Slide 1: Third Quarter 2023 Earnings Teleconference
Third Quarter 2023 Earnings Teleconference November 2, 2023
Slide 2: Contents
CONTENTS Q3 2023 Summary 2023 Guidance Q3 2023 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: Q3 2023 Summary
Q3 2023 Summary • Third quarter revenues of $8.4 billion • Third quarter results include $26 million of cost related to the separation of the Filtration business • EBITDA of $1,230 million or 14.6 percent of sales ◦ EBITDA of $1,256 million or 14.9 percent of sales excluding $26 million of cost rela
Slide 5: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q3 2023 Q3 2022 Sales 8,431 7,333 Gross Margin (% of Sales)1 24.6% 22.4% SAR (% of Sales)2 14.1% 14.2% EBITDA3 1,256 900 EBITDA (% of Sales)3 14.9% 12.3% Net Income attributable to Cummins Inc.4 676 412 Net Income (% of Sales)4 8.0% 5.6% Dilu
Slide 6: Q3 2023 Summary
Q3 2023 Summary
Slide 7: Q3 2023 Net Sales and EBITDA by Segment
Q3 2023 Net Sales and EBITDA by Segment Components Engine Distribution Power Accelera Intersegment Total $ MILLIONS Systems Eliminations Three months ended September 30, 2023 Net Sales 3,236 2,931 2,535 1,444 103 (1,818) 8,431 Sales growth vs 2022 20% 5% 13% 7% 106% 2% 15% 1 EBITDA 461 395 306 234 (
Slide 8: Q3 2023 EBITDA Detail
Q3 2023 EBITDA Detail Components Engine Distribution Power Accelera CMI Systems Eliminations $ MILLIONS Segment Segment Segment Segment Segment Reported EBITDA 1,230 441 395 306 234 (114) (32) Reported EBITDA included costs related to (26) (20) (6) the separation of the Filtration business 8
Slide 9: Q3 2023 EPS Detail
Q3 2023 EPS Detail EPS Reported EPS $ 4.59 Reported EPS included costs related to $ (0.14) the separation of the Filtration business 9
Slide 10: 2023 Guidance
2023 Guidance
Slide 11: Guidance for 2023 Consolidated Results
Guidance for 2023 Consolidated Results ITEM FULL YEAR GUIDANCE Consolidated Revenue Up 18% to 21% Earnings from JVs Up 10% to 20% EBITDA Margin 15.2% to 15.4% Depreciation & Amortization $980 to $1,030 M 1 Effective Tax Rate 22.0% Capital Expenditures $1.2 B to $1.3 B Global Pension Funding $115 M I
Slide 12: Guidance for 2023 Meritor Results
Guidance for 2023 Meritor Results 1,2 ITEM FULL YEAR GUIDANCE Consolidated Revenue $4.7 to $4.9 billion EBITDA Margin 10.5% to 11.0% 1 Meritor guidance is for the axles and brakes business within the Components segment 2 The electric powertrain portion of the Meritor business has been integrated wit
Slide 13: Guidance for 2023 Segment Results
Guidance for 2023 Segment Results ITEM COMPONENTS ENGINE DISTRIBUTION POWER SYSTEMS ACCELERA Consolidated Up 35% to 40% Up 2% to 7% Up 10% to 15% Up 8% to 13% $350M to $400M Revenue Growth 2023 EBITDA Margins 14.2% to 14.7% 13.6% to 14.1% 11.9% to 12.4% 14.8% to 15.3% ($440M) to ($420M) (% of Revenu
Slide 14: Key On-Highway Engine Markets - 2023
Key On-Highway Engine Markets - 2023 2023 Market Size KEY MARKET Forecast Vs. 2022 Heavy Duty Truck - North America 280K - 300K units Flat to Up 8% Class 8, Group 2 - Production Down 4% to Up 4% in prior guidance Medium Duty Truck - North America 135K - 150K units Up 5 - 15% Class 6-7, and Class 8 G
Slide 15: Cummins Inc. 2023 Guidance
Cummins Inc. 1,2,3 2023 Guidance Sales Up 18% to 21% EBITDA 15.2% to 15.4% 1 2022 EBITDA excludes $111 million of net cost related to the indefinite suspension of operations in Russia and $81 million of cost related to the separation of the Filtration business, and includes $115 million of cost rela
Slide 16: Q3 2023 Supplemental Information
Q3 2023 Supplemental Information
Slide 17: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 20% driven by the $ MILLIONS Q3 2023 Q3 2022 CHANGE acquisition of Meritor and strong demand in key markets. Sales 3,236 2,703 20% • The increase in EBITDA is primarily due to the acquisition of Meritor, EBITDA1 461 307 50% pricing to reco
Slide 18: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 5% due to $ MILLIONS Q3 2023 Q3 2022 CHANGE higher demand for trucks in North America. Sales 2,931 2,779 5% • EBITDA margin as a percent of sales increased due to EBITDA 395 362 9% operational improvements and the impact of the one-time EBITDA
Slide 19: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenue increase $ MILLIONS Q3 2023 Q3 2022 CHANGE driven by pricing actions and strong demand in North Heavy-Duty Truck 1,116 972 15% American truck market. Medium-Duty Truck & Bus 931 868 7% • Off-highway revenues Light-Duty Automotive 455 466 (2)% dec
Slide 20: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 13% driven by $ MILLIONS Q3 2023 Q3 2022 CHANGE pricing actions and stronger demand for whole goods. Sales 2,535 2,239 13% • The increase in EBITDA is primarily EBITDA 306 225 36% due to pricing actions and higher volumes. EBITDA 12.1% 1
Slide 21: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased 7% due to pricing $ MILLIONS Q3 2023 Q3 2022 CHANGE actions and stronger global demand for power generation products. Sales 1,444 1,349 7% • EBITDA margin as a percent of sales increased due to strong price EBITDA 234 193 21% realizatio
Slide 22: Accelera Segment Selected Financial Data
Accelera Segment Selected Financial Data • Sales increased due to higher demand for battery electric systems, $ MILLIONS Q3 2023 Q3 2022 CHANGE increased electrolyzer installations, and the additions of the Siemens Commercial Vehicle business and Sales 103 50 106% electric powertrain portion of the
Slide 23: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q3 2023 Q3 2022 Components 26 17 Engine 62 27 Distribution 22 20 Power Systems 11 10 Accelera (3) (4) Total JV Income 118 70 23
Slide 24: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q3 2023 Q3 2022 Operating Cash Flow 1,529 382 Capital Expenditures 280 202 Working Capital Measure 7,306 6,342 Working Capital Measure 21.7% 21.6% (% of Net Sales) Total Debt to Capital % 39.0% 46.4% Net Debt to Capital % 23.0% 29.5% 24
Slide 25: Appendix
Appendix
Slide 26: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q3 2023 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q3 2023 LTM Results Sales: $33.3 billion EBITDA1: $5.1 billion EBITDA%1: 15.3% 1 Exclud
Slide 27: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q3 2023 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 27
Slide 28: Cummins - Joint Venture Sales Unconsolidated
Cummins - Joint Venture Sales Unconsolidated Q3 2023 LTM Revenue * Rest of world 28
Slide 29: Components Segment - Overview
Components Segment - Overview • Leading supplier of axles, brakes, Q3 2023 LTM Revenue by Business and aftertreatment products for commercial vehicle applications • Largest worldwide supplier of turbochargers from 3.8L to 25L for commercial applications • World's leading supplier of filtration, cool
Slide 30: Components Segment - Sales Mix
Components Segment - Sales Mix Q3 2023 LTM Revenue $13.3 billion 30
Slide 31: Components Segment - Historical Performance
Components Segment - Historical Performance 1,2,3 2023 Guidance Sales Up 35% to 40% EBITDA 14.2% to 14.7% 1 2022 EBITDA excludes $4 million of net cost related of the indefinite suspension of operations in Russia and $28 million of cost related to the separation of the Filtration business, and inclu
Slide 32: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q3 2023 LTM Revenue 32
Slide 33: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q3 2023 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 34: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q3 2023 LTM Revenue $11.5 billion 34
Slide 35: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1 2023 Guidance Sales Up 2% to 7% EBITDA 13.6% to 14.1% 1 2022 EBITDA excludes $33 million of cost related of the indefinite suspension of operations in Russia 35
Slide 36: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q3 2023 LTM Revenue 36
Slide 37: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q3 2023 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q3 2023 LTM Results Sales: $9.9 billion EBITDA: $1.2 billion EBITDA%: 12.1% 37
Slide 38: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q3 2023 LTM Revenue $9.9 billion 38
Slide 39: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1 2023 Guidance Sales Up 10% to 15% EBITDA 11.9% to 12.4% 1 2022 excludes $55 million of net cost related to the indefinite suspension of operations in Russia 39
Slide 40: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q3 2023 LTM Revenue * Rest of World 40
Slide 41: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q3 2023 LTM Revenue by Product systems, components and services from 2kW to 3.5 Megawatts (MW) • Leading supplier of alternators from 7.5kVA to 11,200kVA • Leading market share in multiple geographies Q3 2023 LTM Results Sales: $
Slide 42: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q3 2023 LTM Revenue $5.6 billion 42
Slide 43: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1 2023 Guidance Sales Up 8% to 13% EBITDA 14.8% to 15.3% 1 2022 EBITDA excludes $19 million of net cost related of the indefinite suspension of operations in Russia 43
Slide 44: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q3 2023 LTM Revenue 44
Slide 45: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 50 years • Market leadership • Strong OEM relationships • Expanding our markets 1 Consolidated & JV sales with eliminations 45
Slide 46: 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 46
Slide 47: Non-GAAP Reconciliation - EBITDA
Non-GAAP Reconciliation - EBITDA Three Months Ended In Millions 30-Sep-23 30-Sep-22 Net income attributable to Cummins Inc. $ 656 $ 400 Net income attributable to noncontrolling interests 34 9 Consolidated net income 690 409 Income tax expense 188 199 Income before taxes 878 608 Interest expense 97
Slide 48: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Last Twelve Months Ended In Millions 30-Sep-23 30-Sep-22 Net income attributable to Cummins Inc. $ 2,797 $ 1,914 Net income attributable to noncontrolling interests 80 25 Consolidated net income 2,877 1,939 Income tax expense 757 616 Income before taxes 3,634 2
Slide 49: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 30-Sep-23 30-Sep-22 Accounts and notes receivable, net $ 5,662 $ 4,799 Inventories 5,906 5,543 Accounts Payable - (principally trade) (4,262) (4,000) Working capital measure $ 7,306 $ 6,342 Annualized Working capital measure (%
Slide 50: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 30-Sep-23 30-Sep-22 Total Assets $ 32,097 $ 29,769 Less: Deferred debt costs 4 4 Less: Deferred tax assets 865 472 Less: Pension and other postretirement benefit adjustments excluded 930 1,048 from net assets Less: Liabilities deducted in arriving at
Slide 51: Non-GAAP Reconciliation - Invested Capital for ROIC Calculation
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 30-Sep-23 30-Sep-22 Total Equity $ 11,678 $ 9,358 Less: Defined benefit postretirement plans (431) (318) Equity used for return on invested capital calculation 12,109 9,676 Loans payable 231 217 Co
Slide 52: Non-GAAP Reconciliation - NOPAT Used for ROIC Calculation
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Last Twelve Months Ended In Millions 30-Sep-23 30-Sep-22 Net income attributable to Cummins Inc. $ 2,797 $ 1,914 Net income attributable to noncontrolling interests 80 25 Consolidated net incom
Slide 53: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 30-Sep-23 31-Dec-22 Total Debt (A) $ 7,464 $ 7,855 Total Equity (B) 11,678 9,967 Total Capital (C) = (A+B) 19,142 17,822 Total Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (D) 3,064 2,573 Net Debt (E) = (A-D) $ 4,400 $ 5,282 Total
Slide 54: Thank you for your interest
Thank you for your interest For additional information: Chris Clulow – Vice President, Investor Relations (812) 377-3121 | Investor.Relations@cummins.com | www.cummins.com