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Cummins (CMI) is sharply lower after reporting its Q4 results this morning. The company beat EPS expectations, while revenue returned to growth after four straight quarters of declines, increasing 1.1% yr/yr to $8.54 bln and coming in above expectations. In a positive development, CMI reinstated full-year guidance, calling for FY26 revenue growth of 3-8%, or roughly $34.68-$36.36 bln, which was in line with expectations.

• The return to growth was driven by strong global power generation demand, higher pickup volumes, and improved pricing, which more than offset weaker North America heavy/medium duty trucks.
• Power Systems continued double-digit growth, increasing 11% yr/yr to $1.90 bln, fueled by data-center-driven backup power demand, favorable pricing, and the benefit of recent capacity actions.
• Distribution continued to run strong, increasing 7% yr/yr to $3.3 bln, reflecting a favorable mix of power generation activity and a resilient aftermarket backdrop.
• Components sales stayed pressured by the on-highway downcycle, decreasing 7% yr/yr to $2.4 bln, as lower North America heavy and medium duty builds weighed on volumes. International was relatively stronger, up 4%, supported by firmer demand in Europe and China.
• Engine also reflected the same end-market split, with sales down 4% to $2.6 bln, with weakness tied to North America heavy and medium duty demand, partially offset by pickup volumes.
• Accelera revenue increased 31% yr/yr to $131 mln, but delivered an EBITDA loss of $374 mln on electrolyzer-review charges and product coverage costs amid a slower, policy-driven hydrogen demand backdrop.
• Notably, while CMI expects North America on-highway pressure in 1H26, it sees conditions improving in 2H alongside continued strength in its power generation, industrial, and aftermarket businesses.

Briefing.com Analyst Insight

CMI's Q4 results underscore the split environment it has been operating in. Its power generation businesses continue to look strong, supported by data-center-related demand and a healthier aftermarket backdrop. On the other hand, the on-highway downcycle, particularly in North America, has continued to weigh on the Engine and Components segments. There was also more noise in Accelera, where electrolyzer-review and reorganization charges were a major drag, driving a sizable EBITDA loss and muddying the quarter. That said, it was nice to see CMI reinstate guidance. It was in line with expectations, but the commentary around on-highway improvement in the second half stood out. Still, with the recovery skewed to the back half, the strong run into the report and a backdrop still clouded by policy uncertainty appear to be putting investors on the sidelines as they await clearer proof of that improvement.