Cummins shares plans to deliver long-term growth and increased profitability
Launching New Power business which includes existing electrification business as well as fuel cell and hydrogen production technologies
Company shares plans to effectively manage through cyclical downturn by lowering structural costs by $250 million to $300 million in 2020
Cummins has the financial strength to invest through the cycle and return cash to shareholders
At a meeting with analysts and shareholders today, members of the leadership team of Cummins Inc. (NYSE: CMI), a global power leader, shared the Company’s plans to generate profitable growth driven by leadership in the design, manufacture, and support of powertrain technology.
“Our leadership in powertrain technology has been instrumental in driving strong returns for Cummins shareholders,” Tom Linebarger, Chairman and CEO, said at the meeting. “Cummins has continued to advance its diesel and natural gas powertrains while we have increased our focus on battery and fuel cell technologies, providing customers with the products and support for all of their powertrain needs.”
The Company shared its plans to leverage its customer relationships and application knowledge to support OEMs and end users as they broaden the number of powertrains in their vehicles and equipment. In his remarks, President and COO Tony Satterthwaite reiterated that while battery and fuel cell technologies have been a clear focus of Cummins, its investments in diesel and natural gas platforms would continue in order to achieve improved fuel economy and lower emissions.
“While we do anticipate a shift towards electrification in some markets over the coming years, diesel will be the primary source of energy in commercial vehicles for many years to come,” Mr. Satterthwaite said. “Cummins will continue to lead the way in developing cleaner and more fuel-efficient diesel engines, such as the recently announced and industry leading 2020 ISX15 Efficiency Series, for the North American heavy-duty truck market, which is 5% more fuel efficient than its 2019 counterpart.”
At the meeting, Chief Financial Officer Mark Smith reminded investors that Cummins has a strong track record of improving cycle-over-cycle profitability and cash flow and that the Company is prepared for a cyclical slowdown in 2020. “Cummins has the financial strength to keep investing through the cycle and return cash to shareholders”, Mr. Smith stated. “We are taking steps to lower our cost base, while continuing to invest in the new products and services that will position the Company for a stronger future, when markets recover.”
Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues, EBITDA and agreement in principle to settle regulatory proceedings regarding our emissions certification and compliance process for pick-up truck applications. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse consequences resulting from entering into the Agreement in Principle, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc. (Meritor); raw material, transportation and labor price fluctuations and supply shortages; aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; uncertainties and risks related to timing and potential value to both Atmus Filtration Technologies Inc. (Atmus) and Cummins of the planned 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 separation; 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.
Cummins Inc., a global power solutions leader, comprises 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 filtration, 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.
