CUMMINS INC (CMI) Q4 2024 Earnings Summary

Executive Summary

Q4 revenue of $8.45B (-1% YoY) and EBITDA margin of 12.1% reflected weaker North America heavy-duty trucks offset by continued strength in Power Systems and Distribution, and pricing; GAAP EPS was $3.02, including $312M ($2.14/sh) of largely non-cash Accelera reorganization charges .
Underlying performance was stronger than reported: EBITDA margin ex-specials was 15.8% vs 14.4% a year ago, and management said Q4 revenue landed at the top end of guidance while EBITDA margin exceeded projections, aided by power gen volume mix and pricing; excluding Accelera charges, EPS was ~$5.16, per management commentary .
2025 guide: revenue down 2% to up 3%; EBITDA margin 16.2%-17.2% (vs 15.7% 2024 ex special items), tax rate ~24.5%; segment guides call for continued margin improvement in Power Systems (19%-20%) and stability-to-improvement across core segments despite softer 1H North America on-highway demand .
Key catalysts: secular data center demand driving Power Systems/Distribution mix and margins; North America EPA’27 prebuy timing (2H skew) and medium-duty breadth; Accelera loss reduction from strategic refocus; pricing discipline. Risks: heavy-duty softness, China timing uncertainty, Accelera breakeven not on track by 2027 .

What Went Well and What Went Wrong

What Went Well
- Power Systems strength: Q4 sales up 22% to $1.74B; segment EBITDA 18.0% vs 12.7% YoY, driven by data center demand and pricing; management expects further improvement, guiding 19%-20% EBITDA for 2025 .
- Distribution momentum: Q4 sales up 13% to $3.07B, EBITDA 13.0% vs 9.9% YoY, with strong power gen demand (particularly data centers) and pricing actions; guides 2025 revenue +2% to +7% and EBITDA 12%-13% .
- Execution vs guidance: “revenue achieving the top end of our prior guidance and EBITDA margins exceeding our projections,” underpinned by higher power gen volume, pricing, and operational efficiency .
What Went Wrong
- Accelera charges and losses: Q4 incurred $312M of largely non-cash reorg charges (inventory write-downs, intangible/PP&E impairments, JV impairments), pushing Accelera segment to a $431M EBITDA loss; management now not on track to EBITDA breakeven by 2027 .
- Heavy-duty truck softness: North America heavy-duty demand declined; Engine segment sales down 2% YoY; management expects weaker 1H’25 with second-half prebuy uncertain in magnitude/timing .
- China visibility limited: management does not see a “meaningful recovery thus far”; while upside exists, timing remains uncertain, which may constrain Engine/Components leverage until volumes recover .

Financial Results

Revenue, EPS, EBITDA margin vs prior quarters

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($B)	$8.8	$8.456	$8.447
Diluted EPS ($)	$5.26	$5.86	$3.02 (GAAP); ~$5.16 ex Accelera charge (mgmt)
EBITDA Margin %	15.3%	16.4%	12.1% (15.8% ex special items)

Selected profit/margin detail

Q4 gross margin $2.03B; management cited gross margin of 25.4% vs 23.7% last year on stronger power gen aftermarket, pricing, and efficiency .
Q4 net income margin 4.9% (GAAP) .

Segment breakdown (Q4 2024)

Segment	Sales ($B)	YoY %	EBITDA ($M)	EBITDA %
Engine	$2.72	-2%	$367	13.5%
Components	$2.64	-17%	$361	13.7%
Distribution	$3.07	+13%	$400	13.0%
Power Systems	$1.74	+22%	$314	18.0%
Accelera	$0.10	+23%	-$431	NM

Key KPIs

KPI	Q4 2024	Commentary
Engine units – Heavy-duty	29,400	Reflects heavy-duty softness
Engine units – Medium-duty	75,700	Medium-duty resilient
Engine units – Light-duty	36,000	Lower pickup units
Power Systems – Power generation sales	$1.09B	Data center demand
Power Systems – High-hp units (PG)	3,200	Capacity ramp in larger sets

YoY highlights

Total revenue down 1% YoY; North America flat, International -3% .
Power Systems and Distribution delivered significant YoY growth; Components down on Atmus separation and heavy-duty demand .

Note on estimates: S&P Global consensus data was unavailable at time of analysis due to API rate limit; result vs consensus not shown (see Estimates Context).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth	FY 2025	N/A	-2% to +3%	New
EBITDA margin	FY 2025	N/A	16.2% – 17.2%	New
Effective tax rate	FY 2025	N/A	~24.5% (ex discrete)	New
Capex	FY 2025	N/A	$1.4B – $1.5B	New
Engine – Revenue	FY 2025	N/A	-2% to +3%	New
Engine – EBITDA %	FY 2025	N/A	14.2% – 15.2%	New
Components – Revenue	FY 2025	N/A	-5% to 0%	New
Components – EBITDA %	FY 2025	N/A	13.8% – 14.8%	New
Distribution – Revenue	FY 2025	N/A	+2% to +7%	New
Distribution – EBITDA %	FY 2025	N/A	12% – 13%	New
Power Systems – Revenue	FY 2025	N/A	+2% to +7%	New
Power Systems – EBITDA %	FY 2025	N/A	19% – 20%	New
Accelera – Revenue	FY 2025	N/A	$400M – $450M	New
Accelera – Net loss	FY 2025	N/A	$(385)M – $(415)M	New

Management also reiterated a long-term objective to return ~50% of operating cash flow to shareholders .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Data centers/power generation	Raised 2024 power gen growth to +15%-20%; PS EBITDA moving toward ~18% on volume, pricing, efficiency	PS Q4 +22% sales; 2025 PS EBITDA 19%-20%; $200M capacity investments; mix skew to larger sets; doubling capacity by YE’25	Improving
North America heavy-duty and prebuy	2H’24 heavy-duty moderation; preparing for EPA’27 with expected prebuy, but capacity constraints limit magnitude	2025 heavy-duty industry 260k–290k; weaker 1H; prebuy expected 2H but timing/magnitude uncertain	Mixed/uncertain
Medium-duty performance	Medium-duty strong; added OEM wins; capacity expansion	Market down 5%-15% in 2025; Cummins to “follow the market,” with strong product positioning	Normalizing
Pricing discipline	~2.5% enterprise pricing in 2024; supports margins	Pricing again cited as margin driver, esp. power gen/distribution	Stable tailwind
Accelera strategy/trajectory	Revenues $400-$450M; losses $400-$430M; pacing investments	$312M non-cash charges to refocus; breakeven by 2027 not on track; loss reduction targeted	Reset; loss reduction focus
China	No meaningful stimulus-driven recovery expected near term	2025 China rev (incl. JVs) +5% projected; still no meaningful recovery yet seen	Gradual; low visibility
Tariffs/regulatory	Monitoring; strategy to build where sold	EPA’27 likely intact; ability to pass-through tariffs if incurred	Manageable

Management Commentary

CEO on Q4 setup and Accelera: “We recorded charges related to the reorganization of our Accelera... to streamline operations and focus investments, as the adoption of certain zero-emissions solutions has slowed in some regions” .
CFO on execution vs guidance: “We delivered strong operational results... revenue achieving the top end of our prior guidance and EBITDA margins exceeding our projections” .
CEO on Power Systems/data centers: “We intend to invest $200 million across our U.S., England, and India manufacturing sites... We’re tracking on plan or slightly ahead to double capacity by end of this year” .
CFO on 2025 outlook: “We currently project 2025 company revenues to be down 2% to 3%... EBITDA margins ~16.2% to 17.2%... Capital investments $1.4B–$1.5B” .
CFO on Accelera trajectory: “We are not, right now, on track to get to breakeven [by 2027]... we took more pronounced actions in Q4” .

Q&A Highlights

Power Systems capacity and pricing: Mix skew to larger (50L–95L) sets; capacity ramp and strategic pricing underpin outlook; doubling capacity by YE’25 remains on track .
EPA’27 and prebuy: EPA’27 expected to stay; prebuy likely in 2H’25 but magnitude/timing uncertain; 1H demand weaker .
Accelera restructuring: Refocusing on areas of differentiation (battery JV, e-mobility), pacing electrolyzers; severance modest; non-cash charges reflect inventory/intangible/PP&E and JV impairments .
R&D cadence: 2025 not a dramatic shift; beyond 2025 engine R&D should trend down post launches, aiding margins .
Tariffs/pricing: Build-where-sold mitigates; pricing pass-through if incurred; continued internal simplification to improve speed/cost .

Estimates Context

We attempted to pull S&P Global consensus for Revenue and EPS for Q4/Q3/Q2, but the API returned a rate-limit error; therefore, estimate comparisons are not included. Values would normally default to S&P Global; unavailable in this instance due to access limits [Values retrieved from S&P Global were unavailable].

Key Takeaways for Investors

Power Systems is the structural profit driver: secular data center demand, larger-set mix, pricing, and operations support 19%-20% EBITDA in 2025; continued capacity adds are a positive catalyst .
2025 margin guide is constructive despite flat revenue: company EBITDA 16.2%-17.2% vs 15.7% in 2024 (ex specials), signaling further efficiency and mix tailwinds even with 1H truck softness .
Engine/Components defend margins via parts, pricing, and cost actions while navigating heavy-duty softness; medium-duty normalizes but product position remains strong .
Accelera reset reduces near-term losses but pushes out breakeven; watch for execution on loss reduction and revenue within $400–$450M guide .
Macro/China optionality: China could add earnings leverage on recovery; management still cautious near term .
Trading setup: near-term narrative driven by Power Systems momentum and 2025 margin guide vs heavy-duty cycle/prebuy timing; estimate revisions likely to focus on PS/Distribution margins and Accelera loss trajectory .

Additional financial detail (Q4 2024 GAAP)

Net sales $8.447B; Operating income $732M; Net income attributable to CMI $418M; Diluted EPS $3.02; EBITDA $1.020B (12.1% of sales) .
Accelera charges totaled $312M (mostly non-cash): $107M inventory write-downs; $84M intangible impairment; $61M PP&E impairment; $17M JV impairment; $7M severance .
Operating cash flow $1.422B in Q4; FY capex $1.208B .
FY 2024 EBITDA (GAAP) $6.326B (18.6% of sales); ex special items ~$5.369B (15.7%) .

Press release cross-reference: The 8-K furnished the detailed financial statements and segment data; the companion press release reiterated Q4/FY results and outlook language .