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Cummins Reports Fourth Quarter and Full Year 2023 Results

  • Fourth quarter 2023 revenues of $8.5 billion; GAAP1 Net Loss of $1.4 billion
  • Fourth quarter 2023 EBITDA was negative 10.3% of sales; Diluted EPS of $(10.01)
  • The results for the fourth quarter 2023 reflect:
    • $2.04 billion, or $13.76 per diluted share, charge related to the previously announced agreement to resolve U.S. regulatory claims
    • $42 million, or $0.22 per diluted share, of costs related to the implementation of voluntary retirement and separation programs
    • $33 million, or $0.17 per diluted share, of costs related to the separation of Atmus
  • Full year 2023 revenues of $34.1 billion; GAAP1 Net Income of $735 million
  • EBITDA for full year 2023 was 8.9% of sales; Diluted EPS of $5.15
  • Full year 2024 revenues expected to decline between 2% and 5%; EBITDA expected to range between 14.4% and 15.4% of sales

Cummins Inc. (NYSE: CMI) today reported fourth quarter and full year 2023 results.

“High global demand for Cummins’ diverse set of innovative products drove record full year revenues and operating cash flow in 2023,” said Jennifer Rumsey, Chair and CEO. “Excluding the impacts related to the agreement to resolve U.S. regulatory claims, 2023 was a record year for EBITDA, Net Income and EPS for Cummins. Also, EBITDA percent improved year over year in the Components, Distribution and Power Systems segments. I want to thank all our employees for delivering high-quality products to our customers and making 2023 a successful year.”

Fourth quarter 2023 revenues of $8.5 billion increased 10% from the same quarter in 2022. Sales in North America increased 8% and international revenues increased 13% reflecting strong demand across most of Cummins’ global markets during the period.

In the fourth quarter of 2023, net loss was $1.4 billion, or $(10.01) per diluted share, compared to net earnings of $631 million, or $4.43 per diluted share, in 2022. The results reflect the recording of a charge related to the agreement to resolve U.S. regulatory claims previously announced in December of $2.04 billion, or $13.76 per diluted share; costs related to the voluntary retirement and separation programs of $42 million, or $0.22 per diluted share; and costs related to the separation of Atmus of $33 million, or $0.17 per diluted share. The fourth quarter of 2022 included $19 million, or $0.11 per diluted share, of costs related to the separation of Atmus. The tax rate in the fourth quarter of 2023 was negative 13.3% due primarily to the non-deductible costs related to the agreement to resolve U.S. regulatory claims.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of 2023 was a loss of $878 million, or negative 10.3% of sales, compared to positive $1.1 billion, or 14.2% of sales, a year ago. EBITDA for the fourth quarter of 2023 and the fourth quarter of 2022 included the costs noted above.

Revenues for the full year 2023 were $34.1 billion, 21% higher than 2022. Sales in North America increased 22% and international revenues increased 20% compared to 2022 due to the addition of Meritor and strong demand across most global markets.

Net income for the full year 2023 was $735 million, or $5.15 per diluted share, compared to $2.2 billion, or $15.12 per diluted share, in 2022. 2023 results included costs related to the agreement to resolve U.S. regulatory claims of $2.04 billion, or $13.78 per diluted share, costs related to the separation of Atmus of $100 million, or $0.54 per diluted share, and costs related to the voluntary retirement and separation programs of $42 million, or $0.22 per diluted share. Full year 2022 results included costs related to the indefinite suspension of operations in Russia of $111 million, or $0.72 per diluted share and costs related to the separation of Atmus of $81 million, or $0.45 per diluted share. The tax rate in 2023 was 48.3%, which is higher than our external guidance, primarily due to the non-deductible costs related to the agreement to resolve U.S. regulatory claims.

EBITDA in 2023 was $3.0 billion, or 8.9% of sales compared to $3.8 billion, or 13.5% of sales, a year ago. EBITDA for 2023 and 2022 included the costs noted above.

Operating cash flow for 2023 was a record inflow of $4.0 billion, compared to $2.0 billion in 2022, as Cummins continues to focus on working capital management within the business.

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 14.4% and 15.4% of sales.

“In 2024, we anticipate that demand will slow particularly in the North America heavy-duty truck market, partially offset by strength in other key markets, and have already taken some actions to reduce cost. We will continue to monitor global economic indicators closely and will ensure we are prepared to adjust our business should economic momentum slow further,” said Rumsey.

“Consistent with how we have managed Cummins through prior cycles, and in alignment with our Destination Zero strategy, we will continue investment in new technologies and products in 2024. This sustained investment will ensure that the company will be positioned to generate strong growth and profitability in both the near- and long-terms,” concluded Rumsey.

Cummins’ 2024 outlook assumes the inclusion of Atmus for the entirety of 2024, but excludes any costs or benefits associated with the planned separation of Atmus. Subject to market conditions, the intention is to split-off the company’s remaining ownership in Atmus through an exchange offer. Until the execution of the exchange offer, Cummins’ will continue to consolidate Atmus in its results.

Cummins plans to continue to generate strong operating cash flow and returns for shareholders and is committed to its long-term strategic goal of returning 50% of operating cash flow back to shareholders. In the near term, Cummins’ capital allocation strategy will focus on the payment of dividends and debt reduction, while the company continues to generate profitable growth.

2023 Highlights:

  • Cummins announced the launch of Accelera™ by Cummins, a new brand for its New Power business unit. Accelera provides a diverse portfolio of zero-emissions solutions for many of the world’s most vital industries empowering customers to accelerate their transition to a sustainable future.
  • Accelera by Cummins, Daimler Trucks & Buses, PACCAR and EVE Energy announced in September a joint venture to accelerate and localize battery cell production and the battery supply chain in the United States. The planned joint venture will manufacture battery cells for electric commercial vehicles and industrial applications. Total investment by the partners is expected to be in the range of $2-3 billion for the 21-gigawatt hour (GWh) factory with production expected to begin in 2027. It was recently announced in January that the joint venture had selected Marshall County, Mississippi as the future site.
  • Cummins completed its acquisition of two Faurecia commercial vehicle manufacturing plants and their related activities, one in Columbus, Indiana (U.S.) and one in Roermond, Netherlands. The acquisition provides an opportunity for the Cummins Emission Solutions business to ensure continued access to the technology and facilities it needs to meet current and future demand for low-emissions products and to ensure continuity for both the employees and customers of the acquired manufacturing facilities.
  • The company announced several collaborations that further enable our customers to achieve their decarbonization goals. Freightliner announced they are partnering with Cummins to offer the new Cummins X15N natural gas engine in its heavy-duty Freightliner Cascadia trucks. Also, Cummins Inc. and Knight Transportation, Inc. announced that the industry's largest full truckload company has successfully tested Cummins’ new X15N engine, using renewable natural gas to realize reductions in nitrous oxides and greenhouse gas without compromising performance. The X15N, which will launch in North America in 2024, is the first natural gas engine to be designed specifically for heavy-duty and on-highway truck applications. The X15N has already achieved success in the heavy-duty truck market in China with strong customer demand and market penetration.
  • Progress continues to be made on the planned separation of the Filtration business. On May 26, 2023, as part of its initial public offering (IPO), Atmus Filtration Technologies Inc. shares began trading on the New York Stock Exchange (NYSE) under the ticker symbol “ATMU”. Upon completion of the IPO, Cummins retained approximately 80.5% of Atmus’ outstanding shares. Subject to market conditions, Cummins’ intention is to split-off the remaining ownership in Atmus through an exchange offer as our next step in the separation.
  • Cummins received several prestigious honors during the year that recognized the company’s sustainability efforts and impact including: Ethisphere’s World’s Most Ethical Companies list; Sustainalytics’ 2023 Top-Rated Companies list; S&P Dow Jones Sustainability World Index and the S&P Dow Jones Sustainability North America Index; and, Automotive and Components industry in Newsweek’s annual ranking of America’s Most Responsible Companies. In addition, Cummins received accolades recognizing its ongoing efforts to foster caring and inclusive environments in which all employees and innovation thrive including: one of 66 companies on America’s Top Corporations for Women’s Business Enterprises in 2023; National Association of Corporate Directors 2023 Diversity, Equity and Inclusion Award; 2023 best place to work for disability inclusion; Military Friendly Employer; Top Hispanic Employer by DiversityComm Magazine; Financial Times Diversity Leaders list in Europe; #55 on Glassdoor’s Best Places to Work; and, a score of 100 on the 2023-2024 Corporate Equality Index.
  • The company increased its cash dividend for the 14th straight year and returned a total of $921 million to shareholders through dividends.

1 Generally Accepted Accounting Principles in the U.S.

Fourth quarter 2023 detail (all comparisons to same period in 2022):

Components Segment

  • Sales - $3.2 billion, up 3%
  • Segment EBITDA - $406 million, or 12.7% of sales, which includes $28 million of costs related to the separation of Atmus and $9 million related to the voluntary retirement and separation programs, compared to $377 million, or 12.2% of sales in the prior year, which included $13 million of costs related to the separation of Atmus, and $27 million of acquisition and integration costs related to Meritor.
  • Revenues in North America decreased by 2% and international sales increased by 10% due to increased demand particularly in China which had weak markets in 2022.

Engine Segment

  • Sales - $2.8 billion, up 5%
  • Segment EBITDA - $353 million, or 12.7% of sales, which includes $12 million related to the voluntary retirement and separation programs, compared to $362 million or 13.7% of sales
  • On-highway revenues increased 10% driven by strong demand in the North American truck market and pricing actions.
  • Sales increased 5% in North America and grew 8% in international markets due to an increase in global demand.

Distribution Segment

  • Sales - $2.7 billion, up 17%
  • Segment EBITDA - $269 million, or 9.9% of sales, compared to $256 million, or 11.0% of sales
  • Revenues in North America increased 18% and international sales increased by 15%.
  • Higher revenues were driven by increased demand for whole goods, especially power generation products, and pricing actions.

Power Systems Segment

  • Sales - $1.4 billion, up 8%
  • Segment EBITDA - $182 million, or 12.7% of sales, compared to $185 million, or 14.0% of sales
  • Power generation revenues increased 19% driven by increased global demand and pricing actions. Industrial revenues decreased 3% due to lower oil and gas demand.

Accelera Segment

  • Sales - $81 million, up 8%
  • Segment EBITDA loss - $121 million
  • Revenues increased due to higher demand for battery electric systems and the addition of the Siemens Commercial Vehicle business that was acquired during the fourth quarter of 2022.
  • 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 leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 73,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $2.2 billion on sales of $28.1 billion in 2022. See how Cummins is powering a world that's always on by accessing news releases and more information at https://www.cummins.com/always-on.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues, 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; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; evolving environmental and climate change legislation and regulatory initiatives; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc.; raw material, transportation and labor price fluctuations and supply shortages; any adverse effects of the conflict between Russia and Ukraine and the global response (including government bans or restrictions on doing business in Russia); aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; uncertainties and risks related to timing and potential value to both Atmus Filtration Technologies Inc. (Atmus) and Cummins of the planned final separation of Atmus, including business, industry and market risks, as well as the risks involving the anticipated favorable tax treatment if there is a significant delay in the completion of the envisioned final separation; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2022 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release, except for forward-looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash items that are excluded from the non-GAAP outlook measure. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited) (a)

 

 

 

Three months ended

 

 

December 31,

In millions, except per share amounts

 

2023

 

2022

NET SALES

 

$

8,543

 

 

$

7,770

Cost of sales

 

 

6,542

 

 

 

5,951

 

GROSS MARGIN

 

 

2,001

 

 

 

1,819

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

 

876

 

 

 

742

 

Research, development and engineering expenses

 

 

390

 

 

 

333

 

Equity, royalty and interest income from investees

 

 

113

 

 

 

88

 

Other operating expense, net

 

 

2,060

 

 

 

30

 

OPERATING (LOSS) INCOME

 

 

(1,212

)

 

 

802

 

Interest expense

 

 

92

 

 

 

87

 

Other income, net

 

 

74

 

 

 

63

 

(LOSS) INCOME BEFORE INCOME TAXES

 

 

(1,230

)

 

 

778

 

Income tax expense

 

 

163

 

 

 

134

 

CONSOLIDATED NET (LOSS) INCOME

 

 

(1,393

)

 

 

644

 

Less: Net income attributable to noncontrolling interests

 

 

38

 

 

 

13

 

NET (LOSS) INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

(1,431

)

 

$

631

 

 

 

 

 

 

(LOSS) EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

Basic

 

$

(10.08

)

 

$

4.47

 

Diluted

 

$

(10.01

)

 

$

4.43

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

 

141.9

 

 

 

141.3

 

Diluted

 

 

142.9

 

 

 

142.3

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

 

 

Years ended December 31,

In millions, except per share amounts

 

2023

 

2022

NET SALES

 

$

34,065

 

$

28,074

Cost of sales

 

 

25,816

 

 

 

21,355

 

GROSS MARGIN

 

 

8,249

 

 

 

6,719

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

 

3,333

 

 

 

2,687

 

Research, development and engineering expenses

 

 

1,500

 

 

 

1,278

 

Equity, royalty and interest income from investees

 

 

483

 

 

 

349

 

Other operating expense, net

 

 

2,138

 

 

 

174

 

OPERATING INCOME

 

 

1,761

 

 

 

2,929

 

Interest expense

 

 

375

 

 

 

199

 

Other income, net

 

 

240

 

 

 

89

 

INCOME BEFORE INCOME TAXES

 

 

1,626

 

 

 

2,819

 

Income tax expense

 

 

786

 

 

 

636

 

CONSOLIDATED NET INCOME

 

 

840

 

 

 

2,183

 

Less: Net income attributable to noncontrolling interests

 

 

105

 

 

 

32

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

735

 

 

$

2,151

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

5.19

 

 

$

15.20

 

Diluted

 

$

5.15

 

 

$

15.12

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

 

141.7

 

 

 

141.5

 

Diluted

 

 

142.7

 

 

 

142.3

 

 

 

 

 

 

(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)

 

 

 

 

 

December 31,

In millions, except par value

 

2023

 

2022

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

2,179

 

 

$

2,101

 

Marketable securities

 

 

562

 

 

 

472

 

Total cash, cash equivalents and marketable securities

 

 

2,741

 

 

 

2,573

 

Accounts and notes receivable, net

 

 

5,583

 

 

 

5,202

 

Inventories

 

 

5,677

 

 

 

5,603

 

Prepaid expenses and other current assets

 

 

1,197

 

 

 

1,073

 

Total current assets

 

 

15,198

 

 

 

14,451

 

Long-term assets

 

 

 

 

Property, plant and equipment, net

 

 

6,249

 

 

 

5,521

 

Investments and advances related to equity method investees

 

 

1,800

 

 

 

1,759

 

Goodwill

 

 

2,499

 

 

 

2,343

 

Other intangible assets, net

 

 

2,519

 

 

 

2,687

 

Pension assets

 

 

1,197

 

 

 

1,398

 

Other assets

 

 

2,543

 

 

 

2,140

 

Total assets

 

$

32,005

 

 

$

30,299

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable (principally trade)

 

$

4,260

 

 

$

4,252

 

Loans payable

 

 

280

 

 

 

210

 

Commercial paper

 

 

1,496

 

 

 

2,574

 

Current maturities of long-term debt

 

 

118

 

 

 

573

 

Accrued compensation, benefits and retirement costs

 

 

1,108

 

 

 

617

 

Current portion of accrued product warranty

 

 

667

 

 

 

726

 

Current portion of deferred revenue

 

 

1,220

 

 

 

1,004

 

Other accrued expenses

 

 

3,754

 

 

 

1,465

 

Total current liabilities

 

 

12,903

 

 

 

11,421

 

Long-term liabilities

 

 

 

 

Long-term debt

 

 

4,802

 

 

 

4,498

 

Deferred revenue

 

 

966

 

 

 

844

 

Other liabilities

 

 

3,430

 

 

 

3,311

 

Total liabilities

 

$

22,101

 

 

$

20,074

 

 

 

 

 

 

Redeemable noncontrolling interests

 

$

 

 

$

258

 

 

 

 

 

 

EQUITY

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued

 

$

2,564

 

 

$

2,243

 

Retained earnings

 

 

17,851

 

 

 

18,037

 

Treasury stock, at cost, 80.7 and 81.2 shares

 

 

(9,359

)

 

 

(9,415

)

Accumulated other comprehensive loss

 

 

(2,206

)

 

 

(1,890

)

Total Cummins Inc. shareholders’ equity

 

 

8,850

 

 

 

8,975

 

Noncontrolling interests

 

 

1,054

 

 

 

992

 

Total equity

 

$

9,904

 

 

$

9,967

 

Total liabilities, redeemable noncontrolling interests and equity

 

$

32,005

 

 

$

30,299

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

 

 

 

 

 

Three months ended

 

 

December 31,

In millions

 

2023

 

2022

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

1,459

 

 

$

817

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital expenditures

 

 

(519

)

 

 

(463

)

Acquisitions of businesses, net of cash acquired

 

 

(165

)

 

 

(183

)

Investments in marketable securities—acquisitions

 

 

(433

)

 

 

(335

)

Investments in marketable securities—liquidations

 

 

332

 

 

 

332

 

Other, net

 

 

2

 

 

 

(27

)

Net cash used in investing activities

 

 

(783

)

 

 

(676

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from borrowings

 

 

82

 

 

 

27

 

Net (payments) borrowings of commercial paper

 

 

(213

)

 

 

181

 

Payments on borrowings and finance lease obligations

 

 

(745

)

 

 

(480

)

Dividend payments on common stock

 

 

(238

)

 

 

(222

)

Repurchases of common stock

 

 

 

 

 

(4

)

Other, net

 

 

6

 

 

 

56

 

Net cash used in financing activities

 

 

(1,108

)

 

 

(442

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 

(1

)

 

 

(97

)

Net decrease in cash and cash equivalents

 

 

(433

)

 

 

(398

)

Cash and cash equivalents at beginning of period

 

 

2,612

 

 

 

2,499

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

2,179

 

 

$

2,101

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

 

 

 

Years ended December 31,

In millions

 

2023

 

2022

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

3,966

 

 

$

1,962

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital expenditures

 

 

(1,213

)

 

 

(916

)

Acquisitions of businesses, net of cash acquired

 

 

(292

)

 

 

(3,191

)

Investments in marketable securities—acquisitions

 

 

(1,409

)

 

 

(1,073

)

Investments in marketable securities—liquidations

 

 

1,334

 

 

 

1,151

 

Other, net

 

 

(63

)

 

 

(143

)

Net cash used in investing activities

 

 

(1,643

)

 

 

(4,172

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from borrowings

 

 

861

 

 

 

2,103

 

Net (payments) borrowings of commercial paper

 

 

(779

)

 

 

2,261

 

Payments on borrowings and finance lease obligations

 

 

(1,136

)

 

 

(1,550

)

Dividend payments on common stock

 

 

(921

)

 

 

(855

)

Repurchases of common stock

 

 

 

 

 

(374

)

Payments for purchase of redeemable noncontrolling interests

 

 

(175

)

 

 

 

Other, net

 

 

(27

)

 

 

84

 

Net cash (used in) provided by financing activities

 

 

(2,177

)

 

 

1,669

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 

(68

)

 

 

50

 

Net increase (decrease) in cash and cash equivalents

 

 

78

 

 

 

(491

)

Cash and cash equivalents at beginning of year

 

 

2,101

 

 

 

2,592

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

2,179

 

 

$

2,101

 

 

 

 

 

 

(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 December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

2,784

 

 

$

2,123

 

 

$

2,705

 

 

$

854

 

 

$

77

 

 

$

8,543

 

 

$

 

 

$

8,543

 

Intersegment sales

 

 

407

 

 

 

656

 

 

 

8

 

 

 

575

 

 

 

4

 

 

 

1,650

 

 

 

(1,650

)

 

 

 

Total sales

 

 

3,191

 

 

 

2,779

 

 

 

2,713

 

 

 

1,429

 

 

 

81

 

 

 

10,193

 

 

 

(1,650

)

 

 

8,543

 

Research, development and engineering expenses

 

 

100

 

 

 

173

 

 

 

14

 

 

 

48

 

 

 

53

 

 

 

388

 

 

 

2

 

 

 

390

 

Equity, royalty and interest income (loss) from investees

 

 

26

 

 

 

53

 

 

 

27

 

 

 

11

 

 

 

(4

)

 

 

113

 

 

 

 

 

 

113

 

Interest income

 

 

10

 

 

 

5

 

 

 

10

 

 

 

2

 

 

 

1

 

 

 

28

 

 

 

 

 

 

28

 

EBITDA (2)

 

 

406

 

(3)

 

353

 

 

 

269

 

 

 

182

 

 

 

(121

)

 

 

1,089

 

 

 

(1,967

)

 

 

(878

)

Depreciation and amortization (4)

 

 

123

 

 

 

59

 

 

 

31

 

 

 

31

 

 

 

16

 

 

 

260

 

 

 

 

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of segment sales

 

 

12.7

%

 

 

12.7

%

 

 

9.9

%

 

 

12.7

%

 

 

NM

 

 

 

10.7

%

 

 

 

 

(10.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

2,633

 

 

$

1,995

 

 

$

2,311

 

 

$

761

 

 

$

70

 

 

$

7,770

 

 

$

 

 

$

7,770

 

Intersegment sales

 

 

462

 

 

 

643

 

 

 

9

 

 

 

560

 

 

 

5

 

 

 

1,679

 

 

 

(1,679

)

 

 

 

Total sales

 

 

3,095

 

 

 

2,638

 

 

 

2,320

 

 

 

1,321

 

 

 

75

 

 

 

9,449

 

 

 

(1,679

)

 

 

7,770

 

Research, development and engineering expenses

 

 

73

 

 

 

141

 

 

 

13

 

 

 

56

 

 

 

50

 

 

 

333

 

 

 

 

 

 

333

 

Equity, royalty and interest income from investees

 

 

17

 

 

 

33

 

 

 

20

 

 

 

12

 

 

 

6

 

 

 

88

 

 

 

 

 

 

88

 

Interest income

 

 

5

 

 

 

6

 

 

 

7

 

 

 

2

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Russian suspension recoveries

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

EBITDA (2)

 

 

377

 

(5)

 

362

 

 

 

256

 

 

 

185

 

 

 

(95

)

 

 

1,085

 

 

 

20

 

 

 

1,105

 

Depreciation and amortization (4)

 

 

117

 

 

 

54

 

 

 

28

 

 

 

28

 

 

 

13

 

 

 

240

 

 

 

 

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of segment sales

 

 

12.2

%

 

 

13.7

%

 

 

11.0

%

 

 

14.0

%

 

 

NM

 

 

 

11.5

%

 

 

 

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"NM" - not meaningful information

(1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. The three months ended December 31, 2023, includes $2.0 billion related to the Agreement in Principle, $21 million of voluntary separation and retirement program charges related to corporate functions and $5 million of costs associated with the separation of Atmus Filtration Technologies Inc. (Atmus). The three months ended December 31, 2022, includes $6 million of costs associated with the planned separation of Atmus.

(2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests.

(3) Includes $28 million of costs associated with the separation of Atmus for the three months ended December 31, 2023.

(4) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. A portion of depreciation expense is included in research, development and engineering expenses.

(5) Includes $27 million of costs related to the acquisition and integration of Meritor and $13 million costs associated with the separation of Atmus for the three months ended December 31, 2022.

In millions

 

Components

 

Engine

 

Distribution

 

Power

Systems

 

Accelera

 

Total

Segments

 

Intersegment

Eliminations (1)

 

Total

Year ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

11,531

 

 

$

8,874

 

 

$

10,199

 

 

$

3,125

 

 

$

336

 

 

$

34,065

 

 

$

 

 

$

34,065

 

Intersegment sales

 

 

1,878

 

 

 

2,810

 

 

 

50

 

 

 

2,548

 

 

 

18

 

 

 

7,304

 

 

 

(7,304

)

 

 

 

Total sales

 

 

13,409

 

 

 

11,684

 

 

 

10,249

 

 

 

5,673

 

 

 

354

 

 

 

41,369

 

 

 

(7,304

)

 

 

34,065

 

Research, development and engineering expenses

 

 

387

 

 

 

614

 

 

 

57

 

 

 

237

 

 

 

203

 

 

 

1,498

 

 

 

2

 

 

 

1,500

 

Equity, royalty and interest income (loss) from investees

 

 

97

 

 

 

251

 

 

 

97

 

 

 

53

 

 

 

(15

)

 

 

483

 

 

 

 

 

 

483

 

Interest income

 

 

31

 

 

 

19

 

 

 

34

 

 

 

9

 

 

 

2

 

 

 

95

 

 

 

 

 

 

95

 

EBITDA (2)

 

 

1,840

 

(3)

 

1,630

 

 

 

1,209

 

 

 

836

 

 

 

(443

)

 

 

5,072

 

 

 

(2,055

)

 

 

3,017

 

Depreciation and amortization (4)

 

 

491

 

 

 

225

 

 

 

115

 

 

 

122

 

 

 

63

 

 

 

1,016

 

 

 

 

 

 

1,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

 

13.7

%

 

 

14.0

%

 

 

11.8

%

 

 

14.7

%

 

 

NM

 

 

 

12.3

%

 

 

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

7,847

 

 

$

8,199

 

 

$

8,901

 

 

$

2,951

 

 

$

176

 

 

$

28,074

 

 

$

 

 

$

28,074

 

Intersegment sales

 

 

1,889

 

 

 

2,746

 

 

 

28

 

 

 

2,082

 

 

 

22

 

 

 

6,767

 

 

 

(6,767

)

 

 

 

Total sales

 

 

9,736

 

 

 

10,945

 

 

 

8,929

 

 

 

5,033

 

 

 

198

 

 

 

34,841

 

 

 

(6,767

)

 

 

28,074

 

Research, development and engineering expenses

 

 

309

 

 

 

506

 

 

 

52

 

 

 

240

 

 

 

171

 

 

 

1,278

 

 

 

 

 

 

1,278

 

Equity, royalty and interest income (loss) from investees

 

 

71

 

 

 

160

 

(5)

 

77

 

 

 

43

 

 

 

(2

)

 

 

349

 

 

 

 

 

 

349

 

Interest income

 

 

12

 

 

 

14

 

 

 

16

 

 

 

7

 

 

 

 

 

 

49

 

 

 

 

 

 

49

 

Russian suspension costs

 

 

5

 

 

 

33

 

(6)

 

54

 

 

 

19

 

 

 

 

 

 

111

 

 

 

 

 

 

111

 

EBITDA (2)

 

 

1,346

 

(7)

 

1,535

 

 

 

888

 

 

 

596

 

 

 

(334

)

 

 

4,031

 

 

 

(232

)

 

 

3,799

 

Depreciation and amortization (4)

 

 

304

 

 

 

205

 

 

 

114

 

 

 

120

 

 

 

38

 

 

 

781

 

 

 

 

 

 

781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

 

13.8

%

 

 

14.0

%

 

 

9.9

%

 

 

11.8

%

 

 

NM

 

 

 

11.6

%

 

 

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"NM" - not meaningful information

(1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. The year ended December 31, 2023, includes $2.0 billion related to the Agreement in Principle, $22 million of costs associated with the initial public offering (IPO) and separation of Atmus and $21 million of voluntary separation and retirement program charges related to corporate functions. The year ended December 31, 2022, includes $53 million of costs associated with the planned separation of Atmus.

(2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests.

(3) Includes $78 million of costs associated with the IPO and separation of Atmus for the year ended December 31, 2023.

(4) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs was $8 million and $3 million for the years ended December 31, 2023 and 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses.

(5) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the indefinite suspension of our Russian operations.

(6) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above.

(7) Includes $83 million of costs related to the acquisition and integration of Meritor and $28 million costs associated with the separation of Atmus for the year ended December 31, 2022.

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 December 31,

 

Years ended December 31,

 

In millions

 

2023

 

2022

 

2023

 

2022

 

Manufacturing entities

 

 

 

 

 

 

 

 

 

Beijing Foton Cummins Engine Co., Ltd.

 

$

14

 

$

3

 

$

47

 

$

37

 

Dongfeng Cummins Engine Company, Ltd.

 

 

13

 

 

 

10

 

 

 

65

 

 

 

45

 

 

Tata Cummins, Ltd.

 

 

8

 

 

 

8

 

 

 

29

 

 

 

27

 

 

Chongqing Cummins Engine Company, Ltd.

 

 

7

 

 

 

9

 

 

 

36

 

 

 

32

 

 

All other manufacturers

 

 

22

 

 

 

14

 

 

 

91

 

 

 

28

 

(1)

Distribution entities

 

 

 

 

 

 

 

 

 

Komatsu Cummins Chile, Ltda.

 

 

15

 

 

 

12

 

 

 

55

 

 

 

44

 

 

All other distributors

 

 

6

 

 

 

3

 

 

 

16

 

 

 

11

 

 

Cummins share of net income

 

 

85

 

 

 

59

 

 

 

339

 

 

 

224

 

 

Royalty and interest income

 

 

28

 

 

 

29

 

 

 

144

 

 

 

125

 

 

Equity, royalty and interest income from investees

 

$

113

 

 

$

88

 

 

$

483

 

 

$

349

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the indefinite suspension of our Russian operations.

 

AGREEMENT IN PRINCIPLE

In December 2023, we announced that we reached an agreement in principle with the Environmental Protection Agency, the California Air Resources Board, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S (collectively, the Agreement in Principle). As part of the Agreement in Principle, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make certain payments. Failure to comply with the terms and conditions of the Agreement in Principle will subject us to further stipulated penalties. We recorded a charge of $2.036 billion in the fourth quarter of 2023 to resolve the matters addressed by the Agreement in Principle involving approximately one million of our pick-up truck applications in the U.S. The charge is included in other operating expense, net, in our Condensed Consolidated Statements of Net Income.

The majority of the amount is expected to be paid in 2024 after final regulatory and judicial approvals are obtained. As a result, $1.938 billion is included in other current liabilities in our Condensed Consolidated Balance Sheets with the remainder included in other long-term liabilities. Of the total charge, $1.732 billion (primarily related to penalties) will be non-deductible for U.S. federal income tax purposes. The remaining amount, related to emissions mitigation projects and payments, extended warranties and other related compliance expenses is deductible for U.S. federal income tax purposes.

We anticipate making $1.938 billion of the payments required by the Agreement in Principle during 2024 through the use of our existing liquidity and access to debt markets.

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 and twelve months ended December 31, 2023, were negative 13.3 percent and 48.3 percent, respectively. Our effective tax rates for the three and twelve months ended December 31, 2022, were 17.2 percent and 22.6 percent, respectively.

The change in effective tax rates and taxability of foreign subsidiaries and joint ventures for the three and twelve months ended December 31, 2023, versus the three and twelve months ended December 31, 2022, was primarily due to the Agreement in Principle, of which $1.732 billion (primarily related to penalties) was non-deductible for tax purposes, jurisdictional mix of pre-tax income and actual and planned repatriations of earnings back to the U.S.

The three months ended December 31, 2023, contained net unfavorable discrete tax items of $402 million, primarily due to $398 million related to the $2.0 billion charge from the Agreement in Principle and $4 million of net unfavorable other discrete items. See Agreement in Principle section above.

The year ended December 31, 2023, contained unfavorable net discrete items of $397 million, primarily due to $398 million in the fourth quarter related to the $2.0 billion charge from the Agreement in Principle, $22 million of unfavorable adjustments for uncertain tax positions and $3 million of net unfavorable other discrete tax items, partially offset by $21 million of favorable return to provision adjustments and $5 million of favorable share-based compensation tax benefit. See Agreement in Principle section above.

The three months ended December 31, 2022, contained favorable discrete tax items of $52 million, primarily due to $31 million of favorable changes in accrued withholding taxes, $15 million of favorable valuation allowance adjustments and $6 million of favorable other net discrete items.

The year ended December 31, 2022, contained discrete tax items that netted to zero, primarily due to $31 million of favorable changes in accrued withholding taxes, $29 million of favorable changes in tax reserves, $15 million of favorable valuation allowance adjustments and $9 million of favorable other net discrete items, offset by $69 million of unfavorable tax costs associated with internal restructuring ahead of the planned separation of Atmus and $15 million of unfavorable return to provision adjustments related to the 2021 filed tax returns.

VOLUNTARY SEPARATION AND RETIREMENT PROGRAMS

In the fourth quarter of 2023, we initiated a voluntary employee separation program and a voluntary early retirement program. We incurred a charge of $42 million ($32 million after-tax) for these actions. The majority of the voluntary actions were completed by December 31, 2023.

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 Agreement in Principle, voluntary retirement and voluntary separation programs and costs associated with the IPO and separation of Atmus. This statement excludes forward looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of non-cash items that are excluded from the non-GAAP outlook measure.

EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Net Income. Below is a reconciliation of net (loss) income attributable to Cummins Inc. to EBITDA for each of the applicable periods:

 

 

Three months ended December 31,

 

Years ended December 31,

In millions

 

2023

 

2022

 

2023

 

2022

Net (loss) income attributable to Cummins Inc.

 

$

(1,431

)

 

$

631

 

 

$

735

 

 

$

2,151

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Cummins Inc. as a percentage of net sales

 

 

(16.8

)%

 

 

8.1

%

 

 

2.2

%

 

 

7.7

%

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

38

 

 

 

13

 

 

 

105

 

 

 

32

 

Consolidated net (loss) income

 

 

(1,393

)

 

 

644

 

 

 

840

 

 

 

2,183

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

Interest expense

 

 

92

 

 

 

87

 

 

 

375

 

 

 

199

 

Income tax expense

 

 

163

 

 

 

134

 

 

 

786

 

 

 

636

 

Depreciation and amortization

 

 

260

 

 

 

240

 

 

 

1,016

 

 

 

781

 

EBITDA

 

$

(878

)

 

$

1,105

 

 

$

3,017

 

 

$

3,799

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of net sales

 

 

(10.3

)%

 

 

14.2

%

 

 

8.9

%

 

 

13.5

%

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

Agreement in Principle

 

 

2,036

 

 

 

 

 

 

2,036

 

 

 

 

Voluntary retirement and voluntary separation programs

 

 

42

 

 

 

 

 

 

42

 

 

 

 

Atmus IPO and separation costs

 

 

33

 

 

 

19

 

 

 

100

 

 

 

81

 

EBITDA, excluding impact of Agreement in Principle, voluntary retirement and voluntary separation programs and costs associated with the IPO and separation of Atmus

 

$

1,233

 

 

$

1,124

 

 

$

5,195

 

 

$

3,880

 

 

 

 

 

 

 

 

 

 

EBITDA, excluding impact of Agreement in Principle, voluntary retirement and voluntary separation programs and costs associated with the IPO and separation of Atmus, as a percentage of net sales

 

 

14.4

%

 

 

14.5

%

 

 

15.3

%

 

 

13.8

%

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding Agreement in Principle, Voluntary Retirement and Voluntary Separation Programs and Atmus IPO and Separation Costs

We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to the Agreement in Principle, voluntary retirement and voluntary separations programs and the Atmus IPO and separation costs. 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 (loss) 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 December 31,

 

 

2023

In millions

 

Net Income

 

Diluted EPS

Net loss and diluted EPS attributable to Cummins Inc.

 

$

(1,431

)

 

$

(10.01

)

Add:

 

 

 

 

Agreement in Principle, net of tax

 

 

1,966

 

 

 

13.76

 

Voluntary retirement and voluntary separation programs, net of tax

 

 

32

 

 

 

0.22

 

Atmus separation costs, net of tax

 

 

25

 

 

 

0.17

 

Net income and diluted EPS attributable to Cummins Inc. excluding Agreement in Principle, voluntary retirement and voluntary separation programs and costs associated with the separation of Atmus, net of tax

 

$

592

 

 

$

4.14

 

 

 

Year ended December 31,

 

 

2023

In millions

 

Net Income

 

Diluted EPS

Net income and diluted EPS attributable to Cummins Inc.

 

$

735

 

$

5.15

Add:

 

 

 

 

Agreement in Principle, net of tax

 

 

1,966

 

 

 

13.78

 

Atmus IPO and separation costs, net of tax

 

 

77

 

 

 

0.54

 

Voluntary retirement and voluntary separation programs, net of tax

 

 

32

 

 

 

0.22

 

Net income and diluted EPS attributable to Cummins Inc. excluding Agreement in Principle, costs associated with the IPO and separation of Atmus and voluntary retirement and voluntary separation programs, net of tax

 

$

2,810

 

 

$

19.69

 

CUMMINS INC. AND SUBSIDIARIES

SEGMENT SALES DATA

(Unaudited)

Components Segment Sales by Business

In the second quarter of 2023, with the Atmus IPO we changed the name of our filtration business to Atmus. Sales for our Components segment by business, adjusted for the reorganized businesses, were as follows:

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Axles and brakes

 

$

 

$

 

$

732

 

$

1,147

 

$

1,879

Emission solutions

 

 

910

 

 

863

 

 

853

 

 

868

 

 

3,494

Engine components

 

 

502

 

 

503

 

 

509

 

 

493

 

 

2,007

Atmus

 

 

382

 

 

391

 

 

399

 

 

385

 

 

1,557

Automated transmissions

 

 

134

 

 

143

 

 

159

 

 

157

 

 

593

Software and electronics

 

 

60

 

 

50

 

 

51

 

 

45

 

 

206

Total sales

 

$

1,988

 

$

1,950

 

$

2,703

 

$

3,095

 

$

9,736

Engine Segment Sales by Market and Unit Shipments by Engine Classification

Sales for our Engine segment by market were as follows:

2023

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

 

$

1,114

 

$

1,117

 

$

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

 

$

908

 

$

1,001

 

$

972

 

$

966

 

$

3,847

Medium-duty truck and bus

 

 

848

 

 

875

 

 

868

 

 

869

 

 

3,460

Light-duty automotive

 

 

498

 

 

456

 

 

466

 

 

318

 

 

1,738

Off-highway

 

 

499

 

 

443

 

 

473

 

 

485

 

 

1,900

Total sales

 

$

2,753

 

$

2,775

 

$

2,779

 

$

2,638

 

$

10,945

Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:

2023

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty

 

34,700

 

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty

 

28,600

 

30,900

 

30,200

 

31,000

 

120,700

Medium-duty

 

72,600

 

68,800

 

69,800

 

72,400

 

283,600

Light-duty

 

66,500

 

60,400

 

58,300

 

42,400

 

227,600

Total units

 

167,700

 

160,100

 

158,300

 

145,800

 

631,900

Distribution Segment Sales by Product Line

Sales for our Distribution segment by product line were as follows:

2023

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts

 

$

1,057

 

$

1,019

 

$

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts

 

$

924

 

$

990

 

$

945

 

$

959

 

$

3,818

Power generation

 

 

401

 

 

441

 

 

431

 

 

501

 

 

1,774

Engines

 

 

441

 

 

429

 

 

449

 

 

457

 

 

1,776

Service

 

 

351

 

 

393

 

 

414

 

 

403

 

 

1,561

Total sales

 

$

2,117

 

$

2,253

 

$

2,239

 

$

2,320

 

$

8,929

Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification

Sales for our Power Systems segment by product line were as follows:

2023

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

$

770

 

$

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

$

664

 

$

657

 

$

739

 

$

730

 

$

2,790

Industrial

 

 

393

 

 

428

 

 

483

 

 

468

 

 

1,772

Generator technologies

 

 

103

 

 

118

 

 

127

 

 

123

 

 

471

Total sales

 

$

1,160

 

$

1,203

 

$

1,349

 

$

1,321

 

$

5,033

High-horsepower unit shipments by engine classification were as follows:

2023

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

2,900

 

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

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

2,200

 

2,400

 

2,400

 

2,700

 

9,700

Industrial

 

1,100

 

1,200

 

1,200

 

1,400

 

4,900

Total units

 

3,300

 

3,600

 

3,600

 

4,100

 

14,600

 

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