Cummins reported QQ1 2025 revenue of $8.174 billion, a year-over-year decline of 2.7% and a sequential decline of 3.2% versus the prior quarter. Despite a modest top-line contraction, gross profit rose 5.6% year over year to $2.156 billion, delivering a gross margin of 26.36%. Operating income expanded to $1.134 billion (operating margin ~13.87%), while EBITDA stood at $1.463 billion. Net income declined 58.7% year over year to $824 million, but rose materially versus the prior quarter (+97.1% QoQ), contributing to an earnings per share of $5.99 (diluted $5.96).
The quarter showcased contrasting dynamics: improving profitability per unit and a lean operating backbone, but headwinds from working capital-driven cash flow. Operating cash flow was largely flat-to-negative (-$3 million), with free cash flow negative by $165 million as working capital consumed cash (notably accounts receivable, inventory, and other working capital movements). The balance sheet remains structurally solid, with a strong liquidity position (cash and short-term investments of ~$2.16 billion) and a conservative leverage profile (total debt ~$8.14 billion; net debt ~$6.50 billion; debt to capitalization ~0.42). Profitability metrics remain healthy for the sector, with strong interest coverage (~14.7x) and solid returns on equity (~7.5%) and capital employed (~5.4%).
Looking ahead, Cummins retains exposure to cyclical end-markets (heavy-duty trucking, construction, and industrial equipment) but maintains a strategic push in electrified and alternative power systems under the New Power initiative. The quarter’s margin resilience supports a constructive long-term view, though investors should monitor working capital discipline, commodity input costs, and the pace of demand recovery in key markets. Overall, the stock presents a balanced risk-reward in the context of a diversified industrials portfolio with meaningful optionality in electrified power and aftermarket services.