Caterpillar Inc. (CAT) wrapped up its 100th year in business with a bang, posting record quarterly and annual revenue on Thursday. Fourth-quarter sales jumped 18% to $19.133 billion, up from $16.215 billion in the same period last year, as equipment sales stayed strong across the board.
The company delivered adjusted earnings of $5.16 per share for the quarter, comfortably ahead of the $4.66 analyst estimate. Revenue also topped expectations, which had been pegged at $17.851 billion. On a GAAP basis, earnings came in at $5.12 per diluted share, down from $5.78 a year earlier.
Here's where things get interesting. While revenue surged, operating profit actually fell 9% to $2.660 billion, and operating margin compressed sharply to 13.9% from 18.0% in last year's fourth quarter. Adjusted operating margin landed at 15.6%, compared with 18.3% a year ago.
So what's pinching margins? Caterpillar pointed to unfavorable manufacturing costs that "largely reflected the impact of higher tariffs," along with elevated restructuring costs, including inventory write-downs in the Rail division. Tariffs are real, they cost money, and they're showing up on Caterpillar's bottom line.
Segment Breakdown
Construction Industries saw sales climb 15% to $6.926 billion in the fourth quarter, with segment profit of $1.030 billion and a profit margin of 14.9%. Resource Industries posted a 13% sales increase to $3.353 billion, generating $360 million in segment profit and a 10.7% margin.
The standout performer was the Power & Energy segment, where sales rocketed 23% to $9.400 billion. Segment profit hit $1.841 billion with a healthy 19.6% margin. Much of that surge came from power-generation equipment flying off the shelves to AI data centers, which are voracious consumers of electricity. Financial Products segment revenues rose 7% to $1.095 billion, with profit climbing to $262 million.
Full-Year Performance
For all of 2025, Caterpillar reported sales and revenues of $67.6 billion, up 4% from $64.8 billion in 2024. That's a company record. Profit per diluted share was $18.81, down from $22.05 the previous year, while adjusted earnings per share came in at $19.06, compared with $21.90 in 2024.
The company generated $11.7 billion in enterprise operating cash flow for the year and closed 2025 with $10.0 billion in enterprise cash. Cash and cash equivalents stood at $9.980 billion as of December 31. Caterpillar returned serious capital to shareholders, deploying $5.2 billion for share repurchases and $2.7 billion in dividends during the year.
CEO Joe Creed struck an optimistic note, saying, "With a record backlog, we enter the new year with strong momentum and a continued focus on delivering long-term value for our customers and shareholders."
CAT Price Action: Caterpillar shares were up 1.36% at $652.00 during premarket trading on Thursday, hovering near the 52-week high of $655.78.