Cat Financial originations climb 8% in Q1

Cat Financial, the financing arm of equipment manufacturer Caterpillar, reported an uptick in revenue in the first quarter as it ramped up new business volume while slashing delinquencies.  

While Caterpillar’s sales and revenue fell 9.8% YoY to $14.2 billion in Q1, strong order rates resulted in record backlog growth of $5 billion, showing that “customers are responding to the attractive rates offered through Cat Financial,” Chief Operating Officer Joseph Creed, who will take over as chief executive on May 1, said today during the company’s earnings call.  

BY THE NUMBERS: Cat Financial reported the following Q1 results in its earning statement:  

• Revenue rose 0.8% YoY to $860 million; 
• New retail business volume reached $3 billion, up 8.1% YoY; 
• Profit declined 23.1% YoY to $130 million; 
• Net recovery write-offs fell 63.6% YoY to $20 million; 
• Allowance for credit losses totaled $282 million, or 0.95% of finance receivables, compared with $281 million, or 1.01% of finance receivables, in Q1 of 2024; and 
• Total assets rose 4% YoY to $34.4 billion. 

Cat Financial’s past dues dropped 20 basis points YoY to 1.58%, their lowest Q1 since 2006, Chief Financial Officer Andrew Bonfield said during the call. 

In addition, retail credit applications increased 13% YoY, reflecting “the attractiveness of our sales merchandising programs,” Bonfield said. 

BIG PICTURE: Irving, Texas-based Caterpillar’s sales decline was “primarily driven by the impact from changes in dealer inventories,” CEO James Umpleby said during the call. 

“Total dealer inventory increased by about $100 million in the first quarter of 2025, compared to about $1.4 billion in the first quarter of 2024,” he said. 

That followed a decrease of $1.3 billion in Q4. 

Amid high dealer inventory, though improving, more OEMs are offering discounts and incentives, contributing to a 5.5% YoY jump in new construction equipment sales in Q1, according to IronAdvisor Insights.  

Caterpillar dealers’ rental revenue also continued to grow in Q1 as the company capitalized on an advantageous market, Creed said. 

“We continue to lean in with our dealer network to have a great rental offering for our customers as we move forward,” he said. 

FUTURE LOOK: Tariffs implemented this year are expected to be “a cost headwind of about $250 million to $350 million” in Q2, Creed said. However, the company is confident in its ability to navigate the uncertainty and other challenges surrounding tariffs, he said. 

“Caterpillar is a global company, and we have manufacturing locations around the world,” he said. “Our largest manufacturing base is in the United States, where we employ over 50,000 full-time employees. And we continue to be a net exporter. Caterpillar’s business is resilient due to the diversity of our portfolio and the end markets we serve.” 

MARKET REACTION: Shares of Caterpillar [NYSE: CAT] were up 0.7% to $309.27 as of market close today. It has a market capitalization of $147.8 billion.  

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