CMI · Q2 2026 Earnings

Bullish

Cummins

Reported August 4, 2026

30-second summary

Cummins raised FY2026 revenue growth to +10% to +13% (from +8% to +11%) and lifted the EBITDA margin floor 25bps to 18.0%–18.5%, marking a second consecutive quarter of comprehensive guide-ups against a backdrop of "demand continues to outpace expectations." Q2 FY2026 revenue of $9.46B (+9.4% YoY) beat consensus of $9.34B by 1.3%, but GAAP EPS of $6.73 missed the $7.17 consensus by 6.1% and the 17.5% Q2 EBITDA margin printed 25bps below the newly-raised FY floor. Power Systems (+19.3%, 24.5% EBITDA margin) and data center demand remain the dominant carry, with international revenue (+12%, led by China) outpacing North America (+8%) this quarter; the H2-stronger-than-H1 thesis now requires visible sequential margin expansion to validate the raise.

Headline numbers

EPS

Q2 FY2026

$6.73

-6.1% vs est.

Revenue

Q2 FY2026

$9.46B

+9.4% YoY

+1.3% vs est.

Gross margin

Q2 FY2026

26.1%

Operating margin

Q2 FY2026

13.5%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$9.46B	$8.64B	+9.4%	$8.40B	+12.6%
EPS	$6.73	$6.43	+4.7%	$4.71	+42.9%
Gross margin	26.1%	26.4%	-30bps	26.7%	-60bps
Operating margin	13.5%	14.2%	-70bps	11.3%	+220bps

Guidance

Full-year FY2026 revenue and EBITDA margin guidance raised; Q2 revenue beat but EPS missed consensus.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q2 FY2026	$9.072B to $9.471B	$9.457B	within high end of range, +1.3% vs consensus estimate	Beat
EBITDA margin	Q2 FY2026	17.75% to 18.50%	17.5%	-25bps below low end of full-year guidance range	Missed
EPS	Q2 FY2026	—	$6.73	-6.1% vs consensus estimate of $7.17	Missed

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue YoY growth	FY2026	up 8% to up 11%	up 10% to up 13%	+2pts at low end, +2pts at high end	Raised
EBITDA margin	FY2026	17.75% to 18.50%	18.0% to 18.5%	+25bps at low end	Raised

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Power Systems	$2.255B	$1.889B	+19.4%
Distribution	$3.326B	$3.041B	+9.4%
Engine	$3.084B	$2.899B	+6.4%
Components	$2.891B	$2.705B	+6.9%
Accelera	$0.145B	$0.105B	+38.1%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
EBITDA Margin	17.5%	18.4%	—
Power Systems EBITDA Margin	24.5%	22.8%	—
Distribution EBITDA Margin	13.6%	14.6%	—
Components EBITDA Margin	13.2%	14.7%	—
Engine EBITDA Margin	12.5%	13.8%	—
North America Revenue Growth	11.3%	—	—
International Revenue Growth	6.4%	—	—
Capital Returns to Shareholders	$501 million	—	—

Management tone

Q3 2025 → Q4 2025 → Q1 FY2026 → Q2 FY2026 arc: Truck cycle cratering → Guidance reinstated with tariff dilution caveat → Broad-based demand reset → Demand outpacing raised expectations.

Three quarters ago the anchor sentence was "I hope that demand in North America on highway markets is close to bottoming." Two quarters ago management framed tariffs as structurally dilutive to EBITDA percent even as dollar costs were recovered. This quarter the language on both fronts has hardened toward confidence: "Demand continues to outpace expectations across several key markets... North American truck markets continue to improve, while demand for data center power generation remains robust." The Q3 2025 "hope" has been replaced by demand consistently running ahead of a guide that itself has been raised twice.

The tariff frame has receded further. In Q4 2025 management quantified tariff dilution at ~50bps of FY2026 EBITDA midpoint and called it structural. In Q1 FY2026 the tariff caveat migrated from headline to footnote. This quarter tariffs are not mentioned in the release's forward commentary at all — the EBITDA floor was raised 25bps and the ceiling reaffirmed, which mathematically implies either the tariff drag has narrowed or volume leverage has more than absorbed it. The absence of the previously-prominent "tariffs dilute every segment" framing is itself the signal.

The H2 narrative shifted from "H1 stronger than previously anticipated, H2 largely consistent with prior outlook" (Q1) to "second half of the year stronger than the first half" (Q2). This is the first quarter in the recovery arc where management is explicitly guiding sequential acceleration rather than sequential moderation. Given Q2 EBITDA margin printed 25bps below the new FY floor, this commitment to H2 strength is not narrative garnish — it is the arithmetic requirement for the raised guide to hold.

The EPS miss creates a subtle counter-signal that management did not address in the release commentary. A 6.1% consensus miss on GAAP EPS alongside a revenue beat implies below-the-line dilution (margin mix, tax, one-time items) that the release framework did not isolate. The release does flag $29M ($0.21/share) of unfavorable discrete tax items in Q2, but the balance of the gap remains unquantified — and it is the single largest datapoint in tension with the bullish guide raise.

Answers to last quarter's watch list

Whether Power Systems EBITDA margin holds above 25% — Held at 24.5%, technically 50bps below the 25% threshold from last quarter's watch item but expanding 170bps YoY. Revenue grew 19.3% YoY on continued data center strength. The Q1 29.5% one-time benefit did not persist, as management flagged; the current run-rate is meaningfully above the 22% downside threshold but below the 25% aspirational floor. Status: Continue monitoring.

China growth trajectory tracking to the +10% FY guide — Not directly broken out at country level, but international revenue growth of +12% led by China (with Engine international +23% specifically citing Chinese construction) suggests the +10% FY China guide is tracking on plan or better. Status: Tracking positively; continue monitoring.

Engine and Components reaching positive YoY growth — Resolved decisively. Engine grew +6.4% YoY (vs -3.6% in Q1) and Components grew +6.9% YoY (vs -5.2% in Q1). The H1-recovery thesis embedded in the raised volume guides has converted to growth one quarter ahead of the Q3 threshold — though composition skewed international, with Engine NA only +1%. Status: Resolved positively on totals; NA-specific recovery still shallow.

EBITDA margin trajectory toward the 17.75%–18.50% FY band — Q2 reported 17.5%, which sits 25bps below the new FY floor of 17.75%. Q1 reported 15.4% (17.7% ex fuel-cell charge). H1 is running below the raised band on a reported basis; H2 must run at roughly 18.5%+ to hit the midpoint. Management's explicit "second half stronger than first half" language acknowledges the arithmetic. Status: Resolved negatively — the print sits below the new floor, and the guide raise widens the H2 delta required.

Any quantified EPA 2027 pre-buy contribution to the raised NA truck volume guides — Not disclosed on this print. The revenue guide was raised another 200bps but management did not isolate pre-buy versus underlying demand in the release commentary. Status: Continue monitoring.

Whether Accelera losses tighten toward the $270M end of the new $270–300M guide — Not disclosed on the print. Accelera revenue grew 38.1% to $145M, indicating scope reduction has stabilized and the remaining business is scaling. Segment EBITDA loss of $69M in Q2 (vs $100M loss in Q2 2025) shows YoY improvement. Status: Tracking positively; continue monitoring.

Analyst day on May 21st — updates to medium-term financial targets, capital deployment, and data center growth opportunities — Analyst day occurred between prints; the Q2 release notes 2030 financial targets were raised at the May event but specific outputs were not restated. Capital returns of $501M in Q2 signal continued deployment discipline. Status: Not resolved on the print itself; the analyst-day content sits outside the earnings-brief scope.

What to watch into next quarter

Whether Q3 EBITDA margin prints inside the raised 18.0%–18.5% FY band on a reported basis, or whether H2 still requires ex-charge adjustments to reach the floor. A Q3 print at 18.0%+ would validate the raise; another sub-floor print would force a Q4 above 18.7% for the full-year to hit the midpoint.

Composition of the Q2 EPS miss beyond the disclosed $0.21 discrete tax hit, expected to surface in the 10-Q. Whether the residual margin/mix drag recurs in Q3 will determine if the pattern is one-time or structural.

Power Systems EBITDA margin sustaining above 24% as the one-time Q1 recovery items anniversary out. A print at 23% or lower would put the segment thesis at risk and expose the guide to Power Systems mix.

North America revenue growth reaccelerating as EPA 2027 pre-buy dynamics develop. Q2's +8% NA growth trailed international's +12%; a further NA deceleration would suggest either the pre-buy has not yet materialized or underlying demand is softer than the raised NA truck volume guides imply.

Any explicit pre-buy quantification in Q3 or Q4 commentary. Management has now raised NA truck volume guides in three consecutive quarters without isolating pre-buy contribution — the visibility gap widens with each raise.

Accelera segment loss disclosure and whether the $270–300M FY range narrows toward the lower end as the fuel-cell exit costs anniversary out through H2.

Sources

Cummins Q2 FY2026 Form 8-K, Exhibit 99 (press release): https://www.sec.gov/Archives/edgar/data/26172/000002617226000026/cmi2026q28-kex99.htm

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