Slide 1: First Quarter 2023 Earnings Teleconference
First Quarter 2023 Earnings Teleconference May 2, 2023
Slide 2: Contents
CONTENTS Q1 2023 Summary 2023 Guidance Q1 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: Q1 2023 Summary
Q1 2023 Summary • First quarter revenues of $8.5 billion • First quarter results include $18 million of cost related to the separation of the Filtration business • EBITDA of $1,361 million or 16.1 percent of sales ◦ EBITDA of $1,379 million or 16.3 percent of sales excluding $18 million of cost rela
Slide 5: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q1 2023 Q1 2022 Sales 8,453 6,385 Gross Margin (% of Sales)1 24.0% 24.9% SAR (% of Sales)2 12.9% 14.0% EBITDA3 1,379 930 EBITDA (% of Sales)3 16.3% 14.6% Net Income attributable to Cummins Inc.4 804 578 Net Income (% of Sales)4 9.5% 9.1% Dilu
Slide 6: Q1 2023 Summary
Q1 2023 Summary
Slide 7: Q1 2023 Net Sales and EBITDA by Segment
Q1 2023 Net Sales and EBITDA by Segment Engine Distribution Components Power Accelera Intersegment Total $ MILLIONS Systems Eliminations Three months ended March 31, 2023 Net Sales 2,986 2,406 3,557 1,343 85 (1,924) 8,453 Sales growth vs 2022 8% 14% 79% 16% 174% 16% 32% 1 EBITDA 457 335 519 219 (94)
Slide 8: Q1 2023 EBITDA Detail
Q1 2023 EBITDA Detail Engine Distribution Components Power Accelera CMI Segment Segment Segment Systems Segment Eliminations $ MILLIONS Segment Reported EBITDA 1,361 457 335 507 219 (94) (63) Reported EBITDA included costs related to the separation of the (18) (12) (6) Filtration business 8
Slide 9: Q1 2023 EPS Detail
Q1 2023 EPS Detail EPS Reported EPS $ 5.55 Reported EPS included costs related to $ (0.10) the separation of the Filtration business 9
Slide 10: Q1 2023 Income Statement Details
Q1 2023 Income Statement Details 10
Slide 11: 2023 Guidance
2023 Guidance
Slide 12: 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 $108 M In
Slide 13: 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% 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 withi
Slide 14: Guidance for 2023 Segment Results
Guidance for 2023 Segment Results ITEM ENGINE DISTRIBUTION COMPONENTS POWER SYSTEMS ACCELERA Consolidated Up 2% to 7% Up 5% to 10% Up 32% to 37% Up 5% to 10% $350M to $400M Revenue Growth 2023 EBITDA Margins 13.8% to 14.5% 11.3% to 12.0% 14.1% to 14.8% 13.7% to 14.4% ($390M) to ($370M) (% of Revenue
Slide 15: 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 Down 5% to Up 2% in prior guidance Medium Duty Truck - North America 125K - 140K units Flat to up 10% Class 6-7, and Cl
Slide 16: 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 Q1 2023 LTM EBITDA excludes $47 milli
Slide 17: Q1 2023 Supplemental Information
Q1 2023 Supplemental Information
Slide 18: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 8% due to higher $ MILLIONS Q1 2023 Q1 2022 CHANGE demand for trucks in North America and improvements in China construction markets. Sales 2,986 2,753 8% • EBITDA margin as a percent of EBITDA1 457 422 8% sales remained flat as the benefits o
Slide 19: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenue increase $ MILLIONS Q1 2023 Q1 2022 CHANGE driven by pricing actions, strong demand in North American truck Heavy-Duty Truck 1,114 908 23% market, and strong aftermarket Medium-Duty Truck & 903 848 6% demand. Bus Light-Duty Automotive 439 498 (12
Slide 20: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased 14% driven by $ MILLIONS Q1 2023 Q1 2022 CHANGE pricing actions and stronger demand for whole goods and aftermarket. Sales 2,406 2,117 14% • The increase in EBITDA is primarily EBITDA1 335 210 60% due to pricing actions and higher volume
Slide 21: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 79% driven by the $ MILLIONS Q1 2023 Q1 2022 CHANGE acquisition of Meritor and strong demand in key markets. Sales 3,557 1,988 79% • The increase in EBITDA is primarily due to the acquisition of Meritor and EBITDA1 519 326 59% benefits of
Slide 22: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased 16% due to pricing $ MILLIONS Q1 2023 Q1 2022 CHANGE actions and stronger global demand for power generation and oil & gas applications. Sales 1,343 1,160 16% • EBITDA margin as a percent of sales EBITDA1 219 110 99% increased due to st
Slide 23: Accelera Segment Selected Financial Data
Accelera Segment Selected Financial Data • EBITDA losses were $94 million as $ MILLIONS Q1 2023 Q1 2022 CHANGE we continue to invest in the products, infrastructure, and capabilities to support strong future Sales 85 31 174% growth. EBITDA (94) (65) (45)% EBITDA (% of Sales) NM1 NM1 1 "NM" - not mea
Slide 24: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q1 2023 Q1 2022 1 Engine 65 73 Distribution 24 16 Components 21 28 Power Systems 13 11 Accelera (4) (1) 1 Total JV Income 119 127 1 Excluding one-time JV Income costs of $31 million related to the indefinite suspension of operations in Russia 24
Slide 25: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q1 2023 Q1 2022 Operating Cash Flow 495 164 Capital Expenditures 193 104 Working Capital Measure 7,076 5,457 Working Capital Measure 20.9% 21.4% (% of Net Sales) Total Debt to Capital % 42.2% 31.5% Net Debt to Capital % 28.9% 10.1% 25
Slide 26: Appendix
Appendix
Slide 27: Cummins Inc.
Cummins Inc. • Strong product portfolio and Q1 2023 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q1 2023 LTM Results Sales: $30.1 billion EBITDA1: $4.4 billion EBITDA%1: 14.7% 2 Exclud
Slide 28: Cummins Inc.
Cummins Inc. 1 • Capitalizing on global Q1 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 28
Slide 29: Cummins - Joint Venture Sales Unconsolidated
Cummins - Joint Venture Sales Unconsolidated Q1 2023 LTM Revenue 1 * Rest of world 29
Slide 30: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q1 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 31: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q1 2023 LTM Revenue $11.2 billion 31
Slide 32: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1,2 2023 Guidance Sales Up 2% to 7% EBITDA 13.8% to 14.5% 1 2022 EBITDA excludes $33 million of net cost related of the indefinite suspension of operations in Russia 2 Q1 2023 LTM EBITDA excludes $1 million of net cost related of the indefinite suspension of o
Slide 33: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q1 2023 LTM Revenue 33
Slide 34: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q1 2023 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q1 2023 LTM Results Sales: $9.2 billion EBITDA1: $1.1 billion EBITDA%1: 11.6% 34 1 Exclu
Slide 35: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q1 2023 LTM Revenue $9.2 billion 35
Slide 36: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1,2 2023 Guidance Sales Up 5% to 10% EBITDA 11.3% to 12.0% 1 2022 excludes $ 55 million of net cost related to the indefinite suspension of operations in Russia 2 Q1 2023 LTM EBITDA excludes $45 million of net benefit related of the indefinite suspension
Slide 37: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q1 2023 LTM Revenue * Rest of World 37
Slide 38: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q1 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 39: Components Segment - Sales Mix
Components Segment - Sales Mix Q1 2023 LTM Revenue $11.3 billion 1 39
Slide 40: 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 Q1 2023
Slide 41: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q1 2023 LTM Revenue 41
Slide 42: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q1 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 Q1 2023 LTM Results Sales: $
Slide 43: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q1 2023 LTM Revenue $5.2 billion 43
Slide 44: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1,2 2023 Guidance Sales Up 5% to 10% EBITDA 13.7% to 14.4% 1 2022 EBITDA excludes $19 million of net cost related of the indefinite suspension of operations in Russia 2 Q1 2023 LTM EBITDA excludes $1 million of net benefit related of the indefinite susp
Slide 45: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q1 2023 LTM Revenue 45
Slide 46: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 50 years • Market leadership • Strong OEM relationships • Expanding our markets 46 1 Consolidated & JV sales with eliminations
Slide 47: 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 47
Slide 48: CMI Organic Growth vs. Prior Year
CMI Organic Growth vs. Prior Year $ MILLIONS Q1-22 Q1-23 % Growth CMI Sales 6,385 8,453 32% Meritor Sales* - 1,272 Sales Excluding Meritor 6,385 7,181 12% * Meritor was acquired in Q3-22 and was excluded from year over year organic revenue growth 48
Slide 49: Non-GAAP Reconciliation - EBITDA
Non-GAAP Reconciliation - EBITDA Three Months Ended In Millions 31-Mar-23 31-Mar-22 Net income attributable to Cummins Inc. $ 790 $ 418 Net income attributable to noncontrolling interests 16 5 Consolidated net income 806 423 Income tax expense 223 155 Income before taxes 1,029 578 Interest expense 8
Slide 50: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Last Twelve Months Ended In Millions 31-Mar-23 31-Mar-22 Net income attributable to Cummins Inc. $ 2,523 $ 1,946 Net income attributable to noncontrolling interests 43 30 Consolidated net income 2,566 1,976 Income tax expense 704 570 Income before taxes 3,270 2
Slide 51: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 31-Mar-23 31-Mar-22 Accounts and notes receivable, net $ 5,834 $ 4,368 Inventories 5,878 4,586 Accounts Payable - (principally trade) (4,636) (3,497) Working capital measure $ 7,076 $ 5,457 Annualized Working capital measure (%
Slide 52: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 31-Mar-23 31-Mar-22 Total Assets $ 31,433 $ 24,122 Less: Deferred debt costs 4 4 Less: Deferred tax assets 688 494 Less: Pension and other postretirement benefit adjustments excluded 922 1,004 from net assets Less: Liabilities deducted in arriving at
Slide 53: Non-GAAP Reconciliation - Invested Capital for ROIC
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 31-Mar-23 31-Mar-22 Total Equity $ 10,620 $ 8,971 Less: Defined benefit postretirement plans (436) (330) Equity used for return on invested capital calculation 11,056 9,301 Loans payable 229 243 Co
Slide 54: 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 31-Mar-23 31-Mar-22 Net income attributable to Cummins Inc. $ 2,523 $ 1,946 Net income attributable to noncontrolling interests 43 30 Consolidated net incom
Slide 55: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 31-Mar-23 31-Mar-22 Total Debt (A) $ 7,752 $ 4,125 Total Equity (B) 10,620 8,971 Total Capital (C) = (A+B) 18,372 13,096 Total Cash, Cash Equivalents & Marketable Securities (D) 2,439 2,803 Net Debt (E) = (A-D) $ 5,313 $ 1,322 Total Debt to Capital % (A
Slide 56: 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