⚠ $29 Billion Not Due for a YearLow threat

Caterpillar (CAT) — threat to the moat

Caterpillar has $29 billion of orders that will not ship for more than a year, priced before anyone knows what steel and tariffs will cost then.

The part of the backlog that will not ship for more than a year is growing faster than the rest. It was $19.3 billion at the end of 20251 and $29.2 billion at 30 June 20262.

Backlog not expected to ship within twelve months ($bn)19.3Dec 202529.2Jun 2026Caterpillar Form 10-K FY2025; Form 10-Q Q2 2026
The long end grew 51% in six months.

Long orders carry cost risk. Caterpillar paid about $1.0 billion of IEEPA tariffs during 2025 and into 20263, and its manufacturing costs were $2.148 billion higher in 2025, largely reflecting tariffs4. An order priced in 2025 for delivery in 2028 has to absorb whatever steel, labour and tariffs cost by then.

The company has some protection: customer advances rose from $3,314 million to $4,777 million in the first half of 20265, meaning customers are paying earlier. That is a sign of bargaining power.

The cash side offers some comfort. In the first half of 2026 customer advances added $2,576 million to operating cash flow, against $1,276 million in the first half of 20256. Customers who pay deposits for long-dated orders share part of the risk that costs rise before delivery.

The margin on backlog shipments is the number that reveals the risk. If Power & Energy's margin, 24.6% in the second quarter of 20267, falls as older orders ship, the backlog was priced too cheaply.

References
  1. ReportedIt was $19.3 billion at the end of 2025 and $29.2 billion at 30 June 2026.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: history, products, Cat Financial, employees and order backlog. — FY2025 · publ. 13 February 2026 · source ↗
  2. ReportedIt was $19.3 billion at the end of 2025 and $29.2 billion at 30 June 2026.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  3. ReportedCaterpillar paid about $1.0 billion of IEEPA tariffs during 2025 and into 2026, and its manufacturing costs were $2.148 billion higher in 2025, largely reflecting tariffs.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  4. ReportedCaterpillar paid about $1.0 billion of IEEPA tariffs during 2025 and into 2026, and its manufacturing costs were $2.148 billion higher in 2025, largely reflecting tariffs.
    Caterpillar Form 10-K for fiscal 2025 - Item 7 MD&A: consolidated results, sales and profit bridges, tariffs, dealer inventory and the 2026 outlook. — FY2025 · publ. 13 February 2026 · source ↗
  5. ReportedThe company has some protection: customer advances rose from $3,314 million to $4,777 million in the first half of 2026, meaning customers are paying earlier.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - financial statements and notes: balance sheet, cash flow and the RPMGlobal acquisition. — Q2 2026 · publ. 5 August 2026 · source ↗
  6. ReportedIn the first half of 2026 customer advances added $2,576 million to operating cash flow, against $1,276 million in the first half of 2025.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - financial statements and notes: balance sheet, cash flow and the RPMGlobal acquisition. — Q2 2026 · publ. 5 August 2026 · source ↗
  7. ReportedIf Power & Energy's margin, 24.6% in the second quarter of 2026, falls as older orders ship, the backlog was priced too cheaply.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 25, 2026