Cummins Inc.

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. A 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 in 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 commons.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'm 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 a 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 continue to advance hybrid solutions for mining customers through two significant actions this year. We acquired the assets of FirstMode, 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 claimed Centum series generator sets, we launched the new 17-liter engine platform generator that produces up to 1 megawatt of power. The F17 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 Accelera 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 total $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 accelerant business segment. This compares to the fourth quarter 2024 result, which included $312 million of charges related to the strategic reorganization of our accelerant 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 tariffs. 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, charges related to the Accelera 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 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 discipline 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% compared to 2025. and EBITDA including the dilutive impact of tariffs to be 17 to 18% of sales compared to 17.4% 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 and heavy and medium-duty truck demand partially offset by growth in data center demand. 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%. 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% driven by replacement demand. For aftermarket, we expect a range of up 2% to 8% 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 to 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.