AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Worldwide dealer coverage, dealers’ principal reliance on Caterpillar sales and servicing, and $24 billion of reported services revenues demonstrate an established distribution and aftermarket infrastructure. Comparative superiority is unquantified, and dealer nonexclusivity limits the barrier.
durability · 2/4 · Extensive dealer coverage persists across the supplied 2023 and 2025 disclosures, and the services business supports continued relevance. The evidence spans a limited period and shows neither exclusive relationships nor insulation from pricing reversals.
customer dependency · 2/4 · Substantial services revenues and the remanufacturing core-return arrangement indicate ongoing equipment-related engagement. They do not establish high switching costs; alternative financing and penalty-free refinancing limit financial lock-in.
erosion resilience · 2/4 · First-half 2026 pricing and operating results recovered after realized 2025 pricing and tariff pressure. This supports resilience but also demonstrates vulnerability. Dealer inventory contributed to growth, and backlog strength does not prove competitive share gains.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Favorable realization in 2023 and 2024, unfavorable realization of $817 million in 2025, and favorable realization of approximately $1.0 billion in first-half 2026 establish mixed but meaningful pricing ability. Geographic mix is included, preventing attribution entirely to comparable-product price increases.
retention · 2/4 · The services business demonstrates ongoing engagement, while higher 2026 end-user sales and backlog support continued demand indirectly. Aggregate demand does not identify repeat buyers, and end-user equipment sales fell in 2024. No retention rate is inferred.
margin resilience · 2/4 · Pricing helped offset lower volume in 2024, but unfavorable pricing and manufacturing costs reduced 2025 profit. First-half 2026 operating profit grew faster than revenue, demonstrating recovery with substantial volume support. The combined evidence supports mixed resilience rather than dependable cost pass-through.
contractual freedom · 2/4 · Disclosed announced price increases and actual dealer discount programs show discretion to adjust commercial pricing. Customer acceptance constrains that discretion, and fixed-price lease purchase options and penalty-free refinancing limit financing flexibility. Equipment repricing rights and contract duration are not supplied.
Predictability92
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 7.74
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.20
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 48.85
- currentRatioGrade
- 54.85
- Current ratio (x)
- 1.44
- cashInterestPaid
- 1842.00
- cashInterestCoverage
- 6.37
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -3.74
- 3-year average SBC / revenue (%)
- 0.34
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Reported 2025 MP&E free cash flow of $9.5 billion covered $7.9 billion of shareholder distributions. First-half 2026 buyback cash deployment of $6.522 billion plus $1.399 billion of dividends exceeded consolidated operating cash flow of $6.241 billion even before capital expenditures and the cash-funded acquisition. Cash declined while MP&E debt was nearly unchanged. Investment returns and repurchase value are not established, yielding a mixed assessment.
incentive alignment · 3/4 · Actual 2025 compensation design included substantial variable pay and long-term awards tied to ROIC and relative shareholder returns; PRSUs generally have three-year performance periods. First-half 2026 disclosures confirm awards were granted. Historical reliance on adjusted ROE and missing individual ownership compliance limit confidence in exceptional alignment.
execution · 2/4 · Strong first-half 2026 sales, operating profit, cash generation and backlog demonstrate delivery and demand conversion indirectly. These results follow a 2025 profit decline from manufacturing costs and pricing weakness, and some current volume growth reflects dealer inventories. Acquisition benefits remain prospective; execution cannot be separated fully from favorable end markets.
governance · 2/4 · An appointed lead independent director, documented Audit Committee activity and disclosed shareholder protections support oversight. Combining CEO and chairman roles, a 25% special-meeting threshold and opposition to written consent create counterweights. The nominee table is not treated as proof of the subsequently elected board or shareholder-vote outcomes.
Evidence
We distribute our machines principally through a worldwide organization of dealers (dealer network), 43 located in the United States and 113 located outside the United States, serving 191 countries.
Business / Dealers and Distributors / 2023 dealer coverage · Filed 16/02/2024
We distribute our machines principally through a worldwide organization of dealers (dealer network), 41 located in the United States and 109 located outside the United States, serving 190 countries.
Business / Dealers and Distributors / 2025 dealer coverage · Filed 13/02/2026
Our dealers do not deal exclusively with our products; however, in most cases sales and servicing of our products are the dealers’ principal business.
Business / Dealers and Distributors / nonexclusive dealers and principal business · Filed 13/02/2026
Services revenues(5) totaled $24 billion in 2025.
Compensation Discussion & Analysis / 2025 services revenues · Filed 30/04/2026
(5) MP&E Services Revenues include, but are not limited to, aftermarket parts and other service-related revenues and exclude most Financial Products’ revenues, discontinued products and captive dealer services.
2025 performance discussion / definition of MP&E Services Revenues · Filed 30/04/2026
In connection with the sale of our remanufactured product to dealers, we collect a deposit that is repaid if the dealer returns an acceptable core within a specified time period.
Revenue recognition / remanufacturing core return deposits · Filed 13/02/2026
Examples of global competitors include CASE (part of CNH Industrial N.V.), Deere Construction & Forestry (part of Deere & Company), Doosan Bobcat (Part of Doosan Group), Hitachi Construction Machinery Co., Ltd., Hyundai Construction Equipment Co., Ltd., Hyundai Doosan Infracore Co., Ltd.
Business / Construction Industries / named global competitors · Filed 13/02/2026
Bamford Excavators Ltd., Kobelco Construction Machinery (part of Kobe Steel, Ltd), Komatsu Ltd., Kubota Farm & Industrial Machinery (part of Kubota Corporation), Sany Heavy Industry Co., Ltd., and Volvo Construction Equipment (part of the Volvo Group).
Business / Construction Industries / additional named global competitors · Filed 13/02/2026
Cat Financial operates in a highly competitive environment, with financing for users of Caterpillar equipment and services available through a variety of sources, principally commercial banks and finance and leasing companies.
Business / Financial Products / alternative financing sources · Filed 13/02/2026
Cat Financial’s finance receivables generally may be repaid or refinanced without penalty prior to contractual maturity.
Finance receivables / repayment and refinancing without penalty · Filed 13/02/2026
The increase was primarily driven by higher sales volume of $3.389 billion, partially offset by unfavorable price realization of $817 million.
MD&A / 2025 sales bridge / unfavorable price realization · Filed 13/02/2026
The decrease was mainly due to unfavorable manufacturing costs and unfavorable price realization, partially offset by the profit impact of higher sales volume.
MD&A / 2025 profit decline / manufacturing costs and pricing · Filed 13/02/2026
Unfavorable manufacturing costs largely reflected the impact of higher tariffs.
MD&A / 2025 manufacturing costs / tariffs · Filed 13/02/2026
Customers in developing economies often prioritize purchase price in making their investment decisions, while customers in developed economies generally weigh productivity and other performance criteria that contribute to lower owning and operating costs over the lifetime of the machine.
Business / Construction Industries / purchase price and lifetime ownership criteria · Filed 13/02/2026
Reduction in these capital expenditures may lead to decreased demand for Caterpillar products and services as well as aftermarket parts as customers may choose to extend preventative maintenance and delay overhauls when possible.
Risk Factors / possible deferral of maintenance and overhauls · Filed 13/02/2026
The increase was primarily due to favorable price realization and higher sales volume.
MD&A / 2023 sales growth / favorable pricing and volume · Filed 16/02/2024
The profit impact of lower sales volume was more than offset by favorable price realization and the absence of the impact of the divestiture of the company's Longwall business in 2023.
MD&A / 2024 profit bridge / favorable pricing and divestiture comparison · Filed 14/02/2025
The increase was primarily due to higher sales volume of $5.4 billion and favorable price realization of $1.0 billion.
MD&A / first-half 2026 sales bridge / volume and favorable pricing · Filed 05/08/2026
The increase in sales volume was mainly driven by higher sales of equipment to end users and the impact from changes in dealer inventories.
MD&A / first-half 2026 volume drivers / end users and dealer inventories · Filed 05/08/2026
Price realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between geographic regions.
MD&A / price realization definition / geographic mix · Filed 05/08/2026
Consolidated Statement of Results of Operations (Unaudited) (Dollars in millions except per share data) Six Months Ended June 30, 2026 2025 Sales and revenues: Sales of Machinery, Power & Energy $ 36,054 $ 29,052 Revenues of Financial Products 1,904 1,766 Total sales and revenues 37,958 30,818 Operating costs: Cost of goods sold 24,087 19,772 Selling, general and administrative expenses 3,834 3,287 Research and development expenses 1,153 1,031 Interest expense of Financial Products 707 662 Other operating (income) expenses 797 627 Total operating costs 30,578 25,379 Operating profit 7,380 5,439 Interest expense excluding Financial Products 269 242 Other income (expense) 658 191 Consolidated profit before taxes 7,769 5,388 Provision (benefit) for income taxes 1,725 1,220 Profit of consolidated companies 6,044 4,168 Equity in profit (loss) of unconsolidated affiliated companies 97 14 Profit of consolidated and affiliated companies 6,141 4,182 Less: Profit (loss) attributable to noncontrolling interests (1) — Profit 1 $ 6,142 $ 4,182 Profit per common share $ 13.29 $ 8.85 Profit per common share – diluted 2 $ 13.23 $ 8.82 Weighted-average common shares outstanding (millions) – Basic 462.0 472.4 – Diluted 2 464.3 474.5 1 Profit attributable to common shareholders.
Consolidated results of operations / six months ended June 30, 2026 and 2025 · Filed 05/08/2026
At the end of the second quarter of 2026, the dollar amount of backlog believed to be firm was approximately $72.1 billion, about $9.4 billion higher than the first quarter of 2026.
MD&A / backlog at June 30, 2026 · Filed 05/08/2026
We provide discounts to dealers through merchandising programs.
Revenue recognition / dealer merchandising discounts · Filed 13/02/2026
Lack of customer acceptance of price increases we announce from time to time, changes in customer requirements for price discounts, changes in our customers’ behavior or a weak pricing environment could have an adverse impact on our business, results of operations and financial condition.
Risk Factors / announced price increases and customer discounts · Filed 13/02/2026
MP&E free cash flow(3) was $9.5 billion in 2025.
2025 performance highlights / MP&E free cash flow · Filed 30/04/2026
Deployed $7.9 billion to shareholders through share repurchases and dividends.
2025 performance highlights / actual shareholder distributions · Filed 30/04/2026
Operating & Execution Model used to assess operational commitments and strategic growth initiatives – Capital expenditures were $1.313 billion during the first six months of 2026, compared to $1.287 billion for the same period in 2025.
MD&A / actual first-half 2026 capital expenditures · Filed 05/08/2026
Consolidated operating cash flow for the first six months of 2026 was $6.241 billion, up $1.830 billion compared to the same period a year ago.
MD&A / actual first-half 2026 consolidated operating cash flow · Filed 05/08/2026
In the first six months of 2026, we deployed $6.522 billion of cash for repurchases of Caterpillar common stock.
MD&A / first-half 2026 cash deployed for repurchases · Filed 05/08/2026
Dividends paid totaled $1.399 billion in the first six months of 2026.
MD&A / first-half 2026 dividends paid · Filed 05/08/2026
On a consolidated basis, we had positive operating cash flow in the first six months of 2026 and ended the second quarter with $6.713 billion of cash, a decrease of $3.267 billion from year-end 2025.
MD&A / June 2026 cash balance and decrease from year-end · Filed 05/08/2026
The purchase price was approximately $733 million, net of $53 million of acquired cash.
Acquisitions / RPMGlobal actual purchase price net of acquired cash · Filed 05/08/2026
We financed the transaction with available cash.
Acquisitions / RPMGlobal cash financing · Filed 05/08/2026
Factors that contributed to a purchase price resulting in the recognition of goodwill included RPMGlobal’s strategic fit into our Resource Industries product portfolio and related cross-selling opportunities, the ability to provide enhanced technological solutions to mining customers and the acquired assembled workforce.
Acquisitions / expected strategic benefits and cross-selling opportunities · Filed 05/08/2026
NEO compensation is composed of three primary components: BASE SALARY Competitive pay to attract and retain talented executives ANNUAL INCENTIVE PLAN (AIP) An opportunity to earn an annual cash award based on the company’s financial performance and strategic business objectives LONG-TERM INCENTIVE A mix of performance-based restricted stock units (PRSUs), time-based restricted stock units (RSUs) and stock options to align management’s interests with long-term shareholders’ interests Approximately 92 percent of our CEO’s 2025 total targeted compensation was variable and/or at-risk compensation, including 50 percentof long-term incentives delivered in the form of PRSUs with two equally-weighted performance metrics, Return on Invested Capital (ROIC) and relative Total Shareholder Return (rTSR) as compared to the S&P Capital Goods peer group, 25 percent delivered in the form of time-based RSUs, and 25 percent delivered in the form of stock options.
Compensation Discussion & Analysis / actual 2025 incentive design · Filed 30/04/2026
PRSU awards generally have a three-year performance period and cliff vest at the end of the period based upon achievement of performance targets established at the time of grant.
Stock-based compensation / PRSU performance period and vesting · Filed 13/02/2026
The following table illustrates the type and fair value of the stock-based compensation awards granted during the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Shares Granted Weighted-Average Fair Value Per Share Shares Granted Weighted-Average Fair Value Per Share Stock options 126,660 $ 270.41 299,523 $ 106.04 RSUs 224,552 $ 758.15 442,800 $ 333.10 PRSUs 86,114 $ 925.49 199,856 $ 345.60 13 Table of Contents The fair value of our stock options was estimated using the Black-Scholes option-pricing model.
Stock-based compensation / awards actually granted in first-half 2026 · Filed 05/08/2026
The 2023–2025 performance period was the last one with PRSUs that were composed of a single return on equity (ROE) metric.
Compensation Discussion & Analysis / historical ROE-based PRSU cycle · Filed 30/04/2026
On April 1, 2026, Joe Creed became chairman of the board, succeeding Jim Umpleby after his forty-five years of dedicated service.
Lead Independent Director letter / April 1, 2026 chairman succession · Filed 30/04/2026
Reed-Klages as its lead independent director in 2022.
Board leadership / actual lead independent director appointment · Filed 30/04/2026
To that end, the Company allows shareholders of 25 percent or more, in the aggregate, of Caterpillar’s shares to call a special shareholder meeting.
Company response to shareholder proposal / special meeting threshold · Filed 30/04/2026
Please vote yes: Shareholder Right to Act by Written Consent - Proposal 4 COMPANY RESPONSE After careful consideration, the board recommends a vote AGAINST this proposal for the reasons provided below: Action by written consent is unnecessary because our shareholders already have the right to act outside of the annual meeting cycle.
Shareholder written-consent proposal / board recommendation against proposal · Filed 30/04/2026
The AC has discussed with the company’s independent auditor the overall scope and execution of the independent audit and has reviewed and discussed the audited financial statements with management.
Audit Committee report / actual audit oversight activities · Filed 30/04/2026
Our governance framework includes, but is not limited to, the following highlights: Board and Governance Information* Board and Governance Information Size of the Board 10 Code of Conduct for Directors, Officers and Employees Yes Number of Independent Directors 9 Supermajority Voting Threshold for Mergers No Average Age of Directors 65 Proxy Access Yes Average Director Tenure (in years) 5.5 Shareholder Action by Written Consent No Annual Election of Directors Yes Shareholder Ability to Call Special Meetings Yes Mandatory Retirement Age 75 Poison Pill No Women 50% Stock Ownership Guidelines for Directors and Executive Officers Yes Ethnic/Racial Diversity 30% Anti-Hedging and Pledging Policies Yes Majority Voting in Director Elections Yes Clawback Policy Yes Lead Independent Director Yes * The information in this table reflects only the director nominees standing for election.
Governance highlights / policies and director-nominee table · Filed 30/04/2026
Debt related to MP&E decreased $7 million in the first six months of 2026.
MD&A / first-half 2026 MP&E debt movement · Filed 05/08/2026
Lower sales volume was primarily driven by lower sales of equipment to end users.
MD&A / 2024 volume decline / lower end-user equipment sales · Filed 14/02/2025
