Cummins Inc.

Greetings and welcome to Cummins Inc. Third Quarter 2026 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, James Hopkins, Vice President, Financial Planning, Capital Management, and Investor Relations. Please go ahead.

Thank you, Donna. Good morning, everyone, and welcome to our teleconference today to discuss Cummins results for the third quarter of 2026. 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 you will hear or be given today will consist of forward-looking statements within the meaning of the Securities 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 these projected in such forward-looking statements because of several 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 Securities and Exchange Commission, particularly the risk factors section of our most recently filed annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. During this call, we'll 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 the website within the investor relations section of Cummins.com. With that out of the way, I wanted to share that I look forward to reconnecting with the investment community in my previously announced role overseeing investor relations as the vice president of financial planning, capital management and investor relations and continue our dialogue about Cummins performance and future prospects for profitable growth. I look forward to speaking with many of you in our follow-up conversations after today's call. With that, I will turn it over to our chair and CEO, Jennifer Rumsey, to kick us off.

Thank you, James. It's great to have you back on our earnings calls as a part of your new role. Good morning, everyone. I'll start with a few highlights from the third quarter and an overview of our financial results. I'll then discuss key trends across our markets and provide an update on our outlook for the remainder of 2026. Mark will follow with additional details on our third quarter results and full year forecast. Before turning to our financial performance, I want to highlight a few important milestones from the quarter. In August, we announced that our power systems business was selected to supply battery energy storage systems for a large U.S. data center project. These systems will help manage AI-driven fluctuations in power demand, improve grid stability, and enhance power reliability. This will be our largest battery energy storage system deployment to date and an important milestone as we expand our capabilities to meet the evolving power needs of data center customers. We continue to make meaningful progress and remain on track with the power generation capacity expansion plans we outlined at our recent analyst day. This includes strengthening our global supply chain, which remains a key pacing item as we bring additional capacity online to meet exceptionally strong demand in power generation. particularly from data center customers. Recently, we celebrated the opening of a 500,000 square foot manufacturing facility for our IEA cooling systems business in Somers, Wisconsin. This approximately $100 million investment will more than double IEA's production capacity and strengthen our ability to supply critical cooling systems for our generator sets. We also made important progress preparing for the upcoming launch of our Helm engine platforms. During the quarter, we completed our 2026 Forever Rising Tour, giving more than 500 customers and dealers the opportunity to experience our 2027 X15 engine alongside our X10 and natural gas X15N engines. Customer feedback has been very positive, particularly around performance, drivability, and confidence in Cummins' reliability and support network. Hearing directly from customers is an important part of our launch preparations and reinforces our confidence in these products as we prepare to bring them to market. Together, these milestones demonstrate the progress we're making against our strategic priorities, strengthening our core business, expanding our capabilities and investing in technologies and capacity needed to support our customers and drive long-term growth. Now, let me turn to our third quarter financial performance in key markets. We delivered third quarter revenues of $9.4 billion, an increase of 13% compared to the third quarter of 2025. Growth was driven primarily by improved demand in North America heavy and medium duty truck markets and continued strength in global power generation, particularly from data center customers, contributing to record sales in our power systems segment. We achieved record quarterly EBITDA of $1.8 billion or 18.9% of sales compared to $1.2 billion or 14.3% of sales a year ago. Last year's results include a $240 million goodwill impairment charge and inventory write down related to our Accelera business. Excluding these charges, EBITDA margin improved approximately 170 basis points year over year. primarily reflecting higher volumes partially offset by increased variable compensation expenses associated with our expectations for a full year record earnings. Turning to our key markets, third quarter revenues in North America increased 15% compared to third quarter of 2025. Industry production of heavy duty trucks in the third quarter was in line with our expectations of 70,000 units, up 62% from 2025 level. while our heavy duty unit sales were 24,000, up 68% year over year. In the medium duty truck market, industry production increased 77% to 36,000 units while our unit sales were up 33,000, up 88% year over year. Despite this strong year over year growth, demand was below our expectations as regulatory uncertainty and the anticipated phase transition to EPA 27 products continued to delay some customer purchasing decisions. We shipped 34,000 engines for pickup trucks in the third quarter of 2026, down 16% from a year ago. Demand was weaker than anticipated amid elevated diesel prices and interest rates. North America power generation revenues increased 22%, driven primarily by continued strong data center demand and supported by the additional manufacturing capacity we brought online at the end of 2025. While we achieved record power generation sales this quarter, revenues were below our expectations as supply chain constraints, limited shipments across both power systems and distribution, which we expect to largely catch up in the fourth quarter. We continue to see robust order intake and engage in multiyear strategic planning discussions with large data center customers. Turning to our international markets, revenues increased 11% compared to the third quarter of last year. In China, third quarter revenues, including joint ventures, increased 9% to $1.9 billion, supported by accelerating data center demand. Industry demand for medium and heavy duty trucks in China was 297,000 units, a decrease of 5% compared to last year. Domestic demand remained challenged by elevated fuel costs Partially offset by strong export demand, particularly in Africa and Southeast Asia. Our sales in units, including joint ventures, were 42,000, a decrease of 15%, reflecting increased adoption of battery electric trucks in the domestic market. Industry demand for excavators in China in the third quarter was 62,000 units, an increase of 15% from 2025 levels. We sold 12,000 units, up 28%, driven by export demand associated with mining investments in Africa and Indonesia, as well as domestic demand for rural development. Sales of power generation equipment in China increased 42% in the third quarter due to accelerating data center demand. In India, third quarter revenues, including joint ventures, were $803 million, an increase of 13% from a year ago. Industry truck production increased 30% from 2025, driven by increased freight, infrastructure, and mining activity. Now let me provide our outlook for 2026, including comments on several of our key markets. We have updated our full-year 2026 outlook and now expect revenue growth of approximately 10% and an EBITDA margin of approximately 18.2%. compared to our prior guidance ranges of 10 to 13% revenue growth and 18 to 18.5% EBITDA margin. In North America, we are maintaining our 2026 heavy duty truck market forecast of 240 to 250,000 units. For medium duty trucks, we are lowering our forecast to 125 to 130,000 units compared to our prior outlook of 130 to 140,000 units. reflecting weaker than expected third quarter demand as regulatory uncertainty delayed customer purchasing decisions. Looking ahead, we expect fourth quarter production in both markets to remain strong near third quarter levels with supply chain constraints limiting the potential for additional upside. For our North America pickup truck engine business, we are now lowering our 2026 shipment forecast to 118 to 122,000 units. compared to our prior guidance of 125 to 140,000 units. We expect demand to moderate further in the fourth quarter, reflecting continued pressure from elevated diesel prices and interest rates. In China, we continue to expect total revenue, including joint ventures, to increase approximately 15% in 2026, consistent with our prior outlook, primarily driven by strong demand and power generation, particularly from data center customers. For China heavy and medium duty truck demand, we continue to expect industry demand to range from a decline of 5% to an increase of 5%. As we saw in the third quarter, elevated fuel prices have contributed to a shift toward battery electric trucks, while export demand for diesel-powered trucks remains strong, particularly in Africa and Southeast Asia. In India, we expect total revenue, including joint ventures, to increase approximately 5% in 2026. We continue to expect full-year industry truck demand to be approximately flat at the midpoint of our forecasted range, supported by recent tax rate reductions. For global construction markets, we are maintaining our outlook for demand to increase 10-20%. In China, we expect export demand to remain strong, while demand in North America is expected to remain relatively flat amid elevated interest rates. In power generation, we continue to expect global revenue to increase 15% to 25% this year, consistent with our prior guidance. We expect to recover most of the shipments delayed by third quarter supply constraints in the fourth quarter, and demand remains exceptionally strong across North America, China, and the broader Asia-Pacific region. We're expanding our manufacturing capacity, and demand continues to grow, with customers increasingly ordering smaller displacement generator sets as availability of larger configurations remains constrained. In mining, we continue to expect engine sales to range from a decline of 5% to an increase of 5% for the year, consistent with our prior guidance. Fleet replacement activity remains supportive in several markets, although elevated inventory levels in others are expected to moderate demand through the remainder of the year. For aftermarket, we are maintaining our outlook for revenue growth of 3-8% in 2026, supported by aging fleets and increased parts consumption. In summary, we delivered a strong third quarter with record profitability and continued growth across several of our key markets. Our updated full-year outlook reflects continued strength across much of our business, tempered by lower-than-expected pickup truck demand. As we enter the fourth quarter, we remain focused on executing our strategy and delivering our commitments to customers and shareholders. We remain on track with the commitments outlined at our recent analyst day, including expanding our production capacity and investing in new products and technologies to strengthen our product portfolio. Finally, I want to thank our employees and leaders around the world for their continued commitment to our customers and to each other through a dynamic time. Their dedication, teamwork, and focus on execution continue to differentiate Cummins and position us to deliver for our customers while creating long-term value for our shareholders. Now I'll turn it over to Mark.