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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown, where we dig into the numbers so you don't have to. I'm Alex.

**JORDAN:** And I'm Jordan. Today we're talking heavy machinery, massive engines, and a backlog number that honestly made me do a double take. We're covering Caterpillar's third quarter 2026 results.

**ALEX:** Before we dive in, quick disclaimer: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Okay, with that out of the way — Alex, this was a big quarter.

**ALEX:** Huge. Caterpillar posted record third-quarter sales of $20.7 billion, up 17% year-over-year. Adjusted earnings per share came in at $7.20, up 45%. And then there's the headline number: backlog hit an all-time high of $78 billion.

**JORDAN:** Seventy-eight billion. For context, that's up roughly 96% from a year ago — basically doubled. And it grew sequentially for the fourth straight quarter across all three major segments. That's the kind of visibility most industrial companies dream about.

**ALEX:** Right, and the story behind that backlog is really the story of this whole earnings call: demand for power generation equipment tied to data centers and AI is so strong that Caterpillar literally cannot build engines fast enough.

**JORDAN:** That's the key tension here. CEO Joe Creed said it plainly — capacity, not demand, is the limiting factor in the Power and Energy segment. They're now taking orders for large reciprocating engines out into 2029, and turbine orders into 2030.

**ALEX:** Which is wild when you think about it. Normally Caterpillar's backlog visibility is maybe 12 months. Now customers are locking in engine slots three or four years out.

**JORDAN:** And to address that, they announced plans to nearly triple large reciprocating engine production by 2030 compared to 2024 levels. Part of that involves repurposing a facility in Winston-Salem, North Carolina — currently making locomotive engines — into a second assembly line for their big 3600 series engines, aimed at natural gas compression for oil and gas customers.

**ALEX:** It's a smart move — using existing footprint and workforce rather than building new from scratch. Faster, cheaper way to add capacity.

**JORDAN:** Let's talk segment performance, because all three told a slightly different story. Power and Energy sales grew 18% to $8.8 billion, with segment margin up 250 basis points to 24.4%. Power generation sales to users were up a stunning 75%, driven by data center demand for turbines and large engines.

**ALEX:** Construction Industries also had a strong quarter — sales up 18% to $8 billion, and this marks the seventh consecutive quarter of year-over-year retail growth. North America sales to users grew 27%. They also launched this "Major Projects" rental joint venture with dealers to handle large-scale infrastructure and data center builds — basically supplementing dealer rental fleets when a project is too big for any single dealer to handle alone.

**JORDAN:** Resource Industries was the laggard of the three — sales to users up only 4%, below expectations, because of shipping and commissioning delays in mining equipment. Management was clear this is temporary, not demand-related. In fact, orders in that segment have been strong for three straight quarters now, driven by copper and gold mining activity.

**ALEX:** So demand isn't the problem anywhere — it's execution and logistics catching up with demand. That's a pretty good problem to have, frankly.

**JORDAN:** It is, though it's not free. Let's talk margins, because this is where I think investors should pay attention. Full-year adjusted operating profit margin, exclud

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex.

JORDAN: And I'm Jordan. Today we're digging into UPS, ticker U, third quarter 2026 results, reported October 27th.

ALEX: Before we get into the brown truck details, quick disclaimer: This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Alright, so Alex, let's set the scene. UPS has been going through this massive, deliberate transformation—shrinking on purpose, specifically cutting back Amazon volume to chase higher-margin business. This quarter is where we start seeing the payoff.

ALEX: Yeah, and the headline numbers back that up. Consolidated revenue came in at $22.9 billion, up 6.7% year-over-year. Operating profit hit $2.1 billion, with a consolidated operating margin of 9%. Diluted EPS was $1.69.

JORDAN: And here's the kicker—revenue grew across ALL three segments: US Domestic, International, and Supply Chain Solutions. That's the first time we've seen that kind of synchronized growth in a while.

ALEX: Right, and because of this strength, UPS actually raised full-year guidance. They're now expecting full-year revenue of approximately $92.6 billion and operating profit of about $8.75 billion, which implies full-year EPS around $7.28.

JORDAN: Let's talk about US Domestic specifically, because that's really the heart of this turnaround story. Operating profit there grew over 14% year-over-year—second straight quarter of strong growth. Operating margin expanded 60 basis points to 7%.

ALEX: And the interesting nuance is total US volume was actually DOWN 3.3%—but that's entirely because of the planned Amazon reduction. Strip that out, and SMB and enterprise customer volume grew 1.8%, with SMB specifically up 3.7%.

JORDAN: SMBs now make up a record 35.1% of total US volume. That's up 240 basis points year-over-year. This is UPS's whole "better not bigger" philosophy playing out in real numbers—smaller, higher-margin customers replacing one giant, lower-margin customer.

ALEX: CEO Carol Tomé put it really memorably on the call: "Better is truly better than bigger." She said they're past the inflection point now.

JORDAN: Let's hit International too, because that was actually a bit of a surprise. Operating profit returned to year-over-year growth for the first time in six quarters, and margin came in at 14.9%—above expectations. This despite total international volume declining 8.7% due to geopolitical and trade policy headwinds.

ALEX: The story there is quality over quantity again—revenue per piece jumped 15%, half of that from fuel surcharges, but the real driver was that China-to-US and Asia-to-Asia trade lanes kept strengthening. September inbound US volume actually turned positive.

JORDAN: And Supply Chain Solutions—forwarding revenue up 17.5%, logistics up 17.2%, driven by healthcare and high-tech demand. UPS Digital, which includes Roadie and Happy Returns, grew nearly 50%.

ALEX: Speaking of healthcare—that's become a real pillar here. Healthcare revenue topped $3 billion for the third straight quarter, growing in every single segment.

JORDAN: Now let's get into some of the Q&A color, because there were some juicy moments. One analyst asked point-blank about Amazon's new in-house delivery push, given all the headlines about Amazon raising prices and expanding its own network. Carol Tomé's answer was pretty confident—she said UPS hasn't seen any "measurable or meaningful impact" from Amazon's moves, partly because the networks are just fundamentally different. UPS offers reverse logistics, guaranteed ground delivery—Amazon's network is more linear, two-to-five-day reliable, not guaranteed.

ALEX: That's a big deal

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown, where we take the transcripts so you don't have to. I'm Alex.

JORDAN: And I'm Jordan. Today we're digging into Illinois Tool Works — ticker ITW — and their Q3 2026 results, which came out this morning.

ALEX: Before we jump in, quick reminder: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Alright, so Alex, ITW — if people don't know this one, it's a diversified industrial manufacturer, seven segments, everything from automotive parts to welding equipment to food service equipment. Very much a "boring but excellent" operator.

ALEX: Exactly, and this quarter was anything but boring on the numbers front. Let's start with the headline: record operating income, organic growth of 4%, and get this — it would've been 5% if not for a tornado that hit two of their welding facilities in Appleton, Wisconsin. That weather event alone knocked about $40 million off revenue.

JORDAN: Which, by the way, kudos to the team there — everyone was safe, and they got operations back up fast. That's actually a nice little proof point for ITW's whole operating philosophy. They run this decentralized, entrepreneurial culture — basically empowering local business unit leaders to make decisions fast. And this was a real-world stress test of that.

ALEX: Right, and even with that disruption, welding still grew 7% — or 15% if you strip out the tornado impact. That's a huge number.

JORDAN: It really is. And it wasn't the only standout. Test and Measurement and Electronics segment put up 16% organic growth, with electronics alone surging 31%. That's being driven by semiconductor demand — their customers are racing to build out fab capacity and produce printed circuit boards to meet AI-related demand.

ALEX: So ITW is basically riding the AI infrastructure wave, just one layer removed from the chipmakers themselves.

JORDAN: Exactly, they're the picks-and-shovels behind the picks-and-shovels. And management said on the call they believe this growth is "very sustainable" given how much they've invested in these businesses over the past several years.

ALEX: Let's talk bottom line now. Operating margin expanded 40 basis points to 27.8% — a quarterly record. GAAP EPS came in at $3, up 7% year-over-year, even with a tax rate headwind that cost them about 10 cents a share.

JORDAN: And because of the strong quarter, they raised full-year EPS guidance again — third time this year — to a new midpoint of $11.50, which implies 10% growth for the full year.

ALEX: One thing that stood out to me is this concept they keep bringing up — CBI, or Customer-Back Innovation. Basically, new products and solutions developed in partnership with customers. It's contributed more than 3% to revenue growth this year, up from 2.4% in 2025.

JORDAN: And CEO Christopher O'Herlihy called that the "single biggest catalyst" for hitting their long-term goal of 4%-plus organic growth. It's a steady climb — they said it was 1% five years ago, 2% two years ago, now over 3%. That's a real trend, not a one-off.

ALEX: Not every segment was rosy though. Automotive OEM was down 2%, and margins there fell 170 basis points due to a price-cost timing lag — meaning input cost inflation hit before their price increases caught up. Construction Products also saw margins down 170 basis points for similar reasons.

JORDAN: Right, and management was pretty transparent about this — they said in the Q&A that they're "busily recovering price" in both those segments and expect that lag to resolve by the time we get into 2027, when they're forecasting a more normal environment — actually a 10-20 basis point tailwin

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown. Today we're diving into Boeing's third quarter 2026 results, and Jordan, there's a lot to unpack here.

**JORDAN:** There really is. Boeing's been on this long road back, and this quarter feels like a real inflection point in the story.

**ALEX:** Before we get into it, quick disclaimer for everyone tuning in: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Important stuff. Okay, let's get into the numbers.

**ALEX:** So Boeing posted revenue of $24.2 billion, up 4% year-over-year. The growth came mainly from defense and services, which offset a less favorable delivery mix on the commercial side.

**JORDAN:** Right, and that commercial piece is interesting — they actually delivered 161 airplanes this quarter, the most since 2018. But revenue in that segment was still down 3% because the mix of planes being delivered wasn't as profitable.

**ALEX:** Operating margin improved to 1.5%, and core EPS came in at a loss of $0.34 — still a loss, but better than prior year. Free cash flow was positive $464 million, which included a hit from that roughly $700 million DOJ settlement payment.

**JORDAN:** And here's the headline, I think, for investors: Boeing finally put out a multiyear free cash flow roadmap. $2 billion in 2026, $3 billion in 2027, $6 billion in 2028, and $10 billion by 2029.

**ALEX:** That's a big deal because management has been pretty cagey about long-term guidance the last couple years. CEO Robert Ortberg basically said they've "narrowed the range of outcomes" enough to finally commit to numbers.

**JORDAN:** And CFO Jay Malave was clear this isn't the ceiling — he kept emphasizing there's "significant growth potential beyond $10 billion" once you get past 2029 and some of these legacy cash drags fully clear out.

**ALEX:** Let's talk strategic wins, because this quarter had some genuinely historic news. The FAA certified both the 737-7 and the 737-10 — the 10 just last week. That closes out years of work on those variants.

**JORDAN:** Which means the spotlight now shifts entirely to the 777X. They're still targeting first delivery in 2027, though they admitted they need more flight test authorization, including ETOPS testing, before they can finish the program.

**ALEX:** And on 737 production — this is the part analysts really grilled them on. They're still trying to stabilize at 47 planes a month, and Ortberg admitted it's taking longer than expected. Rate 52 has now been pushed to the back half of 2027.

**JORDAN:** The culprit was pretty specific too — issues in the wing "back shop," where some of their process improvements just didn't yield the flow savings they expected. Ortberg was refreshingly candid: engines aren't the problem, it's wings and, to a lesser extent, fuselage output out of Wichita.

**ALEX:** I appreciated that he kept hammering this theme: "it's more important that we do this ramp right than in what particular month we achieve a rate break." That's a very different Boeing tone than a few years ago.

**JORDAN:** Now let's talk about the real showstopper — defense. Boeing won the Navy's F/A-XX sixth-generation fighter program. Combined with their earlier NGAD win for the Air Force, that makes Boeing the exclusive sixth-gen fighter manufacturer for both the Air Force and Navy.

**ALEX:** That's a massive structural shift. Analyst Ron Epstein actually called it out directly on the call — basically saying nobody expected Boeing to be sitting on both these programs a couple years ago.

**JORDAN:** And Ortberg's response was telling — he said defense growth expectations are shifting from "low sin

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into Honeywell's third quarter 2026 results — and this one's special because it's the first full quarter for Honeywell as a standalone, pure-play automation company following the aerospace spinoff.

Before we jump in, just a quick note: This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Alex, I've been waiting for this one. Honeywell basically told investors in June, "trust us, this new standalone structure is going to unlock value," and this quarter is the first real receipt.

**ALEX:** And it delivered. Let's start with the headline numbers. Organic sales growth came in at 7%, which actually beat the high end of the targets management laid out at their Investor Day back in June. Adjusted EPS hit $2.27, up 34% year-over-year. And margins expanded by 370 basis points to over 21%.

**JORDAN:** That 370 basis points of margin expansion is the number that jumps out at me. That's not incremental — that's a step function. And a big chunk of that came from something kind of unglamorous but really important: stranded cost elimination.

**ALEX:** Right, for listeners who aren't familiar — when a company spins off a division, like Honeywell did with aerospace, there are leftover corporate costs that used to be shared across both businesses. Those are "stranded costs," and management originally gave themselves a longer runway to eliminate them.

**JORDAN:** But CEO Vimal Kapur said on the call they're now on track to eliminate ALL remaining stranded costs by the end of this year — just six months after the spinoff. That's ahead of schedule, and it's a real signal of execution discipline.

**ALEX:** Let's talk segments, because all three outperformed. Process Automation and Technology — they call it PA&T — grew 8% organically, with projects up a huge 14% year-over-year on LNG and petrochemical backlog conversion. Building Automation posted its eighth straight quarter of high-single-digit growth, up 8% this quarter. And Industrial Automation, which has been the laggard, grew 4% — modest, but management framed it as a genuine turnaround story.

**JORDAN:** And I want to flag the data center angle, because it's becoming a real thread through this whole business. Orders in the data center vertical were up over 100% this quarter. Kapur talked about this expanding beyond just Building Automation — now Process Automation and even Industrial Automation are getting pulled into data center projects, things like liquid cooling systems and power infrastructure.

**ALEX:** It's turning into what he called a "pan-Honeywell strategy" — not just one segment riding the AI infrastructure wave, but multiple pieces of the portfolio contributing.

**JORDAN:** Let's talk backlog, because at nearly $19 billion, up 7% excluding divestitures, that's a serious cushion going into next year. And PA&T's backlog specifically was up double digits, driven by these massive LNG and energy project wins. Management's thesis here is that we're entering a multiyear energy upcycle — LNG buildout, refining expansion in Africa, and even early traction in low-carbon energy like sustainable aviation fuel and carbon capture.

**ALEX:** The Dangote refinery example was a great anecdote from the Q&A — they're literally doubling the size of what's already the world's largest refinery, plus building another one in Kenya. That's the kind of multi-year, high-certainty project Honeywell is plugging into.

**JORDAN:** Now, there was healthy skepticism in the Q&A too. A few analysts pushed on whether Q4 order guidance — high singl

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex.

JORDAN: And I'm Jordan. Today we're diving into RTX's third quarter 2026 results, and Alex, this one's got some big numbers.

ALEX: It really does. But before we jump in, quick note — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Important stuff. Okay, let's get into it.

ALEX: So RTX — the parent company of Raytheon, Pratt & Whitney, and Collins Aerospace — reported adjusted sales of $25 billion for Q3, up 12% organically. That's growth across all three segments, which is pretty rare to see all firing at once.

JORDAN: And the EPS number really jumps out — $2.26, up 33% year-over-year. But here's the asterisk: $0.25 of that came from something called IEEPA cost recovery. That's basically tariff-related cost reimbursement, not pure operational performance.

ALEX: Right, so strip that out and you're still looking at really solid underlying growth — about 43 cents of that EPS gain came from actual segment operating profit improvement.

JORDAN: And free cash flow was strong too — $2.1 billion for the quarter. The company also raised full-year guidance across the board. New sales range is $97 to $97.5 billion, up from $95-96 billion. EPS guidance jumped to $7.65-$7.75, up from $7.10-$7.25.

ALEX: Now let's talk backlog, because this is the headline for me. $340 billion — up 36% year-over-year, 18% just sequentially. That's a massive number.

JORDAN: It's driven largely by defense. Raytheon booked almost $59 billion in awards this quarter alone — a book-to-bill ratio of 4.57 times. The big drivers were converting framework agreements into actual multi-year production contracts — about $23 billion for Tomahawk missiles and over $14 billion for AMRAAM.

ALEX: And they followed that up with multi-year contracts for SM-6 and SM-3 IIA missiles too. Management described this whole munitions push as converting nearly a decade's worth of demand visibility into firm contracts.

JORDAN: Which is great, but it comes with execution risk. CEO Christopher Calio talked about needing to ramp production 2x to 4x on some of these munitions. That means supply chain expansion, new suppliers — they added 150 new suppliers at Raytheon in 2025 alone — and working through bottlenecks like castings and solid rocket motors.

ALEX: Yeah, one analyst actually asked about printed circuit boards and capacitors being hard to source because of the AI data center buildout competing for the same components. Calio acknowledged it's a real constraint they're actively managing with the Department of Defense.

JORDAN: On the commercial side, let's talk Pratt & Whitney and the GTF engine story, because that's been the long-running saga for RTX.

ALEX: Right, the GTF — Geared Turbofan — has had durability issues for years that required extra maintenance checks. The good news this quarter: MRO output on the PW1100 engine was up 37% year-over-year, and critically, the GTF Advantage — the next-gen version with double the time-on-wing performance — just entered service with United Airlines.

JORDAN: That's a real milestone. And there's also a retrofit kit called Hot Section Plus coming next year that'll bring most of those durability benefits to the existing fleet without needing a whole new engine.

ALEX: Commercial aftermarket overall grew 16% organically, which is impressive given that global air traffic — RPKs — actually declined slightly. CFO Neil Mitchill noted about 60% of the Pratt Canada business jet fleet hasn't even had its first shop visit yet, so there's a long runway there.

JORDAN: Collins Aerospace also had a strong quarter — margins expanded 560 basis

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into 3M's third quarter 2026 results, reported October 20th. This is a loaded one, folks — strong numbers, a major Amazon partnership, and a lot of forward-looking commentary on 2027. Before we get into it, though, the standard reminder: This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: And honestly, Alex, there's a lot to unpack here. 3M stock jumped over 5% on this print, so let's figure out why.

ALEX: Let's start with the headline numbers. Organic growth of 3.3% for the quarter, operating margin of 26.2% — up 110 basis points year-over-year — adjusted EPS of $2.50, up 12%, and free cash flow of $1.2 billion. They returned $600 million to shareholders, split between dividends and buybacks.

JORDAN: And importantly, they raised full-year EPS guidance to $9.10-$9.15, up from the prior range. That's roughly 11-12% growth for the year. Management also reaffirmed they expect organic growth above 3.5% for 2026, with Q4 actually accelerating to over 4%.

ALEX: That acceleration story is interesting because it's backed by real data — backlog was up high-teens year-over-year heading into Q4, and orders grew high single digits in the quarter. That's not just hopeful talk, that's visibility.

JORDAN: Right, and CFO Anurag Maheshwari broke down where the margin expansion is coming from — gross margins were up 230 basis points, driven by procurement savings, better quality control, and higher factory utilization. They've closed 16 manufacturing sites this year already, with 10 more targeted over the next year. That footprint simplification is expected to keep paying off well beyond 2027.

ALEX: Now let's get to the part everyone's been buzzing about — Expanded Beam Optical, or EBO. This is 3M's connector technology for AI data center infrastructure.

JORDAN: This is the big one. They filed an 8-K the night before the call announcing they issued Amazon a warrant for up to 3.2 million shares — about 0.6% of 3M's stock — tied to Amazon hitting $6 billion in cumulative purchases of optical connectivity and data-center-related products over seven years, plus other milestones.

ALEX: CEO Bill Brown was careful to frame this as strategic validation rather than a guaranteed revenue stream. He emphasized there's no firm volume commitment — 3M has to "earn the right" to that business. But symbolically, locking in a warrant structure with Amazon, on top of the previously announced Microsoft Azure partnership, signals real traction with hyperscalers.

JORDAN: And they paired that with a manufacturing deal — a contract agreement with Genius Electronic Optical, or GSEO, plus taking a 4.7% equity stake in that company to secure supply chain capacity. 3M's doubling its internal ferrule manufacturing capacity, and GSEO can reportedly scale multiples beyond that.

ALEX: Sizing it for listeners — EBO revenue this year is around $40 million. Management expects that to roughly double next year, maybe a bit more. They've pegged the total addressable market at around $2 billion by 2028. So it's small today, but the growth trajectory and the ecosystem-building — they mentioned a Multi-Source Agreement that's grown from 17 to 63 member companies — suggests this could become a meaningful growth vertical.

JORDAN: Let's talk segments for a second, because the picture is mixed. Safety & Industrial had a standout quarter, up 7% organically, driven by commercial excellence and new product ramp. Transportation & Electronics was basically flat at 0.5%, dragged down by co

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown where we take the dense stuff from earnings calls and turn it into something you'd actually want to listen to. I'm Alex.

**JORDAN:** And I'm Jordan. And Alex, before we get into today's company, we gotta say this.

**ALEX:** Right. This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Okay, with that out of the way — today we're talking GE Aerospace, ticker GE, Q3 2026 results, reported October 20th.

**ALEX:** And Jordan, I'll just say it — this was a genuinely blowout quarter. Orders up 49% company-wide. Revenue up 18%. Operating profit up 30%. EPS up 36%. If you're an investor in this name, that's about as clean a sweep as you can ask for.

**JORDAN:** It really is. And the engine — pun intended — behind all of it is their Commercial Engines and Services segment, CES. Orders there were up 58%. Services orders alone, up 23% in the quarter, 30% year-to-date. That's the sixth straight quarter of at least 20% revenue growth in that segment.

**ALEX:** Six quarters! That's not a blip, that's a trend. And it's being driven by this massive backlog — over $170 billion now. CEO Larry Culp talked about the Farnborough Airshow where they locked in commitments for more than 1,800 engines, including that IndiGo deal — the largest LEAP engine agreement ever, over 1,000 engines for their A320neo fleet.

**JORDAN:** And just last week, before this call even happened, they announced Turkish Airlines — over 300 LEAP-1B engines plus a long-term service deal covering their entire 600-plus engine fleet. So the order book just keeps stacking up.

**ALEX:** Let's talk numbers a bit more. CFO Rahul Ghai broke down margins — 22.5% operating margin, up 220 basis points year-over-year. Free cash flow came in over $2 billion for the quarter, $6.7 billion year-to-date, which is 105% conversion of earnings into cash. That's a really healthy number.

**JORDAN:** And because of all this strength, they raised full-year 2026 guidance across the board. Revenue growth now expected at 19-20%, up from high teens. EPS guidance bumped to $8 to $8.10, up 30 cents at the midpoint. Free cash flow guidance raised to $9.1 to $9.4 billion.

**ALEX:** And here's the one that really jumped out to me — they gave an early look at 2027, guiding to low double-digit growth in commercial services. That's based on the sheer size of that backlog and engines that are already flying and will need shop visits.

**JORDAN:** Right, and this is where it gets interesting operationally. They're using something called "Flight Deck" — their lean operating system — to attack bottlenecks. One example: they reoriented a LEAP fan assembly production line and more than doubled output just through better workflow design, not new equipment.

**ALEX:** And there's an AI angle too, which feels very on-brand for 2026. At their Celma MRO site in Brazil, they built an AI tool to automate technical records collection for CFM56 engine shop visits — cut processing time by about 25%.

**JORDAN:** That stuff matters more than people realize. Turnaround times on shop visits are down over a week since the end of last year, LEAP specifically down two weeks. And probably the headline operational win — LEAP-related grounded aircraft, the AOG number, is down to near zero since summer. That's been a persistent pain point for airlines, so that's a real customer-facing win.

**ALEX:** Big strategic news too — the agreement to acquire Consolidated Precision Products, or CPP. This is about securing capacity for mission-critical castings industry-wide, and also accelerating next-gen engine cooling technology. Culp mention

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown, where we take the numbers and the noise from corporate earnings calls and turn them into something you can actually digest. I'm Alex.

JORDAN: And I'm Jordan. Today we're digging into Deere & Company's third quarter fiscal 2026 results — big green tractors, big infrastructure equipment, and a business that's basically riding two different economic cycles at once.

ALEX: Before we get into it — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Good, let's get into the numbers. Alex, what jumped out at you?

ALEX: The headline is Deere beat expectations pretty handily. Net sales and revenue up 5% to $12.6 billion, equipment operations sales up 6% to $11 billion, net income of $1.38 billion, or $5.10 a share. And that 14.4% operating margin for equipment operations is genuinely strong given how choppy the ag market is right now.

JORDAN: Right, and that's really the story of this quarter — a tale of two businesses. Production & Precision Ag, their big-tractor and combine segment, was actually down 6% year-over-year to $4 billion, with margins around 13.2%. That's the segment feeling the ag downturn most directly.

ALEX: But then you flip to Small Ag & Turf — up 12% to $3.4 billion with an 18.4% margin — and Construction & Forestry, up 18% to $3.6 billion with a 12.1% margin. Those two segments are basically carrying the company through the ag trough.

JORDAN: That diversification point came up again and again on the call. Management kept saying it — while big ag equipment is struggling, construction and the smaller ag/turf business are picking up the slack. It's a nice illustration of why a diversified portfolio actually matters in a cyclical industry.

ALEX: Let's talk guidance, because they actually raised the full-year outlook despite trimming some segment numbers. Full-year net income guidance moved up to $4.75 to $5 billion, and operating cash flow guidance improved to $5 to $5.5 billion.

JORDAN: But within that, Production & Precision Ag guidance came down — now expecting sales down about 10% for the year, with margin guidance narrowed to 11-12%. That's mostly South America and Europe softness. South America specifically is now guided down 15-20% for the year, driven by high interest rates and elevated fertilizer costs squeezing farmer economics.

ALEX: Meanwhile Small Ag & Turf guidance actually went up — margin guide raised to 14.5-15.5% — and Construction & Forestry held its roughly 20% sales growth guide with margins tightened to 10.5-11.5%. Construction is genuinely firing on all cylinders right now: data centers, infrastructure, road building.

JORDAN: One thing worth flagging for listeners — tariffs were a huge theme on this call. Deere now expects about $1.1 billion in direct tariff expense for the year, offset partially by $382 million in IEPA refunds recognized so far. CFO Brent Norwood said net tariff exposure this year is around $750 million, but he flagged that it'll actually step up to roughly $1 billion next year as the refund benefit doesn't repeat.

ALEX: That's an important nuance — investors hear "tariff relief" and assume it's all good news, but the mechanics here mean next year could actually be a modest headwind, not a tailwind.

JORDAN: The other big storyline was the model year 2027 early order programs — these are essentially pre-orders dealers and farmers lock in ahead of the season. Deanna Kovar, who runs the ag and turf business, said combined planter and sprayer orders are running up mid-single digits versus last year.

ALEX: And that's a meaningful signal because management explicitly said they view 20

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Welcome to Beta Finch, your AI-powered earnings breakdown of the companies moving the markets. Let's get into Caterpillar's second quarter.

ALEX: Hey everyone, welcome back to Beta Finch! I'm Alex, joined as always by Jordan, and today we're digging into Caterpillar's Q2 2026 results — and folks, this is a big one. But before we dive in, quick reminder: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: And it's a good quarter to have that disclaimer front and center, Alex, because the numbers here are eye-popping. Caterpillar just posted $20.5 billion in sales and revenues — up 24% year-over-year. That's the first time in company history they've cracked $20 billion in a single quarter.

ALEX: A genuine milestone. And it wasn't just the top line — adjusted profit per share came in at $8.17, up 73% from last year. CEO Joe Creed called it out as a record, and honestly, the whole print beat expectations across the board.

JORDAN: What really stands out to me is the backlog. It grew sequentially by $9 billion to $72 billion total — that's up 92% versus a year ago. And all three primary segments — Construction Industries, Resource Industries, and Power & Energy — contributed to that growth. This isn't a one-segment story.

ALEX: Right, and that Power & Energy segment is the one everyone's buzzing about because of the AI and data center angle. Sales to users in power generation grew 72% — driven by demand for large gen sets and turbines going into data centers.

JORDAN: It's wild — they're literally restarting a discontinued product line for this. They stopped making their 10-megawatt medium-speed gas reciprocating engine back in 2022, and now they're bringing back about 1.5 gigawatts of capacity because customers are asking for more units. Shipments start in Q4.

ALEX: And on the call, an analyst pushed Creed on whether that demand has real staying power out to 2028, 2029, 2030 — given how much AI capex speculation is out there. Creed's answer was pretty direct: "No one is slowing down at the moment. In fact, if we can get more units out, they're asking us to give them more units." They're already taking orders into 2029 and 2030.

JORDAN: And it's not just data centers propping this up — that's the part I found reassuring. Oil and gas backlog is nearly double what it was a year ago, mostly gas compression demand. So even if the AI narrative cools at some point, there's a broader base under this Power & Energy growth story.

ALEX: Let's talk Construction Industries too, because that segment had its own headline moment — sales up 35% to $8.3 billion, sixth straight quarter of sales-to-users growth. A lot of that was rental fleet loading, including this new "Major Projects" joint venture with dealers — basically a national rental fleet aimed at massive infrastructure and data center builds.

JORDAN: Margins there were strong too — 23.3%, up 320 basis points. Resource Industries also chipped in with 20% sales growth, helped by mining demand for copper and gold, plus they closed the Skycatch acquisition in July — that's AI-powered spatial data tech for mining operations.

ALEX: Now, we can't ignore tariffs — they came up a lot on this call. CFO Kyle Epley said the company got a $392 million benefit from IEEPA tariff recoveries this quarter, and actual tariff costs came in lower than expected, around $400 million versus the $700 million they'd guided to in April. For the full year, they now expect about $2.2 billion in tariff costs, the low end of their prior range.

JORDAN: That's a meaningful swing, and it's part of why margins beat — adjusted operating profit margin hit 21.9%, up 430 basis points year-over

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