Cummins Q1 Earnings Call Highlights

Key Points

• Cummins reported Q1 sales of $8.4 billion (up 3%) and EBITDA of $1.3 billion (15.4%) including a net charge of $199 million for the sale of its low‑pressure fuel cell business; excluding the charge, EBITDA was $1.5 billion and adjusted net earnings were $853 million, with operating cash flow of $309 million and about $519 million returned to shareholders ($243M buybacks, $276M dividends).
• Power generation — led by accelerating data center demand — was the quarter’s growth driver: Power Systems revenue rose 19% with a record 29.5% EBITDA margin, China revenue (including JVs) was $2.1 billion (+19%) and the company raised full‑year 2026 revenue guidance to +8% to +11% and EBITDA margin to 17.75%–18.5%.
• North America heavy‑ and medium‑duty truck volumes were down roughly 20%, pressuring Engine and Components margins, but management raised its 2026 NA truck production forecasts and said Accelera’s outlook improved after completing the fuel‑cell sale (one‑time charge) with smaller adjusted EBITDA losses expected.

Cummins NYSE: CMI reported first-quarter 2026 sales of $8.4 billion, up 3% from the year-ago period, as strong demand in power generation—particularly from data centers—more than offset weaker North America heavy- and medium-duty truck markets. Chair and CEO Jennifer Rumsey said the quarter reflected “higher demand in power generation markets, particularly from data centers,” while North America heavy- and medium-duty truck unit volumes were down 20% versus a year ago.

EBITDA for the quarter was $1.3 billion, or 15.4% of sales, including a net charge of $199 million tied to the sale of the company’s low-pressure fuel cell business. Excluding that charge, EBITDA was $1.5 billion, or 17.7%, compared with $1.5 billion, or 17.9%, a year ago, with lower North America truck volumes and higher compensation expenses partly offset by stronger power generation demand, pricing, and higher joint venture income.

Key quarter developments

Rumsey highlighted several strategic milestones during the quarter, including what she described as “the world’s first commercial hybrid electric ultra-class mining truck,” now operating at the Caserones open pit mine in Chile. The project marked Cummins’ “first retrofit of a 300-ton Komatsu haul truck using First Mode hybrid technology in daily operation,” she said.

Rumsey also pointed to Mack Trucks’ announcement that it will integrate the Cummins X10 engine into the Mack Granite chassis, calling it a collaboration that will provide a new option for customers in the vocational truck segment. In addition, the company took “targeted actions” in its Accelera segment, completing the sale of its low-pressure fuel cell business and related customer commitments, which management said should improve Accelera’s financial trajectory.

Regional and end-market performance

North America revenues declined 6% year-over-year in the quarter. Rumsey said industry production of heavy-duty trucks totaled 50,000 units in Q1, down 23% from a year earlier, while Cummins’ heavy-duty unit sales were 18,000, down 16%. Medium-duty industry production was 27,000 units, down 20%, while Cummins’ unit sales were 25,000, down 19%.

Pickup truck engine shipments to Stellantis totaled 30,000 in Q1, up 4% year-over-year, Rumsey said. She added that North America power generation revenues increased 23% on strong data center demand.

International revenues increased 16% year-over-year, driven by China. Rumsey said Q1 revenues in China, including joint ventures, were $2.1 billion, up 19%, citing accelerating data center demand and strong off-highway export activity by OEM customers. She noted China’s industry demand for medium- and heavy-duty trucks rose 20% to 353,000 units, while Cummins’ unit sales, including joint ventures, increased 14% to 55,000 units. China excavator demand was up 19% to 73,000 units; Cummins sold 14,000 units, up 25%, which she attributed primarily to export demand. Power generation equipment sales in China increased 84% in Q1 due to data center demand, Rumsey said.

In India, Q1 revenues, including joint ventures, were $814 million, up 12%, as industry truck production increased 21% year-over-year, driven by tax incentives, Rumsey said.

Profitability, cash flow, and capital return

Chief Financial Officer Mark Smith said gross margin was $2.2 billion, or 26.7% of sales, up from 26.4% a year ago, driven by pricing and higher power generation sales, partially offset by lower North America truck volumes and higher compensation. Selling, administrative, and research expenses increased to $1.2 billion, or 14.3% of sales, driven primarily by higher variable compensation expense.

Joint venture income was $148 million, up $17 million from the prior year, which Smith attributed primarily to stronger performance in on- and off-highway joint ventures in China. Other income was negative $178 million, compared with positive $23 million a year ago, primarily due to the $199 million net charge related to the fuel cell business sale.

Net earnings were $654 million, or $4.71 per diluted share, including $1.44 per diluted share related to the fuel cell sale. Excluding the sale, net earnings were $853 million, or $6.615 per share, compared to $824 million, or $5.96 per diluted share, a year ago, Smith said. Operating cash flow was an inflow of $309 million, compared with an outflow of $3 million in Q1 2025.

The company returned more than half a billion dollars to shareholders in the quarter. Smith said Cummins repurchased $243 million of shares at an average price of $536.97 and paid $276 million in dividends.

Rumsey said the company returned “$519 billion to shareholders” in the quarter, including $243 million in repurchases. (Management’s remarks elsewhere on the call described more than half a billion dollars returned, with $243 million in repurchases and $276 million in dividends.)

Segment results: power strength offsets truck softness

Smith provided detail across the company’s segments:

• Engine: Revenue of $2.7 billion, down 4% year-over-year. EBITDA margin was 10.4%, down from 16.5%, pressured by weaker North America truck volumes, higher compensation, higher R&D as the company approaches 2027 launches, and increased product coverage costs, partly offset by higher joint venture income.
• Components: Revenue of $2.5 billion, down 5%. EBITDA margin was 13.3%, down from 14.3%, as lower truck volumes and higher material costs were partly offset by pricing.
• Distribution: Revenue of $3.1 billion, up 7%. EBITDA margin improved to 14.2% from 12.9%, driven by higher power generation demand, partly offset by higher variable compensation.
• Power Systems: Revenue of $2.0 billion, up 19%. EBITDA margin rose to a record 29.5% from 23.6%, aided by higher volumes, pricing, net tariff recovery, higher joint venture income, and one-time cost recoveries.
• Accelera: Revenue of $101 million, down 2%. EBITDA loss was $277 million including the fuel cell sale charge; excluding the charge, EBITDA loss was $78 million, improving from an $86 million loss in the prior-year period, Smith said.

On tariffs, Smith said the net impact to EBITDA was “immaterial” in Q1 and is expected to remain immaterial for the remainder of 2026 as the company works with supply chain partners and customers to mitigate impacts. Rumsey added the company continues to work with the U.S. Department of Commerce on how the “engine offset program” will work related to 232 tariffs, noting it has not yet been finalized and that the company’s guidance reflects its assumptions.

2026 outlook raised; power generation demand a key driver

Management raised its full-year 2026 outlook following what Rumsey called “a strong Q1.” Cummins now expects total company revenues to increase 8% to 11% in 2026, up from prior guidance of 3% to 8%. The company also increased EBITDA margin guidance to 17.75% to 18.5%.

Rumsey said Cummins raised its North America heavy-duty truck forecast to 230,000 to 250,000 units (from 220,000 to 240,000), citing strong recent orders and improving spot rates. The company also raised its North America medium-duty truck forecast to 125,000 to 135,000 units (from 110,000 to 120,000) due to stronger-than-expected first-half demand and momentum expected into the second half. Pickup engine shipments are still expected to total 125,000 to 140,000 units for the year.

In China, Cummins now expects total revenue, including joint ventures, to increase 10% in 2026, improved from prior expectations of a 1% decline, driven by stronger data center demand. In India, the company now projects total revenue, including joint ventures, to increase 2% in 2026, up from prior guidance of a 5% decline, which Rumsey said is supported by tax rate reductions improving underlying demand.

For global power generation, Cummins raised its revenue growth outlook to 15% to 25% (from 10% to 20%), citing accelerating data center demand and capacity additions in North America late in 2025, along with stronger-than-expected international growth. Smith said Power Systems margins are expected to remain strong but “a little below Q1 levels” due to the uneven timing of tariff costs and recoveries and the benefit of certain one-time cost recoveries in Q1.

Smith also updated segment guidance, including higher expected 2026 revenue and margin ranges for the engine, components, distribution, and power systems businesses, and an improved loss outlook for Accelera. Excluding the fuel cell sale charge, Cummins now expects Accelera EBITDA losses of $270 million to $300 million, improved from a prior range of $325 million to $355 million.

On EPA 2027 emissions regulation readiness, Rumsey said Cummins remains “very excited about launching our HELM platforms,” anticipating fuel efficiency improvements and other performance benefits. She said Cummins decided to “de-delay the launch of our B-platform to January 28,” which she described as the final launch of its diesel HELM platform, while continuing plans to move forward with the X15 and X10 in 2027. Later in the Q&A, she said Cummins anticipates continuing to offer the current B-Series product through 2027 and launching the new seven-liter at the beginning of 2028, adding that details will depend on the final rule.

Looking ahead, management pointed investors to the company’s Analyst Day on May 21, where it plans to discuss strategy and updated financial targets. Investor relations executive Nick Arens said Cummins has “achieved our 2030 profitability targets early” and expects to provide updates on targets, capital deployment, and growth opportunities, including data centers.

About Cummins NYSE: CMI

Cummins Inc NYSE: CMI is a global power technology company that designs, manufactures, distributes and services a broad portfolio of diesel and natural gas engines, electrified powertrains, power generation systems and related components. Founded in 1919 and headquartered in Columbus, Indiana, Cummins has grown into one of the world's leading suppliers of internal combustion engines and a provider of technologies that reduce emissions and improve fuel efficiency.

The company's product lineup includes heavy-, medium- and light-duty engines for on-highway and off-highway applications, generator sets and power systems for commercial and industrial use, and key engine components such as turbochargers, fuel systems, air handling, filtration and aftertreatment solutions.

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