Slide 1: Second Quarter 2021 Earnings Teleconference
Second Quarter 2021 Earnings Teleconference August 3, 2021
Slide 2: Contents
CONTENTS Q2 2021 Summary 2021 Guidance Q2 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: Q2 2021 Summary
Q2 2021 Summary
Slide 5: Q2 2021 Summary
Q2 2021 Summary • Second quarter revenues of $6.1 billion • GAAP1 Net Income of $600 million and Diluted EPS of $4.10 • EBITDA of $974 million or 15.9 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 G
Slide 6: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q2 2021 Q2 2020 Sales 6,111 3,852 Gross Margin (% of Sales) 24.2% 23.1% SAR (% of Sales) 14.3% 17.1% EBITDA 974 549 EBITDA (% of Sales) 15.9% 14.3% GAAP Net Income attributable to Cummins Inc. 600 276 GAAP Net Income (% of Sales) 9.8% 7.2% Di
Slide 7: Q2 2021 Income Statement by Segment
Q2 2021 Income Statement by Segment Engine Distribution Components Power New Power Intersegment Total Systems Eliminations $M Three months ended July 4, 2021 Net Sales 2,491 1,920 1,994 1,143 24 (1,461) 6,111 Sales growth vs 2020 75% 20% 73% 47% 140% 31% 59% EBITDA 402 201 301 139 (60) (9) 974 Segme
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 Up 10% EBITDA Margin 15.5% to 16.0% Depreciation & Amortization $650 to $670 M Effective Tax Rate1 21.5% Capital Expenditures $775 M Global Pension Funding $75 M Interest Expense $115
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 135K units Up 30% Class 6-7, and Class 8 Group 1 - Production Heavy & Medium Truck - China 1,650K units Down 7% 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: CMI Analyst Day
CMI Analyst Day Wednesday, February 23, 2022 Location TBD For additional information contact: Jack Kienzler, Executive Director – Investor Relations (812) 377-3121 Jack.Kienzler@cummins.com www.cummins.com 13
Slide 14: Q2 2021 Supplemental Information
Q2 2021 Supplemental Information
Slide 15: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 75% driven by $ MILLIONS Q2 2021 Q2 2020 CHANGE higher demand for trucks in North America and construction equipment in North America and Sales 2,491 1,423 75% Europe. EBITDA 402 150 168% • The increase in EBITDA was driven by higher volumes a
Slide 16: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenues increased $ MILLIONS Q2 2021 Q2 2020 CHANGE due to higher demand in North America truck markets. Heavy-Duty Truck 839 415 102% Medium-Duty Truck & 688 391 76% • Off-highway revenues increased Bus due to higher demand in Light-Duty Automotive 484
Slide 17: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased due to stronger $ MILLIONS Q2 2021 Q2 2020 CHANGE demand for both whole goods and aftermarket parts and service. Sales 1,920 1,605 20% • EBITDA margin as a percent of sales EBITDA 201 160 26% increased primarily due to stronger performan
Slide 18: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 73% driven by $ MILLIONS Q2 2021 Q2 2020 CHANGE stronger demand for trucks in North America. Sales 1,994 1,150 73% • EBITDA margin as a percent of sales increased due to the benefit from EBITDA 301 141 113% stronger sales, partially offset
Slide 19: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased due to stronger global $ MILLIONS Q2 2021 Q2 2020 CHANGE demand for power generation and mining equipment . Sales 1,143 777 47% • The increase in EBITDA percent was due to the benefits of higher volumes EBITDA 139 91 53% and lower produ
Slide 20: New Power Segment Selected Financial Data
New Power Segment Selected Financial Data • EBITDA losses were $60 million for $ MILLIONS Q2 2021 Q2 2020 CHANGE the quarter driven by the development of new products and the expected slow ramp of new Sales 24 10 140% technology adoption. EBITDA (60) (38) (58)% EBITDA (% of Sales) NM1 NM1 1 "NM" - n
Slide 21: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q2 2021 Q2 2020 Engine 104 84 Distribution 15 11 Components 12 12 Power Systems 9 9 New Power (3) (1) Total JV Income 137 115 21
Slide 22: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q2 2021 Q2 2020 Operating Cash Flow 616 (22) Capital Expenditures 125 77 Working Capital Measure 5,036 4,815 Working Capital Measure 20.6% 31.3% (% of Net Sales) Total Debt to Capital % 30.9% 32.1% Net Debt to Capital % 8.0% 14.5% 22
Slide 23: Appendix
Appendix
Slide 24: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q2 2021 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q2 2021 LTM Results Sales: $23.2 billion EBITDA: $3.7 billion EBITDA%: 15.8% 24
Slide 25: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q2 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 25
Slide 26: Cummins - Joint Venture Sales Unconsolidated
Cummins - Joint Venture Sales Unconsolidated Q2 2021 LTM Revenue * Rest of world 26
Slide 27: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q2 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 28: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q2 2021 LTM Revenue $9.4 billion 28
Slide 29: 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. 29
Slide 30: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q2 2021 LTM Revenue 30
Slide 31: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q2 2021 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q2 2021 LTM Results Sales: $7.5 billion EBITDA: $708 million EBITDA%: 9.5% 31
Slide 32: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q2 2021 LTM Revenue $7.5 billion 32
Slide 33: 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. 33
Slide 34: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q2 2021 LTM Revenue * Rest of World 34
Slide 35: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q2 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 36: Components Segment - Sales Mix
Components Segment - Sales Mix Q2 2021 LTM Revenue $7.5 billion 36
Slide 37: 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. 37
Slide 38: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q2 2021 LTM Revenue 38
Slide 39: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q2 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 Q2 2021 LTM Results Sales: $4.
Slide 40: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q2 2021 LTM Revenue $4.1 billion 40
Slide 41: 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. 41
Slide 42: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q2 2021 LTM Revenue 42
Slide 43: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 50 years • Market leadership • Strong OEM relationships • Expanding our markets 43 1 Consolidated & JV sales with eliminations
Slide 44: 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 44
Slide 45: Non-GAAP Reconciliation - EBITDA
Non-GAAP Reconciliation - EBITDA Three Months Ended In Millions 04-Jul-21 28-Jun-20 Net income attributable to Cummins Inc. $ 600 $ 276 Net income attributable to noncontrolling interests 12 (7) Consolidated net income 612 269 Income tax expense 167 93 Income before taxes 779 362 Interest expense 29
Slide 46: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Twelve Months Ended In Millions 04-Jul-21 28-Jun-20 Net income attributable to Cummins Inc. $ 2,205 $ 1,709 Net income attributable to noncontrolling interests 32 2 Consolidated net income 2,237 1,711 Income tax expense 646 424 Income before taxes 2,883 2,135 I
Slide 47: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 04-Jul-21 28-Jun-20 Accounts and notes receivable, net $ 4,132 $ 3,441 Inventories 4,076 3,655 Accounts Payable - (principally trade) (3,172) (2,281) Working capital measure $ 5,036 $ 4,815 Annualized Working capital measure (%
Slide 48: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 04-Jul-21 28-Jun-20 30-Jun-19 Total Assets $ 22,608 $ 20,314 $ 20,254 Less: Deferred debt costs 3 3 3 Less: Deferred tax assets 436 462 408 Less: Pension and other postretirement benefit 151 81 87 adjustments excluded from net assets Less: Liabilities
Slide 49: Non-GAAP Reconciliation - Invested Capital for ROIC Calculation
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 04-Jul-21 28-Jun-20 30-Jun-19 Total Equity $ 8,793 $ 8,130 $ 9,196 Less: Defined benefit postretirement plans (690) (716) (676) Equity used for return on invested capital calculation 9,483 8,846 9,
Slide 50: Non-GAAP Reconciliation - NOPAT for ROIC Calculation
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Twelve Months Ended In Millions 04-Jul-21 28-Jun-20 Net income attributable to Cummins Inc. $ 2,205 $ 1,709 Net income attributable to noncontrolling interests 32 2 Consolidated net income 2,23
Slide 51: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 04-Jul-21 28-Jun-20 Total Debt (A) $ 3,931 $ 3,841 Total Equity (B) 8,793 8,130 Total Capital (C) = (A+B) 12,724 11,971 Total Cash, Cash Equivalents & Marketable Securities (D) 2,919 2,104 Net Debt (E) = (A-D) $ 1,012 $ 1,737 Total Debt to Capital % (A/
Slide 52: 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