CUMMINS Q1 FY26 earnings call CMI

Q1 North America revenue fell 6%, with industry heavy-duty production of 50,000 units down 23% and medium-duty of 27,000 units down 20%; Cummins' own HD unit sales were 18,000 (-16%) and MD 25,000 (-19%). Management now sees the recovery arriving sooner than the previously modeled 'weak-H1/strong-H2' shape, citing rising truck orders and improving spot rates. Cummins is adding a third shift at its Rocky Mount, North Carolina medium-duty plant to meet demand, and raised full-year NA HD industry units to 230,000-250,000 and MD to 125,000-135,000. H2 build rates were left largely unchanged given potential supply-chain constraints capping upside.

Power Systems revenue rose 19% to $2B with record EBITDA margin of 29.5% (up from 23.6%), aided by higher volumes, positive pricing, net tariff recovery, higher JV income, and some one-time^📎 non-tariff cost recoveries. Management raised the segment's full-year revenue guide to +14-19% and EBITDA margin to ~25-26%. Rest-of-year margins are expected strong but below Q1 given uneven tariff cost/recovery timing and the non-repeating^📎 one-time^📎 recoveries. The 95-liter high-horsepower engine, whose capacity was doubled last year, is a key beneficiary, with multiyear customer demand discussions underpinning the outlook.

China revenue incl. JVs rose 19% to $2.1B on accelerating data-center power-gen demand (China power-gen sales +84%) and strong off-highway export activity; Cummins truck-equivalent unit sales incl. JVs were 55,000 (+14%) against industry demand of 353,000 (+20%), and excavator sales were 14,000 (+25%). Full-year China revenue guidance swung to +10% from -1%. India revenue incl. JVs rose 12% to $814M with industry truck production up 21% on tax incentives; the full-year India guide improved to +2% from -5%. Management framed China as decisively 'more of a tailwind than a headwind,' driven by content gains from tighter emissions rules, localization, and rising displacement.

Management remains excited about the HELM platform launching with EPA'27 regulation, expecting fuel-efficiency and performance gains. Citing late regulatory changes, Cummins decided to delay the B (7-liter) diesel platform launch to January 2028 — the final Diesel HELM launch — while proceeding with X15 and X10 in 2027. The current B Series will be offered through 2027. Management has been transparent with the EPA, awaits a draft revised rule expected this quarter, and anticipates changes to longer emissions warranty and useful-life provisions. New platforms will start with higher warranty accrual rates fixed for the first six quarters.

Cummins completed the sale of its Low-pressure Fuel Cell business (and related customer commitments) to Alstom, recording a $199M net charge and improving Accelera's loss trajectory. Q1 Accelera revenue was $101M (-2%); ex-charge EBITDA loss narrowed to $78M from $86M. Full-year net-loss guidance (ex-charge) improved to $270M-$300M from $325M-$355M. The segment is refocusing on battery-electric powertrain, pacing investment as the market evolves, while winding down remaining electrolyzer commitments. North America electric truck demand remains very low with no near-term improvement expected outside buses.

Net tariff impact^🌐 to Q1 EBITDA was immaterial and is expected to remain so for 2026; the gross full-year impact was revised down to ~20-30 bps from the prior ~0.5% estimate. Cummins predominantly makes and sources in the US for the US market and is working with the Department of Commerce on a Section 232 engine-offset program (not yet finalized but reflected in guidance). Price/cost was a 'very modest positive' overall. Engine per-unit pricing appeared down YoY/sequentially, which management attributed to mix (on- vs off-highway, geography, parts in revenue but not units), not price cuts; 2027 content adds are expected to be powertrain-driven.