Cummins posted record Q2 sales of $9.46B (+9.4%) on data-center generator demand; EPS rose 4.7% to $6.73 as higher pay costs trimmed margins, and full-year revenue guidance was raised to +10–13%.
Revenue
$9.5B
+9.4% YoY
Net income
$932M
+4.7% YoY
Diluted EPS
$6.73
+4.7% YoY
Operating margin
13.5%
Overview
Cummins had a record second quarter for revenue: $9.46 billion, up 9.4% from Q2 2025. The growth came mostly from one place: generators that provide backup ("standby") power for data centers. Net income attributable to Cummins rose a slower 4.7% to $932 million ($6.73 per diluted share, up from $6.43). Profit grew more slowly than sales mainly because of higher pay costs. The company's earnings release says most of that was incentive compensation, which is building up because the company expects a record year. The core truck-engine business was roughly flat. Heavy-duty truck engine sales slipped 1%, while medium-duty trucks recovered. Accelera, the zero-emissions unit, lost less money than a year earlier.
Management raised its full-year guidance on the same day (see Outlook below).
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$9,457M
$8,643M
+9.4%
Gross margin (% of sales)
26.1%
26.4%
-0.3 pts
Operating income
$1,279M
$1,226M
+4.3%
Operating margin
13.5%
14.2%
-0.7 pts
Net income attributable to Cummins
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Operating margin is the share of revenue left after the costs of running the business, before interest and tax. EBITDA is earnings before interest, taxes, depreciation and amortization. Cummins uses it as its main yardstick for its segments. Margins and the operating-income change are our calculations from the income statement.
First half (six months to June 30): sales were $17,855M, up 6%. Net income attributable to Cummins was $1,586M, down from $1,714M. Diluted EPS was $11.44 versus $12.38. The first half fell, even though Q2 grew, because of a $199 million net charge in Q1 from selling the low-pressure fuel cell business (details below). Cummins recognized no tax benefit on that charge. By our arithmetic, it cost about $1.44 per diluted share.
Segment results
Cummins reports five segments. The segment figures add up to more than total company sales because the segments sell to each other (for example, engines sold to Power Systems or Distribution). Those internal sales are removed from the company total.
Segment
Q2 2026 sales
YoY
Q2 2026 EBITDA
EBITDA margin
Q2 2025 EBITDA margin
Engine
$3,084M
+6%
$386M
12.5%
13.8%
Components
$2,891M
+7%
$381M
13.2%
14.7%
Distribution
$3,326M
+9%
$451M
13.6%
14.6%
Power Systems
$2,255M
+19%
$552M
24.5%
22.8%
Accelera
$145M
+38%
$(69)M
n/m
n/m
Power Systems was the only large segment whose EBITDA margin rose, and Accelera narrowed its loss. Engine, Components and Distribution all grew sales but earned a smaller share of each sales dollar. The 10-Q attributes this mainly to higher compensation expenses. It also cites higher freight costs in Engine and higher "product coverage" (warranty-type) costs in Components and Distribution.
Power generation and data centers
This quarter's growth came mainly from power generation.
Power Systems power-generation sales rose 27% to $1,536M. Segment EBITDA rose $122M (+28%) to $552M, which the 10-Q attributes "mainly due to higher volumes." Over the first half, EBITDA was up 38% to $1,129M, at 26.8% of sales.
Distribution, the company-owned dealer network, sold $1,378M of power-generation equipment, up 15%. Its North America sales rose 13%. The 10-Q attributes this to higher demand "especially in data center applications."
Cummins' earnings release (8-K Exhibit 99.1) says Power Systems revenue rose 19% in both North America and internationally. It says demand came "particularly for data center markets in the United States, China and Asia Pacific." The release also cites a June agreement to supply natural-gas generator sets for a Texas AI data center, with deliveries running from 2026 to 2030.
North American trucks
The truck business showed two different trends:
Heavy-duty truck engine sales were $968M, down 1%, although heavy-duty unit shipments rose 2%. For the first half, heavy-duty truck sales fell 7%. North American heavy-duty shipments were down 10% "principally due to lower demand."
Medium-duty truck and bus sales rose 8% to $1,030M. Total medium-duty engine shipments rose 17%, and North American medium-duty truck shipments rose 15%.
Off-highway engine sales (construction and similar equipment) rose 22% to $595M, driven by construction demand in China.
Emissions rules and a possible pre-buy: a "pre-buy" is when fleets rush to purchase trucks before stricter emissions rules make them more expensive. The 10-Q does not describe or quantify any pre-buy ahead of the 2027 rules. What it does say is that in February 2026 the EPA repealed greenhouse-gas emission standards for on-highway vehicles and engines, effective April 20, 2026. As a result, Cummins' $89M of GHG compliance credits could become worth little or nothing if the vehicle-safety regulator (NHTSA) also stops allowing them. That could mean a non-cash write-off of up to that amount. The earnings release says Cummins will launch its new Model Year 2027 X10 and X15 engines with a "measured production ramp" and keep some legacy engines available in 2027, following the EPA's proposed changes. The 10-Q's outlook expects "strong demand for medium-duty and heavy-duty trucks in North America" for the rest of 2026.
Components
Components sales rose 7%. Emission-solutions sales (exhaust aftertreatment) grew $88M (+10%), and components-and-software sales grew $70M (+12%), led by China and North America. Drivetrain and braking sales grew only 2% in the quarter and fell 5% in the first half on weaker demand in India and North America. EBITDA fell $16M despite the higher sales, because product-coverage and pay costs rose faster than price increases could offset.
Accelera: smaller losses, fuel-cell exit
Accelera's Q2 EBITDA loss narrowed to $69M from $100M. Sales rose 38% to $145M, helped by electrified powertrains and electrolyzers (machines that make hydrogen from water). Research and engineering spending fell to $22M from $46M, which reflects the restructuring the company carried out in 2024 and 2025 after zero-emission vehicles were adopted more slowly than expected.
The first-half loss of $346M includes the Q1 transaction. On March 31, 2026, Cummins sold its low-pressure fuel cell business to a customer, cancelled future commitments and resolved claims with that customer. Cummins paid a net $175M and booked a net charge of $199M. Excluding that charge, the first-half Accelera loss would have been $147M versus $186M a year earlier (our arithmetic). Management's outlook still expects "continued near-term operating losses" in Accelera as it keeps investing in priority technologies.
Other items
Tax: the Q2 tax rate was 25.1%, compared with 24.2% a year ago. It included $29M of unfavorable one-off tax items, which the earnings release puts at $0.21 per diluted share. Cummins expects a full-year rate of about 23% before one-off items.
Joint-venture income: income from investees rose $36M to $154M. The increase came mainly from Chinese engine joint ventures (Dongfeng, Chongqing and Beijing Foton Cummins) and Komatsu Cummins Chile.
Cash: operating cash flow in the first half was $1,808M, up from $782M. Working capital used $377M of cash, compared with $1,347M a year earlier. Cummins repurchased $468M of stock in the first half and raised its quarterly dividend 10% to $2.20.
Takeaway: Cummins is now driven as much by data-center generators as by trucks. Power Systems increased EBITDA by $122M in the quarter at a 24.5% margin. The truck-heavy Engine and Components segments earned less than a year earlier despite higher sales. Because pay costs (tied to an expected record year) squeezed margins elsewhere, a 9% sales gain became a 4.7% gain in earnings per share.
Outlook
According to the earnings release (8-K Exhibit 99.1), Cummins raised full-year 2026 revenue guidance to growth of 10% to 13%, up from 8% to 11%. It cited stronger North American on-highway demand, construction in China, and power generation. It now expects EBITDA of 18.0% to 18.5% of sales, compared with 17.75% to 18.5% before, excluding the Q1 fuel-cell charges. Management expects the second half to be stronger than the first. It also expects full-year EBITDA margins to exceed 2025's.
Our view: the upgrade looks credible. Sales grew 6% in the first half, so reaching 10% to 13% for the full year requires faster growth in the second half. Management expects exactly that from data-center power and a North American truck recovery. Power Systems' volume leverage is the main lever for margins. The risks the 10-Q names are the following:
tariffs and the lapse of the USMCA trade agreement (the U.S. declined to extend it on July 1, 2026)
oil and input-cost pressure from the Iran conflict
a possible non-cash write-off of up to $89M on emission credits
continuing Accelera losses
Also, the Q2 year-on-year gain in heavy-duty trucks is still small. The truck part of the story depends on the "strong demand" management expects actually showing up in second-half shipments.