Slide 1: First Quarter 2021 Earnings Teleconference
First Quarter 2021 Earnings Teleconference May 4, 2021
Slide 2: Contents
CONTENTS Q1 2021 Summary 2021 Guidance Q1 2021 Supplemental Information Appendix 2
Slide 3: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, e
Slide 4: Q1 2021 Summary
Q1 2021 Summary
Slide 5: Q1 2021 Summary
Q1 2021 Summary • First quarter revenues of $6.1 billion • GAAP1 Net Income of $603 million and Diluted EPS of $4.07 • EBITDA of $980 million or 16.1 percent of sales • Full year revenues expected to be up 20 to 24 percent • EBITDA is expected to be in the range of 15.5 to 16.0 percent of sales 1 Ge
Slide 6: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q1 2021 Q1 2020 Sales 6,092 5,011 Gross Margin (% of Sales) 24.4% 25.8% SAR (% of Sales) 13.7% 15.6% EBITDA 980 846 EBITDA (% of Sales) 16.1% 16.9% GAAP Net Income attributable to Cummins Inc. 603 511 GAAP Net Income (% of Sales) 9.9% 10.2% D
Slide 7: Q1 2021 Income Statement by Segment
Q1 2021 Income Statement by Segment Engine Distribution Components Power New Power Intersegment Total Systems Eliminations $M Three months ended April 4, 2021 Net Sales 2,459 1,835 2,152 1,022 35 (1,411) 6,092 Sales growth vs 2020 14% 1% 43% 16% 250% (4)% 22% EBITDA 354 160 421 126 (51) (30) 980 Seg
Slide 8: 2021 Guidance
2021 Guidance
Slide 9: Guidance for 2021 Consolidated Results
Guidance for 2021 Consolidated Results ITEM FULL YEAR GUIDANCE Consolidated Revenue Up 20% to 24% Earnings from JVs Down 5% EBITDA Margin 15.5% to 16.0% Depreciation & Amortization $650 to $670 M Effective Tax Rate1 22.5% Capital Expenditures $725 to $775 M Global Pension Funding $75 M Interest Expe
Slide 10: Guidance for 2021 Segment Results
Guidance for 2021 Segment Results ITEM ENGINE DISTRIBUTION COMPONENTS POWER SYSTEMS NEW POWER Consolidated Up 23% to 27% Up 6% to 10% Up 30% to 34% Up 16% to 20% $110M to $130M Revenue Growth 2021 EBITDA Margins 14.5% to 15.0% 8.75% to 9.25% 16.75% to 17.25% 11.0% to 11.5% ($210M) to ($190M) (% of R
Slide 11: Key On-Highway Engine Markets - 2021
Key On-Highway Engine Markets - 2021 2021 Market Size KEY MARKET Forecast Vs. 2020 Heavy Duty Truck - NAFTA 264K units Up 45% Class 8, Group 2 - Production Medium Duty Truck - NAFTA 140K units Up 35% Class 6-7, and Class 8 Group 1 - Production Heavy & Medium Truck - China 1,500K units Down 15% Sales
Slide 12: Cummins Inc. 2021 Guidance
Cummins Inc. 1 2021 Guidance Sales Up 20% to 24% EBITDA 15.5% to 16.0% 1 2019 EBITDA excludes $119 million of restructuring charges. 12
Slide 13: Q1 2021 Supplemental Information
Q1 2021 Supplemental Information
Slide 14: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased due to higher $ MILLIONS Q1 2021 Q1 2020 CHANGE demand in North America truck and global construction markets. Sales 2,459 2,158 14% • The decrease in EBITDA percent was primarily due to increased EBITDA 354 365 (3)% premium freight costs and
Slide 15: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenues increased $ MILLIONS Q1 2021 Q1 2020 CHANGE due to higher demand in North America truck markets. Heavy-Duty Truck 827 750 10% Medium-Duty Truck & 674 618 9% • Off-highway revenues increased Bus due to higher demand in global Light-Duty Automotiv
Slide 16: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 1% driven by higher $ MILLIONS Q1 2021 Q1 2020 CHANGE engine and power generation sales partially offset by lower parts sales. Sales 1,835 1,814 1% • EBITDA margin as a percent of sales EBITDA 160 158 1% remained flat as the benefits of
Slide 17: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 43% driven by stronger $ MILLIONS Q1 2021 Q1 2020 CHANGE demand for trucks in North America and continued strength in China. Sales 2,152 1,502 43% • EBITDA margin as a percent of sales increased due to the benefits of higher EBITDA 421 279
Slide 18: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased 16% driven by stronger $ MILLIONS Q1 2021 Q1 2020 CHANGE demand for power generation and mining equipment globally. Sales 1,022 884 16% • The increase in EBITDA percent was primarily due to the benefits of higher EBITDA 126 77 64% volum
Slide 19: New Power Segment Selected Financial Data
New Power Segment Selected Financial Data • EBITDA losses were $51 million for $ MILLIONS Q1 2021 Q1 2020 CHANGE the quarter driven by the development of new products and the expected slow ramp of new Sales 35 10 250% technology adoption. EBITDA (51) (43) (19)% EBITDA (% of Sales) NM1 NM1 1 "NM" - n
Slide 20: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q1 2021 Q1 2020 Engine 113 78 Distribution 17 21 Components 19 21 Power Systems 12 9 New Power 5 — Total JV Income 166 129 20
Slide 21: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q1 2021 Q1 2020 Operating Cash Flow 339 379 Capital Expenditures 87 75 Working Capital Measure 4,683 4,436 Working Capital Measure 19.2% 22.1% (% of Net Sales) Total Debt to Capital % 31.2% 29.5% Net Debt to Capital % 5.6% 11.6% 21
Slide 22: Appendix
Appendix
Slide 23: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q1 2021 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q1 2021 LTM Results Sales: $20.9 billion EBITDA: $3.2 billion EBITDA%: 15.5% 23
Slide 24: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q1 2021 LTM Revenue by Marketing Territory emissions regulations • Strong geographic diversification and leadership across multiple end-markets • Global distribution network with presence in approximately 190 countries and territories 24
Slide 25: Cummins - Joint Venture Sales Unconsolidated
Cummins - Joint Venture Sales Unconsolidated Q1 2021 LTM Revenue * Rest of world 25
Slide 26: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q1 2021 LTM Revenue by Product 2.8L to 15L and 48 hp to 715 hp • Long-term engine supply agreements with key customers to stabilize pricing and to jointly engineer better integrated vehicles to market • Leading market share in multiple
Slide 27: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q1 2021 LTM Revenue $8.3 billion 27
Slide 28: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1 2021 Guidance Sales Up 23% to 27% EBITDA 14.5% to 15.0% 1 2019 EBITDA excludes $18 million of restructuring charges. 28
Slide 29: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q1 2021 LTM Revenue 29
Slide 30: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q1 2021 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q1 2021 LTM Results Sales: $7.2 billion EBITDA: $667 million EBITDA%: 9.3% 30
Slide 31: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q1 2021 LTM Revenue $7.2 billion 31
Slide 32: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1 2021 Guidance Sales Up 6% to 10% EBITDA 8.75% to 9.25% 1 2019 EBITDA excludes $37 million of restructuring charges. 32
Slide 33: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q1 2021 LTM Revenue * Rest of World 33
Slide 34: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q1 2021 LTM Revenue by Business products for commercial vehicle applications • Largest worldwide supplier of turbochargers from 3.8L to 25L for commercial applications • World's leading supplier of filtration, coolant and chemical pr
Slide 35: Components Segment - Sales Mix
Components Segment - Sales Mix Q1 2021 LTM Revenue $6.7 billion 35
Slide 36: Components Segment - Historical Performance
Components Segment - Historical Performance 1 2021 Guidance Sales Up 30% to 34% EBITDA 16.75% to 17.25% 1 2019 EBITDA excludes $20 million of restructuring charges. 36
Slide 37: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q1 2021 LTM Revenue 37
Slide 38: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q1 2021 LTM Revenue by Product systems, components and services from 2kW to 3.5 Megawatts (MW) • Leading supplier of alternators from 3kVA to 12,000kVA • Leading market share in multiple geographies Q1 2021 LTM Results Sales: $3.
Slide 39: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q1 2021 LTM Revenue $3.8 billion 39
Slide 40: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1 2021 Guidance Sales Up 16% to 20% EBITDA 11.0% to 11.5% 1 2019 EBITDA excludes $12 million of restructuring charges. 40
Slide 41: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q1 2021 LTM Revenue 41
Slide 42: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 50 years • Market leadership • Strong OEM relationships • Expanding our markets 42 1 Consolidated & JV sales with eliminations
Slide 43: Emerging Market Sales - China
Emerging Market Sales - China1 • Present in China for over 40 years • Broad product portfolio for On and Off Highway • Strong OEM partners • Growth from new products and tightening emission standards 1 Consolidated & JV sales with eliminations 43
Slide 44: Non-GAAP Reconciliation - EBITDA
Non-GAAP Reconciliation - EBITDA Three Months Ended In Millions 04-Apr-21 29-Mar-20 Net income attributable to Cummins Inc. $ 603 $ 511 Net income attributable to noncontrolling interests 8 17 Consolidated net income 611 528 Income tax expense 172 127 Income before taxes 783 655 Interest expense 28
Slide 45: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Twelve Months Ended In Millions 04-Apr-21 29-Mar-20 Net income attributable to Cummins Inc. $ 1,881 $ 2,108 Net income attributable to noncontrolling interests 13 19 Consolidated net income 1,894 2,127 Income tax expense 572 517 Income before taxes 2,466 2,644
Slide 46: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 04-Apr-21 29-Mar-20 Accounts and notes receivable, net $ 4,209 $ 3,505 Inventories 3,753 3,579 Accounts Payable - (principally trade) (3,279) (2,648) Working capital measure $ 4,683 $ 4,436 Annualized Working capital measure (%
Slide 47: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 04-Apr-21 29-Mar-20 31-Mar-19 Total Assets $ 22,962 $ 20,076 $ 19,846 Less: Deferred debt costs 3 3 3 Less: Deferred tax assets 439 461 410 Less: Pension and other postretirement benefit 121 60 51 adjustments excluded from net assets Less: Liabilities
Slide 48: Non-GAAP Reconciliation - Invested Capital for ROIC
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 04-Apr-21 29-Mar-20 31-Mar-19 Total Equity $ 9,031 $ 8,018 $ 8,727 Less: Defined benefit postretirement plans (706) (732) (682) Equity used for return on invested capital calculation 9,737 8,750 9,
Slide 49: Non-GAAP Reconciliation - NOPAT for ROIC
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Twelve Months Ended In Millions 04-Apr-21 29-Mar-20 Net income attributable to Cummins Inc. $ 1,881 $ 2,108 Net income attributable to noncontrolling interests 13 19 Consolidated net income 1,8
Slide 50: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 04-Apr-21 29-Mar-20 Total Debt (A) $ 4,091 $ 3,351 Total Equity (B) 9,031 8,018 Total Capital (C) = (A+B) 13,122 11,369 Total Cash, Cash Equivalents & Marketable Securities (D) 3,355 2,030 Net Debt (E) = (A-D) $ 736 $ 1,321 Total Debt to Capital % (A/C)
Slide 51: Thank you for your interest
Thank you for your interest For additional information: Jack Kienzler – Investor Relations Executive Director (812) 377-3121 | Jack.Kienzler@cummins.com www.cummins.com