Cummins reported Q4 sales that were essentially flat year-over-year, with revenue holding steady despite a 4% decline in its Engine segment and a 7% drop in Components. These weaknesses were offset by robust growth in Distribution (up 7%) and Power Systems (up 11%), driven primarily by data center power generation demand. Segment EBITDA margins ranged from 10.1% in Engines to a record 21.7% in Power Systems, resulting in consolidated EBITDA of approximately 13.5% of sales, a modest improvement over the prior year’s 12.1%.

For the full year, free cash flow exploded to $2.4 billion, a sharp increase from $279 million in the prior year, as working capital improvements and disciplined capital spending combined with solid end-market demand. Operating cash flow benefited from reduced inventory levels in North America and China, while capex remained in line with guidance at roughly $1.1 billion. The strong cash profile enables Cummins to support ongoing dividends and opportunistic share repurchases aligned with its goal of returning half of operating cash flow to shareholders.

Cummins projects full-year 2026 sales growth of 3%–8% with an EBITDA margin target of 17%–18%, closely tracking consensus forecasts. Management highlighted continued strength in data center backup power, a modest trucking market recovery expected in H2, and potential tariff pressures on imported components. Uncertainty around the North American on-highway market and shifting hydrogen demand dynamics in its electrolyzer business remain the primary risks to meeting these targets.