Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 4, 2026 · Beat 7 of last 7 quarters
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Cummins' record Power Systems results and hyperscaler agreement underscore the sustained demand for backup power in AI data centers. The company's capacity expansion and new prime power solutions position it to capture growth in the AI infrastructure buildout, though near-term growth remains capacity-constrained. The raised guidance and strong backlog signal continued momentum in the power generation supply chain.
Cummins delivered record Q2 sales of $9.5B, up 9% YoY, with EBITDA of $1.7B (17.5% of sales). Power Systems revenue grew 19% to a record $2.3B with EBITDA margin expanding to 24.5%, driven by data center demand in the U.S. and China. China revenue including JVs rose 30% to $2.3B, with power generation equipment sales up 88%. The company signed a multiyear agreement with a global hyperscaler for several gigawatts of backup power genset demand and announced a prime power project with Circe Energy for a Texas data center. Net earnings were $932M or $6.73 per diluted share, which included $0.21 of unfavorable discrete tax items.
Management raised full-year 2026 revenue growth guidance to 10%–13% (from 8%–11%) and lifted the midpoint of EBITDA margin guidance to 18%–18.5%. The improved outlook reflects stronger North America on-highway demand, continued strength in power generation from data centers, and improved on- and off-highway demand in China. They raised the North America heavy-duty truck forecast to 240,000–250,000 units and medium-duty to 130,000–140,000 units, citing strong orders and a modestly higher prebuy following EPA regulatory clarity. Power generation revenue growth is still guided at 15%–25%, constrained by capacity. Management expects smoother EPA 2027 transition with phased production, and noted incentive compensation will be lower in H2, supporting margin expansion.
“We recently signed a multiyear agreement with a global hyperscaler, expanding a long-standing partnership and securing visibility into several gigawatts of future backup power genset demand.”
on Data center demand
“The message from them really remains consistent, which is continue to expand capacity, demand for backup power is ahead of industry supply availability and how much more can we deliver them.”
on Power generation capacity
“So we're now selling out into the second -- further out into the second half of 2020 overall as a general statement about demand. So we have seen absolutely no pausing or blinking in demand.”
on Backlog and demand
Given the incremental clarity on EPA 2027, how are you thinking about the setup for 2027? And can you explain the change in distribution margin guidance?
Jennifer said the transition will be smoother than previously anticipated, with less abrupt year-over-year demand variation. Mark noted the second half has no onetime items, with strong EBITDA percent expected. Distribution margins were impacted by higher incentive compensation and slower parts growth, but underlying growth remains strong.
Can you provide more financial detail on the EPA27 transition—pricing, costs, and market share implications? Also, what is the shape of the backup power backlog?
Mark said pricing for new products will reflect the value delivered, and NCPs will be passed on to the market. R&D costs will stay elevated longer, but product coverage costs will be lower. Jennifer said backlog remains very strong, with demand ahead of supply, and customers are pushing for faster capacity expansion.
How far out are you booking orders for the 95-liter genset, and are lead times extending? Any changes in pricing?
Mark said demand continues to grow, with orders now extending into the second half of 2028. He noted no pausing in demand and that pricing remains consistent with prior agreements, with ambitions to grow margins over time.