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Date
Thursday, November 6, 2025 at 10 a.m. ET
Call participants
Chair and Chief Executive Officer — Jennifer W. Rumsey
Chief Financial Officer — Mark A. Smith
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Risks
Chief Financial Officer Smith said, "outside of a broad economic recession or what I would call a hard emissions change, this is the sharpest decline in truck orders that many of you have been here a long time have witnessed."
Smith described, "non-cash impairment charges, mostly goodwill write down," in the Accelera segment, which he stated was "disappointing but necessary given the weaker outlook."
Smith stated, "the net position has been negative for the company, resulting in a negative impact of tens of millions of dollars each quarter so far."
Rumsey highlighted, "never had this level of uncertainty around regulation," noting the challenge of keeping product launches on track amid regulatory changes.
Takeaways
Data center power generation revenue -- $2.6 billion in 2024, with approximately half from Power Systems and half from DBU, driven by data center backup power demand.
Projected data center revenue growth -- Management expects a 30%-35% increase in companywide data center-related revenue in 2025 compared to the prior year, reaching a full run rate by year end.
Accelera segment impairment -- The Accelera segment recorded non-cash impairment charges, primarily goodwill write-downs, in Q3 2025 due to a declining revenue outlook, with no near-term change expected in the loss trajectory.
Electrolyzer revenue outlook -- Smith reported that, "it is dried up faster than anything I have seen in my career," and noted the sharp fall leaves a "hole in the projections going forwards for the next couple of years."
eMobility progress -- eMobility, mainly in bus applications, delivered sales growth, achieved more stable gross margins, and is on track to meet or slightly exceed full-year revenue guidance for Accelera this year.
Engine segment margin guidance -- Smith stated, "I expect to have 8% margins in the fourth quarter in the engine business," citing volume declines, seasonality, and net tariff impacts as contributing factors.
Tariff headwinds -- Net tariff impact peaked in Q3 and is described as a margin diluter, with recovery efforts ongoing; quarterly negative impact is in the "tens of millions of dollars."
International data center demand -- Rumsey identified the U.S. and China as leading data center markets with ongoing investment, while local competition increases challenges in China.
Power Systems and Distribution outlook -- Management expects Power Systems and Distribution to remain strong, with segment earnings growth projected for next year, as stated during the Q3 2025 earnings call.
Aftermarket tailwind -- An expanding installed base in non-data center segments is expected to provide a tailwind for aftermarket Distribution revenue.
R&D spending -- Research and development expenses are projected to remain flat next year if regulations do not change significantly, with decreases anticipated after product launches, according to company commentary on budgetary planning for the upcoming year.
Capacity expansion -- Cummins (CMI +5.38%) is nearing completion of a capacity doubling for large engines by the end of 2024, with further expansion under consideration if data center and prime power demand continues.
Summary
Management emphasized record demand for data center-related power generation, citing a decisive 30%-35% revenue growth forecast for 2025 and the near-term completion of large-engine capacity expansion. The call revealed a sharp, management-recognized downturn in Accelera’s electrolyzer business, causing immediate non-cash impairment charges, mostly goodwill write-downs, and a "hole in the projections" for future growth in that segment. The ongoing negative financial impact from tariffs remains significant, diluting margins by tens of millions of dollars per quarter according to the CFO, with no current clarity on future regulatory or rebate developments, as stated during the Q3 2025 earnings call.
Rumsey explained that for data center power generation, total company revenue was $2.6 billion, with about half in Power Systems and about half in DBU. One of the company's unique advantages is the engine, along with key components and auxiliaries sold to that market, plus the channel. As a result, the company benefits in both PSPU and DBU.
Smith confirmed that, despite challenging truck demand and regulatory uncertainty, Cummins is positioned to support customers through an extensive U.S. manufacturing base and broad OEM penetration.
Management communicated that the strong Power Systems and Distribution forecast is based on visible demand drivers, while engine and component businesses continue to face cost and volume headwinds.
Cummins remains disciplined in evaluating prime power investment and focusing on battery opportunities over fuel cell technology in the near term.
Industry glossary
Accelera: Cummins business segment focused on new power technologies, including eMobility, battery, fuel cell, and electrolyzer products.
eMobility: Segment of Cummins business centered on electric mobility solutions, primarily electrified powertrains for vehicles such as buses.
Electrolyzer: Equipment and systems for producing hydrogen from water using electricity, a key technology in Cummins new power initiatives.
Prime power: Continuous onsite power generation for facilities, such as data centers, replacing or supplementing grid power.
DBU (Distribution Business Unit): Cummins division responsible for distribution, sales, and aftermarket services of its products.
PSPU (Power Systems Power Unit): Divisional group focused on power generation solutions including advanced engines and generators.
Full Conference Call Transcript
Operator: Perhaps pursue some of the kind of prime power opportunities that we are seeing out there? Prime power, kind of speed to power opportunities. So given the strong demand we are seeing?
Jennifer W. Rumsey: Yes. So first I would say, our focus has really been on this capacity investment that we have talked about. We are reaching the end of that doubling in capacity as large on large engines as you noted. And position is heavily been in the backup power for data centers with the products that we have that we are selling into the market today. I am really pleased with the execution of that team. We have tracked kind of ahead of schedule on that capacity expansion or reach an end as we come to the end of the year.
And just to give you a sense in 2024, for data center power generation our total revenue for the company was $2.6 billion, about half of that was in Power Systems, about half of that was in DBU because one of the unique things that we have is engine, some of the key components and auxiliaries that we sell to that market. Plus the channel. So we are getting benefit in both PSPU and DBU. For 2025, we expect that revenue into the data center market going to be up 30% to 35%. It has been ramping up. Q4 of last year, we had a nice bump up continuing to ramp up this year.
And so we will be kind of at that full run rate. On that product expansion for data centers. And then that leads kind of the second part of your question is really focused now on what is next. Are there additional places where we want to do capacity expansion of the product that we have? Because we think that demand in that market is going to remain strong. So we are actively looking at that. With the products that we have engines for peak shaving should we invest in prime power engines or more natural gas engines.
So no decisions there, but certainly those are things that we are looking at and we will continue to share as we make decisions on where we want to go next in the data center.
Mark A. Smith: Component technologies we are also selling to other customers as well somewhat akin to the components business story. So yes, it is exciting to be talking about investment with visibility in the returns of the business.
Operator: That is very helpful. And then just for my follow-up, Mark on the Section 232, you help us quantify, I guess, how much the headwind is in 3Q and 4Q on kind of a gross basis? And any comments or kind of way to maybe put guardrails around potential for getting a similar rebate on engines manufactured in The U.S? As we have seen I think the S. Jet and what is kind of the financial impact of that as think about potentially 2026 is getting such a rebate?
Mark A. Smith: Tell you what, I have got exactly the same questions that you have got and we got. We need to know a lot more details than we have currently got. To be able to predict that. What I will say is we are in a we are strong manufacturer of engines in our plants here in The U.S. So we are really well positioned to help our customers and navigate through.
But honestly, all this modeling I know it is important in some regards, but the actual details there are five or six questions that we need a lot more details to be able to calculate it, let alone we are in a strong position given our footprint and we will remain a strong through all of this. And you can generally tell from our tone that stability going forward would be really, really helpful for what is outside of a broad economic recession or what I would call a hard emissions change, this is the sharpest decline in truck orders that many of you have been here a long time. Have witnessed.
And it is not all down the tariffs, but they also do not help with that uncertainty. So look forward to more clarity, even more so the stability but we are in a good position overall. And we are trying to work through all this collaborative customers. Suppliers. It has been huge demand on all participants.
Operator: Our next question comes from David with Evercore. Please proceed with your question.
David Michael Raso: Hi, thank you for the time. Thinking about a delta between 25-26%, the actions taken in Accelera sort of set up an interesting dynamic there. What percent of the losses right now are
Timothy W. Thein: electrolyzers? How should we think about the actions taken sort of the decision around that business? How much that can improve the size of the losses from 25 to 26?
Mark A. Smith: Yes. What I would say is all we have recorded in this quarter they are really non-cash impairment charges, mostly goodwill write down, which is disappointing but necessary given the weaker outlook. So would say what we have done really does not so far, David, has not does not do much to change the trajectory. But as Jennifer W. Rumsey pointed out, we obviously have been and continue to look very closely at further actions we can do to reduce the rate of losses. It is less than half of the total of the overall Accelera segment but watch for updates on that from us.
Timothy W. Thein: Okay. And actions that would help reduce that loss. I mean, once you make that decision on the write down, would think there are harder decisions playing out behind the scenes on cost. Are those actions that could help 2026? Or is there a longer timeframe? When I think of the delta between '25 and twenty There are different types of actions, but
Mark A. Smith: we are conscious if there is a lower demand environment, we are not nobody is comfortable sitting at the losses that we are at when the demand environments change. So we are looking at all that and we will be transparent when we have concluded that here, but we are working on it right now.
Jennifer W. Rumsey: It is fair to say strategically continuing to look at the Accelera portfolio in light of how markets are moving, slowdown that is happening, what technologies we think are most likely to win. And then investing in the places that we see the opportunity to ourselves for the medium and long term and looking at how we reduce losses and other areas. At the end of last year, we did that in the fuel cell part of the business and we are continuing to execute some of those changes and now we are looking at electrolyzers as Mark noted. But it is fair to describe the decline in revenue outlook as
Mark A. Smith: sharp and dramatic and merits further close review, is ongoing right now.
Operator: Our next question comes from Rob Wertheimer with Melius Research. Please proceed with your question.
Rob Wertheimer: Hi, thanks for all the comments on direction. It is very helpful. On
Jennifer W. Rumsey: nat gas and data centers and prime power, I mean Cummins obviously has very successful nat gas platforms in different engines. So I wonder if you could give us a mini teach in on what that entails. Is it a hard engineering challenge to bring it to large engines? Is it you need a lot of operating hours? Maybe what goes into that decision? I wonder if you could just talk about any changes. I mean, you guys were ahead of the data center boom and are capitalizing on that. Anything shifting now? Any change in data center design? All of them use backup, the ratio just maybe what is evolved in the market over the last few months?
Thank you.
Jennifer W. Rumsey: Yes. So as you said, I mean Cummins has strengthened engine research and development and manufacturing capability we understand natural gas. So the question is, we have a certain portfolio of natural gas products today. And assessing what is if there is demand for natural gas for data centers, what is the right product? If we do not have it today in our development, it is a multiyear development cycle typically, but we have the capability to do that if we think that is going to be attractive growth opportunity. So that is how I would think about natural gas. In terms of the data center landscape, what you see is high reliability is absolutely critical.
So the need to have backup power to ensure that high reliability is not going to go away. They do not run that often. Really where the challenge is, is more in the prime power and kind of grid supported and how do they solve the prime power challenge. And so that is where using a backup genset maybe for peak shaving or additional source of prime power or what data centers are out exploring. And as I mentioned in my comments earlier, think we have ability to do some peak shaving with products that we have today.
We have started to invest in some stationary energy storage solutions that could be used in data center applications, and we are continuing to evaluate where else we think we are positioned to invest and get attractive returns.
Rob Wertheimer: Thank you.
Operator: Our next question comes from Kyle Menges with Citigroup. Please proceed with your question.
Kyle David Menges: Thank you. I was hoping if you could just talk
Timothy W. Thein: a little bit more about Accelera and actually just looking at the performance and I mean, seems like you are actually also on track to hit the midpoint, if not a little bit above the full year guide within Accelera on revenues for this year. It sounds like eMobility had some nice growth in the quarter as well. So would be helpful just to hear about the growth you are seeing in e mobility versus electrolyzers and then also maybe at a high level, the differences in profitability that you are seeing right between the e mobility piece of Excelera and the electrolyzer piece?
Mark A. Smith: I would say most of the actual sales in e mobility are bus applications, a lot of it here in The U.S. and that is continuing and we are in a great position there.
Jennifer W. Rumsey: There are lots of other explorations and
Mark A. Smith: discussions that have been a big shakeout even in the e mobility industry given I would say, lower prospects for accelerated growth even though we are growing the overall everybody's projections for growth as come down and that has led to a shakeout certainly a lot of the start ups, some of the less well capitalized participants. So I think there is still a lot of discussion and future opportunity for Cummins e mobility.
And I think that has been generally been a good story that has the volumes and we have released new iterations of products that we have moved from, yes, significant losses and negative gross margin to a sense there is something a lot more stable and sustainable going forward. It is still somewhat muted, right, in the grand scheme of a $35 billion company, but we have seen clear progress there. Positive and staying invested there. On electrolyzers, went back a couple of years, we had pretty ambitious targets for growth. And we were tracking that trajectory every quarter.
It was we were tracking years out where do we need to be and we were on that curve for significant revenue growth for quite some time. And the reality is, yes, it is dried up faster than anything I have seen in my career, for a variety of reasons. Especially here in The U.S. But also some of the adoption in international markets. So whilst, yes, we have probably guided a little cautiously going into the New Year, not knowing exactly what would happen. So we are not way off on the revenue from the guidance that we no longer have, but the one that we originally gave.
Jennifer W. Rumsey: But yes, it is just internally, it is
Mark A. Smith: it surprised even us to the downside. And so that is why it might look to you like we are on track, but electrolyzer is way off. And it is not just for now, but then that leaves the orders as a big gestation period between taking an order shipping a product, having it installed, recognizing the revenue. And so not only is that shorter orders now, that is leaving like a hole in the projections going forwards for the next couple of years. So that is why we are acting now.
So it is tough, very tough in ex e mobility, but we are pleased with the progress and I do not want that to be lost from the e mobility team.
Timothy W. Thein: That is helpful, Mark. And then just a follow-up, clarifying some of your comments on the engine margins and maybe just thinking about some of the puts and takes into the fourth quarter. On engine margins as you start to neutralize tariffs, even though volumes could still be down sequentially. I mean, guess the question when you said engine could be kind of similar to the third quarter, Does that mean that you have confidence in doing 10% EBITDA margin again in the fourth quarter? Or we talking about similar decrementals, in which case you could be talking about 8% EBITDA margins for engine in the fourth quarter based on
Mark A. Smith: I will just say it out here in this. You can only I expect to have 8% margins in the fourth quarter in the engine business. But some of the factors the volume is going down, not we expect it to. Unfortunately confident, but we hope that is a bottoming. We also saw a slowdown in parts. We hope that does not continue. And then, yes, all the other things that we are doing on cost productivity managing through tariffs can all help mitigate. It is certainly not going to be dramatically better. We are dealing with more headwinds. I have tried to be clear about that. So hopefully that helps.
I would just there is always a bit of seasonality fourth quarter going into the holiday period. Those usually get exaggerated when you are in a weak economic environment. But just know we are working hard. The engine business is working hard every day to get this balance right. And what you can see from our financial reports that we disclosed the engineering costs by segment, by quarter, you can see engineering costs are up year over year because we are still in this pre launch development not yet final certain regulations. So that has got to continue, but that should not be step worse in the fourth quarter.
So do not expect magic, but do not expect 8% EBITDA with what I know right now. I will just add a couple of points. I mean, we have been working to flex down plants and so seeing that
Jennifer W. Rumsey: action coming through the full Q4 as well as the eB the engine business has seen more than its share of the net tariff impact. That impacted them in Q3. To more full recovery in Q4 will reduce.
Mark A. Smith: I mean there is always some natural variation across some of the businesses. In general, as we have said, we expect Power Systems and Distribution to be strong. No quarter is ever identical to the prior one, even if it looks similar on the top line. Pressure is still there on engine business and components. We still got to take control on costs and we are figuring out what else we can do on Accelera. That is the headline. And then as I mentioned, we have also done a lot to improve our credit metrics which gives us flexibility for capital allocation going forwards.
So as much as trucks are tough, they also give you working through them effectively gives you that platform and that confidence to move forward when demand improves. Unfortunately, I wish I could be more bullish and say we would super confident. We feel like we are getting to the closer to the bottom of trough. Bottom of the trough on highway. We think the trends on power generation, data centers, which benefit power system distribution are going to continue, So hopefully, we get this coming together of strong demand across the company at some point here in the not too distant future.
It is a little elusive right now on trucks but we feel given how long it has been and how far it has been down, that is a question of time and a cyclical business but it is not imminent that it is going to turn up.
Operator: Our next question comes from Tami Zakaria with JPMorgan. Please proceed with your question.
Tami Zakaria: Hi, good morning. Great quarter and thanks for your
Jennifer W. Rumsey: time.
Operator: Are you able to speak to the
Tami Zakaria: distribution or services opportunity you see long term as you are selling these gensets and probably have a very sizable installed base right now. What is the typical expectancy of these? Is there a scenario where we would see the first wave of aftermarket services picking up for those units that you have sold over the twelve to twenty four months. So any way to comment on that or quantify that? So, Tammy, for data centers,
Jennifer W. Rumsey: the distribution business gets revenue on the front end for a lot of the customers as they do the installation and some of the additional components. And product around the engine and the genset in the data center. There is not a lot of aftermarket revenue in data center backup power because they do not run that often. So there is some service. It is not the same if you think about like a mining application or a heavy duty truck application. That said, our installed base has been growing and those other applications that do drive more aftermarket content.
So we believe aftermarket in general will be a tailwind for the distribution business and especially as customers come back business financial conditions, but we think that we will see some improvement in aftermarket as Mark had noted.
Tami Zakaria: Understood. That is very helpful. And if not, 2027 is not delayed after review how are you thinking about the cadence of any product launches in 2026 tied to that?
Jennifer W. Rumsey: Yes, great. Well, we continue to make maintain our focus on development of the new products that we are launching
Tami Zakaria: for '27 and feel good about how we are positioned with the new
Jennifer W. Rumsey: platforms and technology that we are bringing to our customers.
Mark A. Smith: It is
Jennifer W. Rumsey: It is important to understand we have never had this level of uncertainty around regulation. So that is certainly been challenging and keeping our team focused on the launches that had starting to work on with our supply base on different scenarios and that would what that could mean to ensure we can offer product to our customers as we understand that the decision and really we have been engaging closely with the EPA as they look at opportunities to try to take some cost out of that rule and also just emphasizing the need to get certainty as soon as. And I think everybody, the OEMs in the industry are pushing on that certainty. Point.
So we are prepared to launch really hoping to give that certainty on direction the not too distant future and assuming that the 27 regulations largely stay in place as they are today, we will be ready to launch our products into the market in 2027. Our next question comes from Steven Fisher with UBS. Please proceed with your question.
Steven Michael Fisher: Thanks. Good morning. Congrats on the Power results. Just curious on the international data center opportunities. Relative to The U.S. How do you see those being different? And is there any difference in the momentum there? And how are the competitive dynamics different internationally versus on the domestic side?
Jennifer W. Rumsey: If you look at the data center market, mean, see strong and growing demand in U.S. And China. Those are the kind of the standouts. There is growth globally. You heard in some of my numbers on how the market is moving. We are seeing investment in data centers in other markets around the world, but the two biggest areas are really U.S. And China. And of course, is trying to figure out how to get in and compete in that market. So we are well very well positioned today and really trying to focus on continuing to maintain a strong position with our products. As others try to figure out how do they take advantage of those market opportunities.
Mark A. Smith: Okay. And then go ahead, Mark. I was going to say, obviously, in China, in most of our markets, tend to see more presence of local competition or trying to get in than we do in The U.S. Or in other markets.
Steven Michael Fisher: That makes sense.
Steven Michael Fisher: And then on the Power Systems margins in general, obviously, still very strong and you talked about the 50% incrementals before.
Jennifer W. Rumsey: I guess just noticing as the years progressed, the segment's margins have kind of flattened out a little bit. I am just kind of curious what is driving that? Are there other things outside of data centers that are restraining that? I know at the beginning of the year, talked a lot about the aftermarket components in there. Maybe that was just fluctuating a little bit. Just curious how to think about sort of that flattening
Mark A. Smith: we are seeing over the course of this year?
Mark A. Smith: I would say the general So that is the great news. There is some natural variation between aftermarket old goods segments. So some of that sometimes is at play a little bit.
Jennifer W. Rumsey: The good
Mark A. Smith: back to somebody asking that should we raise the targets. I really like the way you think. I am sure Jenny and the team might be dialing in. If not, we will relay that to them later. But yes, really proud of the work that we have done there. And with rising demand. Yes, there is some capacity investment. We are expecting earnings growth. Let us just put it out there. We are expecting earnings growth from here going into next year with what we know right now.
Jennifer W. Rumsey: Sounds good. Thanks very much.
Operator: Our next question comes from Noah Kaye with Oppenheimer. Please proceed with your question.
Noah Duke Kaye: Well, thanks. Jen, I think you framed it well and talked about
David Michael Raso: level of uncertainty right now as you prepare for next year. Product launch vis a vis the regulations.
Mark A. Smith: But as you kind of get into year end budgetary planning, is it fair to think of as a baseline that
Noah Duke Kaye: engineering and development spend can be a potential tailwind
Mark A. Smith: into next year? Or would you expect it to be
Noah Duke Kaye: a headwind if the base case of unchanged regulations goes forward?
Jennifer W. Rumsey: The base case of unchanged regulation, I would think of our research spend is pretty flat. Through next year when we launch the product and then we will have the ability to start decreasing that after that. And then I would think about just in terms of demand, that is where our as we are planning for next year, that is where the highest error bars are is what is going to happen in on highway
Tami Zakaria: demand. As Mark noted, we think we are
Jennifer W. Rumsey: we are reaching the bottom. We think there is some upside. When does that happen? Given the capacity that has been taken out as we have responded to this big down cycle how quickly will capacity be added back once demand starts to come up. So I am thinking about some revenue increase at some point in the year, but R and D staying pretty flat.
Mark A. Smith: Yeah.
Mark A. Smith: Accelera probably will not be growing and there is always the question of what are we investing in the future, whether that is in engines and components or in power systems or future technologies but yet not a dramatic change for the next year. I mean, there is natural inflation because a lot of those costs are people because there is some natural inflation that we are always counting against. It will not be a significant tailwind, let us put it like Sure. That is just helpful for us. Longer term, yes, but not. Tomorrow. Not yet. Yes.
Jennifer W. Rumsey: Yes, yes. And on that topic of investing and I want to tie it back to the discussion around the Prime Power opportunity. 30% of data center sites could be using Prime Power. Some form five years out from now. You have got fuel cell in the portfolio, you have got battery, you have got natural gas and diesel gen. How do you think about tying together some of those elements, including what might sit in the Accelera today? To go after expanded wallet share if Prime Power becomes more of a growth opportunity?
Jennifer W. Rumsey: Yes. Well, our strategy really has been to maintain a portfolio of solutions likely across different customers and markets. There is not going to be one answer. I think our strong position in engines as power demand grows and as energy transition pushes out, positions us really well. We are really more focused frankly and both power generation and in mobile applications on the battery opportunities where we think there is more opportunity versus fuel cell.
Tami Zakaria: We have as
Jennifer W. Rumsey: as you know, we have slowed down some of the investment and work in the fuel cell side and there will be more to say if we have a clear investment that we think is going to be attractive on the prime side. But today, we are very focused
Tami Zakaria: on
Jennifer W. Rumsey: continuing to execute on some of the investments that we have made to expand capacity in standby
Tami Zakaria: And being
Jennifer W. Rumsey: disciplined in how we think about additional investments into that market.
Noah Duke Kaye: Makes sense. Thank you.
Mark A. Smith: I think the great thing with what we have done right now it is relatively modest for a lot of growth with quite high predictability of returns. So we are definitely enjoying that in our financial results. Should do more going forward.
Operator: Our next question comes from Scott Group with Wolfe Research. Please proceed with your question.
David Michael Raso: Hey guys, this is Cole on for Scott. Maybe just to expand on engine margins, it sounds like the net tariff impact peaked in 3Q as you recover more price and ramp down facilities in 4Q?
Jennifer W. Rumsey: But as you look ahead to 2026,
David Michael Raso: a 3.75% rebate is not immaterial. How much could this positively impact margins in 1Q or throughout 2026 all else equal?
Tami Zakaria: I just cannot I simply cannot answer that.
Mark A. Smith: Right? I would not be thinking about tariffs as margin improvement things.
Mark A. Smith: It has been a big cost headwind that we have been trying to recover and work with all that we can. To mitigate the cost. I think I understand why you are asking, but we are not framing tariffs as a margin opportunity in any way shape or form. It has been a big hindrance to our industry and hopefully we get stability and relief.
Jennifer W. Rumsey: Okay.
Mark A. Smith: Fair enough. You are right. Going into Q4, it is true we are catching up more with the recovery of the tariffs. Correct methodology, but anything incremental that is not the way we are thinking about it. We are hoping there is a platform for greater demand for the end user customers.
Jennifer W. Rumsey: Okay. Yes, that is just to reiterate Mark's
Jennifer W. Rumsey: part, the way think about it is if we get stability and tariffs and customers start ordering again, that will help our margins because we will be utilizing our plants more, but by itself as margin improvement. We are just trying to cover the cost basically.
Mark A. Smith: We do not know enough to know all these the nuances of any recently announced things, rebates or other things. It is just a lot more detail. Even the emissions regulations, it is great to get the headline. There is a gazillion things that you need to know between that as to how that actually works. Financially, practically, another thing. So we would love to give you more clarity. We just cannot. Yet.
David Michael Raso: And maybe just on the competitive dynamic, there is like a lot of moving pieces with certain OEMs now either in a better or worse competitive position. Due to these new Section 232 tariffs?
Tami Zakaria: How do you expect this to impact your share position across the engine business moving forward?
Mark A. Smith: We are in a strong position to support all of our customers with our US base and we have got the great news is we have got great penetration across multiple brands and OEMs. And our generally, the trend has been for our customer demand for Cummins products has been rising in heavy and medium truck over the last few years. So we feel like we are really well positioned but it is obviously been very complex for all involved and continues to be so.
Operator: Our final question comes from Chad Dillard with Bernstein. Please proceed with your question.
Chad Dillard: Hey, good morning guys. So just given the market demand for standby power that you guys talked about, record level of orders this past quarter. Does Cummins need to expand
Tami Zakaria: beyond what you have already announced? And then I was hoping you could comment on, I guess, the role of Standby Power as more prime power moves behind the meter.
Jennifer W. Rumsey: Yeah. So from a capacity perspective, certainly we are looking at in addition to evaluating our if we do anything on the prime power side, which we have talked a lot about this morning. We are evaluating other places that we can continue to invest in because we do see such strong demand and whether it is orders we took last quarter and the conversations we are having with some of our customers around the world, we think that demand is going to continue. And so if there is places that we think we can invest to take capacity up, we will
Tami Zakaria: we will.
Jennifer W. Rumsey: Be evaluating that. That certainly And we still think that in the coming years this demand for our prime power is going to continue. Well, I do think that there tends to be a hype cycle around technology fundamentally the need to store more data in the cloud, whether it is AI or other driven is trend that is going to continue to grow.
Chad Dillard: And then second question, just on tariffs. So can you quantify the gross tariff impact in 2025? And then what is the split between AEBITDA versus February? And, you know, if we do get AEPA rolled back, I mean, should we consider this more of like a like a pass through?
Mark A. Smith: We have not provided the guidance on the on the gross amounts generally. But negative the net position has been negative for the company and we are in the tens of millions of dollars of negative impact each quarter so far. That is what I can tell you. And what happens, I am just not going to speculate. We just do not know enough what happens, but we as we said, as clearly as we possibly can we have been battling to offset costs on the industry. It is not a margin. It is a margin diluter even if we recover it, right?
Jennifer W. Rumsey: There is a lot of moving parts between IEPA and 232 tariffs and uncertainty around that. So really we want understand the details on that before we provide any color on what that looks like. The great news is the we make our engines and our gensets for The U.S. Here in The U.S. And the team has done a outstanding job of navigating a lot of change and challenge and working to have recover. The cost of this tariff. Really proud of what they have done given the environment that we have been navigating this year.
Mark A. Smith: All right. Appreciate it everybody. Thanks for joining us.
David Michael Raso: That concludes our teleconference for the day. Thank you all for participating in your continued interest. As always, the Investor Relations team will be available for questions after the call. Thank you.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.