Q2 2026 Caterpillar Inc Earnings Call Transcript
Key Points
- Record quarterly sales and revenues of $20.5 billion, up 24% year-over-year, with strong demand across all three primary segments.
- Adjusted profit per share surged 73% to $8.17, driven by higher sales volume and favorable price realization.
- Backlog grew to $72 billion, up 92% year-over-year, with all segments contributing and orders extending into 2030.
- Power and Energy sales to users grew 33%, with power generation up 72% on data center demand, and the company is resuming production of its 10-megawatt gas reciprocating engine platform.
- Record MP&E free cash flow of $5.1 billion in the quarter, with $2.2 billion returned to shareholders via dividends and buybacks.
- Customer financial health is strong, with past dues at 1.31%, the lowest since 1998, and allowance rate at a record low of 0.84%.
- Full-year 2026 sales and revenues outlook raised to mid- to high-teens growth, with improved margin and free cash flow expectations.
- Tariff costs remain a significant headwind, with $400 million in Q2 and an expected $2.2 billion for the full year, impacting segment margins.
- Higher SG&A and R&D expenses, driven by strategic investments and compensation, partially offset margin gains from volume.
- Construction Industries dealer inventory is expected to be a headwind to sales volume in the second half of 2026, with a typical Q4 drawdown.
- Geopolitical uncertainty and fluid tariff situation create ongoing risks to the outlook.
- Manufacturing costs are rising due to capacity expansion, including higher depreciation and freight costs.
- Power and Energy capacity constraints limit the ability to fully meet demand, with lead times extending into 2028-2029 for some products.
- Softness in the Middle East and economic challenges in Asia Pacific outside of China are noted as regional headwinds.
Welcome to the second quarter 2026 Caterpillar earnings conference call. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Alex Kapper. Thank you. Please go ahead.
Thank you, Andrea. Good morning, everyone, and welcome to Caterpillar's second quarter of 2026 earnings call. I'm Alex Kapper, Vice President of Investor Relations. Joining me today are Joe Creed, Chairman and CEO; Kyle Epley, Chief Financial Officer; Stephanie Baughman, Senior Vice President of the Global Finance Services Division; and Ryan Coleman, Senior Director of IR.
During our call, we'll be discussing the second-quarter earnings release we issued earlier today. You can find our slides, the news release, and a webcast recap at investors.caterpillar.com under Events and Presentation.
The content of this call is protected by US and international copyright law. Any rebroadcast, retransmission, reproduction or distribution of
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