Greetings. Welcome to the fourth quarter of fiscal year 2025 Cummins, Inc. earnings conference call. This time all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to Nick Ahrens, Executive Director of Investor Relations. Thank you. You may now begin.

Thank you, Rob. Good morning, everyone, and welcome to our teleconference today to discuss Cummins' results for the fourth quarter and full year of 2025. Participating with me today are Jennifer Rumsey, our Chair and Chief Executive Officer, and Mark Smith, our Chief Financial Officer. We will all be available to answer questions at the end of the teleconference. Before we start, please note that some of the information that you will hear or be given today will consist of forward-looking statements within the meaning of the Security Exchange Act of 1934. Such statements express our forecasts, expectations, hopes, beliefs, and intentions on strategies regarding the future. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the forward-looking disclosure statement in the slide deck and our filings with the Security and Exchange Commission, particularly the risk factors section of our most recently filed annual report on Form 10-K and subsequently filed quarterly reports on Form 10-Q. During the course of this call, we will be discussing certain non-GAAP financial measures, and we will refer you to our website for the reconciliation of those measures to GAAP financial measures. Our press release with a copy of the financial statements and a copy of today's webcast presentation are available on our website within the Investor Relations section at Cummins.com. With that out of the way, I will turn you over to our Chair and CEO, Jennifer Rumsey, to kick us

off. Thank you, Nick. Good morning. I'll start with a summary of 2025, discuss our fourth quarter and full year results, and finish with the discussion of our outlook for 2026. Mark will then take you through more details of our fourth quarter and full year financial performance and our forecast for this year. As I reflect on 2025, I'm pleased to share that we delivered strong financial performance despite weak demand in North America truck markets, ongoing trade tariff volatility, and an uncertain regulatory landscape. Our results underscore the disciplined execution of our strategy, the dedication of our employees, and the commitment to deliver strong financial performance. I am proud of what Cummins accomplished for our stakeholders and remain energized by the opportunities ahead as we continue to advance our strategic priorities and deliver on our financial commitments. Our strategy continues to be the right one, pursuing many paths forward to meet our customers' evolving needs today and in the future. Our strong and diverse position across geographies and markets and technologies continues to differentiate us and provides the flexibility to adapt in a rapidly changing environment. In 2025, we further strengthened our position by evolving our portfolio to continue investing in innovative solutions that meet our customers' evolving priorities and long-term requirements. In our engine business, we introduced the much-anticipated X10 as a part of Cummins Helm platforms. This engine replaces both the L9 and X12 engine platforms and will deliver a new level of performance, durability, and efficiency for heavy and medium-duty customers. Alongside the X15 and B series, the X10 provides customers with the power solution to meet their unique operational requirements while maintaining the performance and reliability for which Cummins is known. In addition, we unveiled the new Cummins B7.2 diesel engine that brings the latest technology and advancements to one of our most proven platforms. The new engine will feature a slightly higher displacement and is designed to be a global platform which creates flexibility for different applications and duty cycles. Both the B7.2 and X10 engines will be manufactured for North America markets in Rocky Mount Engine Plant in North Carolina. In our power systems business, we continued to advance hybrid solutions for mining customers through two significant actions this year. We acquired the assets of FIRST Mode, a leader in retrofit hybrid solutions for mining and rail operations. This technology represents the first commercially available retrofit system for mining equipment, significantly reducing total cost of ownership while advancing decarbonization and operations. Additionally, we announced a collaboration with Komatsu to develop hybrid powertrains for surface hauling mining equipment. This joint development effort will leverage the breadth and scale of Komatsu's and Cummins' global capabilities to enable the acceleration of optimized hybrid solutions for mining. We are excited about the opportunity to bridge current operational needs with future low carbon goals to support our customers' sustainability efforts. Additionally, within power systems, expanding on the success of our acclaimed Centum series generator sets, we launched the new 17-liter engine platform generator that produces up to 1 megawatt of power. The S17 Centum genset was developed to produce a large power output within a compact footprint to meet the growing power demands in urban environments, where compact design and high performance is critical. The new genset is designed to support a wide range of critical market segments, such as commercial properties, healthcare facilities, and water treatment plants. Along with completing the Centum Series lineup, we also completed our capacity expansion on the 95-liter ahead of schedule, positioning us to meet rising demand and support a wide range of customer needs. Lastly, as we navigate this long and dynamic transition with our customers, we remain committed to pacing and refocusing our investments on the most promising paths, as the adoption of zero-emission solutions flows in some regions around the world. As we mentioned last quarter, we initiated a review of our electrolyzer business within the Accelerus segment to streamline operations and focus investments amid policy-driven shifts in hydrogen demand. In the fourth quarter, this led to additional recorded charges, which you will see reflected in our results. We remain committed to our multi-solution strategy while pacing and focusing our investments as the zero emissions landscape evolves. The actions we have taken will lower costs going forward. Now I will comment on the overall company performance for the fourth quarter of 2025 and cover some of our key markets. Revenues for the quarter totaled $8.5 billion, an increase of 1% compared to 2024 as continued high demand in our global power generation markets, higher pickup truck volumes, and improved pricing more than offset lower North America heavy and medium duty truck volumes. EBITDA was $1.2 billion or 13.5% compared to $1 billion or 12.1% a year ago. Fourth quarter 2025 results included $218 million of charges related to the strategic review of our electrolyzer business within our Accelerate business segment. This compares to the fourth quarter 2024 result, which included $312 million of charges related to the strategic reorganization of our Accelerate business segment. Excluding those items, EBITDA was $1.4 billion, or 16%, compared to $1.3 billion, or 15.8%, a year ago. EBITDA percent improved compared to the fourth quarter of 2024 as the benefits of higher power generation and pickup truck volume, pricing, lower compensation expenses, and operational efficiency more than exceeded lower North America medium and heavy-duty truck volumes, higher product coverage costs, and the dilutive impact of sheriffs. 2025 revenues were $33.7 billion, down 1% from prior year as lower North America heavy and medium-duty truck demand, more than offset higher power generation volumes, and improved pricing. EBITDA was $5.4 billion, or 16% of sales, compared to $6.3 billion, or 18.6% of sales in 2024. The 2025 results included $458 million of charges related to our electrolyzer business within our Accelera business segment. This compares to 2024 results that included the gain related to the separation of ATMOS, net of transaction costs and other expenses of $1.3 billion, charters related to the accelerator reorganization actions of $312 million, and $29 million of other restructuring actions. Excluding those items, EBITDA was a record $5.8 billion or 17.4% of sales for 2025, compared to $5.4 billion or or 15.7% of sales for 2024, as the benefits of higher power generation volumes, pricing, lower compensation expenses, and improved operational efficiency more than exceeded lower North America heavy and medium duty truck volumes, and the negative impact from tariffs. EBITDA reached record levels in both our power systems and distribution segments. Power Systems delivered a record full-year EBITDA of 22.7% of sales, up from 18.4% in 2024, while Distribution achieved a record 14.6% of sales, up from 12.1% in the prior year. I am proud of these remarkable results with record earnings despite a down cycle for North America truck markets and the achievement of our 2030 financial commitments ahead of schedule. This reflects the strength of our strategy and our disciplined focus on execution. As you will see from our 2026 financial guidance, we are well positioned to build on this momentum. As we look to 2026, we continue to operate in a dynamic trade and regulatory environment, but we are getting greater clarity on important areas for our industry. EPA's confirmation of the 2027 low NOx rule is an important step in advancing regulatory certainty, and we are well positioned with our product plans. Now let me provide our overall outlook for 2026 and then comment on individual regions and end markets. We are forecasting total company revenues for 2026 to be up 3 to 8 percent compared to 2025, and EBITDA, including the dilutive impact of tariffs, to be 17 to 18 percent of sales compared to 17.4 percent the prior year. For our markets, we expect continued weakness in first-half demand in our North America heavy and medium-duty truck markets, but anticipate other markets, particularly power generation, to remain strong throughout the year. Industry production for heavy-duty trucks in North America is projected to range from 220,000 to 240,000 units in 2026, flat to up 10% year-over-year, with the second half of the year higher than the first. In the medium-duty truck market, we expect market size to be between 110,000 to 120,000 units, also flat to up 10% compared to 2025. Our engine shipments for pickup trucks in North America are expected to be 125,000 to 140,000 in 2026, down 5% to up 5% year-over-year. In China, we project total revenue, including joint ventures, to decrease 1% in 2026, with weakness in heavy and medium-duty truck demand partially offset by growth in data center For China heavy and medium-duty truck demand, we project a range of down 10% to flat. While we expect export demand to remain high, we anticipate the domestic demand will decline as a result of lower impacts from NS4 scrapping policy stimulus. In India, we project total revenues, including joint ventures, to decrease 5% in 2025. We expect industry demand for trucks to be down 10% to flat for the year, with weak replacement demand and limited infrastructure spending. For global construction, we expect a range of down 5% to up 5% year over year, as we anticipate domestic demand in China and North America to be roughly flat. and export demand in China slightly down given geopolitical uncertainties. We project our major global high horsepower markets to remain strong in 2026. Revenues in our global power generation markets are expected to increase 10 to 20 percent, driven by continued high demand in the data center market and the successful execution of our capacity expansion, which was completed in 2025. Sales of mining engines are expected to be flat to up 10 percent driven by replacement demand. For aftermarket, we expect a range of up 2 to 8 percent for 2026, with increased parts consumption from aging fleets and higher rebuild demand. In summary, 2025 was a strong year with record earnings, excluding one-time items, despite a down cycle in North America truck markets. In 2026, we expect North America truck demand to be slightly better than 2025, particularly in the second half of the year, along with continued strength in our power generation, industrial, and aftermarket businesses. Cummins remains well positioned to invest in future growth and deliver strong financial returns and return cash to investors. As I close, I would like to officially announce that our Analyst Day is now scheduled for May 21st in New York City and expect invitations to be sent out shortly. I look forward to sharing updates on our financial guidance and further discussing our strategy then. Now, let me turn it over to Mark, who will discuss our financial results in more detail.

Thanks, Jen, and good morning, everyone. We delivered strong operational results in 2025, achieving record EBITDA and earnings per share, excluding one-time items, despite the down cycle in North America truck markets and ongoing tariff volatility. These results reflect the effectiveness of our strategy, our disciplined focus on financial performance, and the hard work of our employees. Now let me go into more detail on Q4 and the full year performance. Fourth quarter reported revenues were $8.5 billion, an increase of $89 million from a year ago. EBITDA was $1.2 billion, or 13.5% of sales, compared to $1 billion, or 12.1% a year ago. In the fourth quarter, the strategic review of the electrolyzer business and Accelera resulted in charges of $218 million. This compares to the fourth quarter of 2024, which included $312 million of costs related to the reorganization of Accelera. Stripping those out and looking at underlying performance, we delivered EBITDA in the fourth quarter of $1.4 billion, or 16%, compared to 1.3 billion or 15.8 percent of sales a year ago even as North America heavy and medium duty truck engine volume declined by a combined 30 percent. Fourth quarter revenues increased from 1 percent a year ago as continued high demand in our global power generation markets higher pickup truck volumes and improving pricing improved pricing more than offset lower North American truck volumes sales in North America were down two percent while international revenues increased five percent foreign currency movements positively impacted sales by less than one percent fourth quarter EBITDA improved to sixteen percent compared to fifteen point eight percent a year ago higher power generation and pickup truck volumes pricing lower compensation expenses operational improvements and higher joint venture and other income lots of things higher all helped more than offset lower North American medium and heavy-duty trucks higher product coverage costs primarily an accelerator and the dilutive impact of tariffs now I'll summarize some of the impacts by line item in the income statement gross margin was two billion dollars or twenty two point nine percent of sales up compared to twenty four gross margin two billion dollars or twenty two point nine percent of sales compared to twenty four point one percent a year ago as lower North American truck volumes higher product coverage and the dilutive impact of tariffs more than offset stronger power generation demand favorable pricing and operational efficiency. Selling, admin, and research expenses were $1.1 billion or 13.3% of sales compared to $1.2 billion or 13.7% last year, primarily due to strong cost control as truck markets weakened and lower compensation expenses. Joint venture income of $116 million increased $46 million, primarily driven by higher volumes in our China joint ventures. and off highway other income was negative 58 million dollars compared to negative 196 million dollars a year ago 2025 other income included 80 million dollars related to the electrolyzer charges whilst 2024 included 171 million dollars related to the accelerator reorganization costs excluding these items other income increased by 50 million dollars driven by mark-to-market gains on investments related to company owned life insurance modest gains this quarter compared to losses a year ago interest expense was 82 million dollars a decrease of 7 million dollars from the prior year driven by a lower weighted average interest rates the all ineffective tax rate in the fourth quarter is 21.6% which included $69 million or $0.50 per diluted share of favorable discrete items. All in-net earnings for the quarter were $593 million or $4.27 per diluted share, which includes $215 million or $1.54 per diluted share of charges related to the strategic review of the electrolyzer business. Excluding these charges, EPS was $5.81 per diluted share. Operating cash flow in the quarter was an inflow of $1.5 billion, up $112 million from a year ago. For the full year 2025, revenues were $33.7 billion, a decrease of 1% from a year ago. EBITDA was $5.4 billion, or 16.0%, compared to $6.3 billion, or 18.6% of sales in 2024. for 2025 include 458 million dollar of charges related to our electrolyzer business within Accelera this compares to 2024 results that included the gain related to the separation of Atmos net of transaction costs and other expenses of 1.3 billion charges related to accelerator 312 million dollars and 29 of restructuring a lot of moving parts in those comparisons if you strip those out the underlying EBITDA percent improved by 170 basis points Europe a year primarily driven by higher power generation volumes pricing lower compensation expenses operational improvements and all of which more than exceeded lower North American truck volumes and the diluted impact from tariffs all in net earnings were 2.8 billion dollars or twenty dollars and fifty cents per diluted share compared to three point nine billion dollars or twenty eight dollars and thirty seven cents per diluted share a year ago excluding previously mentioned one-time charges 2025 net earnings were three point three billion dollars or twenty three dollars and 78 cents the diluted share compared to 2024 was net earnings of three billion dollars or twenty one dollars and thirty seven cents a diluted share capital expenditures in 2025 or 1.2 billion dollars flat compared to 2024 as we continue to invest in the new products and capabilities to drive growth particularly related to that the on highway helm platforms within our engine and components business in North America and also incremental capacity ads within our power systems business to serve the growing demand for data centers our long cut-term goal is to deliver at least 50 percent of operating cash flow to shareholders in the form of share repurchases and dividends in 2025 we focused our capital allocation on organic investment dividend growth returning 1.1 billion dollars to shareholders via the dividend and maintaining our a credit rating metrics i will now summarize the 2025 results for the operating segments that exclude the the electrolyzer strategic review costs and I will provide guidance for 2026 engine segment 2025 revenues were ten point nine billion dollars down seven percent from a year ago EBITDA was twelve point seven percent of sales compared to fourteen point one percent of sales a year ago primarily due to lower North American heavy and medium duty truck volumes in 26 we project revenues for the engine business will be flat to up five percent with weakness continuing in north american heavy and medium duty trucks in the first half of the year with an anticipated strengthening in the second half of the year 2026 ebitda is expected to be in the range of 12 to 13 percent our component segment revenues were 10.1 billion dollars down 10 percent from the prior year and EBITDA was 13.8% up compared to 13.5% in 2024. Let's get the impact of lower truck volumes with more than offset with cost reduction improvements. For 2026, we expect total revenue for the components business to be flat to up 5%, primarily driven by the expected improvement in North American heavy and medium-duty truck markets in the second half of this year the EBITDA margins are expected to be 13 to 14 percent in the distribution segment revenues increased nine percent from a year ago to a record 12.4 billion dollars and EBITDA was also a record of 14.6 percent up 250 basis points from a year ago driven by higher power generation volumes and pricing we expect 2026 distribution revenues to grow five to ten percent driven by continued strength in power generation markets and higher aftermarket demand the EBITDA margins are expected to be in the range of thirteen point two five to fourteen point two five percent in the power system segment revenues were also a record seven point five billion dollars up sixteen percent from the prior year driven primarily by demand for power generation equipment especially in data center applications in North America and China. EBITDA was a record 22.7 percent up 430 basis points from 2024 driven by stronger volumes favorable pricing and a continued focus on operational performance margin improvement whilst improving capacity for future growth in demand. In 26 we expect power systems revenues used to be up 12 to 17 percent, driven by continued strength in power generation, and EBITDA in the range of 23 to 24 percent. Accelerate revenues increased to $460 million in 2025. We had a net operating loss in this segment of $438 million compared to $452 million the prior year. Whilst we lowered costs in existing operations or restructure actions this was partially offset by higher product coverage costs in this segment in the fourth quarter in 2026 we expect accelerator revenues to be in the range of 300 to 350 million and net losses to decline to 325 to 355 million dollars reflecting our ongoing efforts to streamline the business lower costs and whilst ensuring we're set up for long-term success in those product lines where the prospects are more promising. We currently project 2026 company revenues to be up 3% to 8%. Company EBITDA margins are expected to be approximately 17% to 18% as the benefits of modest second-half recovery in truck, strength in power generation, are somewhat offset by the diluted impact of tariffs. I should have added, but in the spirit of saving time, I did not acknowledge that tariffs diluted the EBITDA percent of every single segment in 2025, and will continue to do so on a percent basis in 2026, even though we did well to mitigate the costs and largely recover them. Our effective tax rate is expected to be approximately 24% in 2026, excluding discrete items. Capital investments will be in the range of $1.35 to $1.45 billion this year as we continue to make critical investments to support growth. To summarize, we delivered record profitability in 2025, excluding one-time charges, even as demand in North America heavy and medium-duty truck markets declined sharply. This performance was driven by strength in execution in our core business with power systems and distribution delivering record profitable growth and the engines and component segments particularly managing costs well through the truck trough in Accelerat we took further actions to reduce costs going forward in like we could demand While maintaining investments where we believe more promising returns lie ahead Cash generation has been and will continue to be a focus, enabling us to continue investing in new products for current and future markets during times of uncertainty and continuing to return cash to shareholders while maintaining a strong balance sheet. We look forward to updating our long-term financial targets at our upcoming analyst day in May. Thank you for your interest and your patience as we got through quarters, years, and full guidance outlook. Now let me turn it back to Nick. Thank you, Mark.

Out of consideration to others on the call, I would ask that you limit yourself to one question and a related follow-up. If you have an additional question, please rejoin the queue. Operator, we are ready for our first question.

Thank you. Our first question comes from the line of Jerry Revich in Wells Fargo.

Please receive your question. Yes, hi. Good morning, everyone. Hi, Jerry. Hi. I'm wondering if you folks can update us on how you're thinking about potentially adding capacity in power systems for the diesel variant, and also what's the updated thoughts around a potential natural gas product and can you update us on where lead times stand

now as well? Thank you. Yep. Yep. Happy to do that, Jerry. So, you know, we continue to see very strong demand in our power generation business and as noted in the comments, we completed the doubling of our capacity of the 95 liter engine and genset that we supply very popular in the data center market. We've completed the launch of our Centrum product line and we continue to see benefits of those investments as well as ongoing just operational efficiency, performance and power systems and DBU, which is leading to the guide for this year. We had record order intake in Q4 for power generation. We're taking orders now well into 2028. So the demand remains very strong for diesel backup power and we're well positioned with the product and support that we offer to provide that. We are continuing to look at opportunities to increase capacity. For this year, you can expect the benefit of those things that I already outlined to come through full year and smaller improvements in efficiency and how we leverage what we have. We'll be talking more in May in our Analyst Day about where we think we may have opportunity to continue to leverage the capacity and products that we offer and if there's any additional investments into new products. But as you would expect, we're being very thoughtful and disciplined in how we think about that.

I would just add, even with it, whilst the total of our CapEx outlook in the last three months hasn't really changed, we've allocated more, incrementally more to power systems in the last few months, Jerry. You know, and really right now, we're a low-risk way to play on the AI boom because we're making in modest incremental internal investments for which there's high and growing visibility for demand. So we feel confident about our approach. Thank you. And I got my voice back. You're

talking about power systems gets me all choked up. I'm wondering, Mark, can we just talk about the guidance outlook for 26? Really good performance this year across engine components and distributions. You're guiding for up sales, but softer margins at the midpoint. Can you just expand for us on the comment you made on tariffs, what's the impact of that pass-through and any other puts and takes around guidance in light of the

strong performance of 25? Yeah. It's no surprise to anyone that the gross impact of tariffs accumulated through the year, you know, the headlines were one thing, but it took time for those costs to start filtering through the supply chain, managing, negotiating, optimizing, but the fourth quarter was you know clearly the biggest gross impact we've done well to offset that but as we look forward with the current um regime of tariffs that's full year dilutive on absolute basis gerry it's about 50 basis points um mostly through sales and recovery not dollar losses and so we'll see more of that on a percent basis in engines and distribution in particular going into next year so that is a modest percentage tailwind into those two areas otherwise there's nothing fundamentally changing it's obviously a very busy period for engines and components with all the new product development going on ahead of the 2027 emissions regulations and then in distribution we do have some modest investments and systems upgrades particularly in our international regions so those are the things but yes we look at the numbers the same as you do we're delighted with the performance given all a combination of conditions variations and complexities of 2025 and fundamentally underneath what is there is a strong business with strong strategic position high visibility to growth in power systems hopefully coming off the bottom of a truck market and we'll continue as the truck cycle moves off this bottom to expect results to improve not just this year but going forwards to more meaningful and sustained improvement as truck

fundamentals improve thank you as a reminder to ask a question today you may press star 1 from your telephone keypad we ask you please leave yourself to one question and one follow-up to allow as many as possible to ask questions the Next question will be coming from the line of Rob Boertheimer with Mellius Research. Please receive your questions.

Just a quick question on the sequential revenue in power systems from 3.2 to 4.9. I don't know whether that was any capacity issues, just timing issues or anything else. Obviously, you're growing next year, so I was just curious about the relative lack of growth. And then more generally, you mentioned demand into 2028 for data centers, which is great. Is there any change in the shape of what's happening? Is there more behind the meter that might demand more backup? Is there any trend in design of data centers that either favors or not diesel backup?

Yeah, on your first question, what I'd say is we were able to deliver the 95-liter capacity expansion ahead of schedule, so we saw more benefit of that sooner last year. And then as we went into Q4, we had a few down days that are not atypical at the end of the year and things that you do at the end of the year. within plants, a little bit of softening in aftermarket. So those things had some impact on top line performance. And then the other dynamic we had in power systems in Q4 was, you know, tariffs are still changing. Let's just acknowledge that while there may be some places where we're getting more clarity, that's still changing. And the India tariffs in Q4 had a negative impact. We're working to recover those costs, but as things change over time, there's typically a lag in how we manage through that with our customers. In terms of diesel backup, there continues to be a desire for most, really, all data center customers to have diesel backup power available just to ensure the level of uptime and reliability that they need. and the conversations are more around how do we use the product line that we have to meet the strong demand that's out there.

Thank you.

Our next question is from the line of Jamie Cook with Truist Securities. Please receive your questions.

Hi, good morning. I guess, Mark, just two questions. If you could just unpack the margins or implied lack of incremental margins in 2026 for the engine business. I understand we have tariffs, but I thought we were getting pricing through and perhaps, you know, some benefit from Section 232. So is there anything else in there? Is there a first half, second half, you know, story there where exiting the year incremental margins are higher and just trying to understand how you think about incremental margins through this cycle relative to your 25% target that you guys laid out for engines? And then my last question on just distribution, again, the implied margins are below 14%. You talked a little, I think, in the last answer about investment in that business. So how much is the investment? Where is it going to? And just, again, exiting margins, exiting 2025, the fourth quarter with a 15.1% margin and ending, you know, implied 2026 below 14 just doesn't make a lot of sense.

We've had a lot of discussions about the distribution margins, and the performance over a number of years has been really good. So we're really thrilled with the distribution leadership team continuing to grow earnings and margins. The tariffs throw a little bit of a spanner in the works from a percentage basis. We're into tens of basis points of dilution there. It's taken longer to work through distribution and then the recoveries. And yet there's a little bit of investment. Nothing underlying has fundamentally changed. So we still think the distribution business is going to be a dollar and a percent grower over time There can be some Yeah, modest investments in over a short period of time, but nothing fundamentally changing there and then in the engine business Yeah, there's not a lot of pricing this year There's been a lot of tariff recovery work and tariff mitigation work going on in 2025 But not not this year. We're really in preparing for more demand whilst preparing for new product launches. All of those things are going on at the same time. A little bit of dilution from tariffs and then nothing's happening significantly we don't expect on the JV income line. Maybe even be down and on highway a little bit in China. Maybe up a little bit in the power systems JV earnings in China. So the net guide is it close to zero for JV earnings for the company, but it may be a little bit of dilution embedded in the engine business guidance and a little bit of enhancement embedded in power systems overall. But nothing dramatic or changing. But yes, overall, I would say pricing is not a big

feature of 2026. I'll just add, Jamie, on the 232 tariff. First, we're, of course, very supportive of the U.S. administration's focus on strengthening manufacturing and some of the things that they're doing a part of 232 to make sure that for companies like Cummins that are manufacturing for the U.S. in the U.S. and even manufacturing in the U.S. for export, that there's incentives to do that. and they are still working through and the details of the engine offset program so we're waiting for clarity on how that will work as well as how they define us content so there is some uncertainty built into that range that we have on our margins and engine business and components that will depend on how those details work out and we hope to have more clarity after Q1 thank you very

helpful the next question is from the line of Angel Castillo with Morgan Stanley, pleased to see you with your questions.

Hi, thanks for taking my question. I just wanted to start out maybe on the supply side of PowerGen, or actually the supply demand. One quick one on the demand side. You mentioned record level of orders in the fourth quarter. Can you size your backlog exactly at this point and maybe provide a little bit more color on what the growth rate was, either year over year or sequentially in terms of orders or the backlog? And then on the supply side, we've been hearing about, you know, capacity investments from perhaps other competitors. How are you kind of thinking about what that means for the competitive environment out there and impact your decision to invest in capacity as well?

Yeah, I mean, we don't get, you know, we don't quantify the size of our back order. So all I can say is we had a record in Q3 and we set another record in Q4 in terms of that demand intake and, you know, multi-year strength and continued discussions. with our data center customers on how we can meet their multi-year needs and what they're doing. So there's, at this point we see plenty of demand and some of the investment questions is just defining the plan that we think is an efficient use of the capital we have as it relates to natural gas or other things having confidence in the multi-year outlook on what the market demand may be. We do feel pretty confident that we'll see strong demand continuing for diesel backup power and so there really it is that developing the detailed plan of what we think we we can do and also our suppliers abilities to invest and keep up with with what

we're doing in our own facilities it's helpful and then maybe just done searching to capital allocation in a little bit here so you're not that T but it seems to be below one and you know you're taking some charges here on accelerator, reducing some investments there. I think your R&D expense, if I'm not mistaken, should be coming down post EPA engines. So I think that's 28. You also have your truck market bottoming here and hopefully starting to improve. So how should we think about capital allocation as we kind of progressed into 2026? You know, I know you mentioned reviewing some of these investments that you'll talk about more at Invest today, but assuming you're able to deploy some of maybe Accelera type of investments or others into that power gen should we expect buybacks to come back and you know the order of magnitude there that we should kind of think about just product application would be helpful

yeah what I would say is we've worked hard over the last couple of years to restore our credit metrics post the drive train business or formerly merit acquisition so we're in a strong position we have financial flexibility most well all of what we're investing in today in the current year can be funded within our current cash flow operations so we do have that flexibility we've talked about them kind of a minimum goal of 50% back to shareholders and we do have that flexibility to deploy more capital shareholders going forwards if

see the right balance of opportunities. Thank you. The next question is from the line of David

Rasso with Evercore ISI. Please proceed with your question. Hi, thank you. On the tariff impact, can you take us through the cadence? I think you alluded to the fourth quarter was your highest gross impact. The 50 bits that you gave is the drag. I assume that was a net number. That wasn't just gross is that correct 50 bit the 50 bits with the net full year drag for 2026 so if the net drag is you know called 175 million for the full year can you take us through the cadence we're just trying to get a sense of you know obviously the the margin guides a bit disappointing and people are just trying to figure out where at least where you think you're exiting 26 on the

margins it's a different kind of drag you're doing some kind of net drag there I think David and that's not right so the drag is really on let's call it inflated revenues and inflated recovering

and inflated cogs incurring costs it is not not just the market won't be a fit it's not a dollar

Yeah, our strategy is to work to recover dollars. That's what I'm trying to figure the revenue number. Yeah, the revenue number will move depending on what the tariff dollar is, as will our recovery.

So what is it you want to know, Dave?

Well, I'm curious. What is the revenue, the price offset? Like, we're just trying to figure out how much is the price cost, and also more we're trying to figure out how we exit the year.

You're talking about less than 2% year-over-year revenue increase due to the annualized impact of tariff recovery.

And the pricing comment, I think you made a comment, not much pricing in 26 or something like that. I apologize. I wasn't sure exactly what you were referring to. The tariff impact, was that something that maybe didn't raise price quickly enough? I'm just kind of curious how you're thinking about your ability to capture.

Talking about pricing, tariffs is not pricing in my mind, so I'm just saying other than puts tariffs to one side, we've done a good job mitigating that. The net impact to our P&L through all the actions we took was modest, but overall pricing given that we're mostly selling out existing products this current year and that we've done a lot both on pricing in the past few years and the tab recovery on top, this is we're not anticipating this is going to be a big year for net pricing ex-tariffs. We're moving towards the transition to new products, which is a whole different angle, and that's for next year, not for this year.

Thank you. The next question is from the line of Stephen Fisher with UBS. Please just see if there's a question.

Good morning.

And sorry, just to clarify again,

I know the message previously had been going into Q4, expect to be price versus cost neutral on the prior existing tariffs and then it was going to take a little time to get the latest round so what are we thinking is it sort of just a net neutral on price versus cost on the tariffs as you see them today for the for the year I guess maybe to start

there yes yes give or take a few dollars not exactly perfect dollar for dollar but yes it not but a significant dollar hit year over year but the magnitude of the annualization of the sales and the cost of sales is diluted to the EBITDA sense of other I'll say another way if we had no tariffs if they suddenly evaporated our EBITDA percent at the midpoint would be half a point higher

but it would be on lower revenues right okay that's helpful and then I guess just related to this since you mentioned India I'm curious what you actually have baked into the guidance for India given some of the changes that we've heard

about very recently I mean you're talking about India right now you're talking well I mean we're talking tens of millions of dollars related to India and a lot of its was moving global product around because we you know it's more international business right in the largely power generation markets where we're shipping products all around the world so yeah we're in the tens of millions but we can't go through every individual tariff by country or we will

be yeah even longer than we'd enjoy yeah I think Steve just to add to that this is Nick what I'd say is Q4 for power systems was more transitory impact of India tariffs coming through but to Mark's point as we move into 26 we feel well positioned on that particular element that hit our Q4. That's where the

margins would one of the reason why the margin down just a little bit in Q4 and you can see from the guide we've got margin expansion built into the guidance

there. Our next question is from the line of Kyle Menches with Citigroup. Please

receive your question. Thanks for taking the question guys. I did want to ask on epa 27 now that we've gotten more clarity on that and we've heard from from various others in the industry that it could lead to plus or minus ten thousand dollars of increase just to the cost of a truck so um trying to think about how that would actually impact cummins um i guess on just engine pricing margin and then also just how to think about the impact to components volume just given the added content as well as pricing.

Yeah, great. Let me break this down in a couple things. First, we're committed to always delivering innovative, efficient solutions to our customers to meet their needs and comply with the regulation. And for those of you that have been around the industry for some time, it's quite unusual to have this level of uncertainty this close to a regulatory implementation date. So the EPA indication late last year, as you noted, that they'll move forward with the 27 Knox rule was an important step to give more regulatory uncertainty. And I think the EPA has worked hard to balance regulatory certainty and allowing those that have made big investments in products to launch in 27, not only to comply with the regulation, but to bring other values to our customers to move forward while also looking at reducing the cost impact to the end customer. And so they've given some indication of what that looks like. We think we're very well positioned with our Helm engine platforms and the new products that we're going to be launching around those regulations. There is still a lot of work underway that we're active in with the regulators, with our customers, with our suppliers on the details of those changes that they're going to make and ensuring that we complete our validation and certification process in accordance with those. So we're working through that. And just we'll note, you know, we work with multiple OEMs. Obviously, the most OEMs on our B-series product, which is in a high variety of different applications. So that's one in particular that we're focused on. Net of that is we're all moving forward toward that, gaining the additional clarity that we need. And it will still result in content add in the engine business and in the components business after treatment. In particular, ACT is estimated $10,000 to $15,000 for a heavy-duty truck add associated with that. And the majority of that will be in the powertrain. So it'll be split for us, you know, in our content add between the engine business and the components business. And we'll see that coming in with those new product launches. But, again, they're also bringing more efficiency, more power, advancing our digital solutions, excited about the value we're going to bring to our customers along with that regulatory change.

Our next question is from the line of Noah Kay with Oppenheimer. Please proceed with your question.

That's a perfect lead into my question, which is now that we have a little bit more certainty that this is going to happen, even if we're still looking for the fine points of it, what is the guide in bed for any kind of pre-buy for 26?

Yeah, I mean, this is a big question and part of what I'd say is, you know, we'll influence the range and how much the second half comes back. But we are assuming we'll see some pre-buy in the second half of next year. There's a combination of the natural coming out of the down cycle for the truck market, the more stability and tariffs that will cost customers to start buying trucks again and then pre-buy in the second half of the year. But we're really watching to try to understand how much will that be. You saw strong orders in December, improvement in orders last month. But how that flows over the course of the year, I think we're all watching and cautiously optimistic is what I would say. And then demand does start to strengthen. How quickly can the supply base flex back up? Because it dropped quite dramatically last year. So those are the things to watch.

Fundamentals have improved a little bit. It's been a long, dry spell. So hopefully that continues in addition to buying some product ahead of these changes.

May mean some more even performance as you go from second half of this year and the next year, though.

And then I guess to tie into that, just again around the engine margins, you mentioned the preparing for new product launches. But I know a lot of investment has gone into preparing the platform. So is it an incremental headwind to margins, the investment and the preparation costs for launch in 26? Or are we actually starting to lap that?

Well, we are starting to lap it to some extent. But said another way, we're essentially in some cases running with parallel operating systems. right, some of the engine platforms are going to change quite significantly as we work through the introduction. So as we get through the other side of the launches, yes, we'd expect the margins to step up once we convert over.

Thank you. The next question is followed from the line of Tim Sine with Raymond James. Please receive your question.

Great, thank you. I'll just kind of package these together. Question one is just on Mark, going back to the comments earlier about the capital allocation flexibility that you have. I'm curious as part of that, maybe it doesn't factor in or not, but your joint venture partner in your AMT venture announced a potential or likely spinoff of that business. I'm just curious if that impacts, Could that give rise to a potential option for Cummins if it wanted to increase its stake there? So maybe just thoughts around that. And then I guess part two is the data center revenue in total in 25. Can you help us on that? And then what is embedded in 26 across power systems and distribution?

Yeah, you know, of course, we have an important partnership with Eaton, as you noted, and the Eaton-Cummins joint venture. I think it's premature to say how that will happen. We would expect a continued partnership with that portion of their business going forward and that joint venture and really making sure that we have optimized powertrains for our customers.

And then specific to your question on data center revenue, we had alluded last call in 2024, $2.6 billion of total company revenue and expectations that would grow 30 to 35%. We did hit the upper bound of that. So for 2025, we're at about $3.5 billion between our power systems business and then also our distribution business.

Thank you. Our last question comes from the line of Chad Dillard with Bernstein. Pleased to see with your question.

Hey, good morning, guys. So with the restructuring you took in Accelera, can you talk about how that changes the cost structure? Where do break-even margins go? So, and then just maybe a little more color on just what the actions were.

Yeah, so the actions in the fourth quarter really focused on our electrolyzer business. And just frankly, with the policy changes in green hydrogen, the demand for green hydrogen has dried up dramatically lower. And so that has had us re-look at our participation. We have commitments to customers that we've made, but we'll stop future commercial activity. And so what that means, and even with some of the actions that are starting to flow through that we took a year ago, is we've meaningfully lowered losses for this year, but some of these things take time to fully play through just based on existing business and commitments that we have. But we've meaningfully reduced our participation in hydrogen, and we continue to feel like we've got some good capability in battery electric powertrains and pacing our investments there given the slowing in the market but the anticipation that that will continue to grow over time is really where we're focused and then of course we never stopped investing in the engine side of our solutions and so anticipate more strength there for longer.

Yeah, and I think you'll see in our disclosure some of the breakdown of the cost was a combination of some people actions some inventory write-downs some contract exits it's a whole combination of things whereas the Q3 charge is really just a goodwill impairment this was related to specific actions that lower the costs going forwards so as Jen said what you know we're permanently reducing the rate of participation in electrolyzers going forward but observing commitments we've already made so that should have a positive trend to it over time that's that's helpful and then I

wanted to revisit the gross tariff conversation can we just go back to talking about the seasonality of that from like first half versus second half

somebody else is responsible for the seasonality of that but this is what I

would say like think of if you look at over the course of last year you saw growing especially in the second half tariff costs through and recovery increasing as we negotiated commercial agreements with our customers that becomes hopefully more stable and steady this year although there are still some new tariff announcements and as I noted details around engine offset and 232 that we'll need to work through so we are continuing to you know spend a lot of time on how this is moving and the agreements that we have with our suppliers and customers and fundamentally uh maintain our goal of recovering at a dollar level our actual costs

the degree of variation has moderated here between the quarters we were able to deliver the net you know mostly recovered in the fourth quarter that we anticipated which contributed to the solid results. Not that seasonal, it's more just the pacing of how long it took to work through the supply And, of course, there were a number of changes up and down.

Thank you. At this time, we've reached the end of our question and answer session, and I'll turn the floor back to Nick Aarons for dry closing remarks.

Thank you. That concludes our teleconference for the day. Thank you all for participating in your continued interest. As always, the investor relations team will be available for questions after the call. Thank you.