Slide 1: Third Quarter 2021 Earnings Teleconference
Third Quarter 2021 Earnings Teleconference November 2, 2021
Slide 2: Contents
CONTENTS Q3 2021 Summary 2021 Guidance Q3 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: Q3 2021 Summary
Q3 2021 Summary
Slide 5: Q3 2021 Summary
Q3 2021 Summary • Third quarter revenues of $6.0 billion • GAAP1 Net Income of $534 million and Diluted EPS of $3.69 • EBITDA of $862 million or 14.4 percent of sales • Full year revenues expected to be up approximately 20 percent • EBITDA is expected to be approximately 15.0 percent of sales 1 Gene
Slide 6: Selected Financial Data - Quarter
Cummins Inc. Selected Financial Data - Quarter $ MILLIONS Q3 2021 Q3 2020 Sales 5,968 5,118 Gross Margin (% of Sales) 23.7% 26.4% SAR (% of Sales) 14.0% 14.8% EBITDA 862 876 EBITDA (% of Sales) 14.4% 17.1% GAAP Net Income attributable to Cummins Inc. 534 501 GAAP Net Income (% of Sales) 8.9% 9.8% Di
Slide 7: Q3 2021 Income Statement by Segment
Q3 2021 Income Statement by Segment Engine Distribution Components Power New Power Intersegment Total Systems Eliminations $M Three months ended October 3, 2021 Net Sales 2,578 1,959 1,793 1,164 23 (1,549) 5,968 Sales growth vs 2020 22% 14% 16% 19% 28% 23% 17% EBITDA 391 192 253 134 (58) (50) 862 Se
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 approx. 20% Earnings from JVs Up 10% EBITDA Margin Approx. 15.0% Depreciation & Amortization $650 to $670 M Effective Tax Rate1 21.5% Capital Expenditures $725 M to $775 M Global Pension Funding $77 M Interest Exp
Slide 10: Guidance for 2021 Segment Results
Guidance for 2021 Segment Results ITEM ENGINE DISTRIBUTION COMPONENTS POWER SYSTEMS NEW POWER Consolidated Up 23% to 25% Up 7% to 9% Up 27% to 29% Up 21% to 23% $110M to $130M Revenue Growth 2021 EBITDA Margins 14.2% to 14.7% 9.2% to 9.4% 15.25% to 15.75% 11.25% to 11.75% ($210M) to ($190M) (% of Re
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 - North America 228K units Up 25% Class 8, Group 2 - Production Medium Duty Truck - North America 118K units Up 15% Class 6-7, and Class 8 Group 1 - Production Heavy & Medium Truck - China 1,650K unit
Slide 12: Cummins Inc. 2021 Guidance
Cummins Inc. 1 2021 Guidance Sales Up Approx. 20% EBITDA Approx. 15.0% 1 2019 EBITDA excludes $119 million of restructuring charges. 12
Slide 13: Q3 2021 Supplemental Information
Q3 2021 Supplemental Information
Slide 14: Engine Segment Selected Financial Data
Engine Segment Selected Financial Data • Sales increased 22% driven by $ MILLIONS Q3 2021 Q3 2020 CHANGE higher demand for trucks in North America and construction equipment in North America, Asia Sales 2,578 2,112 22% Pacific and Europe. EBITDA 391 382 2% • The decrease in EBITDA margin as a percen
Slide 15: Engine Segment - Sales by Market
Engine Segment - Sales by Market • On-highway revenues increased $ MILLIONS Q3 2021 Q3 2020 CHANGE due to higher demand in North America truck markets. Heavy-Duty Truck 861 694 24% Medium-Duty Truck & 713 492 45% • Off-highway revenues increased Bus due to higher demand in Light-Duty Automotive 515
Slide 16: Distribution Segment Selected Financial Data
Distribution Segment Selected Financial Data • Sales increased due to stronger $ MILLIONS Q3 2021 Q3 2020 CHANGE demand for both whole goods and aftermarket parts and service. Sales 1,959 1,721 14% • EBITDA margin as a percent of sales EBITDA 192 182 5% decreased primarily due to supply chain constr
Slide 17: Components Segment Selected Financial Data
Components Segment Selected Financial Data • Sales increased 16% driven by $ MILLIONS Q3 2021 Q3 2020 CHANGE stronger demand for trucks in North America. Sales 1,793 1,541 16% • EBITDA margin as a percent of sales decreased due to higher freight and EBITDA 253 261 (3)% material costs and higher warr
Slide 18: Power Systems Segment Selected Financial Data
Power Systems Segment Selected Financial Data • Sales increased due to stronger global $ MILLIONS Q3 2021 Q3 2020 CHANGE demand for power generation and mining equipment. Sales 1,164 981 19% • The increase in EBITDA percent was due to the benefits of higher volumes EBITDA 134 101 33% and lower produ
Slide 19: New Power Segment Selected Financial Data
New Power Segment Selected Financial Data • EBITDA losses were $58 million for $ MILLIONS Q3 2021 Q3 2020 CHANGE the quarter in line with our expectations as we continue to invest in new products and scale up Sales 23 18 28% ahead of widespread adoption of the new technologies. EBITDA (58) (40) (45)
Slide 20: Joint Venture Income - Quarter
Joint Venture Income - Quarter $ MILLIONS Q3 2021 Q3 2020 Engine 61 74 Distribution 15 13 Components 10 13 Power Systems 11 — New Power (3) (2) Total JV Income 94 98 20
Slide 21: Cash Flow - Quarter
Cash Flow - Quarter $ MILLIONS Q3 2021 Q3 2020 Operating Cash Flow 569 1,223 Capital Expenditures 150 116 Working Capital Measure 5,264 4,501 Working Capital Measure 22.1% 22% (% of Net Sales) Total Debt to Capital % 30.5% 32.2% Net Debt to Capital % 7.1% 6.3% 21
Slide 22: Appendix
Appendix
Slide 23: Cummins Inc. - LTM Revenue by Segment
Cummins Inc. • Strong product portfolio and Q3 2021 LTM Revenue by Segment global partners • Macro growth trends play to Cummins' strengths • Disciplined investment for growth • Demonstrated technology leadership Q3 2021 LTM Results Sales: $24 billion EBITDA: $3.7 billion EBITDA%: 15.2% 23
Slide 24: Cummins Inc. - LTM Revenue by Marketing Territory
Cummins Inc. • Capitalizing on global Q3 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 24
Slide 25: Joint Venture Sales Unconsolidated
Cummins - Joint Venture Sales Unconsolidated Q3 2021 LTM Revenue * Rest of world 25
Slide 26: Engine Segment - Overview
Engine Segment - Overview • Diesel and natural gas engines from Q3 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 27: Engine Segment - Sales Mix
Engine Segment - Sales Mix Q3 2021 LTM Revenue $9.9 billion 27
Slide 28: Engine Segment - Historical Performance
Engine Segment - Historical Performance 1 2021 Guidance Sales Up 23% to 25% EBITDA 14.2% to 14.7% 1 2019 EBITDA excludes $18 million of restructuring charges. 28
Slide 29: Engine Segment - Joint Venture Sales Unconsolidated
Engine Segment - Joint Venture Sales Unconsolidated Q3 2021 LTM Revenue 29
Slide 30: Distribution Segment - Overview
Distribution Segment - Overview • Provide aftermarket support and Q3 2021 LTM Revenue by Product increase solution-based revenue • Increasing network capabilities in emerging markets to capture profitable growth Q3 2021 LTM Results Sales: $7.7 billion EBITDA: $718 million EBITDA%: 9.3% 30
Slide 31: Distribution Segment - Sales Mix
Distribution Segment - Sales Mix • Key enabler for Cummins growth • Benefiting from increased population of products in the field Q3 2021 LTM Revenue $7.7 billion 31
Slide 32: Distribution Segment - Historical Performance
Distribution Segment - Historical Performance 1 2021 Guidance Sales Up 7% to 9% EBITDA 9.2% to 9.4% 1 2019 EBITDA excludes $37 million of restructuring charges. 32
Slide 33: Distribution Segment - Joint Venture Sales Unconsolidated
Distribution Segment - Joint Venture Sales Unconsolidated Q3 2021 LTM Revenue * Rest of World 33
Slide 34: Components Segment - Overview
Components Segment - Overview • Leading supplier of aftertreatment Q3 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 35: Components Segment - Sales Mix
Components Segment - Sales Mix Q3 2021 LTM Revenue $7.8 billion 35
Slide 36: Components Segment - Historical Performance
Components Segment - Historical Performance 1 2021 Guidance Sales Up 27% to 29% EBITDA 15.25% to 15.75% 1 2019 EBITDA excludes $20 million of restructuring charges. 36
Slide 37: Components Segment - Joint Venture Sales Unconsolidated
Components Segment - Joint Venture Sales Unconsolidated Q3 2021 LTM Revenue 37
Slide 38: Power Systems Segment - Overview
Power Systems Segment - Overview • Global provider of power generation Q3 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 Q3 2021 LTM Results Sales: $4.
Slide 39: Power Systems Segment - Sales Mix
Power Systems Segment - Sales Mix Q3 2021 LTM Revenue $4.3 billion 39
Slide 40: Power Systems Segment - Historical Performance
Power Systems Segment - Historical Performance 1 2021 Guidance Sales Up 21% to 23% EBITDA 11.25% to 11.75% 1 2019 EBITDA excludes $12 million of restructuring charges. 40
Slide 41: Power Systems Segment - Joint Venture Sales Unconsolidated
Power Systems Segment - Joint Venture Sales Unconsolidated Q3 2021 LTM Revenue 41
Slide 42: Emerging Market Sales - India
Emerging Market Sales - India1 • Present in India for over 50 years • Market leadership • Strong OEM relationships • Expanding our markets 42 1 Consolidated & JV sales with eliminations
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 03-Oct-21 27-Sep-20 Net income attributable to Cummins Inc. $ 534 $ 501 Net income attributable to noncontrolling interests 7 3 Consolidated net income 541 504 Income tax expense 134 182 Income before taxes 675 686 Interest expense 28 2
Slide 45: Non-GAAP Reconciliation - EBITDA (LTM)
Non-GAAP Reconciliation - EBITDA (LTM) Twelve Months Ended In Millions 03-Oct-21 27-Sep-20 Net income attributable to Cummins Inc. $ 2,238 $ 1,588 Net income attributable to noncontrolling interests 36 11 Consolidated net income 2,274 1,599 Income tax expense 598 467 Income before taxes 2,872 2,066
Slide 46: Non-GAAP Reconciliation - Working Capital
Non-GAAP Reconciliation - Working Capital Three Months Ended In Millions 03-Oct-21 27-Sep-20 Accounts and notes receivable, net $ 4,152 $ 3,628 Inventories 4,322 3,470 Accounts Payable - (principally trade) (3,210) (2,597) Working capital measure $ 5,264 $ 4,501 Annualized Working capital measure (%
Slide 47: Non-GAAP Reconciliation - Net Assets
Non-GAAP Reconciliation - Net Assets In Millions 03-Oct-21 27-Sep-20 29-Sep-19 Total Assets $ 23,063 $ 21,568 $ 20,346 Less: Deferred debt costs 3 3 3 Less: Deferred tax assets 411 457 435 Less: Pension and other postretirement benefit 177 101 111 adjustments excluded from net assets Less: Liabiliti
Slide 48: Non-GAAP Reconciliation - Invested Capital Used for ROIC Calculation
Non-GAAP Reconciliation - Invested Capital Used for Return on Invested Capital Calculation In Millions 03-Oct-21 27-Sep-20 29-Sep-19 Total Equity $ 9,003 $ 8,641 $ 8,753 Less: Defined benefit postretirement plans (672) (699) (669) Equity used for return on invested capital calculation 9,675 9,340 9,
Slide 49: Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for ROIC
Non-GAAP Reconciliation - Net Operating Profit After Taxes Used for Return on Invested Capital Calculation Twelve Months Ended In Millions 03-Oct-21 27-Sep-20 Net income attributable to Cummins Inc. $ 2,238 $ 1,588 Net income attributable to noncontrolling interests 36 11 Consolidated net income 2,2
Slide 50: Net Debt to Capital Reconciliation
Net Debt to Capital Reconciliation In Millions 03-Oct-21 27-Sep-20 Total Debt (A) $ 3,942 $ 4,112 Total Equity (B) 9,003 8,641 Total Capital (C) = (A+B) 12,945 12,753 Total Cash, Cash Equivalents & Marketable Securities (D) 3,018 3,312 Net Debt (E) = (A-D) $ 924 $ 800 Total Debt to Capital % (A/C) 3
Slide 51: 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