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 First Quarter 2024 Results By: Cummins Inc. via Business Wire May 02, 2024 at 07:30 AM EDT First quarter revenues of $8.4 billion; GAAP1 Net Income of $2.0 billion EBITDA in the first quarter was 30.6% of sales; Diluted EPS of $14.03 First quarter results include a net gain of $1.3 billion, or $9.08 per diluted share, related to the separation of Atmus and $29 million, or $0.15 per diluted share, of restructuring expenses. The company is raising its guidance for full year 2024 revenue and EBITDA after adjusting for the separation of Atmus. Full year revenues are expected to decline 2% to 5%; prior guidance was also down 2% to 5% but assumed the inclusion of Atmus revenues for the full year. EBITDA is now expected to be in the range of 14.5% to 15.5%; an increase from previous guidance of 14.4% to 15.4% which also included Atmus for the full year. Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2024. “We continued to see strong demand from customers in the first quarter of 2024, reflecting the quality and performance of our products,” said Jennifer Rumsey, Chair and CEO. “We delivered solid profitability and also completed the separation of Atmus, allowing Cummins to continue its focus on advancing innovative power solutions and positioning Atmus to pursue its own plans for profitable growth. I am deeply appreciative of our Cummins employees across the globe, whose broad expertise and diverse perspectives are driving our ability to innovate for our customers and meet global demand.” First quarter revenues of $8.4 billion decreased 1% from the same quarter in 2023. Sales in North America were flat, and international revenues decreased 1% due to lower demand in China and Europe. Net income attributable to Cummins in the first quarter was $2.0 billion, or $14.03 per diluted share, compared to $790 million, or $5.55 per diluted share, in 2023. The results reflect the gain related to the separation of Atmus, net of transaction costs and other expenses, of $1.3 billion, or $9.08 per diluted share, and restructuring expenses of $29 million, or $0.15 per diluted share. The first quarter of 2023 included costs related to the separation of Atmus of $18 million, or $0.10 per diluted share. The tax rate in the first quarter was 8.7%, primarily due to the nontaxable gain on the separation of Atmus. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $2.6 billion, or 30.6% of sales, compared to $1.4 billion, or 16.1% of sales, a year ago. EBITDA for the first quarter of 2024 and the first quarter of 2023 included the gain and costs noted above. 2024 Outlook: Based on its current forecast, Cummins projects full year 2024 revenues to decline 2% to 5% on a year-over-year basis, and EBITDA to be in the range of 14.5% and 15.5% of sales. The prior guidance, which was also a decline of 2% to 5%, assumed the inclusion of the financial results of Atmus for the full year. Due to strong global demand, the revenue guidance is unchanged as compared to the prior guidance despite the separation of Atmus. The current EBITDA guidance is an increase from the prior guidance of between 14.4% and 15.4%. Cummins 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% 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 expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services. We do still expect slowing demand in some of our key markets in the second half of the year,” said Rumsey. “Despite lower sales, Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2024 Highlights: In March, Cummins finalized the separation of Atmus Filtration Technologies Inc. through a share exchange offer in which shareholders had the option to exchange their shares of Cummins common stock for shares of Atmus. Following completion of the exchange offer, Cummins did not retain any outstanding shares of Atmus common stock. Accelera™ by Cummins, Daimler Trucks & Buses and PACCAR selected Marshall County, Mississippi, as the future site of advanced battery cell manufacturing for their planned joint venture. The joint venture will localize battery cell production for commercial electric vehicles and is expected to create more than 2,000 U.S. manufacturing jobs, with the option for further expansion as demand grows. The 21-gigawatt hour (GWh) factory is expected to begin producing battery cells in 2027. Cummins re-introduced the fuel agnostic platforms with a name that captures the innovation that powers the business forward, the Cummins HELM™ platforms. With higher efficiency, lower emissions and multiple fuels, the Cummins HELM™ platforms give customers control of how they navigate their own journeys as part of the energy transition. As the next product in the Cummins HELM™15-liter platform, Cummins announced it will launch the next generation diesel X15 in North America for the heavy-duty on-highway market which will be compliant with U.S. EPA and CARB 2027 aligned regulations at launch. In April, Cummins Power Generation introduced four new generator sets to the award-winning Centum™ Series, two each powered by Cummins’ QSK50 and QSK78 engines. In response to high market demand, these new models have been engineered specifically for the most critical applications such as data centers, healthcare facilities and wastewater treatment plants. These products build on decades of experience meeting our customers' needs and deliver a step-change improvement in power density, assured reliability, sustainability and low emissions. Cummins received several prestigious honors during the quarter including being ranked in the Financial Times Diversity Leaders list for the third consecutive year, winning the World 50 Inclusion & Diversity Impact Award, and being named industry leader in the Commercial Vehicle and Machinery category for America’s Most JUST Companies list. Also, Cummins was named a 2024 Handshake Early Talent Award winner for its role in shaping the workforce of the future and was recognized as a 2024 Top Hispanic Employer by DiversityComm Magazine. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2024 detail (all comparisons to same period in 2023): Components Segment Sales - $3.3 billion, down 6% Segment EBITDA - $473 million, or 14.2% of sales, which includes $21 million of costs related to the separation of Atmus compared to $507 million, or 14.3% of sales, which includes $12 million of costs related to the separation of Atmus Revenues in North America decreased by 5% and international sales decreased by 8% primarily due to lower demand in China and Europe. Engine Segment Sales - $2.9 billion, down 2% Segment EBITDA - $414 million, or 14.1% of sales, compared to $457 million, or 15.3% of sales On-highway revenues increased 1% driven by continued strong demand in the North American medium-duty truck market and pricing actions. Sales were flat in North America and decreased 8% in international markets due to lower demand in China and Europe. Distribution Segment Sales - $2.5 billion, up 5% Segment EBITDA - $294 million, or 11.6% of sales, compared to $335 million, or 13.9% of sales Revenues in North America increased 2% and international sales increased by 14%. Higher revenues were driven by increased demand for power generation products and pricing actions. Power Systems Segment Sales - $1.4 billion, up 3% Segment EBITDA - $237 million, or 17.1% of sales, compared to $219 million, or 16.3% of sales Power generation revenues increased 11% driven by increased global demand, particularly for the data center market. Industrial revenues decreased 8% primarily due to weaker demand in oil and gas markets. Accelera Segment Sales - $93 million, up 9% Segment EBITDA loss - $101 million Revenues increased due to increased electrolyzer installations. 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. The company continues to make investments to support our customers through the energy transition and deliver future profitable growth. About Cummins Inc. Cummins Inc., a global power solutions leader, is comprised of five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company’s commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 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 $735 million on sales of $34.1 billion in 2023. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/. 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, EBITDA and Agreement in Principle to settle regulatory proceedings regarding our emissions certification and compliance process for pick-up truck applications. 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 consequences resulting from entering into the Agreement in Principle, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; 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. (Meritor); raw material, transportation and labor price fluctuations and supply shortages; 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; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; 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; 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 2023 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 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. EDT. 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 2024 2023 NET SALES $ 8,403 $ 8,453 Cost of sales 6,362 6,424 GROSS MARGIN 2,041 2,029 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 839 753 Research, development and engineering expenses 369 350 Equity, royalty and interest income from investees 123 119 Other operating expense, net 33 19 OPERATING INCOME 923 1,026 Interest expense 89 87 Other income, net 1,387 90 INCOME BEFORE INCOME TAXES 2,221 1,029 Income tax expense 193 223 CONSOLIDATED NET INCOME 2,028 806 Less: Net income attributable to noncontrolling interests 35 16 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 1,993 $ 790 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 14.10 $ 5.58 Diluted $ 14.03 $ 5.55 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.3 141.5 Diluted 142.1 142.4 (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, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents $ 2,541 $ 2,179 Marketable securities 510 562 Total cash, cash equivalents and marketable securities 3,051 2,741 Accounts and notes receivable, net 5,463 5,583 Inventories 5,758 5,677 Prepaid expenses and other current assets 1,348 1,197 Total current assets 15,620 15,198 Long-term assets Property, plant and equipment, net 6,011 6,249 Investments and advances related to equity method investees 1,774 1,800 Goodwill 2,406 2,499 Other intangible assets, net 2,455 2,519 Pension assets 1,187 1,197 Other assets 2,374 2,543 Total assets $ 31,827 $ 32,005 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,476 $ 4,260 Loans payable 342 280 Commercial paper 609 1,496 Current maturities of long-term debt 113 118 Accrued compensation, benefits and retirement costs 561 1,108 Current portion of accrued product warranty 652 667 Current portion of deferred revenue 1,236 1,220 Other accrued expenses 3,697 3,754 Total current liabilities 11,686 12,903 Long-term liabilities Long-term debt 5,771 4,802 Deferred revenue 1,061 966 Other liabilities 3,208 3,430 Total liabilities $ 21,726 $ 22,101 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,557 $ 2,564 Retained earnings 19,605 17,851 Treasury stock, at cost, 85.7 and 80.7 shares (10,831 ) (9,359 ) Accumulated other comprehensive loss (2,264 ) (2,206 ) Total Cummins Inc. shareholders’ equity 9,067 8,850 Noncontrolling interests 1,034 1,054 Total equity $ 10,101 $ 9,904 Total liabilities and equity $ 31,827 $ 32,005 (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 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 2,028 $ 806 Adjustments to reconcile consolidated net income to net cash provided by operating activities Gain related to divestiture of Atmus (1,333 ) — Depreciation and amortization 265 246 Deferred income taxes (38 ) (38 ) Equity in income of investees, net of dividends (78 ) (67 ) Pension and OPEB expense 9 1 Pension contributions and OPEB payments (48 ) (92 ) Changes in current assets and liabilities, net of acquisitions and divestitures Accounts and notes receivable (11 ) (621 ) Inventories (354 ) (263 ) Other current assets (175 ) (142 ) Accounts payable 327 381 Accrued expenses (393 ) 151 Other, net 77 133 Net cash provided by operating activities 276 495 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (169 ) (193 ) Acquisition of business, net of cash acquired (59 ) — Investments in marketable securities—acquisitions (379 ) (326 ) Investments in marketable securities—liquidations 431 345 Cash associated with Atmus divestiture (174 ) — Other, net (56 ) (54 ) Net cash used in investing activities (406 ) (228 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 2,398 43 Net payments of commercial paper (887 ) (29 ) Payments on borrowings and finance lease obligations (748 ) (142 ) Dividend payments on common stock (239 ) (222 ) Other, net (25 ) (13 ) Net cash provided by (used in) financing activities 499 (363 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7 ) (25 ) Net increase (decrease) in cash and cash equivalents 362 (121 ) Cash and cash equivalents at beginning of year 2,179 2,101 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,541 $ 1,980 (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) In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2024 External sales $ 2,842 $ 2,240 $ 2,529 $ 708 $ 84 $ 8,403 $ — $ 8,403 Intersegment sales 490 688 6 681 9 1,874 (1,874 ) — Total sales 3,332 2,928 2,535 1,389 93 10,277 (1,874 ) 8,403 Research, development and engineering expenses 84 154 14 60 55 367 2 369 Equity, royalty and interest income (loss) from investees 26 57 24 19 (3 ) 123 — 123 Interest income 8 7 11 3 — 29 — 29 EBITDA (2) 473 (3 ) 414 294 237 (101 ) 1,317 1,255 2,572 Depreciation and amortization (4) 125 58 31 34 14 262 — 262 EBITDA as a percentage of total sales 14.2 % 14.1 % 11.6 % 17.1 % NM 12.8 % 30.6 % 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 (5 ) 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 % "NM" - not meaningful information (1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses. The three months ended March 31, 2024, included a $1.3 billion gain related to the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus. The three months ended March 31, 2023, included $6 million of costs associated with the divestiture of Atmus. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. 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. (3) Included $21 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. (4) Depreciation and amortization, as shown on a segment basis, excluded 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 $3 million and $1 million for the three months ended March 31, 2024 and 2023, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Included $12 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023. 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 2024 2023 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 22 $ 19 Chongqing Cummins Engine Company, Ltd. 15 9 Beijing Foton Cummins Engine Co., Ltd. 13 16 Tata Cummins, Ltd. 9 8 All other manufacturers 23 19 Distribution entities Komatsu Cummins Chile, Ltda. 13 14 All other distributors 5 3 Cummins share of net income 100 88 Royalty and interest income 23 31 Equity, royalty and interest income from investees $ 123 $ 119 ATMUS DIVESTITURE On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. The transaction involved the exchange of our shares in Atmus for shares of Cummins stock with a 7.0 percent discount on the exchange ratio for Atmus shares. The exchange ratio was determined based on each entity's respective stock price using the daily volume weighted-average stock price for three days preceding the final exchange offer date. Based on the final exchange ratio, we exchanged all 67 million of our Atmus shares for 5.6 million shares of Cummins stock, which was recorded as treasury stock based on the fair value of the Cummins shares obtained. We evaluated the full divestiture of Atmus and determined the transaction did not qualify for discontinued operation presentation. We recognized a gain related to the divestiture of approximately $1.3 billion (based on the difference between the fair value of the Cummins shares obtained less the carrying value of our Atmus investment), which was recorded as other income in the Condensed Consolidated Statements of Net Income for the three months ended March 31, 2024. Approximately $114 million of goodwill was included in the carrying value of the Atmus investment for purposes of calculating the gain. The operating results of Atmus were reported in the Condensed Consolidated Financial Statements through March 18, 2024, the date of divestiture. INCOME TAXES Our effective tax rate for 2024 is expected to approximate 24.0 percent, excluding any discrete items that may arise. Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 21.7 percent, respectively. The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements. The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits. 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 impact of the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding accounting principles generally accepted in the United States (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, 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 2024 2023 Net income attributable to Cummins Inc. $ 1,993 $ 790 Net income attributable to Cummins Inc. as a percentage of net sales 23.7 % 9.3 % Add: Net income attributable to noncontrolling interests 35 16 Consolidated net income 2,028 806 Add: Interest expense 89 87 Income tax expense 193 223 Depreciation and amortization 262 245 EBITDA $ 2,572 $ 1,361 EBITDA as a percentage of net sales 30.6 % 16.1 % Less: Gain related to the divestiture of Atmus 1,333 — Add: Atmus divestiture costs 35 18 Restructuring actions 29 — EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions $ 1,303 $ 1,379 EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions, as a percentage of net sales 15.5 % 16.3 % Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. These measures are not in accordance with, or an alternative for GAAP and may not be consistent with measures used by other companies. This should be considered supplemental data. The following table reconciles net income and diluted EPS attributable to Cummins Inc. to net income and diluted EPS attributable to Cummins Inc. excluding special items for the following periods: Three months ended March 31, 2024 In millions Net Income Diluted EPS Net income and diluted EPS attributable to Cummins Inc. $ 1,993 $ 14.03 Less: Gain recognized and costs associated with the divestiture of Atmus, net of tax 1,291 9.08 Add: Restructuring actions, net of tax 22 0.15 Net income and diluted EPS attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions, net of tax $ 724 $ 5.10 CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,232 $ — $ — $ — $ 1,232 Emission solutions 971 — — — 971 Engine components 544 — — — 544 Atmus (1) 353 — — — 353 Automated transmissions 165 — — — 165 Software and electronics 67 — — — 67 Total sales $ 3,332 $ — $ — $ — $ 3,332 (1) Included sales through the March 18, 2024, divestiture. 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ 1,249 $ 1,177 $ 1,124 $ 4,822 Emission solutions 1,056 964 893 922 3,835 Engine components 581 557 532 519 2,189 Atmus 417 417 396 399 1,629 Automated transmissions 179 179 187 169 714 Software and electronics 52 59 51 58 220 Total sales $ 3,557 $ 3,425 $ 3,236 $ 3,191 $ 13,409 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,059 $ — $ — $ — $ 1,059 Medium-duty truck and bus 995 — — — 995 Light-duty automotive 438 — — — 438 Off-highway 436 — — — 436 Total sales $ 2,928 $ — $ — $ — $ 2,928 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ 1,117 $ 1,116 $ 1,052 $ 4,399 Medium-duty truck and bus 903 942 931 894 3,670 Light-duty automotive 439 445 455 423 1,762 Off-highway 530 484 429 410 1,853 Total sales $ 2,986 $ 2,988 $ 2,931 $ 2,779 $ 11,684 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 33,600 — — — 33,600 Medium-duty 75,800 — — — 75,800 Light-duty 54,800 — — — 54,800 Total units 164,200 — — — 164,200 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 36,400 36,300 34,500 141,900 Medium-duty 78,900 76,000 71,300 67,900 294,100 Light-duty 55,000 53,600 53,300 49,600 211,500 Total units 168,600 166,000 160,900 152,000 647,500 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,001 $ — $ — $ — $ 1,001 Power generation 707 — — — 707 Engines 421 — — — 421 Service 406 — — — 406 Total sales $ 2,535 $ — $ — $ — $ 2,535 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ 1,019 $ 995 $ 1,000 $ 4,071 Power generation 492 614 606 797 2,509 Engines 456 531 511 499 1,997 Service 401 431 423 417 1,672 Total sales $ 2,406 $ 2,595 $ 2,535 $ 2,713 $ 10,249 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: 2024 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 853 $ — $ — $ — $ 853 Industrial 420 — — — 420 Generator technologies 116 — — — 116 Total sales $ 1,389 $ — $ — $ — $ 1,389 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ 854 $ 850 $ 866 $ 3,340 Industrial 455 468 475 456 1,854 Generator technologies 118 135 119 107 479 Total sales $ 1,343 $ 1,457 $ 1,444 $ 1,429 $ 5,673 High-horsepower unit shipments by engine classification were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Power generation 3,000 — — — 3,000 Industrial 1,300 — — — 1,300 Total units 4,300 — — — 4,300 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 3,300 2,800 3,300 12,300 Industrial 1,500 1,600 1,800 1,800 6,700 Total units 4,400 4,900 4,600 5,100 19,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20240501092828/en/Contacts Jon Mills Director, External Communications Cummins Inc. 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 First Quarter 2024 Results By: Cummins Inc. via Business Wire May 02, 2024 at 07:30 AM EDT First quarter revenues of $8.4 billion; GAAP1 Net Income of $2.0 billion EBITDA in the first quarter was 30.6% of sales; Diluted EPS of $14.03 First quarter results include a net gain of $1.3 billion, or $9.08 per diluted share, related to the separation of Atmus and $29 million, or $0.15 per diluted share, of restructuring expenses. The company is raising its guidance for full year 2024 revenue and EBITDA after adjusting for the separation of Atmus. Full year revenues are expected to decline 2% to 5%; prior guidance was also down 2% to 5% but assumed the inclusion of Atmus revenues for the full year. EBITDA is now expected to be in the range of 14.5% to 15.5%; an increase from previous guidance of 14.4% to 15.4% which also included Atmus for the full year. Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2024. “We continued to see strong demand from customers in the first quarter of 2024, reflecting the quality and performance of our products,” said Jennifer Rumsey, Chair and CEO. “We delivered solid profitability and also completed the separation of Atmus, allowing Cummins to continue its focus on advancing innovative power solutions and positioning Atmus to pursue its own plans for profitable growth. I am deeply appreciative of our Cummins employees across the globe, whose broad expertise and diverse perspectives are driving our ability to innovate for our customers and meet global demand.” First quarter revenues of $8.4 billion decreased 1% from the same quarter in 2023. Sales in North America were flat, and international revenues decreased 1% due to lower demand in China and Europe. Net income attributable to Cummins in the first quarter was $2.0 billion, or $14.03 per diluted share, compared to $790 million, or $5.55 per diluted share, in 2023. The results reflect the gain related to the separation of Atmus, net of transaction costs and other expenses, of $1.3 billion, or $9.08 per diluted share, and restructuring expenses of $29 million, or $0.15 per diluted share. The first quarter of 2023 included costs related to the separation of Atmus of $18 million, or $0.10 per diluted share. The tax rate in the first quarter was 8.7%, primarily due to the nontaxable gain on the separation of Atmus. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $2.6 billion, or 30.6% of sales, compared to $1.4 billion, or 16.1% of sales, a year ago. EBITDA for the first quarter of 2024 and the first quarter of 2023 included the gain and costs noted above. 2024 Outlook: Based on its current forecast, Cummins projects full year 2024 revenues to decline 2% to 5% on a year-over-year basis, and EBITDA to be in the range of 14.5% and 15.5% of sales. The prior guidance, which was also a decline of 2% to 5%, assumed the inclusion of the financial results of Atmus for the full year. Due to strong global demand, the revenue guidance is unchanged as compared to the prior guidance despite the separation of Atmus. The current EBITDA guidance is an increase from the prior guidance of between 14.4% and 15.4%. Cummins 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% 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 expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services. We do still expect slowing demand in some of our key markets in the second half of the year,” said Rumsey. “Despite lower sales, Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2024 Highlights: In March, Cummins finalized the separation of Atmus Filtration Technologies Inc. through a share exchange offer in which shareholders had the option to exchange their shares of Cummins common stock for shares of Atmus. Following completion of the exchange offer, Cummins did not retain any outstanding shares of Atmus common stock. Accelera™ by Cummins, Daimler Trucks & Buses and PACCAR selected Marshall County, Mississippi, as the future site of advanced battery cell manufacturing for their planned joint venture. The joint venture will localize battery cell production for commercial electric vehicles and is expected to create more than 2,000 U.S. manufacturing jobs, with the option for further expansion as demand grows. The 21-gigawatt hour (GWh) factory is expected to begin producing battery cells in 2027. Cummins re-introduced the fuel agnostic platforms with a name that captures the innovation that powers the business forward, the Cummins HELM™ platforms. With higher efficiency, lower emissions and multiple fuels, the Cummins HELM™ platforms give customers control of how they navigate their own journeys as part of the energy transition. As the next product in the Cummins HELM™15-liter platform, Cummins announced it will launch the next generation diesel X15 in North America for the heavy-duty on-highway market which will be compliant with U.S. EPA and CARB 2027 aligned regulations at launch. In April, Cummins Power Generation introduced four new generator sets to the award-winning Centum™ Series, two each powered by Cummins’ QSK50 and QSK78 engines. In response to high market demand, these new models have been engineered specifically for the most critical applications such as data centers, healthcare facilities and wastewater treatment plants. These products build on decades of experience meeting our customers' needs and deliver a step-change improvement in power density, assured reliability, sustainability and low emissions. Cummins received several prestigious honors during the quarter including being ranked in the Financial Times Diversity Leaders list for the third consecutive year, winning the World 50 Inclusion & Diversity Impact Award, and being named industry leader in the Commercial Vehicle and Machinery category for America’s Most JUST Companies list. Also, Cummins was named a 2024 Handshake Early Talent Award winner for its role in shaping the workforce of the future and was recognized as a 2024 Top Hispanic Employer by DiversityComm Magazine. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2024 detail (all comparisons to same period in 2023): Components Segment Sales - $3.3 billion, down 6% Segment EBITDA - $473 million, or 14.2% of sales, which includes $21 million of costs related to the separation of Atmus compared to $507 million, or 14.3% of sales, which includes $12 million of costs related to the separation of Atmus Revenues in North America decreased by 5% and international sales decreased by 8% primarily due to lower demand in China and Europe. Engine Segment Sales - $2.9 billion, down 2% Segment EBITDA - $414 million, or 14.1% of sales, compared to $457 million, or 15.3% of sales On-highway revenues increased 1% driven by continued strong demand in the North American medium-duty truck market and pricing actions. Sales were flat in North America and decreased 8% in international markets due to lower demand in China and Europe. Distribution Segment Sales - $2.5 billion, up 5% Segment EBITDA - $294 million, or 11.6% of sales, compared to $335 million, or 13.9% of sales Revenues in North America increased 2% and international sales increased by 14%. Higher revenues were driven by increased demand for power generation products and pricing actions. Power Systems Segment Sales - $1.4 billion, up 3% Segment EBITDA - $237 million, or 17.1% of sales, compared to $219 million, or 16.3% of sales Power generation revenues increased 11% driven by increased global demand, particularly for the data center market. Industrial revenues decreased 8% primarily due to weaker demand in oil and gas markets. Accelera Segment Sales - $93 million, up 9% Segment EBITDA loss - $101 million Revenues increased due to increased electrolyzer installations. 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. The company continues to make investments to support our customers through the energy transition and deliver future profitable growth. About Cummins Inc. Cummins Inc., a global power solutions leader, is comprised of five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company’s commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 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 $735 million on sales of $34.1 billion in 2023. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/. 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, EBITDA and Agreement in Principle to settle regulatory proceedings regarding our emissions certification and compliance process for pick-up truck applications. 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 consequences resulting from entering into the Agreement in Principle, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; 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. (Meritor); raw material, transportation and labor price fluctuations and supply shortages; 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; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; 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; 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 2023 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 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. EDT. 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 2024 2023 NET SALES $ 8,403 $ 8,453 Cost of sales 6,362 6,424 GROSS MARGIN 2,041 2,029 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 839 753 Research, development and engineering expenses 369 350 Equity, royalty and interest income from investees 123 119 Other operating expense, net 33 19 OPERATING INCOME 923 1,026 Interest expense 89 87 Other income, net 1,387 90 INCOME BEFORE INCOME TAXES 2,221 1,029 Income tax expense 193 223 CONSOLIDATED NET INCOME 2,028 806 Less: Net income attributable to noncontrolling interests 35 16 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 1,993 $ 790 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 14.10 $ 5.58 Diluted $ 14.03 $ 5.55 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.3 141.5 Diluted 142.1 142.4 (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, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents $ 2,541 $ 2,179 Marketable securities 510 562 Total cash, cash equivalents and marketable securities 3,051 2,741 Accounts and notes receivable, net 5,463 5,583 Inventories 5,758 5,677 Prepaid expenses and other current assets 1,348 1,197 Total current assets 15,620 15,198 Long-term assets Property, plant and equipment, net 6,011 6,249 Investments and advances related to equity method investees 1,774 1,800 Goodwill 2,406 2,499 Other intangible assets, net 2,455 2,519 Pension assets 1,187 1,197 Other assets 2,374 2,543 Total assets $ 31,827 $ 32,005 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,476 $ 4,260 Loans payable 342 280 Commercial paper 609 1,496 Current maturities of long-term debt 113 118 Accrued compensation, benefits and retirement costs 561 1,108 Current portion of accrued product warranty 652 667 Current portion of deferred revenue 1,236 1,220 Other accrued expenses 3,697 3,754 Total current liabilities 11,686 12,903 Long-term liabilities Long-term debt 5,771 4,802 Deferred revenue 1,061 966 Other liabilities 3,208 3,430 Total liabilities $ 21,726 $ 22,101 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,557 $ 2,564 Retained earnings 19,605 17,851 Treasury stock, at cost, 85.7 and 80.7 shares (10,831 ) (9,359 ) Accumulated other comprehensive loss (2,264 ) (2,206 ) Total Cummins Inc. shareholders’ equity 9,067 8,850 Noncontrolling interests 1,034 1,054 Total equity $ 10,101 $ 9,904 Total liabilities and equity $ 31,827 $ 32,005 (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 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 2,028 $ 806 Adjustments to reconcile consolidated net income to net cash provided by operating activities Gain related to divestiture of Atmus (1,333 ) — Depreciation and amortization 265 246 Deferred income taxes (38 ) (38 ) Equity in income of investees, net of dividends (78 ) (67 ) Pension and OPEB expense 9 1 Pension contributions and OPEB payments (48 ) (92 ) Changes in current assets and liabilities, net of acquisitions and divestitures Accounts and notes receivable (11 ) (621 ) Inventories (354 ) (263 ) Other current assets (175 ) (142 ) Accounts payable 327 381 Accrued expenses (393 ) 151 Other, net 77 133 Net cash provided by operating activities 276 495 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (169 ) (193 ) Acquisition of business, net of cash acquired (59 ) — Investments in marketable securities—acquisitions (379 ) (326 ) Investments in marketable securities—liquidations 431 345 Cash associated with Atmus divestiture (174 ) — Other, net (56 ) (54 ) Net cash used in investing activities (406 ) (228 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 2,398 43 Net payments of commercial paper (887 ) (29 ) Payments on borrowings and finance lease obligations (748 ) (142 ) Dividend payments on common stock (239 ) (222 ) Other, net (25 ) (13 ) Net cash provided by (used in) financing activities 499 (363 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7 ) (25 ) Net increase (decrease) in cash and cash equivalents 362 (121 ) Cash and cash equivalents at beginning of year 2,179 2,101 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,541 $ 1,980 (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) In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2024 External sales $ 2,842 $ 2,240 $ 2,529 $ 708 $ 84 $ 8,403 $ — $ 8,403 Intersegment sales 490 688 6 681 9 1,874 (1,874 ) — Total sales 3,332 2,928 2,535 1,389 93 10,277 (1,874 ) 8,403 Research, development and engineering expenses 84 154 14 60 55 367 2 369 Equity, royalty and interest income (loss) from investees 26 57 24 19 (3 ) 123 — 123 Interest income 8 7 11 3 — 29 — 29 EBITDA (2) 473 (3 ) 414 294 237 (101 ) 1,317 1,255 2,572 Depreciation and amortization (4) 125 58 31 34 14 262 — 262 EBITDA as a percentage of total sales 14.2 % 14.1 % 11.6 % 17.1 % NM 12.8 % 30.6 % 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 (5 ) 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 % "NM" - not meaningful information (1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses. The three months ended March 31, 2024, included a $1.3 billion gain related to the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus. The three months ended March 31, 2023, included $6 million of costs associated with the divestiture of Atmus. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. 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. (3) Included $21 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. (4) Depreciation and amortization, as shown on a segment basis, excluded 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 $3 million and $1 million for the three months ended March 31, 2024 and 2023, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Included $12 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023. 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 2024 2023 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 22 $ 19 Chongqing Cummins Engine Company, Ltd. 15 9 Beijing Foton Cummins Engine Co., Ltd. 13 16 Tata Cummins, Ltd. 9 8 All other manufacturers 23 19 Distribution entities Komatsu Cummins Chile, Ltda. 13 14 All other distributors 5 3 Cummins share of net income 100 88 Royalty and interest income 23 31 Equity, royalty and interest income from investees $ 123 $ 119 ATMUS DIVESTITURE On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. The transaction involved the exchange of our shares in Atmus for shares of Cummins stock with a 7.0 percent discount on the exchange ratio for Atmus shares. The exchange ratio was determined based on each entity's respective stock price using the daily volume weighted-average stock price for three days preceding the final exchange offer date. Based on the final exchange ratio, we exchanged all 67 million of our Atmus shares for 5.6 million shares of Cummins stock, which was recorded as treasury stock based on the fair value of the Cummins shares obtained. We evaluated the full divestiture of Atmus and determined the transaction did not qualify for discontinued operation presentation. We recognized a gain related to the divestiture of approximately $1.3 billion (based on the difference between the fair value of the Cummins shares obtained less the carrying value of our Atmus investment), which was recorded as other income in the Condensed Consolidated Statements of Net Income for the three months ended March 31, 2024. Approximately $114 million of goodwill was included in the carrying value of the Atmus investment for purposes of calculating the gain. The operating results of Atmus were reported in the Condensed Consolidated Financial Statements through March 18, 2024, the date of divestiture. INCOME TAXES Our effective tax rate for 2024 is expected to approximate 24.0 percent, excluding any discrete items that may arise. Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 21.7 percent, respectively. The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements. The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits. 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 impact of the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding accounting principles generally accepted in the United States (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, 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 2024 2023 Net income attributable to Cummins Inc. $ 1,993 $ 790 Net income attributable to Cummins Inc. as a percentage of net sales 23.7 % 9.3 % Add: Net income attributable to noncontrolling interests 35 16 Consolidated net income 2,028 806 Add: Interest expense 89 87 Income tax expense 193 223 Depreciation and amortization 262 245 EBITDA $ 2,572 $ 1,361 EBITDA as a percentage of net sales 30.6 % 16.1 % Less: Gain related to the divestiture of Atmus 1,333 — Add: Atmus divestiture costs 35 18 Restructuring actions 29 — EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions $ 1,303 $ 1,379 EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions, as a percentage of net sales 15.5 % 16.3 % Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. These measures are not in accordance with, or an alternative for GAAP and may not be consistent with measures used by other companies. This should be considered supplemental data. The following table reconciles net income and diluted EPS attributable to Cummins Inc. to net income and diluted EPS attributable to Cummins Inc. excluding special items for the following periods: Three months ended March 31, 2024 In millions Net Income Diluted EPS Net income and diluted EPS attributable to Cummins Inc. $ 1,993 $ 14.03 Less: Gain recognized and costs associated with the divestiture of Atmus, net of tax 1,291 9.08 Add: Restructuring actions, net of tax 22 0.15 Net income and diluted EPS attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions, net of tax $ 724 $ 5.10 CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,232 $ — $ — $ — $ 1,232 Emission solutions 971 — — — 971 Engine components 544 — — — 544 Atmus (1) 353 — — — 353 Automated transmissions 165 — — — 165 Software and electronics 67 — — — 67 Total sales $ 3,332 $ — $ — $ — $ 3,332 (1) Included sales through the March 18, 2024, divestiture. 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ 1,249 $ 1,177 $ 1,124 $ 4,822 Emission solutions 1,056 964 893 922 3,835 Engine components 581 557 532 519 2,189 Atmus 417 417 396 399 1,629 Automated transmissions 179 179 187 169 714 Software and electronics 52 59 51 58 220 Total sales $ 3,557 $ 3,425 $ 3,236 $ 3,191 $ 13,409 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,059 $ — $ — $ — $ 1,059 Medium-duty truck and bus 995 — — — 995 Light-duty automotive 438 — — — 438 Off-highway 436 — — — 436 Total sales $ 2,928 $ — $ — $ — $ 2,928 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ 1,117 $ 1,116 $ 1,052 $ 4,399 Medium-duty truck and bus 903 942 931 894 3,670 Light-duty automotive 439 445 455 423 1,762 Off-highway 530 484 429 410 1,853 Total sales $ 2,986 $ 2,988 $ 2,931 $ 2,779 $ 11,684 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 33,600 — — — 33,600 Medium-duty 75,800 — — — 75,800 Light-duty 54,800 — — — 54,800 Total units 164,200 — — — 164,200 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 36,400 36,300 34,500 141,900 Medium-duty 78,900 76,000 71,300 67,900 294,100 Light-duty 55,000 53,600 53,300 49,600 211,500 Total units 168,600 166,000 160,900 152,000 647,500 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,001 $ — $ — $ — $ 1,001 Power generation 707 — — — 707 Engines 421 — — — 421 Service 406 — — — 406 Total sales $ 2,535 $ — $ — $ — $ 2,535 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ 1,019 $ 995 $ 1,000 $ 4,071 Power generation 492 614 606 797 2,509 Engines 456 531 511 499 1,997 Service 401 431 423 417 1,672 Total sales $ 2,406 $ 2,595 $ 2,535 $ 2,713 $ 10,249 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: 2024 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 853 $ — $ — $ — $ 853 Industrial 420 — — — 420 Generator technologies 116 — — — 116 Total sales $ 1,389 $ — $ — $ — $ 1,389 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ 854 $ 850 $ 866 $ 3,340 Industrial 455 468 475 456 1,854 Generator technologies 118 135 119 107 479 Total sales $ 1,343 $ 1,457 $ 1,444 $ 1,429 $ 5,673 High-horsepower unit shipments by engine classification were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Power generation 3,000 — — — 3,000 Industrial 1,300 — — — 1,300 Total units 4,300 — — — 4,300 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 3,300 2,800 3,300 12,300 Industrial 1,500 1,600 1,800 1,800 6,700 Total units 4,400 4,900 4,600 5,100 19,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20240501092828/en/Contacts Jon Mills Director, External Communications Cummins Inc. jon.mills@cummins.com
First quarter revenues of $8.4 billion; GAAP1 Net Income of $2.0 billion EBITDA in the first quarter was 30.6% of sales; Diluted EPS of $14.03 First quarter results include a net gain of $1.3 billion, or $9.08 per diluted share, related to the separation of Atmus and $29 million, or $0.15 per diluted share, of restructuring expenses. The company is raising its guidance for full year 2024 revenue and EBITDA after adjusting for the separation of Atmus. Full year revenues are expected to decline 2% to 5%; prior guidance was also down 2% to 5% but assumed the inclusion of Atmus revenues for the full year. EBITDA is now expected to be in the range of 14.5% to 15.5%; an increase from previous guidance of 14.4% to 15.4% which also included Atmus for the full year.
Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2024. “We continued to see strong demand from customers in the first quarter of 2024, reflecting the quality and performance of our products,” said Jennifer Rumsey, Chair and CEO. “We delivered solid profitability and also completed the separation of Atmus, allowing Cummins to continue its focus on advancing innovative power solutions and positioning Atmus to pursue its own plans for profitable growth. I am deeply appreciative of our Cummins employees across the globe, whose broad expertise and diverse perspectives are driving our ability to innovate for our customers and meet global demand.” First quarter revenues of $8.4 billion decreased 1% from the same quarter in 2023. Sales in North America were flat, and international revenues decreased 1% due to lower demand in China and Europe. Net income attributable to Cummins in the first quarter was $2.0 billion, or $14.03 per diluted share, compared to $790 million, or $5.55 per diluted share, in 2023. The results reflect the gain related to the separation of Atmus, net of transaction costs and other expenses, of $1.3 billion, or $9.08 per diluted share, and restructuring expenses of $29 million, or $0.15 per diluted share. The first quarter of 2023 included costs related to the separation of Atmus of $18 million, or $0.10 per diluted share. The tax rate in the first quarter was 8.7%, primarily due to the nontaxable gain on the separation of Atmus. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $2.6 billion, or 30.6% of sales, compared to $1.4 billion, or 16.1% of sales, a year ago. EBITDA for the first quarter of 2024 and the first quarter of 2023 included the gain and costs noted above. 2024 Outlook: Based on its current forecast, Cummins projects full year 2024 revenues to decline 2% to 5% on a year-over-year basis, and EBITDA to be in the range of 14.5% and 15.5% of sales. The prior guidance, which was also a decline of 2% to 5%, assumed the inclusion of the financial results of Atmus for the full year. Due to strong global demand, the revenue guidance is unchanged as compared to the prior guidance despite the separation of Atmus. The current EBITDA guidance is an increase from the prior guidance of between 14.4% and 15.4%. Cummins 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% 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 expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services. We do still expect slowing demand in some of our key markets in the second half of the year,” said Rumsey. “Despite lower sales, Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.” First Quarter 2024 Highlights: In March, Cummins finalized the separation of Atmus Filtration Technologies Inc. through a share exchange offer in which shareholders had the option to exchange their shares of Cummins common stock for shares of Atmus. Following completion of the exchange offer, Cummins did not retain any outstanding shares of Atmus common stock. Accelera™ by Cummins, Daimler Trucks & Buses and PACCAR selected Marshall County, Mississippi, as the future site of advanced battery cell manufacturing for their planned joint venture. The joint venture will localize battery cell production for commercial electric vehicles and is expected to create more than 2,000 U.S. manufacturing jobs, with the option for further expansion as demand grows. The 21-gigawatt hour (GWh) factory is expected to begin producing battery cells in 2027. Cummins re-introduced the fuel agnostic platforms with a name that captures the innovation that powers the business forward, the Cummins HELM™ platforms. With higher efficiency, lower emissions and multiple fuels, the Cummins HELM™ platforms give customers control of how they navigate their own journeys as part of the energy transition. As the next product in the Cummins HELM™15-liter platform, Cummins announced it will launch the next generation diesel X15 in North America for the heavy-duty on-highway market which will be compliant with U.S. EPA and CARB 2027 aligned regulations at launch. In April, Cummins Power Generation introduced four new generator sets to the award-winning Centum™ Series, two each powered by Cummins’ QSK50 and QSK78 engines. In response to high market demand, these new models have been engineered specifically for the most critical applications such as data centers, healthcare facilities and wastewater treatment plants. These products build on decades of experience meeting our customers' needs and deliver a step-change improvement in power density, assured reliability, sustainability and low emissions. Cummins received several prestigious honors during the quarter including being ranked in the Financial Times Diversity Leaders list for the third consecutive year, winning the World 50 Inclusion & Diversity Impact Award, and being named industry leader in the Commercial Vehicle and Machinery category for America’s Most JUST Companies list. Also, Cummins was named a 2024 Handshake Early Talent Award winner for its role in shaping the workforce of the future and was recognized as a 2024 Top Hispanic Employer by DiversityComm Magazine. 1 Generally Accepted Accounting Principles in the U.S. First quarter 2024 detail (all comparisons to same period in 2023): Components Segment Sales - $3.3 billion, down 6% Segment EBITDA - $473 million, or 14.2% of sales, which includes $21 million of costs related to the separation of Atmus compared to $507 million, or 14.3% of sales, which includes $12 million of costs related to the separation of Atmus Revenues in North America decreased by 5% and international sales decreased by 8% primarily due to lower demand in China and Europe. Engine Segment Sales - $2.9 billion, down 2% Segment EBITDA - $414 million, or 14.1% of sales, compared to $457 million, or 15.3% of sales On-highway revenues increased 1% driven by continued strong demand in the North American medium-duty truck market and pricing actions. Sales were flat in North America and decreased 8% in international markets due to lower demand in China and Europe. Distribution Segment Sales - $2.5 billion, up 5% Segment EBITDA - $294 million, or 11.6% of sales, compared to $335 million, or 13.9% of sales Revenues in North America increased 2% and international sales increased by 14%. Higher revenues were driven by increased demand for power generation products and pricing actions. Power Systems Segment Sales - $1.4 billion, up 3% Segment EBITDA - $237 million, or 17.1% of sales, compared to $219 million, or 16.3% of sales Power generation revenues increased 11% driven by increased global demand, particularly for the data center market. Industrial revenues decreased 8% primarily due to weaker demand in oil and gas markets. Accelera Segment Sales - $93 million, up 9% Segment EBITDA loss - $101 million Revenues increased due to increased electrolyzer installations. 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. The company continues to make investments to support our customers through the energy transition and deliver future profitable growth. About Cummins Inc. Cummins Inc., a global power solutions leader, is comprised of five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company’s commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 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 $735 million on sales of $34.1 billion in 2023. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/. 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, EBITDA and Agreement in Principle to settle regulatory proceedings regarding our emissions certification and compliance process for pick-up truck applications. 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 consequences resulting from entering into the Agreement in Principle, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; 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. (Meritor); raw material, transportation and labor price fluctuations and supply shortages; 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; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; 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; 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 2023 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 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. EDT. 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 2024 2023 NET SALES $ 8,403 $ 8,453 Cost of sales 6,362 6,424 GROSS MARGIN 2,041 2,029 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 839 753 Research, development and engineering expenses 369 350 Equity, royalty and interest income from investees 123 119 Other operating expense, net 33 19 OPERATING INCOME 923 1,026 Interest expense 89 87 Other income, net 1,387 90 INCOME BEFORE INCOME TAXES 2,221 1,029 Income tax expense 193 223 CONSOLIDATED NET INCOME 2,028 806 Less: Net income attributable to noncontrolling interests 35 16 NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 1,993 $ 790 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 14.10 $ 5.58 Diluted $ 14.03 $ 5.55 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic 141.3 141.5 Diluted 142.1 142.4 (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, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents $ 2,541 $ 2,179 Marketable securities 510 562 Total cash, cash equivalents and marketable securities 3,051 2,741 Accounts and notes receivable, net 5,463 5,583 Inventories 5,758 5,677 Prepaid expenses and other current assets 1,348 1,197 Total current assets 15,620 15,198 Long-term assets Property, plant and equipment, net 6,011 6,249 Investments and advances related to equity method investees 1,774 1,800 Goodwill 2,406 2,499 Other intangible assets, net 2,455 2,519 Pension assets 1,187 1,197 Other assets 2,374 2,543 Total assets $ 31,827 $ 32,005 LIABILITIES Current liabilities Accounts payable (principally trade) $ 4,476 $ 4,260 Loans payable 342 280 Commercial paper 609 1,496 Current maturities of long-term debt 113 118 Accrued compensation, benefits and retirement costs 561 1,108 Current portion of accrued product warranty 652 667 Current portion of deferred revenue 1,236 1,220 Other accrued expenses 3,697 3,754 Total current liabilities 11,686 12,903 Long-term liabilities Long-term debt 5,771 4,802 Deferred revenue 1,061 966 Other liabilities 3,208 3,430 Total liabilities $ 21,726 $ 22,101 EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued $ 2,557 $ 2,564 Retained earnings 19,605 17,851 Treasury stock, at cost, 85.7 and 80.7 shares (10,831 ) (9,359 ) Accumulated other comprehensive loss (2,264 ) (2,206 ) Total Cummins Inc. shareholders’ equity 9,067 8,850 Noncontrolling interests 1,034 1,054 Total equity $ 10,101 $ 9,904 Total liabilities and equity $ 31,827 $ 32,005 (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 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 2,028 $ 806 Adjustments to reconcile consolidated net income to net cash provided by operating activities Gain related to divestiture of Atmus (1,333 ) — Depreciation and amortization 265 246 Deferred income taxes (38 ) (38 ) Equity in income of investees, net of dividends (78 ) (67 ) Pension and OPEB expense 9 1 Pension contributions and OPEB payments (48 ) (92 ) Changes in current assets and liabilities, net of acquisitions and divestitures Accounts and notes receivable (11 ) (621 ) Inventories (354 ) (263 ) Other current assets (175 ) (142 ) Accounts payable 327 381 Accrued expenses (393 ) 151 Other, net 77 133 Net cash provided by operating activities 276 495 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (169 ) (193 ) Acquisition of business, net of cash acquired (59 ) — Investments in marketable securities—acquisitions (379 ) (326 ) Investments in marketable securities—liquidations 431 345 Cash associated with Atmus divestiture (174 ) — Other, net (56 ) (54 ) Net cash used in investing activities (406 ) (228 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 2,398 43 Net payments of commercial paper (887 ) (29 ) Payments on borrowings and finance lease obligations (748 ) (142 ) Dividend payments on common stock (239 ) (222 ) Other, net (25 ) (13 ) Net cash provided by (used in) financing activities 499 (363 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7 ) (25 ) Net increase (decrease) in cash and cash equivalents 362 (121 ) Cash and cash equivalents at beginning of year 2,179 2,101 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,541 $ 1,980 (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) In millions Components Engine Distribution Power Systems Accelera Total Segments Intersegment Eliminations (1) Total Three months ended March 31, 2024 External sales $ 2,842 $ 2,240 $ 2,529 $ 708 $ 84 $ 8,403 $ — $ 8,403 Intersegment sales 490 688 6 681 9 1,874 (1,874 ) — Total sales 3,332 2,928 2,535 1,389 93 10,277 (1,874 ) 8,403 Research, development and engineering expenses 84 154 14 60 55 367 2 369 Equity, royalty and interest income (loss) from investees 26 57 24 19 (3 ) 123 — 123 Interest income 8 7 11 3 — 29 — 29 EBITDA (2) 473 (3 ) 414 294 237 (101 ) 1,317 1,255 2,572 Depreciation and amortization (4) 125 58 31 34 14 262 — 262 EBITDA as a percentage of total sales 14.2 % 14.1 % 11.6 % 17.1 % NM 12.8 % 30.6 % 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 (5 ) 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 % "NM" - not meaningful information (1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses. The three months ended March 31, 2024, included a $1.3 billion gain related to the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus. The three months ended March 31, 2023, included $6 million of costs associated with the divestiture of Atmus. (2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. 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. (3) Included $21 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. (4) Depreciation and amortization, as shown on a segment basis, excluded 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 $3 million and $1 million for the three months ended March 31, 2024 and 2023, respectively. A portion of depreciation expense is included in research, development and engineering expenses. (5) Included $12 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023. 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 2024 2023 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 22 $ 19 Chongqing Cummins Engine Company, Ltd. 15 9 Beijing Foton Cummins Engine Co., Ltd. 13 16 Tata Cummins, Ltd. 9 8 All other manufacturers 23 19 Distribution entities Komatsu Cummins Chile, Ltda. 13 14 All other distributors 5 3 Cummins share of net income 100 88 Royalty and interest income 23 31 Equity, royalty and interest income from investees $ 123 $ 119 ATMUS DIVESTITURE On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. The transaction involved the exchange of our shares in Atmus for shares of Cummins stock with a 7.0 percent discount on the exchange ratio for Atmus shares. The exchange ratio was determined based on each entity's respective stock price using the daily volume weighted-average stock price for three days preceding the final exchange offer date. Based on the final exchange ratio, we exchanged all 67 million of our Atmus shares for 5.6 million shares of Cummins stock, which was recorded as treasury stock based on the fair value of the Cummins shares obtained. We evaluated the full divestiture of Atmus and determined the transaction did not qualify for discontinued operation presentation. We recognized a gain related to the divestiture of approximately $1.3 billion (based on the difference between the fair value of the Cummins shares obtained less the carrying value of our Atmus investment), which was recorded as other income in the Condensed Consolidated Statements of Net Income for the three months ended March 31, 2024. Approximately $114 million of goodwill was included in the carrying value of the Atmus investment for purposes of calculating the gain. The operating results of Atmus were reported in the Condensed Consolidated Financial Statements through March 18, 2024, the date of divestiture. INCOME TAXES Our effective tax rate for 2024 is expected to approximate 24.0 percent, excluding any discrete items that may arise. Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 21.7 percent, respectively. The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements. The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits. 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 impact of the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding accounting principles generally accepted in the United States (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, 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 2024 2023 Net income attributable to Cummins Inc. $ 1,993 $ 790 Net income attributable to Cummins Inc. as a percentage of net sales 23.7 % 9.3 % Add: Net income attributable to noncontrolling interests 35 16 Consolidated net income 2,028 806 Add: Interest expense 89 87 Income tax expense 193 223 Depreciation and amortization 262 245 EBITDA $ 2,572 $ 1,361 EBITDA as a percentage of net sales 30.6 % 16.1 % Less: Gain related to the divestiture of Atmus 1,333 — Add: Atmus divestiture costs 35 18 Restructuring actions 29 — EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions $ 1,303 $ 1,379 EBITDA, excluding the impact of gain recognized and costs associated with the divestiture of Atmus and restructuring actions, as a percentage of net sales 15.5 % 16.3 % Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to the gain recognized and costs associated with the divestiture of Atmus and restructuring actions. These measures are not in accordance with, or an alternative for GAAP and may not be consistent with measures used by other companies. This should be considered supplemental data. The following table reconciles net income and diluted EPS attributable to Cummins Inc. to net income and diluted EPS attributable to Cummins Inc. excluding special items for the following periods: Three months ended March 31, 2024 In millions Net Income Diluted EPS Net income and diluted EPS attributable to Cummins Inc. $ 1,993 $ 14.03 Less: Gain recognized and costs associated with the divestiture of Atmus, net of tax 1,291 9.08 Add: Restructuring actions, net of tax 22 0.15 Net income and diluted EPS attributable to Cummins Inc. excluding the gain recognized and costs associated with the divestiture of Atmus and restructuring actions, net of tax $ 724 $ 5.10 CUMMINS INC. AND SUBSIDIARIES SEGMENT SALES DATA (Unaudited) Components Segment Sales by Business Sales for our Components segment by business were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,232 $ — $ — $ — $ 1,232 Emission solutions 971 — — — 971 Engine components 544 — — — 544 Atmus (1) 353 — — — 353 Automated transmissions 165 — — — 165 Software and electronics 67 — — — 67 Total sales $ 3,332 $ — $ — $ — $ 3,332 (1) Included sales through the March 18, 2024, divestiture. 2023 In millions Q1 Q2 Q3 Q4 YTD Axles and brakes $ 1,272 $ 1,249 $ 1,177 $ 1,124 $ 4,822 Emission solutions 1,056 964 893 922 3,835 Engine components 581 557 532 519 2,189 Atmus 417 417 396 399 1,629 Automated transmissions 179 179 187 169 714 Software and electronics 52 59 51 58 220 Total sales $ 3,557 $ 3,425 $ 3,236 $ 3,191 $ 13,409 Engine Segment Sales by Market and Unit Shipments by Engine Classification Sales for our Engine segment by market were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,059 $ — $ — $ — $ 1,059 Medium-duty truck and bus 995 — — — 995 Light-duty automotive 438 — — — 438 Off-highway 436 — — — 436 Total sales $ 2,928 $ — $ — $ — $ 2,928 2023 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 1,114 $ 1,117 $ 1,116 $ 1,052 $ 4,399 Medium-duty truck and bus 903 942 931 894 3,670 Light-duty automotive 439 445 455 423 1,762 Off-highway 530 484 429 410 1,853 Total sales $ 2,986 $ 2,988 $ 2,931 $ 2,779 $ 11,684 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 33,600 — — — 33,600 Medium-duty 75,800 — — — 75,800 Light-duty 54,800 — — — 54,800 Total units 164,200 — — — 164,200 2023 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 34,700 36,400 36,300 34,500 141,900 Medium-duty 78,900 76,000 71,300 67,900 294,100 Light-duty 55,000 53,600 53,300 49,600 211,500 Total units 168,600 166,000 160,900 152,000 647,500 Distribution Segment Sales by Product Line Sales for our Distribution segment by product line were as follows: 2024 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,001 $ — $ — $ — $ 1,001 Power generation 707 — — — 707 Engines 421 — — — 421 Service 406 — — — 406 Total sales $ 2,535 $ — $ — $ — $ 2,535 2023 In millions Q1 Q2 Q3 Q4 YTD Parts $ 1,057 $ 1,019 $ 995 $ 1,000 $ 4,071 Power generation 492 614 606 797 2,509 Engines 456 531 511 499 1,997 Service 401 431 423 417 1,672 Total sales $ 2,406 $ 2,595 $ 2,535 $ 2,713 $ 10,249 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: 2024 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 853 $ — $ — $ — $ 853 Industrial 420 — — — 420 Generator technologies 116 — — — 116 Total sales $ 1,389 $ — $ — $ — $ 1,389 2023 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 770 $ 854 $ 850 $ 866 $ 3,340 Industrial 455 468 475 456 1,854 Generator technologies 118 135 119 107 479 Total sales $ 1,343 $ 1,457 $ 1,444 $ 1,429 $ 5,673 High-horsepower unit shipments by engine classification were as follows: 2024 Units Q1 Q2 Q3 Q4 YTD Power generation 3,000 — — — 3,000 Industrial 1,300 — — — 1,300 Total units 4,300 — — — 4,300 2023 Units Q1 Q2 Q3 Q4 YTD Power generation 2,900 3,300 2,800 3,300 12,300 Industrial 1,500 1,600 1,800 1,800 6,700 Total units 4,400 4,900 4,600 5,100 19,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20240501092828/en/