CUMMINS INC. Annual Report: A Look Back at 2025

Curious about Cummins' financial health and future direction? This summary breaks down their 2025 annual report (10-K) into plain English, offering key insights for investors like you. Discover how this global power solutions leader performed last year and what lies ahead.

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1. Business Overview (What the Company Does)

Cummins is a global leader in power solutions. The company designs, manufactures, distributes, and services a wide range of products, including engines, filtration systems, power generation equipment, and various components. These solutions power everything from heavy-duty trucks to industrial machinery. Cummins also maintains an extensive global distribution and service network.

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2. Financial Performance (Revenue, Profit, Year-over-Year Changes)

Overall Performance in Fiscal Year 2025 (compared to 2024):

• Revenue (Sales): Cummins' total sales remained steady at approximately $33 billion in Fiscal Year 2025, matching its strong performance in 2024. This stability followed significant growth from $29 billion in 2023 to $33 billion in 2024, suggesting a period of market consolidation.
• Net Income: The company reported a net income of approximately $2.8 billion in 2025, a modest increase from $2.7 billion in 2024. This profit growth occurred despite flat revenue.
• Earnings Per Share (EPS): Diluted earnings per share (EPS) reached approximately $19.50 in 2025, up from $18.80 in 2024. This increase reflects operational efficiency and the positive impact of share repurchases.
• Profit from Joint Ventures: Earnings from joint ventures (partnerships with other companies) remained consistent at $700 million in both 2025 and 2024. These contributions came from key partnerships, including those in China and India.
• Growth: In summary, 2025 saw stable revenue and modest profit growth, building on a strong growth year in 2024.

Segment Performance (Sales):

Each of Cummins' main operating segments reported stable sales in 2025, consistent with the previous year:

• Engine Segment: This core segment, which produces engines for heavy-duty, medium-duty, bus, and light-duty vehicles, generated $11 billion in sales, unchanged from 2024.
• Components Segment: This segment, encompassing drivetrain, braking systems, emission solutions, and filtration products (including Atmus Filtration), also maintained $8 billion in sales, matching 2024.
• Distribution Segment: Responsible for sales and service through Cummins' global network, this segment reported $8 billion in sales, flat compared to 2024.
• Power Systems Segment: This segment, which covers power generation and industrial applications, saw sales remain steady at $6 billion in 2025, consistent with 2024.
• Accelera Segment: While detailed sales figures for Accelera are not yet separately reported, this segment highlights Cummins' strategic investment in new power solutions such as hydrogen fuel cells and battery-electric powertrains, signaling a clear focus on future growth.

Geographical Sales: Sales remained flat in key markets like the U.S., China, and India in 2025 compared to 2024. Total sales outside the U.S. also showed no change.

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3. Risk Factors (Key Risks)

Investors face several key risks when considering Cummins:

• Economic Downturns: A global economic slowdown could reduce demand for heavy-duty equipment and power solutions.
• Regulatory Changes: Stricter global emission standards and environmental regulations demand substantial research and development (R&D) investment, potentially increasing product costs and affecting market acceptance.
• Supply Chain Disruptions: Geopolitical events, natural disasters, or other factors could interrupt the supply of critical components, impacting production and delivery.
• Intense Competition: The power solutions market is highly competitive, requiring continuous innovation and efficient operations.
• Transition to New Energy: The shift to zero-emission technologies (such as those in Accelera) involves significant capital investment and market adoption uncertainty, posing financial and operational risks.

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4. Management Discussion (MD&A Highlights)

In 2025, Cummins showcased strong operational resilience, maintaining profitability despite flat revenue in what appeared to be a mature or softening market. A key highlight was the continued strategic investment and development in Accelera. This segment positions Cummins for leadership in future zero-emission technologies. Accelera focuses on developing and commercializing solutions like hydrogen fuel cells, battery-electric powertrains, and electrolyzers, marking a pivotal strategic shift towards decarbonization and diversification beyond traditional internal combustion engines.

Cummins actively managed challenges, including the transition to new energy technologies, optimizing its core business, and navigating ongoing supply chain complexities. Several market trends influenced operations:

• An accelerating global push for decarbonization and stricter emission standards.
• Increasing demand for diversified and sustainable power solutions.
• Evolving global supply chains.

Regulatory changes, especially those related to environmental standards and incentives for green technologies, significantly drove Cummins' innovation and product development strategy. The company actively adapts its product portfolio to meet these evolving requirements, with a clear strategic direction centered on innovation and sustainability.

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5. Financial Health (Debt, Cash, Liquidity)

• Cash Flow: Operating cash flow remained robust, reaching approximately $4.0 billion in 2025, up from $3.8 billion in 2024. This strong cash generation provides ample liquidity for investments and shareholder returns.
• Cash Position: Cummins maintained a healthy cash and cash equivalents balance of around $2.7 billion at the end of 2025.
• Debt: Cummins' debt levels remained stable. Long-term debt held steady at $6 billion in both 2025 and 2024, and the portion of debt due within the next year (current maturities) also remained at $1 billion. This demonstrates a consistent and manageable approach to borrowing. The debt-to-equity ratio stood at approximately 1.05x in 2025.
• Overall Company Value (Equity): Total shareholder equity (referred to as "equity attributable to parent") saw a slight dip, decreasing by about 5.7% from $7.033 billion in 2024 to $6.633 billion in 2025.
  • Retained Earnings: Despite this, retained earnings (profits kept within the business) increased by $1.4 billion to $20.404 billion in 2025, a positive sign of accumulating profits.
  • Treasury Stock: However, the company significantly increased its stock buybacks ("treasury stock") by $1.5 billion, reaching a total of $13 billion in 2025. While stock buybacks reduce total equity, they can enhance EPS and return value to shareholders. This largely explains the decrease in overall shareholder equity despite the rise in retained earnings.
• Dividends: Cummins continued to return value to shareholders, paying out approximately $6.20 per share in dividends during 2025.

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6. Future Outlook (Guidance, Strategy)

Looking ahead, Cummins plans continued strategic investment in new technologies, especially within Accelera. These investments aim to drive long-term growth and meet evolving market demands for sustainable power. Management expresses cautious optimism, balancing potential market uncertainties with significant opportunities in electrification and alternative fuels. The company focuses on operational efficiency, strategic partnerships, and disciplined capital allocation to navigate this transition and deliver shareholder value.

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7. Competitive Position

Cummins holds a strong competitive position as a global leader in diversified power solutions. Its extensive global distribution and service network, continuous technological innovation, and a strong brand reputation built over decades underpin this leadership. By strategically focusing on expanding into new energy technologies through Accelera, Cummins aims to secure its long-term market leadership in a rapidly evolving industry.