卡特彼勒 (CAT) 2026财年第三季度业绩电话会：销售额增长17%

核心要点

• 卡特彼勒公布的季度销售额和营收达到创纪录的 207亿美元，同比增长17%， 得益于其三个主要业务板块的销量增加和良好的价格变现。
• 调整后营业利润增长38%至43亿 美元，同时调整后营业利润率扩大310个 基点至20.6%。调整后每股 收益增长45%至7.20美元。
• 电力与能源、建筑行业以及资源行业强劲的订单将积压订单推升至创纪录水平。该公司 预计58%的积压订单将在未来12个月内转化为销售额。
• 对用户的发电产品销售额增长75%， 这得益于数据中心对轮机和大型往复式发动机的需求。部分大型发动机订单已排至 2029年，而轮机订单则排至 2030年。
• 管理层维持了2026年销售额和营收增长在10%的中高段的预期。扣除IEEPA关税追回影响，全年调整后营业利润率预计将接近卡特彼勒目标区间的下限。
• 机械、能源与运输板块（ME&T）自由现金流 达到38亿美元。卡特彼勒在该季度向股东回报了20亿 美元，形式包括股票回购和分红。

关键财务数据

业务与经营业绩

电力与能源

电力与能源业务销售额增长 18% 至 88亿美元。部门利润增长 31% 至 21亿美元，利润率扩大 250个基点 至 24.4%。

对终端用户的销售额增长 36%，主要得益于发电业务 75% 的增长。卡特彼勒将这一增长归因于数据中心应用中对燃气轮机和大型往复式发动机的强劲需求。石油和天然气领域的终端用户销售额增长 5%，而工业需求因EAME地区的疲软而下降。

产能仍是增长的主要制约因素。卡特彼勒计划将其位于北卡罗来纳州温斯顿-塞勒姆的部分工厂设施用作3600系列大型往复式发动机的第二个组装与测试基地。与2024年相比，该公司继续致力于到2030年将大型往复式发动机产能提高至近三倍。

建筑工程业务

建筑工程业务销售额增长 18% 至 80亿美元。利润增长 33% 至 18亿美元，利润率上升 250个基点 至 22.9%。

对终端用户的销售额增长 20%，连续第七个季度实现同比增长。北美对终端用户的销售额增长 27%，这得益于住宅和非住宅建筑施工、代理商租赁车队投资以及重点项目租赁合资企业的推动。

卡特彼勒还宣布了一项 10亿美元 的投资，用于扩大北卡罗来纳州桑福德的制造产能，以支持其 CAT Compact 战略以及小型承包商的需求。

资源工业业务

资源工业业务销售额增长 15% 至 46亿美元，而利润增长 14% 至 6.22亿美元。利润率基本持平，为 13.5%。

对终端用户的销售额增长 4%，低于管理层预期。重型建筑以及采石和骨料业务有所改善，但采矿业受到运输和调试延迟的影响。管理层表示，采矿订单保持强劲，特别是铜、金和加拿大油砂应用领域的订单。

金融产品业务

金融产品业务营收增长 9% 至 12亿美元，该部门利润增长 10% 至 2.64亿美元。逾期率下降至 1.31%，创下1998年以来的最低水平，同时零售新业务量有所增加 6%。

管理层业绩指引

卡特彼勒继续预计2026全年销售额和营业收入增幅将处于10%中高段。管理层指出，健康的终端市场、强劲的订单、产能扩展和服务业务增长是主要支撑因素。

剔除《国际紧急经济权力法案》（IEEPA）关税追回款后，全年调整后营业利润率预计将接近公司目标区间的底部。销售额增加和有利的定价预计将被产能扩张支出、折旧、货运、关税以及较高的销售、一般与行政费用（SG&A）和研发费用部分抵消。

公司预计全年关税成本约为22亿美元，其中不包括今年迄今约5.2亿美元的IEEPA关税追回款。该展望假设第四季度不会获得额外的IEEPA关税追回款。

机械、能源与交通（ME&T）自由现金流预计处于全年60亿至150亿美元目标区间的上半段。目前预计全年资本支出约为33亿美元，低于此前预期的35亿美元。重组费用预计约为3亿美元，预计年度有效税率仍维持在约23%（不含离散项目）。

对于第四季度，在面对上年同期强劲对比基数的情况下，管理层预计合并销售额将实现温和增长。电力与能源部门应实现温和增长，工程机械部门的销售额预计与上年持平，而资源工业部门预计将录得强劲增长。

工程机械部门面临预计16亿美元的季节性经销商库存削减，而上年同期为减少6亿美元。管理层预计这一差异将产生约10亿美元的同比销量逆风。

风险与关注要点

• 产能扩张仍是电力与能源部门增长的主要限制因素，生产和测试系统的余量有限。
• 货运、材料和关税成本的上行继续对制造成本和利润率构成压力。
• 工程机械部门在第四季度面临大幅的经销商库存削减以及更具挑战性的同比基数。
• 资源工业部门经历了发货与调试延误，同时随着大型矿用卡车提产，出现了运营效率低下的情况。
• 地缘政治不确定性、高企的能源价格以及潜在的成本通胀仍是管理层密切监控的因素。
• 长周期发电订单可能导致季度订单量分布不均，因为大型主电源和矿业项目通常规模巨大且依赖项目进度节点。

分析师问答环节要点

管理层表示，主电源、柴油备用系统和天然气发电的需求依然强劲。大型往复式发动机和燃气轮机的交付周期已延伸至2028年底、2029年，部分燃气轮机订单甚至延长至2030年。较小型发电机组和发动机的交付周期则相对较短。

卡特彼勒预计积压订单中的58%将在未来12个月内完成销售，而上一季度这一比例为59%。管理层提醒，评估积压订单和订单出货比时，应结合向最终用户的销售情况、产能提升以及项目时间节点综合考量。

关于利润率，管理层表示卡特彼勒计划从2027年开始走出目标区间的底部，并在未来几年向中点靠拢。调整节奏取决于销量增长、产能提升、关税情况以及持续的战略投资。

在矿业方面，管理层强调了资源工业部门连续三个季度强劲的订单表现。生产挑战集中在大型矿用卡车上，卡特彼勒正在扩大内部产能，并与供应商合作以增加产出。

公司计划发运首批重启的10兆瓦MK发动机机组，安排在第四季度，并在2027年前逐步扩大面向发电应用的生产规模。

业绩电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Welcome to the Third Quarter 2026 Caterpillar Earnings Conference Call. Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Alex Kapper. Thank you. Please go ahead.

Alex Kapper

Thank you, Audra. Good morning, everyone, and welcome to Caterpillar's Third Quarter of 2026 Earnings Call. I'm Alex Kapper, Vice President of Investor Relations. Joining me today are Joe Creed, Chairman and CEO; Kyle Epley, Chief Financial Officer; Stephanie Bohman, Senior Vice President of the Global Finance Services Division; And Ryan Coleman, Senior Director of IR. During our call, we'll be discussing third quarter earnings release we issued earlier today. You can find our slides, the news release and a webcast recap at investors.caterpillar.com under Events and Presentations. The content of this call is protected by U.S. and international core law. Any rebroadcast, retransmission, reproduction for distribution of all or part of this content without Caterpillar's prior written permission is prohibited.

Moving to Slide 2. During our call today, we'll make forward-looking statements, which are subject to risks and uncertainties. We'll also make assumptions that could cause our actual results to be different than the information we're sharing with you on this call. Please refer to our recent SEC filings and the forward-looking statements reminder and the news release for details on factors that indigeally or in aggregate could cause our actual results to vary materially from our forecast. A detailed discussion of many factors that we believe may have a material effect on our business on an ongoing basis is contained in our SEC filings.

On today's call, we'll also refer to non-GAAP numbers. For any reconciliation of any non-GAAP numbers to the appropriate U.S. GAAP numbers, please see the appendix of the earnings call slides. For today's agenda, Joe will begin by share's perspectives about our results, and he will highlight key initiatives across our segments. Then he'll discuss our full year outlook and insights of our end markets. Kyle will provide a detailed overview of results and share keys looking forward. We will conclude by taking your questions. Now let's advance to Slide 3 and turn the call over to Joe Creed.

Joseph Creed

All right. Good morning, and thanks, Alex. I appreciate everyone joining us today. Our third quarter results reflect the durability of our end markets with our highest sales quarter ever strong order rates and a record backlog. Our team continues to execute our strategic priorities in a dynamic environment, positioning us for a strong year. Sales and revenues were $20.7 million, up 17% versus the prior year, driven by strong end market demand. We delivered adjusted profit per share of $7.20 and an increase of 45% versus last year.

Strong order rates across all 3 of our primary segments drove backlog to a record $78 million. That's an increase of approximately $38 million or 96% from the third quarter last year and marks the fourth consecutive quarter of sequential backlog growth in all 3 of our primary segments. The quarter demonstrated team's ability to execute in a high-growth environment. Specifically, our Power and Energy team continued to increase production of large reciprocating engines and turbines while simultaneously expanding capacity to meet demand. team is effectively managing the operational challenges that come with this rapid growth, bringing additional capacity online is still the top pacing factor for growth in Power and Energy.

So working diligently to execute our plans and meet our customers' needs. As I mentioned, sales and revenues were $20.7 billion, and they were in line with our expectations. The increase from the prior year was primarily driven by strong growth in sales volume and favorable price realization in all 3 of our primary segments. Third quarter adjusted operating profit margin was 20.6%. Excluding IEEPA tariff recoveries, adjusted operating profit margin was in line with our expectations. In the third quarter, we generated MP&E free cash flow of $3.8 billion and deployed $2 billion to shareholders through share repurchases and dividends.

Now I'll review third quarter retail statistics. In Power and Energy, sales to users grow grew a robust 36%. Power generation grew 75%, driven by continued very strong demand for turbines and large reciprocating engines used in data center applications. Sales users in oil and gas increased 5% and were driven by turbines and turbine-related services. Industrial sales users were down due to softness in the AME region.

Now for Construction Industries. We have 1 of the broadest ranges of products, technology and services to support customers whether they prefer to own lease or rent equipment. Combined with healthy construction activity, our unique position has allowed us to outpace the industry throughout the year. In the third quarter, total sales users increased 20%, marking the seventh consecutive quarter of year-over-year growth. In North America, sales users grew a robust 27%, in line with expectations. Dealer rental revenue in North America continued to grow, driving increased investment in their equipment fleets.

We also saw strong customer interest in the Cat dealer-owned rental joint venture called Major Projects, which was launched last quarter. As a reminder, major projects will serve customers developing large-scale infrastructure across North America, including transportation, energy, manufacturing and data center builds. It's a supplemental national rental solution to help deliver larger size class construction equipment and capabilities where existing individual dealer rental fleets aren't sufficient to execute at scale.

As a result, rental fleet line was exceptionally strong in the third quarter, contributing significantly to sales to users growth compared with prior year when fleet loading was a slight headwind. Even excluding the positive impact from the rental fleet loading, sales users growth was strong, driven by residential and nonresidential construction act. Sales to users in EAME were above expectations with growth driven by strength in Europe and Africa, partially offset by softness in the Middle East. In Asia Pacific, sales users outside of China were lower than we anticipated and declined slightly due to timing. China, however, continued to grow from a low base as expected. Latin America continued to grow but at a lower rate than we anticipated.

For Resource Industries, third quarter sales to users increased 4%, which is below our expectations. Sales to users were higher in heavy construction, quarry and aggregates, but lower in mining due to delays in shipping and commissioning. The rail decrease was driven by lower international locomotive deliveries. Turning to Slide 4. I'll cover a few highlights since our last earnings call, starting with Power and Energy. We serve customers across the power and energy value chain and demand for our solutions remains strong. To ensure we can meet their needs and maintain operational excellence, we're continually evaluating opportunities to repurpose underutilized facilities across our footprint.

In line with that approach, we plan to use a portion of our Winston Sanlam, North Carolina facility, which currently produces locomotive engines as a second assembly and test location for the 3600 series large reciprocating engine. The footprint will support our oil and gas customers to meet the growing need for natural gas compression. The initiative directly supports previously in plans to increase large reciprocating engine capacity to nearly 3x to the '24 level by 2030. Utilizing our existing footprint and workforce is the most cost-effective and quickest way for us to bring additional capacity online.

In Construction Industries, we launched CAT Compact earlier this year, a key part of our strategy to reach more small contractors in the growing compact construction equipment industry. To support that growth and meet increasing customer demand, we announced a $1 billion investment to expand manufacturing capacity in Sanford, North Carolina. The investment will create a modern technology-enabled manufacturing environment designed to improve safety, quality and operational performance while supporting long-term growth.

The facility will incorporate advanced manufacturing technologies, automation, digital production systems and integrated logistics capabilities to create a more connected and efficient operation. This demonstrates how we're aligning our investments to meet our 2030 targets in positioning Caterpillar for long-term profitable growth. And in Resource Industries, we announced last month that we're working with Luxstone to expand autonomous hauling technology across 2 additional Virginia operations.

The expansion follows a highly successful pilot at the Bull Run quarry where autonomous trucks have hauled more than 3.5 million tons since going live in November of 2024. These deployments also marked the first use of Caterpillar's autonomous technology on a CAT 775 truck, expanding our advanced autonomy capabilities beyond large mining applications and into quarry in aggregates. Through this customer collaboration, we gained insights that are helping us refine and scale our autonomous hauling solutions to deliver measurable value for operations at shop sites around the world. This expansion marks another important step towards our goal of tripling the number of CAT autonomous trucks by 2030 compared with 2024.

Now on Slide 5, I'll provide an update on our outlook. Our strong execution through the first 9 months positions us well to meet our full year outlook. We continue to expect our full year 2026 sales and revenues to grow in the mid- to high teens. Strong order rates and a growing backlog reflect continued broad-based momentum across our business despite ongoing geopolitical uncertainty. Excluding the favorable impact from IEEPA tariff recoveries, we continue to expect full year adjusted operating profit margin to be near the bottom of the target range.

Our full year margin expectation reflects the strategic investments we're making to execute our growth strategy as well as the ongoing impact of tariffs and higher freight costs due to elevated energy prices. We remain focused on delivering long-term OPAT growth, and we aim to operate around the midpoint of our adjusted operating profit margin target range over time. We're also maintaining our MPE free cash flow expectations to be in the top half of our annual target range. Kyle will provide additional details to you shortly.

And now I'll discuss our key end markets, starting with Power and Energy. We continue to work closely with our customers, which allows us to understand and respond to their evolving needs. Customers view of demand for both oil and gas and power generation remains strong. As I mentioned, backlog continues to grow due to strong order rates, and we're now taking some large reciprocating orders as far out as 2029 and turbine orders into 2030.

We continue to anticipate full year growth in power generation for both CAT reciprocating engines and solar turbines driven by increasing energy demand to support the data center build-out related to cloud computing and generative AI. Additionally, prime power demand continues to trend higher as customers look to Caterpillar's turbine and reciprocating engine products to support their need for power solutions.

After a record year for sales in 2025, oil and gas is expected to grow moderately again this year. reciprocating engine sales are anticipated to increase driven by strong demand in gas compression applications. We also see continued momentum in demand for reciprocating engine aftermarket parts. Solar turbines oil and gas sales are expected to grow and the backlog remains healthy with solid order and inquiry activity.

Demand for products and industrial applications is expected to grow moderately in 2026 as well. For Construction Industries, we expect strong fourth quarter and full year sales to users growth, supported by healthy end markets. The outlook for North America remains positive with construction spending at healthy levels. Nonresidential construction investment continues to be supported by the IIJA, critical infrastructure programs and data centers.

We expect fourth quarter dealer rental fleet loading to remain strong. However, it will contribute less to sales to users growth than in the third quarter due to lapping strong rental loading in the fourth quarter of last year. In EAME, Europe is expected to remain stable, supported by nonresidential construction, while construction activity in Africa is projected to remain strong. The Middle East continues to face challenges, and we currently anticipate only a limited impact on EAME sales to users.

In Asia Pacific, outside of China, stable economic conditions are expected. In China, we anticipate moderate conditions with full year growth in the above 10-ton excavator industry off low levels of activity. We expect full year growth in Latin America. We're maintaining positive momentum in Resource Industries with robust order rates driving strong backlog growth. Customer product utilization is high and the age of the fleet remains elevated.

Most key commodities remain above investment thresholds and customers are focused on the long term. For full year 2026, we expect strong sales to users growth, primarily driven by rising demand for copper and gold, increasing activity in the Canadian oil sands and positive dynamics in heavy construction and quarry and aggregates. We expect commissioning delays from the third quarter to catch up, which will contribute to strong sales to users growth in the fourth quarter.

We continue to expect rebuild activity to increase moderately compared with last year. Rail services are anticipated to grow for the year, and we now see -- we now expect locomotive deliveries to be slightly lower year-over-year due to timing of deliveries. And finally, earlier this month, we announced that Derek York will succeed Denise Johnson as Group President of Reach and Industries. I want to congratulate Denise on a remarkable career. Under her leadership, Resource Industries returned to profitability and position Caterpillar as an industry leader in mining autonomy and technology. I'm deeply grateful for all he's done to strengthen our relationships with customers develop our people and shape the future of our company. Her impact and influence will be remembered long after her retirement.

I've worked closely with Derek for well over a decade. I'm confident in his ability to lead the RI team into its next chapter of innovation, growth and customer success. He is a highly respected leader who understands our customers, our strategy and the industries that we serve. With that, I'll turn over to Kyle.

Kyle Epley

Thank you, Joe. Good morning, everyone. I'm going to take a few minutes to walk you through our third quarter results, including details about segment performance as well as the balance sheet and cash flow. I will finish with remarks on our expectations for the fourth quarter and our full year assumptions. Beginning on Slide 6. Sales and revenues were $20.7 billion, up 17% versus the prior year, which was in line with our expectations. Adjusted operating profit was $4.3 billion, and our adjusted operating profit margin was 20.6%, excluding the IEEPA tariff recoveries, both were in line with expectations.

Moving to Slide 7, the 17% increase in sales and revenues compared to the third quarter of 2025 was primarily driven by strong growth in sales volume and favorable price realization. The stronger sales volume was mainly driven by higher sales of equipment to end users, supported by healthy end market demand and strong execution by our team. Dealer inventory increased by $300 million in Construction Industries compared to an increase of $600 million in the third quarter of 2025. This created a modest headwind to sales volume in the quarter and was in line with our expectations.

Sales and revenues both at a consolidated level and across all 3 primary segments were in line with our expectations. Moving to operating profit on Slide 8. Operating profit in the third quarter increased by 38% to $4.2 billion, adjusted operating profit of $4.3 billion also increased by 38% versus the prior year. The adjusted operating profit margin was 20.6%, which was an increase of 310 basis points compared to the prior year. The margin benefited from the profit impact of higher sales volume and favorable price realization. This was partially offset by higher manufacturing costs, mainly driven by higher freight and higher expenses related to our capacity expansions.

In the quarter, we recognized $128 million in IEEPA tariff recoveries. Nearly all of this amount is reflected in corporate items. Where tariffs introduced since the beginning of 2025 and excluding IEEPA recoveries, our third quarter tariff costs were approximately [indiscernible] million and about flat year-over-year as we anticipated.

Moving to Slide 9. Profit per share was $7.13 in the quarter. Adjusted profit per share was $7.20. Excluding discrete items, the provision for income taxes in the third quarter of 2026 reflected a global estimated annual effective tax rate of 23%. Finally, the year-over-year impact from the reduction in the average number of shares outstanding due to share repurchases resulted in a favorable impact on adjusted profit per share of approximately $0.15 compared to the third quarter of 2025.

On Slide 10, I will now review the third quarter results of our segments, starting with Power and Energy. For Power and Energy, sales of $8.8 billion increased by 18% versus the prior year, which was in line with our expectations. The sales increase versus the prior year was mainly due to higher sales volume and favorable price realization. Services revenues were also strong in the quarter, especially for sales into oil and gas applications.

Third quarter profit for Power and Energy increased by 31% versus the prior year to $2.1 billion. The segment's margin of 24.4% was an increase of 250 basis points versus the prior year. The increase was mainly due to the profit impact of higher sales volume. Favorable price realization was mostly offset by unfavorable manufacturing costs driven by spend related to our capacity expansions, including higher depreciation and along with higher freight and material costs. Segment margins matched our expectations.

Now moving to Slide 11. Construction Industry sales increased by 18% in the third quarter to $8 billion as we anticipated. The sales increase versus the prior year was primarily due to the higher sales volume and favorable price realization. Higher sales volume was mainly driven by sales of equipment to end users, which included strong contributions from both retail sales and rental fleet loading. Both residential and nonresidential industries contributed to the growth.

Third quarter profit for Construction Industries was $1.8 billion, a 33% increase versus the prior year. The segment's margin of 22.9% was an increase of 250 basis points versus the prior year, mainly driven by favorable price realization and the profit impact of higher sales volume. This was partially offset by unfavorable manufacturing costs, including the impact of freight and tariff costs. SG&A and R&D expenses related to our digital and technology investments also increased compared to the prior year. Segment margin was also consistent with our expectations.

Turning to Slide 12. Resource Industry sales, which were broadly in line with our expectations increased by 15% in the third quarter to $4.6 billion, primarily driven by higher sales volume. Price realization was also applicable versus the prior year and slightly better than our expectations primarily driven by positive geographic mix. Third quarter profit for Resource Industries increased by 14% versus the prior year to $622 million. The segment's margin of 13.5% was roughly unchanged versus the prior year. This was mainly driven by unfavorable manufacturing costs, primarily due to higher material costs, including tariffs, offset by the profit impact of higher sales volume and favorable price realization.

Overall, the segment margin was about in line with our expectations. Moving to Slide 13. Financial Products revenues increased by 9% versus the prior year to $1.2 billion, mainly due to higher average earning assets across all regions. Segment profit increased by 10% to $264 million. This increase was primarily due to a favorable impact from higher average earning assets, partially offset by a higher provision for credit losses. Our customers' financial health remains strong. Past dues were 1.31% in the quarter, down 16 basis points versus the prior year and remains the lowest level we have recorded since 1998.

The allowance rate was 0.91% at the end of the third quarter. Business activity within CAT Financial remains healthy. Retail new business volume grew by 6% versus the prior year. In addition, used equipment inventory levels continue to remain low and conversion rates remain above historical averages as customers continue to choose to purchase their equipment at the end of their lease term.

Moving on to Slide 14. MP&E free cash flow was $3.8 billion in the quarter. This was an increase of roughly $600 million versus the prior year, mainly driven by stronger profit. CapEx spend was about $700 million in the quarter. We deployed $2 billion to shareholders in the third quarter, of which share repurchases accounted for $1.2 billion and nearly $750 million for our quarterly dividend payment. Earlier this year, we announced our sixth consecutive year of high single-digit quarterly dividend increase and this year will mark 33 consecutive years of paying higher annual dividends to our shareholders.

Our balance sheet remains strong. We have ample liquidity with an enterprise cash balance of $7.9 billion. In addition, there is $1.6 billion in slightly longer-dated liquid marketable securities to improve yields on our cash.

Now for outlook assumptions. Turning to Slide 15. I will start with the fourth quarter. End user demand remains favorable across all 3 primary segments and the team is working diligently to deliver our commitments for the year. At the same time, we are aware of potential headwinds presented by higher cost inflation, which we continue to monitor closely. For the fourth quarter, we anticipate moderate sales growth versus the prior year. As a reminder, we are lapping a strong quarter last year, which creates a tougher comparison this year.

Now let me walk you through each of our 3 primary segments. In Power and Energy, we anticipate moderate sales growth in the fourth quarter versus the prior year as we lap a strong prior year fourth quarter and continue to ramp capacity. Volume growth is expected to be driven by continued strength in power generation, modest growth in oil and gas and moderate growth in industrial applications as it continues to recover. We also expect favorable price realization. In Construction Industries, we expect it to be similar to the prior year.

We anticipate the typical seasonal dealer inventory reduction to be roughly $1.6 billion, which compares to a decline of $600 million in the fourth quarter of 2025. As a result, we expect the year-over-year impact to be about a $1 billion headwind to sales volume in the fourth quarter against the backdrop of continued strong sales to users and industry growth. As a result, we expect sales volume in Construction Industries to be down modestly versus the prior year. However, we continue to expect favorable price realization in the fourth quarter. Despite the drawdown, we continue to expect dealer inventories at the end of the year to be higher than the prior year in anticipation of strong sales to users in 2027.

In Resource Industries, we expect strong sales growth in the fourth quarter versus the prior year. Volume is expected to be driven by higher sales to users and services growth. We also anticipate favorable price realization. I will now provide some color on our fourth quarter margin expectations versus the prior year. At the enterprise level, we expect higher adjusted operating profit margin versus the prior year. This is primarily due to a favorable price utilization and the profit impact of higher sales volume. Excluding the Imtelor tariffs, we expect unfavorable manufacturing costs driven by higher freight as well as expenses related to our capacity expansions. SG&A and R&D expenses are also expected to be higher, driven by our continued investment in the strategic initiatives aligned with our 2030 goals.

We anticipate tariff costs, excluding IEFPA recoveries of around $600 million, which is similar to what we incurred in the third quarter. but roughly $200 million lower than what we incurred in the fourth quarter of 2025. We continue to expect about 50% of the tariffs to be incurred in Construction Industries and 25% in both Power and Energy and Resource Industries. Now for our fourth quarter margin expectations in our 3 primary submits. In Power and Energy, we anticipate favorable price realization and a stronger volume to drive a higher margin percentage compared to the prior year.

The higher margin compared to the prior year is expected to be partially offset by unfavorable manufacturing costs, including depreciation and expenses related to our capacity expansion, along with higher material and freight costs. We expect fourth quarter margin to be similar to the third quarter. In Construction Industries, we anticipate a higher margin percentage compared to the prior year, primarily due to the favorable price realization, which is partially offset by lower sales volume.

Excluding the impact of lower tariffs, manufacturing costs are expected to be higher, driven by freight. We also expect higher SG&A and R&D related to our technology investments. Also, as a reminder, our Construction Industries fourth quarter margin typically has a sequential step down from the third quarter. We expect this seasonality change to be slightly more than our typical average step down to the expected lower sales volume, higher SG&A and R&D related to our technology and digital investments as well as higher freight costs.

In Resource Industries, we anticipate a higher margin percentage compared to the prior year, driven by favorable price realization and the profit impact of higher sales volume, partially offset by unfavorable manufacturing cost including freight and material. Now on Slide 16, let me provide a few comments on the full year. As Joe mentioned, we continue to anticipate sales and revenues growth in the mid- to high teens for the full year 2026.

Our strong full year sales and revenues expectations is supported by strong sales to users growth across all 3 primary segments driven by healthy end markets, strong order rates across all 3 primary segments driving our backlog growth, increased output from our capacity expansion plans, which remain on schedule, and a strong year of services growth.

Now for our adjusted operating profit margin for the full year. Compared to last year, we expect a higher adjusted operating profit margin, which reflects profit impact of higher sales and favorable price realization, partially offset by unfavorable manufacturing costs, including spend related to our capacity expansion, which includes higher depreciation expense as well as higher freight. We also expect higher SG&A and R&D. Excluding IEEPA tariff recoveries, our full year adjusted operating profit margin is expected to be near the bottom of our target range.

Excluding our reported year-to-date IEFPA tariff recoveries of about $520 million, we continue to expect full year 2026 tariff costs of around $2.2 billion. Our outlook does not include any additional IEEPA tariff recoveries in the fourth quarter. We now expect restructuring costs of about $300 million in 2026, which is on the low end of our prior range. Our estimated global annual effective tax rate remains approximately 23% for 2026, excluding discrete items.

We also continue to expect MP&E free cash flow to be in the top half of our annual target range of $6 billion to $15 billion. Our CapEx spend for 2026 is now anticipated to be about $3.3 billion, which is slightly below our prior expectations of $3.5 billion. Now turning to Slide 17 to summarize. We delivered another very strong quarter with year-to-date financial results tracking toward another record year for Caterpillar. Our end markets remain healthy with strong order rates and a growing backlog, we continue to drive improved profitability in a dynamic operating environment.

We will remain disciplined and committed to operational excellence and the O&E model. We will continue to look for ways to invest efficiently. We will maintain a strong balance sheet and continue to return substantially all of our MP&E free cash flow to our shareholders through dividends and share repurchases over time. And finally, we will continue to execute our strategy for profitable growth. With that, we will take your questions.

Operator

[Operator Instructions] Your first question comes from the line of Tami Zakaria from JPMorgan. Hearing no response, we'll go next to Rob Wertheimer with Melius Research.

分析师问答

Robert Wertheimer

I had a couple of questions around Power Gen. And two quarters ago, you detailed some of the prime power projects you've done, I think you gave gigawatt numbers. Do you have any update there? Is Prime Power still expanding for you, either in general, if you have any update on gigawatts. And then you mentioned you're taking orders in the '29. Does that imply that '28 is sold out? Are you selling out current capacity but leaving future capacity for future orders? Can you just sort of talk about how you manage backlog.

Joseph Creed

We still continue to see trending higher prime power, both turbines and reciprocating gen sets. I've had a handful of discussions with customers for Prime Power just in this last quarter. So a lot of quoting activity continuing to go on. And I think we'll continue to see that trend as we move into the future. We're not seeing anything different in that space. When it comes to orders and sort of backlog, if it's significant order in gas, prime power, we're probably looking at 2029. I mean maybe some -- we'll probably still roll some diesel backup orders into 2028 where we're not completely full. But we're still -- we have frame agreements in the pipeline that kind of net orders as we move over time. .

So again, we continue to have extended backlog. I'm happy that the backlog grew in all 3 segments. And what we're hearing from our customers is they still want more from us if we can get more power. So we're trying to ramp as quickly as we can and still hit our customers' needs.

Operator

We'll go next to Tami Zakaria at JPMorgan.

Tami Zakaria

Good morning. Can you hear me? .

Joseph Creed

We can.

Tami Zakaria

So just wanted to touch on that backlog comment. I think I heard you say that the engines and turbine orders are now going as far as 2029, 2030. So is it that the total orders you received in the quarter are primarily for the out years? Or are the majority of the orders booked still for the next 12 months. And given the new capacity that will be coming online, when would you expect this record backlog to start stepping down? Or is it the new normal for the bad clog magnitude? .

Joseph Creed

Tami, thanks for the question. So I want to be clear, I mean, we're taking our orders into '29. We have some in '29 and 2030, we still have more to fill. And this is a bit of a complicated question because it's going to depend on the product, right? So for a large reciprocating engines and turbines, we're definitely extended out into late '28 into '29. Smaller gensets, smaller engines, obviously, lead times are much shorter than that. And on the machine side of the business, the backlog grew in all 3 segments, aside from a couple of products where we're ramping production and operationally trying to ramp production and those were not extended near as far.

I would like to produce and get our production ramp closer to Stu. So when we look at the backlog, we want to make sure we're looking at the backlog in the context of sales to users and order rates and the entire system and how it works. So if we can sales users stay healthy, which is what we're expecting, and we can produce more product, we'll continue to take orders, but I would like to see the backlog -- I mean if we can get it to even come in on the machine side because we can keep up, that would be a good thing.

And I also think if you -- when you look at, we've had a few quarters of backlog growth, I think we'll continue to see some backlog growth, but it's going to really depend. I mean customers have time to place orders and sort of digest what we have. And so I don't know that quarter-to-quarter, it's going to be something we look at as the singular metric as we start to move out, especially as we get extended. We're continuing to do long-term planning with our big data center customers and Prime Power customers.

We're seeing demand for cloud compute and our backup power continue to be strong. And then AI obviously comes in on top of that in the Prime Power numbers. So with those frame agreements, we have a line of sight past the backlog, and we continue to talk to our customers. And then on Prime Power, those are big projects. And I think they get negotiated individually and those can come in lumpy in the backlog as can mining orders. So I'm really pleased with the backlog growth we saw in this quarter. It was broad-based. Oil and gas, power gen, RI, in CI. So we have good momentum.

Kyle Epley

And just for a reference, we expect 58% of our backlog is expected to be sold within the next 12 months. that's comparative to 59% last quarter.

Operator

We'll move next to Jamie Cook at Truist Securities.

Jamie Cook

I guess my question, Joe, is just around your longer-term margin framework that you guys have put out there. You guys have done an exceptional job, but the margins have been pushing towards the lower end. Obviously, we have tariffs and inflationary pressures, et cetera. But like what do you think with sort of capacity coming online and price cost in your backlog, what's like a reasonable time for us to assume we can get back towards like the mid- to high end of your longer-term target range, and what would be the major drivers behind that? And last, is there any way you can help us frame how much incremental capacity is coming online in 2027 on a dollar basis if or any way you could frame it.

Joseph Creed

Jamie. As far as the margin target range, we -- I've said many times, I want to operate towards the middle of that range. the sales growing at a really good clip, which is a good thing, and we've been able to as best we can keep up with customer demand, and it's a progressive target. So as our margins are going up, we the target continues to increase. So we're kind of skipping along the bottom. I would expect and we'll talk to you a lot more about 2027 in the next quarter that we start to caraway off the bottom of that margin target range as we go forward, while we still try to keep up with demand.

We also are trying to do with the tariff headwind in a smart way where we're not slowing down investments that would impact the growth and the momentum we have in the business. So I'm happy with the progress we've made, our margins to go up as our volume goes up and over the next couple of years, we want to try to work our way back to the midpoint.

Operator

Next, we'll move to David Raso at Evercore ISI.

David Raso

I'm trying to figure out the revenue sequentially and what it means when we think about 187 revenue. If you look at the sequential revenue 3Q to 4Q, let's use the guide for the full year, mid- to high teens, right, let's call it, 17%. It implies the fourth quarter, even if I give you back the extra $1 billion, right, the headwind of the dealer inventory, it implies the revenue is barely up sequentially. And over a long period of time, fourth quarter is up 5% to 10%. I mean it was around, but a year where you're adding capacity, it's a big focus. And I mean demand is there. You speak to in retail, even the backlog still pretty solid.

Just trying to understand, is there some capacity issue supplier issue, why is the revenue growth so modest sequentially especially given the capacity adds? And any implications on how to think about '27 top line would be appreciated as well.

Joseph Creed

As we said in the prepared remarks, I mean, on power and energy, it's really paced by capacity and timing of customer deliveries. So we're not seeing anything different in the business that we would say would impact the fourth quarter, but it is hand to mouth, right? The teams are working really hard. We had a test sell go down for a little bit in the third quarter. I don't know we were able to overcome, but there's no slack in the system. And then as you mentioned, and we've kind of said we're going to have the inventory drawdown in CI, which seasonally isn't unusual. It's going to be a little different than the patterns that we had last year.

And then RI, we are, as we mentioned, we think operationally, we're trying to ramp. So we're going to obviously get as much product out as we can on large mining trucks in some of those products. But I don't think there's other than typical seasonality and things that we've talked about on trying to ramp production, we're pretty confident. And this is an in line -- our third quarter results came in line as we expected. We haven't really changed our view for what we plan to do in the fourth quarter.

And as you think about how we're going to finish the year, again, we'll talk to you more about 2027 in January, but our backlog continues to increase. We have a longer line of sight. We are drawing down CI inventory, $1.6 billion. We're going to finish the year with almost $700 million more of inventory in place than we finished 2025 heading into 2026. So we feel good about where we sit right now.

Kyle Epley

And David, I -- this is Kyle. Just to remind you, and I said in my prepared remarks, when we talk about the growth, it's off a really tough comparison versus 4Q last year. Just from a consolidated level, and then especially from a power and energy standpoint. But going into 2027, the dealer inventory increase in CI, we still expect really strong sees across all 3 primary segments in 4Q going into 2027.

Operator

We'll take our next question from Michael Feniger at Bank of America.

Michael Feniger

And just kind of following up on David Roso's question. The Q4 implying a moderate sales growth you guys talked about the dealer destock. I know your target is 6% to 9% CAGR on the revenue growth side, some years higher, some years lower to get to that average. Just with the backlog with where it is, the framework agreements, and I understand there's a quarter dynamic with destocking. But why would set up for '27, should we be thinking that we're above that 6% to 9% CAGR at the higher end based on where retail sales are and where we're seeing it, what hold us back to be in that line? I'm just kind of curious what the setup in the building blocks would look like for next year on that.

Joseph Creed

Yes. So 2027, again, we have much different than how I answered David's question I mean, we're finishing the year strong. We had -- as Kyle mentioned, a really strong fourth quarter last year. So when we say moderate growth year-over-year, some of that's a comp issue. We're based on capacity on power and energy, we think we'll continue to increasity. It's not a cliff event as we've said, so every quarter, we try to get more and more product out. We expect to continue that.

When it comes to the dealer inventory drawdown, 1 dealers are independent businesses, just to remind you, we do work with them. And we want to make sure we have the right inventory in the right place in the right regions of the world with the right products. And we do feel like we're in a good position heading into 2027 finishing the year with more dealer inventory in CI than we finished last year. So RI orders continue to go up. We've had 3 really strong quarters in a row of orders in RI. Having some operational challenges and inefficiencies as we ramp, but I think we'll continue to work those and get those behind us. So we're pretty confident and bullish in where we sit right now as we watch things. We're focused on delivering a strong fourth quarter and a strong finish to the year, and we'll talk to you guys more about '27 in January.

Operator

Next, we'll go to Chad Dillard at Bernstein.

Charles Albert Dillard

I just wanted to spend some time on the mining business. I recall from at the beginning of this year, you talked about orders being the highest, I think, since 2012. So I was wondering if you could give an update on how that's trending talk about what's driving it more refurbishment versus replacement? And if you can just give a little bit more color on some of the ramping challenges that you're seeing? And do you have a line of sight to you're seeing that being resolved in the next quarter or so? .

Joseph Creed

Yes, we've had 3 really good order quarters in a row for RI, which we're really happy about. As I mentioned in the prepared remarks, driven a lot by mining and both heavy construction. But in mining, in particular, copper and gold. We're starting to see activity in the Canadian oil sands services are continuing to grow. So customers are using the fleet, and we're seeing aftermarket rebuilds continue to happen and customers are starting to order equipment.

So that's all a really good sign. We've as we try to ramp, particularly in large mining trucks is where we've been actually increasing capacity at some of our factories where we can inside our 4 walls and working with the supply base to get ramped up. They're just sort of I would say, is normal growing pains and operational challenges when you're increasing capacity and trying to get product out the door. So we'll continue to work those. I think we'll get them behind this as we move forward. But it's a great sign that we've had the strength in orders as we've been waiting for orders to kind of pick up in mining for quite a while. So we're really happy with what we've seen in the first 3 months of -- or the first 3 quarters of this year.

Operator

We'll go next to Jerry Revich at Wells Fargo Securities.

Jerry Revich

Congratulations to Denise and Derek. Joe, Kyle, I want to ask in terms of, as you think about the production slots and lead times out to '29, '30 for urbans and large reciprocating engines, as you folks look at the permit requirements out that far and the counterparty has given some angst about credit in the market, can you just talk about if you've seen some timing in backlog? And I don't know if you can share what proportion of those production slots are backed by hyperscaler just to build comfort around the moving pieces given all of the use on the permitting side? .

Joseph Creed

Yes. I mean I don't think we would quantify hyperscalers versus colos versus others or IPPs, but we work with all of them. Typically, when we roll orders from pipeline in the backlog and working with other customers, we generally have line of sight to the project that they're working on. Our teams are working closely with customers. We continue to see strong oil and gas activity as well for large engines. So as we think of this, we've always tend to move a can, some slots around to meet customer needs to deliver on their projects. And we've been doing that in the last couple of years because we want to make sure we meet our customers' time line, but also no need to get product there early. It allows us to meet more customer demand if we're getting it when they need it. And we haven't seen really any significant change in how we're working with our customers to deliver projects so -- and product to get their project time lines.

So we continue to talk to our customers. We stay close to them. We'll follow their lead, but we're not seeing significant changes. But as I said earlier, as we're extended pretty far out, I mean this is going to be -- this is unusual for us. Typically, we only had 12 months or less line of sight to our backlog. And now in particularly the situation, customers are placing orders pretty far out there. We have a lot of quoting activity in '29, '30. We've had some quoting activity even beyond as we talk to customers. But I think they have time to firm up those orders and place the firm orders and move them into our backlog.

So we'll see our backlog kind of move in a long way moving forward. But we'll continue to watch sales to users. We continue to watch order rates, our backlog, all in conjunction together and stay close to our customers as we move into the end of this year and into next year.

Operator

We'll move to our next question from Mig Dobre at Baird.

Mircea Dobre

Yes. And just to follow up on these last comments, if we're kind of looking at backlog progression or maybe looking at it from the perspective of book-to-bill, was 1.7 earlier this year decelerated to about 1.3 in a quarter here. As you look at the fourth quarter, based on what you know, how should we think about book-to-bill here? And given that you're taking now orders into '29, maybe even '30 for solar, is there some kind of slippage in terms of bookings, given how constrained from a capacity we seem to be?

Joseph Creed

Yes. I mean one of the things you have to look at book-to-bill as we continue to increase production as well. So our sales are continuing to go up. And as I mentioned, for certain products, when you look at our backlog, all 3 segments are in there and all 3 have been growing. There are some of them we'd like to actually bring in and increase production. And so as we continue to ramp book-to-bill, we'll sort of move around.

And then in Power and Energy, again, or extended way longer than we've ever been. And so we continue to talk to our customers. That's why it's great to have the frame agreements and sort of the pipeline view beyond what's in the backlog. That's what we're using to plan with customers and those orders are rolling to backlog at different times as we continue to move forward, RI and Prime Power projects, as I mentioned earlier, will also probably come in, in not sequential fashion, they'll be lumpy depending on when those orders get placed because they're typically big orders.

So I think we'll continue to talk to our customers. And again, you can't just look at 1 metric like backlog growth in a quarter or book-to-bill in a quarter has to be taken into context with continued momentum in sales to users our ability to produce more and get more product out the door. There's a lot of things that we're watching on the health of the business more than just book-to-bill and a singular backlog number.

Operator

Our next question comes from Kyle Menges at Citi.

Kyle Menges

Great. I would love to hear from you guys, how the landscape might be changing a little bit as far as the demand you're seeing in the data center market. Maybe you can talk a little bit about how you're seeing things evolve in demand for turbines versus nat gas resets and then for diesel backup. And then also just your booking into the latter part of this decade and having a lot of discussions, it sounds like a lot of quoting activity to 2030 and even beyond, would love to get just some sense of how you could see your mix shifting maybe that mix of prime versus backup where you've been versus maybe where that mix is heading as you look to 2030?

Joseph Creed

Yes. As we talk to our customers, we've not seen really any change since the last quarter in our discussions with customers. We continue to see momentum in standby diesel backup, which has been the growing base of our business for quite a while before even really AI started to accelerate the growth even more driven by a lot of demand for cloud compute and AI has obviously accelerated that.

When it comes to Prime Power versus diesel, that's one of the things that's good about the capacity we put in place, it's pretty fungible as long as we have line of sight to those orders. If you get the largest 3520, that one, they're probably a little more extended on the G3520K, but keep in mind as well, the capacity we have in place and the momentum we have, it's more than just power generation.

We continue to see the momentum there. Oil and gas, and I think we're going to move a lot of natural gas in the next few years and are really strong in gas compression both at solar turbines and in our reciprocating engine business, demand is there for that. It's for marine and large engines also go into our mining products as well. So the mining picks up, we're excited about making sure that we can serve those customers. And really, when you talk about side from diesel standby, all these other applications, we -- as the field population grows, we need to be able to support customers in the aftermarket and grow services. So the capacity is all aligned to what we plan to have in place to meet our goals in 2030.

Operator

We'll go next to Kristen Owen at Oppenheimer.

Kristen Owen

We've talked a lot about the synchronous growth within the portfolio, but I'm hoping you can maybe double-click for us on the construction side. You called out the tough comps here in the fourth quarter, but backlog growth in construction, can you maybe help us understand or give us some color on the underlying demand? How much of that growth is going into rental for your own fleet versus third parties and maybe some of these other sources of demand outside of rental and mega projects. .

Joseph Creed

Tees, we've seen really strong order rates, strong stus continue in construction. So we're really excited about the progress we have there, and the initiatives that we've announced. I think it's the 7th consecutive growth quarter. And we'll see as we move forward. But our goal and our strategy really is to get customers in the cabs of cab machines, whether they want to rent or lease or buy, and we're seeing customers do all 3. We're really excited, and we were heavy in the fleet load in the major projects fleet in the third quarter.

And basically as soon as we can get fleet on the ground, they're moving to projects. So I think that's going to be a great initiative for us to continue to drive rental. And the point of that is to supplement. If you think about that strategy, the major projects JV, it supplements the local dealer where they wouldn't be able to get on, have the scale to get the project before. So it drives not only major projects, but allows each of the individual dealers to be in more rental deals they move forward as well.

So we're seeing great progress there. We're excited about CAT compact and how we're taking care of customers in the growing compact equipment industry. And in particular, we've seen -- it's large infrastructure projects, high IGA spending saws a lot of money left to be spent and projects left to be completed. I'm confident we'll continue to prioritize critical infrastructure as we move forward. Data centers obviously have a little bit of a rollover into CI as well. And so we're seeing really good momentum with the CI team. We're getting closer to customers than we ever have. and it's showing in their results. And we're seeing strength in all 3 of our segments right now, which is really exciting.

Operator

And today's final question comes from the line of Stephen Volkmann from Jefferies.

Stephen Volkmann

Joe, I'm just wondering any update on the 10-megawatt MAC restart that you're doing? And how we should think about that kind of ramping going forward? .

Joseph Creed

Yes, we plan to ship our first units here in the fourth quarter, and we'll continue to ramp as we go through next year on restarting the 10-megawatt MK engine in using it in power generation. I think that's going to be a great opportunity for us as we move into -- we'll get started here in the fourth quarter, but as we move into 2027. So everything is on track with that program. All right.

Well, that was the last question. So I just want to say thanks for joining us today. We really appreciate your questions. And I'm really proud of our team, the CAT team strong performance in what's been a pretty dynamic environment as we try to ramp production, add capacity and take care of our customers. We're well positioned to deliver a strong year and we'll continue creating long-term value for our customers and shareholders. So thank you. I'll turn it back over to Alex.

Alex Kapper

Thank you, Joe, Kyle, Stephanie and everyone who joined us today. A replay of our call will be available online later this morning. also post a transcript on our Investor Relations website as soon as it's available. You also find a third quarter results video with our CFO and an SEC filing with our sales to users data. Visit investors.caterpillar.com and then click on Financials to view those materials. If you have any questions, please reach out to me or Ryan Coleman, the Investor Relations general phone number is (309) 675-4549. Now let's turn it back to Audra to conclude our call. .

Operator

Thank you. And that concludes our call. Thank you for joining. You may all now disconnect.