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- **Revenue Record**: Q3 2025 sales of $17.6 billion (10% YoY) and record $39.8 billion backlog highlight strong demand across all segments.
- **Profit Resilience**: 17.5% adjusted operating margin despite $600 million tariffs, with Energy & Transportation leading margin expansion.
- **Tariff Headwinds**: $1.6-$1.75 billion 2025 tariff impact expected, but 2026 mitigation actions could reduce pressure.
- **Cash Flow Strength**: $3.2 billion free cash flow and $1.1 billion shareholder returns support long-term growth initiatives.
- **Data Center Growth**: Solar Turbines prime power orders for data centers driving 33% power generation sales growth, with capacity expansions planned for 2026.

**【CEO Summary Section】**
- **Record Sales and Revenues**: Q3 2025 sales reached $17.6 billion, up 10% YoY, driven by strong demand across all segments. Backlog hit a record $39.8 billion, up $2.4 billion QoQ, with Energy & Transportation leading growth.
- **Profit Performance**: Adjusted operating profit margin was 17.5%, slightly above expectations despite $600 million in incremental tariffs. Adjusted EPS was $4.95, down 4% YoY due to tariffs and tax rate changes.
- **Tariff Mitigation**: Company expects $1.6-$1.75 billion net tariff impact in 2025. Longer-term actions will be taken once trade policy stabilizes.
- **Free Cash Flow**: Generated $3.2 billion in ME&T free cash flow, with $1.1 billion returned to shareholders via dividends and buybacks.

**【CFO Financial Commentary】**
- **Segment Performance**: 
  - **Construction Industries**: 7% sales growth to $6.8 billion, but margin down 300 bps to 20.4% due to tariffs and price realization.
  - **Resource Industries**: 2% sales growth to $3.1 billion, but margin down 430 bps to 16% due to tariffs and unfavorable mix.
  - **Energy & Transportation**: 17% sales growth to $8.4 billion, margin up 10 bps to 20% despite $140 million tariff impact.
- **Tariff Impact**: Q3 net tariff cost was $600 million, with 55% impacting Construction Industries, 20% Resource Industries, and 25% Energy & Transportation.
- **Tax Rate**: Global effective tax rate rose to 24% due to U.S. tax legislation changes, but 2025 cash flow benefited from one-time items.

**【Q&A Highlights】**
- **Data Center Growth**: Solar Turbines backlog for prime power applications is strong, with Titan 350 orders outpacing expectations. Lead times are extending but capacity additions will support 2026 demand.
- **Tariff Outlook**: Q4 2025 net tariff impact expected to be $650-$800 million, higher than Q3, but 2026 mitigation actions could reduce headwinds.
- **Construction Margin**: CI segment margin expected to remain under pressure in 2026 due to tariff headwinds, but volume growth will offset some margin erosion.
- **Services Growth**: Solar Turbines services revenue is growing as customers adopt long-term service agreements for their power generation equipment.

Caterpillar Inc. (CAT) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CAT

CAT fundamentals

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