10-QPeriod: Q2 FY2025

CUMMINS INC Quarterly Report for Q2 Ended Jun 30, 2025

Filed August 5, 2025For Securities:CMI

Summary

Cummins Inc. (CMI) reported solid financial results for the second quarter and first half of 2025, demonstrating resilience despite a slight year-over-year dip in net sales. The company achieved revenue of $8.64 billion for the quarter and $16.82 billion for the first half, with net income attributable to Cummins Inc. rising to $890 million and $1.71 billion, respectively. This performance was bolstered by strong demand in power generation markets, particularly for data centers and commercial applications, and favorable pricing on updated light-duty engine products. However, demand in on-highway truck markets showed weakness, contributing to the overall sales decline. The company's operational efficiency improved, with gross margin increasing to 26.4% in Q2 2025 from 24.9% in Q2 2024, driven by pricing strategies and lower compensation expenses. The Distribution and Power Systems segments showed significant growth. Cummins also maintained a strong liquidity position with $3.1 billion in cash and marketable securities and access to substantial credit facilities. The company's outlook suggests continued strength in Power Systems and aftermarket businesses, while acknowledging challenges in North American truck markets and ongoing tariff-related uncertainties.

Financial Highlights

54 data points
Beta

Revenue

$8.64B

26.4% Gross Margin

Net Income

$890.00M

10.3% Net Margin

EPS (Diluted)

$6.43

Total Assets

$34.26B

Cash & Equivalents

$2.32B

Free Cash Flow

$554.00M

Financial Statements
Beta
Revenue$8.64B
Cost of Revenue$6.36B
Gross Profit$2.28B
R&D Expenses$357.00M
SG&A Expenses$779.00M
Operating Income$1.23B
Interest Expense$87.00M
Net Income$890.00M
EPS (Basic)$6.46
EPS (Diluted)$6.43
Shares Outstanding (Basic)137.80M
Shares Outstanding (Diluted)138.50M

Key Highlights

  • 1Net sales for the second quarter of 2025 were $8.64 billion, a slight decrease of 2% from $8.80 billion in the prior year period.
  • 2Net income attributable to Cummins Inc. increased by 23% to $890 million ($6.43 per diluted share) in Q2 2025, up from $726 million ($5.26 per diluted share) in Q2 2024.
  • 3Gross margin improved to 26.4% in Q2 2025 from 24.9% in Q2 2024, driven by favorable pricing and lower compensation expenses.
  • 4The Distribution segment saw an 8% increase in sales, reaching $3.03 billion, primarily driven by strong power generation demand in North America.
  • 5The Power Systems segment reported a 19% increase in sales, to $1.05 billion, also fueled by robust power generation demand.
  • 6The company generated $782 million in cash from operating activities for the first six months of 2025, a significant improvement from a $575 million outflow in the same period of 2024.
  • 7Cummins announced an approximately 10% increase in its quarterly dividend to $2.00 per share, signaling confidence in future financial performance.

Frequently Asked Questions

The increase in net income was primarily driven by strong growth in power generation markets, favorable non-tariff related pricing from updated engine products in light-duty markets, and lower compensation expenses. These factors more than offset the negative impact of lower demand in on-highway truck markets and a slight decrease in net sales.

Cummins acknowledges the uncertain tariff environment and its potential to impact supply chains and product costs. The company is proactively mitigating these impacts by working with suppliers, exploring alternative sourcing, and negotiating cost recovery agreements with customers. The net impact of tariffs was immaterial to profitability and operating cash flows in Q2 2025, although the company expects these costs and recoveries to increase if current tariff levels persist.

Cummins anticipates continued strong demand in its Power Systems business, particularly in power generation and industrial markets, and stable aftermarket business. However, the company expects declining demand for medium-duty and heavy-duty trucks in North America in the second half of 2025. Challenges include increasing costs, tariffs, potential trade disruptions, and regulatory uncertainty.

Cummins maintains a strong financial position, with $3.1 billion in cash and marketable securities as of June 30, 2025. The company has access to $4.0 billion in credit facilities. Its debt-to-capital ratio was 38.7% at the end of the quarter. The company generated positive operating cash flow in the first half of 2025, a significant improvement from the prior year.