CUMMINS INC

Previous wording

•any adverse consequences resulting from entering into agreements with the U.S. Environmental Protection Agency, California Air Resources Board, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements), including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions;

Current wording

•any adverse consequences resulting from entering into agreements with the U.S. Environmental Protection Agency (EPA), California Air Resources Board, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements), including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions;

Previous wording

We are a global power solutions leader comprised of five business segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems, including battery, fuel cell and electric power technologies and hydrogen production technologies. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. 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. We serve our customers through a service network of approximately 650 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.

Current wording

We are a global power leader committed to powering a more prosperous world. Since 1919, we have delivered innovative solutions that move people, goods and economies forward. Our five reportable operating segments - Engine, Components, Distribution, Power Systems and Accelera offer a broad portfolio, including advanced diesel, alternative fuel, electric and hybrid powertrains; integrated power generation systems; critical components such as aftertreatment, turbochargers, fuel systems, controls, transmissions, axles and brakes; and zero emissions technologies like battery and electric powertrain systems and electrolyzers. With a global footprint, deep technical expertise and an extensive service network, we deliver dependable, cutting-edge solutions tailored to our customers' needs, supporting them through the energy transition with our Destination Zero strategy. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. 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. We serve our customers through a service network of approximately 650 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.

Previous wording

As disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, we operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs and trade disruptions (such as embargoes, sanctions and export controls), could adversely impact the demand for our products and our competitive position. The uncertain tariff environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. Our primary risks include reduced global movement of goods impacting freight activity, increased costs for suppliers and end-users and uncertainty around the availability of supply, all of which could contribute to a decline in business confidence, a reduction in demand for our products and increased product costs. Our tariff related costs increased during the second quarter. We have and continue to look for ways to mitigate these costs including discussions with our suppliers, sourcing alternatives and agreements with our customers to recover these costs. The financial impact of tariffs, net of mitigation actions, was immaterial to our profitability and operating cash flows in the second quarter of 2025. We expect tariff-related costs and recoveries to increase from second quarter levels, assuming that the current level of tariffs remain in place. The continued tariff costs, the effectiveness of our mitigation efforts and the resulting market volatility could materially and adversely affect our results of operations, financial condition and cash flows in the future. We will continue work to minimize the related impacts to our business to the extent possible. See the "OUTLOOK" section for a discussion of the potential tariff impacts for the remainder of 2025.

Current wording

As disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, we operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs, trade disruptions (such as embargoes, sanctions and export controls) and broader geopolitical tensions, could adversely impact the demand for our products and our competitive position. The uncertain global trade environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs and other actions against U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. Our primary risks include reduced global movement of goods impacting freight activity, increased costs for suppliers and end-users and uncertainty around the availability of supply, all of which could contribute to a decline in business confidence, a reduction in demand for our products and increased product costs. Our tariff-related costs increased during the third quarter. We have and continue to look for ways to mitigate these costs including discussions with our suppliers, sourcing alternatives and agreements with our customers to recover these costs. The financial impact of tariffs, net of mitigation actions, was immaterial to our profitability and operating cash flows in the third quarter of 2025. Continued and increasing tariff costs, the effectiveness of our mitigation efforts and the resulting market volatility could materially and adversely affect our results of operations, financial condition and cash flows in the future. We will continue work to minimize the related impacts to our business to the extent possible. See the "OUTLOOK" section for a discussion of the potential tariff impacts for the remainder of 2025.

Previous wording

2025 Second Quarter and Year-to-Date Results

Current wording

2025 Third Quarter and Year-to-Date Results

Previous wording

Net income attributable to Cummins Inc. was $890 million, or $6.43 per diluted share, on sales of $8.6 billion for the three months ended June 30, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $726 million, or $5.26 per diluted share, on sales of $8.8 billion. The increases in net income attributable to Cummins Inc. and earnings per diluted share were driven by the strong growth in power generation markets, especially data center and commercial markets, favorable non-tariff pricing mainly related to the launch of updated engine products in light-duty markets and lower compensation expenses, partially offset by lower demand in on-highway truck markets.

Current wording

Net income attributable to Cummins Inc. was $536 million, or $3.86 per diluted share, on sales of $8.3 billion for the three months ended September 30, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $809 million, or $5.86 per diluted share, on sales of $8.5 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were driven by lower demand in on-highway commercial truck markets, the goodwill impairment charge and inventory write-down in our Accelera segment and the unfavorable tax expense for passage of the One Big Beautiful Bill Act (The Act), partially offset by strong growth in power generation markets, especially data center and commercial markets, increased demand in light-duty automotive markets and lower compensation expenses. See NOTE 5, “INCOME TAXES,” and NOTE 14, “GOODWILL IMPAIRMENT AND INVENTORY WRITE-DOWN,” to our Condensed Consolidated Financial Statementsfor additional information.

Previous wording

Net income attributable to Cummins Inc. was $1.7 billion, or $12.38 per diluted share, on sales of $16.8 billion for the six months ended June 30, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $2.7 billion, or $19.42 per diluted share, on sales of $17.2 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were driven by the absence of the $1.3 billion gain recognized on the divestiture of Atmus in the first quarter of 2024 and lower demand in on-highway truck markets, partially offset by the strong growth in power generation markets, especially data center and commercial markets, favorable non-tariff pricing mainly related to the launch of updated engine products in light-duty markets and lower compensation expenses. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Net income attributable to Cummins Inc. was $2.3 billion, or $16.23 per diluted share, on sales of $25.1 billion for the nine months ended September 30, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $3.5 billion, or $25.31 per diluted share, on sales of $25.7 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were driven by the absence of the $1.3 billion gain recognized on the divestiture of Atmus in the first quarter of 2024, lower demand in on-highway commercial truck markets and the goodwill impairment charge and inventory write-down in our Accelera segment in the third quarter of 2025, partially offset by the strong growth in power generation markets, especially data center and commercial markets, lower compensation expenses and favorable non-tariff pricing mainly related to the launch of updated engine products in light-duty automotive markets. See NOTE 5, “INCOME TAXES,” and NOTE 15, “ATMUS DIVESTITURE,” to our Condensed Consolidated Financial Statements for additional information.

Previous wording

Worldwide revenues decreased by 2 percent in the three months ended June 30, 2025, compared to the same period in 2024, primarily due to the weaker demand in on-highway truck markets, partially offset by higher demand in power generation markets, especially data center and commercial markets. Net sales in the U.S. and Canada declined 6 percent primarily due to the lower demand in heavy-duty and medium-duty markets, partially offset by higher sales in power generation markets. International sales (excludes the U.S. and Canada) improved 5 percent primarily due to higher sales in Europe and China, partially offset by lower sales in Asia Pacific. The increase in international sales was primarily due to higher power generation demand, partially offset by lower demand in on-highway markets.

Current wording

Worldwide revenues decreased by 2 percent in the three months ended September 30, 2025, compared to the same period in 2024, primarily due to the weaker demand in on-highway commercial truck markets, partially offset by higher demand in power generation markets, especially data center and commercial markets, higher sales in light-duty automotive markets and customer tariff recoveries. Net sales in the U.S. and Canada declined 4 percent primarily due to the lower demand in medium-duty and heavy-duty truck markets, partially offset by higher sales in power generation markets and light-duty automotive markets. International sales (excludes the U.S. and Canada) improved 2 percent primarily due to higher sales in China and Europe, partially offset by lower sales in Latin America and Asia Pacific. The increase in international sales was primarily due to higher power generation demand, partially offset by lower demand in commercial on-highway truck markets. Favorable foreign currency fluctuations impacted international sales by 2 percent (primarily the Euro).

Previous wording

Worldwide revenues decreased by 2 percent in the six months ended June 30, 2025, compared to the same period in 2024, mainly due to weaker demand in on-highway truck markets and the divestiture of Atmus, partially offset by higher demand in power generation markets, especially data center and commercial markets. Net sales in the U.S. and Canada declined 3 percent mainly due to lower demand in on-highway truck markets and the divestiture of Atmus in the first quarter of 2024, partially offset by higher sales in power generation markets. International sales (excludes the U.S. and Canada) remained flat primarily due to lower sales in Latin America, offset by higher sales in China. Weaker demand in on-highway truck markets and the divestiture of Atmus were offset by higher power generation demand. Unfavorable foreign currency fluctuations impacted international sales by 2 percent (primarily the Brazilian real and Indian rupee). See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Worldwide revenues decreased by 2 percent in the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to weaker demand in on-highway commercial truck markets and the divestiture of Atmus in the first quarter of 2024, partially offset by higher demand in power generation markets, especially data center and commercial markets, non-tariff pricing mainly related to the launch of updated engine products in light-duty automotive markets and customer tariff recoveries. Net sales in the U.S. and Canada declined 4 percent mainly due to lower demand in heavy-duty and medium-duty truck markets and the divestiture of Atmus, partially offset by higher sales in power generation markets and non-tariff pricing mainly related to the launch of updated engine products in light-duty automotive markets. International sales (excludes the U.S. and Canada) improved 1 percent primarily due to higher sales in China and Europe, partially offset by lower sales in Latin America and Asia Pacific. The increase in international sales was primarily due to higher demand in power generation markets and increased off-highway demand (primarily construction and mining), partially offset by weaker demand in on-highway commercial truck markets and the divestiture of Atmus. See NOTE 15, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

The following tables contain sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by reportable segment for the three and six months ended June 30, 2025 and 2024. See NOTE 15, "REPORTABLE SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Current wording

The following tables contain sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by reportable segment for the three and nine months ended September 30, 2025 and 2024. See NOTE 16, "REPORTABLE SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Previous wording

We generated $782 million in cash from operations for the six months ended June 30, 2025, compared to using $575 million for the comparable period in 2024. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows.

Current wording

We generated $2.1 billion in cash from operations for the nine months ended September 30, 2025, compared to $65 million for the comparable period in 2024. The $2.0 billion increase was mainly due to $1.9 billion of payments in 2024 required by the Settlement Agreements. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows. See NOTE 11, "COMMITMENTS AND CONTINGENCIES," to our Condensed Consolidated Financial Statements for additional information on the Settlement Agreements.

Previous wording

Our debt to capital ratio (total capital defined as debt plus equity) at June 30, 2025, was 38.7 percent, compared to 38.4 percent at December 31, 2024. The increase was primarily due to higher debt balances at June 30, 2025, partially offset by increased equity balances from strong earnings since December 31, 2024. At June 30, 2025, we had $3.1 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $353 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.

Current wording

Our debt to capital ratio (total capital defined as debt plus equity) at September 30, 2025, was 36.8 percent, compared to 38.4 percent at December 31, 2024. The decrease was primarily due to increased equity balances from strong earnings since December 31, 2024, partially offset by higher debt balances at September 30, 2025. At September 30, 2025, we had $3.2 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $353 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.

Previous wording

On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law, enacting significant changes to U.S. federal income tax rules affecting corporations, such as the ability to immediately deduct domestic research and development costs, restoration of elective 100 percent bonus depreciation for qualified property and changes related to the international tax provisions. We are currently assessing the impact to our consolidated financial statements.

Current wording

On July 4, 2025, the The Act was signed into law, enacting significant changes to U.S. federal income tax rules affecting corporations, such as the ability to immediately deduct domestic research and development costs, restoration of elective 100 percent bonus depreciation for qualified property and changes to the international tax provisions. See NOTE 5, "INCOME TAXES," to our Condensed Consolidated Financial Statementsfor additional information.

Previous wording

In the first six months of 2025, the investment gain on our U.S. pension trusts was 4.6 percent, while our U.K. pension trusts' loss was 0.8 percent. We anticipate making additional defined benefit pension contributions during the remainder of 2025 of $22 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our 2025 annual net periodic pension cost to approximate $79 million.

Current wording

In the first nine months of 2025, the investment gain on our U.S. pension trusts was 7.9 percent, while our U.K. pension trusts' loss was 1.8 percent. We anticipate making additional defined benefit pension contributions during the remainder of 2025 of $10 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our 2025 annual net periodic pension cost to approximate $79 million.

Previous wording

Net sales for the three months ended June 30, 2025, decreased by $153 million versus the comparable period in 2024. The primary drivers were as follows:

Current wording

Net sales for the three months ended September 30, 2025, decreased by $139 million versus the comparable period in 2024. The primary drivers were as follows:

Previous wording

•Engine segment sales decreased 7 percent largely due to lower demand in North American heavy-duty truck markets.

Current wording

•Engine segment sales decreased 11 percent largely due to lower demand in North American medium-duty and heavy-duty truck markets.

Previous wording

Net sales for the six months ended June 30, 2025, decreased $382 million versus the comparable period in 2024. The primary drivers were as follows:

Current wording

Net sales for the nine months ended September 30, 2025, decreased $521 million versus the comparable period in 2024. The primary drivers were as follows:

Previous wording

•Components segment sales decreased 15 percent mainly due to the divestiture of Atmus on March 18, 2024, and lower drivetrain and braking systems demand in North America and lower sales in India due to changes in our business model. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

•Components segment sales decreased 15 percent mainly due to lower demand in North American heavy-duty and medium-duty truck markets and the divestiture of Atmus on March 18, 2024. See NOTE 15, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

•Engine segment sales decreased 8 percent largely due to lower demand in North American heavy-duty truck markets.

Current wording

•Engine segment sales decreased 8 percent largely due to lower demand in North American heavy-duty and medium-duty truck markets.

Previous wording

Sales to international markets (excludes the U.S. and Canada), based on location of customers, for the three and six months ended June 30, 2025, were 40 percent and 39 percent of total net sales compared with 37 percent and 38 percent of total net sales for the comparable periods in 2024. A more detailed discussion of sales by segment is presented in the “REPORTABLE SEGMENT RESULTS” section.

Current wording

Sales to international markets (excludes the U.S. and Canada), based on location of customers, for the three and nine months ended September 30, 2025, were 40 percent and 39 percent of total net sales compared with 39 percent and 38 percent of total net sales for the comparable periods in 2024. A more detailed discussion of sales by segment is presented in the “REPORTABLE SEGMENT RESULTS” section.

Previous wording

Gross margin increased $88 million for the three months ended June 30, 2025, and increased 1.5 points as a percentage of net sales versus the comparable period in 2024. The increases in gross margin and gross margin as a percentage of sales were primarily due to favorable non-tariff related pricing mainly due to the launch of updated engine products in light-duty markets, partially offset by lower volumes. The net impact of tariff costs and related recoveries was immaterial for the three month period ended June 30, 2025.

Current wording

Gross margin decreased $42 million for the three months ended September 30, 2025, and decreased 0.1 points as a percentage of net sales versus the comparable period in 2024. The decreases in gross margin and gross margin as a percentage of sales were primarily due to lower demand in on-highway commercial truck markets, partially offset by higher demand in power generation markets, especially data center and commercial markets, higher demand in light-duty automotive markets, as well as favorable non-tariff related pricing mainly due to the launch of updated engine products in light-duty automotive markets. The net impact of tariff costs and related recoveries was immaterial for the three month period ended September 30, 2025.

Previous wording

Gross margin increased $202 million for the six months ended June 30, 2025, and increased 1.8 points as a percentage of sales versus the comparable period in 2024. The increases in gross margin and gross margin as a percentage of sales were primarily due to favorable non-tariff related pricing mainly due to the launch of updated engine products in light-duty markets, partially offset by lower volumes and the absence of Atmus sales. The net impact of tariff costs and related recoveries was immaterial for the six month period ended June 30, 2025. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Gross margin increased $160 million for the nine months ended September 30, 2025, and increased 1.1 points as a percentage of sales versus the comparable period in 2024. The increases in gross margin and gross margin as a percentage of sales were primarily due to strong growth in power generation markets, especially data center and commercial markets, as well as favorable non-tariff related pricing mainly due to the launch of updated engine products in light-duty automotive markets, partially offset by lower demand in on-highway commercial truck markets and the absence of Atmus sales. The net impact of tariff costs and related recoveries was immaterial for the nine month period ended September 30, 2025. See NOTE 15, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

The provision for base warranties issued as a percentage of sales for the three and six months ended June 30, 2025, was 1.9 percent and 1.9 percent, respectively, compared to 1.9 percent and 1.9 percent for the comparable periods in 2024.

Current wording

The provision for base warranties issued as a percentage of sales for the three and nine months ended September 30, 2025, was 1.8 percent and 1.9 percent, respectively, compared to 1.9 percent and 1.9 percent for the comparable periods in 2024.

Previous wording

Selling, general and administrative expenses decreased $49 million and $117 million and decreased 0.4 and 0.5 points as a percentage of net sales, respectively, for the three and six months ended June 30, 2025, versus the comparable periods in 2024. The decreases were mainly due to lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Current wording

Selling, general and administrative expenses decreased $18 million for the three months ended September 30, 2025, and remained flat as a percentage of net sales versus the comparable period in 2024. The decrease was mainly due to lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Previous wording

Research, development and engineering expenses decreased $22 million and $47 million and decreased 0.2 and 0.1 points as a percentage of net sales, respectively, for the three and six months ended June 30, 2025, versus the comparable periods in 2024. The decreases were mainly due to lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Current wording

Research, development and engineering expenses decreased $14 million for the three months ended September 30, 2025, and decreased 0.1 points as a percentage of net sales versus the comparable period in 2024. The decreases were mainly due to lower spending on prototypes and lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Previous wording

Equity, royalty and interest income from investees increased $23 million for the six months ended June 30, 2025, versus the comparable period in 2024, mainly due to the absence of a joint venture consolidated in the first quarter of 2025 with prior year losses, higher royalty and interest income from investees and increased earnings at Chongqing Cummins Engine Co., Ltd. and Beijing Foton Cummins Engine Co., Ltd., partially offset by lower earnings at Sistemas Automotrices de Mexico S.A. de C.V., the absence of joint venture earnings from the divestiture of Atmus and higher start-up costs from Amplify Cell Technologies LLC. See NOTE 4, "EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES," and NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Equity, royalty and interest income from investees increased $28 million for the nine months ended September 30, 2025, versus the comparable period in 2024, mainly due to increased earnings at Beijing Foton Cummins Engine Co., Ltd. and Chongqing Cummins Engine Co., Ltd. and the absence of a joint venture consolidated in the first quarter of 2025 with prior year losses, partially offset by lower earnings at Sistemas Automotrices de Mexico S.A. de C.V. and the absence of joint venture earnings from the divestiture of Atmus. See NOTE 4, "EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES," and NOTE 15, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

Interest expense was $87 million and $164 million for the three and six months ended June 30, 2025, versus $109 million and $198 million for the comparable periods in 2024. Interest expense decreased $22 million and $34 million, respectively, primarily due to lower weighted-average interest rates, partially offset by higher debt balances.

Current wording

Interest expense was $83 million and $247 million for the three and nine months ended September 30, 2025, versus $83 million and $281 million for the comparable periods in 2024. Interest expense remained flat for the three months ended September 30, 2025, primarily due to lower weighted-average interest rates, offset by higher average debt balances. Interest expense decreased $34 million for the nine months ended September 30, 2025, primarily due to lower weighted-average interest rates, partially offset by higher average debt balances.

Previous wording

Our effective tax rate for 2025 is expected to approximate 24.5 percent, excluding any discrete items that may arise and potential adjustments for the "One Big Beautiful Bill Act" signed into law on July 4, 2025.

Current wording

Our effective tax rate for 2025 is expected to approximate 26.5 percent, excluding any discrete items that may arise, which is a 2 percent increase over our prior estimates. This increase is attributable to the impacts of The Act and the non-deductible goodwill impairment and inventory write-down. See NOTE 14, “GOODWILL IMPAIRMENT AND INVENTORY WRITE-DOWN,” to our Condensed Consolidated Financial Statementsfor additional information.

Previous wording

Our effective tax rates for the three and six months ended June 30, 2025, were 24.2 percent and 24.1 percent, respectively. Our effective tax rates for the three and six months ended June 30, 2024, were 23.0 percent and 13.1 percent, respectively.

Current wording

Our effective tax rates for the three and nine months ended September 30, 2025, were 32.7 percent and 26.3 percent, respectively. Our effective tax rates for the three and nine months ended September 30, 2024, were 19.2 percent and 14.6 percent, respectively.

Previous wording

The three months ended June 30, 2025, contained net favorable discrete tax items of $3 million primarily due to $4 million of favorable adjustments for uncertain tax positions, partially offset by $1 million of other unfavorable tax items.

Current wording

The three months ended September 30, 2025, contained net unfavorable discrete tax items of $4 million, primarily due to $32 million of unfavorable return to provision adjustments and net $1 million of other unfavorable tax items, partially offset by $25 million of favorable adjustments for uncertain tax positions and $4 million of favorable adjustments for share-based compensation.

Previous wording

The six months ended June 30, 2025, contained net favorable discrete tax items of $10 million primarily due to $8 million of favorable adjustments for share-based compensation tax benefits and $5 million of favorable adjustments for uncertain tax positions, partially offset by $3 million of other unfavorable tax items.

Current wording

The nine months ended September 30, 2025, contained net favorable discrete tax items of $6 million, primarily due to $30 million of favorable adjustments for uncertain tax positions and $12 million of favorable adjustments for share-based compensation, partially offset by $32 million of unfavorable return to provision adjustments and net $4 million of other unfavorable tax items.

Previous wording

The six months ended June 30, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $30 million favorable primarily due to adjustments related to audit settlements and share-based compensation tax benefits.

Current wording

The nine months ended September 30, 2024, contained net favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were net favorable by $66 million, primarily due to $21 million of favorable adjustments related to audit settlements, $20 million of favorable adjustments from tax return amendments, $18 million of favorable return to provision adjustments and $17 million of favorable share-based compensation tax benefits, partially offset by $7 million of unfavorable adjustments for uncertain tax positions and $3 million of other unfavorable adjustments.

Previous wording

Noncontrolling interests eliminate the income or loss attributable to non-Cummins ownership interests in our consolidated entities. Noncontrolling interests in income of consolidated subsidiaries for the three and six months ended June 30, 2025, increased $12 million and $3 million versus the comparable periods in 2024. The increase for the three months ended June 30, 2025, was primarily due to higher earnings at Cummins India Limited. The increase for the six months ended June 30, 2025, was mainly due to higher earnings at Eaton Cummins Joint Venture and Cummins India Limited, partially offset by the divestiture of Atmus and losses from a former joint venture consolidated in the first quarter of 2025.

Current wording

Noncontrolling interests eliminate the income or loss attributable to non-Cummins ownership interests in our consolidated entities. Noncontrolling interests in income of consolidated subsidiaries for the three and nine months ended September 30, 2025, decreased $11 million and $8 million versus the comparable periods in 2024. The decrease for the three months ended September 30, 2025, was primarily due to lower earnings at Eaton Cummins Joint Venture. The decrease for the nine months ended September 30, 2025, was mainly due to losses from a former joint venture consolidated in the first quarter of 2025, the divestiture of Atmus and lower earnings at our other joint ventures, partially offset by higher earnings at Cummins India limited.

Previous wording

The foreign currency translation adjustment was a net gain of $197 million and $314 million, for the three and six months ended June 30, 2025, respectively, compared to a net loss of $83 million and $143 million, for the three and six months ended June 30, 2024, respectively, driven by the following:

Current wording

The foreign currency translation adjustment was a net loss of $67 million and a net gain of $247 million, for the three and nine months ended September 30, 2025, respectively, compared to a net gain of $165 million and $22 million, for the three and nine months ended September 30, 2024, respectively, driven by the following:

Previous wording

Tariff related costs were evaluated independently of all other drivers included in the disclosures below and all references to "price" and "material cost" variances exclude these separately evaluated tariff costs. The net impact of tariff costs and related recoveries were immaterial to each reportable segment's EBITDA.

Current wording

Tariff related costs and recoveries were evaluated independently of all other drivers included in the disclosures below and all references to "price" and "material cost" variances exclude these separately evaluated tariff costs and recoveries. The net impact of tariff costs and related recoveries were immaterial to each reportable segment's EBITDA.

Previous wording

•Medium-duty truck and bus sales decreased $133 million primarily due to lower truck demand, especially in North America with shipments down 20 percent.

Current wording

•Medium-duty truck and bus sales decreased $289 million primarily due to lower truck demand, especially in North America with shipments down 50 percent.

Previous wording

•Heavy-duty truck sales decreased $208 million mainly due to weaker demand, especially in North America with shipments down 26 percent.

Current wording

•Heavy-duty truck sales decreased $249 million mainly due to weaker demand, especially in North America with shipments down 36 percent.

Previous wording

•Heavy-duty truck sales decreased $346 million principally due to lower demand, especially in North America with shipments down 25 percent.

Current wording

•Heavy-duty truck sales decreased $595 million principally due to lower demand, especially in North America with shipments down 28 percent.

Previous wording

•Medium-duty truck and bus sales decreased $124 million primarily due to lower truck demand, especially in North America with shipments down 30 percent.

Current wording

•Medium-duty truck and bus sales decreased $422 million primarily due to lower truck demand, especially in North America with shipments down 30 percent.

Previous wording

Engine segment EBITDA for the three months ended June 30, 2025, decreased $45 million versus the comparable period in 2024, primarily due to lower volumes and unfavorable material costs, partially offset by favorable pricing. Unfavorable material costs and favorable pricing were primarily related to the launch of updated products in light-duty markets.

Current wording

Engine segment EBITDA for the three and nine months ended September 30, 2025, decreased $166 million and $167 million, respectively, versus the comparable period in 2024, primarily due to lower volumes, the absence of a customer agreement recorded in the third quarter of 2024 providing for a price adjustment for certain units sold beginning January 1, 2024 and higher material costs, partially offset by favorable pricing. Unfavorable material costs and favorable pricing were primarily related to the launch of updated products in light-duty automotive markets.

Previous wording

•Drivetrain and braking systems sales decreased $161 million primarily due to lower demand in North America and lower sales in India due to changes in our business model.

Current wording

•Drivetrain and braking systems sales decreased $214 million primarily due to lower demand in North America and lower sales in India due to changes in the business model.