Cat Financial originations rise 5.5%

Cat Financial increased its revenue, new business volume and total assets in the second quarter despite declining total and North American sales at the parent company. 

Cat Financial, the financing arm of equipment manufacturer Caterpillar, continues to see healthy business activity as new business volume hit the highest in more than a decade, Chief Financial Officer Andrew Bonfield said during today’s Caterpillar earnings call. 

“Retail new business volume is at its highest level for a second quarter in over 10 years, reflecting the attractiveness of our sales merchandising programs,” he said. “In addition, used equipment inventory levels remain low and conversion rates remain above historical averages, as customers choose to buy equipment at the end of their lease term.” 

By the numbers

Cat Financial reported the following Q2 results in its earning statement: 

• Revenue rose 3.9% year over year to $899 million;  

• New retail business volume reached, or originations, $3.6 billion, up 5.5% YoY;  

• Profit was $137 million compared with a $65 million loss in Q2 2024; 

• Net recovery write-offs were flat YoY at $18 million;  

• Allowance for credit losses totaled $290 million, or 0.94% of finance receivables, compared with $254 million, or 0.89% of finance receivables, in Q2 2024; and  

• Total assets rose 7.7% YoY to $36.1 billion.  

Cat Financial’s past dues dropped 12 basis points YoY to 1.62%, the lowest Q2 figure in more than 25 years, Bonfield said. In addition, retail credit applications increased 5% YoY, he said.  

Meanwhile, Caterpillar reported the following Q2 results in its earnings statement: 

• Total sales and revenue dipped 0.7% YoY to $16.6 billion; 

• North American sales and revenue declined 2.1% YoY to $8.9 billion; 

• Total construction industry sales and revenue fell 7.4% YoY to $6.2 billion; 

• North American construction industry sales and revenue dropped 14.9% YoY to $3.4 billion; 

• Total energy and transportation sales and revenue rose 6.8% YoY to $7.8 billion; 

• North American energy and transportation sales and revenue increased 14.1% to $3.8 billion; 

• Total resource industry sales and revenue decreased 3.7% YoY to $3.1 billion; and 

• North American resource industry sales and revenue declined 7.8% to $1.1 billion. 

Tariff impact

Irving, Texas-based Caterpillar’s net incremental impact from tariffs in the quarter was near the high end of the $250 million to $350 million range predicted in Q1, Bonfield said. The result came following the easing of some tariffs, as increased inbound shipments more than offset the benefit of lower rates in its primary segments. 

“Tariffs impacted all three primary segments, and part of the charge was not allocated to the segments recorded in corporate items,” he said. “The impact is net of mitigating actions in the quarter, which were of the no-regrets type, mainly short-term actions around cost controls.” 

Big picture 

While Caterpillar’s overall sales and revenue declined in Q2, the results were in line with expectations, including dealer inventory rising by $100 million, as a $400 million decline in machine inventory was offset elsewhere, Director and Chief Executive Joseph Creed said during the earnings call. Meanwhile, Caterpillar’s backlog grew by $2.5 billion to a record $37.5 billion, driven by strong order rates across all major segments. 

“Sales were in line with our expectations, and we delivered adjusted operating profit and adjusted operating profit margin above our expectations,” he said. “We continue to see strong orders across our segments as demand remains resilient, supported by infrastructure spending and growing energy needs.” 

Caterpillar is optimistic about second-half 2025 revenue growth, supported by strong orders, backlog expansion, and demand in construction and power generation, but expects recently announced tariffs to pressure profitability despite mitigation efforts, Creed said. 

“We will remain flexible and we intend to implement longer-term actions once there is sufficient certainty,” he said. “We are considering all options to further reduce the impact of tariffs going forward.” 

MARKET REACTION: Shares of Caterpillar [NYSE: CAT] were up 0.12% to $434.23 as of market close today. It has a market capitalization of $201.62 billion. 

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