Cummins (CMI) Barclays 42nd Annual Industrial Select Conference summary

Regulatory and market outlook

• Anticipates significant regulatory changes in 2027, with ongoing investments to meet EPA and CARB requirements, and uncertainty beyond 2027 regarding greenhouse gas regulations.

• Advocates for stable, pragmatic, and aligned regulations across states to minimize market disruption.

• CARB's forward-leaning stance influences national standards, but divergence could impact commercial strategies.

• Pre-buy activity is expected in anticipation of 2027 regulations, with volumes likely ramping in the year's second half.

• No major structural changes have been made due to the current downturn, maintaining readiness for market shifts.

Business strategy and investment

• Undertaking record R&D and capital expenditures to launch three new engine platforms for 2027 compliance, supporting long-term incremental improvements.

• Focused on adding value through increased engine content, aftertreatment, and new technologies, driving market share and profitability.

• Cost efficiencies and margin expansion are being realized, with 2030 profitability targets potentially reached earlier.

• Strategic investments in Accelera (batteries, hydrogen) continue, with efforts to streamline operations and protect core technology.

• Remains disciplined in M&A, favoring bolt-on opportunities and capital efficiency, with no urgency for large acquisitions.

Growth, portfolio, and market positioning

• Gaining share in internal combustion as alternative power adoption lags, benefiting from a cleaner competitive landscape.

• Expanding content per vehicle through acquisitions and joint ventures, optimizing system integration for efficiency and profitability.

• Selectively declined high-risk investments in new energy, focusing on capital-efficient, strategic technology additions.

• Power systems business is doubling capacity for large gensets, targeting data center growth with flexible, supplier-driven expansion.

• Distribution business complements power systems, offering turnkey solutions and capturing value primarily at the point of sale.