Cummins Delivers Strong Q3 with Power and Distribution Gains Amid Hydrogen Write-Down

Resilient Core Segments Offset Electrolyzer Setback

Cummins reported a resilient third quarter, underscored by double-digit growth in both its Power Systems and Distribution segments, helping to offset weakness and a $240 million non-cash charge in the company’s electrolyzer (hydrogen) business. Revenue reached $8.3 billion, just 2% below the prior year, reflecting strength in core end markets even as the North American truck cycle cooled.

Profitability remained solid: Cummins generated a GAAP net income of $536 million (6.4% of sales) and delivered an EBITDA margin of 14.3%. However, these figures include a $210 million goodwill impairment and $30 million in inventory write-downs related to deteriorating hydrogen market prospects, as the company undergoes a strategic review of the electrolyzer segment. Adjusting for these special items, Q3 EBITDA margin was a strong 17.2%.

Power Systems and Distribution Fuel Growth

Segment data reveal where Cummins’ strengths lie. Power Systems sales soared 18% and Distribution was up 7%, both driven by surging demand for data center and power generation equipment. Notably, Power Systems delivered an industry-leading EBITDA margin of 22.9%, underscoring both strong end-market growth and cost management.

By contrast, Engine and Components segments faced double-digit sales declines (-11% and -15%, respectively), hit by the anticipated sharp drop in North American medium- and heavy-duty truck demand. Yet, the Distribution segment saw North American revenues jump 13%, fueled by rising power generation orders, even as international revenues dipped slightly.

Hydrogen Investment Write-Down Signals Industry Hurdles

Cummins recorded a $240 million non-cash charge (including a $210 million goodwill impairment and $30 million inventory write-down) in its Accelera electrolyzer unit, reflecting lower demand and less favorable policy support for hydrogen projects. The company is now reviewing the segment’s strategy, but CEO Jennifer Rumsey reiterated a long-term commitment to zero-emission technologies.

Cash Flow and Dividend Remain Solid

Despite market challenges, Cummins generated $1.3 billion in operating cash flow for the quarter and finished with a cash and marketable securities balance of $3.2 billion. The Board approved a quarterly dividend increase to $2.00 per share, marking 16 consecutive years of dividend growth—clear evidence of management’s confidence in the company’s resilience.

Balance Sheet Shows Stability Amid Strategic Transition

Cummins continues to operate from a position of financial strength. With equity of $13.1 billion and current assets of $16.7 billion against $9.5 billion in current liabilities, liquidity and capital allocation flexibility remain robust even as certain businesses face structural headwinds.

Outlook Withheld—Guidance Returns in February

Cummins will not issue guidance for the remainder of 2025, citing ongoing end-market uncertainties. The company plans to reinstate its financial outlook in February with its full-year 2026 guidance. Management highlighted the firm’s ability to “navigate this dynamic environment” by leveraging a diversified business model and disciplined execution.

Strategic Partnerships and Recognition Underpin Long-Term Focus

Looking beyond the quarter, Cummins expanded its relationship with Komatsu to jointly develop hybrid powertrains for mining equipment, aligning with its decarbonization roadmap. The company also received workplace and inclusion accolades from Forbes and Military Friendly®, highlighting ongoing investment in its corporate culture and future talent.

Bottom Line: Resilience and Adaptation as Industry Evolves

While policy-driven setbacks in the hydrogen sector cloud the near-term outlook for part of its zero-emissions portfolio, Cummins’ robust cash flows, expanding Power Systems and Distribution segments, and disciplined approach to capital allocation position the company to weather industry changes and invest in future growth. Shareholders will be watching February’s guidance closely, as Cummins charts its next chapter in an evolving energy landscape.

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