CMI · 10-Q · 2026Q3 · Full report

Operating Margin Drivers

CUMMINS INC · 2026-11-05 · Importance 43 · Surprise 32 · In source text

Gross margin increased $486 million in the third quarter and $758 million in the first nine months of 2026, reaching 27.7% and 26.8% of sales, respectively, up 2.1 and 0.7 percentage points year over year. Higher volumes and favorable pricing drove the improvement, partly offset by increased compensation expenses. Power Systems EBITDA margin rose 2.5 points to 25.4% in the quarter and 3.2 points to 26.3% for the nine months, reflecting higher volumes and favorable pricing. Engine’s quarterly EBITDA margin increased 3.5 points to 13.5% on higher volumes, while its nine-month margin declined 1.3 points to 12.2%, primarily due to higher compensation expenses.

Key facts

• Cummins' consolidated gross margin increased $486 million and $758 million, and rose 2.1 and 0.7 percentage points as a share of sales, in the three and nine months ended September 30, 2026, respectively. source
• Cummins' base-warranty provision was 1.9 percent of sales in both the three- and nine-month periods ended September 30, 2026, versus 1.8 percent and 1.9 percent in the comparable 2025 periods. source
• Cummins' gross-margin increases in the three and nine months ended September 30, 2026, were primarily due to higher volumes and favorable pricing, partly offset by increased compensation expenses. source

Impact estimates