Slide 1: Second Quarter 2022 Earnings Teleconference
Second Quarter 2022 Earnings Teleconference August 2, 2022
Slide 2: Contents
CONTENTS Q2 2022 Summary 2022 Guidance Q2 2022 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 2022 Summary
Q2 2022 Summary
Slide 5: Q2 2022 Summary
Q2 2022 Summary • Second quarter revenues of $6.6 billion • Second quarter results include $47 million of benefit from adjusting the reserves related to the indefinite suspension of operations in Russia and $29 million of cost related to the separation of the Filtration business • EBITDA of $1.1 bil
Slide 6: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q2 2022 Q2 2021 Sales 6,586 6,111 Gross Margin (% of Sales)1 25.6% 24.2% SAR (% of Sales)2 13.5% 14.3% EBITDA3 1,037 974 EBITDA (% of Sales)3 15.7% 15.9% GAAP Net Income attributable to Cummins Inc.4 678 600 GAAP Net Income (% of Sales)4 10.3
Slide 7: Q2 2022 Net Sales and EBITDA by Segment
Q2 2022 Net Sales and EBITDA by Segment Engine Distribution Components Power New Power Intersegment Total $ MILLIONS Systems Eliminations Three months ended June 30, 2022 Net Sales 2,775 2,253 1,950 1,203 42 (1,637) 6,586 Sales growth vs 2021 11% 17% (2)% 5% 75% 12% 8% 2 3 4 5 6 EBITDA 423 252 355 1
Slide 8: Q2 2022 EBITDA Detail
Q2 2022 EBITDA Detail Engine Distribution Components Power New Power CMI Segment Segment Segment Systems Segment Eliminations $ MILLIONS Segment Reported EBITDA 1,055 422 297 352 128 (80) (64) Reported EBITDA included the net benefit/(cost) from adjusting the reserves 47 (1) 45 2 1 related to the in
Slide 9: Q2 2022 EPS Detail
Q2 2022 EPS Detail EPS Reported EPS $ 4.94 Reported EPS included the net benefit from adjusting the reserves related to the indefinite suspension of operations in $ 0.33 Russia Reported EPS included loss on $ (0.34) Company-Owned Life Insurance Reported EPS included costs related to $ (0.16) the sep
Slide 10: Q2 2022 Income Statement
Q2 2022 Income Statement Included in Reported Results Q2-22 Russia COLI Filtration $ MILLIONS Reported Net Benefit Gain/(Loss) Separation Net Sales 6,586 Gross Margin 1,726 40 Selling 246 2 Admin 376 27 Research 299 SAR 921 29 JV Income 95 Other Inc/(Exp) (11) 7 (48) JV/Other Income 84 7 (48) Deprec
Slide 11: 2022 Guidance
2022 Guidance
Slide 12: Guidance for 2022 Consolidated Results
Guidance for 2022 Consolidated Results ITEM FULL YEAR GUIDANCE Consolidated Revenue Up 8% Earnings from JVs 1 Down 25% compared to down 20% in prior guidance 2 EBITDA Margin approx. 15.5% Depreciation & Amortization $660 to $680 M 3 Effective Tax Rate 21.5% Capital Expenditures $850 M to $900 M Glob
Slide 13: Guidance for 2022 Segment Results
Guidance for 2022 Segment Results ITEM ENGINE DISTRIBUTION COMPONENTS POWER SYSTEMS NEW POWER Consolidated Up 10% Up 11% Up 3% Up 8% $200M Revenue Growth 2022 EBITDA Margins approx. 14.5% approx. 10.5% approx. 16.75% approx. 11.0% approx. ($290M) (% of Revenue) 2021 EBITDA Margins 14.2% 9.4% 15.4% 1
Slide 14: Key On-Highway Engine Markets - 2022
Key On-Highway Engine Markets - 2022 2022 Market Size KEY MARKET Forecast Vs. 2021 Heavy Duty Truck - North America Up 10 % to 15% 250K - 260K units Class 8, Group 2 - Production Flat with prior forecast Medium Duty Truck - North America Up 5% to 10% 120K - 130K units Class 6-7, and Class 8 Group 1
Slide 15: Cummins Inc. 2022 Guidance
Cummins Inc. 1,2,3 ~ ~ 2022 Guidance Sales Up 8% EBITDA approx. 15.5% 1 2019 EBITDA excludes $119 million of restructuring charges 2 Q2 2022 LTM EBITDA excludes $111 million of net cost related to the indefinite suspension of operations in Russia and $46 million of cost related to the separation of
Slide 16: Q2 2022 Supplemental Information
Q2 2022 Supplemental Information
Slide 17: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased due to higher $ MILLIONS Q2 2022 Q2 2021 CHANGE demand for trucks in North America. Sales 2,775 2,491 11% • EBITDA margin as a percent of sales decreased as the benefits of EBITDA1 423 402 5% stronger volumes and pricing actions were more than
Slide 18: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenues increased $ MILLIONS Q2 2022 Q2 2021 CHANGE due to higher demand in North America truck markets. Heavy-Duty Truck 1,001 839 19% Medium-Duty Truck & 875 688 27% • Off-highway revenues Bus decreased due to lower Light-Duty Automotive 456 484 (6)%
Slide 19: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 17% driven by $ MILLIONS Q2 2022 Q2 2021 CHANGE stronger demand for both whole goods and aftermarket parts and Sales 2,253 1,920 17% service. EBITDA1 252 201 25% • The increase in EBITDA is primarily due to higher volumes and pricing EBI
Slide 20: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales decreased 2% driven by weaker $ MILLIONS Q2 2022 Q2 2021 CHANGE demand in China. Sales 1,950 1,994 (2)% • The increase in EBITDA is primarily due to the benefits of pricing actions and lower warranty expense. EBITDA1 355 301 18% EBITDA1 18.2% 15.1%
Slide 21: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased due to stronger global $ MILLIONS Q2 2022 Q2 2021 CHANGE demand for generator technologies and oil & gas applications. Sales 1,203 1,143 5% • EBITDA margin as a percent of sales decreased as the benefits of stronger EBITDA1 127 139 (9)%
Slide 22: New Power Segment Selected Financial Data
New Power Segment Selected Financial Data • EBITDA losses were $80 million as $ MILLIONS Q2 2022 Q2 2021 CHANGE we continue to invest in the products, infrastructure, and capabilities to support strong future Sales 42 24 75% growth. EBITDA (80) (60) (33)% EBITDA (% of Sales) NM1 NM1 1 "NM" - not mea
Slide 23: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q2 2022 Q2 2021 Engine 59 104 Distribution 21 15 Components 9 12 Power Systems 10 9 New Power (4) (3) Total JV Income 95 137 23
Slide 24: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q2 2022 Q2 2021 Operating Cash Flow 599 616 Capital Expenditures 147 125 Working Capital Measure 5,516 5,036 Working Capital Measure 20.9% 20.6% (% of Net Sales) Total Debt to Capital % 31.4% 30.9% Net Debt to Capital % 10.1% 8.0% 24
Slide 25: Appendix
Appendix
Slide 26: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q2 2022 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q2 2022 LTM Results Sales: $24.8 billion EBITDA1: $3.5 billion EBITDA%1: 14.3% 1 Exclud
Slide 27: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q2 2022 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 Q2 2022 LTM Revenue * Rest of world 28
Slide 29: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q2 2022 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 30: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q2 2022 LTM Revenue $10.5 billion 30
Slide 31: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1,2,3 ~ ~ 2022 Guidance Sales Up 10% EBITDA approx. 14.5% 1 2019 EBITDA excludes $18 million of restructuring charges 2 Q2 2022 LTM EBITDA excludes $33 million of net cost related of the indefinite suspension of operations in Russia 3 2022 Guidance EBITDA excl
Slide 32: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q2 2022 LTM Revenue 32
Slide 33: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q2 2022 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q2 2022 LTM Results Sales: $8.4 billion EBITDA1: $832 million EBITDA%1: 9.9% 33 1 Exclud
Slide 34: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q2 2022 LTM Revenue $8.4 billion 34
Slide 35: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1,2,3 ~ ~ 2022 Guidance Sales Up 11% EBITDA approx. 10.5% 1 2019 EBITDA excludes $37 million of restructuring charges 2 Q2 2022 LTM EBITDA excludes $55 million of net cost related of the indefinite suspension of operations in Russia 3 2022 Guidance EBITD
Slide 36: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q2 2022 LTM Revenue * Rest of World 36
Slide 37: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q2 2022 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 38: Components Segment - Sales Mix
Components Segment - Sales Mix Q2 2022 LTM Revenue $7.5 billion 38
Slide 39: Components Segment - Historical Performance
Components Segment - Historical Performance 1,2,3 ~ ~ 2022 Guidance Sales Up 3% EBITDA approx. 16.75% 1 2019 EBITDA excludes $20 million of restructuring charges 2 Q2 2022 LTM EBITDA excludes $4 million of net cost related of the indefinite suspension of operations in Russia and $5 million of cost r
Slide 40: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q2 2022 LTM Revenue 40
Slide 41: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q2 2022 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 2022 LTM Results Sales: $
Slide 42: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q2 2022 LTM Revenue $4.6 billion 42
Slide 43: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1,2,3 ~ ~ 2022 Guidance Sales Up 8% EBITDA approx. 11.0% 1 2019 EBITDA excludes $12 million of restructuring charges 2 Q2 2022 LTM EBITDA excludes $19 million of net cost related of the indefinite suspension of operations in Russia 3 2022 Guidance EBITD
Slide 44: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q2 2022 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 45 1 Consolidated & JV sales with eliminations
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-Jun-22 04-Jul-21 Net income attributable to Cummins Inc. $ 702 $ 600 Net income attributable to noncontrolling interests 5 12 Consolidated net income 707 612 Income tax expense 148 167 Income before taxes 855 779 Interest expense 34
Slide 48: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Twelve Months Ended In Millions 30-Jun-22 04-Jul-21 Net income attributable to Cummins Inc. $ 2,048 $ 2,205 Net income attributable to noncontrolling interests 23 32 Consolidated net income 2,071 2,237 Income tax expense 551 646 Income before taxes 2,622 2,883
Slide 49: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 30-Jun-22 04-Jul-21 Accounts and notes receivable, net $ 4,156 $ 4,132 Inventories 4,765 4,076 Accounts Payable - (principally trade) (3,405) (3,172) Working capital measure $ 5,516 $ 5,036 Annualized Working capital measure (%
Slide 50: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 30-Jun-22 04-Jul-21 28-Jun-20 Total Assets $ 24,477 $ 22,608 $ 20,314 Less: Deferred debt costs 4 3 3 Less: Deferred tax assets 526 436 462 Less: Pension and other postretirement benefit 966 151 81 adjustments excluded from net assets Less: Liabilitie
Slide 51: Non-GAAP Reconciliation - Invested Capital for ROIC
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 30-Jun-22 04-Jul-21 28-Jun-20 Total Equity $ 9,655 $ 8,793 $ 8,130 Less: Defined benefit postretirement plans (324) (690) (716) Equity used for return on invested capital calculation 9,979 9,483 8,
Slide 52: 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 30-Jun-22 04-Jul-21 Net income attributable to Cummins Inc. $ 2,048 $ 2,205 Net income attributable to noncontrolling interests 23 32 Consolidated net income 2,0
Slide 53: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 30-Jun-22 04-Jul-21 Total Debt (A) $ 4,425 $ 3,931 Total Equity (B) 9,655 8,793 Total Capital (C) = (A+B) 14,080 12,724 Total Cash, Cash Equivalents & Marketable Securities (D) 2,998 2,919 Net Debt (E) = (A-D) $ 1,427 $ 1,012 Total Debt to Capital % (A/
Slide 54: Thank you for your interest
Thank you for your interest For additional information: Chris Clulow – Vice President Investor Relations (812) 377-3121 | Christopher.Clulow@cummins.com www.cummins.com