“the net impact of tariffs was around the top end of our estimated range for the quarter and is likely to be a more significant headwind to profitability in the second half of 2025.”

In context

“to our CEO, Joe Creed. Joseph E. Creed: Thank you, Alex, and good morning, everyone. Thanks for joining us today. The Caterpillar team demonstrated solid operational performance in a fluid environment this quarter. Sales were in line with our expectations, and we delivered adjusted operating profit, and adjusted operating profit margin above our expectations. We continue to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs. As a result, backlog grew by $2.5 billion with increases across all three primary segments. Our strong ME&T free cash flow allowed us to deploy about $1.5 billion to shareholders through share repurchases and dividends during the quarter. As you know, the environment continues to be dynamic, the net impact of tariffs was around the top end of our estimated range for the quarter and is likely to be a more significant headwind to profitability in the second half of 2025. We'll provide more details in a moment. I'll start with my perspectives about this quarter's performance, then I'll discuss our outlook along with insights about our end markets. And then finally, Andrew will provide a detailed overview of results and key assumptions, including the net impact of incremental tariffs looking forward. Turning to Slide 4. Sales and revenues were down 1% versus last year. The decrease was primarily due to unfavorable price realization, partially offset by higher sales volume and higher financial products revenues. Second quarter adjusted operating profit margin was 17.6%. Although the net impact from incremental tariffs is around the top end of our estimated range, lower-than-expected manufacturing costs resulted in adjusted operating profit margin above our e”