Cummins (CMI) Goldman Sachs Industrials and Materials Conference summary

Margin expansion and operational performance

• Achieved 2030 margin targets within months, driven by strong performance in Power Systems, Engines, Components, and Distribution.

• Power Systems margins rose from 12% in 2022 to nearly 20%, with data center growth contributing but not being the sole driver.

• Standardization, capacity maximization, and value-based pricing have been key to margin improvement.

• Distribution and supply chain improvements unlocked throughput, supporting margin gains.

• R&D to sales ratio expected to decline post-EPA '27 as heavy investment period concludes.

Strategic initiatives and capacity investments

• Acquired a radiator company and expanded alternator capacity in India, China, and Romania to support growth.

• Vertically integrated approach enables control over key components and rapid scaling.

• Plan to double data center gen set capacity by end of next year, with further room for expansion.

• New product launches (Centum Series) have accelerated standardization and broadened the addressable market.

Data center and market growth

• Data center sales expected to grow 30% in 2024, with continued expansion into 2025 and beyond.

• Growth is global, with significant increases in the US, Asia, and Europe; Asia, especially Malaysia and Singapore, is emerging as a hot market.

• High ASP product mix and supply chain improvements are driving revenue per unit higher.

• Market share in data centers projected to increase by 50% from 2026 to 2030 due to expanded product range.