Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Cummins Reports Record First Quarter 2023 Results By: Cummins Inc. via Business Wire May 02, 2023 at 07:30 AM EDT Record first quarter revenues of $8.5 billion; Record GAAP1 Net Income of $790 million EBITDA in the first quarter was 16.1 percent of sales; Record Diluted EPS of $5.55 First quarter results include $18 million, or $0.10 per diluted share, of costs related to the separation of the Filtration business. The company is raising its full year 2023 revenue guidance to be up 15 to 20 percent; an increase from previous guidance of up 12 to 17 percent. EBITDA is now expected to be in the range of 15.0 to 15.7 percent; an increase from previous guidance of 14.5 to 15.2 percent. Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2023. First quarter revenues of $8.5 billion increased 32 percent from the same quarter in 2022. Sales in North America increased 39 percent and international revenues increased 24 percent due to the addition of Meritor and strong demand across all key global markets. “The company achieved record revenues, EBITDA and EPS in the first quarter of 2023, with demand for our products remaining strong across most of our key markets and regions,” said Jennifer Rumsey, President and CEO. “We are delivering cycle-over-cycle improvement in financial performance despite persistent supply chain constraints, and we continue to invest in sustainable solutions that will protect our planet for future generations and support the success of our customers.” Net income attributable to Cummins in the first quarter was $790 million, or $5.55 per diluted share compared to $418 million, or $2.92 per diluted share, in 2022, which included $158 million, or $1.03 per diluted share, of costs related to the indefinite suspension of operations in Russia. Results included costs associated with the separation of the Filtration business of $18 million, or $0.10 per diluted share, in the first quarter of 2023, and $17 million, or $0.09 per diluted share, in the first quarter of 2022. The tax rate in the first quarter was 21.7 percent including $3 million, or $0.02 per diluted share, of favorable discrete tax items. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $1.4 billion, or 16.1 percent of sales, compared to $755 million, or 11.8 percent of sales, a year ago. EBITDA for the first quarter of 2023 included the costs related to the separation of the Filtration business and the first quarter 2022 EBITDA included the costs related to the indefinite suspension of operations in Russia and costs related to the separation of the Filtration business as noted above. 2023 Outlook: Based on its current forecast, Cummins is raising its full year 2023 revenue guidance to be up 15 to 20 percent, an increase from our prior projections of up 12 to 17 percent due to stronger demand across most markets. EBITDA is expected to be in the range of 15.0 to 15.7 percent, an increase from the prior range of 14.5 and 15.2 percent of sales. The outlook above includes the projected results of the Meritor business for 2023, but excludes any costs or benefits associated with the planned separation of the Filtration business. Within the Components Segment, Cummins expects revenues of the Meritor business for 2023 to be between $4.7 billion to $4.9 billion, an increase from $4.5 billion to $4.7 billion previously, and EBITDA to be in the range of 10.3 to 11.0 percent of sales, consistent with prior guidance. The company plans to continue to generate strong operating cash flow and returns for shareholders and is committed to our long-term strategic goal of returning 50 percent of operating cash flow back to shareholders. In the near term, we will focus on reinvesting for profitable growth, dividends and reducing debt. “We have raised our guidance on revenue and profitability for 2023 due to continued demand for Cummins’ products and services. We will continue monitoring global economic indicators closely to ensure we are prepared should economic momentum slow,” said Rumsey. “Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2023 Highlights: In March, Cummins announced the launch of Accelera by Cummins, a new brand for its New Power business unit. Accelera provides a diverse portfolio of zero-emissions solutions for many of the world’s most vital industries empowering customers to accelerate their transition to a sustainable future. Accelera announced that it will supply a 90-megawatt (MW) proton exchange membrane (PEM) electrolyzer system for Varennes Carbon Recycling’s (VCR) plant in Quebec, Canada – a key step in advancing North America’s green hydrogen economy. Progress continues to be made on the planned separation of the Filtration business. In February, the company announced that its Filtration business, Atmus Filtration Technologies, has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed underwritten initial public offering of newly issued common stock. Cummins received several prestigious honors during the quarter including being named to Ethisphere’s World’s Most Ethical Companies list for the 16th consecutive year, included in Sustainalytics’ 2023 Top-Rated Companies list, recognizing the best performing sustainability/ESG companies, and ranked first in the Automotive and Components industry in Newsweek’s annual ranking of America’s Most Responsible Companies. Also, Cummins was one of 66 companies honored as America’s Top Corporations for Women’s Business Enterprises in 2023 for the way it works with women-owned businesses and was recognized as a 2023 Military Friendly Employer, receiving the bronze designation for creating sustainable and meaningful benefits for the military community. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2023 detail (all comparisons to same period in 2022): Components Segment Sales - $3.6 billion, up 79 percent Segment EBITDA - $507 million, or 14.3 percent of sales, which includes $12 million of costs related to the separation of the Filtration business compared to $320 million, or 16.1 percent of sales, which includes $6 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased by 87 percent and international sales increased by 69 percent due to the addition of Meritor and increased global demand. Engine Segment Sales - $3.0 billion, up 8 percent Segment EBITDA - $457 million, or 15.3 percent of sales, compared to $390 million or 14.2 percent of sales, which includes $32 million of costs from the indefinite suspension of operations in Russia On-highway revenues increased 9 percent driven by strong demand in the North American truck market, pricing actions and strong aftermarket demand. Sales increased 9 percent in North America and grew 8 percent in international markets due to an increase in China and India demand. Distribution Segment Sales - $2.4 billion, up 14 percent Segment EBITDA - $335 million, or 13.9 percent of sales, compared to $110 million, or 5.2 percent of sales, which includes $100 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased 24 percent and international sales decreased by 5 percent. Higher revenues were driven by increased demand for parts, service, and whole goods and pricing actions. Power Systems Segment Sales - $1.3 billion, up 16 percent Segment EBITDA - $219 million, or 16.3 percent of sales, compared to $90 million, or 7.8 percent of sales, which includes $20 million of costs from the indefinite suspension of operations in Russia Power generation revenues increased 16 percent driven by increased global demand and pricing actions. Industrial revenues increased 16 percent due to strong demand for aftermarket products and increased demand in oil and gas markets. Accelera Segment Sales - $85 million, up 174 percent Segment EBITDA loss - $94 million Revenues increased due to higher demand for battery electric systems in the North American school bus market and the additions of the electric powertrain portion of the Meritor business and Siemens Commercial Vehicle business. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles are contributing to EBITDA losses. About Cummins Inc. Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 73,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $2.2 billion on sales of $28.1 billion in 2022. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/always-on. Forward-looking disclosure statement 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, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; evolving environmental and climate change legislation and regulatory initiatives; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc.; raw material, transportation and labor price fluctuations and supply shortages; any adverse effects of the conflict between Russia and Ukraine and the global response (including government bans or restrictions on doing business in Russia); aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; failure to complete, adverse results from or failure to realize the expected benefits of the separation of our filtration business; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas (GHG) regulations or other legislation designed to address climate change; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2022 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website. Presentation of Non-GAAP Financial Information EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release, except for forward-looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash items that are excluded from the non-GAAP outlook measure. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units. Webcast information Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited) (a) Three months ended March 31, In millions, except per share amounts 2023 2022 NET SALES $ 8,453 $ 6,385 Cost of sales 6,424 4,853 GROSS MARGIN 2,029 1,532 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 753 615 Research, development and engineering expenses 350 298 Equity, royalty and interest income from investees 119 96 Other operating expense, net 19 111 OPERATING INCOME 1,026 604 Interest expense 87 17 Other income (expense), net 90 (9 ) INCOME BEFORE INCOME TAXES 1,029 578 Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 5.58 $ 2.94 Diluted $ 5.55 $ 2.92 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.5 142.2 Diluted 142.4 143.1 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (a) In millions, except par value March 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 1,980 $ 2,101 Marketable securities 459 472 Total cash, cash equivalents and marketable securities 2,439 2,573 Accounts and notes receivable, net 5,834 5,202 Inventories 5,878 5,603 Prepaid expenses and other current assets 1,217 1,073 Total current assets 15,368 14,451 Long-term assets Property, plant and equipment, net 5,590 5,521 Investments and advances related to equity method investees 1,860 1,759 Goodwill 2,365 2,343 Other intangible assets, net 2,640 2,687 Pension assets 1,496 1,398 Other assets 2,114 2,140 Total assets $ 31,433 $ 30,299 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,636 $ 4,252 Loans payable 229 210 Commercial paper 2,545 2,574 Current maturities of long-term debt 569 573 Accrued compensation, benefits and retirement costs 510 617 Current portion of accrued product warranty 746 726 Current portion of deferred revenue 1,040 1,004 Other accrued expenses 1,648 1,465 Total current liabilities 11,923 11,421 Long-term liabilities Long-term debt 4,409 4,498 Deferred revenue 937 844 Other liabilities 3,283 3,311 Total liabilities $ 20,552 $ 20,074 Redeemable noncontrolling interests $ 261 $ 258 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,230 $ 2,243 Retained earnings 18,605 18,037 Treasury stock, at cost, 80.9 and 81.2 shares (9,389 ) (9,415 ) Accumulated other comprehensive loss (1,823 ) (1,890 ) Total Cummins Inc. shareholders’ equity 9,623 8,975 Noncontrolling interests 997 992 Total equity $ 10,620 $ 9,967 Total liabilities, redeemable noncontrolling interests and equity $ 31,433 $ 30,299 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (a) Three months ended March 31, In millions 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 806 $ 423 Adjustments to reconcile consolidated net income to net cash provided by operating activities Depreciation and amortization 246 161 Deferred income taxes (38 ) (66 ) Equity in income of investees, net of dividends (67 ) (76 ) Pension and OPEB expense 1 9 Pension contributions and OPEB payments (92 ) (43 ) Russian suspension costs — 158 (Gain) loss on corporate owned life insurance (19 ) 37 Foreign currency remeasurement and transaction exposure (11 ) (7 ) Changes in current assets and liabilities, net of acquisitions Accounts and notes receivable (621 ) (417 ) Inventories (263 ) (289 ) Other current assets (142 ) (57 ) Accounts payable 381 484 Accrued expenses 151 (251 ) Changes in other liabilities 64 70 Other, net 99 28 Net cash provided by operating activities 495 164 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (193 ) (104 ) Acquisition of a business, net of cash acquired — 83 Investments in marketable securities—acquisitions (326 ) (197 ) Investments in marketable securities—liquidations 345 254 Other, net (54 ) (46 ) Net cash used in investing activities (228 ) (10 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 43 14 Net payments of commercial paper (29 ) (2 ) Payments on borrowings and finance lease obligations (142 ) (24 ) Dividend payments on common stock (222 ) (207 ) Repurchases of common stock — (311 ) Other, net (13 ) 33 Net cash used in financing activities (363 ) (497 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (25 ) 27 Net decrease in cash and cash equivalents (121 ) (316 ) Cash and cash equivalents at beginning of year 2,101 2,592 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,980 $ 2,276 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) REORGANIZATION WITHIN CERTAIN SEGMENTS, REBRANDING A SEGMENT AND TRANSFER OF A JOINT VENTURE BETWEEN SEGMENTS Beginning in the first quarter of 2023, we realigned certain businesses and regions within our reportable segments to be consistent with how our segment managers monitor the performance of our segments. We reorganized the businesses within our Components segment to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuel systems businesses into the newly formed engine components business. Our Components segment now consists of the following businesses: axles and brakes, emission solutions, engine components, filtration, automated transmissions and software and electronics. As a result of the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. In March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented. These changes had no impact on our consolidated results. Descriptions of the new Components' businesses and adjusted prior period balances for all segments are shown below: Components Segment Engine components - We design, manufacture and market turbocharger, valvetrain and fuel system technologies for light-duty, mid-range, heavy-duty and high-horsepower markets across North America, Europe, China and India. Software and electronics - We develop, supply and remanufacture control units, specialty sensors, power electronics, actuators and software for on-highway, off-highway and power generation applications. We primarily serve markets in the Americas, China, India and Europe. Adjusted balances for the Components' businesses are shown in the "SEGMENT SALES DATA" section below under "Components Segment Sales by Business." External sales in 2022 and 2021 for our Components segment by business, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 808 767 748 763 3,086 Engine components 240 223 239 244 946 Filtration 308 319 322 310 1,259 Automated transmissions 134 143 159 157 593 Software and electronics 27 25 20 12 84 Total sales $ 1,517 $ 1,477 $ 2,220 $ 2,633 $ 7,847 2021 In millions YTD Emission solutions $ 3,142 Engine components 1,019 Filtration 1,171 Automated transmissions 481 Software and electronics 119 Total sales $ 5,932 Distribution Segment Total segment sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,367 $ 1,494 $ 1,512 $ 1,575 $ 5,948 Asia Pacific 246 242 260 268 1,016 Europe 281 248 182 218 929 China 83 99 92 81 355 Africa and Middle East 50 61 79 61 251 Latin America 41 56 58 55 210 India 49 53 56 62 220 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 2021 In millions YTD North America $ 4,912 Asia Pacific 906 Europe 966 China 330 Africa and Middle East 278 Latin America 182 India 198 Total sales $ 7,772 External sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,371 $ 1,491 $ 1,512 $ 1,574 $ 5,948 Asia Pacific 244 242 258 267 1,011 Europe 275 246 181 212 914 China 82 99 89 81 351 Africa and Middle East 50 61 79 60 250 Latin America 41 56 58 55 210 India 48 52 55 62 217 Total sales $ 2,111 $ 2,247 $ 2,232 $ 2,311 $ 8,901 2021 In millions YTD North America $ 4,902 Asia Pacific 901 Europe 962 China 323 Africa and Middle East 278 Latin America 182 India 194 Total sales $ 7,742 Accelera Segment NPROXX joint venture move to Engine Segment The move of our NPROXX joint venture from our Accelera segment to Engine segment resulted in adjustments to prior period balances as follows: 2022 2021 In millions Q1 Q2 Q3 Q4 Total Total Engine Equity, royalty and interest income from investees, as disclosed $ 44 $ 59 $ 28 $ 35 $ 166 $ 340 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Equity, royalty and interest income from investees, as adjusted $ 42 $ 58 $ 27 $ 33 $ 160 $ 335 Segment EBITDA, as disclosed $ 392 $ 422 $ 363 $ 364 $ 1,541 $ 1,411 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Segment EBITDA, as adjusted $ 390 $ 421 $ 362 $ 362 $ 1,535 $ 1,406 Investments and advances to equity investees, as disclosed $ 590 $ 742 NPROXX investment adjustment 27 29 Investments and advances to equity investees, as adjusted $ 617 $ 771 Accelera Equity, royalty and interest (loss) income from investees, as disclosed $ (3 ) $ (4 ) $ (5 ) $ 4 $ (8 ) $ (3 ) NPROXX loss adjustment 2 1 1 2 6 5 Equity, royalty and interest (loss) income from investees, as adjusted $ (1 ) $ (3 ) $ (4 ) $ 6 $ (2 ) $ 2 Segment EBITDA, as disclosed $ (67 ) $ (80 ) $ (96 ) $ (97 ) $ (340 ) $ (223 ) NPROXX loss adjustment 2 1 1 2 6 5 Segment EBITDA, as adjusted $ (65 ) $ (79 ) $ (95 ) $ (95 ) $ (334 ) $ (218 ) Investments and advances to equity investees, as disclosed $ 60 $ 49 NPROXX investment adjustment (27 ) (29 ) Investments and advances to equity investees, as adjusted $ 33 $ 20 Summarized financial information regarding our reportable operating segments for the three months ended, including adjusted prior year balances for the changes noted above, is shown in the table below: In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2023 External sales $ 3,043 $ 2,252 $ 2,399 $ 679 $ 80 $ 8,453 $ — $ 8,453 Intersegment sales 514 734 7 664 5 1,924 (1,924 ) — Total sales 3,557 2,986 2,406 1,343 85 10,377 (1,924 ) 8,453 Research, development and engineering expenses 91 134 14 63 48 350 — 350 Equity, royalty and interest income (loss) from investees 21 65 24 13 (4 ) 119 — 119 Interest income 6 3 7 2 — 18 — 18 EBITDA (2) 507 (3) 457 335 219 (94 ) 1,424 (63 ) 1,361 Depreciation and amortization (4) 123 51 28 29 14 245 — 245 EBITDA as a percentage of total sales 14.3 % 15.3 % 13.9 % 16.3 % NM 13.7 % 16.1 % Three months ended March 31, 2022 External sales $ 1,517 $ 2,049 $ 2,111 $ 683 $ 25 $ 6,385 $ — $ 6,385 Intersegment sales 471 704 6 477 6 1,664 (1,664 ) — Total sales 1,988 2,753 2,117 1,160 31 8,049 (1,664 ) 6,385 Research, development and engineering expenses 76 109 13 64 36 298 — 298 Equity, royalty and interest income (loss) from investees 28 42 (5) 16 11 (1 ) 96 — 96 Interest income 1 4 2 1 — 8 — 8 Russian suspension costs 6 32 (6) 100 20 — 158 — 158 EBITDA (2) 320 390 110 90 (65 ) 845 (90 ) 755 Depreciation and amortization (4) 43 51 28 31 7 160 — 160 EBITDA as a percentage of total sales 16.1 % 14.2 % 5.2 % 7.8 % NM 10.5 % 11.8 % "NM" - not meaningful information (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended March 31, 2023 and 2022, except for $6 million and $17 million of costs associated with the planned separation of our filtration business in 2023 and 2022, respectively. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. (3) Includes $12 million of costs associated with the planned separation of our filtration business. (4) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs was $1 million and $1 million for the three months ended March 31, 2023 and 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. (6) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above. A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below: Three months ended March 31, In millions 2023 2022 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Less: Interest expense 87 17 Depreciation and amortization 245 160 INCOME BEFORE INCOME TAXES 1,029 578 Less: Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % CUMMINS INC. AND SUBSIDIARIES SELECT FOOTNOTE DATA (Unaudited) EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting periods was as follows: Three months ended March 31, In millions 2023 2022 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 19 $ 16 Beijing Foton Cummins Engine Co., Ltd. 16 14 Chongqing Cummins Engine Company, Ltd. 9 9 Tata Cummins, Ltd. 8 9 All other manufacturers 19 (10 ) (1) Distribution entities Komatsu Cummins Chile, Ltda. 14 7 All other distributors 3 2 Cummins share of net income 88 47 Royalty and interest income 31 49 Equity, royalty and interest income from investees $ 119 $ 96 (1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. INCOME TAXES Our effective tax rate for 2023 is expected to approximate 22.0 percent, excluding any discrete items that may arise. Our effective tax rate for the three months ended March 31, 2023, was 21.7 percent and contained favorable discrete tax items of $3 million, or $0.02 per share, primarily due to share-based compensation tax benefits. Our effective tax rate for the three months ended March 31, 2022, was 26.8 percent and contained unfavorable discrete tax items of $31 million, or $0.22 per share, primarily due to $18 million of unfavorable changes associated with the indefinite suspension of Russian operations, $9 million of net unfavorable changes in tax reserves and $4 million of net unfavorable other discrete tax items. CUMMINS INC. AND SUBSIDIARIES FINANCIAL MEASURES THAT SUPPLEMENT GAAP (Unaudited) Reconciliation of Non GAAP measures - Earnings before interest, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. We believe EBITDA excluding special items is a useful measure of our operating performance without regard to the costs associated with the planned separation of our filtration business and indefinite suspension of Russian operations. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of non-cash items that are excluded from the non-GAAP outlook measure. EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Net Income. Below is a reconciliation of “Net income attributable to Cummins Inc.” to EBITDA for each of the applicable periods: Three months ended March 31, In millions 2023 2022 Net income attributable to Cummins Inc. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % Add: Net income attributable to noncontrolling interests 16 5 Consolidated net income 806 423 Add: Interest expense 87 17 Income tax expense 223 155 Depreciation and amortization 245 160 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Add: Filtration separation costs 18 17 Russian suspension costs — 158 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations $ 1,379 $ 930 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations, as a percentage of net sales 16.3 % 14.6 % CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business, adjusted for the reorganized businesses as note above, were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ — $ — $ — $ 1,272 Emission solutions 1,056 — — — 1,056 Engine components 581 — — — 581 Filtration 417 — — — 417 Automated transmissions 179 — — — 179 Software and electronics 52 — — — 52 Total sales $ 3,557 $ — $ — $ — $ 3,557 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 910 863 853 868 3,494 Engine components 502 503 509 493 2,007 Filtration 382 391 399 385 1,557 Automated transmissions 134 143 159 157 593 Software and electronics 60 50 51 45 206 Total sales $ 1,988 $ 1,950 $ 2,703 $ 3,095 $ 9,736 2021 In millions YTD Emission solutions $ 3,499 Engine components 2,009 Filtration 1,438 Automated transmissions 478 Software and electronics 241 Total sales $ 7,665 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ — $ — $ — $ 1,114 Medium-duty truck and bus 903 — — — 903 Light-duty automotive 439 — — — 439 Off-highway 530 — — — 530 Total sales $ 2,986 $ — $ — $ — $ 2,986 2022 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 908 $ 1,001 $ 972 $ 966 $ 3,847 Medium-duty truck and bus 848 875 868 869 3,460 Light-duty automotive 498 456 466 318 1,738 Off-highway 499 443 473 485 1,900 Total sales $ 2,753 $ 2,775 $ 2,779 $ 2,638 $ 10,945 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 — — — 34,700 Medium-duty 78,900 — — — 78,900 Light-duty 55,000 — — — 55,000 Total units 168,600 — — — 168,600 2022 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 28,600 30,900 30,200 31,000 120,700 Medium-duty 72,600 68,800 69,800 72,400 283,600 Light-duty 66,500 60,400 58,300 42,400 227,600 Total units 167,700 160,100 158,300 145,800 631,900 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ — $ — $ — $ 1,057 Power generation 492 — — — 492 Engines 456 — — — 456 Service 401 — — — 401 Total sales $ 2,406 $ — $ — $ — $ 2,406 2022 In millions Q1 Q2 Q3 Q4 YTD Parts $ 924 $ 990 $ 945 $ 959 $ 3,818 Power generation 401 441 431 501 1,774 Engines 441 429 449 457 1,776 Service 351 393 414 403 1,561 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification Sales for our Power Systems segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ — $ — $ — $ 770 Industrial 455 — — — 455 Generator technologies 118 — — — 118 Total sales $ 1,343 $ — $ — $ — $ 1,343 2022 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 664 $ 657 $ 739 $ 730 $ 2,790 Industrial 393 428 483 468 1,772 Generator technologies 103 118 127 123 471 Total sales $ 1,160 $ 1,203 $ 1,349 $ 1,321 $ 5,033 High-horsepower unit shipments by engine classification were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 — — — 2,900 Industrial 1,500 — — — 1,500 Total units 4,400 — — — 4,400 2022 Units Q1 Q2 Q3 Q4 YTD Power generation 2,200 2,400 2,400 2,700 9,700 Industrial 1,100 1,200 1,200 1,400 4,900 Total units 3,300 3,600 3,600 4,100 14,600 View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005439/en/Contacts Jon Mills, Director External Communications and Global Brand 317-658-4540 jon.mills@cummins.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Cummins Reports Record First Quarter 2023 Results By: Cummins Inc. via Business Wire May 02, 2023 at 07:30 AM EDT Record first quarter revenues of $8.5 billion; Record GAAP1 Net Income of $790 million EBITDA in the first quarter was 16.1 percent of sales; Record Diluted EPS of $5.55 First quarter results include $18 million, or $0.10 per diluted share, of costs related to the separation of the Filtration business. The company is raising its full year 2023 revenue guidance to be up 15 to 20 percent; an increase from previous guidance of up 12 to 17 percent. EBITDA is now expected to be in the range of 15.0 to 15.7 percent; an increase from previous guidance of 14.5 to 15.2 percent. Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2023. First quarter revenues of $8.5 billion increased 32 percent from the same quarter in 2022. Sales in North America increased 39 percent and international revenues increased 24 percent due to the addition of Meritor and strong demand across all key global markets. “The company achieved record revenues, EBITDA and EPS in the first quarter of 2023, with demand for our products remaining strong across most of our key markets and regions,” said Jennifer Rumsey, President and CEO. “We are delivering cycle-over-cycle improvement in financial performance despite persistent supply chain constraints, and we continue to invest in sustainable solutions that will protect our planet for future generations and support the success of our customers.” Net income attributable to Cummins in the first quarter was $790 million, or $5.55 per diluted share compared to $418 million, or $2.92 per diluted share, in 2022, which included $158 million, or $1.03 per diluted share, of costs related to the indefinite suspension of operations in Russia. Results included costs associated with the separation of the Filtration business of $18 million, or $0.10 per diluted share, in the first quarter of 2023, and $17 million, or $0.09 per diluted share, in the first quarter of 2022. The tax rate in the first quarter was 21.7 percent including $3 million, or $0.02 per diluted share, of favorable discrete tax items. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $1.4 billion, or 16.1 percent of sales, compared to $755 million, or 11.8 percent of sales, a year ago. EBITDA for the first quarter of 2023 included the costs related to the separation of the Filtration business and the first quarter 2022 EBITDA included the costs related to the indefinite suspension of operations in Russia and costs related to the separation of the Filtration business as noted above. 2023 Outlook: Based on its current forecast, Cummins is raising its full year 2023 revenue guidance to be up 15 to 20 percent, an increase from our prior projections of up 12 to 17 percent due to stronger demand across most markets. EBITDA is expected to be in the range of 15.0 to 15.7 percent, an increase from the prior range of 14.5 and 15.2 percent of sales. The outlook above includes the projected results of the Meritor business for 2023, but excludes any costs or benefits associated with the planned separation of the Filtration business. Within the Components Segment, Cummins expects revenues of the Meritor business for 2023 to be between $4.7 billion to $4.9 billion, an increase from $4.5 billion to $4.7 billion previously, and EBITDA to be in the range of 10.3 to 11.0 percent of sales, consistent with prior guidance. The company plans to continue to generate strong operating cash flow and returns for shareholders and is committed to our long-term strategic goal of returning 50 percent of operating cash flow back to shareholders. In the near term, we will focus on reinvesting for profitable growth, dividends and reducing debt. “We have raised our guidance on revenue and profitability for 2023 due to continued demand for Cummins’ products and services. We will continue monitoring global economic indicators closely to ensure we are prepared should economic momentum slow,” said Rumsey. “Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2023 Highlights: In March, Cummins announced the launch of Accelera by Cummins, a new brand for its New Power business unit. Accelera provides a diverse portfolio of zero-emissions solutions for many of the world’s most vital industries empowering customers to accelerate their transition to a sustainable future. Accelera announced that it will supply a 90-megawatt (MW) proton exchange membrane (PEM) electrolyzer system for Varennes Carbon Recycling’s (VCR) plant in Quebec, Canada – a key step in advancing North America’s green hydrogen economy. Progress continues to be made on the planned separation of the Filtration business. In February, the company announced that its Filtration business, Atmus Filtration Technologies, has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed underwritten initial public offering of newly issued common stock. Cummins received several prestigious honors during the quarter including being named to Ethisphere’s World’s Most Ethical Companies list for the 16th consecutive year, included in Sustainalytics’ 2023 Top-Rated Companies list, recognizing the best performing sustainability/ESG companies, and ranked first in the Automotive and Components industry in Newsweek’s annual ranking of America’s Most Responsible Companies. Also, Cummins was one of 66 companies honored as America’s Top Corporations for Women’s Business Enterprises in 2023 for the way it works with women-owned businesses and was recognized as a 2023 Military Friendly Employer, receiving the bronze designation for creating sustainable and meaningful benefits for the military community. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2023 detail (all comparisons to same period in 2022): Components Segment Sales - $3.6 billion, up 79 percent Segment EBITDA - $507 million, or 14.3 percent of sales, which includes $12 million of costs related to the separation of the Filtration business compared to $320 million, or 16.1 percent of sales, which includes $6 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased by 87 percent and international sales increased by 69 percent due to the addition of Meritor and increased global demand. Engine Segment Sales - $3.0 billion, up 8 percent Segment EBITDA - $457 million, or 15.3 percent of sales, compared to $390 million or 14.2 percent of sales, which includes $32 million of costs from the indefinite suspension of operations in Russia On-highway revenues increased 9 percent driven by strong demand in the North American truck market, pricing actions and strong aftermarket demand. Sales increased 9 percent in North America and grew 8 percent in international markets due to an increase in China and India demand. Distribution Segment Sales - $2.4 billion, up 14 percent Segment EBITDA - $335 million, or 13.9 percent of sales, compared to $110 million, or 5.2 percent of sales, which includes $100 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased 24 percent and international sales decreased by 5 percent. Higher revenues were driven by increased demand for parts, service, and whole goods and pricing actions. Power Systems Segment Sales - $1.3 billion, up 16 percent Segment EBITDA - $219 million, or 16.3 percent of sales, compared to $90 million, or 7.8 percent of sales, which includes $20 million of costs from the indefinite suspension of operations in Russia Power generation revenues increased 16 percent driven by increased global demand and pricing actions. Industrial revenues increased 16 percent due to strong demand for aftermarket products and increased demand in oil and gas markets. Accelera Segment Sales - $85 million, up 174 percent Segment EBITDA loss - $94 million Revenues increased due to higher demand for battery electric systems in the North American school bus market and the additions of the electric powertrain portion of the Meritor business and Siemens Commercial Vehicle business. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles are contributing to EBITDA losses. About Cummins Inc. Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 73,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $2.2 billion on sales of $28.1 billion in 2022. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/always-on. Forward-looking disclosure statement 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, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; evolving environmental and climate change legislation and regulatory initiatives; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc.; raw material, transportation and labor price fluctuations and supply shortages; any adverse effects of the conflict between Russia and Ukraine and the global response (including government bans or restrictions on doing business in Russia); aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; failure to complete, adverse results from or failure to realize the expected benefits of the separation of our filtration business; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas (GHG) regulations or other legislation designed to address climate change; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2022 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website. Presentation of Non-GAAP Financial Information EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release, except for forward-looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash items that are excluded from the non-GAAP outlook measure. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units. Webcast information Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited) (a) Three months ended March 31, In millions, except per share amounts 2023 2022 NET SALES $ 8,453 $ 6,385 Cost of sales 6,424 4,853 GROSS MARGIN 2,029 1,532 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 753 615 Research, development and engineering expenses 350 298 Equity, royalty and interest income from investees 119 96 Other operating expense, net 19 111 OPERATING INCOME 1,026 604 Interest expense 87 17 Other income (expense), net 90 (9 ) INCOME BEFORE INCOME TAXES 1,029 578 Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 5.58 $ 2.94 Diluted $ 5.55 $ 2.92 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.5 142.2 Diluted 142.4 143.1 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (a) In millions, except par value March 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 1,980 $ 2,101 Marketable securities 459 472 Total cash, cash equivalents and marketable securities 2,439 2,573 Accounts and notes receivable, net 5,834 5,202 Inventories 5,878 5,603 Prepaid expenses and other current assets 1,217 1,073 Total current assets 15,368 14,451 Long-term assets Property, plant and equipment, net 5,590 5,521 Investments and advances related to equity method investees 1,860 1,759 Goodwill 2,365 2,343 Other intangible assets, net 2,640 2,687 Pension assets 1,496 1,398 Other assets 2,114 2,140 Total assets $ 31,433 $ 30,299 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,636 $ 4,252 Loans payable 229 210 Commercial paper 2,545 2,574 Current maturities of long-term debt 569 573 Accrued compensation, benefits and retirement costs 510 617 Current portion of accrued product warranty 746 726 Current portion of deferred revenue 1,040 1,004 Other accrued expenses 1,648 1,465 Total current liabilities 11,923 11,421 Long-term liabilities Long-term debt 4,409 4,498 Deferred revenue 937 844 Other liabilities 3,283 3,311 Total liabilities $ 20,552 $ 20,074 Redeemable noncontrolling interests $ 261 $ 258 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,230 $ 2,243 Retained earnings 18,605 18,037 Treasury stock, at cost, 80.9 and 81.2 shares (9,389 ) (9,415 ) Accumulated other comprehensive loss (1,823 ) (1,890 ) Total Cummins Inc. shareholders’ equity 9,623 8,975 Noncontrolling interests 997 992 Total equity $ 10,620 $ 9,967 Total liabilities, redeemable noncontrolling interests and equity $ 31,433 $ 30,299 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (a) Three months ended March 31, In millions 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 806 $ 423 Adjustments to reconcile consolidated net income to net cash provided by operating activities Depreciation and amortization 246 161 Deferred income taxes (38 ) (66 ) Equity in income of investees, net of dividends (67 ) (76 ) Pension and OPEB expense 1 9 Pension contributions and OPEB payments (92 ) (43 ) Russian suspension costs — 158 (Gain) loss on corporate owned life insurance (19 ) 37 Foreign currency remeasurement and transaction exposure (11 ) (7 ) Changes in current assets and liabilities, net of acquisitions Accounts and notes receivable (621 ) (417 ) Inventories (263 ) (289 ) Other current assets (142 ) (57 ) Accounts payable 381 484 Accrued expenses 151 (251 ) Changes in other liabilities 64 70 Other, net 99 28 Net cash provided by operating activities 495 164 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (193 ) (104 ) Acquisition of a business, net of cash acquired — 83 Investments in marketable securities—acquisitions (326 ) (197 ) Investments in marketable securities—liquidations 345 254 Other, net (54 ) (46 ) Net cash used in investing activities (228 ) (10 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 43 14 Net payments of commercial paper (29 ) (2 ) Payments on borrowings and finance lease obligations (142 ) (24 ) Dividend payments on common stock (222 ) (207 ) Repurchases of common stock — (311 ) Other, net (13 ) 33 Net cash used in financing activities (363 ) (497 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (25 ) 27 Net decrease in cash and cash equivalents (121 ) (316 ) Cash and cash equivalents at beginning of year 2,101 2,592 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,980 $ 2,276 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) REORGANIZATION WITHIN CERTAIN SEGMENTS, REBRANDING A SEGMENT AND TRANSFER OF A JOINT VENTURE BETWEEN SEGMENTS Beginning in the first quarter of 2023, we realigned certain businesses and regions within our reportable segments to be consistent with how our segment managers monitor the performance of our segments. We reorganized the businesses within our Components segment to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuel systems businesses into the newly formed engine components business. Our Components segment now consists of the following businesses: axles and brakes, emission solutions, engine components, filtration, automated transmissions and software and electronics. As a result of the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. In March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented. These changes had no impact on our consolidated results. Descriptions of the new Components' businesses and adjusted prior period balances for all segments are shown below: Components Segment Engine components - We design, manufacture and market turbocharger, valvetrain and fuel system technologies for light-duty, mid-range, heavy-duty and high-horsepower markets across North America, Europe, China and India. Software and electronics - We develop, supply and remanufacture control units, specialty sensors, power electronics, actuators and software for on-highway, off-highway and power generation applications. We primarily serve markets in the Americas, China, India and Europe. Adjusted balances for the Components' businesses are shown in the "SEGMENT SALES DATA" section below under "Components Segment Sales by Business." External sales in 2022 and 2021 for our Components segment by business, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 808 767 748 763 3,086 Engine components 240 223 239 244 946 Filtration 308 319 322 310 1,259 Automated transmissions 134 143 159 157 593 Software and electronics 27 25 20 12 84 Total sales $ 1,517 $ 1,477 $ 2,220 $ 2,633 $ 7,847 2021 In millions YTD Emission solutions $ 3,142 Engine components 1,019 Filtration 1,171 Automated transmissions 481 Software and electronics 119 Total sales $ 5,932 Distribution Segment Total segment sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,367 $ 1,494 $ 1,512 $ 1,575 $ 5,948 Asia Pacific 246 242 260 268 1,016 Europe 281 248 182 218 929 China 83 99 92 81 355 Africa and Middle East 50 61 79 61 251 Latin America 41 56 58 55 210 India 49 53 56 62 220 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 2021 In millions YTD North America $ 4,912 Asia Pacific 906 Europe 966 China 330 Africa and Middle East 278 Latin America 182 India 198 Total sales $ 7,772 External sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,371 $ 1,491 $ 1,512 $ 1,574 $ 5,948 Asia Pacific 244 242 258 267 1,011 Europe 275 246 181 212 914 China 82 99 89 81 351 Africa and Middle East 50 61 79 60 250 Latin America 41 56 58 55 210 India 48 52 55 62 217 Total sales $ 2,111 $ 2,247 $ 2,232 $ 2,311 $ 8,901 2021 In millions YTD North America $ 4,902 Asia Pacific 901 Europe 962 China 323 Africa and Middle East 278 Latin America 182 India 194 Total sales $ 7,742 Accelera Segment NPROXX joint venture move to Engine Segment The move of our NPROXX joint venture from our Accelera segment to Engine segment resulted in adjustments to prior period balances as follows: 2022 2021 In millions Q1 Q2 Q3 Q4 Total Total Engine Equity, royalty and interest income from investees, as disclosed $ 44 $ 59 $ 28 $ 35 $ 166 $ 340 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Equity, royalty and interest income from investees, as adjusted $ 42 $ 58 $ 27 $ 33 $ 160 $ 335 Segment EBITDA, as disclosed $ 392 $ 422 $ 363 $ 364 $ 1,541 $ 1,411 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Segment EBITDA, as adjusted $ 390 $ 421 $ 362 $ 362 $ 1,535 $ 1,406 Investments and advances to equity investees, as disclosed $ 590 $ 742 NPROXX investment adjustment 27 29 Investments and advances to equity investees, as adjusted $ 617 $ 771 Accelera Equity, royalty and interest (loss) income from investees, as disclosed $ (3 ) $ (4 ) $ (5 ) $ 4 $ (8 ) $ (3 ) NPROXX loss adjustment 2 1 1 2 6 5 Equity, royalty and interest (loss) income from investees, as adjusted $ (1 ) $ (3 ) $ (4 ) $ 6 $ (2 ) $ 2 Segment EBITDA, as disclosed $ (67 ) $ (80 ) $ (96 ) $ (97 ) $ (340 ) $ (223 ) NPROXX loss adjustment 2 1 1 2 6 5 Segment EBITDA, as adjusted $ (65 ) $ (79 ) $ (95 ) $ (95 ) $ (334 ) $ (218 ) Investments and advances to equity investees, as disclosed $ 60 $ 49 NPROXX investment adjustment (27 ) (29 ) Investments and advances to equity investees, as adjusted $ 33 $ 20 Summarized financial information regarding our reportable operating segments for the three months ended, including adjusted prior year balances for the changes noted above, is shown in the table below: In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2023 External sales $ 3,043 $ 2,252 $ 2,399 $ 679 $ 80 $ 8,453 $ — $ 8,453 Intersegment sales 514 734 7 664 5 1,924 (1,924 ) — Total sales 3,557 2,986 2,406 1,343 85 10,377 (1,924 ) 8,453 Research, development and engineering expenses 91 134 14 63 48 350 — 350 Equity, royalty and interest income (loss) from investees 21 65 24 13 (4 ) 119 — 119 Interest income 6 3 7 2 — 18 — 18 EBITDA (2) 507 (3) 457 335 219 (94 ) 1,424 (63 ) 1,361 Depreciation and amortization (4) 123 51 28 29 14 245 — 245 EBITDA as a percentage of total sales 14.3 % 15.3 % 13.9 % 16.3 % NM 13.7 % 16.1 % Three months ended March 31, 2022 External sales $ 1,517 $ 2,049 $ 2,111 $ 683 $ 25 $ 6,385 $ — $ 6,385 Intersegment sales 471 704 6 477 6 1,664 (1,664 ) — Total sales 1,988 2,753 2,117 1,160 31 8,049 (1,664 ) 6,385 Research, development and engineering expenses 76 109 13 64 36 298 — 298 Equity, royalty and interest income (loss) from investees 28 42 (5) 16 11 (1 ) 96 — 96 Interest income 1 4 2 1 — 8 — 8 Russian suspension costs 6 32 (6) 100 20 — 158 — 158 EBITDA (2) 320 390 110 90 (65 ) 845 (90 ) 755 Depreciation and amortization (4) 43 51 28 31 7 160 — 160 EBITDA as a percentage of total sales 16.1 % 14.2 % 5.2 % 7.8 % NM 10.5 % 11.8 % "NM" - not meaningful information (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended March 31, 2023 and 2022, except for $6 million and $17 million of costs associated with the planned separation of our filtration business in 2023 and 2022, respectively. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. (3) Includes $12 million of costs associated with the planned separation of our filtration business. (4) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs was $1 million and $1 million for the three months ended March 31, 2023 and 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. (6) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above. A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below: Three months ended March 31, In millions 2023 2022 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Less: Interest expense 87 17 Depreciation and amortization 245 160 INCOME BEFORE INCOME TAXES 1,029 578 Less: Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % CUMMINS INC. AND SUBSIDIARIES SELECT FOOTNOTE DATA (Unaudited) EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting periods was as follows: Three months ended March 31, In millions 2023 2022 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 19 $ 16 Beijing Foton Cummins Engine Co., Ltd. 16 14 Chongqing Cummins Engine Company, Ltd. 9 9 Tata Cummins, Ltd. 8 9 All other manufacturers 19 (10 ) (1) Distribution entities Komatsu Cummins Chile, Ltda. 14 7 All other distributors 3 2 Cummins share of net income 88 47 Royalty and interest income 31 49 Equity, royalty and interest income from investees $ 119 $ 96 (1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. INCOME TAXES Our effective tax rate for 2023 is expected to approximate 22.0 percent, excluding any discrete items that may arise. Our effective tax rate for the three months ended March 31, 2023, was 21.7 percent and contained favorable discrete tax items of $3 million, or $0.02 per share, primarily due to share-based compensation tax benefits. Our effective tax rate for the three months ended March 31, 2022, was 26.8 percent and contained unfavorable discrete tax items of $31 million, or $0.22 per share, primarily due to $18 million of unfavorable changes associated with the indefinite suspension of Russian operations, $9 million of net unfavorable changes in tax reserves and $4 million of net unfavorable other discrete tax items. CUMMINS INC. AND SUBSIDIARIES FINANCIAL MEASURES THAT SUPPLEMENT GAAP (Unaudited) Reconciliation of Non GAAP measures - Earnings before interest, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. We believe EBITDA excluding special items is a useful measure of our operating performance without regard to the costs associated with the planned separation of our filtration business and indefinite suspension of Russian operations. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of non-cash items that are excluded from the non-GAAP outlook measure. EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Net Income. Below is a reconciliation of “Net income attributable to Cummins Inc.” to EBITDA for each of the applicable periods: Three months ended March 31, In millions 2023 2022 Net income attributable to Cummins Inc. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % Add: Net income attributable to noncontrolling interests 16 5 Consolidated net income 806 423 Add: Interest expense 87 17 Income tax expense 223 155 Depreciation and amortization 245 160 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Add: Filtration separation costs 18 17 Russian suspension costs — 158 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations $ 1,379 $ 930 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations, as a percentage of net sales 16.3 % 14.6 % CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business, adjusted for the reorganized businesses as note above, were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ — $ — $ — $ 1,272 Emission solutions 1,056 — — — 1,056 Engine components 581 — — — 581 Filtration 417 — — — 417 Automated transmissions 179 — — — 179 Software and electronics 52 — — — 52 Total sales $ 3,557 $ — $ — $ — $ 3,557 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 910 863 853 868 3,494 Engine components 502 503 509 493 2,007 Filtration 382 391 399 385 1,557 Automated transmissions 134 143 159 157 593 Software and electronics 60 50 51 45 206 Total sales $ 1,988 $ 1,950 $ 2,703 $ 3,095 $ 9,736 2021 In millions YTD Emission solutions $ 3,499 Engine components 2,009 Filtration 1,438 Automated transmissions 478 Software and electronics 241 Total sales $ 7,665 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ — $ — $ — $ 1,114 Medium-duty truck and bus 903 — — — 903 Light-duty automotive 439 — — — 439 Off-highway 530 — — — 530 Total sales $ 2,986 $ — $ — $ — $ 2,986 2022 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 908 $ 1,001 $ 972 $ 966 $ 3,847 Medium-duty truck and bus 848 875 868 869 3,460 Light-duty automotive 498 456 466 318 1,738 Off-highway 499 443 473 485 1,900 Total sales $ 2,753 $ 2,775 $ 2,779 $ 2,638 $ 10,945 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 — — — 34,700 Medium-duty 78,900 — — — 78,900 Light-duty 55,000 — — — 55,000 Total units 168,600 — — — 168,600 2022 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 28,600 30,900 30,200 31,000 120,700 Medium-duty 72,600 68,800 69,800 72,400 283,600 Light-duty 66,500 60,400 58,300 42,400 227,600 Total units 167,700 160,100 158,300 145,800 631,900 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ — $ — $ — $ 1,057 Power generation 492 — — — 492 Engines 456 — — — 456 Service 401 — — — 401 Total sales $ 2,406 $ — $ — $ — $ 2,406 2022 In millions Q1 Q2 Q3 Q4 YTD Parts $ 924 $ 990 $ 945 $ 959 $ 3,818 Power generation 401 441 431 501 1,774 Engines 441 429 449 457 1,776 Service 351 393 414 403 1,561 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification Sales for our Power Systems segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ — $ — $ — $ 770 Industrial 455 — — — 455 Generator technologies 118 — — — 118 Total sales $ 1,343 $ — $ — $ — $ 1,343 2022 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 664 $ 657 $ 739 $ 730 $ 2,790 Industrial 393 428 483 468 1,772 Generator technologies 103 118 127 123 471 Total sales $ 1,160 $ 1,203 $ 1,349 $ 1,321 $ 5,033 High-horsepower unit shipments by engine classification were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 — — — 2,900 Industrial 1,500 — — — 1,500 Total units 4,400 — — — 4,400 2022 Units Q1 Q2 Q3 Q4 YTD Power generation 2,200 2,400 2,400 2,700 9,700 Industrial 1,100 1,200 1,200 1,400 4,900 Total units 3,300 3,600 3,600 4,100 14,600 View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005439/en/Contacts Jon Mills, Director External Communications and Global Brand 317-658-4540 jon.mills@cummins.com
Record first quarter revenues of $8.5 billion; Record GAAP1 Net Income of $790 million EBITDA in the first quarter was 16.1 percent of sales; Record Diluted EPS of $5.55 First quarter results include $18 million, or $0.10 per diluted share, of costs related to the separation of the Filtration business. The company is raising its full year 2023 revenue guidance to be up 15 to 20 percent; an increase from previous guidance of up 12 to 17 percent. EBITDA is now expected to be in the range of 15.0 to 15.7 percent; an increase from previous guidance of 14.5 to 15.2 percent.
Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2023. First quarter revenues of $8.5 billion increased 32 percent from the same quarter in 2022. Sales in North America increased 39 percent and international revenues increased 24 percent due to the addition of Meritor and strong demand across all key global markets. “The company achieved record revenues, EBITDA and EPS in the first quarter of 2023, with demand for our products remaining strong across most of our key markets and regions,” said Jennifer Rumsey, President and CEO. “We are delivering cycle-over-cycle improvement in financial performance despite persistent supply chain constraints, and we continue to invest in sustainable solutions that will protect our planet for future generations and support the success of our customers.” Net income attributable to Cummins in the first quarter was $790 million, or $5.55 per diluted share compared to $418 million, or $2.92 per diluted share, in 2022, which included $158 million, or $1.03 per diluted share, of costs related to the indefinite suspension of operations in Russia. Results included costs associated with the separation of the Filtration business of $18 million, or $0.10 per diluted share, in the first quarter of 2023, and $17 million, or $0.09 per diluted share, in the first quarter of 2022. The tax rate in the first quarter was 21.7 percent including $3 million, or $0.02 per diluted share, of favorable discrete tax items. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $1.4 billion, or 16.1 percent of sales, compared to $755 million, or 11.8 percent of sales, a year ago. EBITDA for the first quarter of 2023 included the costs related to the separation of the Filtration business and the first quarter 2022 EBITDA included the costs related to the indefinite suspension of operations in Russia and costs related to the separation of the Filtration business as noted above. 2023 Outlook: Based on its current forecast, Cummins is raising its full year 2023 revenue guidance to be up 15 to 20 percent, an increase from our prior projections of up 12 to 17 percent due to stronger demand across most markets. EBITDA is expected to be in the range of 15.0 to 15.7 percent, an increase from the prior range of 14.5 and 15.2 percent of sales. The outlook above includes the projected results of the Meritor business for 2023, but excludes any costs or benefits associated with the planned separation of the Filtration business. Within the Components Segment, Cummins expects revenues of the Meritor business for 2023 to be between $4.7 billion to $4.9 billion, an increase from $4.5 billion to $4.7 billion previously, and EBITDA to be in the range of 10.3 to 11.0 percent of sales, consistent with prior guidance. The company plans to continue to generate strong operating cash flow and returns for shareholders and is committed to our long-term strategic goal of returning 50 percent of operating cash flow back to shareholders. In the near term, we will focus on reinvesting for profitable growth, dividends and reducing debt. “We have raised our guidance on revenue and profitability for 2023 due to continued demand for Cummins’ products and services. We will continue monitoring global economic indicators closely to ensure we are prepared should economic momentum slow,” said Rumsey. “Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2023 Highlights: In March, Cummins announced the launch of Accelera by Cummins, a new brand for its New Power business unit. Accelera provides a diverse portfolio of zero-emissions solutions for many of the world’s most vital industries empowering customers to accelerate their transition to a sustainable future. Accelera announced that it will supply a 90-megawatt (MW) proton exchange membrane (PEM) electrolyzer system for Varennes Carbon Recycling’s (VCR) plant in Quebec, Canada – a key step in advancing North America’s green hydrogen economy. Progress continues to be made on the planned separation of the Filtration business. In February, the company announced that its Filtration business, Atmus Filtration Technologies, has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed underwritten initial public offering of newly issued common stock. Cummins received several prestigious honors during the quarter including being named to Ethisphere’s World’s Most Ethical Companies list for the 16th consecutive year, included in Sustainalytics’ 2023 Top-Rated Companies list, recognizing the best performing sustainability/ESG companies, and ranked first in the Automotive and Components industry in Newsweek’s annual ranking of America’s Most Responsible Companies. Also, Cummins was one of 66 companies honored as America’s Top Corporations for Women’s Business Enterprises in 2023 for the way it works with women-owned businesses and was recognized as a 2023 Military Friendly Employer, receiving the bronze designation for creating sustainable and meaningful benefits for the military community. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2023 detail (all comparisons to same period in 2022): Components Segment Sales - $3.6 billion, up 79 percent Segment EBITDA - $507 million, or 14.3 percent of sales, which includes $12 million of costs related to the separation of the Filtration business compared to $320 million, or 16.1 percent of sales, which includes $6 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased by 87 percent and international sales increased by 69 percent due to the addition of Meritor and increased global demand. Engine Segment Sales - $3.0 billion, up 8 percent Segment EBITDA - $457 million, or 15.3 percent of sales, compared to $390 million or 14.2 percent of sales, which includes $32 million of costs from the indefinite suspension of operations in Russia On-highway revenues increased 9 percent driven by strong demand in the North American truck market, pricing actions and strong aftermarket demand. Sales increased 9 percent in North America and grew 8 percent in international markets due to an increase in China and India demand. Distribution Segment Sales - $2.4 billion, up 14 percent Segment EBITDA - $335 million, or 13.9 percent of sales, compared to $110 million, or 5.2 percent of sales, which includes $100 million of costs from the indefinite suspension of operations in Russia Revenues in North America increased 24 percent and international sales decreased by 5 percent. Higher revenues were driven by increased demand for parts, service, and whole goods and pricing actions. Power Systems Segment Sales - $1.3 billion, up 16 percent Segment EBITDA - $219 million, or 16.3 percent of sales, compared to $90 million, or 7.8 percent of sales, which includes $20 million of costs from the indefinite suspension of operations in Russia Power generation revenues increased 16 percent driven by increased global demand and pricing actions. Industrial revenues increased 16 percent due to strong demand for aftermarket products and increased demand in oil and gas markets. Accelera Segment Sales - $85 million, up 174 percent Segment EBITDA loss - $94 million Revenues increased due to higher demand for battery electric systems in the North American school bus market and the additions of the electric powertrain portion of the Meritor business and Siemens Commercial Vehicle business. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles are contributing to EBITDA losses. About Cummins Inc. Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 73,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $2.2 billion on sales of $28.1 billion in 2022. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/always-on. Forward-looking disclosure statement 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, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; evolving environmental and climate change legislation and regulatory initiatives; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc.; raw material, transportation and labor price fluctuations and supply shortages; any adverse effects of the conflict between Russia and Ukraine and the global response (including government bans or restrictions on doing business in Russia); aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; failure to complete, adverse results from or failure to realize the expected benefits of the separation of our filtration business; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas (GHG) regulations or other legislation designed to address climate change; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2022 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website. Presentation of Non-GAAP Financial Information EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release, except for forward-looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash items that are excluded from the non-GAAP outlook measure. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units. Webcast information Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited) (a) Three months ended March 31, In millions, except per share amounts 2023 2022 NET SALES $ 8,453 $ 6,385 Cost of sales 6,424 4,853 GROSS MARGIN 2,029 1,532 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 753 615 Research, development and engineering expenses 350 298 Equity, royalty and interest income from investees 119 96 Other operating expense, net 19 111 OPERATING INCOME 1,026 604 Interest expense 87 17 Other income (expense), net 90 (9 ) INCOME BEFORE INCOME TAXES 1,029 578 Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 5.58 $ 2.94 Diluted $ 5.55 $ 2.92 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.5 142.2 Diluted 142.4 143.1 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (a) In millions, except par value March 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 1,980 $ 2,101 Marketable securities 459 472 Total cash, cash equivalents and marketable securities 2,439 2,573 Accounts and notes receivable, net 5,834 5,202 Inventories 5,878 5,603 Prepaid expenses and other current assets 1,217 1,073 Total current assets 15,368 14,451 Long-term assets Property, plant and equipment, net 5,590 5,521 Investments and advances related to equity method investees 1,860 1,759 Goodwill 2,365 2,343 Other intangible assets, net 2,640 2,687 Pension assets 1,496 1,398 Other assets 2,114 2,140 Total assets $ 31,433 $ 30,299 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,636 $ 4,252 Loans payable 229 210 Commercial paper 2,545 2,574 Current maturities of long-term debt 569 573 Accrued compensation, benefits and retirement costs 510 617 Current portion of accrued product warranty 746 726 Current portion of deferred revenue 1,040 1,004 Other accrued expenses 1,648 1,465 Total current liabilities 11,923 11,421 Long-term liabilities Long-term debt 4,409 4,498 Deferred revenue 937 844 Other liabilities 3,283 3,311 Total liabilities $ 20,552 $ 20,074 Redeemable noncontrolling interests $ 261 $ 258 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,230 $ 2,243 Retained earnings 18,605 18,037 Treasury stock, at cost, 80.9 and 81.2 shares (9,389 ) (9,415 ) Accumulated other comprehensive loss (1,823 ) (1,890 ) Total Cummins Inc. shareholders’ equity 9,623 8,975 Noncontrolling interests 997 992 Total equity $ 10,620 $ 9,967 Total liabilities, redeemable noncontrolling interests and equity $ 31,433 $ 30,299 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (a) Three months ended March 31, In millions 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 806 $ 423 Adjustments to reconcile consolidated net income to net cash provided by operating activities Depreciation and amortization 246 161 Deferred income taxes (38 ) (66 ) Equity in income of investees, net of dividends (67 ) (76 ) Pension and OPEB expense 1 9 Pension contributions and OPEB payments (92 ) (43 ) Russian suspension costs — 158 (Gain) loss on corporate owned life insurance (19 ) 37 Foreign currency remeasurement and transaction exposure (11 ) (7 ) Changes in current assets and liabilities, net of acquisitions Accounts and notes receivable (621 ) (417 ) Inventories (263 ) (289 ) Other current assets (142 ) (57 ) Accounts payable 381 484 Accrued expenses 151 (251 ) Changes in other liabilities 64 70 Other, net 99 28 Net cash provided by operating activities 495 164 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (193 ) (104 ) Acquisition of a business, net of cash acquired — 83 Investments in marketable securities—acquisitions (326 ) (197 ) Investments in marketable securities—liquidations 345 254 Other, net (54 ) (46 ) Net cash used in investing activities (228 ) (10 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 43 14 Net payments of commercial paper (29 ) (2 ) Payments on borrowings and finance lease obligations (142 ) (24 ) Dividend payments on common stock (222 ) (207 ) Repurchases of common stock — (311 ) Other, net (13 ) 33 Net cash used in financing activities (363 ) (497 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (25 ) 27 Net decrease in cash and cash equivalents (121 ) (316 ) Cash and cash equivalents at beginning of year 2,101 2,592 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,980 $ 2,276 (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. CUMMINS INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) REORGANIZATION WITHIN CERTAIN SEGMENTS, REBRANDING A SEGMENT AND TRANSFER OF A JOINT VENTURE BETWEEN SEGMENTS Beginning in the first quarter of 2023, we realigned certain businesses and regions within our reportable segments to be consistent with how our segment managers monitor the performance of our segments. We reorganized the businesses within our Components segment to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuel systems businesses into the newly formed engine components business. Our Components segment now consists of the following businesses: axles and brakes, emission solutions, engine components, filtration, automated transmissions and software and electronics. As a result of the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. In March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented. These changes had no impact on our consolidated results. Descriptions of the new Components' businesses and adjusted prior period balances for all segments are shown below: Components Segment Engine components - We design, manufacture and market turbocharger, valvetrain and fuel system technologies for light-duty, mid-range, heavy-duty and high-horsepower markets across North America, Europe, China and India. Software and electronics - We develop, supply and remanufacture control units, specialty sensors, power electronics, actuators and software for on-highway, off-highway and power generation applications. We primarily serve markets in the Americas, China, India and Europe. Adjusted balances for the Components' businesses are shown in the "SEGMENT SALES DATA" section below under "Components Segment Sales by Business." External sales in 2022 and 2021 for our Components segment by business, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 808 767 748 763 3,086 Engine components 240 223 239 244 946 Filtration 308 319 322 310 1,259 Automated transmissions 134 143 159 157 593 Software and electronics 27 25 20 12 84 Total sales $ 1,517 $ 1,477 $ 2,220 $ 2,633 $ 7,847 2021 In millions YTD Emission solutions $ 3,142 Engine components 1,019 Filtration 1,171 Automated transmissions 481 Software and electronics 119 Total sales $ 5,932 Distribution Segment Total segment sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,367 $ 1,494 $ 1,512 $ 1,575 $ 5,948 Asia Pacific 246 242 260 268 1,016 Europe 281 248 182 218 929 China 83 99 92 81 355 Africa and Middle East 50 61 79 61 251 Latin America 41 56 58 55 210 India 49 53 56 62 220 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 2021 In millions YTD North America $ 4,912 Asia Pacific 906 Europe 966 China 330 Africa and Middle East 278 Latin America 182 India 198 Total sales $ 7,772 External sales in 2022 and 2021 for our Distribution segment by region, as adjusted, were as follows: 2022 In millions Q1 Q2 Q3 Q4 YTD North America $ 1,371 $ 1,491 $ 1,512 $ 1,574 $ 5,948 Asia Pacific 244 242 258 267 1,011 Europe 275 246 181 212 914 China 82 99 89 81 351 Africa and Middle East 50 61 79 60 250 Latin America 41 56 58 55 210 India 48 52 55 62 217 Total sales $ 2,111 $ 2,247 $ 2,232 $ 2,311 $ 8,901 2021 In millions YTD North America $ 4,902 Asia Pacific 901 Europe 962 China 323 Africa and Middle East 278 Latin America 182 India 194 Total sales $ 7,742 Accelera Segment NPROXX joint venture move to Engine Segment The move of our NPROXX joint venture from our Accelera segment to Engine segment resulted in adjustments to prior period balances as follows: 2022 2021 In millions Q1 Q2 Q3 Q4 Total Total Engine Equity, royalty and interest income from investees, as disclosed $ 44 $ 59 $ 28 $ 35 $ 166 $ 340 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Equity, royalty and interest income from investees, as adjusted $ 42 $ 58 $ 27 $ 33 $ 160 $ 335 Segment EBITDA, as disclosed $ 392 $ 422 $ 363 $ 364 $ 1,541 $ 1,411 NPROXX loss adjustment (2 ) (1 ) (1 ) (2 ) (6 ) (5 ) Segment EBITDA, as adjusted $ 390 $ 421 $ 362 $ 362 $ 1,535 $ 1,406 Investments and advances to equity investees, as disclosed $ 590 $ 742 NPROXX investment adjustment 27 29 Investments and advances to equity investees, as adjusted $ 617 $ 771 Accelera Equity, royalty and interest (loss) income from investees, as disclosed $ (3 ) $ (4 ) $ (5 ) $ 4 $ (8 ) $ (3 ) NPROXX loss adjustment 2 1 1 2 6 5 Equity, royalty and interest (loss) income from investees, as adjusted $ (1 ) $ (3 ) $ (4 ) $ 6 $ (2 ) $ 2 Segment EBITDA, as disclosed $ (67 ) $ (80 ) $ (96 ) $ (97 ) $ (340 ) $ (223 ) NPROXX loss adjustment 2 1 1 2 6 5 Segment EBITDA, as adjusted $ (65 ) $ (79 ) $ (95 ) $ (95 ) $ (334 ) $ (218 ) Investments and advances to equity investees, as disclosed $ 60 $ 49 NPROXX investment adjustment (27 ) (29 ) Investments and advances to equity investees, as adjusted $ 33 $ 20 Summarized financial information regarding our reportable operating segments for the three months ended, including adjusted prior year balances for the changes noted above, is shown in the table below: In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2023 External sales $ 3,043 $ 2,252 $ 2,399 $ 679 $ 80 $ 8,453 $ — $ 8,453 Intersegment sales 514 734 7 664 5 1,924 (1,924 ) — Total sales 3,557 2,986 2,406 1,343 85 10,377 (1,924 ) 8,453 Research, development and engineering expenses 91 134 14 63 48 350 — 350 Equity, royalty and interest income (loss) from investees 21 65 24 13 (4 ) 119 — 119 Interest income 6 3 7 2 — 18 — 18 EBITDA (2) 507 (3) 457 335 219 (94 ) 1,424 (63 ) 1,361 Depreciation and amortization (4) 123 51 28 29 14 245 — 245 EBITDA as a percentage of total sales 14.3 % 15.3 % 13.9 % 16.3 % NM 13.7 % 16.1 % Three months ended March 31, 2022 External sales $ 1,517 $ 2,049 $ 2,111 $ 683 $ 25 $ 6,385 $ — $ 6,385 Intersegment sales 471 704 6 477 6 1,664 (1,664 ) — Total sales 1,988 2,753 2,117 1,160 31 8,049 (1,664 ) 6,385 Research, development and engineering expenses 76 109 13 64 36 298 — 298 Equity, royalty and interest income (loss) from investees 28 42 (5) 16 11 (1 ) 96 — 96 Interest income 1 4 2 1 — 8 — 8 Russian suspension costs 6 32 (6) 100 20 — 158 — 158 EBITDA (2) 320 390 110 90 (65 ) 845 (90 ) 755 Depreciation and amortization (4) 43 51 28 31 7 160 — 160 EBITDA as a percentage of total sales 16.1 % 14.2 % 5.2 % 7.8 % NM 10.5 % 11.8 % "NM" - not meaningful information (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended March 31, 2023 and 2022, except for $6 million and $17 million of costs associated with the planned separation of our filtration business in 2023 and 2022, respectively. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. (3) Includes $12 million of costs associated with the planned separation of our filtration business. (4) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs was $1 million and $1 million for the three months ended March 31, 2023 and 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. (6) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above. A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below: Three months ended March 31, In millions 2023 2022 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Less: Interest expense 87 17 Depreciation and amortization 245 160 INCOME BEFORE INCOME TAXES 1,029 578 Less: Income tax expense 223 155 CONSOLIDATED NET INCOME 806 423 Less: Net income attributable to noncontrolling interests 16 5 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % CUMMINS INC. AND SUBSIDIARIES SELECT FOOTNOTE DATA (Unaudited) EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting periods was as follows: Three months ended March 31, In millions 2023 2022 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 19 $ 16 Beijing Foton Cummins Engine Co., Ltd. 16 14 Chongqing Cummins Engine Company, Ltd. 9 9 Tata Cummins, Ltd. 8 9 All other manufacturers 19 (10 ) (1) Distribution entities Komatsu Cummins Chile, Ltda. 14 7 All other distributors 3 2 Cummins share of net income 88 47 Royalty and interest income 31 49 Equity, royalty and interest income from investees $ 119 $ 96 (1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. INCOME TAXES Our effective tax rate for 2023 is expected to approximate 22.0 percent, excluding any discrete items that may arise. Our effective tax rate for the three months ended March 31, 2023, was 21.7 percent and contained favorable discrete tax items of $3 million, or $0.02 per share, primarily due to share-based compensation tax benefits. Our effective tax rate for the three months ended March 31, 2022, was 26.8 percent and contained unfavorable discrete tax items of $31 million, or $0.22 per share, primarily due to $18 million of unfavorable changes associated with the indefinite suspension of Russian operations, $9 million of net unfavorable changes in tax reserves and $4 million of net unfavorable other discrete tax items. CUMMINS INC. AND SUBSIDIARIES FINANCIAL MEASURES THAT SUPPLEMENT GAAP (Unaudited) Reconciliation of Non GAAP measures - Earnings before interest, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. We believe EBITDA excluding special items is a useful measure of our operating performance without regard to the costs associated with the planned separation of our filtration business and indefinite suspension of Russian operations. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of non-cash items that are excluded from the non-GAAP outlook measure. EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Net Income. Below is a reconciliation of “Net income attributable to Cummins Inc.” to EBITDA for each of the applicable periods: Three months ended March 31, In millions 2023 2022 Net income attributable to Cummins Inc. $ 790 $ 418 Net income attributable to Cummins Inc. as a percentage of net sales 9.3 % 6.5 % Add: Net income attributable to noncontrolling interests 16 5 Consolidated net income 806 423 Add: Interest expense 87 17 Income tax expense 223 155 Depreciation and amortization 245 160 EBITDA $ 1,361 $ 755 EBITDA as a percentage of net sales 16.1 % 11.8 % Add: Filtration separation costs 18 17 Russian suspension costs — 158 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations $ 1,379 $ 930 EBITDA, excluding costs associated with the separation of our filtration business and indefinite suspension of Russian operations, as a percentage of net sales 16.3 % 14.6 % CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business, adjusted for the reorganized businesses as note above, were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ — $ — $ — $ 1,272 Emission solutions 1,056 — — — 1,056 Engine components 581 — — — 581 Filtration 417 — — — 417 Automated transmissions 179 — — — 179 Software and electronics 52 — — — 52 Total sales $ 3,557 $ — $ — $ — $ 3,557 2022 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ — $ — $ 732 $ 1,147 $ 1,879 Emission solutions 910 863 853 868 3,494 Engine components 502 503 509 493 2,007 Filtration 382 391 399 385 1,557 Automated transmissions 134 143 159 157 593 Software and electronics 60 50 51 45 206 Total sales $ 1,988 $ 1,950 $ 2,703 $ 3,095 $ 9,736 2021 In millions YTD Emission solutions $ 3,499 Engine components 2,009 Filtration 1,438 Automated transmissions 478 Software and electronics 241 Total sales $ 7,665 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ — $ — $ — $ 1,114 Medium-duty truck and bus 903 — — — 903 Light-duty automotive 439 — — — 439 Off-highway 530 — — — 530 Total sales $ 2,986 $ — $ — $ — $ 2,986 2022 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 908 $ 1,001 $ 972 $ 966 $ 3,847 Medium-duty truck and bus 848 875 868 869 3,460 Light-duty automotive 498 456 466 318 1,738 Off-highway 499 443 473 485 1,900 Total sales $ 2,753 $ 2,775 $ 2,779 $ 2,638 $ 10,945 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 — — — 34,700 Medium-duty 78,900 — — — 78,900 Light-duty 55,000 — — — 55,000 Total units 168,600 — — — 168,600 2022 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 28,600 30,900 30,200 31,000 120,700 Medium-duty 72,600 68,800 69,800 72,400 283,600 Light-duty 66,500 60,400 58,300 42,400 227,600 Total units 167,700 160,100 158,300 145,800 631,900 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ — $ — $ — $ 1,057 Power generation 492 — — — 492 Engines 456 — — — 456 Service 401 — — — 401 Total sales $ 2,406 $ — $ — $ — $ 2,406 2022 In millions Q1 Q2 Q3 Q4 YTD Parts $ 924 $ 990 $ 945 $ 959 $ 3,818 Power generation 401 441 431 501 1,774 Engines 441 429 449 457 1,776 Service 351 393 414 403 1,561 Total sales $ 2,117 $ 2,253 $ 2,239 $ 2,320 $ 8,929 Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification Sales for our Power Systems segment by product line were as follows: 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ — $ — $ — $ 770 Industrial 455 — — — 455 Generator technologies 118 — — — 118 Total sales $ 1,343 $ — $ — $ — $ 1,343 2022 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 664 $ 657 $ 739 $ 730 $ 2,790 Industrial 393 428 483 468 1,772 Generator technologies 103 118 127 123 471 Total sales $ 1,160 $ 1,203 $ 1,349 $ 1,321 $ 5,033 High-horsepower unit shipments by engine classification were as follows: 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 — — — 2,900 Industrial 1,500 — — — 1,500 Total units 4,400 — — — 4,400 2022 Units Q1 Q2 Q3 Q4 YTD Power generation 2,200 2,400 2,400 2,700 9,700 Industrial 1,100 1,200 1,200 1,400 4,900 Total units 3,300 3,600 3,600 4,100 14,600 View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005439/en/