01—Abstract
Summary
Summary of the 10-Q filed May 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Cummins Inc. (CMI) reported a net sales increase of 3% to $8.4 billiona for the first quarter of 2026 compared to the prior year.
However, net income attributable to Cummins Inc. saw a significant decrease of 21% to $654 millionb, translating to diluted earnings per share of $4.71, down from $5.96 in the prior year period. This decline was primarily attributed to a substantial $199 million charge related to the sale of a business and the settlement of customer obligations, alongside higher compensation costs, partially offset by improved gross margins and favorable foreign currency movements. Operationally, the Power Systems and Distribution segments showed robust growth, driven by strong demand in power generation markets, while the Engine and Components segments experienced declines due to weaker demand in North American truck markets.
The Accelera segment continues to incur losses as it navigates the early stages of commercializing its electrified power systems. The company maintains a strong liquidity position with $3.2 billionc in cash and marketable securities and access to substantial credit facilities.
02—Key points
Key Highlights
- Net sales increased by 3% year-over-year to $8.4 billion, driven by growth in the Power Systems and Distribution segments, particularly in power generation markets.
- Net income attributable to Cummins Inc. decreased by 21% to $654 million, with diluted EPS falling to $4.71 from $5.96.
- A significant $199 million charge related to the sale of a business and settlement of customer obligations negatively impacted profitability.
- Operating income declined by 16% to $949 million, impacted by increased SG&A expenses and the aforementioned business sale charge.
- The Accelera segment reported an EBITDA loss of $277 million, reflecting ongoing investments in electrified power systems and slower market adoption.
- Cash flow from operations improved substantially, generating $309 million compared to a $3 million outflow in the prior year, largely due to better working capital management.
- The company repurchased $243 million of common stock in the quarter, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Cummins Inc kept $0.08.
- Revenue$8.40B100.0%
- Cost of revenue−$6.16B73.3%
- Gross profit$2.24B26.7%
- Operating costs−$1.29B15.4%
- Operating income$949.0M11.3%
- Interest, other & tax−$295.0M3.5%
- Net income$654.0M7.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 5, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $8.40B$8.17B | +2.7% |
| Cost of Revenue | $6.16B$6.02B | +2.3% |
| Gross Profit | $2.24B$2.15B | +4.1% |
| R&D Expenses | $358.00M$344.00M | +4.1% |
| SG&A Expenses | $845.00M$771.00M | +9.6% |
| Operating Income | $949.00M$1.13B | −16.3% |
| Net Income | $654.00M$824.00M | −20.6% |
| EPS (Basic) | $4.73$5.99 | −21.0% |
| EPS (Diluted) | $4.71$5.96 | −21.0% |
| Shares Outstanding (Basic) | 138.30M137.60M | +0.5% |
| Shares Outstanding (Diluted) | 138.80M138.30M | +0.4% |
05—Questions
Frequently Asked Questions
What was the primary reason for the significant decrease in net income year-over-year?
The primary reason for the 21% decrease in net income was a substantial $199 million charge related to the sale of the company's low pressure fuel cell business and the settlement of current and future customer obligations. Higher compensation expenses also contributed to the decline, partially offset by improved gross margins and favorable foreign currency fluctuations.
How did the different business segments perform in the quarter?
The Power Systems segment saw a strong 25% increase in sales, driven by power generation demand, and the Distribution segment grew 7%, also benefiting from power generation markets. Conversely, the Engine segment's sales declined 4% and the Components segment's sales fell 5%, both impacted by weaker demand in North American truck markets. The Accelera segment experienced a slight sales decrease and continued to report significant operating losses as it develops electrified power systems.
What is the company's liquidity position and how is it managing its cash?
Cummins maintains a strong liquidity position with $3.2 billion in cash and marketable securities. Cash flow from operations significantly improved, generating $309 million in the quarter compared to a small outflow in the prior year, primarily due to better working capital management. The company also has access to substantial revolving credit facilities and continues its capital allocation strategy through dividend payments and share repurchases.
Are there any significant ongoing regulatory or legal issues impacting the company?
In December 2023, Cummins reached an agreement in principle with regulatory agencies concerning emissions certification and compliance for certain engines. This settlement involved penalties, recall requirements, and mitigation projects, with a $2.0 billion charge recorded in 2023. The company also faces ongoing litigation and contingent liabilities, but stated in the filing that it does not believe these are material individually or in the aggregate.
06—Continue