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Cummins Reports First Quarter 2024 Results

02 May 2024
  • 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.

COLUMBUS, Ind. / May 02, 2024 / Business Wire / 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

 

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