Caterpillar posted surging revenue but warned tariffs are squeezing its margins

The equipment maker's operating profit margin slipped to 17.7% as higher tariff costs weighed on manufacturing across all 3 segments

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First-quarter 2026 sales and revenues at Caterpillar $CAT climbed 22% to $17.4 billion from $14.2 billion in the year-ago period, though the equipment maker flagged that rising tariff costs put pressure on manufacturing expenses throughout its business.

Adjusted earnings per share came in at $5.54, up from $4.25 in the first quarter of 2025. Operating profit margin slipped to 17.7% from 18.1% in the same period a year ago. The company said unfavorable manufacturing costs of $710 million — driven largely by higher tariff costs — partially offset gains from higher sales volume and favorable price realization.

"Our team delivered a strong start to the year, driven by resilient end markets and disciplined execution in a dynamic operating environment," CEO Joe Creed said in a statement. "A record backlog provides a strong foundation for continued positive momentum."

The tariff impact was felt across all three of Caterpillar's primary business segments. In Power & Energy, unfavorable manufacturing costs of $346 million — primarily reflecting higher tariff costs — offset gains from volume and pricing, leaving segment profit margin at 20.6%, down from 22.3% a year earlier. Construction Industries saw unfavorable manufacturing costs of $362 million tied to tariffs, though its segment profit still rose 50% to $1.5 billion as North American sales climbed 48%. Resource Industries was hit hardest in relative terms: segment profit fell 39% to $378 million, with the company citing unfavorable manufacturing costs largely driven by tariff costs as the primary cause.

Among the three segments, Construction Industries led in revenue expansion, with sales climbing 38% to $7.2 billion; dealer restocking of equipment inventory and better pricing both contributed to the gain. Power & Energy revenue rose 22% to $7 billion, with power generation sales up 41%, supported by demand from data center customers. Resource Industries revenue edged up 4% to $3.8 billion.

Caterpillar deployed $5.7 billion in cash during the quarter for share repurchases and dividends — $5 billion for stock buybacks and $0.7 billion for dividends. Enterprise operating cash flow was $1.9 billion, and the company ended the quarter with $4.1 billion in cash.

Shares jumped close to 5% before the opening bell after the results were released, CNBC reported.

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© Quartz