CUMMINS INC (CMI) Q1 2025 Earnings Summary

Executive Summary

Cummins delivered solid Q1 2025 results with revenue of $8.17B (-3% YoY), Diluted EPS of $5.96, and EBITDA margin of 17.9%; profitability was led by record Power Systems margins as Distribution also expanded .
Versus Wall Street, EPS beat consensus by ~$1.04 while revenue was essentially in line; margin improvement was driven by price/cost, aftermarket strength, and operational efficiency, offsetting weaker North America truck demand *.
Management withdrew full-year 2025 guidance due to growing economic uncertainty from evolving tariffs, increasing the near-term stock narrative risk around demand and margin visibility despite strong secular drivers in power generation/data centers .
Segment mix improved: Power Systems sales +19% YoY with 23.6% segment EBITDA margin, and Distribution sales +15% YoY with 12.9% margin; Engine and Components saw volume headwinds from on-highway markets and Atmus separation .

What Went Well and What Went Wrong

What Went Well

Power Systems delivered record profitability: segment EBITDA margin expanded to 23.6% on strong data center and aftermarket demand, favorable pricing, and operational improvements. “There are no significant one-off items in those results… the business has made tremendous improvement” .
Price/cost and aftermarket strength lifted gross margin about 200 bps YoY. “Gross margin… 26.4% of sales, up from 24.5% last year… driven by favorable pricing, higher aftermarket and operational improvements” .
Distribution growth and margin expansion: revenues +15% YoY with segment EBITDA margin up to 12.9% on higher power generation volumes and favorable pricing .

What Went Wrong

On-highway demand softened: heavy-duty industry production -18% YoY and Cummins heavy-duty unit sales -21%; medium-duty industry -21% with Cummins units -14% .
Components sales -20% YoY with margin dilution from Atmus separation and lower North America/Europe demand, partly offset by efficiencies .
Heightened macro/tariff uncertainty forced withdrawal of full-year guidance and raised risk of demand destruction, with management highlighting limited visibility and potential lag between tariff costs and recovery .

Financial Results

Headline Comparisons (GAAP)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$8.456	$8.447	$8.174
Diluted EPS ($)	$5.86	$3.02	$5.96
EBITDA Margin %	16.4%	12.1%	17.9%
Operating Income ($USD Billions)	$1.050	$0.732	$1.134
Net Income Attributable to CMI ($USD Billions)	$0.809	$0.418	$0.824

Versus S&P Global Consensus

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue Consensus ($USD Billions)	$8.449	$8.095	$8.174
Revenue Actual ($USD Billions)	$8.403	$8.447	$8.174
Primary EPS Consensus Mean ($)	$4.965	$4.693	$4.924
Actual Diluted EPS ($)	$14.03	$4.5356	$5.96

Values retrieved from S&P Global.*

Segment Breakdown – Q1 2025

Segment	Sales ($USD Billions)	Segment EBITDA ($USD Millions)	EBITDA Margin %
Engine	$2.771	$458	16.5%
Components	$2.670	$382	14.3%
Distribution	$2.907	$376	12.9%
Power Systems	$1.649	$389	23.6%
Accelera	$0.103	-$86	NM

YoY detail: Engine (-5% sales) and Components (-20%) reflected lower on-highway demand and Atmus separation; Distribution (+15%) and Power Systems (+19%) benefited from power generation demand (data centers), pricing, and North America strength .

KPIs

KPI	Q1 2024	Q1 2025
Engine Unit Shipments – Heavy-duty	33,600	26,700
Engine Unit Shipments – Medium-duty	75,800	75,200
Engine Unit Shipments – Light-duty	54,800	39,100
Distribution – Power Generation Sales ($USD Millions)	$707	$1,090
Power Systems – Power Generation Sales ($USD Millions)	$853	$1,001
Power Systems – High-HP Units (Power Gen / Industrial)	3,000 / 1,300	2,600 / 1,300

Non-GAAP context: Q1 2024 included a $1.3B Atmus gain; EBITDA margin excluding special items was 15.5% vs reported 30.6% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	Down 2% to Up 3% YoY (issued 2/4/25)	No outlook provided (withdrawn 5/5/25)	Lowered/Withdrawn
EBITDA Margin %	FY 2025	16.2%–17.2% (issued 2/4/25)	No outlook provided (withdrawn 5/5/25)	Lowered/Withdrawn
Dividend (Quarterly)	Q2 declaration	$1.82 per share (declared 5/13/25)	—	Maintained vs prior quarter at time; subsequently increased to $2.00 on 8/5/25

Management cited “growing economic uncertainty driven by tariffs” as the reason to withdraw the full-year forecast .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Data center power demand	Power Systems +17% YoY; power gen revenues +24% in Q3 2024	Continued strength; record Power Systems margins; aftermarket unusually strong; U.S. and China data center demand noted	Strengthening; secular tailwind
Tariffs & macro uncertainty	No FY 2024 guidance change in Q3; FY 2025 outlook given in Q4	Guidance withdrawn; tariffs impact expected to build through 2H25; lag between cost and recovery	Uncertainty rising
On-highway truck market	Q3/Q4 noted slowing North America heavy-duty demand	Heavy-duty industry -18% YoY; Cummins heavy units -21%; medium-duty industry -21%	Weaker
Regulatory/NOx 2027	2025 outlook set in Q4; Accelera reorg charges	Expect NOx regulation in 2027; EPA exploring cost-lowering options; launch plans unchanged (X10/B7.2 in 2027; X15 diesel in 2026)	Ongoing; watch rulemaking
Technology/HELM engines	X15N production; HELM platforms showcased in Q3 2024	Introduced X10; unveiled B7.2; First Mode assets acquisition for hybrid solutions	Advancing

Management Commentary

“We delivered very strong results… led by record performance in our Power Systems segment… Due to growing economic uncertainty driven by tariffs we have withdrawn our full year forecast” – Jennifer Rumsey, CEO .
“Gross margin… 26.4%… up from 24.5% last year… driven by favorable pricing, higher aftermarket and operational improvements” – Mark Smith, CFO .
“It’s not a data center-driven phenomena… aftermarket relates to mining, oil & gas, marine, broader power gen… the leadership team has driven margins across most parts” – Mark Smith .
“We plan to launch the new 10-liter and B7.2 in ’27… X15 diesel in ’26… diesel version brings significant fuel efficiency improvement” – Jennifer Rumsey .

Q&A Highlights

Tariffs impact: management will quantify impacts as realized, expects effects to build over months with lag in cost recovery; broader concern is demand destruction and confidence rather than just cost pass-through .
Backlog/Power gen resiliency: limited cancellations; ability to reallocate orders; distribution partnership critical; least sensitivity to economic sentiment so far .
Engine margins drivers: parts demand, pricing on light-duty launches, warranty cost improvements (product coverage ~1.9%) contributed; JV tech fees were positive but lumpy .
Regional trends: China power gen up sharply (data centers); North America truck orders disappointing in April; India power gen normalized post pre-buy .

Estimates Context

Q1 2025: EPS $5.96 vs consensus $4.92 → significant beat; revenue $8.174B vs consensus $8.174B → inline; margin outperformance reflects price/cost, aftermarket strength, and operational efficiency in Power Systems and Distribution *.
Prior quarters: Q3 2024 EPS $5.86 vs $4.81 estimate; revenue $8.456B vs $8.309B estimate, indicating a pattern of margin-driven beats in late 2024 and early 2025 *.
Implications: With guidance withdrawn and tariffs building, analysts may need to lower 2H truck volumes and raise power gen/aftermarket assumptions; margin trajectories in Power Systems and Distribution look structurally higher, but policy risk caps visibility .