The paragraph introduces the participants of the teleconference, including the operator, CEO, CFO, and Vice President of Investor Relations. It also mentions that the call will be recorded and a question-and-answer session will follow the presentation. The host, Chris Clulow, then introduces the CEO and CFO before reminding listeners that some information may contain forward-looking statements and non-GAAP financial measures.

In the second quarter, Cummins released their financial statements and held a webcast presentation, led by CEO Jennifer Rumsey. She discussed their sales and end market trends, as well as their outlook for 2024. Cummins also announced partnerships with Isuzu Motors Limited, including the launch of a new 6.7-liter engine for Isuzu's medium-duty truck lineup and plans for a battery electric powertrain for Isuzu's F-Series in North America. These developments mark a significant milestone for Cummins as they enter the Japan on-highway market for the first time in their history.

The company is proud of their partnership with Daimler Trucks and PACCAR, and they have formed a joint venture called Amplify Cell Technologies to localize battery cell production in the US. This will allow them to advance battery cells for commercial and industrial applications in North America. They were also awarded a $75 million grant from the Department of Energy to convert manufacturing space for zero emissions components. Demand for their products remains strong, resulting in record revenues in the second quarter of 2024.

In the second quarter of 2024, sales for the company increased by 2% due to high demand and improved pricing. EBITDA also increased compared to the same quarter in 2023, but there were additional costs related to the separation of Atmus. North American revenues grew by 4%, driven by strong demand in core markets. Production of heavy-duty trucks and engines also increased, while medium-duty truck sales outpaced market growth. Power generation revenues in North America increased by 23%, contributing to record sales and profitability in the Power Systems segment. International revenues decreased by 2%, with weaker domestic volumes in China partially offset by higher data center demand.

The demand for trucks in China remains low, but is offset by higher orders for natural gas engines and strong exports. In the light-duty market, there was a 4% increase in units sold. Excavator demand also increased by 4%, with a 19% increase in units sold. Power generation equipment sales in China saw a 36% increase, driven by demand in data centers. In India, truck production increased by 11%, but Cummins' shipments only increased by 5%. Power generation revenues decreased by 17% due to pre-buy demand in 2023. For 2024, Cummins has raised its revenue guidance to down 3% to flat and increased its EBITDA guide to 15% to 15.5%. The company expects higher revenue in its Engine, Power Systems, and Distribution segments, but slightly lower revenue for the Accelera business.

The company expects stronger profitability in the Engine and Power Systems segments, driven by an increase in heavy-duty truck demand in North America and a rise in medium-duty truck sales. They also project an increase in revenue in China and India, driven by strong demand in power generation and on-highway sectors. However, global construction demand is expected to remain flat or decrease slightly. The company has raised their guidance for the global power generation market and aftermarket sales, but mining engine sales are expected to remain consistent.

Accelera expects a reduction in full year sales due to a slower energy transition, but is still raising its guidance for sales and EBITDA. Cummins is well-positioned to continue investing in growth and returning cash to shareholders. The company had a strong performance in the first half of the year, driven by record demand in core markets and new partnerships. The company is dedicated to delivering financial performance, investing in future growth, and returning cash to shareholders while also working towards sustainable solutions for decarbonization.

Mark Smith, speaking at Analyst Day, highlighted the company's strong second quarter results and raised their full year expectations for 2024. Revenues increased by 2% due to organic growth, with North America seeing a 4% increase while international sales decreased by 2%. EBITDA was $1.35 billion or 15.3% of sales, with gross margins remaining flat due to favorable pricing and operational improvements. Selling, admin, and research expenses decreased, while joint venture income and other income also decreased. Interest expense increased and the effective tax rate was 23%, including some favorable discrete tax items.

In the second quarter, the company's net earnings increased to $726 million, or $5.26 per diluted share, compared to $720 million, or $5.05 per diluted share, in the same quarter last year. The increase was mainly due to a lower weighted average share count resulting from a tax-free share exchange. Operating cash flow was an outflow of $851 million, mainly due to a $1.9 billion payment for settlement agreements with regulatory agencies. Excluding the settlement, operating cash flow increased to $1.1 billion, more than double the amount generated in the second quarter of last year. The Components segment saw a decrease in revenue and EBITDA due to the separation of Atmus, while the Engine segment had record revenues but a slight decrease in EBITDA due to higher research costs and lower joint venture income. For 2024, the company projects a decrease in Components segment revenue and expects EBITDA margins to be in the range of 13.7% to 14.2%. The Engine segment is expected to see a decrease in revenue but maintain EBITDA margins of 14.1%.

The company projects an increase in revenues for the Engine business in 2024, due to a revised outlook in the North American medium-duty truck market. The Distribution segment saw a record increase in revenues, but a decrease in EBITDA margin due to higher expenses and a higher mix of power generation sales. The company expects an increase in Distribution revenues and a slight decrease in EBITDA margin. The Power Systems segment also saw record revenues and an increase in EBITDA due to higher volumes and operational improvements. The company projects an increase in Power Systems revenues and EBITDA for 2024. The Accelera segment saw a significant increase in revenues due to increased electrolyzer installations.

In the second quarter of 2024, the company's EBITDA loss was $117 million, slightly higher than the previous year. They have been investing in products and capabilities to support growth in certain areas while cutting costs in others. They have revised their Accelera revenue forecast to be between $400-$450 million in 2024, and their net losses are expected to be between $400-$430 million. Due to strong performance and improved outlook, the company has raised their full year revenue guidance to be down 3% to flat. EBITDA margins are projected to be approximately 15-15.5%, and the effective tax rate is expected to be 24%. Capital investments will remain the same at $1.2-$1.3 billion as they continue to invest in new products and capacity expansion. The company anticipates some moderation in key markets in the second half of the year, but they have taken steps to reduce costs and streamline their business to prepare for any economic cyclicality.

The company has achieved strong financial results and plans to continue investing in growth, increasing dividends, and reducing debt. They are seeing consistent performance in China despite potential government incentives and are not anticipating any significant changes in the near-term. The margins in Power Systems are impressive despite modest sales growth projections for 2024.

The speaker responds to a question about the company's Power Systems segment and its margins. They explain that there are three factors contributing to the strong margins, including cost reduction, pricing, and operational efficiency. They also mention that there is still room for improvement in the segment and express confidence in its future performance.

The speaker discusses the market outlook for their company, focusing on the power generation and on-highway truck markets. They mention strong demand and backlog in both markets, with plans to make capacity investments to take advantage of the growth. They also mention positive pricing in both markets, with potential for a pre-buy ahead of future emissions regulations. The question of how large this pre-buy will be remains uncertain, but the company is preparing for strong demand.

The speaker discusses the company's expected 2.5% increase in the year, with a focus on the Power Systems results. They also mention their recent acquisitions of Daimler's and Isuzu's medium-duty engine businesses, which will lead to growth in the US, India, Europe, and Brazil. The speaker also mentions the launch of a new product in Japan and the impact of regulation changes on their strategy.

The company is not importing the engine but building it in the market. They expect slow volume growth in Japan and plan to launch the truck in other markets later this year. They anticipate steady growth in the medium-duty space due to new partnerships and changes in emissions regulations. The company has taken measured actions to improve costs and has a stronger outlook in medium-duty truck, which has helped improve profitability. They are not disclosing specific profit margins but these are the key factors driving improvement.

The speaker responds to a question about the company's second quarter results and future projections. They mention that there is still room for improvement in operating efficiencies and there has been no significant change in pricing. The speaker then addresses the skepticism about the guidance for the engine business, explaining that there may be enough new customers to offset declines in other areas. They also mention that there is potential for growth in the PowerGen sector, but the margins may be affected by industrial factors. Overall, the business is performing well and there are different potential outcomes for margins.

The speaker discusses the company's increased capacity and strong business performance, reassuring that there is no cause for concern. They mention cost reduction actions and a slightly better outlook for parts as factors contributing to the expected maintenance of margins. A question is asked about the distribution segment's lower margins despite strong sales, and the speaker explains that this is due to a mix headwind from PowerGen and some individual charges in the first and second quarter. The speaker also mentions a slight cost headwind and a 2.5% expected price increase.

The speaker discusses the company's margins and its potential for improvement, as well as addressing questions about market shares and the parts business. They note that while the company works to create customer demand for its heavy-duty products, the vocational segment is currently stronger than the truckload segment. However, the company's goal is always to have the best product and create demand for its products.

The market for OEMs has been shifting between different segments and there has been a focus on reducing inventory levels in response to disruptions. Demand for both on- and off-highway markets is now steady. There is early demand for the X15 product from some fleet customers with sustainability goals, but it may take time to reach projected levels.

The speaker is unable to predict when the heavy-duty demand will improve, but believes it will happen at some point in 2025. They also mention that they will work with both the Trump and Biden administrations to ensure regulations and policies reflect the needs of the industry and their destination strategy is focused on decarbonizing the industry over time.

The speaker discusses the company's focus on advocating for stable regulations and navigating the energy transition. They also mention the strong demand for medium duty vehicles and their investments in raising capacity to meet this demand. They expect less volatility and sustained high demand for medium duty, but there are more uncertainties around heavy duty. The speaker also mentions the power systems unit and how they are running at high capacity, with an estimated 20,000 unit shipments for the year. They are making investments to increase capacity and looking at future capacity for 2025.

Mark Smith and Jennifer Rumsey discuss the challenges and opportunities in the engine business, which has a wide range of products and applications. They mention that there may be some capacity increases in certain segments, such as data centers, but it varies across markets. The company is confident in their revenue projections for this year and next, thanks to improvements in their supply chain and the launch of new products.

The speaker discusses capacity constraints in the data center market and mentions the company's investments to address them. The operator thanks participants for their questions and the call concludes. The Investor Relations team will be available for further questions.

This summary was generated with AI and may contain some inaccuracies.