AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 19/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · The established service infrastructure and enforceable cancellation protections support a narrow advantage. Relative superiority and barriers across the whole business remain incompletely demonstrated.
durability · 2/4 · Long-standing OEM relationships and multiyear obligations support persistence. Recognition extending up to ten years is contractual visibility, not proof of equivalent moat duration; technology substitution and regulatory dependence constrain confidence.
customer dependency · 2/4 · Maintenance arrangements, cancellation penalties and long-standing relationships indicate customer continuity and friction indirectly. Other contracts are generally short, and no renewal rates or quantified replacement costs are disclosed.
erosion resilience · 2/4 · First-half growth and stable gross margin demonstrate resilience across divergent markets. Realized electrolyzer impairment and fuel-cell exit costs show that resilience is uneven as technology and demand change.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Management identifies favorable pricing as an actual first-half gross profit driver. This supports demonstrated positive pricing, but the unquantified contribution and limited observation period do not establish strong sustained pricing power.
retention · 2/4 · Long-standing OEM relationships, maintenance commitments and growth in contracted transaction prices support continuity indirectly. The balance increase may reflect new orders or mix rather than renewals, and retention following price increases is undisclosed.
margin resilience · 2/4 · First-half gross margin percentage held flat and second-quarter net tariff effects were immaterial, supporting actual cost recovery. Second-quarter gross margin percentage nevertheless declined 0.3 points, and contractual timing can delay pass-through.
contractual freedom · 2/4 · Contractual pricing-adjustment provisions provide some flexibility, but agreed time frames can prevent timely cost recovery. Short duration elsewhere does not establish unrestricted unilateral pricing authority.
Predictability90
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 9.98
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.63
Financial strength83
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 70.94
- netDebtEbitGrade
- 78.17
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 80.89
- Debt / FCF (x)
- 3.03
- Net debt / operating income (x)
- 1.09
- Interest coverage (x)
- 12.23
- Current ratio (x)
- 1.76
Capital allocation87
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 20.02
- 3-year average dilution (%)
- -0.85
- 3-year average SBC / revenue (%)
- 0.27
- cashConversionGrade
- 68.89
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Disclosed liquidity and actual repurchases coexist with substantial investment losses and remaining battery-joint-venture commitments. Cancelling fuel-cell commitments limits future exposure but required a $175 million payment. This is mixed capital-allocation evidence; cash-generation and return histories are incomplete, and planned battery production is not an achieved outcome.
incentive alignment · 3/4 · Existing policies include performance-linked incentives, end-period vesting, ownership requirements, payout caps, clawbacks and hedging restrictions. Actual bonus and multiyear awards demonstrate implementation and differentiated payouts. Detailed target calibration and actual ownership compliance are absent.
execution · 2/4 · Execution is assessed from indirect operating evidence: first-half sales grew 6%, gross margin percentage held flat and tariff recoveries limited net costs. Operating income declined, while realized transition-business charges demonstrate uneven execution.
governance · 3/4 · Existing annual majority elections, shareholder rights, lead-director responsibilities and adopted governance changes establish substantive accountability mechanisms. Combined Chair and CEO roles concentrate leadership; disclosed processes do not prove exceptional oversight effectiveness.
Evidence
We serve our customers through a service network of approximately 640 wholly-owned, joint venture and independent distributor locations and more than 13,000 Cummins certified dealer locations in approximately 190 countries and territories.
Business overview / worldwide service network · Filed 04/08/2026
We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc., Traton Group, Daimler Trucks AG and Stellantis N.V.
MD&A / long-standing OEM relationships · Filed 04/08/2026
REVENUE FROM CONTRACTS WITH CUSTOMERS Long-term Contracts We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year.
Note 2 / long-term contracts and cancellation protections · Filed 04/08/2026
The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at June 30, 2026, was $7.6 billion.
Note 2 / June 2026 long-term contract transaction price · Filed 04/08/2026
We expect to recognize the related revenue of $4.1 billion over the next 12 months and $3.5 billion over periods up to 10 years.
Note 2 / expected recognition of contracted revenue · Filed 04/08/2026
The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at December 31, 2025, was $6.3 billion.
Note 2 / December 2025 long-term contract transaction price · Filed 10/02/2026
The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products, maintaining relationships with various OEMs throughout the world and providing selected sales and aftermarket support for our Accelera business.
MD&A / Distribution service, repair and aftermarket activities · Filed 04/08/2026
Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.
Note 2 / duration of other contracts · Filed 04/08/2026
Economic downturns in markets we serve generally result in reduced sales of our products and can result in price reductions in certain products and/or markets.
MD&A / downturn sensitivity and possible price reductions · Filed 04/08/2026
The development of new technologies may materially reduce the demand for our current products and services, and we may not be successful in developing new technologies and products in order to effectively address the energy transition.
Risk factors / technology substitution and energy transition · Filed 10/02/2026
Our businesses establish prices with our customers in accordance with contractual time frames; however, the timing of material and commodity market price increases may prevent us from passing these additional costs on to our customers through timely pricing actions.
Risk factors / contractual pricing timing and cost pass-through · Filed 10/02/2026
While we customarily enter into financial transactions and contractual pricing adjustment provisions with our customers that attempt to address some of these risks, there can be no assurance that commodity price fluctuations will not adversely affect our results of operations and cash flows.
Risk factors / contractual pricing adjustments · Filed 10/02/2026
The increase in gross margin was primarily due to higher volumes and favorable pricing, partially offset by increased compensation expenses.
MD&A / first-half gross profit drivers including favorable pricing · Filed 04/08/2026
Gross margin increased $272 million for the six months ended June 30, 2026, and remained flat as a percentage of sales versus the comparable period in 2025.
MD&A / first-half gross margin resilience · Filed 04/08/2026
Gross Margin Gross margin increased $184 million for the three months ended June 30, 2026, and decreased 0.3 points as a percentage of net sales versus the comparable period in 2025.
MD&A / second-quarter gross margin percentage decline · Filed 04/08/2026
The net impact of tariff costs and related recoveries was immaterial for the three month period ended June 30, 2026.
MD&A / realized second-quarter tariff costs and recoveries · Filed 04/08/2026
Worldwide revenues increased by 6 percent in the six months ended June 30, 2026, compared to the same period in 2025, mainly due to higher demand for power generation equipment, especially in data center and commercial applications, and in international construction markets, partially offset by lower demand in most on-highway markets.
MD&A / first-half growth and divergent end-market demand · Filed 04/08/2026
Accelera Actions During 2025, due to the continued rapid deterioration in our electrolyzer markets and overall hydrogen markets, along with significant uncertainty in the alternative power markets resulting from reductions in government incentives, we fully impaired all of the goodwill for our electrolyzer business and wrote off certain inventory in the third quarter of 2025, totaling $240 million.
MD&A / electrolyzer goodwill impairment and inventory write-off · Filed 10/02/2026
On March 31, 2026, we sold our low pressure fuel cell business to a customer, cancelled future commitments and resolved certain claims against us with that customer resulting in a net payment by us of $175 million.
MD&A / fuel-cell disposal, commitment cancellation and cash payment · Filed 04/08/2026
These transactions resulted in a net charge of $199 million, which is reflected in other operating expense, net in our Condensed Consolidated Statements of Net Income.
MD&A / realized fuel-cell transaction charge · Filed 04/08/2026
At June 30, 2026, we had $3.9 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $348 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.
MD&A / cash, marketable securities and available financing · Filed 04/08/2026
In the first half of 2026, we repurchased $468 million, or 0.8 million shares, of common stock.
MD&A / first-half 2026 actual share repurchases · Filed 04/08/2026
As of December 31, 2025, we contributed $412 million and our maximum remaining required contribution to the joint venture was $418 million, which could be reduced by future government incentives received by the joint venture.
Investments / Amplify contributions and remaining required commitment · Filed 10/02/2026
37 Table of Contents RESULTS OF OPERATIONS Three months ended Favorable/ Six months ended Favorable/ June 30, (Unfavorable) June 30, (Unfavorable) In millions, except per share amounts 2026 2025 Amount Percent 2026 2025 Amount Percent NET SALES $ 9,457 $ 8,643 $ 814 9 % $ 17,855 $ 16,817 $ 1,038 6 % Cost of sales 6,992 6,362 (630) (10) % 13,147 12,381 (766) (6) % GROSS MARGIN 2,465 2,281 184 8 % 4,708 4,436 272 6 % OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 893 779 (114) (15) % 1,738 1,550 (188) (12) % Research, development and engineering expenses 385 357 (28) (8) % 743 701 (42) (6) % Equity, royalty and interest income from investees 154 118 36 31 % 302 249 53 21 % Other operating expense, net 62 37 (25) (68) % 301 74 (227) NM OPERATING INCOME 1,279 1,226 53 4 % 2,228 2,360 (132) (6) % Interest expense 80 87 7 8 % 156 164 8 5 % Other income, net 94 86 8 9 % 155 146 9 6 % INCOME BEFORE INCOME TAXES 1,293 1,225 68 6 % 2,227 2,342 (115) (5) % Income tax expense 325 297 (28) (9) % 579 564 (15) (3) % CONSOLIDATED NET INCOME 968 928 40 4 % 1,648 1,778 (130) (7) % Less: Net income attributable to noncontrolling interests 36 38 2 5 % 62 64 2 3 % NET INCOME ATTRIBUTABLE TO CUMMINS INC.
Results of operations / sales, expenses and operating income · Filed 04/08/2026
WHAT WE DO WHAT WE DO NOT DO Set clear financial goals that we believe are challenging yet achievable, meet or exceed competitive standards, and will enhance shareholder value over time We do not allow backdating or repricing of stock options Use multiple measures to ensure our executives focus on both annual and longer-term goals We do not have separate employment contracts with our executive officers Tie incentive awards for all participants at least in part to overall company performance to reinforce the importance of the company’s success and to encourage collaboration and teamwork We do not guarantee salary increases, bonuses or equity grants for our executive officers Encourage executives to focus on the sustained long-term growth of our company and promote retention by vesting performance-based awards only at the end of the performance or service period We will not gross-up excise taxes that may be imposed on payments to our executive officers in connection with a change in control Cap payouts under our short- and long-term incentive compensation plans at 200% of the target awards Perquisites do not constitute a major element of our executive compensation program Require all incentive and equity awards for senior executives be subject to clawback and cancellation provisions that go beyond the minimum required by law and apply to both performance-based and time-vesting awards We do not permit officers or directors to engage in pledging, hedging or similar types of transactions with respect to our stock Maintain a Talent Management and Compensation Committee composed of independent directors who are advised by an outside, independent compensation consultant We do not pay dividends or dividend equivalents on unearned performance shares Complete an annual assessment of the risk associated with our compensation program Require executive officers and outside directors to maintain prescribed stock ownership levels Subject our executives to double trigger change in control provisions TABLE OF CONTENTS EXECUTIVE COMPENSATION CUMMINS 2026 PROXY 37 HOW PERFORMANCE MEASURES AND GOALS ARE DETERMINED The Committee regularly reviews all elements of our executive compensation program and makes changes as it deems appropriate.
Executive compensation / existing incentive and ownership policies · Filed 02/04/2026
Rumsey’s target compensation compared to her realized compensation for 2025 is shown in the table below: Pay Component Target Performance Factor Realized Comments Salary for 2025 $1,545,000 Not Applicable $1,533,750 The realized salary differs from the target amount due to a change in salary that occurred during the year Annual Bonus for 2025 $2,703,750 90% $2,415,656 $1,533,750 (2025 base salary earnings) x 175% (target as a percentage of base salary earnings) x 90% (2025 performance factor) Performance Cash for 2023-2025 cycle $2,850,000 160% $4,560,000 $2,850,000 x 160% Performance Shares for 2023-2025 cycle 27,960 160% 44,736 Performance shares earned for 2023-2025 cycle, valued at $22,835,491 Value reflected $510.45 stock price on December 31, 2025; 27,960 shares x 160% x $510.45 stock price TABLE OF CONTENTS EXECUTIVE COMPENSATION CUMMINS 2026 PROXY 49 Mark Smith Vice President – Chief Financial Officer (1) The salary shown is based on the annual salary rate after giving effect to any salary adjustments for the year.
Executive compensation / actual 2025 bonus and 2023–2025 performance awards · Filed 02/04/2026
Board Leadership • Annual assessment and determination of Board leadership structure • Lead Director has a strong role and significant governance duties, including serving as Chair of the Governance & Nominating Committee and of all executive sessions of independent directors Board Accountability • All directors are elected annually via majority voting standard • Our Board has adopted proxy access, shareholder right to call special meetings, and shareholder right to amend by-laws Board Evaluation and Effectiveness • Board evaluation process led by Lead Director and facilitated by either Lead Director, the Office of the Corporate Secretary or third party (at discretion of Lead Director); facilitator schedules feedback calls with each Board member annually; recommends any improvements or enhancements derived from evaluations • Annual feedback and evaluation session by each Committee Chair with its members on Committee performance; recommends any Committee improvements or enhancements Board Oversight of Risk & ESG • Our Board and its committees exercise robust oversight of the company’s enterprise risk management program with dedicated time to review the top tier risks at every regular Board meeting • Our Board or its committees review Environmental Social and Governance (ESG) strategies, risks and progress with dedicated time at every regular Board meeting Shareholder Engagement • Board members routinely meet with top shareholders for conversations focused on our Board’s skill set and refreshment and its oversight of a variety of topics including company strategy, growth, risk management, governance and ESG issues Board Refreshment • 7 new directors added to Board since 2020 • Director nominees represent different backgrounds, experiences and perspectives 2026 Recognition Highlights Our practices and policies have earned Cummins recognition on a range of issues.
Corporate governance / existing voting rights, lead director and oversight processes · Filed 02/04/2026
As a result of these interactions, we have taken the following corporate governance-related actions in recent years: • adopted proxy access; • adopted a unilateral right for shareholders to amend the company’s bylaws; and • lowered the threshold at which shareholders may call a special meeting.
Corporate governance / adopted shareholder-rights changes · Filed 02/04/2026
Signatures Title Date /s/ JENNIFER RUMSEY Chair and Chief Executive Officer (Principal Executive Officer) February 10, 2026 Jennifer Rumsey /s/ MARK A.
Signatures / combined Chair and Chief Executive Officer roles · Filed 10/02/2026
Any delays in implementation or enforcement could 18 Table of Contents result in a loss of our competitive advantage and could have a material adverse impact on our results of operations, financial condition and cash flows.
Risk factors / potential loss of regulatory competitive advantage · Filed 10/02/2026
The joint venture was formed in May 2024, but is not expected to begin production until 2028.
Investments / Amplify expected production commencement · Filed 10/02/2026
