CATERPILLAR INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide information that will assist the reader in understanding the company’s Consolidated Financial Statements, the changes in certain key items in those financial statements between select periods and the primary factors that accounted for those changes. In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations as well as a discussion of the many factors that we believe may have an impact on our business on an ongoing basis. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Part I, Item 1A. Risk Factors of the 2025 Form 10-K . Highlights for the second quarter of 2026 include: • Total sales and revenues for the second quarter of 2026 were $20.543 billion, an increase of $3.974 billion, or 24 percent, compared with $16.569 billion in the second quarter of 2025. Sales were higher across the three primary segments. • Operating profit margin was 20.9 percent for the second quarter of 2026, compared with 17.3 percent for the second quarter of 2025. Adjusted operating profit margin was 21.9 percent for the second quarter of 2026, compared with 17.6 percent for the second quarter of 2025. • Second-quarter 2026 profit per share was $7.77, and excluding the items in the table below, adjusted profit per share was $8.17. Second-quarter 2025 profit per share was $4.62, and excluding the item in the table below, adjusted profit per share was $4.72. • Caterpillar ended the second quarter of 2026 with $6.7 billion of enterprise cash. Highlights for the six months ended June 30, 2026 include: • Total sales and revenues were $37.958 billion for the six months ended June 30, 2026, an increase of $7.140 billion, or 23 percent, compared with $30.818 billion for the six months ended June 30, 2025. • Operating profit margin was 19.4 percent for the six months ended June 30, 2026, compared with 17.6 percent for the six months ended June 30, 2025. Adjusted operating profit margin was 20.1 percent for the six months ended June 30, 2026, compared with 17.9 percent for the six months ended June 30, 2025. • Profit per share for the six months ended June 30, 2026, was $13.23, and excluding the items in the table below, adjusted profit per share was $13.70. Profit per share for the six months ended June 30, 2025, was $8.82, and excluding the item in the table below, adjusted profit per share was $8.97. • Enterprise operating cash flow was $6.2 billion for the six months ended June 30, 2026. In order for our results to be more meaningful to our readers, we have separately quantified the impact of significant items. Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Dollars in millions except per share data) Profit Before Taxes Profit Per Share Profit Before Taxes Profit Per Share Profit Before Taxes Profit Per Share Profit Before Taxes Profit Per Share Profit $ 4,558 $ 7.77 $ 2,818 $ 4.62 $ 7,769 $ 13.23 $ 5,388 $ 8.82 Restructuring costs - divestiture of certain non-U.S. entities 139 0.30 — — 139 0.30 — — Other restructuring (income) costs 63 0.10 56 0.10 104 0.17 89 0.15 Adjusted profit $ 4,760 $ 8.17 $ 2,874 $ 4.72 $ 8,012 $ 13.70 $ 5,477 $ 8.97 A detailed reconciliation of GAAP to non-GAAP financial measures is included on pages 71 - 73 . Overview Total sales and revenues for the second quarter of 2026 were $20.543 billion, an increase of $3.974 billion, or 24 percent, compared with $16.569 billion in the second quarter of 2025. The increase was primarily due to higher sales volume of $3.1 billion and favorable price realization of $595 million. Second-quarter 2026 profit per share was $7.77, compared with $4.62 profit per share in the second quarter of 2025. In the second quarter of 2026 and 2025, profit per share included restructuring costs. Profit for the second quarter of 2026 was $3.593 billion, an increase of $1.414 billion, or 65 percent, compared with $2.179 billion for the second quarter of 2025. The increase was mainly due to the profit impact of higher sales volume. 51 Table of Contents Trends and Economic Conditions Outlook for Key End Markets We continue to see strong momentum in our end markets despite ongoing uncertainty due to geopolitical events. We are also progressing on our capacity expansion plans, and we expect to increase our throughput in the second half of 2026. In Power & Energy , our positive outlook for 2026 continues to reflect strong demand in both Power Generation and Oil & Gas. We continue to anticipate growth in Power Generation for both reciprocating engines and turbines and turbine-related services , driven by increasing energy demand to support data center build-out related to cloud computing and generative Artificial Intelligence (AI). Additionally, prime power demand continues to trend higher for turbines and turbine-related services and for reciprocating engine products and services to support their need for power solutions. Oil & Gas is expected to grow moderately in 2026 as compared to 2025. Reciprocating engine sales are anticipated to increase, driven by strong demand in gas compression applications. We expect continued momentum in demand for reciprocating engine aftermarket parts. For turbines and turbine-related services used in Oil & Gas applications, sales are expected to grow while the backlog remains healthy, with continued solid order and inquiry activity. Demand for products in Industrial applications is expected to grow moderately in 2026 as compared to 2025. In Construction Industries , in 2026 as compared to 2025, we continue to expect growth in sales of equipment to end users supported by strong order rates. The outlook for North America remains positive, as sales of equipment to end users are anticipated to grow in 2026 as compared to 2025. Construction spending remains at healthy levels supported by the Infrastructure Investment and Jobs Act (IIJA), with the remaining funds to be spent over the next few years. Non-residential investment in critical infrastructure programs, heavy construction and data centers is contributing to overall construction spending levels. We expect dealer rental fleet loading will continue to grow in 2026 compared to 2025, including additional fleet loading for Major Projects in the third quarter of 2026. In EAME , Europe is expected to remain stable in 2026 as compared to 2025, supported by non-residential construction, and construction activity in Africa is projected to remain strong. While the Middle East continues to be challenged, we currently anticipate only a limited impact on sales of equipment to end users in EAME. In Asia Pacific, outside of China, softer economic conditions are expected in 2026. In China, we anticipate moderate conditions, with growth in the above 10-ton excavator industry in 2026, off of low levels of activity. Growth in Latin America is expected to continue. In Resource Industries , we are seeing continued positive momentum with robust order rates and strong backlog growth. Sales of equipment to end users are expected to increase in 2026 as compared to 2025, primarily driven by rising demand for copper and gold, and positive dynamics in Heavy Construction and Quarry and Aggregates. In Mining, most key commodities remain above investment thresholds, customer product utilization is high, and the age of the fleet remains elevated. While some commodity prices have increased recently, customers remain focused on the long-term. We now expect rebuild activity in 2026 to increase moderately as compared to 2025. Rail services and locomotive deliveries are both anticipated to grow in 2026 as compared to 2025. Third-Quarter 2026 Company Trends and Expectations In the third quarter of 2026 as compared to the third quarter of 2025, we anticipate strong sales and revenues growth, primarily driven by higher sales volume and favorable price realization in each of our three primary segments. We expect higher sales volume to be mainly driven by higher sales of equipment to end users across all three primary segments in the third quarter of 2026 as compared to the third quarter of 2025. In the third quarter of 2026 as compared to the third quarter of 2025, we anticipate strong sales growth in Power & Energy, driven by continued strength in Power Generation and in Oil & Gas, and modest growth in Industrial applications as it continues to recover. We expect favorable price realization in Power & Energy. In Construction Industries, we expect strong sales growth primarily due to higher sales volume and favorable price realization. We expect higher sales volume to be primarily driven by higher sales of equipment to end users, partially offset by the impact from changes in dealer inventories . We expect a slight increase in dealer inventory in the third quarter of 2026, but modestly lower than the increase in the third quarter of 2025. In Resource Industries, we expect strong sales growth primarily due to higher sales volume. We expect higher sales volume to be mainly driven by higher sales of equipment to end users. We also expect services revenues growth in the third quarter of 2026 as compared to the third quarter of 2025. We anticipate favorable price realization in Resource Industries in the third quarter of 2026 as compared to the third quarter of 2025, but to a lesser extent than the second quarter of 2026 as compared to the second quarter of 2025. We anticipate tariff costs of around $600 million in the third quarter of 2026, which is similar to what was incurred in the third quarter of 2025. We expect about 50 percent of the tariff costs to be incurred in Construction Industries and 25 percent in both Power & Energy and Resource Industries. 52 Table of Contents In the third quarter of 2026 as compared to the third quarter of 2025, we expect the profit impact of higher sales volume and favorable price realization to be partially offset by unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses. In the third quarter of 2026 as compared to the third quarter of 2025, in Power & Energy, we anticipate the profit impact of higher sales volume and favorable price realization to be partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. In Construction Industries, we anticipate favorable price realization and the profit impact of higher sales volume to be partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. In Resource Industries, we anticipate the profit impact of higher sales volume and favorable price realization will be partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Full-Year 2026 Company Trends and Expectations We now anticipate sales and revenues growth in the mid-to-high teens for 2026 as compared to 2025. We expect strong sales growth across each of our primary segments, mainly driven by higher sales volume and favorable price realization. Services revenues are also expected to grow in 2026 as compared to 2025. We expect higher sales and revenues in the second half of 2026 as compared to the first half of 2025 following the typical seasonable trend. We expect a more typical decrease in Construction Industries’ dealer inventory of over $1.0 billion in the fourth quarter of 2026. We also expect Construction Industries’ dealer inventory will be higher at year-end 2026 as compared to year-end 2025. As a result, we expect an unfavorable impact from changes in dealer inventories for Construction Industries’ sales volume in the second half of 2026 as compared to the second half of 2025. Excluding the expected IEEPA tariff recoveries in the second quarter of 2026, we now expect 2026 tariff costs of around $2.2 billion. Our outlook does not include any additional IEEPA tariff recoveries in the second half of 2026. In 2026 as compared to 2025, we expect the profit impact of higher sales volume and favorable price realization to be partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. In 2026, we continue to expect restructuring costs of approximately $300 to $350 million, and capital expenditures of approximately $3.5 billion. We anticipate our estimated annual effective tax rate to be 23.0 percent, excluding discrete items. Global Business Conditions We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary cost, labor pressures and the impact of trade policies. Areas of particular focus include transportation, certain components and raw materials. We continue to work to minimize supply chain challenges that may impact our ability to meet customer demand. We continue to assess the environment to determine if additional actions need to be taken. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the IEEPA on goods imported into the United States were unauthorized. During 2025 and until CBP ceased collecting IEEPA tariffs in 2026, the company's total IEEPA tariff costs were approximately $1.0 billion. During the second quarter of 2026, CBP launched the CAPE system, which enabled the submission of certain IEEPA refund claims. For both the three and six months ended June 30, 2026, the company recorded $392 million of expected IEEPA tariff recoveries for claims submitted and accepted through the CAPE system. These recoveries were deemed probable and were recorded in Current assets: Receivables - trade and other within the Consolidated Statement of Financial Position and in Cost of goods sold within the Consolidated Statement of Results of Operations. The company continues to assess the availability, timing and amounts of additional claim submissions for the remaining amounts paid under IEEPA, as these remain uncertain and were not deemed to be probable as of June 30, 2026. Risk Factors Risk factors are disclosed within Item 1A. Risk Factors of the 2025 Form 10-K. Notes: • Glossary of terms is included on pages 65 - 67 ; first occurrence of terms shown in bold italics. • Information on non-GAAP financial measures is included on pages 71 - 73 . • Certain amounts may not add due to rounding. 53 Table of Contents Consolidated Results of Operations THREE MONTHS ENDED JUNE 30, 2026, COMPARED WITH THREE MONTHS ENDED JUNE 30, 2025 CONSOLIDATED SALES AND REVENUES The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the second quarter of 2025 (at left) and the second quarter of 2026 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. Total sales and revenues for the second quarter of 2026 were $20.543 billion, an increase of $3.974 billion, or 24 percent, compared with $16.569 billion in the second quarter of 2025. The increase was primarily due to higher sales volume of $3.1 billion and favorable price realization of $595 million. Higher sales volume was mainly driven by higher sales of equipment to end users. Sales were higher across the three primary segments. North America sales increased 39 percent due to higher sales volume and favorable price realization. The increase in sales volume was mainly driven by higher sales of equipment to end users. Sales increased 10 percent in Latin America primarily due to higher sales volume. The increase in sales volume was mainly driven by higher sales of equipment to end users. EAME sales increased 15 percent mainly due to higher sales volume and favorable currency impacts primarily related to the euro. Higher sales volume was mainly driven by higher sales of equipment to end users. Sales increased 4 percent in Asia/Pacific primarily due to favorable currency impacts mainly related to the Australian dollar and favorable price realization. Total dealer inventory increased $600 million during the second quarter of 2026, compared with an increase of $100 million during the second quarter of 2025. Construction Industries' dealer inventory increased by $400 million during the second quarter of 2026, compared with a $300 million decrease during the second quarter of 2025. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. 54 Table of Contents Sales and Revenues by Segment (Millions of dollars) Second Quarter 2025 Sales Volume Price Realization Currency Inter-Segment / Other Second Quarter 2026 $ Change % Change Power & Energy $ 7,037 $ 736 $ 212 $ 53 $ 200 $ 8,238 $ 1,201 17 % Construction Industries 6,190 1,755 309 74 18 8,346 2,156 35 % Resource Industries 3,886 639 75 65 (17) 4,648 762 20 % All Other Segment 85 1 1 — (3) 84 (1) (1 %) Corporate Items and Eliminations (1,524) (18) (2) 7 (198) (1,735) (211) Machinery, Power & Energy Sales 15,674 3,113 595 199 — 19,581 3,907 25 % Financial Products Segment 1,042 — — — 103 1,145 103 10 % Corporate Items and Eliminations (147) — — — (36) (183) (36) Financial Products Revenues 895 — — — 67 962 67 7 % Consolidated Sales and Revenues $ 16,569 $ 3,113 $ 595 $ 199 $ 67 $ 20,543 $ 3,974 24 % Sales and Revenues by Geographic Region North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues (Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg Second Quarter 2026 Power & Energy $ 4,182 30 % $ 373 (16 %) $ 1,348 3 % $ 892 9 % $ 6,795 17 % $ 1,443 16 % $ 8,238 17 % Construction Industries 5,065 50 % 676 25 % 1,456 23 % 1,064 3 % 8,261 35 % 85 27 % 8,346 35 % Resource Industries 2,230 34 % 671 13 % 713 22 % 954 1 % 4,568 21 % 80 (18 %) 4,648 20 % All Other Segment 9 50 % 1 — % 2 100 % 3 (50 %) 15 15 % 69 (4 %) 84 (1 %) Corporate Items and Eliminations (51) 1 (1) (7) (58) (1,677) (1,735) Machinery, Power & Energy Sales 11,435 39 % 1,722 10 % 3,518 15 % 2,906 4 % 19,581 25 % — — % 19,581 25 % Financial Products Segment 765 9 % 122 16 % 137 9 % 121 12 % 1,145 1 10 % — — % 1,145 10 % Corporate Items and Eliminations (106) (23) (30) (24) (183) — (183) Financial Products Revenues 659 7 % 99 16 % 107 (1 %) 97 11 % 962 7 % — — % 962 7 % Consolidated Sales and Revenues $ 12,094 37 % $ 1,821 10 % $ 3,625 14 % $ 3,003 4 % $ 20,543 24 % $ — — % $ 20,543 24 % Second Quarter 2025 Power & Energy $ 3,225 $ 442 $ 1,306 $ 821 $ 5,794 $ 1,243 $ 7,037 Construction Industries 3,369 540 1,185 1,029 6,123 67 6,190 Resource Industries 1,668 592 584 945 3,789 97 3,886 All Other Segment 6 — 1 6 13 72 85 Corporate Items and Eliminations (32) (3) (4) (6) (45) (1,479) (1,524) Machinery, Power & Energy Sales 8,236 1,571 3,072 2,795 15,674 — 15,674 Financial Products Segment 703 105 126 108 1,042 1 — 1,042 Corporate Items and Eliminations (88) (20) (18) (21) (147) — (147) Financial Products Revenues 615 85 108 87 895 — 895 Consolidated Sales and Revenues $ 8,851 $ 1,656 $ 3,180 $ 2,882 $ 16,569 $ — $ 16,569 1 Includes revenues from Machinery, Power & Energy o f $210 m illion and $172 million in the second quarter of 2026 and 2025 , respectively. 55 Table of Contents CONSOLIDATED OPERATING PROFIT The chart above graphically illustrates reasons for the change in consolidated operating profit between the second quarter of 2025 (at left) and the second quarter of 2026 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Power & Energy's other operating (income) expenses . Operating profit for the second quarter of 2026 was $4.295 billion, an increase of $1.435 billion, or 50 percent, compared with $2.860 billion in the second quarter of 2025. The increase was primarily due to the profit impact of higher sales volume. Operating profit in the second quarter of 2026 included $392 million of expected IEEPA tariff recoveries. Operating profit margin was 20.9 percent for the second quarter of 2026, compared with 17.3 percent for the second quarter of 2025. Profit (Loss) by Segment (Millions of dollars) Second Quarter 2026 Second Quarter 2025 $ Change % Change Power & Energy $ 2,027 $ 1,554 $ 473 30 % Construction Industries 1,947 1,244 703 57 % Resource Industries 693 563 130 23 % All Other Segment — — — — % Corporate Items and Eliminations (453) (566) 113 Machinery, Power & Energy 4,214 2,795 1,419 51 % Financial Products Segment 328 248 80 32 % Corporate Items and Eliminations (65) (36) (29) Financial Products 263 212 51 24 % Consolidating Adjustments (182) (147) (35) Consolidated Operating Profit $ 4,295 $ 2,860 $ 1,435 50 % 56 Table of Contents Other Profit/Loss and Tax Items • Interest expense excluding Financial Products in the second quarter of 2026 was $135 million, compared with $126 million in the second quarter of 2025. The increase was primarily due to higher average debt outstanding. • Other income (expense) in the second quarter of 2026 was income of $398 million, compared with income of $84 million in the second quarter of 2025. The change was primarily driven by favorable impacts from foreign currency, total return swap contracts and investment and interest income. • The effective tax rate for the second quarter of 2026 was 23.1 percent compared to 23.0 percent for the second quarter of 2025. Excluding the discrete items discussed below, the estimated annual effective tax rate was 23.0 percent for the second quarters of 2026 and 2025. A discrete tax benefit of $26 million was recorded in the second quarter of 2026, compared with a $1 million benefit in the second quarter of 2025, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In addition, the estimated annual effective tax rate in the second quarter of 2026 excluded the impact of second quarter losses of $139 million for the divestiture of certain non-U.S. entities with no related tax benefit. Please see a reconciliation of GAAP to non-GAAP financial measures on pages 71 - 73 . Power & Energy Sales by Application (Millions of dollars) Second Quarter 2026 Second Quarter 2025 $ Change % Change Power Generation $ 3,098 $ 2,407 $ 691 29 % Oil and Gas 2,044 1,867 177 9 % Industrial 1,653 1,520 133 9 % External Sales 6,795 5,794 1,001 17 % Inter-segment 1,443 1,243 200 16 % Total Sales $ 8,238 $ 7,037 $ 1,201 17 % Power & Energy’s total sales were $8.238 billion in the second quarter of 2026, an increase of $1.201 billion, or 17 percent, compared with $7.037 billion in the second quarter of 2025. The increase was primarily due to higher sales volume of $736 million, favorable price realization of $212 million and higher inter-segment sales of $200 million. • Power Generation – Sales increased in large reciprocating engines and in turbines and turbine-related services, primarily in data center applications. • Oil and Gas – Sales increased in reciprocating engines used in gas compression applications and in reciprocating engine aftermarket parts, partially offset by lower sales of reciprocating engines used in well servicing applications. Sales also increased in turbines and turbine-related services. • Industrial – Sales increased primarily in North America and EAME. Power & Energy’s segment profit was $2.027 billion in the second quarter of 2026, an increase of $473 million, or 30 percent, compared with $1.554 billion in the second quarter of 2025. The increase was mainly due to the profit impact of higher sales volume of $457 million and favorable price realization of $212 million, partially offset by unfavorable manufacturing costs of $149 million. Unfavorable manufacturing costs largely reflected increased period manufacturing costs. Power & Energy’s segment profit as a percent of total sales was 24.6 percent in the second quarter of 2026, compared with 22.1 percent in the second quarter of 2025. 57 Table of Contents Construction Industries Construction Industries’ total sales were $8.346 billion in the second quarter of 2026, an increase of $2.156 billion, or 35 percent, compared with $6.190 billion in the second quarter of 2025. The increase in sales was mainly due to higher sales volume of $1.8 billion and favorable price realization of $309 million. Higher sales volume was primarily driven by higher sales of equipment to end users. • In North America, sales increased primarily due to higher sales volume and favorable price realization. Higher sales volume was mainly driven by higher sales of equipment to end users and by the impact from changes in dealer inventories. • Sales increased in Latin America mainly due to higher sales volume and favorable currency impacts primarily related to the Brazilian real. Higher sales volume was mainly driven by higher sales of equipment to end users. • In EAME, sales increased primarily due to higher sales volume and favorable currency impacts mainly related to the euro. Higher sales volume was primarily driven by higher sales of equipment to end users. • Sales increased in Asia/Pacific mainly due to higher sales volume. Higher sales volume was primarily driven by higher sales of equipment to end users. Construction Industries’ segment profit was $1.947 billion in the second quarter of 2026, an increase of $703 million, or 57 percent, compared with $1.244 billion in the second quarter of 2025. The increase was primarily due to the profit impact of higher sales volume. Construction Industries’ segment profit as a percent of total sales was 23.3 percent in the second quarter of 2026, compared with 20.1 percent in the second quarter of 2025. Resource Industries Sales by Industry (Millions of dollars) Second Quarter 2026 Second Quarter 2025 $ Change % Change Mining, HC and Q&A* $ 3,685 $ 3,024 $ 661 22 % Rail 883 765 118 15 % External Sales 4,568 3,789 779 21 % Inter-segment 80 97 (17) (18 %) Total Sales $ 4,648 $ 3,886 $ 762 20 % *Heavy Construction and Quarry & Aggregates (HC and Q&A) Resource Industries’ total sales were $4.648 billion in the second quarter of 2026, an increase of $762 million, or 20 percent, compared with $3.886 billion in the second quarter of 2025. The increase was primarily due to higher sales volume. Higher sales volume was primarily driven by higher sales of equipment to end users. • Mining, Heavy Construction and Quarry & Aggregates – Sales increased primarily due to higher sales of equipment to end users. • Rail – Sales increased due to higher international locomotive deliveries. Sales also increased in rail services. Resource Industries’ segment profit was $693 million in the second quarter of 2026, an increase of $130 million, or 23 percent, compared with $563 million in the second quarter of 2025. The increase was mainly due to the profit impact of higher sales volume of $269 million, partially offset by unfavorable manufacturing costs of $158 million. Unfavorable manufacturing costs primarily reflected increased period manufacturing costs. Resource Industries’ segment profit as a percent of total sales was 14.9 percent in the second quarter of 2026, compared with 14.5 percent in the second quarter of 2025. 58 Table of Contents Financial Products Segment Financial Products’ segment revenues were $1.145 billion in the second quarter of 2026, an increase of $103 million, or 10 percent, compared with $1.042 billion in the second quarter of 2025. The increase was primarily due to a favorable impact from higher average earning assets across all regions. Financial Products’ segment profit was $328 million in the second quarter of 2026, an increase of $80 million, or 32 percent, compared with $248 million in the second quarter of 2025. The increase was mainly due to favorable impacts from higher average earning assets of $44 million, equity securities at Insurance Services of $22 million and higher margins at Insurance Services of $21 million, partially offset by higher provision for credit losses at Cat Financial of $22 million. At the end of the second quarter of 2026, past dues at Cat Financial were 1.31 percent, compared with 1.62 percent at the end of the second quarter of 2025. Write-offs, net of recoveries, were $20 million for the second quarter of 2026 compared with $18 million for the second quarter of 2025. As of June 30, 2026, Cat Financial's allowance for credit losses totaled $294 million, or 0.84 percent of finance receivables, compared with $283 million, or 0.86 percent of finance receivables at March 31, 2026. The allowance for credit losses at year-end 2025 was $284 million, or 0.86 percent of finance receivables. Corporate Items and Eliminations Expense for corporate items and eliminations was $518 million in the second quarter of 2026, a decrease of $84 million from the second quarter of 2025. This decrease was due to timing differences, which included the majority of the expected IEEPA tariff recoveries recorded in the second quarter of 2026, and favorable impacts of segment reporting methodology differences. This was partially offset by higher corporate costs, higher restructuring costs and an unfavorable change in fair value adjustments related to deferred compensation plans. In the second quarter of 2026, restructuring costs increased primarily due to the divestiture of certain non-U.S. entities. 59 Table of Contents SIX MONTHS ENDED JUNE 30, 2026 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2025 CONSOLIDATED SALES AND REVENUES The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the six months ended June 30, 2025 (at left) and the six months ended June 30, 2026 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. Total sales and revenues were $37.958 billion for the six months ended June 30, 2026, an increase of $7.140 billion, or 23 percent, compared with $30.818 billion for the six months ended June 30, 2025. The increase was primarily due to higher sales volume of $5.4 billion and favorable price realization of $1.0 billion. The increase in sales volume was mainly driven by higher sales of equipment to end users and the impact from changes in dealer inventories. Dealer inventory increased more during the six months ended June 30, 2026 than during the six months ended June 30, 2025. Sales were higher across the three primary segments. North America sales increased 37 percent primarily due to higher sales volume and favorable price realization. The increase in sales volume was mainly driven by higher sales of equipment to end users and the impact from changes in dealer inventories. Dealer inventory increased more during the six months ended June 30, 2026 than during the six months ended June 30, 2025. Sales increased 7 percent in Latin America mainly due to higher sales volume. The increase in sales volume was primarily driven by higher sales of equipment to end users. EAME sales increased 17 percent primarily due to higher sales volume and favorable currency impacts mainly related to the euro. The increase in sales volume was primarily driven by the impact from changes in dealer inventories. Dealer inventory increased more during the six months ended June 30, 2026, than during the six months ended June 30, 2025. Sales increased 4 percent in Asia/Pacific mainly due favorable currency impacts primarily related to the Australian dollar. Dealer inventory increased $2.6 billion during the six months ended June 30, 2026, compared with an increase of $200 million during the six months ended June 30, 2025. Construction Industries' dealer inventory increased $1.9 billion during the six months ended June 30, 2026, compared with a decrease of $400 million during the six months ended June 30, 2025. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. 60 Table of Contents Sales and Revenues by Segment (Millions of dollars) Six Months Ended June 30, 2025 Sales Volume Price Realization Currency Inter-Segment / Other Six Months Ended June 30, 2026 $ Change % Change Power & Energy $ 12,820 $ 1,576 $ 320 $ 164 $ 389 $ 15,269 $ 2,449 19 % Construction Industries 11,374 3,214 665 217 37 15,507 4,133 36 % Resource Industries 7,547 724 36 143 (5) 8,445 898 12 % All Other Segment 155 2 1 — 3 161 6 4 % Corporate Items and Eliminations (2,844) (85) (1) 26 (424) (3,328) (484) Machinery, Power & Energy Sales 29,052 5,431 1,021 550 — 36,054 7,002 24 % Financial Products Segment 2,049 — — — 192 2,241 192 9 % Corporate Items and Eliminations (283) — — — (54) (337) (54) Financial Products Revenues 1,766 — — — 138 1,904 138 8 % Consolidated Sales and Revenues $ 30,818 $ 5,431 $ 1,021 $ 550 $ 138 $ 37,958 $ 7,140 23 % Sales and Revenues by Geographic Region North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues (Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg Six Months Ended June 30, 2026 Power & Energy $ 7,682 31 % $ 651 (15 %) $ 2,489 7 % $ 1,686 13 % $ 12,508 20 % $ 2,761 16 % $ 15,269 19 % Construction Industries 9,357 49 % 1,326 27 % 2,655 29 % 2,025 7 % 15,363 36 % 144 35 % 15,507 36 % Resource Industries 4,066 24 % 1,243 4 % 1,273 16 % 1,696 (6 %) 8,278 12 % 167 (3 %) 8,445 12 % All Other Segment 16 14 % 1 — % 5 150 % 5 (38 %) 27 13 % 134 2 % 161 4 % Corporate Items and Eliminations (106) 1 (5) (12) (122) (3,206) (3,328) Machinery, Power & Energy Sales 21,015 37 % 3,222 7 % 6,417 17 % 5,400 4 % 36,054 24 % — — % 36,054 24 % Financial Products Segment 1,506 9 % 233 14 % 270 9 % 232 9 % 2,241 1 9 % — — % 2,241 9 % Corporate Items and Eliminations (197) (42) (54) (44) (337) — (337) Financial Products Revenues 1,309 8 % 191 16 % 216 2 % 188 9 % 1,904 8 % — — % 1,904 8 % Consolidated Sales and Revenues $ 22,324 35 % $ 3,413 8 % $ 6,633 17 % $ 5,588 4 % $ 37,958 23 % $ — — % $ 37,958 23 % Six Months Ended June 30, 2025 Power & Energy $ 5,850 $ 768 $ 2,332 $ 1,498 $ 10,448 $ 2,372 $ 12,820 Construction Industries 6,273 1,044 2,052 1,898 11,267 107 11,374 Resource Industries 3,278 1,198 1,094 1,805 7,375 172 7,547 All Other Segment 14 — 2 8 24 131 155 Corporate Items and Eliminations (43) (4) (5) (10) (62) (2,782) (2,844) Machinery, Power & Energy Sales 15,372 3,006 5,475 5,199 29,052 — 29,052 Financial Products Segment 1,385 204 248 212 2,049 1 — 2,049 Corporate Items and Eliminations (168) (39) (37) (39) (283) — (283) Financial Products Revenues 1,217 165 211 173 1,766 — 1,766 Consolidated Sales and Revenues $ 16,589 $ 3,171 $ 5,686 $ 5,372 $ 30,818 $ — $ 30,818 1 Includes revenues from Machinery, Power & Energy of $393 million and $335 million for the six months ended June 30, 2026 and 2025, respectively. 61 Table of Contents CONSOLIDATED OPERATING PROFIT The chart above graphically illustrates reasons for the change in consolidated operating profit between the six months ended June 30, 2025 (at left) and the six months ended June 30, 2026 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Power & Energy’s other operating (income) expenses. Operating profit for the six months ended June 30, 2026, was $7.380 billion, an increase of $1.941 billion, or 36 percent, compared with $5.439 billion for the six months ended June 30, 2025. The increase was primarily due to the profit impact of higher sales volume. Operating profit for the six months ended June 30, 2026 included $392 million of expected IEEPA tariff recoveries. Operating profit margin was 19.4 percent for the six months ended June 30, 2026, compared with 17.6 percent for the six months ended June 30, 2025. Profit (Loss) by Segment (Millions of dollars) Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 $ Change % Change Power & Energy $ 3,477 $ 2,842 $ 635 22 % Construction Industries 3,482 2,268 1,214 54 % Resource Industries 1,071 1,186 (115) (10 %) All Other Segment (43) (19) (24) (126 %) Corporate Items and Eliminations (774) (967) 193 Machinery, Power & Energy 7,213 5,310 1,903 36 % Financial Products Segment 573 463 110 24 % Corporate Items and Eliminations (73) (50) (23) Financial Products 500 413 87 21 % Consolidating Adjustments (333) (284) (49) Consolidated Operating Profit $ 7,380 $ 5,439 $ 1,941 36 % 62 Table of Contents Other Profit/Loss and Tax Items • Interest expense excluding Financial Products for the six months ended June 30, 2026, was $269 million, compared with $242 million for the six months ended June 30, 2025. The increase was primarily due to higher average debt outstanding. • Other income (expense) for the six months ended June 30, 2026, was income of $658 million, compared with income of $191 million for the six months ended June 30, 2025. The change was primarily driven by favorable impacts from foreign currency, total return swap contracts and investment and interest income. • The effective tax rate for the six months ended June 30, 2026 was 22.2 percent compared to 22.6 percent for the six months ended June 30, 2025. Excluding the discrete items discussed below, the estimated annual effective tax rate was 23.0 percent for the six months ended June 30, 2026 and June 30, 2025. A discrete tax benefit of $94 million was recorded in the six months ended June 30, 2026 for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense, compared with $18 million for the six months ended June 30, 2025. In addition, the 2026 estimated annual effective tax rate excluded the impact of losses of $139 million for the divestiture of certain non-U.S. entities with no related tax benefit. Please see a reconciliation of GAAP to non-GAAP financial measures on pages 71 - 73 . Power & Energy Sales by Application (Millions of dollars) Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 $ Change % Change Power Generation $ 5,915 $ 4,403 $ 1,512 34 % Oil and Gas 3,467 3,125 342 11 % Industrial 3,126 2,920 206 7 % External Sales 12,508 10,448 2,060 20 % Inter-segment 2,761 2,372 389 16 % Total Sales $ 15,269 $ 12,820 $ 2,449 19 % Power & Energy’s total sales were $15.269 billion for the six months ended June 30, 2026, an increase of $2.449 billion, or 19 percent, compared with $12.820 billion for the six months ended June 30, 2025. The increase was primarily due to higher sales volume of $1.6 billion and higher inter-segment sales of $389 million. • Power Generation – Sales increased in large reciprocating engines and in turbines and turbine-related services, primarily in data center applications. • Oil and Gas – Sales increased in reciprocating engines used in gas compression applications and in reciprocating engine aftermarket parts. Sales also increased in turbines and turbine-related services. • Industrial – Sales increased primarily in North America and EAME. Power & Energy’s profit was $3.477 billion for the six months ended June 30, 2026, an increase of $635 million, or 22 percent, compared with $2.842 billion for the six months ended June 30, 2025. The increase was mainly due to the profit impact of higher sales volume of $892 million and favorable price realization of $320 million, partially offset by unfavorable manufacturing costs of $495 million. Unfavorable manufacturing costs primarily reflected increased period manufacturing costs. Power & Energy’s profit as a percent of total sales was 22.8 percent for the six months ended June 30, 2026, compared with 22.2 percent for the six months ended June 30, 2025. 63 Table of Contents Construction Industries Construction Industries’ total sales were $15.507 billion for the six months ended June 30, 2026, an increase of $4.133 billion, or 36 percent, compared with $11.374 billion for the six months ended June 30, 2025. The increase was primarily due to higher sales volume of $3.2 billion and favorable price realization of $665 million. Higher sales volume was mainly driven by the impact from changes in dealer inventories and higher sales of equipment to end users. Dealer inventory increased during the six months ended June 30, 2026, compared with a decrease during the six months ended June 30, 2025. • In North America, sales increased due to higher sales volume and favorable price realization. Higher sales volume was mainly driven by the impact from changes in dealer inventories and higher sales of equipment to end users. • Sales increased in Latin America mainly due to higher sales volume and favorable currency impacts primary related to the Brazilian real. Higher sales volume was mainly driven by higher sales of equipment to end users. • In EAME, sales increased primarily due to higher sales volume and favorable currency impacts mainly related to the euro. Higher sales volume was primarily driven by the impact from changes in dealer inventories. • Sales increased in Asia/Pacific due to favorable price realization, higher sales volume and favorable currency impacts primarily related to the Australian dollar. Higher sales volume was mainly driven by higher sales of equipment to end users. Construction Industries’ profit was $3.482 billion for the six months ended June 30, 2026, an increase of $1.214 billion, or 54 percent, compared with $2.268 billion for the six months ended June 30, 2025. The increase was primarily due to the profit impact of higher sales volume. Construction Industries’ profit as a percent of total sales was 22.5 percent for the six months ended June 30, 2026, compared with 19.9 percent for the six months ended June 30, 2025. Resource Industries Sales by Industry (Millions of dollars) Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 $ Change % Change Mining, HC and Q&A* $ 6,639 $ 5,866 $ 773 13 % Rail 1,639 1,509 130 9 % External Sales 8,278 7,375 903 12 % Inter-segment 167 172 (5) (3 %) Total Sales $ 8,445 $ 7,547 $ 898 12 % *Heavy Construction and Quarry & Aggregates (HC and Q&A) Resource Industries’ total sales were $8.445 billion for the six months ended June 30, 2026, an increase of $898 million, or 12 percent, compared with $7.547 billion for the six months ended June 30, 2025. The increase was primarily due to higher sales volume. The increase in sales volume was mainly due to higher sales of equipment to end users. • Mining, Heavy Construction and Quarry & Aggregates – Sales increased primarily due to higher sales of equipment to end users. • Rail – Sales increased due to higher international locomotive deliveries. Sales also increased in rail services. Resource Industries’ profit was $1.071 billion for the six months ended June 30, 2026, a decrease of $115 million, or 10 percent, compared with $1.186 billion for the six months ended June 30, 2025. The decrease was mainly due to unfavorable manufacturing costs of $376 million and higher SG&A/R&D expenses of $113 million, partially offset by the profit impact of higher sales volume of $333 million and favorable price realization of $36 million. Unfavorable manufacturing costs largely reflected higher tariff costs. The increase in SG&A/R&D expenses was primarily driven by higher compensation expenses. Resource Industries’ profit as a percent of total sales was 12.7 percent for the six months ended June 30, 2026, compared with 15.7 percent for the six months ended June 30, 2025. 64 Table of Contents Financial Products Segment Financial Products’ segment revenues were $2.241 billion for the six months ended June 30, 2026, an increase of $192 million, or 9 percent, compared with $2.049 billion for the six months ended June 30, 2025. The increase was primarily due to a favorable impact from higher average earning assets across all regions. Financial Products’ segment profit was $573 million for the six months ended June 30, 2026, an increase of $110 million, or 24 percent, compared with $463 million for the six months ended June 30, 2025. The increase was mainly due to favorable impacts from higher average earning assets of $85 million and higher margins at Insurance Services of $30 million. Corporate Items and Eliminations Expense for corporate items and eliminations was $847 million for the six months ended June 30, 2026, a decrease of $170 million from the six months ended June 30, 2025, mainly driven by decreased expenses due to timing differences, which included the majority of the expected IEEPA tariff recoveries recorded in the six months ended June 30, 2026, and favorable impacts of segment reporting methodology differences, partially offset by higher corporate costs, higher restructuring costs and an unfavorable change in fair value adjustments related to deferred compensation plans. For the six months ended June 30, 2026, restructuring costs increased primarily due to the divestiture of certain non-U.S. entities. RESTRUCTURING COSTS In 2026, we expect to incur about $300 million to $350 million of restructuring costs. We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold and SG&A expenses, of about $39 million in 2026 compared with 2025. Additional information related to restructuring costs is included in Note 20 – "Restructuring income/costs" of Part I, Item 1 "Financial Statements." GLOSSARY OF TERMS 1. Adjusted Operating Profit Margin – Operating profit excluding restructuring income/costs as a percentage of sales and revenues. 2. Adjusted Profit Per Share – Profit per share excluding restructuring income/costs. 3. All Other Segment – Primarily includes activities such as: business strategy; product management and development; parts distribution; integrated logistics solutions; electronics and control systems; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; research and development for automation, electronics and software for machines and engines and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. 4. Consolidating Adjustments – Elimination of transactions between Machinery, Power & Energy and Financial Products. 5. Construction Industries – A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes asphalt pavers; backhoe loaders; cold planers; compactors; compact track loaders; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; track-type loaders; track-type tractors (small, medium); track excavators (mini, small, medium, large); wheel excavators; wheel loaders (compact, small, medium); and related parts and work tools. 6. Corporate Items and Eliminations – Includes corporate-level expenses, timing differences (as some expenses are reported in segment profit on a cash basis), methodology differences between segment and consolidated external reporting, certain restructuring costs and inter-segment eliminations. 65 Table of Contents 7. Currency – With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency only includes the impact on sales and operating profit for the Machinery, Power & Energy line of business; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates (hedging) and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results (translation). 8. Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts. 9. EAME – A geographic region including Europe, Africa, the Middle East and Eurasia. 10. Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases net of accumulated depreciation at Cat Financial. 11. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. 12. Financial Products Segment – Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that incorporate Caterpillar products. Financing plans include operating and finance leases, revolving charge accounts, installment sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans, extended service coverage and maintenance plans for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from Machinery, Power & Energy, but the related costs are not allocated to operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/expense items. 13. Latin America – A geographic region including Central and South American countries, Caribbean and Mexico. 14. Machinery, Power & Energy (MP&E) – The company defines MP&E as Caterpillar Inc. and its subsidiaries, excluding Financial Products. MP&E’s information relates to the design, manufacturing and marketing of its products. 15. Machinery, Power & Energy Other Operating (Income) Expenses – Comprised primarily of gains/losses on disposal of long-lived assets, gains/losses on divestitures and legal settlements and accruals. 16. Manufacturing Costs – Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume, such as freight, power to operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management. 17. Mark-to-market gains/losses – Represents the net gain or loss of actual results differing from the company’s assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and losses are immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement. 18. Pension and Other Postemployment Benefits (OPEB) – The company’s defined-benefit pension and postretirement benefit plans. 66 Table of Contents 19. Power & Energy – A segment primarily responsible for supporting customers using reciprocating engines, turbines and related services across industries serving Power Generation, Oil and Gas and Industrial applications, including marine applications and product support of on-highway engines. Responsibilities include business strategy, product design, product management, development and testing, manufacturing, marketing and sales and product support. The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the oil and gas industry; reciprocating engines, drivetrain and integrated systems and solutions supplied to the industrial industry as well as Caterpillar machines; and electrified powertrain and zero-emission power sources and service solutions. Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and engine and machine components and remanufacturing services for other companies. 20. Price Realization – The impact of net price changes excluding currency and new product introductions. Price realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between geographic regions. 21. Resource Industries – A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates as well as customers using locomotives and rail-related products and services. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; wide-body trucks; select work tools; machinery components; wear and maintenance components and related parts; diesel-electric, hybrid and battery-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing. In addition, Resource Industries sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated component design and manufacturing and research and development for hydraulic systems and cabs. 22. Restructuring income/costs – May include costs for employee separation, long-lived asset impairments, contract terminations and (gains)/losses on divestitures. These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense). Restructuring costs also include other exit-related costs, which may consist of accelerated depreciation, inventory write-downs, building demolition, equipment relocation and project management costs and LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. 23. Sales Volume – With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery, Power & Energy as well as the incremental sales impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery, Power & Energy combined with product mix as well as the net operating profit impact of new product introductions, including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Power & Energy sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales. 24. Services – Machinery, Power & Energy services revenues include, but are not limited to, aftermarket parts and other service-related revenues and exclude most Financial Products revenues, discontinued products and captive dealer services. LIQUIDITY AND CAPITAL RESOURCES Sources of funds We generate significant capital resources from operating activities, which are the primary source of funding for our MP&E operations. Funding for these businesses is also available from commercial paper, revolving credit facility and long-term debt issuances. Financial Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. On a consolidated basis, we had positive operating cash flow in the first six months of 2026 and ended the second quarter with $6.713 billion of cash, a decrease of $3.267 billion from year-end 2025. In addition, MP&E invests in available-for-sale debt securities and bank time deposits that are considered highly liquid and are available for current operations. These MP&E securities were $1.517 billion as of June 30, 2026 and are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position. We intend to maintain a strong cash and liquidity position. 67 Table of Contents Consolidated operating cash flow for the first six months of 2026 was $6.241 billion, up $1.830 billion compared to the same period a year ago. The increase was primarily due to higher profit before taxes adjusted for non-cash items. Total debt as of June 30, 2026 was $45.146 billion, an increase of $1.816 billion from year-end 2025. Debt related to MP&E decreased $7 million in the first six months of 2026. Debt related to Financial Products increased $1.839 billion. As of June 30, 2026, we had three global credit facilities with a syndicate of banks totaling $11.500 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to MP&E as of June 30, 2026 was $2.875 billion. Information on our Credit Facility is as follows: • The 364-day facility of $3.500 billion (of which $875 million is available to MP&E) expires in August 2026. • The three-year facility, as amended in August 2025, of $3.000 billion (of which $750 million is available to MP&E) expires in August 2028. • The five-year facility, as amended in August 2025, of $5.000 billion (of which $1.250 billion is available to MP&E) expires in August 2030. At June 30, 2026, Caterpillar’s consolidated net worth was $19.463 billion, which was above the $9.000 billion required covenant in the Credit Facility. The consolidated net worth is defined in the Credit Facility as Caterpillar's consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss). At June 30, 2026, Cat Financial’s covenant interest coverage ratio was 1.54 to 1. This was above the 1.15 to 1 minimum ratio calculated as (1) profit excluding income taxes, interest expense and net gain (loss) from interest rate derivatives to (2) interest expense calculated at the end of each fiscal quarter for the prior four consecutive fiscal quarter periods, required in the Credit Facility. In addition, at June 30, 2026, Cat Financial’s six-month covenant leverage ratio was 7.96 to 1. This was below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required in the Credit Facility. In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At June 30, 2026, there were no borrowings under the Credit Facility. The aforementioned financial covenants are being reported as calculated under the Credit Facility and not pursuant to U.S. GAAP. Please refer to the credit agreements governing the Credit Facility filed as an exhibit to our periodic reports for further information related to the calculation thereof. For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor "Restrictive covenants in our debt agreements could limit our financial and operating flexibility" set forth in Part I, Item 1A of our most recent annual report on Form 10-K. 68 Table of Contents Our total credit commitments and available credit as of June 30, 2026 were: June 30, 2026 (Millions of dollars) Consolidated Machinery, Power & Energy Financial Products Credit lines available: Global credit facilities $ 11,500 $ 2,875 $ 8,625 Other external 4,250 899 3,351 Total credit lines available 15,750 3,774 11,976 Less: Commercial paper outstanding (4,901) — (4,901) Less: Utilized credit (835) — (835) Available credit $ 10,014 $ 3,774 $ 6,240 The other external consolidated credit lines with banks as of June 30, 2026 totaled $4.250 billion. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines. We receive debt ratings from the major credit rating agencies. Fitch and Moody's maintain a "high-A" debt rating, while S&P maintains a "mid-A" debt rating. A downgrade of our credit ratings by any of the major credit rating agencies could result in increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, MP&E’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities. Our Financial Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our committed credit facilities and other credit line facilities of Cat Financial, and borrowings from Caterpillar. In addition, we maintain a support agreement with Cat Financial, which requires Caterpillar to remain the sole owner of Cat Financial and may, under certain circumstances, require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios. We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. We account for the payments made under the Programs, the same as other accounts payable, as a reduction to our cash flows from operations. We do not believe that changes in the availability of the programs will have a significant impact on our liquidity. Additional information related to the programs is included in Note 21 – "Supplier finance programs" of Part I, Item 1 "Financial Statements." Machinery, Power & Energy Net cash provided by operating activities was $7.011 billion in the first six months of 2026, compared with net cash provided of $3.862 billion for the same period in 2025. The increase was primarily due to higher profit before taxes, adjusted for non-cash items; favorable changes to customer advances, accounts payable and accrued wages, salaries and employee benefits; and lower cash taxes paid. These increases were partially offset by unfavorable changes in receivables and inventories. Net cash used for investing activities in the first six months of 2026 was $2.195 billion, compared with net cash used of $1.530 billion in the first six months of 2025. The change was due to higher investments and acquisitions, primarily due to the acquisition of RPMGlobal, lower proceeds from maturities and sale of securities, and higher investments in securities. These changes were partially offset by changes in activity related to intercompany lending with Financial Products. For additional information related to the acquisition of RPMGlobal, see Note 22 - "Acquisitions" of Part I, Item 1 "Financial Statements." Net cash used for financing activities during the first six months of 2026 was $8.158 billion, compared with net cash used of $4.050 billion in the same period of 2025. The change was primarily due to higher payments to purchase common stock and lower proceeds from debt issued. While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our resource allocation framework is focused on the following priorities. Our top priority is to maintain a strong financial position in support of a mid-A rating. Next, we intend to fund operational commitments and strategic growth initiatives assessed using the Operating & Execution Model. Then, we intend to return capital to shareholders through dividend growth and share repurchases. Additional information on the resource allocation framework is as follows: 69 Table of Contents Strong financial position – Our top priority is to maintain a strong financial position in support of a mid-A rating. We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our resource allocation framework and the various methodologies used by the major credit rating agencies. Operating & Execution Model used to assess operational commitments and strategic growth initiatives – Capital expenditures were $1.313 billion during the first six months of 2026, compared to $1.287 billion for the same period in 2025. We expect MP&E’s capital expenditures in 2026 to be about $3.5 billion. We made $282 million of contributions to our pension and other postretirement benefit plans during the first six months of 2026. We currently anticipate full-year 2026 contributions of approximately $360 million. In comparison, we made $276 million of contributions to our pension and other postretirement benefit plans during the first six months of 2025. We intend to utilize our liquidity and debt capacity to fund initiatives targeted to drive long term profitable growth focused on our three strategic growth pillars. Our strategic growth pillars are commercial excellence, advanced technology leadership and transforming how we work. These pillars work together to drive sustainable growth, innovation and operational efficiency for Caterpillar and our customers. Return to shareholders – Our goal is to return substantially all MP&E free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating. MP&E free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases. We define MP&E free cash flow as cash from MP&E operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions. Each quarter, our Board of Directors reviews the company’s dividend for the applicable quarter. The Board evaluates the financial condition of the company and considers corporate cash flow, the company’s liquidity needs, the economic outlook, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend. In June 2026, the Board of Directors approved an eight percent increase in the quarterly dividend to $1.63 per share, and we continue to expect our strong financial position to support the dividend. Dividends paid totaled $1.399 billion in the first six months of 2026. Our share repurchase plans are subject to the company’s resource allocation framework and are evaluated on an ongoing basis considering the financial condition of the company, corporate cash flow, the company’s liquidity needs, the economic outlook, and the health and stability of global credit markets. The timing and amount of future repurchases may vary depending on market conditions and investing priorities. In June 2024, the Board approved a share repurchase authorization (the 2024 Authorization) of up to $20.0 billion of Caterpillar common stock, effective June 12, 2024, with no expiration. In the first six months of 2026, we deployed $6.522 billion of cash for repurchases of Caterpillar common stock. As of June 30, 2026, $8.415 billion remained available under the 2024 Authorization. Our basic shares outstanding as of June 30, 2026 were approximately 460 million. Financial Products Net cash provided by operating activities was $614 million in the first six months of 2026, compared with $597 million for the same period in 2025. Net cash used for investing activities was $2.580 billion in the first six months of 2026, compared with $990 million for the same period in 2025. The change was primarily due to portfolio-related activity. Net cash provided by financing activities was $2.077 billion in the first six months of 2026, compared with $670 million for the same period in 2025. The change was due to increased external borrowing activity, partially offset by decreased intercompany borrowings from MP&E. RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements, see Note 2 – “New accounting guidance” of Part I, Item 1 "Financial Statements." 70 Table of Contents CRITICAL ACCOUNTING ESTIMATES For a discussion of the company’s critical accounting estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our 2025 Annual Report on Form 10-K. OTHER MATTERS Information related to legal proceedings appears in Note 14 – "Environmental and legal matters" of Part I, Item 1 “Financial Statements.” Order Backlog At the end of the second quarter of 2026, the dollar amount of backlog believed to be firm was approximately $72.1 billion, about $9.4 billion higher than the first quarter of 2026. The order backlog increased across the three primary segments, with the largest increase in Power & Energy. Of the total backlog at June 30, 2026, approximately $29.2 billion was not expected to be filled in the following twelve months. NON-GAAP FINANCIAL MEASURES We provide the following definitions for the non-GAAP financial measures used in this report. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. We believe it is important to separately quantify the profit impact of two significant items in order for the company’s results to be meaningful to our readers. These items consist of (i) restructuring costs related to the divestiture of certain non-U.S. entities in 2026 and (ii) other restructuring income/costs. We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing the company’s period-over-period results. Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows: (Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Profit Profit per Share Three Months Ended June 30, 2026 - U.S. GAAP $ 4,295 20.9 % $ 4,558 $ 1,055 $ 3,593 $ 7.77 Restructuring costs - divestiture of certain non-U.S. entities 139 0.7 % 139 — 139 0.30 Other restructuring (income) costs 63 0.3 % 63 15 48 0.10 Three Months Ended June 30, 2026 - Adjusted $ 4,497 21.9 % $ 4,760 $ 1,070 $ 3,780 $ 8.17 Three Months Ended June 30, 2025 - U.S. GAAP $ 2,860 17.3 % $ 2,818 $ 646 $ 2,179 $ 4.62 Other restructuring (income) costs 56 0.3 % 56 12 47 0.10 Three Months Ended June 30, 2025 - Adjusted $ 2,916 17.6 % $ 2,874 $ 658 $ 2,226 $ 4.72 Six Months Ended June 30, 2026 - U.S. GAAP $ 7,380 19.4 % $ 7,769 $ 1,725 $ 6,142 $ 13.23 Restructuring costs - divestiture of certain non-U.S. entities 139 0.4 % 139 — 139 0.30 Other restructuring (income) costs 104 0.3 % 104 24 80 0.17 Six Months Ended June 30, 2026 - Adjusted $ 7,623 20.1 % $ 8,012 $ 1,749 $ 6,361 $ 13.70 Six Months Ended June 30, 2025 - U.S. GAAP $ 5,439 17.6 % $ 5,388 $ 1,220 $ 4,182 $ 8.82 Other restructuring (income) costs 88 0.3 % 89 20 72 0.15 Six Months Ended June 30, 2025 - Adjusted $ 5,527 17.9 % $ 5,477 $ 1,240 $ 4,254 $ 8.97 71 Table of Contents We believe it is important to separately disclose our annual effective tax rate, excluding discrete items for our results to be meaningful to our readers. The annual effective tax rate is discussed using non-GAAP financial measures that exclude the effects of amounts associated with discrete items recorded fully in the quarter they occur. These items consist of (i) restructuring costs related to the divestiture of certain non-U.S. entities in 2026 and (ii) the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. We believe the non-GAAP measures will provide investors with useful perspective on underlying business results and trends and aids with assessing the company's period-over-period results. A reconciliation of our effective tax rate to annual effective tax rate, excluding discrete items is below: (Millions of dollars) Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate Three Months Ended June 30, 2026 - U.S. GAAP $ 4,558 $ 1,055 23.1 % Restructuring costs - divestiture of certain non-U.S. entities 139 — Excess stock-based compensation — 26 Annual effective tax rate, excluding discrete items 4,697 1,081 23.0 % Excess stock-based compensation — (26) Other restructuring (income) costs 63 15 Three Months Ended June 30, 2026 - Adjusted $ 4,760 $ 1,070 Three Months Ended June 30, 2025 - U.S. GAAP $ 2,818 $ 646 23.0 % Excess stock-based compensation — 1 Annual effective tax rate, excluding discrete items 2,818 647 23.0 % Excess stock-based compensation — (1) Other restructuring (income) costs 56 12 Three Months Ended June 30, 2025 - Adjusted $ 2,874 $ 658 Six Months Ended June 30, 2026 - U.S. GAAP $ 7,769 $ 1,725 22.2 % Restructuring costs - divestiture of certain non-U.S. entities 139 — Excess stock-based compensation — 94 Annual effective tax rate, excluding discrete items 7,908 1,819 23.0 % Excess stock-based compensation — (94) Other restructuring (income) costs 104 24 Six Months Ended June 30, 2026 - Adjusted $ 8,012 $ 1,749 Six Months Ended June 30, 2025 - U.S. GAAP $ 5,388 $ 1,220 22.6 % Excess stock-based compensation — 18 Annual effective tax rate, excluding discrete items 5,388 1,238 23.0 % Excess stock-based compensation — (18) Other restructuring (income) costs 89 20 Six Months Ended June 30, 2025 - Adjusted $ 5,477 $ 1,240 72 Table of Contents In addition, we provide a calculation of MP&E free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases. Reconciliations of MP&E free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities are as follows: (Millions of dollars) Six Months Ended June 30, 2026 2025 MP&E net cash provided by operating activities 1 $ 7,011 $ 3,862 MP&E capital expenditures (1,313) (1,287) MP&E free cash flow $ 5,698 $ 2,575 1 See reconciliation of MP&E net cash provided by operating activities to consolidated net cash provided by operating activities on pages 80 - 81 . Supplemental Consolidating Data We are providing supplemental consolidating data for the purpose of additional analysis. The data has been grouped as follows: Consolidated – Caterpillar Inc. and its subsidiaries. Machinery, Power & Energy – The company defines MP&E as Caterpillar Inc. and its subsidiaries, excluding Financial Products. MP&E’s information relates to the design, manufacturing and marketing of its products. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. Consolidating Adjustments – Elimination of transactions between Machinery, Power & Energy and Financial Products. The nature of the MP&E and Financial Products businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. We believe this presentation will assist readers in understanding our business. Pages 74 - 81 reconcile MP&E and Financial Products to Caterpillar Inc. consolidated financial information. 73 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Three Months Ended June 30, 2026 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Power & Energy $ 19,581 $ 19,581 $ — $ — Revenues of Financial Products 962 — 1,188 (226) 1 Total sales and revenues 20,543 19,581 1,188 (226) Operating costs: Cost of goods sold 12,781 12,783 — (2) 2 Selling, general and administrative expenses 2,018 1,800 223 (5) 2 Research and development expenses 616 616 — — Interest expense of Financial Products 362 — 374 (12) 2 Other operating (income) expenses 471 168 328 (25) 2 Total operating costs 16,248 15,367 925 (44) Operating profit 4,295 4,214 263 (182) Interest expense excluding Financial Products 135 141 — (6) 3 Other income (expense) 398 163 59 176 4 Consolidated profit before taxes 4,558 4,236 322 — Provision (benefit) for income taxes 1,055 963 92 — Profit of consolidated companies 3,503 3,273 230 — Equity in profit (loss) of unconsolidated affiliated companies 90 90 — — Profit of consolidated and affiliated companies 3,593 3,363 230 — Less: Profit (loss) attributable to noncontrolling interests — — — — Profit 5 $ 3,593 $ 3,363 $ 230 $ — 1 Elimination of Financial Products’ revenues earned from MP&E. 2 Elimination of net expenses recorded between MP&E and Financial Products. 3 Elimination of interest expense recorded between Financial Products and MP&E. 4 Elimination of discount recorded by MP&E on receivables sold to Financial Products and of interest earned between MP&E and Financial Products as well as dividends paid by Financial Products to MP&E. 5 Profit attributable to common shareholders. 74 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Six Months Ended June 30, 2026 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Power & Energy $ 36,054 $ 36,054 $ — $ — Revenues of Financial Products 1,904 — 2,331 (427) 1 Total sales and revenues 37,958 36,054 2,331 (427) Operating costs: Cost of goods sold 24,087 24,091 — (4) 2 Selling, general and administrative expenses 3,834 3,409 445 (20) 2 Research and development expenses 1,153 1,153 — — Interest expense of Financial Products 707 — 730 (23) 2 Other operating (income) expenses 797 188 656 (47) 2 Total operating costs 30,578 28,841 1,831 (94) Operating profit 7,380 7,213 500 (333) Interest expense excluding Financial Products 269 281 — (12) 3 Other income (expense) 658 262 75 321 4 Consolidated profit before taxes 7,769 7,194 575 — Provision (benefit) for income taxes 1,725 1,570 155 — Profit of consolidated companies 6,044 5,624 420 — Equity in profit (loss) of unconsolidated affiliated companies 97 97 — — Profit of consolidated and affiliated companies 6,141 5,721 420 — Less: Profit (loss) attributable to noncontrolling interests (1) (1) — — Profit 5 $ 6,142 $ 5,722 $ 420 $ — 1 Elimination of Financial Products’ revenues earned from MP&E. 2 Elimination of net expenses recorded between MP&E and Financial Products. 3 Elimination of interest expense recorded between Financial Products and MP&E. 4 Elimination of discount recorded by MP&E on receivables sold to Financial Products and of interest earned between MP&E and Financial Products as well as dividends paid by Financial Products to MP&E. 5 Profit attributable to common shareholders. 75 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Three Months Ended June 30, 2025 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Power & Energy $ 15,674 $ 15,674 $ — $ — Revenues of Financial Products 895 — 1,081 (186) 1 Total sales and revenues 16,569 15,674 1,081 (186) Operating costs: Cost of goods sold 10,807 10,809 — (2) 2 Selling, general and administrative expenses 1,694 1,497 209 (12) 2 Research and development expenses 551 551 — — Interest expense of Financial Products 336 — 342 (6) 2 Other operating (income) expenses 321 22 318 (19) 2 Total operating costs 13,709 12,879 869 (39) Operating profit 2,860 2,795 212 (147) Interest expense excluding Financial Products 126 130 — (4) 3 Other income (expense) 84 (101) 42 143 4 Consolidated profit before taxes 2,818 2,564 254 — Provision (benefit) for income taxes 646 585 61 — Profit of consolidated companies 2,172 1,979 193 — Equity in profit (loss) of unconsolidated affiliated companies 7 7 — — Profit of consolidated and affiliated companies 2,179 1,986 193 — Less: Profit (loss) attributable to noncontrolling interests — (1) 1 — Profit 5 $ 2,179 $ 1,987 $ 192 $ — 1 Elimination of Financial Products’ revenues earned from MP&E. 2 Elimination of net expenses recorded by MP&E paid to Financial Products. 3 Elimination of interest expense recorded between Financial Products and MP&E. 4 Elimination of discount recorded by MP&E on receivables sold to Financial Products and of interest earned between MP&E and Financial Products as well as dividends paid by Financial Products to MP&E. 5 Profit attributable to common shareholders. 76 Table of Contents Caterpillar Inc. Supplemental Data for Results of Operations For the Six Months Ended June 30, 2025 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Sales and revenues: Sales of Machinery, Power & Energy $ 29,052 $ 29,052 $ — $ — Revenues of Financial Products 1,766 — 2,129 (363) 1 Total sales and revenues 30,818 29,052 2,129 (363) Operating costs: Cost of goods sold 19,772 19,776 — (4) 2 Selling, general and administrative expenses 3,287 2,905 405 (23) 2 Research and development expenses 1,031 1,031 — — Interest expense of Financial Products 662 — 668 (6) 2 Other operating (income) expenses 627 30 643 (46) 2 Total operating costs 25,379 23,742 1,716 (79) Operating profit 5,439 5,310 413 (284) Interest expense excluding Financial Products 242 249 — (7) 3 Other income (expense) 191 (146) 60 277 4 Consolidated profit before taxes 5,388 4,915 473 — Provision (benefit) for income taxes 1,220 1,105 115 — Profit of consolidated companies 4,168 3,810 358 — Equity in profit (loss) of unconsolidated affiliated companies 14 14 — — Profit of consolidated and affiliated companies 4,182 3,824 358 — Less: Profit (loss) attributable to noncontrolling interests — (1) 1 — Profit 5 $ 4,182 $ 3,825 $ 357 $ — 1 Elimination of Financial Products’ revenues earned from MP&E. 2 Elimination of net expenses recorded between MP&E and Financial Products. 3 Elimination of interest expense recorded between Financial Products and MP&E. 4 Elimination of discount recorded by MP&E on receivables sold to Financial Products and of interest earned between MP&E and Financial Products as well as dividends paid by Financial Products to MP&E. 5 Profit attributable to common shareholders. 77 Table of Contents Caterpillar Inc. Supplemental Data for Financial Position At June 30, 2026 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Assets Current assets: Cash and cash equivalents $ 6,713 $ 5,945 $ 768 $ — Receivables – trade and other 13,188 4,630 686 7,872 1,2 Receivables – finance 10,844 — 18,938 (8,094) 2 Prepaid expenses and other current assets 3,078 2,683 423 (28) 3 Inventories 20,627 20,627 — — Total current assets 54,450 33,885 20,815 (250) Property, plant and equipment – net 15,628 11,314 4,268 46 4 Long-term receivables – trade and other 3,086 2,721 101 264 1,2 Long-term receivables – finance 14,364 — 15,912 (1,548) 2 Noncurrent deferred and refundable income taxes 2,286 2,596 124 (434) 5 Intangible assets 420 420 — — Goodwill 5,859 5,859 — — Other assets 6,516 4,826 2,783 (1,093) 6 Total assets $ 102,609 $ 61,621 $ 44,003 $ (3,015) Liabilities Current liabilities: Short-term borrowings $ 5,046 $ — $ 5,046 $ — Accounts payable 10,313 10,275 251 (213) 7 Accrued expenses 5,825 5,069 756 — Accrued wages, salaries and employee benefits 2,148 2,098 50 — Customer advances 4,777 4,774 3 — Dividends payable 749 749 — — Other current liabilities 2,871 2,212 709 (50) 5,8,9 Long-term debt due within one year 8,061 35 8,026 — Total current liabilities 39,790 25,212 14,841 (263) Long-term debt due after one year 32,039 10,948 22,384 (1,293) 9 Liability for postemployment benefits 3,744 3,743 1 — Other liabilities 7,642 6,607 1,552 (517) 5 Total liabilities 83,215 46,510 38,778 (2,073) Commitments and contingencies Shareholders’ equity Common stock 5,654 5,654 905 (905) 10 Treasury stock (54,533) (54,533) — — Profit employed in the business 70,141 64,890 5,219 32 10 Accumulated other comprehensive income (loss) (1,867) (901) (966) — Noncontrolling interests (1) 1 67 (69) 10 Total shareholders’ equity 19,394 15,111 5,225 (942) Total liabilities and shareholders’ equity $ 102,609 $ 61,621 $ 44,003 $ (3,015) 1 Elimination of receivables between MP&E and Financial Products. 2 Reclassification of MP&E’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of MP&E’s insurance premiums that are prepaid to Financial Products. 4 Reclassification of Financial Products' other assets to property, plant and equipment. 5 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 6 Elimination of other intercompany assets and liabilities between MP&E and Financial Products. 7 Elimination of payables between MP&E and Financial Products. 8 Elimination of prepaid insurance in Financial Products’ other liabilities. 9 Elimination of debt between MP&E and Financial Products. 10 Eliminations associated with MP&E’s investments in Financial Products’ subsidiaries. 78 Table of Contents Caterpillar Inc. Supplemental Data for Financial Position At December 31, 2025 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Assets Current assets: Cash and cash equivalents $ 9,980 $ 9,333 $ 647 $ — Receivables – trade and other 10,920 3,883 657 6,380 1,2 Receivables – finance 10,649 — 17,325 (6,676) 2 Prepaid expenses and other current assets 2,801 2,448 441 (88) 3 Inventories 18,135 18,135 — — Total current assets 52,485 33,799 19,070 (384) Property, plant and equipment – net 15,140 10,985 4,106 49 4 Long-term receivables – trade and other 2,142 1,982 163 (3) 1,2 Long-term receivables – finance 14,272 — 15,538 (1,266) 2 Noncurrent deferred and refundable income taxes 2,882 3,208 133 (459) 5 Intangible assets 241 241 — — Goodwill 5,321 5,321 — — Other assets 6,102 4,525 2,651 (1,074) 6 Total assets $ 98,585 $ 60,061 $ 41,661 $ (3,137) Liabilities Current liabilities: Short-term borrowings $ 5,514 $ — $ 5,514 $ — Accounts payable 8,968 8,988 268 (288) 7 Accrued expenses 5,587 4,877 710 — Accrued wages, salaries and employee benefits 2,554 2,494 60 — Customer advances 3,314 3,311 3 — Dividends payable 703 703 — — Other current liabilities 2,798 2,259 645 (106) 5,8 Long-term debt due within one year 7,120 35 7,085 — Total current liabilities 36,558 22,667 14,285 (394) Long-term debt due after one year 30,696 10,955 21,018 (1,277) 9 Liability for postemployment benefits 3,838 3,837 1 — Other liabilities 6,175 5,162 1,516 (503) 5 Total liabilities 77,267 42,621 36,820 (2,174) Commitments and contingencies Shareholders’ equity Common stock 7,181 7,181 905 (905) 10 Treasury stock (49,539) (49,539) — — Profit employed in the business 65,448 60,639 4,799 10 10 Accumulated other comprehensive income (loss) (1,772) (843) (929) — Noncontrolling interests — 2 66 (68) 10 Total shareholders’ equity 21,318 17,440 4,841 (963) Total liabilities and shareholders’ equity $ 98,585 $ 60,061 $ 41,661 $ (3,137) 1 Elimination of receivables between MP&E and Financial Products. 2 Reclassification of MP&E’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables. 3 Elimination of MP&E’s insurance premiums that are prepaid to Financial Products. 4 Reclassification of Financial Products' other assets to property, plant and equipment. 5 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction. 6 Elimination of other intercompany assets between MP&E and Financial Products. 7 Elimination of payables between MP&E and Financial Products. 8 Elimination of prepaid insurance in Financial Products' other liabilities. 9 Elimination of debt between MP&E and Financial Products. 10 Eliminations associated with MP&E’s investments in Financial Products’ subsidiaries. 79 Table of Contents Caterpillar Inc. Supplemental Data for Cash Flow For the Six Months Ended June 30, 2026 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Cash flow from operating activities: Profit of consolidated and affiliated companies $ 6,141 $ 5,721 $ 420 $ — Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortization 1,211 812 399 — Provision (benefit) for deferred income taxes 644 666 (22) — (Gain) loss on divestiture 139 139 — — Other (22) (74) (271) 323 1 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables – trade and other (3,182) (1,356) (27) (1,799) 1,2 Inventories (2,553) (2,552) — (1) 1 Accounts payable 1,528 1,518 (65) 75 1 Accrued expenses 189 183 6 — Accrued wages, salaries and employee benefits (408) (399) (9) — Customer advances 2,576 2,576 — — Other assets – net (93) (111) 35 (17) 1 Other liabilities – net 71 (112) 148 35 1 Net cash provided by (used for) operating activities 6,241 7,011 614 (1,384) Cash flow from investing activities: Capital expenditures – excluding equipment leased to others (1,315) (1,302) (16) 3 1 Expenditures for equipment leased to others (847) (11) (840) 4 1 Proceeds from disposals of leased assets and property, plant and equipment 436 35 407 (6) 1 Additions to finance receivables (8,639) — (10,312) 1,673 2 Collections of finance receivables 8,060 — 9,188 (1,128) 2 Net intercompany purchased receivables — — (838) 838 2 Proceeds from sale of finance receivables 33 — 33 — Collections of intercompany receivables (original maturities greater than three months) — — 48 (48) 3 Investments and acquisitions (net of cash acquired) (802) (802) — — Proceeds from sale of businesses and investments (net of cash sold) (92) (92) — — Proceeds from maturities and sale of securities 734 395 339 — Investments in securities (1,155) (648) (507) — Other – net 148 230 (82) — Net cash provided by (used for) investing activities (3,439) (2,195) (2,580) 1,336 Cash flow from financing activities: Dividends paid (1,399) (1,399) — — Common stock issued, and other stock compensation transactions, net (121) (121) — — Payments to purchase common stock (6,522) (6,522) — — Excise tax paid on purchases of common stock (49) (49) — — Payments on intercompany borrowings (original maturities greater than three months) — (48) — 48 3 Proceeds from debt issued (original maturities greater than three months) 7,363 — 7,363 — Payments on debt (original maturities greater than three months) (4,763) (19) (4,744) — Short-term borrowings – net (original maturities three months or less) (542) — (542) — Net cash provided by (used for) financing activities (6,033) (8,158) 2,077 48 Effect of exchange rate changes on cash (35) (44) 9 — Increase (decrease) in cash, cash equivalents and restricted cash (3,266) (3,386) 120 — Cash, cash equivalents and restricted cash at beginning of period 9,986 9,336 650 — Cash, cash equivalents and restricted cash at end of period $ 6,720 $ 5,950 $ 770 $ — 1 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 2 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 3 Elimination of proceeds and payments to/from MP&E and Financial Products. 80 Table of Contents Caterpillar Inc. Supplemental Data for Cash Flow For the Six Months Ended June 30, 2025 (Unaudited) (Millions of dollars) Supplemental Consolidating Data Consolidated Machinery, Power & Energy Financial Products Consolidating Adjustments Cash flow from operating activities: Profit of consolidated and affiliated companies $ 4,182 $ 3,824 $ 358 $ — Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortization 1,094 716 378 — Provision (benefit) for deferred income taxes (110) (88) (22) — Other 398 357 (286) 327 1 Changes in assets and liabilities, net of acquisitions and divestitures: Receivables – trade and other (319) 90 5 (414) 1,2 Inventories (1,639) (1,639) — — Accounts payable 973 930 6 37 1 Accrued expenses (12) (64) 52 — Accrued wages, salaries and employee benefits (805) (786) (19) — Customer advances 1,276 1,276 — — Other assets – net (90) (133) (3) 46 1 Other liabilities – net (537) (621) 128 (44) 1 Net cash provided by (used for) operating activities 4,411 3,862 597 (48) Cash flow from investing activities: Capital expenditures – excluding equipment leased to others (1,265) (1,273) (22) 30 1 Expenditures for equipment leased to others (608) (14) (597) 3 1 Proceeds from disposals of leased assets and property, plant and equipment 365 36 362 (33) 1 Additions to finance receivables (7,064) — (8,084) 1,020 2 Collections of finance receivables 6,399 — 7,278 (879) 2 Net intercompany purchased receivables — — 93 (93) 2 Proceeds from sale of finance receivables 18 — 18 — Additions to intercompany receivables (original maturities greater than three months) — (1,000) — 1,000 3 Collections of intercompany receivables (original maturities greater than three months) — — 35 (35) 3 Investments and acquisitions (net of cash acquired) (21) (21) — — Proceeds from sale of businesses and investments (net of cash sold) 12 12 — — Proceeds from maturities and sale of securities 1,328 1,026 302 — Investments in securities (618) (278) (340) — Other – net (53) (18) (35) — Net cash provided by (used for) investing activities (1,507) (1,530) (990) 1,013 Cash flow from financing activities: Dividends paid (1,336) (1,336) — — Common stock issued, and other stock compensation transactions, net (59) (59) — — Payments to purchase common stock (4,488) (4,488) — — Excise tax paid on purchases of common stock (73) (73) — — Proceeds from intercompany borrowings (original maturities greater than three months) — — 1,000 (1,000) 3 Payments on intercompany borrowings (original maturities greater than three months) — (35) — 35 3 Proceeds from debt issued (original maturities greater than three months) 5,707 1,976 3,731 — Payments on debt (original maturities greater than three months) (4,168) (35) (4,133) — Short-term borrowings – net (original maturities three months or less) 72 — 72 — Net cash provided by (used for) financing activities (4,345) (4,050) 670 (965) Effect of exchange rate changes on cash (7) (21) 14 — Increase (decrease) in cash, cash equivalents and restricted cash (1,448) (1,739) 291 — Cash, cash equivalents and restricted cash at beginning of period 6,896 6,170 726 — Cash, cash equivalents and restricted cash at end of period $ 5,448 $ 4,431 $ 1,017 $ — 1 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting. 2 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory. 3 Elimination of proceeds and payments to/from MP&E and Financial Products. 81 Table of Contents Forward-looking Statements Certain statements in this Form 10-Q relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements. Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) catastrophic events, including global pandemics such as the COVID-19 pandemic; and (xxvii) other factors described in more detail under the section entitled "Part I - Item 1A. Risk Factors" of Caterpillar's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as such factors may be updated from time to time in Caterpillar's periodic filings with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures About Market Risk The information required by this Item is incorporated by reference from Note 5 – “Derivative financial instruments and risk management” included in Part I, Item 1 and Management’s Discussion and Analysis included in Part I, Item 2 of this Form 10-Q.