All right, great. I think we'll get going today for what is day three of the Barclays Industrial Select Conference. My name's Adam Seiden, and I lead the U.S. Machinery and Construction effort at Barclays, if I haven't met you. We're pleased to have at this session the folks from Cummins. We got both Jeff as well as Nick, and Colin from the IR team is out in the audience as well. So the format of the session here is gonna be fireside chat, myself and the fellows to my left. We will invite your participation through the event, through the touchpads on your table there. So look out for that as we get to it. So with that, Team Cummins, welcome back to Miami. Thanks, Adam. Than ks for having us. You got it. So I guess I wanted to start off by something more theoretical, but on your last call, I think you guys said publicly that you described yourself as a low-risk way to play the AI, AI boom. So a lot of conversations around AI clearly in the hallways here in Miami. So my first question to you guys is gonna be: how durable do you believe, you know, this AI boom, really data center-driven demand would be for, you know, for power gen, et cetera? Yeah, great question, and I think we look at this and with all humility here say it's very difficult to answer that with certainty. You know, most folks didn't see this coming anywhere near the magnitude and pace at which it has come at us over the last couple of years, and so as such, it's also worth understanding and noting that I don't have a perfect answer to just how durable it is. What I would say is, you know, as we do our own perspective and work and understand the space, as we talk directly to the big customers that we serve, we certainly believe there's no signals to suggest that there's any breaks or pauses happening anytime soon. So as we think about our own investments and planning and preparing to take advantage of this opportunity and serve it well, we certainly see what we would suggest as being very strong, ongoing visibility of demand certainly out through this decade. My view is when you think into the next decade, then just the inherent underlying dynamics of the pace and the power dynamics around this data center build-out and AI build-out, you know, I think there are various... The scenarios start to diverge from there, and that's what we're spending a lot of time to work to make sure we understand as clearly as possible. So certainly feel like the next five years, very difficult to envision much scenarios that meaningfully change the trajectory. Beyond that, I think it gets a little bit less clear. Great. And you talked about that visibility out to the end of the decade, and certainly it seems like your orders reflect some of that. So what guardrails are in place, you know, to avoid overbuilding, you know, if demand evolves differently than expected for the broader industry? Yeah. Obviously, something we're trying to be very cognizant of, sensitive to, to react, build, grow, and enable and underpin some of the story we've been able to achieve over the last couple of years. Excuse me. The way we think about it is to characterize the potential investments we could make and to nest them against those scenarios I just talked about, right? There are several we feel like we can make and feel confident in generating returns, building revenue growth, profitable revenue growth in that window where we have higher conviction around the durability of the demand and the trends. Those we want to move, and we want to execute quickly, and I think that's what we've done through our doubling of power gen capacity over the last couple of years. We're gonna continue to evaluate next tranches of capacity and, you know, other product investments we want to make to kind of broaden and extend our participation there. But all that's done with the main guardrails just being: how do we envision scenarios? Because many of our bigger investments, the more significant extensions and things like that, would require longer-term conviction on the durability of the power space. You would need more of a 10- to 15-year visibility, and that's where you get into some of the more challenging decisions that we'll continue to evaluate, where we're equipped and prepared to take risk, and we think it's the right risk with a high probability of returns, but, we're not gonna do that without, you know, doing our homework and being pragmatic and disciplined about it. That's practical. Makes sense. So if we think about some of the orders, though, that you do have within the backlog and so forth, as far as how do you guys go about protecting pricing and, you know, and margin on that backlog that, of course, just won't ship for a number of years here? Yeah. So just structurally, I'd say that, you know, it varies by customer, to start there, but generally there's three elements that we look at. You're gonna have an inflation adjuster on there to make sure we mitigate that. You're then gonna have a pricing adjuster as well, to take advantage of the pricing opportunity. And then you're also gonna have other elements within those tariff surcharges, whatever it might be, that gives us flexibility for how the world may evolve over the next couple of years here. Got it. And thinking through the backlog a bit, you may notice a theme. It's just trying to get a sense of how concentrated is, you know, the backlog, when you think of it from a customer standpoint? Is there any, you know... Or is there a handful of hyperscalers and more diversified? Just how should we be thinking about that? Yeah, I would step back and say, if you just looked at the Pareto of where broader CapEx is being spent- Yeah ... I would say that that mirrors largely if you looked at our backlog. So we're, you know, for the most part, all of the large hyperscalers are our customers. It's not like we're only with one. Yep. But you would have a concentration in our backlog across those hyperscalers, and then you have a long tail of all the other people participating in the space. Got it. Now, I think, Jeff, you mentioned earlier as far as that you guys will be thoughtful as far as the next tranche of decisions and so forth that you make on capacity. So just trying to get into your guys' head a little bit about- ... how do you guys underwrite those organic, you know, investments in power systems? Is there, you know, a targeted return or a payback that you're looking for if and when you would make those decisions? Yeah. So yes, obviously, I mean, I think what we would say is, yes, we have to start with, as anybody does, our own kind of internal hurdle rate that we have to make sure that any investments we're making, whether it be in power systems or elsewhere, hits that hurdle rate. Of course, we look to make sure as we're doing that, we're driving into growth, driving into profitable and accretive growth wherever we possibly can. So, I would say, the pretty simple blocking and tackling of making new investments. Within some of these dynamics in particular, then again, what we do ask ourselves is, but while we don't inherently rely totally on payback, we do give a sense for kind of when do those returns manifest itself? How quickly can we translate investment into real profitable returns, given some of the dynamics we just talked about of just how significant this uptick is and the fact that that just simply cannot go on forever. And so we wanna make sure that we are able, as much as possible, to have a higher—that enables higher confidence returns. The more you can feel pace the timing when with which you're gonna be able to generate the returns on that. So when we think specifically around things like capacity, that's one, by and large, of course, we need to work with suppliers and things like that, you know, it's somewhat controllable, to put it that way. So we can have a pretty clear understanding of what it's gonna cost to invest to do that, how quickly we can enable it, and working with our customers to, as much as we can, risk adjust the weight, the demand that we can then use to fulfill against that capacity. So that's the inputs we're using to do that calculus and really make sure we're confident that we're gonna have investments that pay off, and then you balance that against, okay, if it begins to slow, right, or come off this very significant growth cycle, we, of course, ask ourselves: So what footprint, capacity, and fixed cost structure do we have then? And what, if any, you know, things are... How do we make sure we're not overexposed, if and when things, you know, do change trajectory? So that's a harder one to calculate, as to do that right, but that's the considerations we take as we execute and evaluate those investments. That's helpful. And it's clearly been a very strong market for yourselves, for others in the space. So a lot of times in broader industrials, when things are very strong, they catch a lot of folks' attention, and they may want to com e in and compete. So just curious on the competitive environment that you see out there, if you've noticed any reasonable shifts at all, in the last year or two, so forth. You want me to take it on? Yeah, go for it. Yeah. So what I would say is, you know, this diesel standby genset market for the data center space has been, you know, largely comprised of a handful of players. Obviously, ourselves, Caterpillar is an obvious one, and Rolls-Royce and others. Not shockingly, given the growth trajectory and what we see happening, there are people more aggressively entering this space. And, you know, I think they are credible competitors, and they will certainly enter. We believe, so one, the first thing I'd say— Yeah ... to date, we haven't seen meaningful shifts in market share. They're all relatively new entrants, and they're all, you know, right now, bidding and getting lead times, putting together and see what they get. So to date, I would say those have been modest. The question is going forward, and, you know, our view is if we continue to deliver on the strategy we have and, and the capabilities we have, which, to reiterate, are, one, we're one of a handful of large diesel engine manufacturers. There are not very many of those, right? So, if, if we continue to do that well, do right, that's the core of the ultimate genset. Secondly is, remember that we've also made investments to be an effective tier one supplier beyond just engines into gensets. They're one of the largest alternator companies, the second largest bill of materials into the genset that we sell both internally and to other genset manufacturers. We made an acquisition in the radiator space, the third largest bill of materials in the genset, that we sell internally and to our competitors. And so we, we like that posture and positioning, that we can play that effectively, and we have a global, credible distribution channel, and so the, the sales, the installation, the commissioning, the responsiveness, if and when our customers need reaction, we do that well. We do it consistently across the country and the globe, and that's a difficult thing to replicate. So what we believe is that set of ingredients, if we continue to execute well, and we continue to treat our customers right and make sure they're happy, we feel like we're gonna win our fair share in the competitive market share space. So we're gonna concentrate more on us and what we're doing than what others are doing. Yep. There are credible entrants, but we like where we stand, and we like the strategy we're executing. Got it. And that's from, you know, that was a good discussion about Cummins and, and the broader competitive landscape, from a company level and, folks looking at the space. Now, now thinking about on the product side- Yep. Just a bit, does battery backup meaningfully grow in data centers? Is, I guess, the essence of the question here. Yeah, I think what you'll no doubt continue to see, as you have seen for the last decade, is as we talk to these companies, they continue to evaluate and find different ways to achieve the base goal of course, prime power consistency and a very high degree of power redundancy to ensure that they're protecting their investments, the chips and the work that they're doing. Diesel standby gensets are a pretty elegant solution to that need in terms of effectiveness, cost, you know, operational viability, and all the rest. They will continue to test and understand well, and there will be some adoption of different technologies. BESS has some trade-offs. It can turn on very quickly. It has some limitations. As a general, it doesn't last very long. And so, once you get beyond a certain amount of hours of backup power, to achieve days' worth of- ...of backup with batteries becomes economically very, very challenging to achieve. We will have a role to play. There's a lot of conversations around how natural gas, you know, gens ets will have a role to play, and we fully expect our customers, and understandably and rightfully so, to continue to evaluate those options. We sell battery energy storage systems in our portfolio. We do have natural gas gen sets that we're continuing to evaluate, our options to continue to participate there. We would hope and intend to play a very effective role with our customers as they continue to evaluate the best alternative to provide that redundant, resilient standby power behind their systems. Very helpful. Well, it's pretty amazing. You know, we're here about 15 minutes in or so, and, we've talked all about power systems. I think the first time you and I were on stage, it- I think my first question to you was, "Does power systems get any airplay? Yeah, I think I remember. That's right. Here we are. The answer was no. Yeah. Yeah. Maybe shifting a little bit, but, like, if you think about the X10 and the HELM platform, rollouts here, you know, how, how, how should we be thinking about life cycle margin, you know, benefits versus, you know, prior platforms? I can take that one. If you step back and you think about what's involved in launching a new product, we've got a lot of capital that we're deploying this year. It's gonna be building some overheads that starts to depress our gross margin space a bit. And then we're also looking at the life cycle of that product. Early-stage launch, you're gonna be at less mature supply chain, so likely a little bit higher cost. And then also, the other element that I'd call it is quality, right? So anytime that we launch a new product, we tend to build in a higher warranty accrual until we can build a larger population and see how it performs in the field. We do a lot of testing in our development. We have a high degree of confidence on how we think it will perform, but from a conservative perspective, we like to build in a higher accrual in that first 12 months or so, see how the population performs, and then draw that down. So if you think about life cycle, you're gonna have some margin compression naturally when you launch. But over the life cycle of this product, if you were to look at our current product, we would anticipate that it's at equivalent levels or higher over time, with the nuance of 2027 launch will be a little bit more compressed. Got it. And 2027 launch, a bit more compressed there, but now thinking about from the cost side, too, so in R&D, and I know there's a lot of folks paying attention to when we get to peak there, so just curious, you know, when is a proper peak in R&D for this platform, and how soon does that step down thereafter? Yeah, I can start out on that, and then Jeff may add a little bit to it. If you step back and look at our primary investments for this HELM platform have been our components and our engine business. Yes. If you went back to 2023 timeframe and just a run rate here, our run rate in R&D stepped up about $150 million a year across both of those businesses because this is a once every couple of decades investment in a core platform that we can build on subsequently there. So over the last few years, we've had that step up. Going into launch January of 2027, you would see that sustained for at least the first six months as we support that product in the field. We would anticipate, in a stable regulatory environment, that that starts to trail off in the second half of 2027. The key elements we've got to keep in front of us, that's in a stable regulatory environment- ... and we've had far from that the last 12-18 months here. So that's the conversation we need to keep in front of us. If, if regulations are stable, that's what we can expect. If not, then we're gonna have to continue to invest, to enhance, and make sure that our products are positioned, to provide value to our customers. Got it. Well, you talked about regulation a little bit. Yeah. So EPA '27, right? Just a reminder for what your guys' base case assumption is on, on that, and I think maybe March, we were supposed to hear a little more, soon. We're sitting here in the middle, end of February, so... Yeah. So the biggest thing there is if we step back and look at the engine architecture, that is largely aimed at 35 milligram NOx, and we've been aimed at that. That's where we anticipate the regulation is going to land. And we're close in talking with regulators and our OEM partners around that. I think there's broadly consensus around that, even though we are still waiting for that to be finalized. The element that has changed, which is less of an issue from a development perspective, but it's meaningful for fleet customers- Sure ... which is what the administration is trying to do, we understand. It's the extended warranty piece. Yep. That would have driven probably a 10-year extended warranty, a much higher upfront price from us to the OEMs and to the fleets. That was an easy compromise by taking that off. You achieve the administration's goals of lowering that price for fleets, and for us, it's sort of business as usual, so the warranty would be similar to what we've had prior. So not a substantial change for us. Those would be the key elements I'd talk through, and then if we step back and look at the challenges that we face, these development programs are multi-year. Yeah. We're now 10 months out from launching. The challenges that we face are by throwing, you know, all of this uncertainty around the regulatory environment, you think about launching the platform, suppliers, you think about customers, you think about OEMs educating fleets. That's now the challenge over the next 10 months that we're working through as a company to make sure we're well-positioned across all those elements. Yeah, tons of investment, tons of prep, and things like that need to be made for this. When we think about how this all plays out from a regulatory side, there's always a question around pre-buy and if, you know, if customers will want to come out and make sure they could secure supply ahead of some of these regulatory changes. Curious on your guys' view there, and then as that gets to 2027, just what do you see in the market? Are the demand, you know, trends strong enough that if there is some push forward this year, that that can still be, it can still grow into next year? Yeah, I'll talk through that one. So yeah. ... Just to take a step back and talk through just kind of the truck cycle, where we obviously came off a very, very weak second half of 2025. You know, worst we've seen in 20 years, basically, barring COVID. Yeah. And so we've started and now see some early signals of, as you just think about the general cyclical trends of fleets being a little bit stronger, spot rates starting to recover. Some of the inherent things that certainly were contributing to that weakness are beginning to show signs of life. And you've seen, while December was anomalous, even in January, you started to see at least trends heading in the right direction. But those are not yet at what we would consider to be kind of replacement value in the heavy-duty truck cycle. So better than a very poor second half of the year, heading in the right direction, but not, you know, not some massive, you know, massive uptick. So that's good. Yeah, this is how these cycles go. We like to see green shoots head in the right direction. All things considered, before I get into the pre-buy, we would expect that continue through the first half of this year and, and begin to march towards that replacement level demand, which for us, we would consider in the heavy-duty space to be 220-240 thousand units annually. And so that's what we kind of expect to see, barring any unforeseen economic, you know, hiccups. That was what we expect to see. You then add into the consideration of the potential pre-buy activity, which in effect, the way we think about it is you are little-- You-- Every unit you sell early, you take, is you subtract a unit in 2027. You are artificially changing the order pattern around a very discrete date. For an emissions change of this magnitude, we would typically, by now, certainly be, if not already into the pre-buy, quite close to it. We are not really, as best we can tell, seeing much of any of that activity. We do expect second half to not only have some of that cyclical, you know, relative uptick. We will see some pre-buy activity. Very hard to believe there will be none, but likely not our predictions, not the magnitude of what you might have expected to see in similar magnitude emission cycles in the past. And remember, the industry decapacitized for a very weak second half of 2025, and that is not an overnight process to recapacitize. And so there is just inherent limitations to throughout the value chain capacity to respond to a massive uptick in pre-buy activity. So it would need to be happening with visibility quite soon for just folks to actually be able to build trucks to the extent that that might be required. So we expect what I would describe as a pre-buy, a relatively modest one, and then 2027 becomes potentially, in that case, a little bit more stable than it otherwise would have been, with a higher pre-buy and as such, a lower 2027. And with our hope and optimism that eventually you're gonna get to a place where the cyclical dynamics begin to further recover, you get to replacement value or beyond, and that 2027, 2028 become hopefully strong years. That's what, of course, we'd love to see. Sure. So maybe shifting gears just on Accelera, right? There's been a year of resizing a bit of that business. Just how would you guys characterize the role of Accelera in Cummins today? Yeah. Speaking of things we talked about two or three years ago. Yeah, so, you know, Accelera for those is our zero-emissions portfolio that we made a series of investments in over the course of the last decade. Simplistically, we think about that in two big chunks. One is hydrogen portfolio, which we invested heavily in, and as we have announced, we've now made some strategic decisions to pretty significantly change course in terms of actively pursuing commercial, you know, wins in the hydrogen space. It just is not showing up at the levels of volumes and demands that we had predicted, and thus we're pretty meaningfully changing course there. The actions we're taking are now to, to frankly, fulfill the contractual obligations that we had signed up to, to do so effectively, but also to now meaningfully and significantly reduce the loss rate associated with that, that hydrogen investment. So that's kind of. We've moved past the strategic decision-making, and now we're into execution. We do retain what we think is a strong position in the e-mobility space, batteries and, eAxles and, and things like that, and candidly and admittedly, in a very low volume environment. So the art and the work that we're doing is to make sure we actually think that's a strong, viable, protectable position. And potentially even more so in scenarios now where the inverse of five years ago, where people were prioritizing battery, electric, and deprioritizing engines, we leaned against that a little bit and invested in engines. Now may be the opportunity for us to sustain some medium to long-term positioning improvements if we're thoughtful in how we invest in the e-mobility space. And so, that's how we're thinking. We still like the investments we made. Our position in Accelera, of course, it's making more significant losses for a longer period of time than we and anyone else hoped. We will manage that, and we will reduce those losses, but we will not necessarily inherently, totally zero everything out because we still do think there's a future in some of those technology spaces that will be important for us as we go forward. Great. Maybe we'll shift to the audience response questions here, guys. Forgot about this. Yeah, exactly. So first is, do you currently own the stock? Yes, overweight, market weight, or underweight, or no? Reminder for the audience, when the, when the time goes on, that's the best time to click. All right, so about 70% no. Next question, please. What is your general bias towards the stock right now? Positive, negative, or neutral? About 60% of the room is positive, 40% neutral. Next question, please. In your opinion, through cycle EPS growth for Cummins will be above peers, in line with peers, or below peers? All right, split 50/50 between above and in line, slightly more to above. Next question, please. In your opinion, what should Cummins do with excess cash: M&A, long-term M&A, repurchases, dividends, debt paydown, or internal investment? This is always my favorite one. Strategy guy likes this. That means I don't-- makes my job easier, I guess. Yeah. Take this back to Columbus. That's right. All right, buy back some shares, Jeff. About a little over half the room says repos. A little split on internal investment in M&A. And then, next question. In your opinion, on what multiple of 2026 earnings should Cummins trade? And it spans from less than 10 to over 21 times. Standard for a conference. All right. Kind of in that, like, 16-21 band, it seems like. All right, so really actually onto the question beforehand- Yep. which, like you said, it's one of your favorites. So when I think about that investment split between organic and M&A- Curious how you guys balance that internally, 'cause there's a lot of folks that you meet at these conferences that all have, you know, expectations and ideas of what to do. Yep. But I think you guys have been pretty smart and thoughtful about it, so curious around organic and M&A. Yeah. We like to be engaged. We like to look at a lot. We like to be, you hear us use the word disciplined a lot when we think about organic investments and inorganic investments. So, you know, when we go through and evaluate, we, like any company, are searching to make sure we have a, a credible story for not only near term, but also medium and long-term profitable growth, right? So if you even think about the last decade, you know, if you highlight the big investments we made, obviously, we, we leaned into the big organic engine investment platforms right at time. We made... We built Accelera based largely off of inorganic investments through investments in battery and hydrogen technologies. We bought Meritor, which was kind of an extension, various things that had a little bit core and a little bit of Accelera. All those investments had different kind of risk-return profiles, but were all anchored in this view of our belief. We view this very much in terms of 10-plus year, especially inorganic investments. We need to be, have a credible 10- to 20-year thesis and how that fits into either capability building, into, you know, expansion into adjacent growth opportunities, you know, market presence and extensions and things like that. For us, that's about, underpinning a 10- to 20-year profitable growth story is how we're thinking about that. And so then we think about individual, assets or, or opportunities. We do the same logic I walked through at the organic investments is say, what are the scenarios we're looking at? Where do we feel like there's pretty low-risk investments, where there's actions largely within our control that we can go execute and generate a return case as quickly as possible? And where are there higher risk, higher amplitude, and higher reward opportunities? I think Meritor is a good test case where, you know, the base case scenario was we were gonna have a nice, profitable business. We could go deliver synergies, right? Which we've delivered on, and that was a pretty solid investm ent case, like a good deal. Yeah. It becomes a great deal over the course of 10+ years to the extent that you're into broader powertrain value creation, you're into the E-axle portfolio and things like that. And you'd say the first 3 or 4 years, that's probably like we would have ideally, but we still believe that that could be quite attractive and viable over the 10-, 15-, 20-year time horizon. We're happy we did the Meritor deal. And the balance of whether or not that's a good deal or a really, really good deal will actually play itself out more over a 10- to 15-year time horizon than a 3- to 5-year one. So that's the rough logic we kind of go through as we think through big, especially big, large M&A, and inorganic activities. Well, that's fair, and you've been consistent, I think, from day one when you announced the acquisition- Yep That, that's, that was your thought process. So, with that, would you join me in thanking the Cummins folks for being here on stage with us? Yeah. Appreciate it. Thank you. Appreciate it.