Caterpillar absorbs $460 million in higher factory costs as sales rise 17% and shares fall 9%

The Irving, Texas, company reported $20.682 billion in sales and revenues, against $17.638 billion a year earlier, and adjusted profit of $7.20 a share against $4.95. Operating profit climbed 38%, to $4.214 billion. That figure includes $128 million in tariffs recovered under the International Emergency Economic Powers Act, the company said.

The cost squeeze landed on the machines contractors buy. Construction Industries, which builds excavators and dozers, sold $7.983 billion, up 18%, with North American sales up 23%. Its profit rose 33% to $1.831 billion despite $252 million in unfavorable manufacturing costs, which Caterpillar tied in part to higher freight. Resource Industries, which covers mining, heavy construction and quarry equipment, absorbed $208 million more, mostly material costs including tariffs. In construction equipment, price increases more than covered the gap: they added $349 million.

Chief financial officer Kyle Epley said tariffs cost about $600 million in the quarter before refunds, and roughly half of that hit construction equipment, Manufacturing Dive reported. Caterpillar still expects about $2.2 billion in tariff costs for 2026. Its inventories stood at $22.214 billion on Sept. 30, up $4.079 billion since the end of 2025, according to a TradingKey review of the results. That is Caterpillar's own stock, separate from what dealers hold.

The order backlog reached $78 billion, nearly double a year earlier, with data center power demand leading, Manufacturing Dive reported. The company forecasts moderate sales growth in the fourth quarter.