Cummins Inc. · NYSE:CMI
Cummins — Q2 2024 Earnings Presentation
53 slides from Cummins's earnings presentation, Aug 1, 2024
Slide 1: Second Quarter 2024 Earnings Teleconference
Second Quarter 2024 Earnings Teleconference August 1, 2024
Slide 2: Contents
CONTENTS Q2 2024 Summary 2024 Guidance Q2 2024 Supplemental Information Appendix 2
Slide 3: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements Information provided in this presentation 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 resul
Slide 4: Q2 2024 Summary
Q2 2024 Summary
Slide 5: Q2 2024 Summary
Q2 2024 Summary • Second quarter revenues of $8.8 billion • GAAP1 Net Income of $726 million and Diluted EPS of $5.26 • EBITDA of $1,345 million or 15.3 percent of sales 1 Generally Accepted Accounting Principles 5
Slide 6: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q2 2024 Q2 2023 Sales 8,796 8,638 Gross Margin (% of Sales)1 24.9% 24.9% SAR (% of Sales)2 13.7% 14.3% EBITDA3 1,345 1,327 EBITDA (% of Sales)3 15.3% 15.4% Net Income attributable to Cummins Inc.4 726 738 Net Income (% of Sales)4 8.3% 8.5% Di
Slide 7: Q2 2024 Net Sales and EBITDA by Segment
Q2 2024 Net Sales and EBITDA by Segment Components Engine Distribution Power Accelera Intersegment Total $ MILLIONS Systems Eliminations Three months ended June 30, 2024 Net Sales 2,982 3,151 2,829 1,589 111 (1,866) 8,796 Sales growth vs 2023 (13)% 5% 9% 9% 31% (2)% 2% EBITDA 406 445 314 301 (117) (
Slide 8: 2024 Guidance
2024 Guidance
Slide 9: Guidance for 2024 Consolidated Results
Guidance for 2024 Consolidated Results ITEM FULL YEAR GUIDANCE2 Consolidated Revenue Down 3% to Flat Earnings from JVs Down 5% to 15% 3 EBITDA Margin 15.0% to 15.5% Depreciation & Amortization $1,030 to $1,080 M 1 Effective Tax Rate 24.0% Capital Expenditures $1.2 to $1.3 B Global Pension Funding $6
Slide 10: Guidance for 2024 Segment Results
Guidance for 2024 Segment Results ITEM COMPONENTS2 ENGINE DISTRIBUTION POWER SYSTEMS ACCELERA Consolidated 3 Down 9% to 14% Down 3% to Up 2% Up 5% to 10% Up 3% to 8% $400M to $450M Revenue Growth 2024 EBITDA Margins 13.7% to 14.2% 13.7% to 14.2% 11.3% to 11.8% 17.5% to 18.0% ($430M) to ($400M) (% of
Slide 11: Key On-Highway Engine Markets - 2024
Key On-Highway Engine Markets - 2024 2024 Market Size KEY MARKET Forecast Vs. 2023 Heavy Duty Truck - North America 255K - 275K units Down 7% to 12% Class 8, Group 2 - Production No change to prior guidance Medium Duty Truck - North America 150K - 160K units Flat to Up 5% Class 6-7, and Class 8 Grou
Slide 12: Cummins Inc. Historical Performance and 2024 Guidance
Cummins Inc. 1,2,3,4 $33,043 - $4,956 - 2024 Guidance Sales down 3% to Flat EBITDA 15.0% to 15.5%4 1 2022 EBITDA excludes $111 million of net cost related to the indefinite suspension of operations in Russia, $81 million of cost related to the separation of Atmus, and includes $115 million of cost r
Slide 13: Q2 2024 Supplemental Information
Q2 2024 Supplemental Information
Slide 14: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales decreased 13% primarily due to $ MILLIONS Q2 2024 Q2 2023 CHANGE the separation of Atmus and lower demand in both China and Europe. Sales 2,982 3,425 (13)% • The decrease in EBITDA margin is primarily due to the separation of EBITDA1 406 504 (19)% A
Slide 15: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 5% driven by $ MILLIONS Q2 2024 Q2 2023 CHANGE strong demand in the North American medium-duty truck Sales 3,151 2,988 5% market. • EBITDA margin decreased EBITDA 445 425 5% driven by lower joint venture income and higher research EBITDA 14.1%
Slide 16: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenues increased $ MILLIONS Q2 2024 Q2 2023 CHANGE 9% driven by continued strong demand in the North American Heavy-Duty Truck 1,184 1,117 6% medium-duty truck market and Medium-Duty Truck & 1,074 942 14% pricing actions. Bus Light-Duty Automotive 461
Slide 17: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 9% driven by $ MILLIONS Q2 2024 Q2 2023 CHANGE increased demand for power generation products and pricing Sales 2,829 2,595 9% actions. • EBITDA margin decreased primarily EBITDA 314 299 5% due to higher compensation expenses and higher
Slide 18: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased 9% due to increased $ MILLIONS Q2 2024 Q2 2023 CHANGE global demand in power generation and mining, partly offset by weaker demand in oil & gas. Sales 1,589 1,457 9% • EBITDA margin increased primarily as EBITDA 301 201 50% a result of
Slide 19: Accelera Segment Selected Financial Data
Accelera Segment Selected Financial Data • Sales increased due to increased electrolyzer installations. $ MILLIONS Q2 2024 Q2 2023 CHANGE • EBITDA losses are driven by costs Sales 111 85 31% associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to
Slide 20: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q2 2024 Q2 2023 Components 13 24 Engine 48 71 Distribution 24 24 Power Systems 26 18 Accelera (8) (4) Total JV Income 103 133 20
Slide 21: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q2 2024 Q2 2023 Operating Cash Flow (851) 483 Capital Expenditures 240 221 Working Capital Measure 7,058 7,581 Working Capital Measure 20.1% 21.9% (% of Net Sales) Total Debt to Capital % 41.5% 40.4% Net Debt to Capital % 29.4% 28.3% 21
Slide 22: Appendix
Appendix
Slide 23: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q2 2024 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q2 2024 LTM Results Sales: $34.2 billion EBITDA1: $5.1 billion EBITDA%1: 15.0% 1 Exclud
Slide 24: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q2 2024 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 Q2 2024 LTM Revenue * Rest of world 25
Slide 26: Components Segment - Overview
Components Segment - Overview • Leading supplier of axles, brakes, Q2 2024 LTM Revenue by Business and aftertreatment products for commercial vehicle applications • Largest worldwide supplier of turbochargers from 3.8L to 25L for commercial applications Q2 2024 LTM Results Sales: $12.7 billion EBITD
Slide 27: Components Segment - Sales Mix
Components Segment - Sales Mix Q2 2024 LTM Revenue $12.7 billion 27
Slide 28: Components Segment - Historical Performance
Components Segment - Historical Performance 4 1,2,3,4 2024 Guidance5 Sales Down 9% to 14% EBITDA 13.7% to 14.2% 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 Atmus, and includes $70 mill
Slide 29: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q2 2024 LTM Revenue 29
Slide 30: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q2 2024 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 31: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q2 2024 LTM Revenue $11.8 billion 31
Slide 32: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1, 2, 3 2024 Guidance Sales Down 3% to Up 2% EBITDA 13.7% to 14.2% 1 2022 EBITDA excludes $33 million of cost related of the indefinite suspension of operations in Russia 2 2023 EBITDA excludes $12 million of cost related to employee voluntary retirement and s
Slide 33: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q2 2024 LTM Revenue 33
Slide 34: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q2 2024 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q2 2024 LTM Results Sales: $10.6 billion EBITDA1: $1.2 billion EBITDA%1: 11.1% 34
Slide 35: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q2 2024 LTM Revenue $10.6 billion 35
Slide 36: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1 2024 Guidance Sales Up 5% to 10% EBITDA 11.3% to 11.8% 1 2022 excludes $55 million of net cost related to the indefinite suspension of operations in Russia 36
Slide 37: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q2 2024 LTM Revenue 1 1 2024 includes higher JV unconsolidated sales as a result of JV ownership restructuring; however, no material change to overall JV income * Rest of World 37
Slide 38: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q2 2024 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 Q2 2024 LTM Results Sales: $
Slide 39: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q2 2024 LTM Revenue $5.9 billion 39
Slide 40: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1 2024 Guidance Sales Up 3% to 8% EBITDA 17.5% to 18.0% 1 2022 excludes $19 million of net cost related to the indefinite suspension of operations in Russia 40
Slide 41: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q2 2024 LTM Revenue 41
Slide 42: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 60 years • Market leadership • Strong OEM relationships • Expanding our markets 1 Consolidated & JV sales with eliminations 42
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 30-Jun-24 30-Jun-23 Net income attributable to Cummins Inc. $ 726 $ 720 Net income attributable to noncontrolling interests 26 17 Consolidated net income 752 737 Income tax expense 225 212 Income before taxes 977 949 Interest expense 10
Slide 45: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Last Twelve Months Ended In Millions 30-Jun-24 30-Jun-23 Net income attributable to Cummins Inc. $ 1,944 $ 2,541 Net income attributable to noncontrolling interests 133 55 Consolidated net income 2,077 2,596 Income tax expense 769 768 Income before taxes 2,846
Slide 46: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 30-Jun-24 30-Jun-23 Accounts and notes receivable, net $ 5,606 $ 5,863 Inventories 5,857 6,026 Accounts Payable - (principally trade) (4,405) (4,308) Working capital measure $ 7,058 $ 7,581 Annualized Working capital measure (%
Slide 47: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 30-Jun-24 30-Jun-23 Total Assets $ 31,320 $ 31,735 Less: Deferred debt costs 4 4 Less: Deferred tax assets 1,009 767 Less: Pension and other postretirement benefit adjustments excluded 302 951 from net assets Less: Liabilities deducted in arriving at
Slide 48: Non-GAAP Reconciliation - Invested Capital for ROIC
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 30-Jun-24 30-Jun-23 Total Equity $ 10,576 $ 11,356 Less: Defined benefit postretirement plans (849) (434) Equity used for return on invested capital calculation 11,425 11,790 Loans payable 329 419
Slide 49: Non-GAAP Reconciliation - Net Operating Profit After Taxes
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Last Twelve Months Ended In Millions 30-Jun-24 30-Jun-23 Net income attributable to Cummins Inc. $ 1,944 $ 2,541 Net income attributable to noncontrolling interests 133 55 Consolidated net inco
Slide 50: Non-GAAP Reconciliation - ROANA
Non-GAAP Reconciliation - ROANA Last 12 Months Ended In Millions 30-Jun-24 30-Jun-23 Unadjusted ROANA EBITDA $ 4,269 $ 4,654 Beginning - Total Net Assets 18,181 13,179 Ending - Total net Assets 17,381 18,181 Unadjusted ROANA 24 % 30 % Adjusted ROANA EBITDA excluding One-Time Items1 5,137 4,730 Begin
Slide 51: Non-GAAP Reconciliation - ROIC
Non-GAAP Reconciliation - ROIC Last 12 Months Ended In Millions 30-Jun-24 30-Jun-23 Unadjusted ROIC Net Operating Profit after Taxes $ 2,360 $ 2,855 Beginning - Unadjusted Invested capital used for ROIC calculation 19,490 14,178 Ending - Unadjusted Invested capital used for ROIC calculation 18,928 1
Slide 52: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 30-Jun-24 30-Jun-23 Total Debt (A) $ 7,503 $ 7,700 Total Equity (B) 10,576 11,356 Total Capital (C) = (A+B) 18,079 19,056 Total Cash, Cash Equivalents & Marketable Securities (D) 2,183 2,314 Net Debt (E) = (A-D) $ 5,320 $ 5,386 Total Debt to Capital % (
Slide 53: 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.investor.cummins.com