Cummins powers record margins as data centre demand offsets truck weakness

Record margins meet a softer revenue outlook

Cummins Inc. (NYSE:CMI) produced its strongest quarterly EBITDA margin on record, but trimmed the top end of its full-year revenue outlook as weakness in North American pickup trucks began to show. Third-quarter revenue rose 13% to US$9.4 billion, while GAAP net income attributable to Cummins more than doubled to US$1.14 billion, or US$8.25 a diluted share, from US$536 million a year earlier.

EBITDA, a non-GAAP measure, reached US$1.786 billion, or 18.9% of sales, compared with US$1.187 billion and 14.3% in the prior-year quarter. The comparison is helped by US$240 million of Accelera non-cash charges in the third quarter of 2025, while this quarter's diluted EPS included a favourable US$75 million of discrete tax items, worth US$0.54 per share.

Power Systems carries the data centre boom

The clearest engine of momentum was Power Systems, where sales climbed 15% to US$2.3 billion and segment EBITDA increased 27% to US$582 million. Its margin expanded to 25.4% from 22.9%, with Cummins pointing to power generation demand from data centre markets in the United States, China and Asia-Pacific.

The company said its Power Generation business had also been selected to supply battery energy storage systems for a large US data centre project. Cummins described the deployment as its largest BESS project to date, with the systems intended to manage AI-driven load fluctuations, mitigate load oscillations and improve ride-through performance. The filing does not disclose the project's value or delivery timetable.

Truck demand splits the portfolio

Engine and Components also benefited from stronger truck demand. Engine sales rose 20% to US$3.1 billion, while Components increased 23% to US$2.9 billion. Distribution sales grew only 4% to US$3.3 billion, and its EBITDA fell to US$461 million from US$492 million, pulling its margin down to 13.9% from 15.5%.

That strength was not uniform across vehicle markets. Cummins said medium- and heavy-duty truck markets in North America had improved, while pickup truck orders weakened. The Engine segment's light-duty automotive sales reached US$500 million in the quarter, down from US$583 million in the same quarter of 2025, even as heavy-duty truck sales rose to US$1.016 billion from US$772 million.

Guidance narrows as Accelera remains a drag

Cummins now expects full-year revenue growth of approximately 10%, replacing its previous 10% to 13% range. It held its EBITDA margin expectation at approximately 18.2%, within the prior 18% to 18.5% range, excluding charges related to the sale of its low-pressure fuel cell business.

Accelera, the zero-emissions segment, remains loss-making. Third-quarter sales fell 15% to US$103 million and the segment recorded a US$56 million EBITDA loss, with lower electrolyser sales following a strategic review. Management said it was reducing the rate of ongoing losses by pacing and focusing its zero-emissions investment, but the filing gives no timetable for the segment to reach profitability.

Cash returns remain substantial

Cummins returned US$661 million to shareholders during the quarter through US$302 million of common-stock dividends and US$359 million of share repurchases. The company raised its quarterly dividend by 10% to US$2.20 per share in July, extending its record of annual quarterly dividend increases to 17 consecutive years.

Operating cash flow was US$1.405 billion in the quarter, while capital expenditure was US$303 million. Cummins says it remains committed to returning 50% of operating cash flow to shareholders. The next test is whether fourth-quarter revenue can set the new record management expects, while the data centre-led Power Systems surge continues to offset a pickup market that has yet to stabilise.