TLDR
- Q1 revenue fell 10% to $14.2B, missing estimates.
- Adjusted profit per share hit $4.25, topping forecasts.
- Backlog grew $5B, marking record organic growth.
- Energy & Transportation sales to users rose 13%.
- Shares gained 1.8% to $314.92, but YTD return lags at -12.4%.
Caterpillar Inc. (NYSE: CAT) reported weaker-than-expected Q1 2025 revenue, but its shares rose 1.8% to $314.92 in midday trading as investors focused on robust backlog growth and strong profit margins. Despite a challenging demand environment, the heavy equipment maker’s order pipeline suggests resilience heading into the second half of the year.
Caterpillar (CAT)
Revenue fell 10% year over year to $14.2 billion, missing Wall Street’s targets. However, adjusted profit per share came in at $4.25, topping expectations. The company also reported an 18.3% operating margin, reflecting solid cost management even as sales softened.
Caterpillar Inc. $CAT reported a 10% year-over-year decline in revenue for Q1 2025, totaling $14.2 billion, which fell short of Wall Street expectations. The revenue drop was primarily attributed to reduced equipment sales volume and unfavorable price realization, largely… pic.twitter.com/zwLU1F0CTq
— Punk Rock Traders (@PunkRockTraders) May 1, 2025
Backlog Growth Hits Record High
One of the bright spots in Caterpillar’s Q1 report was its $5 billion increase in backlog — the largest organic quarterly gain in its history. CEO Jim Umpleby highlighted strong order rates across all divisions, particularly in the Energy & Transportation segment, which benefited from soaring data center demand.
Machine sales to users declined just 1%, a better-than-expected figure that helped stabilize dealer inventory levels.
Mixed Segment Results
Caterpillar’s Energy & Transportation unit was the standout, with user sales jumping 13%, driven by power generation projects and data center demand for reciprocating engines. In contrast, other divisions struggled:
- Construction Industries’ sales dropped 19% to $5.2 billion.
- Resource Industries’ revenue fell 10% to $2.9 billion.
- Energy & Transportation total sales slipped 2% to $6.6 billion.
Financial Products revenue rose 2%, though profits in that segment fell 27% due to one-time benefits a year ago and higher credit loss provisions.
Tariff Pressures and Cost Headwinds
Looking ahead, Caterpillar warned of tariff-related cost headwinds of $250 million to $350 million in Q2, which could compress margins. The company also anticipates lower adjusted operating profit margins compared to the same quarter last year, citing pricing pressures and the ongoing impact of tariffs.
Shares Rebound but Lag Year to Date
Despite today’s 1.8% stock bump, Caterpillar’s shares are down 12.4% year to date, sharply underperforming the S&P 500’s -4.4% return. Over the past year, CAT stock is off 3.3%, though its three- and five-year returns remain strong at 58.6% and 214.6%, respectively.
Conclusion
Caterpillar’s Q1 revenue miss reflects softening demand in key construction and mining markets. But the company’s record backlog growth and solid profitability reassured investors about its near-term resilience. Challenges remain, including tariff costs and weaker Resource Industries sales, but the energy sector strength and growing order book could help Caterpillar navigate through 2025.
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