Slide 1: Second Quarter 2023 Earnings Teleconference
Second Quarter 2023 Earnings Teleconference August 3, 2023
Slide 2: Contents
CONTENTS Q2 2023 Summary 2023 Guidance Q2 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: Q2 2023 Summary
Q2 2023 Summary • Second quarter revenues of $8.6 billion • Second quarter results include $23 million of cost related to the separation of the Filtration business • EBITDA of $1,304 million or 15.1 percent of sales ◦ EBITDA of $1,327 million or 15.4 percent of sales excluding $23 million of cost re
Slide 5: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q2 2023 Q2 2022 Sales 8,638 6,586 Gross Margin (% of Sales)1 24.9% 25.6% SAR (% of Sales)2 14.3% 13.5% EBITDA3 1,327 1,037 EBITDA (% of Sales)3 15.4% 15.7% Net Income attributable to Cummins Inc.4 738 681 Net Income (% of Sales)4 8.5% 10.3% D
Slide 6: Q2 2023 Summary
Q2 2023 Summary
Slide 7: Q2 2023 Net Sales and EBITDA by Segment
Q2 2023 Net Sales and EBITDA by Segment Components Engine Distribution Power Accelera Intersegment Total $ MILLIONS Systems Eliminations Three months ended June 30, 2023 Net Sales 3,425 2,988 2,595 1,457 85 (1,912) 8,638 Sales growth vs 2022 76% 8% 15% 21% 102% 17% 31% 1 EBITDA 504 425 299 201 (114)
Slide 8: Q2 2023 EBITDA Detail
Q2 2023 EBITDA Detail Components Engine Distribution Power Accelera CMI Segment Segment Segment Systems Segment Eliminations $ MILLIONS Segment Reported EBITDA 1,304 486 425 299 201 (114) 7 Reported EBITDA included costs related to the separation of the (23) (18) (5) Filtration business 8
Slide 9: Q2 2023 EPS Detail
Q2 2023 EPS Detail EPS Reported EPS $ 5.05 Reported EPS included costs related to $ (0.13) 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 15% to 20% Earnings from JVs Up 5% to 15% EBITDA Margin 15.0% to 15.7% 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 $114 M In
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 10.3% 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 32% to 37% Up 2% to 7% Up 10% to 15% Up 8% to 13% $350M to $400M Revenue Growth 2023 EBITDA Margins 14.1% to 14.8% 13.8% to 14.5% 11.7% to 12.4% 14.3% to 15.0% ($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 270K - 290K units Down 4% to Up 4% Class 8, Group 2 - Production Flat with prior guidance Medium Duty Truck - North America 135K - 150K units Up 5 - 15% Class 6-7, and Class 8 Group 1
Slide 15: Cummins Inc. 2023 Guidance
Cummins Inc. 1,2,3 2023 Guidance Sales Up 15% to 20% EBITDA 15.0% to 15.7% 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 2 Q2 2023 LTM EBITDA excludes $76 milli
Slide 16: Q2 2023 Supplemental Information
Q2 2023 Supplemental Information
Slide 17: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 76% driven by the $ MILLIONS Q2 2023 Q2 2022 CHANGE acquisition of Meritor and strong demand in key markets. Sales 3,425 1,950 76% • The increase in EBITDA is primarily due to the acquisition of Meritor and EBITDA1 504 355 42% benefits of
Slide 18: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 8% due to higher $ MILLIONS Q2 2023 Q2 2022 CHANGE demand for trucks in North America and pricing actions. Sales 2,988 2,775 8% • EBITDA margin as a percent of sales dropped as the benefits of EBITDA1 425 422 1% stronger volumes and pricing ac
Slide 19: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenue increase $ MILLIONS Q2 2023 Q2 2022 CHANGE driven by pricing actions, strong demand in North American truck Heavy-Duty Truck 1,117 1,001 12% market, and strong aftermarket Medium-Duty Truck & 942 875 8% demand. Bus Light-Duty Automotive 445 456 (
Slide 20: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 15% driven by $ MILLIONS Q2 2023 Q2 2022 CHANGE pricing actions and stronger demand for whole goods. Sales 2,595 2,253 15% • The increase in EBITDA is primarily EBITDA1 299 252 19% due to pricing actions and higher volumes. EBITDA 11.5%
Slide 21: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased 21% due to pricing $ MILLIONS Q2 2023 Q2 2022 CHANGE actions and stronger global demand for power generation, mining, and oil & gas applications. Sales 1,457 1,203 21% • EBITDA margin as a percent of sales EBITDA1 201 127 58% improved d
Slide 22: Accelera Segment Selected Financial Data
Accelera Segment Selected Financial Data • EBITDA losses were $114 million as $ MILLIONS Q2 2023 Q2 2022 CHANGE we continue to invest in the products, infrastructure, and capabilities to support strong future Sales 85 42 102% growth. EBITDA (114) (79) (44)% • Order backlog for electrolyzers continue
Slide 23: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q2 2023 Q2 2022 Components 24 9 Engine 71 58 Distribution 24 21 Power Systems 18 10 Accelera (4) (3) Total JV Income 133 95 23
Slide 24: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q2 2023 Q2 2022 Operating Cash Flow 483 599 Capital Expenditures 221 147 Working Capital Measure 7,581 5,516 Working Capital Measure 21.9% 20.9% (% of Net Sales) Total Debt to Capital % 40.4% 31.9% Net Debt to Capital % 28.3% 10.3% 24
Slide 25: Appendix
Appendix
Slide 26: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q2 2023 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q2 2023 LTM Results Sales: $32.2 billion EBITDA1: $4.7 billion EBITDA%1: 14.7% 1 Exclud
Slide 27: Cummins Inc. - Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q2 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 Q2 2023 LTM Revenue 1 * Rest of world 28
Slide 29: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q2 2023 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 30: Components Segment - Sales Mix
Components Segment - Sales Mix Q2 2023 LTM Revenue $12.8 billion 30
Slide 31: Components Segment - Historical Performance
Components Segment - Historical Performance 1,2,3 2023 Guidance Sales Up 32% to 37% EBITDA 14.1% to 14.8% 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 2 Q2 2023
Slide 32: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q2 2023 LTM Revenue 32
Slide 33: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q2 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 Q2 2023 LTM Revenue $11.4 billion 34
Slide 35: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1 2023 Guidance Sales Up 2% to 7% EBITDA 13.8% to 14.5% 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 Q2 2023 LTM Revenue 36
Slide 37: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q2 2023 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q2 2023 LTM Results Sales: $9.6 billion EBITDA: $1.1 billion EBITDA%: 11.7% 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 Q2 2023 LTM Revenue $9.6 billion 38
Slide 39: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1 2023 Guidance Sales Up 10% to 15% EBITDA 11.7% 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 Q2 2023 LTM Revenue * Rest of World 40
Slide 41: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q2 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 Q2 2023 LTM Results Sales: $
Slide 42: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q2 2023 LTM Revenue $5.5 billion 42
Slide 43: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1 2023 Guidance Sales Up 8% to 13% EBITDA 14.3% to 15.0% 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 Q2 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 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-23 30-Jun-22 Net income attributable to Cummins Inc. $ 720 $ 702 Net income attributable to noncontrolling interests 17 5 Consolidated net income 737 707 Income tax expense 212 148 Income before taxes 949 855 Interest expense 99
Slide 48: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Last Twelve Months Ended In Millions 30-Jun-23 30-Jun-22 Net income attributable to Cummins Inc. $ 2,541 $ 2,048 Net income attributable to noncontrolling interests 55 23 Consolidated net income 2,596 2,071 Income tax expense 768 551 Income before taxes 3,364 2
Slide 49: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 30-Jun-23 30-Jun-22 Accounts and notes receivable, net $ 5,863 $ 4,156 Inventories 6,026 4,765 Accounts Payable - (principally trade) (4,308) (3,405) Working capital measure $ 7,581 $ 5,516 Annualized Working capital measure (%
Slide 50: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 30-Jun-23 30-Jun-22 Total Assets $ 31,735 $ 24,477 Less: Deferred debt costs 4 4 Less: Deferred tax assets 767 525 Less: Pension and other postretirement benefit adjustments excluded 951 966 from net assets Less: Liabilities deducted in arriving at ne
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-23 30-Jun-22 Total Equity $ 11,356 $ 9,429 Less: Defined benefit postretirement plans (434) (324) Equity used for return on invested capital calculation 11,790 9,753 Loans payable 419 165 Co
Slide 52: Non-GAAP Reconciliation - NOPAT for ROIC
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Last Twelve Months Ended In Millions 30-Jun-23 30-Jun-22 Net income attributable to Cummins Inc. $ 2,541 $ 2,048 Net income attributable to noncontrolling interests 55 23 Consolidated net incom
Slide 53: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 30-Jun-23 30-Jun-22 Total Debt (A) $ 7,700 $ 4,425 Total Equity (B) 11,356 9,429 Total Capital (C) = (A+B) 19,056 13,854 Total Cash, Cash Equivalents & Marketable Securities (D) 2,314 2,998 Net Debt (E) = (A-D) $ 5,386 $ 1,427 Total Debt to Capital % (A
Slide 54: Thank you for your interest
Thank you for your interest For additional information: Chris Clulow – Vice President of Investor Relations (812) 377-3121 | Investor.Relations@cummins.com, Christopher.Clulow@cummins.com www.investor.cummins.com