Name: Cummins Inc. (NYSE:CMI) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Cummins Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Consolidated net income	840)	2,183)	2,164)	1,811)	2,268)
Depreciation and amortization	1,024)	784)	662)	673)	672)
Deferred income taxes	(457)	(274)	7)	7)	(4)
Equity in income of investees, net of dividends	(81)	64)	(83)	(105)	(14)
Pension and OPEB expense	8)	24)	83)	108)	75)
Pension contributions and OPEB payments	(134)	(85)	(102)	(121)	(150)
Russian suspension costs, net of recoveries	—)	111)	—)	—)	—)
Accounts and notes receivable	(330)	(697)	(174)	(51)	195)
Inventories	—)	(567)	(945)	46)	291)
Other current assets	(120)	(109)	2)	(39)	(95)
Accounts payable	(66)	538)	217)	288)	(310)
Accrued expenses	2,934)	(170)	541)	121)	(112)
Changes in current assets and liabilities, net of acquisitions	2,418)	(1,005)	(359)	365)	(31)
Other, net	348)	160)	(116)	(16)	365)
Adjustments to reconcile consolidated net income to net cash provided by operating activities	3,126)	(221)	92)	911)	913)
Net cash provided by operating activities	3,966)	1,962)	2,256)	2,722)	3,181)
Capital expenditures	(1,213)	(916)	(734)	(528)	(700)
Acquisitions of businesses, net of cash acquired	(292)	(3,191)	—)	—)	(237)
Investments in marketable securities, acquisitions	(1,409)	(1,073)	(806)	(593)	(495)
Investments in marketable securities, liquidations	1,334)	1,151)	673)	469)	389)
Other, net	(63)	(143)	(6)	(67)	(107)
Net cash used in investing activities	(1,643)	(4,172)	(873)	(719)	(1,150)
Proceeds from borrowings	861)	2,103)	79)	2,014)	11)
Net borrowings (payments) of commercial paper	(779)	2,261)	(10)	(337)	(120)
Payments on borrowings and finance lease obligations	(1,136)	(1,550)	(73)	(73)	(96)
Dividend payments on common stock	(921)	(855)	(809)	(782)	(761)
Repurchases of common stock	—)	(374)	(1,402)	(641)	(1,271)
Payments for purchase of redeemable noncontrolling interests	(175)	—)	—)	—)	—)
Other, net	(27)	84)	(12)	99)	142)
Net cash provided by (used in) financing activities	(2,177)	1,669)	(2,227)	280)	(2,095)
Effect of exchange rate changes on cash and cash equivalents	(68)	50)	35)	(11)	(110)
Net increase (decrease) in cash and cash equivalents	78)	(491)	(809)	2,272)	(174)
Cash and cash equivalents at beginning of year	2,101)	2,592)	3,401)	1,129)	1,303)
Cash and cash equivalents at end of period	2,179)	2,101)	2,592)	3,401)	1,129)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

An analysis of the cash flow patterns from 2019 to 2023 reveals a divergence between accounting profitability and operational cash generation, characterized by significant volatility in investing and financing activities.

Operating Activities and Cash Flow Quality: Net income remained relatively stable between 2019 and 2022, ranging from 1.8 billion to 2.2 billion US$, before experiencing a sharp decline to 840 million US$ in 2023. Despite this decrease in profitability, net cash provided by operating activities reached a five-year peak of 3.966 billion US$ in 2023. This discrepancy is primarily attributed to a substantial increase in accrued expenses, which rose to 2.934 billion US$ in 2023, suggesting a significant shift in working capital management. Depreciation and amortization have shown a steady upward trend, increasing from 672 million US$ in 2019 to 1.024 billion US$ in 2023, reflecting a growing asset base.
Investing Strategy and Capital Allocation: Capital expenditures have increased consistently over the period, rising from 700 million US$ in 2019 to 1.213 billion US$ in 2023, indicating a sustained commitment to long-term infrastructure or technology investments. A significant outlier occurred in 2022, where net cash used in investing activities spiked to 4.172 billion US$, driven largely by a 3.191 billion US$ acquisition of businesses. The company also maintains active liquidity management through the continuous acquisition and liquidation of marketable securities, with liquidation volumes peaking at 1.334 billion US$ in 2023.
Financing Activities and Shareholder Returns: Dividend payments on common stock have exhibited a consistent annual increase, growing from 761 million US$ in 2019 to 921 million US$ in 2023. Repurchases of common stock have been inconsistent, with high levels of activity in 2019 and 2021, but no recorded repurchases in 2023. To fund operations and acquisitions, the company utilized significant borrowings in 2020 and 2022, with proceeds from borrowings and commercial paper totaling over 4 billion US$ in 2022 alone, which was subsequently offset by 1.550 billion US$ in payments on borrowings and finance lease obligations in the same year.
Liquidity and Net Cash Position: The cash and cash equivalents balance has fluctuated significantly, peaking at 3.401 billion US$ at the end of 2020. Following a period of contraction driven by high investing and financing outflows, the balance stabilized at 2.179 billion US$ by the end of 2023. The net increase in cash for 2023 was marginal at 78 million US$, as the strong operating cash flow was largely offset by continued capital expenditures and financing outflows.

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