Executive Summary

Q3 2025 sales and revenues rose 10% to $17.638B, an all-time quarterly record; adjusted EPS was $4.95 and GAAP EPS $4.88 as operating margin compressed on tariffs and incentives .
Backlog grew ~$2.4B sequentially to a record $39.8B, led by Energy & Transportation (E&T), underpinning stronger H2 trajectory .
Results beat Wall Street on both revenue and EPS; Q3 EPS beat and revenue beat vs S&P Global consensus, while Q1/Q2 saw mixed outcomes (see Estimates Context) [Values retrieved from S&P Global]*.
Management tightened and raised elements of guidance: full-year sales/revenues now “modestly higher” vs 2024; tariff headwind raised to $1.6–$1.75B; ME&T free cash flow expected above the midpoint of $5–$10B; Q4 margin stronger ex-tariffs but lower including tariffs .
Stock narrative/catalysts: record backlog and accelerating data center prime-power demand (power gen +31% YoY) in E&T; Investor Day on Nov. 4 to highlight long-term plan and capacity actions .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue and backlog: “Sales and revenues increased 10% to $17.6 billion… Backlog grew by about $2.4 billion… now $39.8 billion” (CEO Joe Creed) .
E&T strength and data centers: Power Generation sales +31% YoY; E&T margin held ~flat despite ~140 bps tariff headwind; “E&T was able to manage flat margins despite tariffs” (CFO) .
Cash generation and capital returns: ME&T free cash flow ~$3.2B in Q3; $1.1B returned to shareholders; dividend maintained at $1.51/quarter .

What Went Wrong

Margin pressure from tariffs and pricing: Enterprise operating margin fell to 17.3% (adj. 17.5% vs 20.0% LY); net incremental tariffs near top-end $500–$600M in Q3 .
Construction and Resource margins down: CI margin 20.4% (-300 bps) and RI margin 16.0% (-430 bps) on unfavorable price realization and higher manufacturing costs (tariffs) .
Elevated tax rate reduced EPS: Effective tax rate 26.7% in Q3; annual ETR ex-discrete increased to 24.0% on U.S. legislation changes .

Financial Results

Consolidated Performance vs Prior Quarters

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$14.249	$16.569	$17.638
Profit Per Share (GAAP) ($)	$4.20	$4.62	$4.88
Adjusted Profit Per Share ($)	$4.25	$4.72	$4.95
Operating Profit Margin (%)	18.1%	17.3%	17.3%
Adjusted Operating Profit Margin (%)	18.3%	17.6%	17.5%

Segment Sales and Profit (YoY and Seq. context)

Segment	Q3 2024 Sales ($B)	Q2 2025 Sales ($B)	Q3 2025 Sales ($B)
Construction Industries	$6.345	$6.190	$6.760
Resource Industries	$3.048	$3.087	$3.110
Energy & Transportation	$7.187	$7.836	$8.397
Financial Products Revenues	$0.875	$0.895	$0.912

Segment	Q3 2024 Profit ($B)	Q2 2025 Profit ($B)	Q3 2025 Profit ($B)	Q3 2025 Margin (%)
Construction Industries	$1.486	$1.244	$1.377	20.4%
Resource Industries	$0.619	$0.537	$0.499	16.0%
Energy & Transportation	$1.433	$1.585	$1.678	20.0%
Financial Products	$0.216	$0.212	$0.203	N/A

Key KPIs

KPI	Q2 2025	Q3 2025
Backlog ($B)	$37.5	$39.8
ME&T Free Cash Flow ($B)	~$2.4	~$3.2
Enterprise Cash ($B)	$5.4	$7.5
Dealer Inventory Change (Seq.)	Machines -$0.4B	Total +$0.6B; Machines +$0.3B
Cat Financial Past Dues (%)	1.62	1.47
Allowance for Credit Losses (% of receivables)	0.94	0.89
Effective Tax Rate (%)	23.0 (Q2 GAAP)	26.7 (Q3 GAAP); Annual ETR ex-discrete 24.0
Q3 Tariff Headwind ($B)	$0.25–$0.35	~$0.50–$0.60

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales & Revenues (FY)	FY 2025	Slightly higher vs 2024	Modestly higher vs 2024; improved since last quarter	Raised
Adjusted Operating Margin (ex-tariffs)	FY 2025	Top half of target range	Top half of target range	Maintained
Adjusted Operating Margin (incl. tariffs)	FY 2025	Bottom half of range	Near bottom of range; slightly higher than Aug 28 AK assumptions	Slightly higher but still near bottom
Tariff Net Impact ($B)	FY 2025	$1.3–$1.5	$1.6–$1.75	Raised
Q4 Tariff Headwind ($B)	Q4 2025	Not specified	~$0.65–$0.80	New detail
Enterprise Adjusted OPM vs PY (ex-tariffs)	Q4 2025	Not specified	Higher YoY	New detail
Enterprise Adjusted OPM vs PY (incl. tariffs)	Q4 2025	Not specified	Lower YoY	New detail
ME&T Free Cash Flow ($B)	FY 2025	Midpoint (~$7.5B) of $5–$10 range	Above midpoint of $5–$10 range	Raised
Global Annual ETR (ex-discrete)	FY 2025	~23%	~24%	Raised
Dividend	Ongoing	$1.51/quarter (June increase)	Maintained $1.51/quarter (Nov. 20 payment)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Data center/AI power demand	Q1: Power Gen +23% driven by data centers ; Q2: Power Gen +28% YoY, strong retail programs	Power Gen +31% YoY; backlog growth led by power gen; prime power opportunity emphasized	Accelerating
Tariffs	Q2: $0.25–$0.35B headwind; increasing in H2	Q3: ~$0.5–$0.6B; FY raised to $1.6–$1.75B; Q4 larger than Q3	Worsening into Q4, then expected to mitigate over time
Pricing/merchandising	Q1/Q2: Unfavorable price realization from incentives	Enterprise price roughly flat in Q4; CI headwind moderating as programs are lapped	Headwind moderating
Dealer inventory	Q1: slight decrease in CI; Q2: machines down ~$0.4B	Q3: total +$0.6B; machines +$0.3B; expect Q4 tailwind vs PY (big destock LY)	Positive tailwind into Q4
Resource Industries demand	Q1: lower STU ; Q2: STU -3%	STU +6% YoY; strong orders/backlog for large mining trucks; coal weak	Improving mix; coal drag
Tax/regulatory	Q2: ETR ~23%	ETR (ex-discrete) 24% due to U.S. legislation; book tax higher, cash benefits later	ETR higher in 2025

Management Commentary

“Sales and revenues increased 10% to $17.6 billion, an all-time record… Backlog grew by about $2.4 billion… now $39.8 billion” — Joe Creed, CEO .
“We are increasingly optimistic… Excluding tariffs, full year adjusted operating profit margin is expected to be in the top half of our margin target range; including tariffs near the bottom” — Andrew Bonfield, CFO .
“Prime power is a great opportunity for us… demand for power that data centers… are putting onto the grid” — Joe Creed on data centers and Solar Turbines capacity .
“E&T was able to manage flat margins despite the impact of tariffs… gives you an idea of the strength of the pull through” — Andrew Bonfield .
“We need greater predictability and stability before making longer-term supply chain investments to mitigate tariffs” — Joe Creed .

Q&A Highlights

Data center prime power capacity and backlog: Management highlighted strong Solar Turbines orders, longer lead times for larger turbines (Titan 250/350), and readiness to add capacity prudently .
E&T margins/pricing: Despite ~140 bps tariff headwind, E&T margins held; pricing remains constructive, driven by capacity constraints and robust demand .
Tariff trajectory/mitigation: FY headwind raised to $1.6–$1.75B; Q4 $0.65–$0.80B; mitigation levers include cost controls, limited sourcing shifts, USMCA certification, with longer-term actions dependent on policy certainty .
Backlog sustainability: Expect ongoing momentum particularly in E&T; goal to improve output and efficiency as capacity comes online, potentially stabilizing lead times .
Services revenue (Solar direct model): Prime power drives multi-year services opportunity directly to Caterpillar (not dealers), enhancing long-term revenue mix .

Estimates Context

Q3 2025: Actual adjusted EPS $4.95 vs consensus $4.523*; GAAP EPS $4.88 vs consensus $4.523*; revenue $17.638B vs $16.774B* — significant beats .
Q2 2025: EPS $4.72 vs $4.903* (miss); revenue $16.569B vs $16.141B* (beat) .
Q1 2025: EPS $4.25 vs $4.345* (miss); revenue $14.249B vs $14.595B* (miss) .

Metric	Q1 2025	Q2 2025	Q3 2025
EPS Consensus Mean ($)	4.34495*	4.90312*	4.52334*
EPS Actual (GAAP) ($)	$4.20	$4.62	$4.88
EPS Actual (Adjusted) ($)	$4.25	$4.72	$4.95
Revenue Consensus Mean ($USD Billions)	14.595*	16.141*	16.774*
Revenue Actual ($USD Billions)	$14.249	$16.569	$17.638

Values retrieved from S&P Global*.

Implication: After two quarters of EPS misses (pricing/tariff headwinds), Q3 beat on stronger volume (esp. E&T) and better-than-expected operations; Street likely to raise 2026 revenue expectations as Investor Day frames capacity expansion and services mix, while near-term margins remain sensitive to tariff timing .

Key Takeaways for Investors

E&T is the engine: double-digit growth across applications; power generation tied to data center prime power is the secular driver; margins resilient even under tariff pressure .
Backlog as visibility: record $39.8B backlog with E&T leading provides multi-quarter revenue visibility and dampens cyclicality; watch conversion pace vs capacity adds .
Tariffs are the swing factor: raised FY headwind to $1.6–$1.75B and larger Q4 impact; ex-tariffs margins are healthy; monitor policy developments and mitigation actions .
CI price headwinds moderating: merchandising program impact laps by Q4; expect Q4 CI strength aided by dealer inventory tailwind vs last year’s destock .
Tax mix adjustment: higher 2025 ETR (24%) reduces EPS near term but provides cash flow benefits beyond 2025 as legislation effects roll through .
Capital returns intact: dividend maintained; balance sheet/liquidity strong; ME&T free cash flow expected above midpoint of target range .
Near-term trading angle: Q4 revenue/margin ex-tariffs should be stronger YoY; Investor Day (Nov. 4) likely to reinforce E&T capacity/prime power narrative and services monetization .

Appendices and Additional Context

Other Q3 press releases: Cat Financial Q3 revenues $926M (+4%) with past dues at 1.47%, allowance 0.89% ; dividend maintained at $1.51 payable Nov. 20 ; agreement to acquire RPMGlobal to deepen mining software/autonomy capabilities with expected close in Q1 2026 .
8-K Item 2.02 furnished press release and retail statistics (Exhibit 99.2), aligning end-user sales trends: Machines & E&T combined retail sales up 12% in Q3; Power Gen retail sales up 33% .

All numeric and qualitative statements above are sourced from Caterpillar’s Q3 2025 press release/8-K, earnings call transcript, Cat Financial release, and prior quarter materials, with citations provided.

CATERPILLAR INC (CAT)·Q3 2025 Earnings Summary