• Third quarter revenues of $8.5 billion; GAAP¹ Net Income of $809 million, or 9.6% of sales
• EBITDA in the third quarter was 16.4% of sales; Diluted EPS of $5.86
• The company is maintaining its full year 2024 revenue guidance of down 3% to flat.
• EBITDA is now expected to be approximately 15.5% compared to previous guidance of 15.0% to 15.5%.

Cummins Inc. (NYSE: CMI) today reported results for the third quarter of 2024.

“We achieved strong sales and profitability in the third quarter, led by improvement in our Power Systems and Distribution businesses, and have adjusted our full year projection for EBITDA percentage to be at the top end of the prior range,” said Jennifer Rumsey, Chair and CEO of Cummins. “We continue to advance our Destination Zero strategy as we deliver innovative technologies for our customers, strengthen our position in key markets and drive improvement in our financial performance.”

Third quarter revenues of $8.5 billion were flat to the same quarter in 2023. Sales in North America decreased 1% while international revenues increased 2%.

Net income attributable to Cummins in the third quarter was $809 million, or $5.86 per diluted share, compared to $656 million, or $4.59 per diluted share, in 2023. The tax rate in the third quarter was 19.2% including $36 million, or $0.26 per diluted share, of favorable discrete tax items. The third quarter of 2023 included costs related to the separation of Atmus of $26 million, or $0.14 per diluted share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter were $1.4 billion, or 16.4% of sales, compared to $1.2 billion, or 14.6% of sales, a year ago. EBITDA for the third quarter of 2023 included the costs related to the separation of Atmus noted above.

2024 Outlook:

Based on its current forecast, Cummins is maintaining its full-year 2024 revenue guidance to be in the range of down 3% to flat. EBITDA is expected to be approximately 15.5%; at the top end of the previous guidance of 15.0% to 15.5%.

Cummins plans to continue generating 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 solidified our expectations on profitability for 2024 to the top end of our prior range thanks to continued improvements in Power Systems and Distribution segments. Although we faced slowing demand in the North American heavy-duty truck market during the third quarter and anticipate this trend to persist into the fourth quarter, Cummins remains well-positioned to deliver strong financial performance, invest in future growth and return cash to shareholders,” said Rumsey.

Third Quarter 2024 Highlights:

• Cummins increased its quarterly common stock cash dividend from $1.68 to $1.82 per share. The company has increased the quarterly dividend to shareholders for 15 consecutive years.

• Cummins started full production of the X15N™ natural gas engine at its Jamestown Engine Plant, which celebrated its 50^th anniversary in the third quarter. The Cummins X15N is part of the X-series Cummins’ HELM™ lineup, a global engine platform that is derived from a common base and offers multiple fuel types including natural gas, advanced diesel and hydrogen.

• Cummins attended IAA Transportation 2024 in Hannover, Germany, to showcase a diverse portfolio of powertrain and component technologies as part of the company���s Destination Zero strategy to progress industry decarbonization. Highlighted products at the booth included Euro-7 ready X10 and the X15H hydrogen internal combustion engines, a hydrogen fuel cell engine, next-generation lithium iron phosphate battery solutions, eAxles, eTurbocharger, eCompressor and hydrogen fuel storage solutions, as well as fully integrated powertrains.

• Accelera™ by Cummins celebrated the opening of its new electrolyzer manufacturing plant in Guadalajara, Castilla-La Mancha, Spain. The plant has the capacity to produce 500 megawatts (MW) of electrolyzers per year, scalable to more than 1 gigawatt (GW) per year in the future.

• Cummins was recognized as one of the 2024 100 Best Companies by Seramount, an organization focused on empowering inclusive workplaces; named a Veteran Friendly Employer by U.S. Veterans Magazine; and ranked #55 on Glassdoor’s Best Places to Work in 2024.

¹ Generally Accepted Accounting Principles in the U.S.

Third quarter 2024 detail (all comparisons to same period in 2023):

Components Segment

• Sales - $2.7 billion, down 16%
• Segment EBITDA - $351 million, or 12.9% of sales compared to $441 million, or 13.6% of sales, which included the operating results of the Atmus business and $20 million of costs related to its separation
• Revenues in North America decreased by 14% and international sales decreased by 18% primarily due to the separation of Atmus and lower demand in heavy-duty truck.

Engine Segment

• Sales - $2.9 billion, down 1%
• Segment EBITDA - $427 million, or 14.7% of sales, compared to $395 million, or 13.5% of sales
• Revenues decreased 2% in North America and increased 4% in international markets due to softening demand in the North American heavy-duty truck market and strength in global medium-duty truck markets.

Distribution Segment

• Sales - $3.0 billion, up 16%
• Segment EBITDA - $370 million, or 12.5% of sales, compared to $306 million, or 12.1% of sales
• Revenues in North America increased 13% and international sales increased by 25% driven by increased demand for power generation products, particularly for data center applications, and pricing actions.

Power Systems Segment

• Sales - $1.7 billion, up 17%
• Segment EBITDA - $328 million, or 19.4% of sales, compared to $234 million, or 16.2% of sales
• Power generation revenues increased 24% driven by increased global demand, particularly for the data center market. Industrial revenues increased 7% primarily due to strong mining demand more than offsetting weaker oil and gas markets.

Accelera Segment

• Sales - $110 million, up 7%
• Segment EBITDA loss - $115 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.

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 the Settlement Agreements to resolve regulatory proceedings regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S. 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 Settlement Agreements, 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.; 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.

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:

INCOME TAXES

Our effective tax rate for 2024, excluding discrete items, is expected to approximate 23.5 percent.

Our effective tax rates for the three and nine month periods ended September 30, 2024, were 19.2 percent and 14.6 percent, respectively. Our effective tax rates for the three and nine months ended September 30, 2023, were 21.4 percent and 21.8 percent, respectively.

The three months ended September 30, 2024, contained net favorable discrete tax items of $36 million, or $0.26 per share, primarily due to $20 million of favorable adjustments from tax return amendments, $15 million of favorable return to provision adjustments and $2 million of favorable share-based compensation tax benefits, partially offset by $1 million of other unfavorable adjustments.

The nine months ended September 30, 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 net favorable by $66 million, or $0.47 per share, primarily due to $21 million of favorable adjustments related to audit settlements, $20 million of favorable adjustments from tax return amendments, $18 million of favorable return to provision adjustments and $17 million of favorable share-based compensation tax benefits, partially offset by $7 million of unfavorable adjustments for uncertain tax positions and $3 million of other unfavorable adjustments.

The three months ended September 30, 2023, contained net favorable discrete tax items of $5 million, or $0.03 per share, primarily due to $13 million of favorable return to provision adjustments and $1 million of favorable share-based compensation tax benefits, partially offset by $9 million of unfavorable adjustments for uncertain tax positions.

The nine months ended September 30, 2023, contained net favorable discrete tax items of $5 million, or $0.03 per share, primarily due to $15 million of favorable return to provision adjustments and $5 million of favorable share-based compensation tax benefits, partially offset by $11 million of unfavorable adjustments for uncertain tax positions and $4 million of other unfavorable adjustments.

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: