $1.6 million or $0.09 per diluted share, compared to net income of $1.5 million or $0.08 per diluted share in the first quarter of 2024 [13] - Adjusted EBITDA was $2.1 million, down from $3.1 million in the first quarter of last year, with an adjusted EBITDA margin of 11.9%, down from 15.7% [13] Business Line Data and Key Metrics Changes - Revenue in marine and aerospace markets grew by over 13% year over year, driven by increased activity with a major aerospace customer [6] - Approximately 51% of revenues were derived from marine and aerospace customers compared to 39% in the first quarter of last year [12] - Power generation revenues remained consistent with Q1 of 2024 [12] Market Data and Key Metrics Changes - The company is focused on expanding its position in high-growth sectors such as marine bunkering, aerospace, and power generation, supported by significant multiyear demand [5] - The company expects steady utilization and demand under existing contracts, with potential upside as new opportunities are converted into signed agreements [7] Company Strategy and Development Direction - The strategy remains focused on becoming the leading small-scale LNG supplier in high-growth sectors where access to traditional LNG supply infrastructure is limited [6] - The company is evaluating potential expansion of liquefaction capacity in South Texas and along the Gulf Coast as part of its long-term growth strategy [7] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in revenues does not reflect the underlying momentum in the business, and they continue to generate consistent positive operating cash flow [6] - The company remains focused on maintaining a strong balance sheet and liquidity position to fund future growth [9] Other Important Information - Cash generated from operations during the first quarter was $1 million, representing a conversion rate of 50% of adjusted EBITDA [14] - Capital expenditures were $0.5 million, with about 70% allocated to growth initiatives [14] Q&A Session Summary Question: Update on contracting side and liquefaction train - Management is actively working on commercial contracts and expects to provide clarity on timing in the second or third quarter of this year [21] Question: Customer inquiries in power generation - Management indicated they are seeing inquiries for various types of power needs, including data centers and emergency power, with projects ranging from six months to five years [24] Question: Details on bunkering operation downtime - The planned downtime was a one-week maintenance period for crew operators, which reduced bunkering events during the quarter [30] Question: Indicators of demand for small-scale LNG services - Management is focused on increased bidding and customer needs in aerospace, marine bunkering, and distributed power markets [33] Question: Space industry demand - The normalization of commercial aerospace activity and increased launches are seen as positive indicators for demand [35]