Cummins Inc. ( CMI ) announced its fourth-quarter 2025 results on Thursday. Shares dropped despite strong revenue, as investors weighed booming data center demand against a major pullback from hydrogen electrolyzers.

The company reported quarterly revenue of $8.54 billion, a 1% year-over-year increase that exceeded the Wall Street estimate of $8.13 billion. Adjusted EPS of $5.81 for the fourth quarter, surpassing the analyst estimate of $5.11.

GAAP diluted earnings per share were $4.27 for the quarter and $20.50 for the year. These GAAP results include $458 million in primarily non-cash charges related to a strategic shift in the Accelera segment.

“Cummins delivered strong operational results in the fourth quarter and full year despite continued weakness in North America truck markets. Our Distribution and Power Systems segments achieved record full-year sales and profitability as a result of disciplined execution and robust demand for data center backup power,” said Jennifer Rumsey, Chair and CEO of Cummins.

“In the fourth quarter, we recorded charges related to our electrolyzer business within the Accelera segment, reflecting actions taken as part of a strategic review initiated in response to shifts in hydrogen adoption expectations. These decisions were aimed at streamlining operations and reducing ongoing costs in light of the weaker outlook for demand.”

Fourth Quarter Segment Performance

The Distribution segment generated $3.3 billion in revenue, up 7%, driven by a 10% increase in North American demand for power generation and aftermarket parts.

Power Systems achieved the highest growth, with sales rising 11% to $1.9 billion and an EBITDA margin of 21.7%, supported by strong global data center demand.

The Engine segment reported a 4% decline in sales to $2.6 billion, with North American revenue down 5% due to a softer truck market.

Components sales fell 7% to $2.4 billion, as a 15% decrease in North American demand offset international growth.

Accelera’s revenue increased 31% to $131 million, but it posted an EBITDA loss of $374 million due to restructuring charges.

Cummins generated $1.5 billion in operating cash flow in the quarter and ended the year with a $2.8 billion cash balance.

Strategic Evolution and Outlook

Cummins completed the acquisition of First Mode assets, expanding its portfolio with retrofit hybrid systems for mining and rail. The company also advanced its HELM multi-fuel engine platforms, introducing the B7.2 and X10 engines. These initiatives support the “Destination Zero” strategy to lead industry decarbonization.

For 2026, Cummins expects revenue growth of 3% to 8% and EBITDA margins of 17.0% to 18.0%.

Rumsey stated, “In 2026, we anticipate that demand will be slightly better in the North America on-highway truck markets, particularly in the second half of the year, paired with continued strength in data center power generation markets. Cummins remains well-positioned to invest in future growth, deliver strong financial results and return cash to shareholders in 2026.”

CMI Price Action: Cummins shares were down 8.91% at $551.68 at the time of publication on Thursday, according to Benzinga Pro data.