Meritor Acquisition and 2022 Financial Results
Table of Contents
more than offset by higher sales in most other geographic regions. The increase in international sales was principally due to incremental sales of axles and brakes in Latin
America and Western Europe since the acquisition of Meritor, favorable pricing and higher demand for power generation and generator technologies equipment and all
distribution product lines. Unfavorable foreign currency fluctuations impacted international sales by 5 percent (mainly the Euro, Chinese renminbi, British pound and Indian
rupee).
The following table contains sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests)
by operating segment for the years ended December 31, 2022 and 2021. See NOTE 24, "OPERATING SEGMENTS," to the Consolidated Financial Statements for additional
information and a reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income.
In millions
Engine
Components
Distribution
Power Systems
New Power
Intersegment eliminations
Total
"NM" not meaningful information
Operating Segments
2022
2021
Percent change
2022 vs. 2021
Percent
Percent
Sales
of Total
EBITDA
Sales
of Total
$
10,945
39 % $ 1,541
$
9,954
42 % $
EBITDA
1,411
Sales
EBITDA
10%
9 %
9,736
34%
1,346
7,665
32 %
1,180
27%
14 %
8,929
32%
888
7,772
32 %
731
15%
21 %
5,033
18%
596
4,415
18%
496
14%
20 %
198
1 %
(340)
116
1 %
(223)
71 %
(52) %
(6,767)
$
28,074
(24)%
100 % $
(232)
3,799 (1) $
(5,901)
24,021
(25)%
(74)
15%
NM
100 % $
3,521
17%
8 %
(1) EBITDA includes $111 million of costs associated with the suspension of our Russian operations, $83 million of costs related to the acquisition and integration of Meritor and
$81 million of costs associated with the planned separation of our filtration business.
Net income attributable to Cummins Inc. for 2022 was $2.2 billion, or $15.12 per diluted share, on sales of $28.1 billion, compared to 2021 net income attributable to
Cummins Inc. of $2.1 billion, or $14.61 per diluted share, on sales of $24.0 billion.
The increases in net income attributable to Cummins Inc. and earnings per diluted share were driven by higher net sales and increased gross margin, partially offset by higher
selling, general and administrative expenses (including Meritor acquisition and integration costs and costs associated with the planned separation of our filtration business),
increased research, development and engineering expenses, lower equity, royalty and interest income from investees (primarily in China), costs associated with the suspension
of our Russian operations, losses in corporate owned life insurance, increased interest expense related to new borrowings and higher intangible asset amortization resulting from
our acquisitions. The increase in gross margin and gross margin as a percentage of sales was mainly due to favorable pricing and increased volumes, partially offset by higher
material costs and increased compensation expenses. Diluted earnings per common share for 2022 benefited $0.15 per share from fewer weighted-average shares outstanding,
primarily due to the stock repurchase program.
We generated $2.0 billion of operating cash flows in 2022, compared to $2.3 billion in 2021. See the section titled 'Cash Flows" in the "LIQUIDITY AND CAPITAL
RESOURCES" section for a discussion of items impacting cash flows.
Our debt to capital ratio (total capital defined as debt plus equity) at December 31, 2022, was 44.1 percent, compared to 31.5 percent at December 31, 2021. The increase was
primarily due to higher debt balances since December 31, 2021, resulting from funding the acquisition of Meritor. At December 31, 2022, we had $2.6 billion in cash and
marketable securities on hand and access to our $4.0 billion credit facilities, net of commercial paper outstanding, to meet acquisition, working capital, investment and funding
needs.
In 2022, we repurchased $374 million or 1.9 million shares of common stock. See NOTE 17, "CUMMINS INC. SHAREHOLDERS' EQUITY" to theConsolidated Financial
Statements for additional information.
On November 30, 2022, we completed the acquisition of Siemens' Commercial Vehicles Propulsion business (Siemens CVP) for approximately $187 million. See NOTE 2,
"ACQUISITIONS," to our Consolidated Financial Statements for additional information.
On September 30, 2022, certain of our subsidiaries entered into a $1.0 billion credit agreement, consisting of a $400 million revolving credit facility and a $600 million term
loan facility, in anticipation of the separation of our filtration business. See NOTE 13, "DEBT," to our Consolidated Financial Statements for additional information.
On August 17, 2022, we entered into an amended and restated 364-day credit agreement and an incremental 364-day credit agreement, which allow us to borrow up to $1.5
billion and $500 million, respectively, of unsecured funds at any time prior to August 16, 2023.
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