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0.17x Total Debt / Equity (Conservative)

20bps rate rise adds ~$15-20M annual interest expense; net debt ~$3.5B at ~3.5x EBITDA; manageable but compresses FCF margin ~30-40bps

Medium intensity; US-China trade tariffs on metals and components disrupt supply chains.

Strait of Malacca (rare earth/electronics from Asia) and Taiwan Strait (semiconductor components for digital engine controls)

India (INR ~15% 5yr vol), China (CNY managed but devaluation risk), UK (GBP Brexit-sensitive); combined ~40% of international revenue exposed

India, China, and UK represent top-3 international markets; INR, CNY, GBP volatility creates ~$150-250M annual FX translation exposure on ~$10B international revenue

Medium intensity; commodities: Steel, Aluminum, Copper, Crude Oil (fuel), Rare Earth Elements, Plastics/Resins; geopolitical: US-China trade tariffs on metals and components disrupt supply chains.

No single supplier exceeds 30% of input costs; steel, castings, and electronics sourced from diversified base; moderate substitutability risk on turbocharger components

Cloud termination impact minimal; Cummins is a physical industrial manufacturer; ERP/cloud disruption would delay orders 1-2 weeks but not halt production

Secondary digital aftermarket services (telematics, connected diagnostics) would be disrupted ~30 days; represents <5% revenue, recoverable via alternative providers

Low API coupling risk; Cummins uses standard ERP (SAP) and proprietary telematics; no single platform API dependency creates existential lock-in

Fails Howey Test; Cummins sells physical engines and services; no investment contract, profit expectation from others' efforts, or token/security element; negligible regulatory risk

Medium

Moderate GDPR exposure via EU telematics/fleet data; CCPA exposure limited; estimated compliance cost ~$20-30M annually; no major enforcement history

Moderate; ~40% diesel engine market share in North America heavy-duty trucks; DOJ settlement history (2023 $1.675B EPA/DOJ emissions fine); ongoing scrutiny plausible

Medium burden; regimes: FAA, DOT, OSHA, EPA, ITAR, FTC; Export controls and defense procurement rules create contract concentration risk.

~30-35% recurring (aftermarket parts, service contracts, extended warranties); ~65-70% transactional (new engine/equipment sales); aftermarket growing as installed base expands

Primary: engine/powertrain unit sales; Secondary: aftermarket parts and service (~$4B+); Emerging: electrolyzers and new power (~$1B target by 2030)

Cost-plus with OEM contract pricing (multi-year); vulnerable to commodity steel/aluminum spikes; passed through with 6-12 month lag; pricing power moderate in downturns

6/10; strong brand and regulatory compliance moat supports pricing, but OEM customer concentration and competition from Paccar/Volvo engines limits unilateral increases

25.3% Gross Margin (Moderate (20-40%))

Low free-rider risk; proprietary service networks and emissions compliance software create captive aftermarket; independent rebuilders represent ~15% leakage of service revenue

Sublinear growth possible via automation and platform scale; doubling revenue would require ~60-70% headcount increase; manufacturing remains labor-intensive but engineering scales better

Marginal cost elevated for new power (hydrogen/EV) capex; traditional diesel incremental EBITDA margin ~22-25%; new power still negative margin, drag on blended economics

Not applicable; Cummins uses authorized dealer/distributor network, not franchised model; dealer compliance managed via contractual standards with moderate drift risk

At 10x scale, OEM channel dominates CAC efficiency; aftermarket CAC near zero for captive base; new power segment CAC currently high (~$500-800/kW equivalent)

Weak direct network effects; installed base of 2M+ engines creates data/parts ecosystem advantage; more defensible as connected fleet telematics scales but not classic network effect

11.7% Return on Assets (Excellent)

Tier 3 (moderate cyclicality); heavy truck demand falls 30-40% in recessions; partially offset by aftermarket resilience and defense/power gen contracts; 2009 revenue fell ~30%

Heavy-duty truck OEMs (PACCAR, Daimler, Navistar) ~40-45% of Engine segment revenue; top-3 OEM customers likely represent 25-35% of total company revenue

Industrial/construction, marine, power generation, and defense customers; more fragmented; government/defense provides counter-cyclical buffer; ~20% of total revenue

["11-0000 Management Occupations", "13-0000 Business and Financial Operations Occupations", "15-0000 Computer and Mathematical Occupations", "17-0000 Architecture and Engineering Occupations", "23-0000 Legal Occupations", "33-0000 Protective Service Occupations", "37-0000 Building and Grounds Cleaning and Maintenance Occupations", "41-0000 Sales and Related Occupations", "43-0000 Office and Administrative Support Occupations", "47-0000 Construction and Extraction Occupations", "49-0000 Installation, Maintenance, and Repair Occupations", "51-0000 Production Occupations", "53-0000 Transportation and Material Moving Occupations"]

0.3 (HIL — ~30% of characteristic roles agent-automatable)

3.7% CapEx / Revenue (Low-CapEx Asset-Light)

0000026172

CMI