Cummins Q3 Net Income Plunges Amid Sales Dip, Atmus Divestiture Impact

TL;DR

**CMI's net income looks rough due to a one-off gain last year, but operating income is up, so don't panic on the core business.**

AI Summary

Cummins Inc. reported a decrease in net sales for the three and nine months ended September 30, 2025, with sales falling to $8.317 billion from $8.456 billion in the prior year's comparable quarter, and to $25.134 billion from $25.655 billion for the nine-month period. Consolidated net income attributable to Cummins Inc. also saw a significant decline, dropping to $536 million ($3.86 diluted EPS) for the three months ended September 30, 2025, from $809 million ($5.86 diluted EPS) in 2024, and to $2.250 billion ($16.23 diluted EPS) for the nine-month period from $3.528 billion ($25.31 diluted EPS) in 2024. This decline was partly due to a substantial 'Other income, net' in 2024 of $1.504 billion for the nine-month period, which included a $1.333 billion gain from the Atmus divestiture. Operating income for the nine months ended September 30, 2025, increased to $3.212 billion from $3.018 billion in 2024, despite the sales decrease, indicating improved operational efficiency excluding the one-time gain. The company's cash and cash equivalents increased significantly to $2.566 billion at September 30, 2025, from $1.671 billion at December 31, 2024, driven by $2.087 billion in net cash provided by operating activities for the nine-month period. Strategic outlook includes continued focus on its 'Destination Zero' strategy, encompassing advanced diesel, alternative fuel, electric, and hybrid powertrains, and zero emissions technologies.

Why It Matters

For investors, the significant drop in net income and diluted EPS, largely due to the absence of the Atmus divestiture gain from the prior year, masks an underlying improvement in operating income. This suggests that while headline numbers look poor, core business operations are performing better. Employees and customers will be interested in the continued investment in 'Destination Zero' technologies, indicating a long-term commitment to innovation and sustainability in a competitive market. The broader market should note Cummins' strong cash generation from operations, which provides financial flexibility for future investments and shareholder returns, positioning it against competitors like Caterpillar and Deere in the evolving power solutions sector.

Risk Assessment

Risk Level: medium — The company experienced a significant decline in net sales for both the three-month ($8.317 billion vs. $8.456 billion) and nine-month ($25.134 billion vs. $25.655 billion) periods ended September 30, 2025, compared to 2024. This, coupled with a substantial decrease in net income attributable to Cummins Inc. from $3.528 billion to $2.250 billion for the nine-month period, largely due to the absence of the $1.333 billion Atmus divestiture gain, indicates potential headwinds in revenue generation and profitability without one-time events.

Analyst Insight

Investors should look beyond the headline net income drop and focus on the improved operating income and strong cash flow from operations. Consider CMI a 'hold' or 'buy on dips' as the core business shows resilience and strategic investments in 'Destination Zero' could drive future growth, but monitor sales trends closely.

Financial Highlights

revenue

$25.134B

operating Margin

12.8%

net Income

$2.250B

eps

$16.23

gross Margin

26.1%

cash Position

$2.566B

revenue Growth

-2.0%

Key Numbers

• $8.317B — Net Sales (Q3 2025) (Decreased from $8.456B in Q3 2024)
• $536M — Net Income Attributable to Cummins Inc. (Q3 2025) (Decreased from $809M in Q3 2024)
• $16.23 — Diluted EPS (9M 2025) (Decreased from $25.31 in 9M 2024)
• $3.212B — Operating Income (9M 2025) (Increased from $3.018B in 9M 2024)
• $1.333B — Gain from Atmus Divestiture (9M 2024) (One-time gain impacting 2024 'Other income, net')
• $2.566B — Cash and Cash Equivalents (Sep 30, 2025) (Increased from $1.671B at Dec 31, 2024)
• $2.087B — Net Cash Provided by Operating Activities (9M 2025) (Significant increase from $65M in 9M 2024)
• 138.0M — Basic Weighted-Average Common Shares Outstanding (Q3 2025) (Slightly increased from 137.2M in Q3 2024)

Key Players & Entities

• CUMMINS INC. (company) — Registrant and global power leader
• Atmus Filtration Technologies Inc. (company) — Company divested by Cummins Inc. in March 2024
• SEC (regulator) — Securities and Exchange Commission
• Wells Fargo Bank, N.A. (company) — Bank for accounts receivable sales agreement
• $8.317 billion (dollar_amount) — Net sales for the three months ended September 30, 2025
• $8.456 billion (dollar_amount) — Net sales for the three months ended September 30, 2024
• $2.250 billion (dollar_amount) — Net income attributable to Cummins Inc. for the nine months ended September 30, 2025
• $3.528 billion (dollar_amount) — Net income attributable to Cummins Inc. for the nine months ended September 30, 2024
• $1.333 billion (dollar_amount) — Gain related to divestiture of Atmus in 2024
• $2.087 billion (dollar_amount) — Net cash provided by operating activities for the nine months ended September 30, 2025

FAQ

Risk Factors

• Global Economic Conditions [high — market]: Downturns in global economic conditions can negatively impact demand for our products, particularly in key markets such as North America, Europe, and China. For the nine months ended September 30, 2025, net sales decreased to $25.134 billion from $25.655 billion in the prior year, reflecting this sensitivity.
• Supply Chain Disruptions [high — operational]: Disruptions in our global supply chain can lead to increased costs and delays in product delivery. This was a factor in the decrease of cost of sales for the nine months ended September 30, 2025, to $18.569 billion from $19.250 billion, but also poses a risk to future production.
• Environmental Regulations [high — regulatory]: Increasingly stringent environmental regulations globally, particularly concerning emissions, require significant investment in research and development for new technologies. The company's 'Destination Zero' strategy aims to address this, but compliance costs and the pace of technological change present ongoing risks.
• Competition [medium — market]: The markets in which we operate are highly competitive, with numerous global and regional players. Intense competition can lead to pricing pressures and affect market share, impacting net sales which fell to $8.317 billion in Q3 2025.
• Product Development and Innovation [medium — operational]: Our ability to successfully develop and introduce new products and technologies, including those related to zero emissions, is critical. Failure to innovate could lead to a loss of competitive advantage and impact future revenue streams.
• Interest Rate Fluctuations [low — financial]: Changes in interest rates can affect our borrowing costs and the valuation of our financial instruments. Interest expense remained stable at $247 million for the nine months ended September 30, 2025, compared to $281 million in the prior year, but future fluctuations remain a risk.

Industry Context

The global power solutions industry, where Cummins operates, is characterized by intense competition and a significant shift towards electrification and alternative fuels driven by environmental regulations and customer demand. Key players are investing heavily in R&D to develop zero-emission technologies, while also maintaining and optimizing traditional engine offerings. Market dynamics are influenced by global economic conditions, infrastructure development, and evolving regulatory landscapes across different regions.

Regulatory Implications

Cummins faces increasing regulatory scrutiny related to emissions standards worldwide. The company's 'Destination Zero' strategy is a direct response to these evolving environmental regulations, requiring substantial investment in new technologies. Failure to comply with or anticipate these regulations could lead to fines, reputational damage, and loss of market access.

What Investors Should Do

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Glossary

Atmus divestiture

The sale or spin-off of a business unit or subsidiary, in this case, Atmus. This event generated a significant one-time gain in the prior year's financial results. (The $1.333 billion gain from the Atmus divestiture in 9M 2024 significantly impacted 'Other income, net' and makes year-over-year net income comparisons misleading without adjustment.)

Destination Zero strategy

Cummins' strategic plan focused on developing and implementing technologies to reduce emissions across its product portfolio, including advanced diesel, alternative fuel, electric, and hybrid powertrains. (This strategy is central to the company's future growth and its ability to meet evolving environmental regulations and market demands.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership stake of outside shareholders in consolidated subsidiaries. (The 'Net income attributable to noncontrolling interests' is subtracted from consolidated net income to arrive at the net income attributable to Cummins Inc. shareholders.)

Other income, net

A line item on the income statement that includes various income and expense items not directly related to the company's core operations, such as gains or losses from asset sales, interest income, and foreign currency exchange gains or losses. (This line item was significantly impacted in 9M 2024 by the $1.333 billion gain from the Atmus divestiture, distorting the comparability of net income between 2025 and 2024.)

Operating income

A measure of a company's profit after deducting operating expenses from revenue. It reflects the profitability of the company's core business operations. (Despite a decrease in net sales, Cummins' operating income for the nine months ended September 30, 2025, increased to $3.212 billion from $3.018 billion in 2024, indicating improved operational efficiency.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Cummins Inc. reported a decrease in net sales for both the three months ($8.317B vs $8.456B) and nine months ($25.134B vs $25.655B) ended September 30, 2025. Net income attributable to Cummins Inc. also saw a substantial decline, particularly in Q3 2025 ($536M vs $809M), largely due to a significant 'Other income, net' in 9M 2024 ($1.504B) which included a $1.333B gain from the Atmus divestiture. However, operating income for the nine months improved to $3.212B from $3.018B, suggesting better core operational performance. Cash and cash equivalents increased significantly to $2.566B from $1.671B at year-end 2024, supported by robust operating cash flow.

Key Financial Figures

• $2.50 — ange on which registered Common stock, $2.50 par value CMI New York Stock Exchange

Filing Documents

• cmi-20250930.htm (10-Q) — 2836KB
• cmi2025q310-qex31a.htm (EX-31.A) — 10KB
• cmi2025q310-qex31b.htm (EX-31.B) — 10KB
• cmi2025q310-qex32.htm (EX-32) — 6KB
• cmi-20250930_g1.jpg (GRAPHIC) — 114KB
• 0000026172-25-000039.txt ( ) — 12610KB
• cmi-20250930.xsd (EX-101.SCH) — 44KB
• cmi-20250930_cal.xml (EX-101.CAL) — 79KB
• cmi-20250930_def.xml (EX-101.DEF) — 243KB
• cmi-20250930_lab.xml (EX-101.LAB) — 727KB
• cmi-20250930_pre.xml (EX-101.PRE) — 475KB
• cmi-20250930_htm.xml (XML) — 2585KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements (Unaudited) 3 Condensed Consolidated Statements of Net Income for the three and nine months ended September 30, 2025 and 2024 3 Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 4 Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 5 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 6 Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2025 and 2024 7 Notes to Condensed Consolidated Financial Statements 9 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 32 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 54 ITEM 4.

Controls and Procedures

Controls and Procedures 54

OTHER INFORMATION

PART II. OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings 54 ITEM 1A.

Risk Factors

Risk Factors 55 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 55 ITEM 3. Defaults Upon Senior Securities 55 ITEM 4. Mine Safety Disclosures 55 ITEM 5. Other Information 56 ITEM 6. Exhibits 56

Signatures

Signatures 57 2 Table of Conten t s

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Condensed Consolidated Financial Statements

ITEM 1. Condensed Consolidated Financial Statements CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited) Three months ended Nine months ended September 30, September 30, In millions, except per share amounts 2025 2024 2025 2024 NET SALES (Notes 1 and 2) $ 8,317 $ 8,456 $ 25,134 $ 25,655 Cost of sales 6,188 6,285 18,569 19,250 GROSS MARGIN 2,129 2,171 6,565 6,405 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 789 807 2,339 2,474 Research, development and engineering expenses 345 359 1,046 1,107 Equity, royalty and interest income from investees (Note 4) 104 99 353 325 Other operating expense, net (Note 14) 247 54 321 131 OPERATING INCOME 852 1,050 3,212 3,018 Interest expense 83 83 247 281 Other income, net (Note 15) 61 76 207 1,504 INCOME BEFORE INCOME TAXES 830 1,043 3,172 4,241 Income tax expense (Note 5) 271 200 835 618 CONSOLIDATED NET INCOME 559 843 2,337 3,623 Less: Net income attributable to noncontrolling interests 23 34 87 95 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 536 $ 809 $ 2,250 $ 3,528 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 3.88 $ 5.90 $ 16.33 $ 25.47 Diluted $ 3.86 $ 5.86 $ 16.23 $ 25.31 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 138.0 137.2 137.8 138.5 Dilutive effect of stock compensation awards 0.8 0.9 0.8 0.9 Diluted 138.8 138.1 138.6 139.4 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 3 Table of Conten t s CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended Nine months ended September 30, September 30, In millions 2025 2024 2025 2024 CONSOLIDATED NET INCOME $ 559 $ 843 $ 2,337 $ 3,623 Other comprehensive income (loss), net of tax (Note 12) Change in pension and other postretirement defined benefit plans 8 5 ( 12 ) 5 Foreign currency translation adjustments ( 67 ) 165 247 22 Unrea