CMI earnings analysis
What we found in CMI's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Cummins delivered strong Q2 top-line growth, with revenue up 9% to $9.457 billion and diluted EPS up 5% to $6.73, powered by data-center-related power-generation demand and international construction activity. Power Systems led with 19% sales growth and 28% EBITDA growth, while operating cash flow increased to $1.808 billion for the first half. The constructive outlook is tempered by core Engine and Components margin contraction, ongoing Accelera losses, and policy-driven trade and emissions-regulation uncertainty.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and EPS increased year over year
- Q2 net sales rose $814 million, or 9%, year over year to $9.457 billion; sequentially, sales increased $1.059 billion from implied Q1 sales of $8.398 billion. Diluted EPS rose $0.30, or 5%, to $6.73 from $6.43.
- Power Systems growth accelerated
- Power Systems was the principal growth engine: sales increased $366 million, or 19%, to $2.255 billion and EBITDA increased $122 million, or 28%, to $552 million. Power-generation sales within the segment rose $331 million, or 27%, to $1.536 billion, led by China and North America.
- Operating cash flow strengthened sharply
- Cash from operations was $1.808 billion in the first six months of 2026, up $1.026 billion from $782 million a year earlier. Capital expenditures were $438 million, implying strong cash conversion, although free cash flow is not explicitly reported in the filing.
- Liquidity and leverage remain solid
- Liquidity remained substantial, with $3.924 billion of cash, cash equivalents and marketable securities plus $3.652 billion of revolving-credit capacity at June 30, 2026. The debt-to-capital ratio improved to 35.6% from 36.0% at December 31, 2025.
- Capital returns increased
- Shareholder distributions continued: Cummins repurchased $468 million of stock in the first half and raised its quarterly dividend 10%, from $2.00 to $2.20 per share, in July 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Margin pressure despite higher revenue
- Profitability lagged sales growth: gross margin declined 0.3 percentage points year over year to 26.1%, while operating income increased only 4% to $1.279 billion on 9% sales growth. Higher compensation costs drove SG&A up $114 million, or 15%, to $893 million.
- Core segment margins contracted
- Engine EBITDA declined $14 million to $386 million and Components EBITDA declined $16 million to $381 million despite sales growth. Their EBITDA margins fell to 12.5% from 13.8% and to 13.2% from 14.7%, respectively.
- Accelera losses and fuel-cell exit charge
- Accelera remained loss-making, reporting a $69 million Q2 EBITDA loss; for the first six months its EBITDA loss widened $160 million to $346 million. The company also recorded a $199 million net charge related to the low-pressure fuel-cell business sale and settlement, including a $175 million net payment.
- GHG-credit regulatory exposure
- The filing states there were no formal Item 1A risk-factor additions or amendments versus the 2025 10-K. However, management identifies a potential non-cash expense of up to $89 million if future NHTSA rulemaking makes its June 30, 2026 GHG compliance credits minimally valuable or valueless.
- Working-capital build and trade uncertainty
- Accounts receivable increased $767 million to $6.585 billion and inventories increased $575 million to $6.397 billion since December 31, 2025; days sales outstanding rose to 63 from 60. Management also cites tariffs and trade disruptions as possible future cost and demand headwinds, although their net impact was immaterial in the first half.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $6.73
- Gross margin
- 26.1%
- Operating margin
- 13.5%
- Segment
- Engine: $3.084 billion sales, +6% year over year; EBITDA $386 million, -4%.
- Segment
- Components: $2.891 billion sales, +7%; EBITDA $381 million, -4%.
- Segment
- Distribution: $3.326 billion sales, +9%; EBITDA $451 million, +1%.
- Segment
- Power Systems: $2.255 billion sales, +19%; EBITDA $552 million, +28%.
- Segment
- Accelera: $145 million sales, +38%; EBITDA loss of $69 million, improved from a $100 million loss.
What they said about what is next.
The 10-Q does not provide numeric revenue or EPS guidance. Management expects Power Systems demand and North American medium- and heavy-duty truck demand to remain strong through the remainder of 2026, but warns tariffs, inflation, trade disruptions and the Iran conflict could negatively affect earnings. Capital expenditures are planned at $1.35 billion to $1.45 billion in 2026, with approximately 60% in North America.
The filing reads better than the one before it.
What came before.
- 10-Q · May 5, 2026
- Cummins Inc. reported Q1 2026 revenue of $8.4 billion, a 3% increase year-over-year, but fell short of analysts' EPS estimate with diluted EPS of $4.71. The company is optimistic about revenue growth in the power…
- 10-K · February 10, 2026
- Cummins reports 2025 net sales of $33.67 billion and diluted EPS of $20.50, with operating income of $4.025 billion and strong operating cash flow of $3.621 billion. Results were mixed: Power Systems and Distribution…
- 10-Q · November 6, 2025
- Cummins reported Q3 net sales of $8,317 million and diluted EPS of $3.86. Revenue was down modestly year-over-year while gross margin and operating income declined; cash, marketable securities and operating cash flow…
- 10-Q · November 5, 2024
- Cummins reported Q3 net sales of $8,456 million and diluted EPS of $5.86, driven by margin expansion and a large divestiture-related gain year-to-date. Revenue was essentially flat year-over-year (+$25 million) while…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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