Business Wire | Nov 2, 2021 07:30AM EDT

Cummins Reports Third Quarter 2021 Results

Nov. 02, 2021

COLUMBUS, Ind.--(BUSINESS WIRE)--Nov. 02, 2021--Cummins Inc. (NYSE: CMI) today reported results for the third quarter of 2021.

Third quarter revenues of $6.0 billion increased 17 percent from the same quarter in 2020. Sales in North America increased 13 percent while international revenues increased 22 percent driven by strong demand across all global markets outside of China compared to the same quarter in 2020.

"Demand remained strong in the third quarter as the global economy continued to improve, driving strong sales growth across most businesses and regions outside of China, which is moderating in line with expectations," said Chairman and CEO Tom Linebarger. "Economic trends such as order activity, freight rates, and used equipment prices remain robust across a number of our key end markets which points to strong demand extending into 2022 and beyond. Cummins is well positioned to benefit as these markets gain momentum as we continue to see orders for our products outpace our competition. Despite this strong demand, supply chain constraints continue to impact our business as well as our customers', resulting in rising material costs, elevated logistics expenses, and other manufacturing inefficiencies and capping revenue below our expectations three months ago."

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter was $862 million (14.4 percent of sales), compared to $876 million (17.1 percent of sales) a year ago.

Net income attributable to Cummins in the third quarter was $534 million ($3.69 per diluted share) compared to $501 million ($3.36 per diluted share) in 2020. The tax rate in the third quarter was 19.9 percent including $11 million, or $0.08 per share, of favorable discrete items.

2021 Outlook:

Based on the current forecast, Cummins is lowering its full year 2021 revenue guidance to be up approximately 20 percent versus last year, compared to prior guidance of up 20 to 24 percent. EBITDA is now expected to be approximately 15.0 percent compared to previous guidance of 15.5 to 16.0 percent of sales due to the ongoing supply chain challenges in our industry. The Company expects to return over 75 percent of Operating Cash Flow to shareholders in 2021 in the form of dividends and share repurchases.

Any expenses outside of the normal course of business associated with the evaluation of strategic alternatives for the Filtration business have been excluded from the outlook provided.

Third Quarter 2021 Highlights:

* Cummins announced that it will bring to market a 15-liter natural gas engine for heavy-duty trucks. The 15-liter natural gas engine is an important part of Cummins strategy for its path to zero emissions. The strategy focuses on new powertrains including advanced diesel, natural gas, hydrogen engines, hybrids, battery electric, and fuel cells along with an increased use of low carbon fuels and renewable electricity and related infrastructure. The expanding product lineup will help achieve Cummins' PLANET 2050 environmental goals which include lowering emissions from newly sold products by 30% by 2030 and a goal of carbon neutrality by 2050, aligned with the Paris Climate Accord targets.

* The company announced it will launch a set of software features to integrate its powertrains with Automated Driving System (ADS) technologies. Cummins is a market leader in delivering powertrains that provide leading performance and fuel economy through the integration of hardware and software. With these new software features, Cummins will extend these core capabilities into the ADS space as well. Cummins is positioned to be a leader in ADS technology integration globally and is actively testing more than 100 vehicles in coordination with ADS technology companies to ensure seamless powertrain integration as ADS solutions enter commercial vehicle markets globally.

* Cummins received two awards, totaling nearly $7 million, from the US Department of Energy for continued work on enhancing the economic viability of fuel cell powertrain solutions for heavy-duty applications, including on-highway tractor-trailers and buses. The program will drive the scale and investment needed to allow for faster adoption of hydrogen fuel cell technologies.

* The company launched Cummins Water Works, a community focused initiative to address the global water crisis around the world by bringing fresh water to 20 million people who would otherwise not have access to it. The program will partner with leading water experts and the Water Resilience Coalition to invest in sustainable, large-scale, high-impact projects in water stressed regions.

* The company administered over 30,000 vaccine doses in India, continuing its commitment to the safety of employees, joint venture partners, and suppliers and their families during the COVID-19 pandemic.

* The company announced an increase in its quarterly dividend from $1.35 to $1.45 a share

1 Generally Accepted Accounting Principles in the U.S.

Third quarter 2021 detail (all comparisons to same period in 2020):

Engine Segment

* Sales - $2.6 billion, up 22 percent * Segment EBITDA - $391 million, or 15.2 percent of sales, compared to $382 million or 18.1 percent of sales * On-highway revenues increased 22 percent driven by strong demand in the North American truck market and off-highway revenues increased 21 percent driven by strong demand in North American, Asian Pacific, and European construction markets * Sales increased 23 percent in North America and 19 percent in international markets

Distribution Segment

* Sales - $2.0 billion, up 14 percent * Segment EBITDA - $192 million, or 9.8 percent of sales, compared to $182 million or 10.6 percent of sales * Revenues in North America increased 10 percent and international sales increased by 21 percent * Demand increased across the power generation and engine markets in addition to parts and service compared to last year.

Components Segment

* Sales - $1.8 billion, up 16 percent * Segment EBITDA - $253 million, or 14.1 percent of sales, compared to $261 million or 16.9 percent of sales * Revenues in North America increased by 21 percent and international sales increased by 11 percent

Power Systems Segment

* Sales - $1.2 billion, up 19 percent * Segment EBITDA - $134 million, or 11.5 percent of sales, compared to $101 million, or 10.3 percent of sales * Power generation revenues increased by 10 percent driven by growth in recreational vehicle and datacenter markets while industrial revenues increased 33 percent due to stronger demand in mining markets

New Power Segment

* Sales - $23 million, up 28 percent * Segment EBITDA loss - $58 million * Revenues increased due to greater demand in transit and school bus markets in addition to the shipments of fuel cell systems to the rail market. Electrolyzer revenue decreased driven by timing of commissioning of projects. * Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles ahead of widespread adoption are contributing to EBITDA losses

About Cummins Inc.

Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company's products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 57,825 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 $1.8 billion on sales of $19.8 billion in 2020. To learn more about Cummins, visit 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 and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; policy changes in international trade; any adverse effects of the U.S. government's COVID-19 vaccine mandates; the U.K.'s exit from the European Union; changes in taxation; global legal and ethical compliance costs and risks; increasingly stringent environmental laws and regulations; future bans or limitations on the use of diesel-powered products; supply shortages and supplier financial risk, particularly from any of our single-sourced suppliers, including suppliers that may be impacted by the COVID-19 pandemic; market slowdown due to the impacts from the COVID-19 pandemic, other public health crises, epidemics or pandemics; impacts to manufacturing and supply chain abilities from an extended shutdown or disruption of our operations due to the COVID-19 pandemic; aligning our capacity and production with our demand, including impacts of COVID-19; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, particularly related to the COVID-19 pandemic, bankruptcy or change in control; a slowdown in infrastructure development and/or depressed commodity prices; failure to realize expected results from our investment in Eaton Cummins Automated Transmission Technologies joint venture; the actions of, and income from, joint ventures and other investees that we do not directly control; product recalls; 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; variability in material and commodity costs; product liability claims; our sales mix of products; protection and validity of our patent and other intellectual property rights; disruptions in global credit and financial markets as the result of the COVID-19 pandemic; labor relations or work stoppages; reliance on our executive leadership team and other key personnel; climate change and global warming; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; exposure to potential security breaches or other disruptions to our information technology systems and data security; political, economic and other risks from operations in numerous countries; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates, particularly those related to the sustained slowdown of the global economy due to the COVID-19 pandemic; the price and availability of energy; the outcome of pending and future litigation and governmental proceedings; 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 2020 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. 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

October SeptemberIn millions, except per share amounts 3, 27, 2021 2020

NET SALES $ 5,968 $ 5,118

Cost of sales 4,554 3,769

GROSS MARGIN 1,414 1,349

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses 571 533

Research, development and engineering expenses 266 224

Equity, royalty and interest income from investees 94 98

Other operating expense, net (5 ) (20 )

OPERATING INCOME 666 670

Interest expense 28 25

Other income, net 37 41

INCOME BEFORE INCOME TAXES 675 686

Income tax expense 134 182

CONSOLIDATED NET INCOME 541 504

Less: Net income attributable to noncontrolling interests 7 3

NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 534 $ 501



EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic $ 3.72 $ 3.39

Diluted $ 3.69 $ 3.36



WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

Basic 143.5 147.9

Diluted 144.7 148.9



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

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited) (a)

Nine months ended

In millions, except per share amounts

October 3,2021

September 27,2020

NET SALES

$

18,171

$

13,981

Cost of sales

13,793

10,448

GROSS MARGIN

4,378

3,533

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses

1,745

1,549

Research, development and engineering expenses

802

651

Equity, royalty and interest income from investees

397

342

Other operating expense, net

(17

)

(35

)

OPERATING INCOME

2,211

1,640

Interest expense

85

71

Other income, net

111

134

INCOME BEFORE INCOME TAXES

2,237

1,703

Income tax expense

473

402

CONSOLIDATED NET INCOME

1,764

1,301

Less: Net income attributable to noncontrolling interests

27

13

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

$

1,737

$

1,288

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic

$

11.96

$

8.69

Diluted

$

11.86

$

8.65

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

Basic

145.2

148.3

Diluted

146.5

148.9

(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 NET INCOME

(Unaudited) (a)

Nine months ended

October 3, SeptemberIn millions, except per share amounts 2021 27, 2020

NET SALES $ 18,171 $ 13,981

Cost of sales 13,793 10,448

GROSS MARGIN 4,378 3,533

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses 1,745 1,549

Research, development and engineering expenses 802 651

Equity, royalty and interest income from investees 397 342

Other operating expense, net (17 ) (35 )

OPERATING INCOME 2,211 1,640

Interest expense 85 71

Other income, net 111 134

INCOME BEFORE INCOME TAXES 2,237 1,703

Income tax expense 473 402

CONSOLIDATED NET INCOME 1,764 1,301

Less: Net income attributable to noncontrolling 27 13 interests

NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 1,737 $ 1,288



EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic $ 11.96 $ 8.69

Diluted $ 11.86 $ 8.65



WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

Basic 145.2 148.3

Diluted 146.5 148.9



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

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (a)

In millions, except par value

October 3,2021

December 31,2020

ASSETS

Current assets

Cash and cash equivalents

$

2,588

$

3,401

Marketable securities

430

461

Total cash, cash equivalents and marketable securities

3,018

3,862

Accounts and notes receivable, net

4,152

3,820

Inventories

4,322

3,425

Prepaid expenses and other current assets

828

790

Total current assets

12,320

11,897

Long-term assets

Property, plant and equipment, net

4,185

4,255

Investments and advances related to equity method investees

1,543

1,441

Goodwill

1,289

1,293

Other intangible assets, net

921

963

Pension assets

1,100

1,042

Other assets

1,705

1,733

Total assets

$

23,063

$

22,624

LIABILITIES

Current liabilities

Accounts payable (principally trade)

$

3,210

$

2,820

Loans payable

85

169

Commercial paper

200

323

Accrued compensation, benefits and retirement costs

626

484

Current portion of accrued product warranty

694

674

Current portion of deferred revenue

806

691

Other accrued expenses

1,185

1,112

Current maturities of long-term debt

55

62

Total current liabilities

6,861

6,335

Long-term liabilities

Long-term debt

3,602

3,610

Pensions and other postretirement benefits

623

630

Accrued product warranty

703

672

Deferred revenue

836

840

Other liabilities

1,435

1,548

Total liabilities

$

14,060

$

13,635

EQUITY

Cummins Inc. shareholders' equity

Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.4 shares issued

$

2,412

$

2,404

Retained earnings

16,555

15,419

Treasury stock, at cost, 79.4 and 74.8 shares

(8,974

)

(7,779

)

Accumulated other comprehensive loss

(1,911

)

(1,982

)

Total Cummins Inc. shareholders' equity

8,082

8,062

Noncontrolling interests

921

927

Total equity

$

9,003

$

8,989

Total liabilities and equity

$

23,063

$

22,624

(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)

October 3, DecemberIn millions, except par value 2021 31, 2020

ASSETS

Current assets

Cash and cash equivalents $ 2,588 $ 3,401

Marketable securities 430 461

Total cash, cash equivalents and marketable 3,018 3,862 securities

Accounts and notes receivable, net 4,152 3,820

Inventories 4,322 3,425

Prepaid expenses and other current assets 828 790

Total current assets 12,320 11,897

Long-term assets

Property, plant and equipment, net 4,185 4,255

Investments and advances related to equity method 1,543 1,441 investees

Goodwill 1,289 1,293

Other intangible assets, net 921 963

Pension assets 1,100 1,042

Other assets 1,705 1,733

Total assets $ 23,063 $ 22,624



LIABILITIES

Current liabilities

Accounts payable (principally trade) $ 3,210 $ 2,820

Loans payable 85 169

Commercial paper 200 323

Accrued compensation, benefits and retirement costs 626 484

Current portion of accrued product warranty 694 674

Current portion of deferred revenue 806 691

Other accrued expenses 1,185 1,112

Current maturities of long-term debt 55 62

Total current liabilities 6,861 6,335

Long-term liabilities

Long-term debt 3,602 3,610

Pensions and other postretirement benefits 623 630

Accrued product warranty 703 672

Deferred revenue 836 840

Other liabilities 1,435 1,548

Total liabilities $ 14,060 $ 13,635



EQUITY

Cummins Inc. shareholders' equity

Common stock, $2.50 par value, 500 shares authorized, $ 2,412 $ 2,404 222.5 and 222.4 shares issued

Retained earnings 16,555 15,419

Treasury stock, at cost, 79.4 and 74.8 shares (8,974 ) (7,779 )

Accumulated other comprehensive loss (1,911 ) (1,982 )

Total Cummins Inc. shareholders' equity 8,082 8,062

Noncontrolling interests 921 927

Total equity $ 9,003 $ 8,989

Total liabilities and equity $ 23,063 $ 22,624



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

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

Three months ended

In millions

October 3,2021

September 27,2020

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income

$

541

$

504

Adjustments to reconcile consolidated net income to net cash provided by operating activities

Depreciation and amortization

160

166

Deferred income taxes

27

4

Equity in income of investees, net of dividends

(36

)

(12

)

Pension and OPEB expense

21

27

Pension contributions and OPEB payments

(18

)

(20

)

Share-based compensation expense

7

10

Restructuring payments

-

(19

)

Gain on corporate owned life insurance

(1

)

(12

)

Foreign currency remeasurement and transaction exposure

17

(5

)

Changes in current assets and liabilities

Accounts and notes receivable

(22

)

(123

)

Inventories

(291

)

174

Other current assets

(27

)

(22

)

Accounts payable

39

329

Accrued expenses

266

186

Changes in other liabilities

(25

)

9

Other, net

(89

)

27

Net cash provided by operating activities

569

1,223

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(150

)

(116

)

Investments in internal use software

(14

)

(12

)

Investments in and advances to equity investees

(7

)

(13

)

Investments in marketable securities-acquisitions

(207

)

(137

)

Investments in marketable securities-liquidations

221

154

Cash flows from derivatives not designated as hedges

7

7

Other, net

18

14

Net cash used in investing activities

(132

)

(103

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

15

1,977

Net payments of commercial paper

-

(1,711

)

Payments on borrowings and finance lease obligations

(24

)

(16

)

Net borrowings under short-term credit agreements

9

2

Distributions to noncontrolling interests

(15

)

(13

)

Dividend payments on common stock

(207

)

(194

)

Repurchases of common stock

(138

)

-

Proceeds from issuing common stock

1

46

Other, net

2

13

Net cash (used in) provided by financing activities

(357

)

104

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

27

(8

)

Net increase in cash and cash equivalents

107

1,216

Cash and cash equivalents at beginning of period

2,481

1,751

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

2,588

$

2,967

(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

October SeptemberIn millions 3, 27, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income $ 541 $ 504

Adjustments to reconcile consolidated net income to net cash provided by operating activities

Depreciation and amortization 160 166

Deferred income taxes 27 4

Equity in income of investees, net of dividends (36 ) (12 )

Pension and OPEB expense 21 27

Pension contributions and OPEB payments (18 ) (20 )

Share-based compensation expense 7 10

Restructuring payments - (19 )

Gain on corporate owned life insurance (1 ) (12 )

Foreign currency remeasurement and transaction exposure 17 (5 )

Changes in current assets and liabilities

Accounts and notes receivable (22 ) (123 )

Inventories (291 ) 174

Other current assets (27 ) (22 )

Accounts payable 39 329

Accrued expenses 266 186

Changes in other liabilities (25 ) 9

Other, net (89 ) 27

Net cash provided by operating activities 569 1,223



CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures (150 ) (116 )

Investments in internal use software (14 ) (12 )

Investments in and advances to equity investees (7 ) (13 )

Investments in marketable securities-acquisitions (207 ) (137 )

Investments in marketable securities-liquidations 221 154

Cash flows from derivatives not designated as hedges 7 7

Other, net 18 14

Net cash used in investing activities (132 ) (103 )



CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 15 1,977

Net payments of commercial paper - (1,711 )

Payments on borrowings and finance lease obligations (24 ) (16 )

Net borrowings under short-term credit agreements 9 2

Distributions to noncontrolling interests (15 ) (13 )

Dividend payments on common stock (207 ) (194 )

Repurchases of common stock (138 ) -

Proceeds from issuing common stock 1 46

Other, net 2 13

Net cash (used in) provided by financing activities (357 ) 104

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH 27 (8 )EQUIVALENTS

Net increase in cash and cash equivalents 107 1,216

Cash and cash equivalents at beginning of period 2,481 1,751

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,588 $ 2,967



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

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

Nine months ended

In millions

October 3,2021

September 27,2020

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income

$

1,764

$

1,301

Adjustments to reconcile consolidated net income to net cash provided by operating activities

Depreciation and amortization

497

499

Deferred income taxes

44

(7

)

Equity in income of investees, net of dividends

(150

)

(136

)

Pension and OPEB expense

62

81

Pension contributions and OPEB payments

(86

)

(102

)

Share-based compensation expense

25

22

Restructuring payments

(1

)

(100

)

Loss (gain) on corporate owned life insurance

11

(50

)

Foreign currency remeasurement and transaction exposure

27

(7

)

Changes in current assets and liabilities

Accounts and notes receivable

(353

)

47

Inventories

(919

)

(50

)

Other current assets

(45

)

73

Accounts payable

416

109

Accrued expenses

435

(236

)

Changes in other liabilities

(59

)

208

Other, net

(144

)

(72

)

Net cash provided by operating activities

1,524

1,580

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(362

)

(268

)

Investments in internal use software

(36

)

(33

)

Proceeds from sale of land

20

-

Investments in and advances to equity investees

3

(30

)

Investments in marketable securities-acquisitions

(569

)

(422

)

Investments in marketable securities-liquidations

602

408

Cash flows from derivatives not designated as hedges

19

(15

)

Other, net

45

23

Net cash used in investing activities

(278

)

(337

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

35

1,999

Net payments of commercial paper

(123

)

(344

)

Payments on borrowings and finance lease obligations

(57

)

(41

)

Net (payments) borrowings under short-term credit agreements

(93

)

6

Distributions to noncontrolling interests

(28

)

(26

)

Dividend payments on common stock

(601

)

(582

)

Repurchases of common stock

(1,228

)

(550

)

Proceeds from issuing common stock

27

78

Other, net

(11

)

24

Net cash (used in) provided by financing activities

(2,079

)

564

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

20

31

Net (decrease) increase in cash and cash equivalents

(813

)

1,838

Cash and cash equivalents at beginning of year

3,401

1,129

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

2,588

$

2,967

(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)

Nine months ended

October SeptemberIn millions 3, 27, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income $ 1,764 $ 1,301

Adjustments to reconcile consolidated net income to net cash provided by operating activities

Depreciation and amortization 497 499

Deferred income taxes 44 (7 )

Equity in income of investees, net of dividends (150 ) (136 )

Pension and OPEB expense 62 81

Pension contributions and OPEB payments (86 ) (102 )

Share-based compensation expense 25 22

Restructuring payments (1 ) (100 )

Loss (gain) on corporate owned life insurance 11 (50 )

Foreign currency remeasurement and transaction exposure 27 (7 )

Changes in current assets and liabilities

Accounts and notes receivable (353 ) 47

Inventories (919 ) (50 )

Other current assets (45 ) 73

Accounts payable 416 109

Accrued expenses 435 (236 )

Changes in other liabilities (59 ) 208

Other, net (144 ) (72 )

Net cash provided by operating activities 1,524 1,580



CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures (362 ) (268 )

Investments in internal use software (36 ) (33 )

Proceeds from sale of land 20 -

Investments in and advances to equity investees 3 (30 )

Investments in marketable securities-acquisitions (569 ) (422 )

Investments in marketable securities-liquidations 602 408

Cash flows from derivatives not designated as hedges 19 (15 )

Other, net 45 23

Net cash used in investing activities (278 ) (337 )



CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 35 1,999

Net payments of commercial paper (123 ) (344 )

Payments on borrowings and finance lease obligations (57 ) (41 )

Net (payments) borrowings under short-term credit (93 ) 6 agreements

Distributions to noncontrolling interests (28 ) (26 )

Dividend payments on common stock (601 ) (582 )

Repurchases of common stock (1,228 ) (550 )

Proceeds from issuing common stock 27 78

Other, net (11 ) 24

Net cash (used in) provided by financing activities (2,079 ) 564

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH 20 31 EQUIVALENTS

Net (decrease) increase in cash and cash equivalents (813 ) 1,838

Cash and cash equivalents at beginning of year 3,401 1,129

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,588 $ 2,967



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

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

In millions

Engine

Distribution

Components

Power Systems

New Power

Total Segments

Intersegment Eliminations (1)

Total

Three months ended October 3, 2021

External sales

$

1,961

$

1,952

$

1,347

$

688

$

20

$

5,968

$

-

$

5,968

Intersegment sales

617

7

446

476

3

1,549

(1,549

)

-

Total sales

2,578

1,959

1,793

1,164

23

7,517

(1,549

)

5,968

Research, development and engineering expenses

97

10

78

55

26

266

-

266

Equity, royalty and interest income (loss) from investees

61

15

10

11

(3

)

94

-

94

Interest income

3

2

1

1

-

7

-

7

EBITDA (2)

391

192

253

134

(58

)

912

(50

)

862

Depreciation and amortization (3)

53

28

44

29

5

159

-

159

EBITDA as a percentage of segment sales

15.2

%

9.8

%

14.1

%

11.5

%

NM

12.1

%

14.4

%

Three months ended September 27, 2020

External sales

$

1,617

$

1,715

$

1,201

$

567

$

18

$

5,118

$

-

$

5,118

Intersegment sales

495

6

340

414

-

1,255

(1,255

)

-

Total sales

2,112

1,721

1,541

981

18

6,373

(1,255

)

5,118

Research, development and engineering expenses

72

9

64

53

26

224

-

224

Equity, royalty and interest income (loss) from investees

74

13

13

-

(2

)

98

-

98

Interest income

1

1

1

1

-

4

-

4

EBITDA (2)

382

182

261

101

(40

)

886

(10

)

876

Depreciation and amortization (3)

51

30

47

32

5

165

-

165

EBITDA as a percentage of segment sales

18.1

%

10.6

%

16.9

%

10.3

%

NM

13.9

%

17.1

%

"NM" - not meaningful information

(1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended October 3, 2021 and September 27, 2020.

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

(3) 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."

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

Power New Total IntersegmentIn millions Engine Distribution Components Systems Power Segments Eliminations ^ Total (1)

Three monthsended October 3,2021

External $ 1,961 $ 1,952 $ 1,347 $ 688 $ 20 $ 5,968 $ - $ 5,968 sales

Intersegment 617 7 446 476 3 1,549 (1,549 ) - sales

Total sales 2,578 1,959 1,793 1,164 23 7,517 (1,549 ) 5,968

Research,developmentand 97 10 78 55 26 266 - 266 engineeringexpenses

Equity,royalty andinterest 61 15 10 11 (3 ) 94 - 94 income(loss) frominvestees

Interest 3 2 1 1 - 7 - 7 income

EBITDA ^(2) 391 192 253 134 (58 ) 912 (50 ) 862

Depreciationand 53 28 44 29 5 159 - 159 amortization^(3)



EBITDA as apercentage 15.2 % 9.8 % 14.1 % 11.5 % NM 12.1 % 14.4 %of segmentsales



Three monthsended September27, 2020

External $ 1,617 $ 1,715 $ 1,201 $ 567 $ 18 $ 5,118 $ - $ 5,118 sales

Intersegment 495 6 340 414 - 1,255 (1,255 ) - sales

Total sales 2,112 1,721 1,541 981 18 6,373 (1,255 ) 5,118

Research,developmentand 72 9 64 53 26 224 - 224 engineeringexpenses

Equity,royalty andinterest 74 13 13 - (2 ) 98 - 98 income(loss) frominvestees

Interest 1 1 1 1 - 4 - 4 income

EBITDA ^(2) 382 182 261 101 (40 ) 886 (10 ) 876

Depreciationand 51 30 47 32 5 165 - 165 amortization^(3)



EBITDA as apercentage 18.1 % 10.6 % 16.9 % 10.3 % NM 13.9 % 17.1 %of segmentsales



"NM" - not meaningful information

^(1) Includes intersegment sales, intersegment profit in inventory eliminationsand unallocated corporate expenses. There were no significant unallocatedcorporate expenses for the three months ended October 3, 2021 and September 27,2020.

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

^(3) Depreciation and amortization, as shown on a segment basis, excludes theamortization of debt discount and deferred costs included in the CondensedConsolidated Statements of Net Income as "Interest expense." A portion ofdepreciation expense is included in "Research, development and engineeringexpenses."

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

In millions

Engine

Distribution

Components

Power Systems

New Power

Total Segments

Intersegment Eliminations (1)

Total

Nine months ended October 3, 2021

External sales

$

5,776

$

5,692

$

4,627

$

1,999

$

77

$

18,171

$

-

$

18,171

Intersegment sales

1,752

22

1,312

1,330

5

4,421

(4,421

)

-

Total sales

7,528

5,714

5,939

3,329

82

22,592

(4,421

)

18,171

Research, development and engineering expenses

288

35

232

172

75

802

-

802

Equity, royalty and interest income (loss) from investees

278

47

41

32

(1

)

397

-

397

Interest income

7

5

3

3

-

18

-

18

EBITDA (2)

1,147

553

975

399

(169

)

2,905

(89

)

2,816

Depreciation and amortization (3)

154

88

138

97

17

494

-

494

EBITDA as a percentage of total sales

15.2

%

9.7

%

16.4

%

12.0

%

NM

12.9

%

15.5

%

Nine months ended September 27, 2020

External sales

$

4,133

$

5,123

$

3,192

$

1,495

$

38

$

13,981

$

-

$

13,981

Intersegment sales

1,560

17

1,001

1,147

-

3,725

(3,725

)

-

Total sales

5,693

5,140

4,193

2,642

38

17,706

(3,725

)

13,981

Research, development and engineering expenses

217

20

187

148

79

651

-

651

Equity, royalty and interest income (loss) from investees

236

45

46

18

(3

)

342

-

342

Interest income

6

3

3

3

-

15

-

15

EBITDA (2)

897

500

681

269

(121

)

2,226

45

2,271

Depreciation and amortization (3)

155

91

142

96

13

497

-

497

EBITDA as a percentage of total sales

15.8

%

9.7

%

16.2

%

10.2

%

NM

12.6

%

16.2

%

"NM" - not meaningful information

(1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the nine months ended October 3, 2021 and September 27, 2020.

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

(3) 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 $3 million and $2 million for the nine months ended October 3, 2021 and September 27, 2020, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses."

CUMMINS INC. AND SUBSIDIARIESSEGMENT INFORMATION(Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

Power New Total IntersegmentIn millions Engine Distribution Components Systems Power Segments Eliminations ^ Total (1)

Nine monthsended October 3,2021

External $ 5,776 $ 5,692 $ 4,627 $ 1,999 $ 77 $ 18,171 $ - $ 18,171 sales

Intersegment 1,752 22 1,312 1,330 5 4,421 (4,421 ) - sales

Total sales 7,528 5,714 5,939 3,329 82 22,592 (4,421 ) 18,171

Research,developmentand 288 35 232 172 75 802 - 802 engineeringexpenses

Equity,royalty andinterest 278 47 41 32 (1 ) 397 - 397 income(loss) frominvestees

Interest 7 5 3 3 - 18 - 18 income

EBITDA ^(2) 1,147 553 975 399 (169 ) 2,905 (89 ) 2,816

Depreciationand 154 88 138 97 17 494 - 494 amortization^(3)



EBITDA as apercentage 15.2 % 9.7 % 16.4 % 12.0 % NM 12.9 % 15.5 %of totalsales



Nine monthsended September27, 2020

External $ 4,133 $ 5,123 $ 3,192 $ 1,495 $ 38 $ 13,981 $ - $ 13,981 sales

Intersegment 1,560 17 1,001 1,147 - 3,725 (3,725 ) - sales

Total sales 5,693 5,140 4,193 2,642 38 17,706 (3,725 ) 13,981

Research,developmentand 217 20 187 148 79 651 - 651 engineeringexpenses

Equity,royalty andinterest 236 45 46 18 (3 ) 342 - 342 income(loss) frominvestees

Interest 6 3 3 3 - 15 - 15 income

EBITDA ^(2) 897 500 681 269 (121 ) 2,226 45 2,271

Depreciationand 155 91 142 96 13 497 - 497 amortization^(3)



EBITDA as apercentage 15.8 % 9.7 % 16.2 % 10.2 % NM 12.6 % 16.2 %of totalsales



"NM" - not meaningful information

^(1) Includes intersegment sales, intersegment profit in inventory eliminationsand unallocated corporate expenses. There were no significant unallocatedcorporate expenses for the nine months ended October 3, 2021 and September 27,2020.

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

^(3) Depreciation and amortization, as shown on a segment basis, excludes theamortization of debt discount and deferred costs included in the CondensedConsolidated Statements of Net Income as "Interest expense." The amortizationof debt discount and deferred costs was $3 million and $2 million for the ninemonths ended October 3, 2021 and September 27, 2020, respectively. A portion ofdepreciation expense is included in "Research, development and engineeringexpenses."

CUMMINS INC. AND SUBSIDIARIESSEGMENT INFORMATION(Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:

Three months ended Nine months ended

October September October SeptemberIn millions 3, 27, 3, 27, 2021 2020 2021 2020

EBITDA $ 862 $ 876 $ 2,816 $ 2,271



EBITDA as a percentage of net 14.4 % 17.1 % 15.5 % 16.2 %sales



Less:

Interest expense 28 25 85 71

Depreciation and amortization 159 165 494 497

INCOME BEFORE INCOME TAXES 675 686 2,237 1,703

Less: Income tax expense 134 182 473 402

CONSOLIDATED NET INCOME 541 504 1,764 1,301

Less: Net income attributable to 7 3 27 13 noncontrolling interests

NET INCOME ATTRIBUTABLE TO CUMMINS $ 534 $ 501 $ 1,737 $ 1,288 INC.



Net income attributable to Cummins 8.9 % 9.8 % 9.6 % 9.2 %Inc. as a percentage of net sales

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.

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. Above is a reconciliation of EBITDA to "Net income attributable to Cummins Inc." for each of the applicable periods.

CUMMINS INC. AND SUBSIDIARIESSELECT 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 Nine months ended

October September October SeptemberIn millions 3, 27, 3, 27, 2021 2020 2021 2020

Manufacturing entities

Beijing Foton Cummins Engine $ 23 $ 30 $ 108 $ 81 Co., Ltd.

Dongfeng Cummins Engine 11 20 63 54 Company, Ltd.

Chongqing Cummins Engine 8 7 28 27 Company, Ltd.

^ ^All other manufacturers 27 22 (1) 117 100 (1) (2)

Distribution entities

Komatsu Cummins Chile, Ltda. 8 6 23 23

All other distributors 2 1 6 1

Cummins share of net income 79 86 345 286

Royalty and interest income 15 12 52 56

Equity, royalty and interest $ 94 $ 98 $ 397 $ 342 income from investees



^(1) Includes impairment charges of $10 million and $13 million for the threeand nine months ended September 27, 2020, respectively, for a joint venture inthe Power Systems segment.

^(2) Includes $37 million in favorable adjustments related to tax changeswithin India's 2020-2021 Union Budget of India (India Tax Law Changes) passedin March 2020.

INCOME TAXES

Our effective tax rate for 2021 is expected to approximate 21.5 percent, excluding any discrete items that may arise.

Our effective tax rates for the three and nine months ended October 3, 2021, were 19.9 percent and 21.1 percent, respectively.

The three months ended October 3, 2021, contained favorable discrete items of $11 million, or $0.08 per share, primarily due to a $16 million favorable release of tax reserves associated with the settlement of tax positions, partially offset by $5 million of unfavorable return to provision adjustments.

The nine months ended October 3, 2021, contained favorable discrete items of $8 million, or $0.05 per share, primarily due to an $18 million favorable release of tax reserves associated with the settlement of tax positions, partially offset by $10 million of unfavorable statutory changes in tax rates, mostly in the U.K.

CUMMINS INC. AND SUBSIDIARIESBUSINESS UNIT SALES DATA(Unaudited)

Engine Segment Sales by Market and Unit Shipments by Engine Classification

Sales for our Engine segment by market were as follows:

2021

In millions Q1 Q2 Q3 Q4 YTD

Heavy-duty truck $ 827 $ 839 $ 861 $ - $ 2,527

Medium-duty truck and 674 688 713 - 2,075 bus

Light-duty automotive 481 484 515 - 1,480

Off-highway 477 480 489 - 1,446

Total sales $ 2,459 $ 2,491 $ 2,578 $ - $ 7,528



2020

In millions Q1 Q2 Q3 Q4 YTD

Heavy-duty truck $ 750 $ 415 $ 694 $ 789 $ 2,648

Medium-duty truck and 618 391 492 565 2,066 bus

Light-duty automotive 353 180 522 492 1,547

Off-highway 437 437 404 483 1,761

Total sales $ 2,158 $ 1,423 $ 2,112 $ 2,329 $ 8,022

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

2021

Units Q1 Q2 Q3 Q4 YTD

Heavy-duty 30,700 29,400 29,200 - 89,300

Medium-duty 73,100 67,500 65,200 - 205,800

Light-duty 68,500 68,100 73,900 - 210,500

Total units 172,300 165,000 168,300 - 505,600



2020

Units Q1 Q2 Q3 Q4 YTD

Heavy-duty 25,800 15,900 23,300 27,500 92,500

Medium-duty 61,200 44,900 50,100 64,700 220,900

Light-duty 49,400 29,800 67,200 69,400 215,800

Total units 136,400 90,600 140,600 161,600 529,200

Distribution Segment Sales by Product Line

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

2021

In millions Q1 Q2 Q3 Q4 YTD

Parts $ 757 $ 765 $ 800 $ - $ 2,322

Power generation 418 454 438 - 1,310

Engines 334 351 377 - 1,062

Service 326 350 344 - 1,020

Total sales $ 1,835 $ 1,920 $ 1,959 $ - $ 5,714



2020

In millions Q1 Q2 Q3 Q4 YTD

Parts $ 787 $ 654 $ 722 $ 768 $ 2,931

Power generation 376 377 416 523 1,692

Engines 323 277 279 371 1,250

Service 328 297 304 334 1,263

Total sales $ 1,814 $ 1,605 $ 1,721 $ 1,996 $ 7,136

Component Segment Sales by Business

Sales for our Components segment by business were as follows:

2021

In millions Q1 Q2 Q3 Q4 YTD

Emission solutions $ 1,035 $ 882 $ 793 $ - $ 2,710

Filtration 372 374 354 - 1,100

Turbo technologies 367 351 325 - 1,043

Electronics and fuel 263 241 210 - 714 systems

Automated transmissions 115 146 111 - 372

Total sales $ 2,152 $ 1,994 $ 1,793 $ - $ 5,939



2020

In millions Q1 Q2 Q3 Q4 YTD

Emission solutions $ 664 $ 472 $ 665 $ 831 $ 2,632

Filtration 312 255 314 351 1,232

Turbo technologies 270 216 281 331 1,098

Electronics and fuel 174 164 187 229 754 systems

Automated transmissions 82 43 94 89 308

Total sales $ 1,502 $ 1,150 $ 1,541 $ 1,831 $ 6,024

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:

2021

In millions Q1 Q2 Q3 Q4 YTD

Power generation $ 611 $ 655 $ 664 $ - $ 1,930

Industrial 324 399 412 - 1,135

Generator 87 89 88 - 264 technologies

Total sales $ 1,022 $ 1,143 $ 1,164 $ - $ 3,329



2020

In millions Q1 Q2 Q3 Q4 YTD

Power generation $ 519 $ 424 $ 601 $ 623 $ 2,167

Industrial 296 291 309 292 1,188

Generator 69 62 71 74 276 technologies

Total sales $ 884 $ 777 $ 981 $ 989 $ 3,631

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

2021

Units Q1 Q2 Q3 Q4 YTD

Power generation 2,100 1,800 2,500 - 6,400

Industrial 1,000 1,200 1,900 - 4,100

Total units 3,100 3,000 4,400 - 10,500



2020

Units Q1 Q2 Q3 Q4 YTD

Power generation 1,800 1,000 2,300 2,600 7,700

Industrial 1,000 1,000 1,200 1,100 4,300

Total units 2,800 2,000 3,500 3,700 12,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005256/en/

CONTACT: Jon Mills Director, External Communications Cummins Inc. 317-658-4540 Jon.mills@cummins.com