⚠ A Yardstick the Company DefinesLow threat

Caterpillar (CAT) — threat to the moat

Caterpillar's favourite measure adds back restructuring charges it records almost every year.

OPACC is Caterpillar's measure, not an accounting one, and it is built from adjusted figures. MP&E adjusted operating profit adds back restructuring costs, which were $780 million in 2023 and $443 million in 2025, and the $925 million goodwill impairment of 20221.

Restructuring costs added back ($M)35420209020212982022780202314820244432025Caterpillar Barclays deck, Feb 2026, OPACC reconciliation
A charge in every year.

Restructuring has been a recurring cost rather than a rare one: $354 million in 2020, $90 million in 2021, $298 million in 2022, $148 million in 20242. Caterpillar expects $300 to $350 million again in 20263. A charge that appears every year is part of the cost of running the business.

The measure also sets aside Cat Financial, whose assets are larger than the manufacturing net assets: Financial Products segment assets were $41,476 million at the end of 20254.

The restructuring is often about shrinking weak businesses. The largest recent items were the 2022 Rail restructuring and goodwill impairment5 and, in the fourth quarter of 2025, write-downs of Rail division inventory6. Adding those back makes the manufacturing return look better than the cost of owning Rail has been.

A reader should keep both views. If OPACC keeps rising while consolidated return on invested capital, 16.8% in 20257, falls, the adjustments are doing more of the work.

References
  1. ReportedMP&E adjusted operating profit adds back restructuring costs, which were $780 million in 2023 and $443 million in 2025, and the $925 million goodwill impairment of 2022.
    Caterpillar presentation for the Barclays fireside chat, 18 February 2026 - Investor Day targets, services, MP&E free cash flow, share count, buyback prices and the OPACC reconciliation. — 2019-2025 · publ. 18 February 2026 · source ↗
  2. ReportedRestructuring has been a recurring cost rather than a rare one: $354 million in 2020, $90 million in 2021, $298 million in 2022, $148 million in 2024.
    Caterpillar presentation for the Barclays fireside chat, 18 February 2026 - Investor Day targets, services, MP&E free cash flow, share count, buyback prices and the OPACC reconciliation. — 2019-2025 · publ. 18 February 2026 · source ↗
  3. ReportedCaterpillar expects $300 to $350 million again in 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 ↗
  4. ReportedThe measure also sets aside Cat Financial, whose assets are larger than the manufacturing net assets: Financial Products segment assets were $41,476 million at the end of 2025.
    Caterpillar Form 8-K of 26 March 2026, exhibit 99.1 - segment data for 2024-2025 recast for the move of Rail into Resource Industries (unaudited), including external sales by region and segment assets. — FY2024-FY2025 · publ. 26 March 2026 · source ↗
  5. ReportedThe largest recent items were the 2022 Rail restructuring and goodwill impairment and, in the fourth quarter of 2025, write-downs of Rail division inventory.
    Caterpillar Form 10-K for fiscal 2022 - segment sales and profit for 2020-2022, the dealer count, sales by application, and the $925 million Rail goodwill impairment. — FY2022 · publ. February 2023 · source ↗
  6. ReportedThe largest recent items were the 2022 Rail restructuring and goodwill impairment and, in the fourth quarter of 2025, write-downs of Rail division inventory.
    Caterpillar fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - capital returned and Rail inventory write-downs. — FY2025 · publ. 29 January 2026 · source ↗
  7. Moat Explorer calcIf OPACC keeps rising while consolidated return on invested capital, 16.8% in 2025, falls, the adjustments are doing more of the work.
    Moat Explorer calculation, a scratch copy of tools_roic_edgar.py on SEC EDGAR XBRL for CIK 18230: return on invested capital 5.9% (2015), 1.7% (2016), 7.0% (2017), 15.4% (2018), 15.0% (2019), 7.8% (2020), 12.5% (2021), 13.9% (2022), 22.9% (2023), 22.3% (2024), 16.8% (2025). Operating profit (OperatingIncomeLoss): 3,785 (2015), 1,162 (2016), 4,460 (2017), 8,293 (2018), 8,290 (2019), 4,553 (2020), 6,878 (2021), 7,904 (2022), 12,966 (2023), 13,072 (2024), 11,151 (2025) $ millions. — 2015-2025 · publ. September 2026 · source ↗
    Method: NOPAT (operating income x (1 - effective tax rate, clamped 0-35%)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL via a scratch copy of tools_roic_edgar.py with CIK 18230 added. For 2015-2019, where Caterpillar's XBRL carries no year-end CashAndCashEquivalentsAtCarryingValue, cash and short-term investments is used; the repo method alone gives the same 2020-2025 values. Invested capital includes about $25bn of Cat Financial finance receivables.
Sources
Generated September 25, 2026