Cummins (CMI) 2 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the Q1 2024 Cummins Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Clulow, Vice President of Investor Relations. Thank you, Chris.

begin. may You

our Good today much. quarter and to Chief Jennifer welcome XXXX. and Executive Thanks Smith, Mark discuss morning, Cummins teleconference our Rumsey, are today to with Officer. first and results our Chief Participating Officer; very Financial me everyone, Chair for of the

to be We at end will available all of the questions answer the teleconference.

be meaning forward-looking note information Exchange XXXX. that intentions the hear hopes, future. or the Before statements and the you of beliefs regarding consist the of we given that start, Act will some Such of our please Securities statements and within today forecasts, strategies will of on express expectations,

annual risks and statement in Factors from in actual and projected on the the our of most our forward-looking Commission, disclosure slide deck in and Form and filed results particularly uncertainties on the information with the Exchange quarterly forward-looking section reports such of subsequently and of because uncertainties. such filed regarding is differ report Our Securities More future Form Risk available risks XX-Q. materially filings those recently statements any number could XX-K a

of will certain financial to be and call, the non-GAAP those you this the our we'll GAAP discussing refer reconciliation for financial measures. During measures, website of course to we measures

section CEO, presentation us release will our Chair With a cummins.com. I webcast our to over a Jennifer available to are copy the Investor at Rumsey kick today's with of press of on Relations Our within of you and the statements and that off. copy financial turn way, website out the

our forecast this financial and our and of details for everyone. I XXXX. will more performance end I'll trends sales take then financial finish by discussion our year. good then Mark I and for first with first start Chris, of quarter our through discuss a morning, a with both you, will you market of outlook region. and our will summary results, quarter Thank

Before events to to on performance, major Atmus now our will the pursue March, its our advancing Atmus plans Cummins want getting details well the of solutions, Technologies. Filtration I a quarter. from completed take . In while its power on into for innovative few is focus separation successfully business, own Filtration moment a positioned first growth. the to highlight profitable continue Cummins

resulted involved We are exchange successful the were separation, proud of The common in of to and tax-free we shares, both Atmus. and by Atmus step what who to for are million. and employees' a work outstanding the future all final our in hard which see holds reduced excited Cummins of separation ensure X.X shares

give In of the platforms part addition, of innovation the the customers reintroduced HELM With us multiple higher forward, efficiency, with fuels, their HELM transition. journeys and how the captures energy fuel-agnostic that Cummins our they navigate name Cummins platform. powers emissions platforms that lower control own we our as

EPA and HELM on-highway As the aligned platform, next-generation with will the in market, launch. CARB the the the at launch for XXXX announced which be will U.S. we product America North in next XXX heavy we Cummins diesel compliant duty regulations XX-liter

wastewater centers, Generation for engines. QSKXX engineered treatment introduced sets These been CentumTM applications April, data new Cummins have X in care Power generator Series, health QSKXX most facilities powered Lastly, plant. the Cummins specifically by and to as such critical models award-winning new the and

low reliability, power decades build about event our density, improvement step for and emissions. genset interest was high and sustainability our growing with change customers' the needs of and deliver hear critical which the these on customers in products, launch and meeting experience attend I a to excited our demand in assured applications

markets. on quarter XXXX of of first company and our the I cover the some overall Now for key comment will performance

regions. and remained was $X.X products our a compared a EBITDA first markets first quarter XXXX. for or decrease of Revenues of year $X.X XX.X% billion our many key XX.X% the compared $X.X for quarter X% ago. Demand to the strong or were billion, across to of billion

a other for to the simplify results net expenses expenses of include to First $XX billion work we of term. quarter efficiency related $X.X and costs long our transaction the of of and million and structure as continue gain Atmus XXXX operating our restructuring to divestiture business improve the

business. of to This $XX included related million of XXXX the compares first the costs results, which Atmus the separation to quarter

offset will Excluding higher we as create partially related products and restructuring the of the separation the development that as invest advantages to to onetime volumes technologies improved continue basis the future. expenses, points the Atmus as and percentage and research in by XX costs gain well as in lower EBITDA pricing and decreased expenses the

Gross chain improved impact to quarter dollars as pricing benefits XXXX the lower compared increases. and supply cost the of the more volumes offset of margin first of than

the Our medium-duty first from of down down units pickups down XXXX sales X% to quarter levels. $XX,XXX, unit for the of in while our with XX,XXX of XXXX XX% Industry unit of XX,XXX were the was the while were quarter in first XX,XXX use XXXX, the X% up revenues sales quarter from trucks in was trucks were Stellantis heavy-duty in XXXX. first production from XX,XXX, quarter from XXXX. of North shipped Ram engines XXXX, production heavy-duty X%, an increase in We America XXXX. flat our units, X% levels, Industry first

XX%, and by strong Revenues mission-critical for generation demand. power driven power data increased continued, by center North America

X% quarter compared in Our international to XXXX by decreased a of the year ago. revenues first

Industry X% trucks in an increase with a offset accelerating First medium- as China, partially data in center units, the from and heavy-duty year. XX% quarter the demand China was domestic last revenues weaker were billion, for demand. including XXX,XXX of ventures, of joint $X.X were volumes decrease

and joint market However, were China including a ventures, X% XX,XXX sold, shifts The for decrease decline year-over-year. quarter equipment from XX% the The an slowing in in the during levels. property XXXX of demand. to XXX,XXX our decrease up population Industry first units, light-duty weak at increase demand of while export due market is units, the size our led units X%. the excavators levels market a quarter investment, in was in XXXX first XX,XXX, in was volumes from share high to

sold Sales units the export X,XXX QSMXX units, penetration markets. power and quarter as generation XX% equipment data first of in demand growth. a the in increase were China of X% softening of as an center by result Our in other accelerating was offset decreased

our revenues in Power XX% an April. quarter increased First quarter the as the of Industry strong. of first joint a X% ventures, the production while India, in market decreased million, economic revenues by truck activity remains elections year were by including $XXX X% X%, Generation quarter ahead increase decreased shipments slowed by first from ago. in as

individual Now XXXX, regions end let me some comments and including for provide on markets. an outlook

provided Our the gain the from first guidance full announcement. divestiture. March The excludes preceded related date separation full included as XX include transaction Atmus Atmus guidance now quarter the onwards for to and year year excludes the -- previously also the it

to our initial issued improved XXXX We from in have are happy February. for guidance our expectations that share

from compared Our revenues forecast higher the future for base remains as to Atmus now excluded total which $X.X company is approximately X% guidance revenue in business X%, our quarters. prior to billion down same of XXXX implies at

XXX,XXX to down from In XXX,XXX units America pickup In shipments to engine with XXXX, We launch in to prepare expect in prior flat XXXX, America, are are units, project year. XXXX our XXXX revenue, for America we prior We XXX,XXX the joint XXXX prior for to down prior X% the guidance. in XXX,XXX guidance, market, XXX,XXX second our trucks medium-duty quarter. compared forecast softening be to in from still trucks year total guidance North consistent increasing though our we XXX,XXX our XXX,XXX consistent of expected truck maintain half in our guide including with of as our to heavy-duty our to units, do X% XXXX, North to to model China, of fourth XX% the to in to ventures, increase XXX,XXX in we North X%

in X% truck demand down range demand expect light-duty X% in a project and to medium-duty of up in to of up truck market. XX% and the X% a heavy- range We down

expect be we shifts joint that slower export ventures, through including noted expected the by total the in short-term normalize and in to of on-highway our progress the remainder as are economy the I effect we and primarily sluggish increase be revenue, to project to driven demand, replacement with driver, a X% but range the the prior share XXXX, in power earlier We year. demand. The India, generation -- In guidance. potentially biggest consistent strong demand market to may be weakened by

trucks up We flat be expect year. industry to the X% for for demand to

XX%. of flat For global year-over-year, up from we X% XX% down our down to to project previous guidance construction,

major our in horsepower global expect We slowing to export to and continue China. weak remain We XXXX. in project demand investment markets property strong high

guidance prior markets guidance XX%, We for be X%, center down about to up compared X% to up with our increases Sales generation are XX% raising expected prior continued to guidance. of markets. X% XX% and driven mining of data by in the our are engines mission-critical to to be power global to consistent our

we anticipate by XX% by primarily gas XX% engines decrease smaller in a While for to XXXX, to continue market decreased for America. in driven to North demand us, demand and oil

expect half throughout our we've the XXXX, full guidance. sales year the X% in our In million the efforts consistent and to million of XXXX, through $XXX prior up we Accelera, to down maintained inventory management XXXX. For of million in guidance to $XXX we happened aftermarket, to that compared as second are X% for be destocking with $XXX industry

to as in growth capacity continued deliver well We are customers manufacturing expect to capability ramping up electrified our and as components. electrolyzer orders

business coming maintaining growth guidance. of for to from has demand base In year future X% our outlook first X% our in summary, offset Atmus stronger as for we quarters our strong the off sales are the down of quarter, removal a

XX.X%, of power stronger We to of for of guidance our of compared our XX.X% XX.X% offsets have profitability loss previous revised be America the heavy-duty XX.X% generation and than to markets, Atmus. truck the to range also forecast North reflecting in more to which EBITDA

for taking in to our reduce optimize addition, and Cummins cost, steps we continued business success In are position XXXX.

keep strong to future, returning technologies position in our investing and new a investors. the to in to are customers cash bringing We

returned in approximately XX% long-term the of of cash return to consistent our plan shareholders. we quarter, shareholders $XXX During to million with the dividends, to flow operating form

grateful the the completed million our we Cummins share be the impressed beyond. around Atmus performance and addition, In more reflected will quarter at reduced share same for generating the which strong am in we fully our financial the $X.X the count employees time. average and of exchange, share for by count second the and leaders world as delivering and for commitment in I overall customers

shareholders. Our investing future will our bringing generations planet sustainable solutions enhance in returning growth, results further future for the Cummins' our to keep cash and that ability protect to

long-term Analyst our to discussing to strategy further forward me it upcoming turn look May let XX in on and I now our Day over Mark.

Thank operating you, and delivered and profitability positive revenue We first good cash flow. everyone. solid morning, Jen, quarter and generated

and the our of our expectations after of first for outlook, Given Atmus. improved we've quarter full adjusting strength year results for separation the XXXX raised

of revenues in Cummins were billion, to ago. consolidated around down The sales. sales $X.X year-over-year our of to a year from X% decline First -- mid-March a in quarter resulted separation X% Atmus .

and and XX.X% offset onetime of of in China $X.X on in full of $X.X which America Our America the separation demand or was costs sales by billion Atmus tax-free net the in gain completed weaker divestiture resulted billion, the underlying for Europe. transaction expenses. North of a increased quarter. and We March, were revenues other EBITDA and in Latin

million First of included costs This $XX expenses. of results first million $XX to which restructuring related quarter XXXX, included of separation to Atmus. compares the quarter also of

volumes. XX in onetime related comparison expenses costs driven The billion first consolidated clarity of EBITDA $X.X the a products following EBITDA sales was comments. and billion my allow in and or XX.X% year of To and quarter of provide prior quarter excluding well performance was to sales the to included Financial compared gain and through Atmus investment by the Atmus capabilities percentage sales March restructuring EBITDA. lower to lower I for ago. as operational the results year, the on as XX.X% and new separation or in our am $X.X are sales of

higher or primarily into within by the business. we expenses line Systems growth, future more development and sales business. Gross operational year. Selling, by line even The XX% look detailed $X research by to driven improved new and the Power let's improvements, margins to bring of Now research product products billion margin by the item. capabilities of were increased Engine the $X.X last billion was administrative driven market and favorable million, to continue as in for costs support particularly compared HELM $XX XX.X% to pricing the especially profitable quarter or

foreign increase revaluation outstanding, to $XXX million year, compared income to the million, segment. of million relative income in year, of negative driven of primarily in a related a venture company-owned related gains from currency an income investments long-term prior is borrowings year driven life increased and prior expense year from by Other to from impact ago. million decrease in decrease The on issuance the the ago. bond lower of the million, the $XX a due Systems earnings $X Power was completed increased million higher $XX Interest was $X February. to we Joint $XX insurance other by

billion net in, $X share, due for all-in the in The of effective or rate X.X%, tax-free gain quarter or or diluted mainly tax $X.X expenses of separation per share the restructuring to to on diluted first separation and which net were the per All quarter related share. of gain Atmus. Atmus earnings $XX was million the the $X.XX of the per $XX.XX includes billion $X.XX

in in Just quarters reinforce inflow share average a lower counts flow since the from basis. an share impact the operating million said, be separation quarter inflow an counted seen what last compared future $XXX year. first $XXX cash weighted to All-in Jen of the on million count was of of the Atmus to will diluted full

for Now and our comment let on performance me segment guidance XXXX.

was year. Cummins from billion, reminder, a to As in sales excluding the assume [indiscernible]. segment results revenue operations of the of XX.X% performance full related XXXX the for within would consolidated improved prior Atmus increased of be EBITDA, separation X%, $X.X Components decrease primarily while included a for guidance by Atmus, of costs our to that XX.X% driven

XX% updated we've XX.X%. to of the to XXXX segment Components, to the margins in expect range and XX.X% decrease Atmus the X% and EBITDA For guidance revenues following for of the separation

the in reflects Our both of separation latest guidance an for and Atmus. margins EBITDA revenues increase after adjusting

from a quarter revenues billion, X% a at markets to the outlook of American down a construction higher and to decrease XX.X% was segment, For customers. ago projections, project the X% and Engine stronger-than-expected costs. revenues we the EBITDA for X% as pricing prior an year year business from midpoint a by volumes XX.X%, first Engine a now in revised year reflecting be truck flat, the from were research of improvement offset from $X.X XXXX, ago. our North of demand our the benefit lower decrease

to XXXX XX sales the to is to of ago a record increased EBITDA sales XX.X% be year billion. a in projected declined aftermarket EBITDA as a to as from at sales, decreased experienced year to range revenues the midpoint Distribution year points particularly basis XX.X% XX.X%, we volumes. XX.X% In that an of industrial due of the to from to $X.X percent of segment, the higher X% increase levels compared customers ago ago. a

margins to and of X% be to an increase XXXX for and from year. improvement guide for a EBITDA XX.X%, full to margins be the to up the X% range of flat XX.X% that Systems expect $X.X increase to prior Power and revenues segment in were distribution trend to segment. We modest revenues operating EBITDA improved improving increased driven XX.X% in volumes, contributed of billion, the of X% which from performance power in higher of an to revenues and a sales XX.X% generation particularly all improvements, by pricing strong markets, of the

basis driven revenues increased X% up to our previous by X%, points to $XX EBITDA also midpoint guide. XX%, be expect to now Accelera Systems XX% flat installations. revenues Power to increased X% XXXX, million, electrolyzer has increased approximately from we the to and at up be XX

an of invest continue to ago we loss loss EBITDA year to the EBITDA support million million a as was $XX capabilities to Our and in products future $XXX compared growth.

In XXXX, is unchanged. our guidance

$XXX expect prior $XXX revenues million the to losses in of net the to with be to guide. range million range to of our be We million in and $XXX million $XXX consistent

in be revenues our the to separation the consolidated given despite end revenue company guidance, regions, full mentioned, the outlook ass. company quarter Jen year X% the the and to down we of year are the and adjusting consistent guidance prior -- with markets, we performance X%, As project strong key first in company

to separation Company which all XX.X%, points to Atmus be to guidance, approximately the and prior the EBITDA related margins up of excludes are of now expenses. net gain XX XX.X% from projected basis the restructuring

to be products, growth. new we Our expected tax-free effective is billion discrete to in of expansion to Atmus $X.X the gain unchanged $X.X and X tax support rate make billion, months to ago investments XX%, future range as be critical will related investments from excluding Capital in capacity our continue outlook to other items. the

some In solid XXXX, quarter. performance flow sales, some We our in still but guide. do any going summary, and XXXX us strong half positive have ways expectations we investing and navigate leaving of second key streamline delivering cash our of quarter of fourth markets continue the in well costs financial profitability the business identify We took moderation performance. economic of we to to positioned forward continue in own in prior our to our raised the to and delivered steps first expect reduce and our cyclicality relative to

are Our priorities XXXX unchanged. for allocation in capital

of reinvest our upcoming raise debt. and you forward person will Thank interest for dividend New for and in you growth, your today, We in to Analyst the I York reduce to look seeing plan Day. some at

over Chris. it turn me let Now to

related of would ask X Mark. others you Thank on and you, I to question consideration yourself call, follow-up. a to that Out limit the

first we're rejoin for If you our have question. the Operator, queue. ready an additional please question,

the Our with Volkmann Instructions] of first comes question Jefferies. line Steve [Operator from

That well. could. seems we Power off business I going I'd start be if think like to with Gen, to

of out? capacity How ability the in should center position thinking increasing grow years, much centers? are hear few how then curious terms is that's business things over about quarters play you kind your you over we of time? what or data next, So is X of data think however, sort to about market. about to whatever, your to be your of exactly thinking kind I'm that And the and additions business going What capacity of in

Steve. data you data is strong position gen market for historically Great. we're have year, XXXX that. in of driver of And had and mission-critical new XX-liter now. up sold the a XX the the customers, uses business strong to that We're demand XX% very launch on the be I the heard our from through out projecting the and really Thanks, right obviously center, to our XX% had growing. a center guidance, as we've And ] in is that which market, CentumTM And engine. [ and XX-liter product, mentioned power

solution customers. of then, growing will look market. how providing that's those And So continuing continuing to capacity and we and additional we're to plan what the of at we to support XX-liter think strong be course,

plans Or So sorry, yet? have you in capacity still is do process? to any XX that concrete of increase

increase Yes, we do have the we for place have today concrete plans X-liter. capacity the that in to

the with comes of our Sachs. from next Revich question Goldman line . Jerry

of the I And folks higher? acceleration was I the internal the in I'm line versus your margins. what's obviously, just consensus of was the the you expectations seeing ask to set this Mark, talk and just that quarter wondering because of guidance year, where over revision you how up, about plan. see versus the the are raise the course cadence an cadence wonder earnings and your top just developed if quarter both quarter upwards to came the where light to nice can versus

Yes.

on parts side moving of all and fair a Atmus. the involved I to fence of of that there's to separation be with the all to of us, think you of everyone lot

driven Atmus, expectations for say, would distribution perspective, in when large of the at our my think sales, [ ] year. industrial line. the the the and see a than pullback in in in, mid-quarter little certainly by we're off-highway came we you seen from and adjust largely a bottom the bit QX with we've in line by total, lower, end I So as someone in separation as pointed out, business range I applications. margins from particularly of lower on last parts and those here, improving what We

X say It's feel months, been the otherwise, So that's good not I'd year-over-year. X the margin new. But for area. It's gross we quarters. couple there improvement of a about

announcements at look make our you As efficient our we continuing to see organization, comments, can. streamline can ways and more us from where we're to our

Jerry, particular its line, distribution in in pick in overall, expecting to margins So up going but forward.

to we be We've -- from a third you've in But probably didn't quarter, always probably the little truck other in decline production particular, and that fair, year, we expecting and it heard expecting were this expected heavy-duty are bit materialize. to industry participants. last

in momentum up the distribution in feel the think will next QX, some of I engine significant to QX into in power really, systems systems that probably and on year, see components and forward volatility is and any power going clearly, revenues. business shouldn't And the distribution.

parts shift it's know, We just lower mix more bit than and and that's little you As reliable. think but temporary. of a a service had we and parts, with half quite predictable the

opportunity I opportunity? how of significant just an on XXXX when will so What can a regulations mean for field Is market warranties the from regulations, dynamic new standpoint, you is bigger market parts to essentially. share that embedded have higher for does have share. folks that that because that that parts your increases warranty population ] engine Super. new And picture [ ask

of you noted, going as application XXXX most mean, with years there's warranty out. or emissions I is XX for regulations that a the to XXX,XXX EPA miles, requirement mile longer Yes. heavy-duty starting for

course, will we'll So to which further period, part purchasing. some that throughout it's to those already that will provide X-year systems that genuine that and will that warranty And that us. extended some drive need then warranty our essentially then, what will engine customers be everybody into mean customers pricing embedded on benefit of are

with line comes question . the from Bank. of Our Deutsche DeBlase Nicole next

to ask I'm together because related. going they're mine

around both power So and they're systems.

margins So I levels. the think below XQ in embedding year guidance, are guys full you

the the And look common the ] an slightly for that I second growth, back comps similar higher. but lumpy than business, is question think in growth then is but a historically, in half used second the you quarter. it's full saw growth [ less if first year half, the your on more guidance I it's outcome

So could both items. address if you those of

But bit the question We in the on point Nicole, quarter, your business. revenue we're we on depending our over messages, and we more essentially the different. to momentum the revenue, dramatically and And ] that that overall, But a in modest is nothing tend confident we're the how worked But confident higher structurally been in months. that hard see [indiscernible] some in the second do we'll guidance is of the [ some team improvements improving. fourth earnings. turn there's XX really is half. the parts performance Jen, flow her Bush have there's the if right, business think seasonality there. get I on We've raising as little in have There variation positive last

we over . forward, improvement expect time. Going

Raso with question comes ISI. of David Our the Evercore line from next

think around you just I XX, can the the particularly expectations us meeting, margins. give some the May around meeting?

increase I think of to the sales implicit was the the power not increase the out to were earnings Even not the the nice people in the guide. the figure gen to are Still company the overall, that leverage quite guide increase. operating margin in last expecting. relative years, couple But maybe today, margins it in see people in just relative trying tremendous.

to the to the a should just bit of May expect up little just what if trying but meeting sort thunder set... of we not level I'm So curious steal can tee XX. you

to and shared where you margin certainly, but and will expectations Yes. tell going that. goals we're what that against I strategy about Well, Analyst us at for about Day tell XXXX obviously, we be to drivers what think revenue you talking won't our talk for that we expect you can and the we're of specifically, the company the in some last certainly overall within

So David, our I Day. more you'll for at Analyst about think that hear sure,

within trying I'm Okay. up you're And of X down. there it the is it the income just a first Is not line sure one. other I we but Is continuing JV year the some income? item why down? China parts of lumpy still guiding the it's quarter know income. And JV year-over-year, to in know royalty make pretty quick The was improvement? the

be can us with would If you great. help that

Yes.

There's line from products I really And the moving right, joint which tends are generally think very tech of or and Cummins you're [indiscernible] we new operating David. rate. new exactly last to market get milestones. consolidated performance, venture better then year X strong to than particularly as of product in back development lumpy fees parts launch, results launched the a move period was certain the

or momentum to particularly as bit So engine were the the it's build offsetting I -- the be in little is we're QX, market there. OEM signs China, any year really was tech lower biggest know, in driver mostly the last for big going assumptions of hopes expectations tech a some as fees business. it's a are clearer you there at earnings growth. increases of waiting still down, which But going in Engine components, the primarily in the forward, on business fees, truck about that and say around that's will the -- but was more

the also on David. there, of in add And quick joint launch One we this our venture have approval. the battery built later year plan post

well So in back comes that will losses second have half. online some as as that the

is in Which embedded Accelera.

that. expecting we're Yes,

battery regulatory We JV. have approval that for final

going that's in start QX. expecting we're to flowing So

Thank you.

Angel Our from the of Castillo next question line with Morgan Stanley. comes

the Just Generation segment. back to Power

and better to guidance about of what kind just you growing XX% are mix just seeing price prior talk X% perspective? you you of volume a that XX% getting a to than pricing previously. from production think anticipated? that Can of your raised makeup matter the is versus I expectations? XX% versus versus Or kind to you of Is this

Yes.

So in of keep dynamics to there's that in a market. mind couple

all, long. So the as of articulated, pretty board first is I order

work and time improve out. performance of inflation in the business the to of price some takes to some response to so And cost play

supply So chain. some also efficiency business new we're Power to that drive be able market. starting And launch in to, we're margins. that to that we've of noted I course, see stronger then the improvements of to at And products the and and in sell pricing continuing leverage designed the come manufacturing Systems into higher

compared dynamics So where favorable gen are market performance. have power have there in historically been the to some been that in happening we margin would

give you talked That's new your just kind diesel lines the that's products, Can regulations. bit the the for us coming emission very emissions and of know a of and of of guardrails along engine in to run out And I XXX margin. helpful. more to reset ahead as that recover little pricing you opportunity cycles around improvement. you about of of potential kind typically what expect when kind you of get terms margin some you

as think given not about -- specifically and So to those your to margins get of any but maybe year, rolled and or those products price the projects as out? we kind implications those necessarily

Yes.

deliver value associated certainly, margin have improvement our that. to like emissions regulations, in goal So to with the past is incremental to customer,

You the will the EPA with see emissions we regulations, warranty dynamic. already about talked XX

warranty we've we You will we will And always in particular, the out launch a also ] additional also to new began in at at we products [ warranty. from the where the has that content. you to see have and added those rate notable demonstrated have least launch dynamic perspective until meet content, a market, as product regulations warranty system then is accrue higher after-treatment to

you'll So that those see. are the parts moving

We have products. expect we what exact pricing for those on specific not around yet numbers shared

from comes with of Zakaria next line Tami question Our the JPMorgan.

you little was guide It a better. excluding sort the margins in understand which better seems a like is points, guide Engines full year probably out and to basis that separating Systems. of the raised wanted headwind about margin headwind, but by becoming which Atmus, -- Power I a expecting XX So

what's savings? this improved more it of be So helpful cost to it Or sense margin get there price would expectation? higher driving volumes? is Or just color more it any is a really cost? Is So

Good question.

You're right Atmus a that to margins. little the bit is separation dilutive

activity. bit So drivers. up and cost on yes, picked a X reduction really . that. good are volume you that Those It's primary of the little

with comes line question Our Melius from research. next the Rob Wertheimer of

of most on prebuy going subtle get you nat whether your do where than additional there's cost also any well a that general more having My what from there's sure. you your early That's how us warranty will whether question. I'm other in see preparedness you and the so may mix be forth. you in stripped competitive can would be whether And transition? better XXXX in of standards the around understand the questions we offset what There's be guys help there around EPA should question out around is a that XXXX your would on the share maybe guys can things an emissions of gas to that, and not and met, gain positioning increase pretty can increase, subtleties bunch today. whether be be Price the

engine for what Thanks we've to And a those position invest regulations. question. scale investing, And future are in Great. in market-leading will solutions in Yes. talked we're as a of our HELM the platforms. to continue to new engine the about we because meet be unique

we There out will be think we 'XX will mean expect and provide into change that will a and so 'XX as a what customers them. period in going that's regulation those anticipate we dynamic regulations. that, play that to And for as major time the end advantage go to some us

to as And strengthen, expect has truck cycle there'll so going think things to next-generation of we're duty the then our period platform XX-liter market. of and go be platform and the XXXX, high-efficiency those to have well cost-effective of market XX-liter well. and as have will sustainability reliable ambitions continued into most a our go that way, later ambitions as that meet is but year in way and some medium drive Obviously, And some into the see this that position customers we'll U.S. interest have uptake, a XX-liter then normal positioned. we'll some new that's and we to we in this gas natural the high we best beyond

our really launching So we're those of and the position development with on execution them the into focused market. and excited products about

next of Our question from line Kaye comes Noah the Oppenheimer. with

continue this sort you at rules nice more primarily of pickup given fuel to a trucks. point inbounds hydrogen wondering most Just crediting started of here. the provide for your EPA XXXX sticking see with or of in whether of Accelera are the minute cell [indiscernible]. this the to space, offerings just if And for final a hydrogen If

Yes.

shape ] with really gas beyond penetration. into we emissions 'XX So X the greenhouse is but industry even us is [ of ambition for III XXXX regulation, if you to as no and going regulation, into get the Phase the the EPA look major announced it start really beyond, level which surprises unprecedented to assumptions that an around vehicle and

work and to that closely is for be the to together successful. to industry the so And government really going have

engines a one in a pleased there that things about it question, hydrogen your things regulation. are solution. we're actually -- to the of few as One is zero-emission recognizes the So

believe that cells to hydrogen EPA likely hydrogen some work to And say. powertrain also time, but engine space will rate take for good would the fueled I certification. -- a streamline that over adoption time, the that, hybrid commit solution still we So create be on are is to that did then a fuel

engines, hybrid to challenge. the because a going be So be availability may think, an solution attractive we infrastructure is

So another that's thing closely. at that looking we're

more solutions. an fuel in battery and still level. there's uptick are a electrolyzers, as low seeing course, engine-based So still today of noted, some cells I we're pretty electric of the Yes, powertrain

Yes, JV. And for approval regulatory that the makes then sense. you got mentioned you

spending So least may gigafactory point for at for plan lining And be and us factory, kind on next supply the for the doing just your this the what years? of can proceed lay demand you game the over of at you should up out terms of couple in [indiscernible] how

that the a mean announced Yes. working getting we selected have site I together earlier partners ahead regulatory this approval been of final we year. the

plant. the of the Memphis chain kind really in starting to we'll we're outside Mississippi, to supply a see of prepare just and for site and So be building work ready getting --

Now believe this have that to entity be and the regulatory able we quarter. finalize we close we'll in approval,

plant will see the as and allow we to then the money build the the design the of in production partners And plant new to XXXX. us based then a will we're, sharing and of this investment that work phase phased have we'll And have course, investment this production up the across and of XX-gigawatt start towards plant the our and hour rates in lines and for really industry market how still to market be on with leverage in designed commercial in the market. feeling about incentive we're ability that adoption specifically have how positioned vehicle commercial cell here enable good together some and vehicle help that's we LFT of available we're developing, scale

line comes with Securities. question of Jamie the next Cook from Our Truist

side. for the incremental to there's Systems years, engine so through wondering, talk Day across understanding Accelera. perhaps medium okay, you about you, Can be, Power historic [indiscernible] question improve you managing story up share Or less an across hasn't gains your month. on have actions looking thinking, I'm the just this the side of there, and like calls. over just Mark, helping then terms it sort taking targeted would if of and hope structurally the that I next as the you be backlog like you sorry, to have to in a there's maybe just couple and you Cummins But question think Analyst my these And I as been opportunity So is I I'm coming to margins? guess, about particular, cost term, spend the your should incremental of this margins? visibility second asked. you apologize. is is more Cummins' portfolio, think X do you hit margins addressed, I'm this think have market you in at

address in So incremental I heard you we May. margins will explicitly

or appropriate mind that all not for of us miss are mind clearly. will who very center of You top asking for

hear will I you shortly, very, that guess. very So

that. and And in business Yes. talk of We're, course, to we'll and you good improvement we we working do Jamie, the Meritor the Revenue, integration seeing as up. ramp the have back. as you're Accelera more about

market seeing in been the a demand market. we're vocational of heavy-duty time. of solid terms been high still color on have market, backlogs the strength in because of up, the down the some that has Truckload continued built In lot for

and some well are PowerGen, we've into our up so take some noted that as anticipating We're as the OEM other well. half will as not as hearing revised capacity new is And still we looking there being into down, our that previous sold earlier, I but launch, customers sell far how of second weakening, out the down our to have can engines 'XX. and that guidance, baked guidance, market XX-liter with we through which as at from CentumTM and able that's

soften truckload heavy-duty good closely watching that we're the gen, going cycle. in It's customers we still the in next pretty really enter power medium-duty and fleet the uptick That's before strong about So feeling -- the one vocational very that feeling on-highway. the anticipating about good it's their market. really to and it's --

about what industry some And ahead 'XX 'XX then Yes. you earlier building was consensus of heard XXXX. maybe and

not our what downturn. assumption for So our momentum a assumption, we're normal for that not sharp China outlook an or more is baseline this today we're still as that's as -- cyclical waiting where as into X fact, is That's probably. is the year. we've steep baked but this

question from with next Our line of Vertical Research. comes Kauffman Jeff the

apparent as know to feared. their on forecast. 'XX engine isn't in Research It's curious that be the just the your thoughts. was lot I going up bad downturn, heavy-duty has as ACT I I feared originally us think of a side taken

otherwise in unrelated? been from are have mention taking did what prebuy but if 'XX? you a have Or XQ, we some we think 'XX You better do weakness are would beginning the in X

they're market. we're I'm freight last they've now sure the XX with spot dynamics that going what's related. at months. mean, for carriers I of really rates some watching if the you with with the And backlog production not there, challenged some in rate look out of been on the

see the chain different really than outlook, -- what's made the forecast, fair. It some and and in supply but we this softening to I the cycle unpredictable. half. so we mean because are certainly has even second that's held And it's we longer expecting and had driving -- dynamic up that so of better still our

Our Research. Chad Bernstein Dillard with last question from line of the comes

how This filling to would double is in on I R&D on Chad. like intensity about the medium-term for the Federico click to basis. think and this

Sorry, repeat I got the we don't can think part. you that? first .

basis. about like R&D and think term on would Sorry. to this a the medium how on We to intensity double-click

Yes.

noted fuel-agnostic investments. you our as our comments new -- in in are up we've platform. So engine taken know, in that making we R&D particular investments, we're because We these

really at and we're new we're at for of products the will we are launch R&D And those period beginning Accelera And course, well. launch period. as 'XX a through launch an work 'XX products level revenue business as up new and ramp investments. of the to elevated those in of there investment So then, and platform time to

turn to the to closing floor like back I'd for Chris you. Thank comments. over Clulow

Really team our day. the will concludes Thanks, everybody, appreciate for teleconference. today. That a after always, Have participation questions call. available good be the your the for as Relations interest. Investor And

many of of forward a seeing in you in couple person to weeks. Look

concludes teleconference. today's This

your disconnect participation. time. lines at may your Thank you for You this