Caterpillar's backlog now equals a year of sales, though only 58% of it ships within twelve months

Caterpillar ended the September 2026 quarter with $78 billion of orders in hand, a backlog the company called a record. A year earlier it was $40 billion. Measured against what the company actually sells, the backlog now equals about one year of sales and revenues, against roughly 0.6 of a year a year earlier, by our calculation from the filed results. Both ratios run slightly low, because the sales figure includes the financing arm, which carries no backlog.

The orders also reach further out. The company said it is now taking large reciprocating-engine orders for 2029 and turbine orders for 2030. Joe Creed, the chief executive, described the change: "Typically, we only had 12 months or less line of sight to our backlog." For a maker of power-generation engines, mining trucks and excavators, that shifts what matters for the next year. Much of the near-term demand is booked: the company expects 58% of the backlog to ship within the next year.

The book is still growing, but by smaller steps. Subtracting the company's rounded quarter-end figures, the backlog rose by about $12 billion in the first quarter of the year and about $6 billion last quarter. That difference nets new orders against shipments and cancellations, so it is not an order figure. An analyst on the results call put book-to-bill, the ratio of new orders to sales, at about 1.7 earlier in the year and about 1.3 now. Creed did not dispute the estimate. He said sales are climbing as production increases, which lowers the ratio by itself, and that "you can't just look at 1 metric like backlog growth in a quarter or book-to-bill in a quarter".

The cash-flow statement shows how the build-up is being paid for. So far this year customer advances, money paid before the equipment is delivered, brought in $4.0 billion, against $1.6 billion in the same nine months a year earlier. That swing accounts for 96% of the rise in operating cash flow, calculated from the reported figures. At the same time Caterpillar's own receivables and inventories absorbed more additional cash than its profit added. Tying the advances to the backlog is our reading rather than the company's, and such payments become sales, not fresh cash, once the products ship.

That is why the outlook for the fourth quarter looks modest next to the order book. The company guided to moderate sales growth over a year earlier. Creed said power and energy output is set by capacity and delivery timing, with no spare room to absorb a disruption. Construction dealers are also expected to cut their inventories by about $1.6 billion in the quarter, more than in the same quarter a year earlier, so factory shipments will trail what dealers sell to end users. Full-year guidance for sales growth, which the company lifted from around its long-term rate in its first guide of the year to the mid- to high teens by August, was held.

Profitability has risen with volume. Adjusted operating margin, which excludes restructuring costs, was 20.6% last quarter against 17.5% a year earlier, and included refunds of tariffs the company had paid. Even so, management still expects the full-year margin, excluding those refunds, to sit near the bottom of its target range. Creed explained that the range is "a progressive target" that moves up as margins rise, so the label describes the margin relative to a higher sales level rather than a weak result.

By our arithmetic, the share of the backlog due to ship in the coming year comes to roughly $45 billion; in power and energy, Creed said output is paced by capacity and the timing of customer deliveries. The company said its expansion plans remain on schedule.