Cummins Q2 2026 earnings: Power Systems lifts revenue and full-year outlook

Cummins (NYSE: CMI) reported Q2 2026 revenue of $9.457 billion, up 9% from $8.643 billion a year earlier, while GAAP diluted EPS rose to $6.73 from $6.43. Net income attributable to Cummins increased to $932 million, and quarterly operating cash flow climbed to $1.499 billion. Power Systems and data center-related demand led growth, but non-GAAP EBITDA margin fell 90 basis points to 17.5%, primarily because of higher incentive compensation.

Core financial results

For the quarter ended June 30, North American sales increased 8%, while international revenue rose 12%, led by China. Revenue growth was faster than profit growth: gross profit increased about 8%, operating income rose about 4%, and EBITDA advanced about 4%.

Higher incentive compensation tied to expected full-year performance was the main reason EBITDA margin declined. Selling, general and administrative expenses increased 15% to $893 million, also outpacing revenue growth.

The quarter’s 25.1% tax rate included $29 million of unfavorable discrete tax items, equivalent to $0.21 per diluted share.

Business and segment performance

Power Systems was the clearest growth driver, supported by power-generation demand from data centers. Engine, Components and Distribution all increased sales, but each reported a lower EBITDA margin.

Segment sales include intersegment revenue and therefore do not add directly to consolidated revenue.

Power Systems revenue increased 19% in both North America and international markets, driven mainly by data center power demand in the United States, China and Asia-Pacific. Its EBITDA increased from $430 million to $552 million, with margin expanding 170 basis points.

Distribution benefited from the same power-generation trend, while Engine growth reflected stronger construction demand in China. Components was supported by stronger truck demand in the United States and China. Accelera’s higher sales came from eMobility demand, and its EBITDA loss narrowed by $31 million as Cummins continued to pace its zero-emissions investments.

Profitability, cash flow and the balance sheet

Quarterly operating cash flow nearly doubled to $1.499 billion. The improvement was helped by a $231 million source of cash from accounts payable, compared with a $182 million use a year earlier, and a smaller cash outflow from receivables. Inventory was a partial offset, consuming $279 million versus $105 million in Q2 2025.

After $249 million of capital spending, Q2 free cash flow was approximately $1.25 billion, compared with approximately $554 million a year earlier. Cummins returned $501 million to shareholders during the quarter through $276 million of dividends and $225 million of share repurchases. It also raised its quarterly dividend from $2.00 to $2.20 per share.

Cash, cash equivalents and marketable securities totaled $3.924 billion at June 30, up from $3.609 billion at the end of 2025. Over the same period, inventory increased by $575 million to $6.397 billion and receivables rose by $767 million to $6.585 billion. Long-term debt declined slightly to $6.737 billion from $6.792 billion.

Full-year guidance

Cummins raised its 2026 revenue growth range and lifted the lower end of its EBITDA margin outlook. Management attributed the change to stronger demand in North American on-highway markets, Chinese construction and power generation.

The EBITDA outlook excludes first-quarter charges associated with the sale of the fuel cell business. Management expects the second half of 2026 to be stronger than the first and expects EBITDA margin to improve year over year in both the second half and full year.

Recent insider transactions

The supplied insider data reports 129,399 shares purchased in 38 transactions and 48,807 shares sold in 14 transactions over the past six months, resulting in net purchases of 80,592 shares. The latest itemized transactions with nonzero reported amounts were two officer sales; no conclusion about management’s outlook can be drawn from these transactions alone.

Risks investors should monitor

• Margin recovery: Consolidated EBITDA margin declined despite higher revenue, while Engine, Components and Distribution all experienced segment margin contraction. The full-year outlook assumes stronger second-half profitability.
• Dependence on several growth markets: The raised guidance relies on continued improvement in North American trucks, Chinese construction and data center-related power generation. Weakness in these markets could affect both revenue and segment mix.
• Inventory and working capital: Inventory reached $6.397 billion and absorbed $279 million of quarterly cash. A mismatch between production and demand could reduce cash conversion.
• Accelera losses: Accelera’s EBITDA loss narrowed but remained $69 million, leaving the pace and returns of zero-emissions investment as an ongoing profitability consideration.
• Regulatory and product transitions: Cummins revised its 2027 North American on-highway launch plans following proposed EPA emissions changes. Further changes could affect launch timing, product availability and transition costs.

Summary

Cummins’ Q2 2026 growth was led by Power Systems and data center power demand, while improving truck and construction markets supported other segments. Profit and EPS increased, but higher incentive compensation caused consolidated and several segment margins to decline. Stronger cash generation and higher full-year guidance provide support, while second-half margin recovery, inventory levels and the durability of demand in key markets remain the main points to monitor.