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CUMMINS INC

CMI
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Business Summary

Cummins Inc. is a global power leader that designs, manufactures, sells, and services a broad portfolio of advanced diesel, electric, and hybrid powertrains; integrated power generation systems; and critical components including aftertreatment, turbochargers, fuel systems, controls, transmissions, axles, and brakes, as well as zero-emissions technologies like battery and electric powertrain systems. The company operates through five reportable segments: Engine, Components, Distribution, Power Systems, and Accelera. Its products are sold to original equipment manufacturers (OEMs), distributors, dealers, and other customers worldwide, supported by a service network of approximately 640 wholly-owned, joint venture, and independent distributor locations and more than 13,000 Cummins certified dealer locations in approximately 190 countries and territories.

Cummins competes worldwide with a number of other manufacturers and distributors that produce and sell similar products, primarily on the basis of performance, price, total cost of ownership, fuel economy, emissions compliance, speed of delivery, quality, and customer support. In the Engine segment, competitors include Weichai Power Co., Ltd., Yuchai, and Deutz AG, while truck OEMs such as Daimler, PACCAR, Traton, Volvo Powertrain, Ford Motor Company, China First Auto Works, Dongfeng Motor Corporation, CNH Industrial, and Isuzu produce some or all of their own engines. In the Components segment, primary competitors include Robert Bosch GmbH, Garrett Motion, Inc., BorgWarner Inc., Tenneco Inc., Eberspacher Holding GmbH & Co. KG, Allison Transmission, Knorr-Bremse AG, and ZF Friedrichshafen AG. In the Power Systems segment, primary competitors are Caterpillar, Inc., MTU (Rolls Royce Power Systems Group), Kohler/SDMO (Kohler Group), INNIO, Generac, and Mitsubishi Heavy Industries. In the Accelera segment, competitors include Daimler, PACCAR, Traton, BYD Company Limited, Dana Incorporated, and BorgWarner Inc. PACCAR is the company's largest customer, accounting for 13% of consolidated net sales in 2025.

Cummins generates revenue through the sale of engines, components, power generation systems, and electrified power systems, as well as through parts and service activities. The Distribution segment serves as the primary sales, service, and support channel, offering a wide range of products and services including power generation systems, high-horsepower engines, heavy-duty and medium-duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. The company has long-standing relationships with leading manufacturers such as PACCAR Inc., Traton Group, Daimler Trucks AG, and Stellantis N.V. Revenue is generated from both external customers and intersegment sales, with the Distribution segment accounting for 30% of consolidated net sales in 2025.

The Engine segment manufactures and markets a broad range of diesel, natural gas, and gasoline-powered engines under the Cummins brand name and certain customer brand names for the heavy-duty truck, medium-duty truck and bus, light-duty automotive, and off-highway markets. Engines have a displacement range of 2.8 to 15 liters and horsepower ranging from 48 to 715. In 2025, Engine segment total sales were $10.875 billion , representing 26% of consolidated net sales. The Components segment designs, manufactures, and supplies drivetrain and braking systems, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions, and electronics. In 2025, Components segment total sales were $10.149 billion , representing 25% of consolidated net sales. The Distribution segment serves customers through a worldwide network of wholly-owned, joint venture, and independent distribution locations across seven geographic regions. In 2025, Distribution segment total sales were $12.405 billion , representing 30% of consolidated net sales. The Power Systems segment offers standby and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as industrial engines up to 4,400 horsepower and alternator products ranging from 7.5 kilovolt-amperes (kVA) to 11,200 kVA. In 2025, Power Systems segment total sales were $7.463 billion , representing 18% of consolidated net sales. The Accelera segment designs, manufactures, sells, and supports electrified power systems including battery and electric powertrain technologies. In 2025, Accelera segment total sales were $460 million , representing 1% of consolidated net sales.

In 2025, due to the continued rapid deterioration in electrolyzer markets and overall hydrogen markets, along with significant uncertainty in alternative power markets resulting from reductions in government incentives, Cummins fully impaired all goodwill for its electrolyzer business and wrote off certain inventory in the third quarter of 2025, totaling $240 million . A further strategic review in the fourth quarter of 2025 resulted in additional charges for inventory write-downs, intangible and fixed asset impairments, lease impairments, contract terminations, and severance, totaling $218 million . Total charges for all Accelera actions in 2025 were $458 million . On March 18, 2024, Cummins completed the divestiture of its remaining 80.5% ownership of Atmus Filtration Technologies Inc. common stock through a tax-free split-off, resulting in a reduction of shares outstanding by 5.6 million shares and a gain of approximately $1.3 billion . In the second quarter of 2024, Cummins made $1.9 billion of payments required by the Settlement Agreements with the EPA, CARB, the DOJ, and the California Attorney General's Office. In September 2025, Cummins repaid its $500 million 0.75% senior notes due in 2025 using cash on hand. On May 9, 2025, Cummins issued $2.0 billion aggregate principal amount of senior unsecured notes, receiving net proceeds of $1.99 billion . In July 2025, the Board authorized an increase to the quarterly dividend of approximately 10% from $1.82 per share to $2.00 per share . In December 2025, Cummins entered into interest rate swaps to effectively convert $150 million of its senior notes due in 2054 from a fixed rate of 5.45% to a floating rate.

Net sales for 2025 were $33.670 billion , compared to $34.102 billion in 2024, a decrease of 1%. Net income attributable to Cummins Inc. for 2025 was $2.843 billion , or $20.50 per diluted share , compared to $3.946 billion , or $28.37 per diluted share , in 2024. The decreases were driven by the absence of the $1.3 billion gain recognized on the divestiture of Atmus in the first quarter of 2024, lower demand in on-highway commercial truck markets, and Accelera actions in the second half of 2025, partially offset by strong growth in power generation markets, especially data center and commercial markets, favorable non-tariff pricing mainly related to the launch of updated engine products in light-duty automotive markets, and lower compensation expenses. Gross margin was $8.516 billion or 25.3% of sales, compared to $8.439 billion or 24.7% of sales in 2024. Operating income was $4.025 billion compared to $3.750 billion in 2024. Cash provided by operations was $3.621 billion compared to $1.487 billion in 2024.

Business Outlook

Cummins' 2026 outlook reflects expectations for strong demand in power generation and industrial markets served by the Power Systems business, and a stable aftermarket business driven by demand in Engine and Power Systems. Challenges include expectations for weak demand for medium-duty and heavy-duty trucks in North America in the first half of 2026, increases in costs and tariffs, and other inflationary pressures that could negatively impact earnings. The potential for trade disruption, including embargoes, sanctions, and export controls, could cause production disruptions and negatively impact earnings. The slower adoption of zero-emission solutions has reduced Accelera's near-term revenue outlook, prompting significant restructuring actions and a refined strategic investment approach, with ongoing investments in priority technologies expected to result in continued near-term operating losses.

Cummins expects demand within markets served by its Power Systems business to remain strong, including the power generation and industrial markets. The company anticipates its aftermarket business will remain stable, driven primarily by demand in its Engine and Power Systems businesses. The company is investing in new products and technologies, including electrified power systems and related components and subsystems, to address the energy transition. The Amplify Cell Technologies LLC joint venture, formed in May 2024, will manufacture battery cells for electric commercial vehicles and industrial applications, with production not expected to begin until 2028. As of December 31, 2025, Cummins had contributed $412 million to the joint venture, with a maximum remaining required contribution of $418 million , which could be reduced by future government incentives.

Cummins expects its effective tax rate for 2026 to approximate 24.0% , excluding any discrete tax items that may arise. The company anticipates that ongoing investments in priority technologies will result in continued near-term operating losses for the Accelera segment, though restructuring actions are expected to gradually improve the cost structure.

Cummins plans to spend an estimated $1.35 billion to $1.45 billion in 2026 on capital expenditures, with over 65% of these expenditures expected to be invested in North America. The company expects to contribute approximately $51 million in cash to its global pension plans in 2026, and expects its 2026 net periodic pension cost to approximate $73 million . The company intends to retain its strong investment credit ratings and to repurchase outstanding shares from time to time to enhance shareholder value.

Cummins expects demand for medium-duty and heavy-duty trucks in North America to remain weak in the first half of 2026. Increases in costs, tariffs, as well as other inflationary pressures, could negatively impact earnings. The potential for trade disruption, including embargoes, sanctions, and export controls, could cause production disruptions and negatively impact earnings. Changes in government policies, such as reduced incentives, delayed infrastructure mandates, or revised emissions standards, may impact Accelera's ability to compete, scale, or recover investments in zero-emission technologies. The reduction of government incentives in the U.S. to support the adoption of hydrogen fuel, along with slower than expected market development in some international markets, has contributed to lower expectations for demand for electrolyzer products. The Board for the Amplify Cell Technologies LLC joint venture is reviewing the timing of investments as the result of changing market adoption projections.

Risk Factors

Cummins faces material risks from the uncertain global trade environment, including tariffs, trade disruptions, and broader geopolitical tensions, which could adversely impact production costs, customer demand, and competitive position. The company's products are subject to extensive and evolving statutory and regulatory requirements governing emissions, and failure to comply could result in significant costs and penalties. The Settlement Agreements with the EPA, CARB, the DOJ, and the California Attorney General's Office, which became final in April 2024, involved a $2.0 billion charge and $1.9 billion in payments, and any further non-compliance subjects Cummins to stipulated penalties. The company derives significant earnings from investees it does not directly control, with nearly fifty percent of equity, royalty, and interest income from investees in 2025 coming from three 50%-owned joint ventures in China. The development of new technologies, including electrified powertrains, may materially reduce demand for current diesel and natural gas products, and Cummins may not be successful in developing segment-leading electrified powertrains. The company's plan to reposition its portfolio through strategic acquisitions, divestitures, or exiting product lines may expose it to additional costs and risks.

Management Priorities

Management's message emphasizes Cummins' commitment to its Destination Zero strategy, supporting customers through the energy transition while growing the business. Key themes include navigating the uncertain global trade environment characterized by tariffs, export controls, and broader geopolitical tensions, which have created significant market volatility. Management highlights proactive steps being taken in the supply chain to mitigate impacts where possible and working with customers to pass through incremental costs. Strategic priorities for the period ahead include focusing on strong growth in power generation markets, especially data center and commercial markets, managing through weak demand in North American heavy-duty and medium-duty truck markets in the first half of 2026, and continuing to invest in future critical technologies and products while refining the strategic investment approach for the Accelera segment following significant restructuring actions.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Reportable Segment Results, Engine Segment
  2. [2] Item 7, MD&A — Reportable Segment Results, Components Segment
  3. [3] Item 7, MD&A — Reportable Segment Results, Distribution Segment
  4. [4] Item 7, MD&A — Reportable Segment Results, Power Systems Segment
  5. [5] Item 7, MD&A — Reportable Segment Results, Accelera Segment
  6. [6] Item 7, MD&A — Executive Summary and Financial Highlights, Accelera Actions
  7. [7] Item 7, MD&A — Executive Summary and Financial Highlights, Accelera Actions
  8. [8] Item 7, MD&A — Executive Summary and Financial Highlights, Accelera Actions
  9. [9] Item 1, Business — Divestiture of Atmus
  10. [10] Item 1, Business — Divestiture of Atmus
  11. [11] Item 1, Business — Settlement Agreements
  12. [12] Item 7, MD&A — Liquidity and Capital Resources, Debt Payments
  13. [13] Item 7, MD&A — Executive Summary and Financial Highlights
  14. [14] Item 7, MD&A — Executive Summary and Financial Highlights
  15. [15] Item 7, MD&A — Executive Summary and Financial Highlights
  16. [16] Item 7, MD&A — Executive Summary and Financial Highlights
  17. [17] Item 7, MD&A — Results of Operations
  18. [18] Item 7, MD&A — Results of Operations
  19. [19] Item 7, MD&A — Results of Operations
  20. [20] Item 7, MD&A — Results of Operations
  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 7, MD&A — Results of Operations
  23. [23] Item 7, MD&A — Results of Operations
  24. [24] Item 7, MD&A — Results of Operations
  25. [25] Item 7, MD&A — Results of Operations
  26. [26] Item 7, MD&A — Results of Operations
  27. [27] Item 7, MD&A — Liquidity and Capital Resources, Cash Flows
  28. [28] Item 7, MD&A — Liquidity and Capital Resources, Cash Flows
  29. [29] Item 1, Business — Joint Ventures, Alliances and Non-Wholly-Owned Subsidiaries, Amplify Cell Technologies LLC
  30. [30] Item 1, Business — Joint Ventures, Alliances and Non-Wholly-Owned Subsidiaries, Amplify Cell Technologies LLC
  31. [31] Item 7, MD&A — Results of Operations, Income Tax Expense
  32. [32] Item 7, MD&A — Liquidity and Capital Resources, Capital Expenditures
  33. [33] Item 7, MD&A — Liquidity and Capital Resources, Pensions
  34. [34] Item 7, MD&A — Application of Critical Accounting Estimates, Pension Benefits
  35. [35] Item 1A, Risk Factors — Government Regulation
  36. [36] Item 1, Business — Settlement Agreements
  37. [37] Item 7, MD&A — Results of Operations
  38. [38] Item 7, MD&A — Results of Operations
  39. [39] Item 7, MD&A — Results of Operations
  40. [40] Item 7, MD&A — Results of Operations
  41. [41] Item 7, MD&A — Results of Operations
  42. [42] Item 7, MD&A — Results of Operations
  43. [43] Item 7, MD&A — Results of Operations
  44. [44] Item 7, MD&A — Results of Operations
  45. [45] Item 7, MD&A — Results of Operations
  46. [46] Item 7, MD&A — Results of Operations
  47. [47] Item 7, MD&A — Liquidity and Capital Resources, Cash Flows
  48. [48] Item 7, MD&A — Liquidity and Capital Resources, Cash Flows
  49. [49] Item 7, MD&A — Liquidity and Capital Resources, Key Working Capital and Balance Sheet Data
  50. [50] Item 7, MD&A — Liquidity and Capital Resources, Key Working Capital and Balance Sheet Data
  51. [51] Item 7, MD&A — Liquidity and Capital Resources, Sources of Liquidity
  52. [52] Item 7, MD&A — Liquidity and Capital Resources, Sources of Liquidity
  53. [53] Item 7, MD&A — Results of Operations, Income Tax Expense
  54. [54] Item 7, MD&A — Results of Operations, Income Tax Expense
  55. [55] Item 7, MD&A — Executive Summary and Financial Highlights, Accelera Actions
  56. [56] Item 7, MD&A — Executive Summary and Financial Highlights, Divestiture of Atmus
  57. [57] Item 7, MD&A — Executive Summary and Financial Highlights, Accelera Actions
  58. [58] Item 7, MD&A — Reportable Segment Results, Engine Segment
  59. [59] Item 7, MD&A — Reportable Segment Results, Components Segment
  60. [60] Item 7, MD&A — Reportable Segment Results, Distribution Segment
  61. [61] Item 7, MD&A — Reportable Segment Results, Power Systems Segment
  62. [62] Item 7, MD&A — Reportable Segment Results, Accelera Segment

Analysis on 6/8/2026