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CMI
Cummins Inc.
Earnings
CMI | Earnings Review
Cummins Inc. | 2026 Q1 reported May 5, 2026 BMO | Analysis date: May 5, 2026 | Daloopa company_id 344
Revenue Beat
+0.4%
$8.40B vs $8.37B Street; +2.7% YoY (4th straight Q of accelerating growth from -2.7% Q1'25 trough)
Power Systems
+18.6% / 29.5% EBITDA
Record EBITDA margin (vs 23.6% PY, +590 bps); 6 straight Q of +18-22% YoY rev; lead times into 2H'28; FY26 PS guide raised to +14-19% rev / 25-26% EBITDA
Adj EPS
$6.15 (+9.0% beat)
vs $5.64 Street (+$0.51 / +9.0%); 8/8 L8Q Adj EPS beat streak; GAAP $4.71 (-21% YoY) hit by $199M low-pressure fuel cell exit charge
FY26 Guide
RAISED across the board
Rev +8-11% (was +3-8%); EBITDA margin 17.75-18.50% (was 17.0-18.0%); 10 of 11 segment/market metrics revised up; May 21 Analyst Day = next leg
Decisive raise across the board; Power Systems data-center cycle confirmed as the structural tailwind. Revenue $8.40B (+2.7% YoY) beat consensus by +0.4% — modest top-line beat but the 4th consecutive quarter of accelerating growth from the Q1'25 -2.7% trough. Power Systems was the standout: revenue +18.6% YoY with record EBITDA margin of 29.5% (+590 bps YoY) — segment hit prior 2030 profitability targets early. NA powergen +23%, China powergen +84%; lead times reportedly into 2H'28; "larger configs sold out" so customers are pulling smaller gensets — the cleanest single tell on hyperscaler power-gen demand acceleration. Adj EPS $6.15 beat $5.64 Street by +$0.51 / +9.0% — extending an 8/8 L8Q Adj EPS beat streak (avg +16% surprise; smallest of 8Q this print as Street catches up). GAAP EPS $4.71 (-21% YoY) was diluted by a $199M / ~$1.44 EPS charge from the Low-pressure Fuel Cell sale to Alstom + customer obligation settlement (continues the Accelera serial-charge pattern: Q4'24 fuel cell restructure → Q3'25 electrolyzer impairment → Q4'25 strategic review charge → Q1'26 fuel cell sale). Stock +6% on print. Guidance: BROAD RAISE, with 10 of 11 segment/market metrics revised up. FY26 revenue +8% to +11% (from +3% to +8%); EBITDA margin 17.75-18.50% (from 17.0-18.0%, ex Q1 charges); Power Systems revenue +14-19% (from +12-17%) with 25-26% margin (from 23-24%); NA HD truck guide raised to 230-250k (from 220-240k); China revenue (incl JV) +10% (from -1%) on data center; India +2% (from -5%); Distribution +9-14% (from +5-10%). Tariff impact "net immaterial" (~20-30 bps full-year vs ~50 bps prior). Top end of guide is supply-constrained, not demand-constrained — adding a third shift at Rocky Mount NC MD plant; supplier capacity now the bottleneck. Major disclosures: (1) B-platform launch delayed to Jan 2028 (was 2027) — current B-Series sold through 2027; X15 + X10 still on track for 2027; (2) EPA expected to issue revised draft this quarter softening warranty/useful-life burdens (cost-per-truck adder cut from ~$20-25k to ~$8-12k) — reduces the post-2027 demand cliff; (3) "Modest 2H'26 prebuy" in HD; Smith warned of "bumpy first half of 2027" as new platforms launch; (4) May 21, 2026 Analyst Day = next major catalyst — mgmt has explicitly teed up updated 2030 targets, dedicated data center disclosure, and capital deployment refresh after achieving prior 2030 profitability targets early; (5) Accelera FY26 EBITDA loss guide improved to ($270-300M) from ($325-355M) post fuel cell sale; electrolyzer wind-down continuing. Tone arc: defensive (Q2'25) → cautious bottom-signaling (Q3'25) → cautious reinstatement (Q4'25) → confident raise + Analyst Day tee-up (Q1'26). Most decisive raise of the cycle. Watch items: (1) May 21 Analyst Day for 2030 targets / data center TAM reset; (2) Power Systems durability into tougher comps + capacity ramp; (3) EPA 2027 final rule timing + competitive impact of B-platform delay; (4) 2H'26 → 1H'27 prebuy unwind air-pocket risk; (5) Engine margins (10.4% in Q1) recovering to 12.5-13.5% FY guide; (6) Eaton-Cummins JV potential reorganization post-ETN spin announcement. Read: structural mix shift toward Power Systems / data center continues; consolidated EPS power decoupling from cyclical NA truck on Power Systems strength; pattern of CMI under-guiding Power Systems is borderline systematic — Analyst Day likely re-rates the multiple via TAM expansion + raised LT margin framework. Bear case narrowed; Accelera-related charges remain a serial overhang on GAAP EPS optics.
Key Metrics Trends
| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 |
|---|---|---|---|---|---|---|---|---|---|
| Engine rev | $2.9B | $3.2B | $2.9B | $2.7B | $2.8B | $2.9B | $2.6B | $2.6B | $2.7B |
| Engine rev YoY % | - | - | - | - | -5.4% | -8.0% | -10.6% | -4.4% | -3.6% |
| Distribution rev | $2.5B | $2.8B | $3.0B | $3.1B | $2.9B | $3.0B | $3.2B | $3.3B | $3.1B |
| Distribution rev YoY % | - | - | - | - | +14.7% | +7.5% | +7.5% | +7.1% | +7.2% |
| Power Systems rev | $1.4B | $1.6B | $1.7B | $1.7B | $1.6B | $1.9B | $2.0B | $1.9B | $2.0B |
| Power Systems rev YoY % | - | - | - | - | +18.7% | +18.9% | +18.3% | +10.7% | +18.6% |
| Components rev | $3.3B | $3.0B | $2.7B | $2.6B | $2.7B | $2.7B | $2.3B | $2.4B | $2.5B |
| Components rev YoY % | - | - | - | - | -19.9% | -9.3% | -14.5% | -7.4% | -5.2% |
| Accelera rev | $93M | $111M | $110M | $100M | $103M | $105M | $121M | $131M | $101M |
| Accelera rev YoY % | - | - | - | - | +10.8% | -5.4% | +10.0% | +31.0% | -1.9% |
| Total revenue | $8.4B | $8.8B | $8.5B | $8.4B | $8.2B | $8.6B | $8.3B | $8.5B | $8.4B |
| Total revenue YoY % | - | - | - | - | -2.7% | -1.7% | -1.6% | +1.1% | +2.7% |
| Adj EBITDA $ | $1.3B | $1.3B | $1.4B | $1.3B | $1.5B | $1.6B | $1.4B | $1.4B | $1.5B |
| Adj EBITDA $ YoY % | - | - | - | - | +12.0% | +18.0% | +2.7% | +2.8% | +2.0% |
| Adj EBITDA margin % | 15.5% | 15.3% | 16.4% | 15.8% | 17.9% | 18.4% | 17.2% | 16.0% | 17.7% |
| Adj EBITDA margin % YoY chg (bps) | - | - | - | - | +240 | +310 | +80 | +20 | -20 |
| Power Systems EBITDA % | 17.1% | 18.9% | 19.4% | 18.0% | 23.6% | 22.8% | 22.9% | 21.7% | 29.5% |
| Power Systems EBITDA % YoY chg (bps) | - | - | - | - | +650 | +390 | +350 | +370 | +590 |
| Engine EBITDA % | 14.1% | 14.1% | 14.7% | 13.5% | 16.5% | 13.8% | 10.0% | 10.1% | 10.4% |
| Engine EBITDA % YoY chg (bps) | - | - | - | - | +240 | -30 | -470 | -340 | -610 |
| Distribution EBITDA % | 11.6% | 11.1% | 12.5% | 13.0% | 12.9% | 14.6% | 15.5% | 15.1% | 14.2% |
| Distribution EBITDA % YoY chg (bps) | - | - | - | - | +130 | +350 | +300 | +210 | +130 |
| Adj diluted EPS | $5.10 | $5.26 | $5.86 | $5.16 | $5.96 | $6.43 | $5.59 | $5.81 | $6.15 |
| Adj diluted EPS YoY % | - | - | - | - | +16.9% | +22.2% | -4.6% | +12.6% | +3.2% |
_Trajectory: top-line inflecting positive, Power Systems is the engine. Total revenue troughed at -2.7% YoY in Q1'25 and has accelerated 4 consecutive quarters to +2.7% in Q1'26 (+169 bps QoQ accel) — broadest-based growth in 2 years. Power Systems compounded at +18-22% YoY for 6 straight quarters, structurally re-rating CMI from a cyclical truck-engine OEM toward a data-center / power-infrastructure beneficiary. PS revenue grew from ~17% of total in Q1'24 to ~23% in Q1'26. PS EBITDA margin set a record at 29.5% (+590 bps YoY) — segment hit prior 2030 targets early. Distribution +7.2% YoY (+18% L4Q EBITDA $) is the second growth pillar. Engine -3.6% YoY with EBITDA margin compressed -610 bps to 10.4% on cyclical truck weakness + EPA'27 R&D peak; expected to recover to 12.5-13.5% FY guide. Components -5.2% / EBITDA % -100 bps. Accelera losses widening (-$277M in Q1'26 vs -$86M PY) but FY26 loss guide IMPROVED to ($270-300M) from ($325-355M) post fuel cell sale — drag inflecting positive in 2H. Adj EPS of $6.15 is the highest non-Atmus-gain quarter on record. Net = decelerating cyclical truck/components offset by accelerating Power Systems data-center mix; quality of earnings improving even as headline revenue growth softens. "Constructive / accelerating" with mix shift the dominant signal._
Beat/Miss
Guidance
Catalysts
Street Q&A
Contradictions
Read-Throughs
This Quarter vs Consensus
| Metric | Consensus | Actual | Variance | Read |
|---|---|---|---|---|
| Revenue | ~$8.37B | $8.40B | +0.4% | Beat — modest, but 4th straight Q of accel |
| Reported Revenue YoY | — | +2.7% | — | Highest in 8Q |
| Power Systems EBITDA margin | ~22-23% | 29.5% | +650+ bps | Strong Beat — record; +590 bps YoY |
| Power Systems revenue | — | $1,956M | +18.6% YoY | Record absolute level |
| Adj Diluted EPS | $5.64 | $6.15 | +$0.51 / +9.0% | Beat — 8/8 L8Q streak |
| Adj EBITDA margin | ~17.0-17.3% | 17.7% | +40-70 bps | Beat |
| GAAP Diluted EPS | ~$5.55 (tied to adj) | $4.71 | -$0.84 / -15% | One-time miss — $199M / $1.44 EPS fuel cell exit charge |
| Engine EBITDA margin | ~12-13% | 10.4% | -200 bps | Light — cyclical truck + EPA R&D |
| Free cash flow / capital return | — | $519M returned ($243M buybacks + $276M dividends) | — | First buyback in 9+ months |
| L4Q Rev beat rate | — | 4/4 = 100% | — | Consistent Beater |
| L8Q Adj EPS beat rate | — | 8/8 = 100% | — | Consistent Beater (avg +16%) |
| Q1'26 Adj EPS surprise vs L8Q avg | +16% | +9.0% | — | Smallest beat in 8Q — Street catching up |
| Stock reaction | — | +6% | — | Market accepted GAAP/Adj framing |
Pattern: Persistent, high-magnitude adjusted beat machine; magnitude moderating into Q1'26. CMI has now beaten Adj EPS for 8 consecutive quarters with average +16% surprise. Q1'26 +9.0% surprise is the smallest beat in the 8Q window — Street has caught up to the Power Systems / data-center generator tailwind that drove Q2'25-Q3'25 monsters (+29% / +18%). Revenue surprises similarly compressed from +4.7% (Q4'25) to +0.4% (Q1'26). Translation: easy estimate-revision phase is behind us — going forward, beat magnitude tracks Power Systems mix and incremental data-center generator capacity rather than estimate slippage. The $199M GAAP charge bridge: ~$1.44 EPS hit from Low-pressure Fuel Cell sale to Alstom + customer obligation settlements (mix of non-cash impairment + cash settlement reserves). Continues 2025 portfolio cleanup: Q4'24 fuel cell restructure → Q3'25 electrolyzer non-cash charges → Q4'25 electrolyzer strategic review → Q1'26 fuel cell sale. Mgmt explicitly excludes from adj figures and FY26 EBITDA guide of 17.75-18.50% — non-recurring strategic restructuring, not operating deterioration. Distribution +7% and Power Systems +19% organic growth confirm the underlying business is accelerating. The 100% L8Q hit rate plus broadly raised FY26 guide supports continued — but smaller — beats.
Guidance Deep Dive
| Metric | Prior (Feb'26) | New (May'26) | Δ Mid | Street | Read |
|---|---|---|---|---|---|
| FY26 Revenue Growth | +3% to +8% | +8% to +11% | +400 bps | ~+5% | Major raise — broad-based |
| FY26 EBITDA Margin (ex charges) | 17.0-18.0% | 17.75-18.50% | +75 bps mid | ~17.5% | +50-75 bps above prior consensus |
| FY26 EPS | Not guided | Not guided | — | ~$26.05 | Q1 beat $6.15 vs $5.63 — upside risk |
| FY26 Tax Rate | ~24% | ~23% | -100 bps | n/a | Favorable |
| FY26 Capex | $1.35-1.45B | $1.35-1.45B (incremental to PS) | Maintained | n/a | — |
| Engine Rev Growth | Flat to +5% | +7% to +12% | +700 bps | n/a | Inflection |
| Engine EBITDA margin | 12.0-13.0% | 12.5-13.5% | +50 bps | n/a | Improving |
| Components Rev Growth | Flat to +5% | +5% to +10% | +500 bps | n/a | Raised |
| Components EBITDA margin | 13.0-14.0% | 13.5-14.5% | +50 bps | n/a | Raised |
| Distribution Rev Growth | +5% to +10% | +9% to +14% | +400 bps | n/a | Raised |
| Distribution EBITDA margin | 13.25-14.25% | 13.7-14.7% | +45 bps | n/a | Raised |
| Power Systems Rev Growth | +12% to +17% | +14% to +19% | +200 bps | n/a | Raised — data center |
| Power Systems EBITDA margin | 23-24% | ~25-26% | +200 bps | n/a | Raised; Q1 was 29.5% |
| Accelera revenue | $300-350M | $300-350M | Maintained | n/a | — |
| Accelera EBITDA loss | ($325-355M) | ($270-300M) | +$55M improvement | n/a | Post fuel cell sale |
| NA HD Truck Units | 220-240k | 230-250k | +10k | n/a | Cycle inflecting earlier |
| NA MD Truck Units | 110-120k | 125-135k | +15k | n/a | Adding 3rd shift Rocky Mount |
| China Total Revenue (incl JV) | -1% | +10% | +1100 bps | n/a | Data center |
| India Total Revenue | -5% | +2% | +700 bps | n/a | Tax incentives |
| Global Construction | -10% to flat | Flat to +10% | +1000 bps | n/a | Raised |
| Global Power Generation | +10% to +20% | +15% to +25% | +500 bps | n/a | Hyperscaler tailwind |
Tone: defensive (Q2'25) → bottom-signaling (Q3'25) → cautious reinstatement (Q4'25) → DECISIVE RAISE + Analyst Day tee-up (Q1'26). Most upbeat tone of the cycle. Rumsey: "We are pleased to share that our expectations for 2026 have improved since our initial guidance issued in February." Smith: "We're seeing an improved profit outlook for all of our segments for the remainder of this year." 10 of 11 segment/market metrics raised. 2H'26 is supply-constrained, not demand-constrained — top-end of guide is gated by OEM/supplier capacity to flex up rapidly; CMI added a third shift at Rocky Mount NC; held supplier conference last week. Power Systems lead times "well into 2028"; Q1 EBITDA margin 29.5% — segment hit prior 2030 profitability targets early. Risk caveats: (1) EPA '27 final rule still pending — "unusual at this stage"; X15 + X10 launches on track for 2027 but B-platform delayed to Jan 2028 (current B-Series sold through 2027); EPA expected to issue revised draft this quarter softening warranty/useful-life burdens; cost-per-truck adder revised down to ~$8-12k (vs original $20-25k); (2) Modest 2H'26 prebuy embedded — could be source of upside if larger or risk of 1H'27 air pocket; Smith warned "bumpy first half of 2027"; (3) Section 232 / engine offset program still being finalized with Commerce; (4) Hyperscaler customer concentration in Power Systems; (5) Eaton-Cummins JV potentially affected by Eaton's spin announcement ("premature" to comment); (6) Pricing not a feature of 2026; real pricing tailwind comes with HELM platform launches 2027+. Watch: May 21 Analyst Day will likely re-rate the multiple via TAM expansion + raised LT margin framework + capital allocation refresh.
Upcoming Catalysts
| # | Catalyst | Timing | What to Watch | Read |
|---|---|---|---|---|
| 1 | ANALYST DAY — updated 2030 targets, data center disclosure, capital deployment | May 21, 2026 (~2 weeks) | Mgmt: "having achieved our 2030 profitability targets early, you should expect updates on our targets, capital deployment and the growth opportunities ahead, including data centers" | HIGH ASYMMETRY UPSIDE — likely framework reset for PS TAM and incremental margin guide |
| 2 | Power Systems data center backstop demand | Through 2026-2030 | Q1 PS rev +19%, NA powergen +23%, China powergen +84%; 95L capacity doubled in '25; lead times into 2H'28; PS guide raised to +14-19% / 25-26% margin | VERY HIGH — core long thesis |
| 3 | EPA 2027 final rule + B-series delay to Jan 2028 | Draft Q2'26; final mid/late 2026 | EPA expected to keep MY27 NOx timeline but reduce warranty/useful-life burdens; B-series HELM launch deferred to 1/1/2028; X15 + X10 still on track for '27 | MIXED — softer rule + B-platform delay; risk of penalty/credit dynamics |
| 4 | NA Class 8 prebuy 2H'26 + post-2027 cycle | 2H'26 → 1H'27 → trough 1H'28 | HD raised to 230-250k, MD to 125-135k; spot rates improving; 3rd shift at Rocky Mount NC (medium-duty); Smith: "bumpy first half of 2027" | Upside near-term, then air-pocket risk |
| 5 | HELM platform launch (X15 + X10 fuel-agnostic) | Jan 2027 | Content-rich next-gen powertrain; "significant content adds primarily on the powertrain" benefits Engine + Components; fuel-agnostic (diesel, NG, H2-ready); 6-quarter higher warranty accrual in early innings | Upside — extends franchise life |
| 6 | Accelera restructuring post-Low-pressure Fuel Cell exit | FY26 (in-progress) | Sale to Alstom closed Q1; FY26 EBITDA loss guide IMPROVED to ($270-300M) from ($325-355M); continuing to wind down electrolyzer commitments; refocusing on battery-electric powertrain | Drag inflecting positive in 2H |
| 7 | Capital allocation post-Atmus / post-divestiture | Ongoing; refresh at May 21 | Q1 buyback $243M at $537 avg (first in 9+ months); ~50% of OCF returned; expect updated buyback authorization at Analyst Day | Optionality returning |
| 8 | China data center / powergen acceleration | 2026-2027 | China rev (incl JVs) +19% YoY Q1; powergen +84%; full-yr China rev guide raised from -1% to +10% | Tailwind — surprise to upside |
| 9 | India recovery on tax incentives | 2026 | India rev +12% YoY Q1; truck industry +21%; full-yr guide moved from -5% to +2% | Modest upside |
| 10 | Megaprojects / reshoring industrial demand | 2026-2028 | Global construction guide raised flat to +10%; mining flat to +10% | Off-highway picking up |
| 11 | X15N natural gas adoption | 2026-2028 | First HELM-architecture engine in market; slow adoption with macro/incentive dependency | Optionality (low-medium) |
| 12 | Tariff policy / Section 232 engine offset program | Throughout 2026 | Net EBITDA "immaterial"; gross gross-up ~20-30 bps; final Engine Offset with Commerce still pending | Neutral-to-mild risk |
| 13 | Eaton-Cummins JV reorganization | TBD | Affected by ETN spin announcement; CMI: "premature" to comment | Watch item |
Street Q&A
| # | Analyst (Firm) | Topic | Mgmt Response | Quality |
|---|---|---|---|---|
| 1 | Angel Castillo Malpica (Morgan Stanley) | Power Systems Q1 one-time benefit + margin cadence? | Smith wouldn't quantify one-time but cited (a) China 1H weighting, (b) tariff recoveries that won't persist at PS, (c) one-time cost recoveries. Rest of year "pretty even" with Q4 slightly lower on production days | Partial — declined to dollar-quantify |
| 2 | Kyle Menges (Citi) | EPA '27 — fuel-efficiency gains for new HD engine, MD engine timing/risks? | Rumsey: B-platform launch delayed to January 2028 due to late EPA rule changes; X15 + X10 still launch in '27. Continue selling current B-Series through '27; modest 2H prebuy expected especially in HD | Well Answered — concrete platform-by-platform timing |
| 3 | Kyle Menges follow-up | Ramifications if MD engine isn't ready until 2028? | Will offer current B-Series through '27 to phase the launch; expects some 2H prebuy in HD | Partial — confirmed plan, no quantification |
| 4 | Jerry Revich (Wells Fargo) | 95L lead times + incremental margins vs historical ~45%? | Capacity doubled last year and fully utilized; multi-year customer discussions underpin raise. Smith deferred specifics to May 21 Analyst Day but signaled continued margin expansion | Deflected — punted to Analyst Day |
| 5 | Jerry Revich follow-up | Engine margin opportunity into EPA '27? | Significant content adds on powertrain benefiting Engines + Components. 1H'27 vs 2H'26 demand volatility; past peak investment; performance to improve over time. Detail saved for Analyst Day | Partial — directional, specific margin walk withheld |
| 6 | Stephen Volkmann (Jefferies) | Engine incrementals only ~low-teens; fair run-rate? | New-platform warranty accruals higher for first ~6 quarters then come down; Engine incrementals improve once past 1H'27 into '28. Tariffs + peak investment have been dilutive but easing | Well Answered — clear warranty bridge |
| 7 | David Raso (Evercore) | Distribution incrementals only ~7%, Components ~19% rest-of-year despite 12-16% top line? | Distribution: parts growth lagging whole-goods (gen-set), tough 2Q/3Q comps from prior-year mid-yr pricing. No one-times; medium-term bullish | Well Answered — specific mix + comp explanation |
| 8 | David Raso follow-up | Customer feedback on '26 build-slot availability, when do they roll to '27 engines? | Truck orders rising, spot rates improving, MD demand picking up since Q1 (3rd shift at Rocky Mount), HD stepping up. Top end of guide gated by supply-chain capacity ahead of '27 | Well Answered — concrete operational detail |
| 9 | Jamie Cook (Truist) | Confidence in 25% incrementals given tariff/R&D/Accelera moving parts; Accelera trajectory? | Saving incremental margin guide for Analyst Day. Past peak investment; Accelera losses on clear downward trajectory after fuel-cell sale and electrolyzer wind-down; 1H'27 may be bumpy | Partial — Accelera solid; incrementals deflected |
| 10 | Steven Fisher (UBS) | Why no 2H HD truck guide raise despite improving orders? | Original guide already anticipated 2H stronger than 1H; upside is showing up sooner. 2H build rates likely capped by supply-chain constraints | Well Answered — coherent shape-of-year |
| 11 | Steven Fisher follow-up | Tariff dynamics — where do benefits and headwinds net? | Smith declined segment-by-segment walk; net-neutral plan now slightly better (20-30 bps full-yr vs ~50 bps prior). Rumsey: 232 tariffs and engine offset program with Commerce still finalizing but baked into guide | Partial — explicitly declined segment detail |
| 12 | Tim Thein (Raymond James) | On B-Series delay, can Cummins use credits to offset EPA penalties? | Working transparently with EPA, awaiting final rule; pricing/penalty implications can't be finalized until rule is | Deflected — declined to confirm strategy |
| 13 | Tim Thein follow-up | China profit pull-through dynamics today vs historical? | Data center power-gen is major positive. Tighter emissions regs driving content; successful localization; rising displacement. China is a tailwind, not headwind | Well Answered — clear thematic framework |
| 14 | Rob Wertheimer (Melius) | NA electrification demand pull + 2-3 year market shape? | Outside school buses, NA electric truck demand "very low" and not improving soon after GHG rule changes. Diesel demand strong; focus on global + bus markets | Well Answered — direct, candid |
| 15 | Tami Zakaria (JPMorgan) | Q1 price realization? | Price/cost was "very modest positive" | Partial — no quantification |
| 16 | Tami Zakaria follow-up | Q3 peak for builds and Engine margins; model 20-30% sequential Q2 growth? | Q2 step up, Q3 step up again, Q4 seasonally lower on holiday/production days. Adding shift in Rocky Mount | Well Answered — clear cadence |
| 17 | Cole (Wolfe Research) | Why is implied engine pricing down YoY/sequentially in Q1? | Mix-driven (on/off-highway, NA/intl, parts in revenue not units); no significant per-unit decline. '27 content increases will be powertrain-driven | Well Answered — mix explanation |
| 18 | Cole follow-up | If EPA introduces non-compliance penalties, competitive impact since other OEMs have compliant engines? | Rumsey declined to speculate; emphasized ongoing dialogue with EPA on a "fair rule" | Deflected — declined competitive risk |
Contradictions
| # | Topic | Severity | Statement A | Statement B | Why it's a tension |
|---|---|---|---|---|---|
| 1 | Accelera fuel cell strategy — supportive language to outright divestiture | HIGH | Q2'25 Rumsey: "We're really trying to position ourselves to pace investments but be able to be the provider as the market starts to develop"; Q3'25: "We've slowed down some of the investment and work in the fuel cell side" | Q1'26 Rumsey: "We took targeted actions in our Accelera segment by completing the sale of our Low-pressure Fuel Cell business and related customer commitments… big action in the first quarter" | Through FY25, fuel cells were framed as paced/refocused investment within "multi-solution strategy." Six months later, the LP fuel cell business was exited entirely with $199M net charge. Q3 commentary gave no indication a sale was imminent. Pattern: Q4'24 fuel cell restructure → Q3'25 electrolyzer impairment → Q4'25 strategic review charge → Q1'26 fuel cell sale = serial-charge pattern. Discount "pacing investments" framing on remaining Accelera lines (battery-electric, electrolyzer wind-down) — likely candidates for further charges. |
| 2 | NA truck cycle — bottoming/recovery timing whipsaw | MODERATE-HIGH | Q2'25 Smith: "hopefully July is the trough"; Q3'25 Smith: "hopefully demand in NA on-highway is close to bottoming in Q4"; Q4'25: 2026 HD 220-240k with "first half weak, second half stronger" | Q1'26 Rumsey: "first half of the year to be stronger than previously anticipated"; HD raised to 230-250k, MD to 125-135k; "improvement is coming sooner"; adding 3rd shift at Rocky Mount | Q2'25 said July likely the trough. Q3'25 pushed bottom to Q4. Q4'25 guidance assumed first-half weakness persisting. Three months later, first half was meaningfully stronger than guided. Either Q4'25 was too conservative, or order patterns inflected sharply Feb-April. Mgmt's near-term cycle visibility has been weak in both directions; symmetric risk if prebuy is front-loaded into 1H'26 and 2H'26 disappoints. |
| 3 | Power Systems — durability and incremental margin (UPSIDE contradiction) | LOW-MODERATE | Q2'25 Rumsey: "the pace of improvement has probably stabilized"; Smith: "revenue should be relatively range bound"; Q3'25: "I would not expect it to stay at that trajectory of incremental margin improvement as we go into future years" | Q1'26 Smith: PS EBITDA margin 29.5% vs 22-23% L4Q; FY26 PS margin guide raised to 25-26% from 23-24%; revenue guide to +14-19% from +12-17%; backlog "well into 2028" vs "out about 2 years" prior | Mgmt explicitly told investors not to expect continued PS margin step-ups or expect range-bound revenue. By Q1'26 segment delivered another 600+ bp sequential jump. Mgmt has consistently under-guided Power Systems — Q1'26 print should be read as the rule, not the exception. Upside bias into May 21 Analyst Day. |
| 4 | Engine margin trajectory — "8% won't happen" vs realized low end | LOW | Q3'25 Smith: "I don't expect to have 8% margins in the fourth quarter in the Engine business" | Q1'26 Engine EBITDA was 10.4%, down from 16.5% PY; FY26 guide 12.5-13.5% | Floor held but Q1'26 came in at the very low end despite tariff impact "immaterial" and JV income up. Drivers (higher comp, R&D, product coverage) mean ex-tariff margin profile is weaker than Q3'25 commentary implied. Engine margin recovery is more back-half-loaded than prior commentary. |
| 5 | Capital allocation — promised but slow to materialize | LOW | Q2'25 Smith: "more of [capital return] going forward as a base case"; Q3'25: "flexibility for capital allocation going forward"; Q4'25: "flexibility to deploy more capital to shareholders" | Q1'26: First share repurchase actually executed — $243M at $537 average. Through 2025 capital returned was dividends only ($1.1B); no buybacks despite three quarters of "more flexibility going forward" language | Mgmt telegraphed buyback flexibility for 9+ months before executing. Q1'26 repurchase was timed to "equity market volatility" — implying opportunistic rather than programmatic. Don't model a steady buyback contribution. |
| 6 | Power Gen guide vs actual — directional consistency, conservatism pattern | LOW | Q4'25 guide: Power gen revenue +10-20% for 2026 | Q1'26: NA powergen +23%, China powergen +84%; full-year guide raised to +15-25% just 90 days later | The guide-then-raise pattern is so persistent for power gen it borders on systematic conservatism. Investors should price this in. |
Indirect Read-Throughs
| Name | Relationship | What CMI signaled | Read-through |
|---|---|---|---|
| Hyperscalers (AMZN/MSFT/GOOGL/META) | Implicit data center demand source | "Accelerating data center demand" globally — NA powergen +23%, China powergen +84%; lead times into 2H'28; "larger configs sold out, customers pulling smaller gensets" | POSITIVE — capex narrative reinforced; demand still inflecting up |
| Vertiv (VRT) | Data center power infra peer | Data center power infrastructure pull continues to accelerate; "lower output gensets" pulled forward as larger sold out | STRONGLY POSITIVE |
| GE Vernova (GEV) | Gas turbine alternative | Hyperscaler power gen "accelerating" globally; CMI gensets sold out into 2H'28 = spillover for gas turbine alternatives | STRONGLY POSITIVE |
| Caterpillar (CAT) | Heavy machinery / power gen peer | NA construction "largely flat given ongoing tariffs and interest rate uncertainty"; mining replacement-only; CAT competes in high-HP power gen | MIXED — NA construction flat; mining flat; offshore power gen positive read |
| Deere (DE) | Off-highway / construction peer | NA construction flat; high-HP off-highway strong; ag not discussed | MIXED |
| PACCAR (PCAR) | Major NA HD/MD OEM customer | CMI raised NA HD to 230-250k, MD to 125-135k; supply-chain cap on upside; modest 2H'26 prebuy | POSITIVE — Class 8 cycle inflecting earlier than expected |
| Daimler Truck NA (DTRUY) | Major NA HD OEM customer | Same read-through as PCAR | POSITIVE |
| Allison Transmission (ALSN) | HD/MD truck transmission paired with CMI | Benefits from same NA cycle inflection | POSITIVE |
| Traton / Navistar (8TRA.DE) | NA HD customer | Same read-through | POSITIVE |
| Mack Trucks / Volvo Group (VLVLY) | Customer | X10 engine integration into Mack Granite chassis announced March | Content win |
| Stellantis (STLA) | RAM pickup engine customer | 30K engines shipped Q1, +4% YoY; FY26 guide unchanged 125-140K | Neutral / mildly positive |
| Komatsu (6301.T) | Mining equipment customer | First Mode hybrid retrofit on 300-ton Komatsu haul truck at Caserones (Chile) | Positive — partnership |
| Tesla (TSLA) Semi | EV truck competitor | Asked about Tesla Semi orders; CMI: "NA EV truck demand 'very low' and not projected to improve" | NEGATIVE for Tesla Semi narrative |
| Plug Power (PLUG) | Hydrogen fuel cell competitor | CMI exiting low-pressure fuel cells; winding down electrolyzer commitments | NEGATIVE — sector signal on hydrogen |
| Nikola | EV/H2 commercial vehicles | Not mentioned; NA EV/H2 truck demand call-out is bearish backdrop | NEGATIVE |
| Alstom (ALO.PA) | Buyer of CMI Low-pressure Fuel Cell business | Closed Q1'26; CMI took $199M charge | Neutral — strategic transfer |
| Eaton (ETN) | JV partner (Eaton-Cummins JV) | JV potentially affected by ETN spin announcement; CMI: "premature" to comment | Watch item — restructuring possible |
| First Mode | CMI hybrid mining truck partner (private) | Caserones deployment | Color |
| NA construction complex (CAT, DE, URI) | Off-highway adjacent | "NA construction largely flat given ongoing tariffs and interest rate uncertainty" | CAUTIOUS — tempering NA construction expectations |
| Multinational tariff-exposed (broad) | Macro | Tariff impact "net immaterial"; gross exposure ~20-30 bps being recovered (down from ~50 bps); 232 tariffs being negotiated; CMI predominantly makes/sources US for US — structural insulation vs European/Japanese competitors | POSITIVE — capital goods passing through cleanly |
Data sourced from Daloopa. Document search is currently in beta; transcript and filing snippets may vary.