Cummins Inc. (CMI) Q2 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. Cummins Inc. is a global power leader operating five reportable segments: Engine, Components, Distribution, Power Systems, and Accelera. The company serves original equipment manufacturers (OEMs) and distributors in approximately 190 countries, focusing on diesel, electric, and hybrid powertrains, as well as power generation systems.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | YTD 2026 (6 Months) | Q2 2025 (3 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $9,457 million | $17,855 million | $8,643 million | $16,817 million |
| Gross Margin | $2,465 million (26.1%) | $4,708 million (26.4%) | $2,281 million (26.4%) | $4,436 million (26.4%) |
| Operating Income | $1,279 million | $2,228 million | $1,226 million | $2,360 million |
| Net Income (Attributable to CMI) | $932 million | $1,586 million | $890 million | $1,714 million |
| Diluted EPS | $6.73 | $11.44 | $6.43 | $12.38 |
| Operating Cash Flow (YTD) | $1,808 million (vs. $782 million YTD 2025) | |||
| Total Debt | $7,695 million (Debt-to-Capital: 35.6%) | |||
| Cash & Marketable Securities | $3,924 million |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 9% in Q2 and 6% YTD compared to 2025. Growth was driven by strong demand in Power Systems (especially data center applications) and Distribution segments, partially offset by lower demand in heavy-duty truck markets.
- Profitability: Q2 Net Income rose 5% due to higher sales volumes and improved gross margins, offset by higher compensation costs. However, YTD Net Income declined 7% primarily due to a $199 million charge related to the sale of the low-pressure fuel cell business and settlement of customer obligations.
- Segment Performance:
- Power Systems: Sales up 19% and EBITDA up 28% (Q2) driven by power generation demand.
- Engine: Sales up 6% (Q2) but EBITDA down 4% due to higher compensation and freight costs.
- Accelera: Reported a loss of $69 million (Q2) and $346 million (YTD) due to ongoing restructuring and investment in zero-emission technologies.
- Cash Flow: Operating cash flow improved significantly to $1.8 billion YTD, driven by lower working capital requirements compared to the prior year.
Guidance, Outlook, and Risks
- Dividend Increase: The Board authorized a 10% increase in the quarterly dividend to $2.20 per share, effective July 2026.
- Capital Allocation: Repurchased $468 million of common stock YTD. Capital expenditures for 2026 are estimated between $1.35 billion and $1.45 billion.
- Outlook: Management expects strong demand in Power Systems and North American truck markets. Challenges include tariff costs, inflationary pressures, and the slower adoption of zero-emission solutions impacting the Accelera segment.
- Regulatory Risks:
- Emissions: The EPA finalized the rescission of GHG emission standards for on-highway vehicles effective April 20, 2026. Cummins holds $89 million in GHG compliance credits which may lose value if NHTSA rules change regarding credit utilization.
- Trade: Ongoing volatility from tariffs and geopolitical tensions (e.g., USMCA negotiations) poses risks to supply chains and product costs.
- Unusual Items: The $199 million charge in Q1 2026 related to the fuel cell business divestiture significantly impacted YTD earnings.
Investor Verification Checklist
- Fuel Cell Divestiture Impact: Verify the long-term strategic implications of the $199 million charge and the exit from the low-pressure fuel cell business.
- Regulatory Credit Valuation: Assess the risk to the $89 million GHG compliance credit balance given the EPA's repeal of GHG standards and potential NHTSA rule changes.
- Accelera Segment Trajectory: Monitor the timeline for profitability in the Accelera segment amidst continued operating losses and restructuring.
- Tariff Mitigation: Evaluate the effectiveness of cost-pass-through strategies to customers in light of ongoing global trade tensions.
- Working Capital Efficiency: Confirm the sustainability of the improved working capital management that drove the $1 billion increase in operating cash flow YTD.