stockrowWhat it does
Caterpillar makes equipment used to build infrastructure, extract minerals and generate power. Its products include construction machines, mining trucks, diesel and natural gas engines, gas turbines and locomotives. It also supplies replacement parts, maintenance services and technology that helps customers manage and operate equipment.
Construction customers use its machines on building, road and other infrastructure projects. Mining and quarry customers use larger machines to dig, load and haul materials. Power and Energy customers use its engines, generator sets and turbines in applications ranging from oil and gas production to electricity generation, marine transport and industrial operations.
The company reaches many equipment buyers through a worldwide network of dealers. Dealers sell and service machines, while Caterpillar sells some products, principally turbines and locomotives, directly to customers. Its Cat Financial business provides financing and leases for customers and dealers; insurance subsidiaries also provide coverage and related services.
Caterpillar was founded in 1925 and is headquartered in Irving. Joseph E. Creed is its chief executive officer. The company employed about 118,000 full-time people at December 31, 2025.
Its operations are organized around Construction Industries, Resource Industries, Power & Energy and Financial Products. In addition to selling new equipment, Caterpillar supports machines and engines after delivery through its dealers and its own services businesses.
How it makes money
Caterpillar earns revenue by selling machines, engines and power systems, as well as parts and services used throughout their working lives. It also earns financing income from loans and leases to equipment customers and dealers.
Construction Industries sells machines such as excavators, loaders and tractors for construction and related work. Its customers can buy, lease or rent equipment. Resource Industries supplies machines for mining, heavy construction and quarries, including large mining trucks and shovels. It also sells wear and maintenance components and technology for fleet management, equipment analytics and autonomous operation.
Power & Energy sells engines, generator sets, turbines and integrated systems for power generation, oil and gas, marine and industrial uses. The business also provides turbine-related services, remanufactures engines and components, and supports on-highway engines. Caterpillar moved its Rail division to Resource Industries in 2026.
Cat Financial makes equipment loans and leases, finances dealer inventory and rental fleets, and offers revolving accounts for parts, services and rentals. Equipment loans are typically secured by the equipment purchased. Its financing plans support equipment sales as well as generate financing income. Financial Products’ segment revenues were $4.220 billion in 2025.
Caterpillar sets prices to dealers after receiving their input on marketplace pricing. Competition can lead to discounting, while sales volumes, manufacturing costs and the prices realized on products affect profit. Parts, services and financing provide business beyond the initial equipment sale, although their results depend on equipment use, dealer sales and customers’ financing decisions.
Sales and revenues were $67.589 billion for 2025 and $20.7 billion for the third quarter of 2026.
Customers and how it sells
Caterpillar serves construction contractors, rental businesses, mining and quarry operators, oil and gas companies, power-generation customers and other industrial users. Construction customers use its machines for infrastructure and building work; resource customers use equipment to extract and haul materials including copper, iron ore, coal and gold.
Customers in developing economies often emphasize purchase price, while those in developed economies generally consider productivity and lifetime ownership and operating costs. Caterpillar offers SEM-branded machines aimed at customers in developing economies.
The company distributes machines principally through dealers serving 190 countries. Most dealers are independently owned and operated, and their agreements assign them geographic service territories. Caterpillar also sells some turbines and locomotives directly. Its Perkins engine and FG Wilson power-generation brands have separate distributor networks.
Cat Financial operates around the world, with a significant portion of its activity in North America and offices and subsidiaries in Latin America, Asia/Pacific, Europe and Africa. Its customers include both equipment users and dealers.
In North America, the dealer-owned Major Projects rental venture serves large infrastructure projects, including transportation, energy, manufacturing and data center construction. Caterpillar also works with Luck Stone to expand autonomous hauling at quarry operations in Virginia.
Suppliers and costs
Caterpillar buys raw materials and manufactured components from suppliers in its home market and internationally. Purchases include steel, castings, forgings and finished parts made either to Caterpillar’s specifications or suppliers’ specifications. The company machines and assembles some components used in its machines, engines and power-generation equipment and for aftermarket parts sales.
Its supplier monitoring covers financial viability, production flexibility, business continuity, quality and delivery. Increases in demand or supply-chain disruptions have constrained parts and components for some products. Caterpillar also buys goods and services for production, logistics, offices and product development.
Manufacturing costs, freight, tariffs and spending on capacity expansions affect profitability. In 2025, unfavorable manufacturing costs largely reflected higher tariffs. In the third quarter of 2026, tariff costs for tariffs introduced since the beginning of 2025 were approximately $600 million, excluding IEEPA recoveries. Higher freight and expenses related to capacity expansions also increased manufacturing costs in the quarter.
Caterpillar continues to invest in product development and manufacturing to comply with emissions standards. Cat Financial’s costs and results are affected by its funding costs, market interest rates and credit losses.
- Revenue$67.6B
- Cost of revenue−$44.8B
- Research and development−$2.1B
- Selling, general and administrative−$7.0B
- Other operating costs−$2.6B
- Operating income$11.2B
Competitive position
Caterpillar competes on product performance, customer service, quality and price. Construction machinery competitors include Deere & Company, CNH Industrial N.V. through CASE, and Komatsu Ltd., alongside regional and specialized manufacturers. In mining and other resource markets, Deere, Epiroc AB, Komatsu and Sandvik AB compete across different equipment categories.
In engines, turbines and power-generation systems, competitors include Cummins Inc. and Siemens Energy AG. Cat Financial also competes with banks, finance and leasing companies, as well as financing subsidiaries owned by equipment manufacturers. Some manufacturer-owned finance businesses use below-market interest-rate programs to support machine sales.
Caterpillar’s dealer network sells and services equipment in assigned territories. Dealers are required to maintain sales and support personnel, while Caterpillar provides warranty and technical support. The company also offers financing, parts and services alongside its equipment, and develops technologies including autonomous machines and fleet management tools.
Our reading: The dealer network is a meaningful competitive advantage because it combines geographic reach with local sales and servicing, although dealers do not handle Caterpillar products exclusively.
Our reading: Financing, parts and services reinforce customer relationships after a sale, but financing faces competition from banks and manufacturers’ own finance businesses.
Our reading: Integrated components and technology support differentiation in resource equipment, though global competitors offer overlapping product ranges. Caterpillar does not consider its business dependent on any single patent or group of patents.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Deere & Company | Construction and surface mining equipment | High |
| CNH Industrial N.V. | Construction machinery through CASE | High |
| Komatsu Ltd. | Construction, surface and underground mining equipment | High |
| Epiroc AB | Surface and underground mining equipment | High |
| Sandvik AB | Surface and underground mining equipment | High |
| Cummins Inc. | Engines and power-generation applications | High |
| Siemens Energy AG | Engines, turbines and power-generation applications | High |
Growth opportunities
Caterpillar’s growth plans include expanding power-equipment capacity, reaching more compact-equipment customers and extending autonomous technology into additional applications.
The company expects power-generation growth in 2026 for reciprocating engines and turbines, driven by energy demand from data centers supporting cloud computing and generative AI. It is using part of its Winston-Salem, North Carolina facility as a planned second assembly and test location for its 3600 series large reciprocating engine. Caterpillar says the initiative supports its plan to increase large reciprocating engine capacity to nearly 3x to the ’24 level by 2030.
In construction, Caterpillar launched Cat Compact to reach more small contractors and announced a $1 billion investment to expand manufacturing capacity in Sanford, North Carolina. In resources, it is working with Luck Stone to extend autonomous hauling to additional quarry operations. The company aims to triple the number of Cat autonomous trucks by 2030 compared with 2024.
Order backlog reached $78 billion in the third quarter of 2026. Caterpillar expects 58% of that backlog to be sold within the next 12 months. It has taken some large reciprocating-engine orders as far out as 2029 and turbine orders into 2030, while noting that large power and mining orders can arrive unevenly.
For full-year 2026, Caterpillar expects sales and revenues growth in the mid- to high teens. It identifies additional production capacity as the main pacing factor for Power & Energy growth.
- $51.0BFY2021
- $59.4BFY2022
- $67.1BFY2023
- $64.8BFY2024
- $67.6BFY2025
Structural risks
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Economic conditions: Caterpillar and the industries it serves are sensitive to global and regional economic conditions. Political instability, trade restrictions, tariffs and changes to trade agreements can disrupt activity or affect its operations.
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Supply and production: Demand increases and supply-chain disruptions have constrained parts and components. Caterpillar also faces operational challenges as it increases production; a Power & Energy test cell was temporarily down in the third quarter of 2026, and the company says the system has no slack.
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Costs and competition: Price discounting can pressure margins and operating profit. Tariffs, freight and capacity-expansion expenses have added to manufacturing costs, while the company must continue to invest to meet product emissions standards.
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Financing and credit: Financial-market disruption can limit liquidity for Caterpillar, customers, dealers or suppliers. Adverse changes in customer payments could increase delinquencies, defaults and Cat Financial’s credit losses. The finance business is also affected by funding costs and interest rates.
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Orders and delivery: Large prime-power and mining orders can enter backlog unevenly. Mining sales to users were lower in the third quarter of 2026 because of shipping and commissioning delays, and locomotive deliveries were lower internationally.
Bottom line
Our reading
Our reading: Caterpillar combines cyclical equipment manufacturing with parts, services and financing tied to machines already in use; its dealer network helps it reach and support customers globally. [item1]
Our reading: Power demand and a growing backlog provide opportunities to expand, but delivering on them depends on adding capacity and managing suppliers, tariffs and other costs. Large orders can also make backlog movements uneven. [call_prepared] [call_qa] [item1]