Cummins (CMI) 16th Annual Wells Fargo Industrials & Materials Conference summary

Product development and capacity expansion

• Launching a new 120 L natural gas engine platform for prime power, leveraging a fuel-agnostic architecture for rapid development and efficient investment.

• Key development milestones targeted for the second half of 2027, with limited production in late 2028 and full-scale production ramping through 2029–2030.

• Capacity expansion of 20 GW, with $450 million investment, primarily within existing facilities, aiming for capital efficiency and quick payback.

• Capacity additions span multiple engine sizes (60 L, 78 L, 95 L) and global sites, including Seymour, Daventry, and potentially sites in India or China.

• Order book for diesel reciprocating engines extends to 2028, with strong demand from hyperscale data center customers.

Market dynamics and revenue outlook

• Diesel standby products underpin a $9 billion revenue target, with incremental gas prime opportunities expected post-2030.

• Industry-wide capacity additions reflect expectations for sustained data center demand into the early 2030s.

• Power systems business currently generates $8.5–$9 billion in annual revenue, with data centers contributing $3–$5 billion.

• Incremental capacity is expected to bring total run-rate revenue potential to $12 billion, though full realization lags capacity additions.

• Pricing for reciprocating engines is about $600 million per GW, with incremental capacity being filled rapidly.

Supply chain, production, and margin management

• Supply constraints focus on large components; vertical integration and local machining are increasing throughput and flexibility.

• EBITDA margins in Power Systems are guided to remain above 25%, with incremental margins previously exceeding 40% due to cost reductions and throughput gains.

• Price increases have been implemented but are expected to moderate; price/cost remains favorable.

• Orders are managed with global framework agreements and punitive clauses to discourage speculative bookings.

• Lead times and order books are managed to match incremental capacity, with 2029 soon to open for orders.