IEEPA Tariff Recoveries Boost Q2 Profits
Caterpillar recorded $392 million in expected IEEPA tariff recoveries from claims submitted through CBP's CAPE system, boosting operating profit and profit per share by about $0.61.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Caterpillar delivered robust sales volume growth in Q2 FY2026, driven by higher end-user demand across all primary segments and favorable pricing, while a $392 million expected recovery of IEEPA tariffs significantly boosted profits. Operating margin expanded to 20.9%, though this included the one-time tariff benefit, and without it, adjusted margins still improved. Dealer inventory increased $600 million, raising questions about channel stuffing, and management warned of $2.2 billion in full-year tariff costs excluding expected recoveries. The company expects mid-to-high teens sales growth for the full year, with strong momentum in Power Generation tied to data centers and AI.
Revenue
$20.54B
+23.98% YoY
EPS (Diluted)
$7.77
+68.18% YoY
Operating Income
$4.29B
+50.17% YoY
Source: SEC XBRL
Caterpillar (CAT) reported Q2 FY2026 revenue of $20.54B, up 24.0% year over year. Operating margin was 20.9%, up 3.6 points from 17.3% a year earlier. CAT's fiscal Q2 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026This filing | 8.17 | 6.26 | Beat +30.5% |
| Mar 2026 | 5.54 | 4.66 | Beat +18.8% |
| Dec 2025 | 5.16 | 4.72 | Beat +9.3% |
| Sep 2025 | 4.95 | 4.57 | Beat +8.3% |
Adjusted (non-GAAP) EPS of $8.17 versus the $6.26 analyst consensus — a +30.5% beat for Jun 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $7.77.
5 reported segments · SEC XBRL
Segment revenue totals $22.46B; with -$1.92B of reconciling items (corporate, unallocated and eliminations) it ties to the $20.54B of consolidated revenue on the income statement.
Compiled by AI from 10-Q Item 2 of this filing
Caterpillar recorded $392 million in expected IEEPA tariff recoveries from claims submitted through CBP's CAPE system, boosting operating profit and profit per share by about $0.61.
Source: 10-Q Item 2 MD&A
Management now expects full-year 2026 sales and revenues to grow in the mid-to-high teens, with strong growth across all primary segments driven by higher volume and pricing.
Source: 10-Q Item 2 MD&A
Total dealer inventory increased $600 million in Q2, including a $400 million build in Construction Industries, whereas a year ago it decreased; full-year dealer inventory is expected to be higher at year-end 2026 vs 2025.
Source: 10-Q Item 2 MD&A
Power Generation sales jumped 29% in Q2, fueled by large reciprocating engines and turbines for data center applications, and management sees continued strong demand from AI-related build-out.
Source: 10-Q Item 2 MD&A
Excluding IEEPA recoveries, full-year 2026 tariff costs are forecast at $2.2 billion, with Q3 expected to incur around $600 million, half of it in Construction Industries.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 2 of this filing · 1 high, 3 medium, 1 low
The company faces ongoing costs from tariffs, with $2.2 billion expected for 2026, and potential further changes in trade policies could impact margins.
Source: 10-Q Item 2 MD&A
Dealer inventory increased sharply in Q2, which may signal overstocking and could lead to weaker future sales if end demand slows.
Source: 10-Q Item 2 MD&A
Management continues to monitor supply chain challenges, including transportation and component shortages, which could impact production and costs.
Source: 10-Q Item 2 MD&A
Ongoing geopolitical events and potential economic slowdowns in Europe and Asia-Pacific could reduce demand for Caterpillar's equipment.
Source: 10-Q Item 2 MD&A
Demand in Resource Industries is sensitive to commodity prices; while currently favorable, a downturn could reduce customer spending.
Source: 10-Q Item 2 MD&A
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 20.54 $B | 16.57 $B | +23.98% |
Cost of Revenue $B | 12.78 $B | 10.81 $B | +18.27% |
Operating Income $B | 4.30 $B | 2.86 $B | +50.17% |
EPS (Basic) $ | 7.80 $ | 4.64 $ | +68.10% |
EPS (Diluted) $ | 7.77 $ | 4.62 $ | +68.18% |
R&D Expense $M | 616.00 $M | 551.00 $M | +11.80% |
SG&A Expense $B | 2.02 $B | 1.69 $B | +19.13% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
CAT delivered strong Q1 FY2026 results with revenue surging 22.2% YoY to $17.4B and EPS jumping 30.3% to $5.50, driven by robust demand across its business segments, though operating margin edged slightly lower and aggressive share buybacks of $5.0B highlight continued capital returns to shareholders.
Caterpillar (CAT) posted FY2025 revenue of $67.6B (+4.3% YoY) but saw operating income fall 14.7% to $11.2B as cost of revenue surged 11.3%, compressing operating margin by ~370 basis points to 16.5%.
Other companies in Construction Machinery & Heavy Transportation Equipment