Tami Zakaria

Feight gave two specific drivers: truck-to-parts revenue mix and a shift toward fleet from vocational trucks.

Feight confirmed the economics and flagged the proposal is still in a comment period.

Management explained outlook shaped by Q1 running at or below 200K annualized, requiring rapid acceleration to reach 250K midpoint

Management directly addressed tariff impact as limited due to truck-specific Section 232 offsets with moderate but not significant effect

Feight confirmed surcharges eliminated for 2026. Some price slide in Q1 expected but more than offset by cost reductions for net positive price-cost.

Feight confirmed sequential margin improvement even within quarters, suggesting Q4 exited at improving levels heading into Q1 guide.

Feight indicated some cost benefit will flow to customers, potentially supporting market share gains, but framed as fair value exchange.

Feight noted conversations with suppliers beginning but too early to commit to sourcing changes. Five-year runway provides planning time.

Baney confirmed Columbus MS plant operational Q1 2026 with 5,000 remanufactured engines per year at full run rate.

Feight attributed South American weakness to 400bps Brazilian interest rate increases since start of year, dampening consumer confidence.

Schippers noted parts can reprice immediately unlike trucks. Less than half of parts purchases from non-US origins. PACCAR makes some proprietary parts.

Feight confirmed Q2 guide reflects current tariffs only. Section 232 adjustments could be favorable but outcome unclear.

Feight gave clear regional breakdown: US Class 8 flat to up, medium-duty normalizing, Mexico pre-buy fading, fewer production days in South America.

Feight strongly defended the Amplify JV as long-term strategic, offering full powertrain portfolio for customers regardless of regulatory shifts.

Gave intra-quarter cadence (April good, May sustained, June better) and confirmed Q3 is tracking to the raised guide.

Walked through Automotive, Test & Measurement, Food Equipment and Construction runway rather than ranking them, but answered the substance.

CEO dismissed GLP-1 as a near-term concern, noting QSR is a smaller portion of Food Equipment and it is too early to assess impact. CFO added innovation will offset pressures.

Chris cited EV penetration with Chinese OEMs (now 70% of market) as primary driver. China auto OEM up 12% for full year. Michael added China overall up 9% for year with welding mid-teens, T&M high single digits. China now $1.2B or 8% of revenue, expected mid-to-high single digit growth in 2026.

Michael said North America up ~2%+ based on run rates, Europe flat with no improvement expected, Asia Pacific up mid-single digits driven by China mid-to-high single digits. More CBI contribution and less PLS headwind bridges to 1-3% organic.

Chris said 2026 PLS not yet determined, it's bottom-up from divisions. Whether 50bps or 100bps, it's an ongoing value-creating activity tied to 80/20 front-to-back with <1 year payback.

Chris said produce-where-we-sell means factories are already in place. More US production would mean more for US factories, but no huge net benefit since capacity already exists.

Michael explained tariff pricing is EPS positive but modestly margin dilutive. This is a timing issue, margin will be recovered as in prior cycles.

Michael confirmed Auto margins will be solidly above 20% in H2 and full year, on track for low-to-mid-20s target by next year. Enterprise initiatives and CBI margins driving improvement.

Michael confirmed organic growth guide includes tariff-related incremental pricing as potential offset to volume weakness in H2. Updated auto build projections also factored in.

Michael confirmed all impacted divisions have acted on March announcements, some already on April announcements. 2017-2018 and post-COVID experience gives confidence in pricing power.

Michael disclosed China at 5-6%, Canada 2%, Mexico 2% of US spend. $250M China imports means 10% tariff = $25M price action needed. Manageable for a $16B company.

Michael said normal price-cost environment: price offsets costs on dollar basis and is slightly favorable on margin. Differentiated products support pricing power.

Rob pointed to an Investor Day next year for new targets and reiterated confidence in continued operating leverage without giving 2027 numbers.

Rob walked through Trimble's involvement from capital program management through survey, civil, layout, fit-out and handover, noting the revenue flows in over months to quarters.

Rob explained Claude creates initial models but SketchUp needed for iteration, multi-user collaboration, professional-grade analysis (rendering, energy modeling, daylight analysis). Professional users require authoring tool. Claude lowers barrier to entry.

Phil cited tough H2 2024 comps, Middle East uncertainty, tariff policy, and less hardware visibility. Started well but incorporating risk alongside opportunities. Will update in a few months.

Rob confirmed majority of AECO ARR under TC1 framework. Rolled out in Europe, still in motion in Asia Pacific. TC1 eliminates friction for cross-sell by establishing unified terms and conditions.

Phil declined to guide on 2026 margins, saying only revenue preview of mid- to high single-digit was being provided at this time. More detail coming at Q4 earnings call.

Phil prioritized business investment, then tuck-in M&A in construction software, then committed to over one-third of free cash flow returning to shareholders via buybacks. Leverage well below 2.5x target.

Phil confirmed no prebuying or inventory buildup. Survey channel actually saw some destocking. Back-half caution driven by macro prudence and tougher year-over-year comps as Field Systems inflected in H2 2024, not demand concerns.

Phil clarified tariff impact is mainly Canada/Mexico USMCA non-compliant products entering U.S., not China. China imports are low-dollar items like cables and batteries with minimal impact.

Phil stated federal exposure is in single-digit millions for rest of year. They were conservative entering 2025 and have removed additional amounts. Further cuts would not be material.

Mark confirmed Q2 step-up, Q3 remaining strong, Q4 seasonally weaker. Rest of year expected as good or better than Q1. Adding production shifts to meet rising medium-duty demand.

Mark confirmed price/cost was modestly positive but not a significant driver. Straightforward and transparent on the limited pricing contribution.

Rumsey clarified limited aftermarket from backup power gen sets. Distribution earns on installation. Broader installed base in other applications does drive aftermarket growth.

Rumsey confirmed products ready to launch in 2027 if regulations stay. Unprecedented uncertainty around regulation has been challenging. Engaging with EPA on cost reduction levers.

Smith confirmed aspirations for higher margins after capacity absorption but noted complexity across products and regions. No dramatic changes expected for remainder of 2025.

Smith provided clear breakdown: ~3% price-cost improvement offset by ~1% negative volume impact for net ~2% gross margin expansion.

Smith noted Distribution is a reseller; Components has U.S. manufacturing but supplier base brings tariff exposure. Complexity comes from sub-tier suppliers, not Cummins plants.

Smith confirmed stronger second half built into forecast driven partly by regulatory prebuy. Q1 expected to be low point. Deflected on quantifying exact prebuy lift.

Smith confirmed power gen as main Distribution swing factor but noted mining and oil/gas could add growth beyond 2025 if economy strengthens.

Rafael credited truck-market dynamics, higher fuel prices, driver shortages and better rail service; no shift in mods/new demand yet.

Rafael confirmed marine engine (Tier 4 compliant, niche market) and power generation capability exist but opportunities are very specific and limited. A locomotive is essentially a generator on wheels.

John explained equipment/services lumpiness driven by locomotive run scheduling. First half favors equipment growth with more new locomotives. Combined worldwide mods and locos expected up for full year, but down slightly in North America. Mods down significantly, double digits, driven by North America.

John confirmed Integration 3.0 savings approximately fifty-fifty between freight and transit, noting transit is slightly overshared relative to its revenue contribution.

Rafael confirmed transit margins on track to expand to high teens over planning horizon. John noted 2025 had level-loading that front-loaded organic growth to Q2-Q3. Expects more balanced delivery in 2026.

John clarified 300 locomotives over ten years as a baseload, noting previous contract was exhausted early due to strong demand growth from new lines, volume growth, and fleet aging.

Rafael noted businesses tracking to plan except for worse-than-expected railcar builds (~$100M impact). Industrial products positive especially heat exchangers for mining and AI-driven power generation.

Rafael declined specifics but described managing a basket of business across new locos, mods, multiyear agreements, and transactional parts. Confident in delivering guidance and constructing profitable growth.

Zakaria asked about full-year sales-to-users and channel restocking; Creed pointed to continued STU momentum and a more normal Q4 dealer-inventory drawdown.

Andrew explained progressive margin targets require 31% pull-through to maintain position. Accelerated depreciation from capacity additions creates margin drag in Power and Energy. Current tariff headwinds also factor in.

Creed said AIP order mostly natural gas generators similar to Joule as a complete system. Battery component is small portion of overall total. Capacity for prime power growth included in existing expansion plans. Prime power creates significant services opportunity three to five years after delivery as gensets hit overhaul cycles.

Creed attributed E&T growth to getting more product through factory as capacity expansion progresses. RI had timing benefits on commissioning from quarter to quarter. CI continuing to see great pickup from merchandising programs in North America with performance above industry trends. Backlog growth across all segments provides momentum into Q4 and next year.

Creed emphasized Caterpillar's global manufacturing complexity with over 50000 US employees across 65 locations in 25 states and a net exporter position with exports up 75% since 2016. All mitigation options on table including sourcing changes and pricing but longer-term levers require investment and time. Taking no-regrets short-term actions and pursuing USMCA certification. Not characterizing anything as permanent given continued fluidity.

Bonfield clarified Q2 tariff estimate is not full quarter impact as some tariffs took effect mid-quarter. Company has not implemented all mitigating actions available. Over 50% of tariff impact from China which has highest rate. If China tariffs moderated through deals would significantly reduce cost base. Will keep investors updated through the year.

Bonfield said E&T was major driver of Q4 order growth. Some improvement in resource industries orders particularly related to large contracts previously announced. CI orders broadly flat for the quarter year over year.