Cummins Inc. (CMI) — Agentic Tribune

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data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-08-04 (period ending 2026-06-30).

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cummins Inc. and its consolidated subsidiaries are hereinafter sometimes referred to as “Cummins,” “we,” “our” or “us.”

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

Certain parts of this quarterly report contain forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those that are based on current expectations, estimates and projections about the industries in which we operate and management’s beliefs and assumptions. Forward-looking statements are generally accompanied by words such as “anticipates,” “expects,” “forecasts,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “could,” “should,” “may” or words of similar meaning. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which we refer to as “future factors,” which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some future factors that could cause our results to differ materially from the results discussed in such forward-looking statements are discussed below and shareholders, potential investors and other readers are urged to consider these future factors carefully in evaluating forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Future factors that could affect the outcome of forward-looking statements include the following:

GOVERNMENT REGULATION

•any adverse consequences resulting from entering into agreements with the U.S. Environmental Protection Agency (EPA), California Air Resources Board (CARB), the Environmental and Natural Resources Division of the U.S. Department of Justice (DOJ) and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements), including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions;

•increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world;

•evolving environmental and climate change legislation and regulatory initiatives;

•any adverse consequences from changes in tariffs and other trade disruptions;

•changes in international, national and regional trade laws, regulations and policies;

•emissions deregulation;

•changes in taxation;

•global legal and ethical compliance costs and risks;

•future bans or limitations on the use of diesel-powered products;

BUSINESS CONDITIONS / DISRUPTIONS

•raw material, transportation and labor price fluctuations and supply shortages;

•aligning our capacity and production with our demand;

•the actions of, and income from, joint ventures and other investees that we do not directly control;

•large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control;

PRODUCTS AND TECHNOLOGY

•product recalls;

•variability in material and commodity costs;

•the development of new technologies that reduce demand for our current products and services or not successfully developing new technologies and products to effectively address the energy transition;

•lower than expected acceptance of new or existing products or services;

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•product liability claims;

•our sales mix of products;

GENERAL

•climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change;

•our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions, divestitures or exiting the production of certain product lines or product categories and related uncertainties of such decisions;

•increasing interest rates;

•challenging markets for talent and ability to attract, develop and retain key personnel;

•exposure to potential security breaches or other disruptions to our information technology (IT) environment and data security;

•the use of artificial intelligence (AI) in our business and in our products, services and features, and challenges with properly managing its use;

•political, economic and other risks from operations among, between and within numerous countries including political, economic and social uncertainty and the evolving globalization of our business;

•competitor activity;

•increasing competition, including increased global competition among our customers in emerging markets;

•failure to meet sustainability expectations or standards, or achieve our sustainability goals;

•labor relations or work stoppages;

•foreign currency exchange rate changes;

•the performance of our pension plan assets and volatility of discount rates;

•the price and availability of energy;

•continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and

•other risk factors described in Part II, Item 1A in this quarterly report and our 2025 Form 10-K, Part I, Item 1A, under the caption “Risk Factors.”

Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this quarterly report and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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ORGANIZATION OF INFORMATION

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) was prepared to provide the reader with a view and perspective of our business through the eyes of management and should be read in conjunction with our Management's Discussion and Analysis of Financial Condition and Results of Operations section of our 2025 Form 10-K. Our MD&A is presented in the following sections:

•EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS

•RESULTS OF OPERATIONS

•REPORTABLE SEGMENT RESULTS

•OUTLOOK

•LIQUIDITY AND CAPITAL RESOURCES

•APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

•RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS

Overview

We are a global power leader committed to powering a more prosperous world. Since 1919, we have delivered innovative solutions that move people, goods and economies forward. Our five reportable segments - Engine, Components, Distribution, Power Systems and Accelera - offer a broad portfolio, including advanced diesel, electric and hybrid powertrains; integrated power generation systems; critical components such as aftertreatment, turbochargers, fuel systems, controls, transmissions, axles and brakes; and zero emissions technologies like battery and electric powertrain systems. With a global footprint, deep technical expertise and an extensive service network, we deliver dependable, cutting-edge solutions tailored to our customers' needs, supporting them through the energy transition with our Destination Zero strategy. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc., Traton Group, Daimler Trucks AG and Stellantis N.V. We serve our customers through 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.

Our segment reporting structure is organized according to the products and markets each segment serves. The Engine segment produces engines (15 liters and smaller) and associated parts for sale to customers in on-highway and various off-highway markets. Our engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, agriculture, power generation systems and other off-highway applications. The Components segment sells axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics. The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products, maintaining relationships with various OEMs throughout the world and providing selected sales and aftermarket support for our Accelera business. The Power Systems segment is an integrated power provider, which designs, manufactures and sells standby and prime power generators, engines (16 liters and larger) for standby and prime power generator sets and industrial applications (including mining, oil and gas, marine, rail and defense), alternators and other power components. The Accelera segment designs, manufactures, sells and supports electrified power systems with innovative components and subsystems, including battery and electric powertrain technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems. We continue to serve all our markets as they adopt electrification, meeting the needs of our OEM partners and end customers.

Our financial performance depends, in large part, on varying conditions in the markets we serve, particularly the on-highway, off-highway, power generation and general industrial markets. Demand in these markets tends to fluctuate in response to overall economic conditions. Our sales may also be impacted by OEM inventory levels, production schedules, stoppages and supply chain challenges. Economic downturns in markets we serve generally result in reduced sales of our products and can result in price reductions in certain products and/or markets. As a worldwide business, our operations are also affected by geopolitical risks, currency fluctuations, political and economic uncertainty, tariffs and related trade disruptions, public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards. As part of our growth strategy, we invest in businesses in certain countries that carry higher levels of these risks such as China, Brazil, India, Mexico and other countries in Europe, the Middle East and Africa. At the same time, our geographic diversity and broad product and service offerings have helped

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limit the impact from a drop in demand in any one industry, region, customer or the economy of any single country on our consolidated results.

Global Trade Environment

As disclosed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, we operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs, trade disruptions (such as embargoes, sanctions and export controls) and broader geopolitical tensions, could adversely impact the demand for our products and our competitive position. In 2025, the U.S. imposed tariffs on certain countries and products, which was followed by retaliatory tariffs and other trade actions against U.S. goods and services. On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on goods imported into the U.S. were unauthorized. After this ruling, new tariffs were subsequently imposed under different statutes. The global trade environment has contributed to ongoing market volatility and heightened concerns about potential economic impacts. Our primary risks include reduced global movement of goods impacting freight activity, increased costs for suppliers and end-users and uncertainty around supply availability. These factors could lead to a decline in business confidence, reduced demand for our products and increased product costs. We continue to pursue mitigation strategies, including engaging with our suppliers, exploring alternative sourcing and negotiating agreements with our customers to recover tariff-related costs. The financial impact of tariffs, net of mitigation actions and U.S. government tariff refunds (net of amounts to be returned to customers), was immaterial to our profitability and operating cash flows during the three and six months ended June 30, 2026. However, continued and increasing tariff costs, the effectiveness of our mitigation efforts and ongoing market volatility could materially and adversely affect our results of operations, financial condition and cash flows in the future. We continue to monitor developments and take actions to minimize the related impacts to our business to the extent possible. See the “OUTLOOK” section for a discussion of the potential tariff impacts for the remainder of 2026.

2026 Second Quarter Results

A summary of our results is as follows:

	Three months ended				Six months ended
	June 30,				June 30,
In millions, except per share amounts	2026		2025		2026		2025
Net sales	$	9,457	$	8,643	$	17,855	$	16,817
Net income attributable to Cummins Inc.	932		890		1,586		1,714
Earnings per common share attributable to Cummins Inc.
Basic	$	6.76	$	6.46	$	11.48	$	12.45
Diluted	6.73		6.43		11.44		12.38

Net income attributable to Cummins Inc. was $932 million, or $6.73 per diluted share, on sales of $9.5 billion for the three months ended June 30, 2026, versus the comparable prior year period net income attributable to Cummins Inc. of $890 million, or $6.43 per diluted share, on sales of $8.6 billion. The increases in net income attributable to Cummins Inc. and earnings per diluted share were primarily driven by higher sales leading to improved gross margin, partially offset by higher compensation costs. Diluted earnings per common share for the three months ended June 30, 2026, benefited $0.01 from fewer weighted-average shares outstanding due to the stock repurchase program.

Net income attributable to Cummins Inc. was $1.6 billion, or $11.44 per diluted share, on sales of $17.9 billion for the six months ended June 30, 2026, versus the comparable prior year period net income attributable to Cummins Inc. of $1.7 billion, or $12.38 per diluted share, on sales of $16.8 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were primarily driven by the loss on sale of business and settlement of current and future customer obligations as well as higher compensation costs, partially offset by higher sales leading to improved gross margin and favorable currency fluctuations (mainly in the Euro and Brazilian real). Diluted earnings per common share for the six months ended June 30, 2026, benefited $0.03 from fewer weighted-average shares outstanding due to stock repurchase programs. See NOTE 14, “REPORTABLE SEGMENTS,” to our Condensed Consolidated Financial Statements for additional information on loss on sale of business and settlement of current and future customer obligations.

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The table below presents our consolidated net sales by geographic area based on the location of the customer:

	Three months ended				Favorable/				Six months ended				Favorable/
	June 30,				(Unfavorable)				June 30,				(Unfavorable)
In millions	2026		2025		Amount		Percent		2026		2025		Amount		Percent
United States and Canada	$	5,596	$	5,189	$	407	8	%	$	10,368	$	10,243	$	125	1	%
International	3,861		3,454		407		12	%	7,487		6,574		913		14	%
Total net sales	$	9,457	$	8,643	$	814	9	%	$	17,855	$	16,817	$	1,038	6	%

Worldwide revenues increased by 9 percent in the three months ended June 30, 2026, compared to the same period in 2025, primarily due to higher demand for power generation equipment, especially in data center applications, and in international construction markets. International sales (excludes the U.S. and Canada) improved 12 percent mainly due to higher sales in China and Asia Pacific. The increase in international sales was primarily due to higher demand for power generation equipment and in construction markets as well as favorable foreign currency fluctuations of 2 percent (primarily the Chinese renminbi and Euro). Net sales in the U.S. and Canada improved 8 percent driven by higher demand for power generation equipment and medium-duty trucks.

Worldwide revenues increased by 6 percent in the six months ended June 30, 2026, compared to the same period in 2025, mainly due to higher demand for power generation equipment, especially in data center and commercial applications, and in international construction markets, partially offset by lower demand in most on-highway markets. International sales (excludes the U.S. and Canada) improved 14 percent primarily due to higher sales in China, Europe and Asia Pacific. The increase in international sales was driven by higher demand for power generation equipment and in construction markets as well as favorable foreign currency fluctuations of 4 percent (primarily the Euro and Chinese renminbi). Net sales in the U.S. and Canada improved 1 percent mainly due to higher demand for power generation equipment, partially offset by lower demand in most on-highway markets.

The following tables contain sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by reportable segment for the three and six months ended June 30, 2026 and 2025. See NOTE 14, “REPORTABLE SEGMENTS,” to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

	Three months ended June 30,
Reportable Segments	2026						2025						Percent change
			Percent						Percent				2026 vs. 2025
In millions	Sales		of Total		EBITDA		Sales		of Total		EBITDA		Sales		EBITDA
Engine	$	3,084	26	%	$	386	$	2,899	27	%	$	400	6	%	(4)	%
Components	2,891		25	%	381		2,705		25	%	397		7	%	(4)	%
Distribution	3,326		29	%	451		3,041		29	%	445		9	%	1	%
Power Systems	2,255		19	%	552		1,889		18	%	430		19	%	28	%
Accelera	145		1	%	(69)		105		1	%	(100)		38	%	31	%
Total segments	11,701		100	%	1,701		10,639		100	%	1,572		10	%	8	%
Intersegment eliminations	(2,244)				(48)		(1,996)				15		12	%	NM
Total	$	9,457			$	1,653	$	8,643			$	1,587	9	%	4	%
“NM” - not meaningful information

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	Six months ended June 30,
Reportable Segments	2026							2025						Percent change
			Percent							Percent				2026 vs. 2025
In millions	Sales		of Total		EBITDA			Sales		of Total		EBITDA		Sales		EBITDA
Engine	$	5,756	26	%	$	665		$	5,670	27	%	$	858	2	%	(22)	%
Components	5,421		25	%	718			5,375		26	%	779		1	%	(8)	%
Distribution	6,442		29	%	895			5,948		29	%	821		8	%	9	%
Power Systems	4,211		19	%	1,129			3,538		17	%	819		19	%	38	%
Accelera	246		1	%	(346)		(1)	208		1	%	(186)		18	%	(86)	%
Total segments	22,076		100	%	3,061			20,739		100	%	3,091		6	%	(1)	%
Intersegment eliminations	(4,221)				(118)			(3,922)				(44)		8	%	NM
Total	$	17,855			$	2,943		$	16,817			$	3,047	6	%	(3)	%
“NM” - not meaningful information
(1) In the first quarter of 2026, we sold our low pressure fuel cell business to a customer, cancelled future commitments and resolved certain claims against us with that customer resulting in a net payment by us of $175 million. These transactions resulted in a net charge of $199 million which is reflected in other operating expense, net in our Condensed Consolidated Statements of Net Income.

2026 Highlights

We generated $1,808 million in cash from operations for the six months ended June 30, 2026, compared to $782 million for the comparable period in 2025. See the section titled “Cash Flows” in the “LIQUIDITY AND CAPITAL RESOURCES” section for a discussion of items impacting cash flows.

Our debt to capital ratio (total capital defined as debt plus equity) at June 30, 2026, was 35.6 percent, compared to 36.0 percent at December 31, 2025. The decrease was primarily due to an increased equity balance from strong earnings since December 31, 2025, partially offset by a higher total debt balance at June 30, 2026. At June 30, 2026, we had $3.9 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $348 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.

In July 2026, the Board of Directors (the Board) authorized an increase to our quarterly dividend of 10 percent from $2.00 per share to $2.20 per share.

In the first half of 2026, we repurchased $468 million, or 0.8 million shares, of common stock.

In the first half of 2026, we entered into a series of interest rates swaps to convert $350 million of our senior notes, due in 2054, from a fixed rate of 5.45 percent to a floating rate equal to the daily Secured Overnight Financing Rate (SOFR) plus a spread. See NOTE 13, “DERIVATIVES,” to our Condensed Consolidated Financial Statements.

On March 31, 2026, we sold our low pressure fuel cell business to a customer, cancelled future commitments and resolved certain claims against us with that customer resulting in a net payment by us of $175 million. These transactions resulted in a net charge of $199 million, which is reflected in other operating expense, net in our Condensed Consolidated Statements of Net Income.

As of the date of this filing, our credit ratings and outlooks from the credit rating agencies remain unchanged. See the section titled “Credit Ratings” in the “LIQUIDITY AND CAPITAL RESOURCES” section for our current ratings.

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RESULTS OF OPERATIONS

	Three months ended				Favorable/				Six months ended				Favorable/
	June 30,				(Unfavorable)				June 30,				(Unfavorable)
In millions, except per share amounts	2026		2025		Amount		Percent		2026		2025		Amount		Percent
NET SALES	$	9,457	$	8,643	$	814	9	%	$	17,855	$	16,817	$	1,038	6	%
Cost of sales	6,992		6,362		(630)		(10)

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Held by

holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Recent insider activity

Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 1 transaction across 1 insider. Net: -698 shares, -$399,410.

Date	Insider	Role	Action	Shares	Price	Value
2026-08-24	Newsome Earl	VP - Chief Information Officer	Sell	-698	$572.22	-$399,410

Source: SEC Form 4 filings.

Next expected filings

~2026-11-07 10-Q expected by 2026-11-12 (in 55 days)
~2027-02-10 10-K expected by 2027-02-28 (in 150 days)
~2027-05-06 10-Q expected by 2027-05-11 (in 235 days)
~2027-08-05 10-Q expected by 2027-08-10 (in 326 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-08-04 8-K Earnings Release; Financial Statements and Exhibits
2026-08-04 10-Q Quarterly Report
2026-05-12 S-8 Employee Benefit Plan Registration
2026-05-05 8-K Earnings Release; Financial Statements and Exhibits
2026-05-05 10-Q Quarterly Report
2026-02-10 10-K Annual Report
2026-02-05 8-K Earnings Release; Financial Statements and Exhibits
2025-11-06 10-Q Quarterly Report
2025-11-06 8-K Earnings Release; Financial Statements and Exhibits
2025-08-05 10-Q Quarterly Report
2025-08-05 8-K Earnings Release; Financial Statements and Exhibits
2025-07-14 8-K Officer/Director Change; Financial Statements and Exhibits
2025-06-02 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
2025-05-09 8-K Material Financial Obligation; Other Events; Financial Statements and Exhibits
2025-05-07 8-K Other Events; Financial Statements and Exhibits

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