Analysis of Reportable Segments
Cummins Inc. operates in 5 segments: Components; Engine; Distribution; Power Systems; and Accelera.
Segment Profit Margin
Cummins Inc., profit margin by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 13.72% | 13.82% | 15.39% | 15.95% | 15.87% |
| Engine | 13.95% | 14.08% | 14.18% | 15.40% | 14.46% |
| Distribution | 11.80% | 9.95% | 9.41% | 9.32% | 8.13% |
| Power Systems | 14.74% | 11.84% | 11.23% | 9.45% | 11.48% |
| Accelera | -125.14% | -171.72% | -192.24% | -238.89% | -392.11% |
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).
The analysis of the annual reportable segment profit margin percentages reveals distinct patterns and trends across different business areas over the five-year period ending December 31, 2023.
- Components Segment
- The profit margin for the Components segment showed a gradual decline, starting at 15.87% in 2019 and decreasing to 13.72% by the end of 2023. There was a slight peak in 2020 at 15.95%, followed by consistent decreases each subsequent year. This downward trend suggests increasing cost pressures or competitive challenges affecting profitability in this segment.
- Engine Segment
- The Engine segment experienced relatively stable but slightly declining margins. After rising from 14.46% in 2019 to 15.40% in 2020, the margin dropped to 13.95% by 2023. The margin maintained a narrow range, which indicates moderate stability, although the overall movement points to marginal erosion of profitability over time.
- Distribution Segment
- The Distribution segment displayed a clear upward trend in profit margins, growing steadily from 8.13% in 2019 to 11.80% in 2023. This consistent improvement each year highlights enhanced operational efficiency, pricing power, or other positive factors contributing to increased profitability in this segment.
- Power Systems Segment
- The Power Systems segment demonstrated volatile but ultimately positive progression in profit margins. After declining from 11.48% in 2019 to 9.45% in 2020, the margin rebounded to 14.74% by 2023. This recovery and growth suggest successful initiatives or market conditions favoring higher profitability starting from 2021 onwards.
- Accelera Segment
- The Accelera segment consistently reported significantly negative profit margins, although the losses decreased in magnitude from -392.11% in 2019 to -125.14% in 2023. Despite the large negative margins, the trend shows notable improvement each year, indicating ongoing efforts to reduce losses. Nonetheless, the segment continues to operate at a substantial deficit relative to others.
Overall, the data reflect diverse financial dynamics among segments. The Distribution and Power Systems segments stand out with improving profitability, while the Components and Engine segments face mild margin contractions. The Accelera segment remains a loss-making area but is on a positive trajectory toward reduced losses.
Segment Profit Margin: Components
Cummins Inc.; Components; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,840) | 1,346) | 1,180) | 961) | 1,097) |
| Sales | 13,409) | 9,736) | 7,665) | 6,024) | 6,914) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 13.72% | 13.82% | 15.39% | 15.95% | 15.87% |
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).
1 2023 Calculation
Segment profit margin = 100 × Segment EBITDA ÷ Sales
= 100 × 1,840 ÷ 13,409 = 13.72%
- Segment EBITDA
- The Segment EBITDA demonstrates a general upward trend over the five-year period. Starting at $1,097 million in 2019, it experienced a decline to $961 million in 2020, likely indicative of challenging market conditions or operational disruptions during that year. From 2020 onwards, the segment showed consistent growth, increasing to $1,180 million in 2021, $1,346 million in 2022, and reaching $1,840 million in 2023. This recovery and growth suggest improved efficiency, higher sales volumes, or favorable market dynamics contributing to enhanced earnings before interest, taxes, depreciation, and amortization.
- Sales
- Sales figures reveal a somewhat volatile but ultimately strong positive trajectory. Recorded sales decreased from $6,914 million in 2019 to $6,024 million in 2020, which may reflect external economic pressures or supply chain issues affecting revenue. However, the subsequent years show significant recovery and growth: sales rose to $7,665 million in 2021, increased further to $9,736 million in 2022, and surged to $13,409 million in 2023. This robust increase over the recent years indicates strong demand growth or successful market expansion initiatives.
- Segment Profit Margin
- The segment profit margin experienced slight fluctuations throughout the five-year span. It started at 15.87% in 2019 and remained relatively stable at 15.95% in 2020 despite the sales and EBITDA decline. This was followed by a modest reduction to 15.39% in 2021. More notably, the margin declined further to 13.82% in 2022 and slightly decreased again to 13.72% in 2023. The downward trend in profit margin, despite improving EBITDA and sales, may suggest increasing cost pressures, investments in growth, or pricing challenges impacting profitability at the operating segment level.
Segment Profit Margin: Engine
Cummins Inc.; Engine; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,630) | 1,541) | 1,411) | 1,235) | 1,454) |
| Sales | 11,684) | 10,945) | 9,954) | 8,022) | 10,056) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 13.95% | 14.08% | 14.18% | 15.40% | 14.46% |
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).
1 2023 Calculation
Segment profit margin = 100 × Segment EBITDA ÷ Sales
= 100 × 1,630 ÷ 11,684 = 13.95%
The financial data for the Engine segment over the five-year period presents several noteworthy trends in operational performance.
- Sales
- Sales experienced a significant decline in 2020, dropping sharply from $10,056 million in 2019 to $8,022 million. This was followed by a strong recovery in 2021, with sales returning close to pre-2020 levels at $9,954 million. The upward trend continued steadily in 2022 and 2023, reaching $10,945 million and $11,684 million respectively, indicating a consistent year-over-year growth in revenue after the initial setback.
- Segment EBITDA
- Segment EBITDA mirrored the sales trend to some extent, decreasing from $1,454 million in 2019 to $1,235 million in 2020. However, it rebounded in the subsequent years, increasing to $1,411 million in 2021 and exceeding its pre-2020 level by reaching $1,541 million in 2022. The growth continued into 2023, with EBITDA increasing further to $1,630 million. This suggests an improvement in operating profitability and cost management following the decline observed in 2020.
- Segment Profit Margin
- The segment profit margin showed relatively minor fluctuations across the period, remaining within a narrow band around 14%. The margin increased slightly from 14.46% in 2019 to 15.4% in 2020, potentially reflecting cost control efforts during the downturn. Thereafter, the margin declined gradually each year, reaching 13.95% in 2023. Despite the slight decline, the margin has remained comparatively stable, indicating consistent operational efficiency despite varying sales and EBITDA levels.
Overall, the data suggests the Engine segment was impacted significantly in 2020, likely due to external factors affecting sales volume. Nevertheless, the segment demonstrated resilience with a strong recovery in sales and EBITDA in the following years. The stable yet slightly declining profit margin points to ongoing challenges in cost or pricing pressures, but overall operational profitability has improved in absolute terms.
Segment Profit Margin: Distribution
Cummins Inc.; Distribution; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,209) | 888) | 731) | 665) | 656) |
| Sales | 10,249) | 8,929) | 7,772) | 7,136) | 8,071) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 11.80% | 9.95% | 9.41% | 9.32% | 8.13% |
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).
1 2023 Calculation
Segment profit margin = 100 × Segment EBITDA ÷ Sales
= 100 × 1,209 ÷ 10,249 = 11.80%
- Sales Trend
- Sales exhibited a fluctuating yet overall upward trend over the five-year period. Starting at 8,071 million USD in 2019, sales declined to 7,136 million USD in 2020, likely reflecting external challenges during that year. Subsequently, sales recovered and increased steadily to 7,772 million USD in 2021, 8,929 million USD in 2022, and reached 10,249 million USD by 2023, marking the highest level in the observed period.
- Segment EBITDA Development
- Segment EBITDA showed consistent growth throughout the five years. It began at 656 million USD in 2019 and experienced a slight increase to 665 million USD in 2020 despite the sales drop that year. From 2021 onwards, EBITDA grew more significantly, reaching 731 million USD, then 888 million USD in 2022, and peaking at 1,209 million USD in 2023. This reflects a strengthening profitability trend within the segment.
- Segment Profit Margin Analysis
- The segment profit margin demonstrated a continuous improvement trajectory from 2019 through 2023. Initially at 8.13% in 2019, the margin increased modestly to 9.32% in 2020 and continued to improve to 9.41% in 2021. More notable margin expansion occurred in 2022 and 2023, reaching 9.95% and then a significant 11.8%, suggesting enhanced operational efficiency and profitability relative to sales.
- Overall Insights
- The data indicates a resilient and improving financial performance within the segment. Despite a downturn in sales in 2020, the company’s ability to grow EBITDA and expand profit margins underscores successful cost management and operational improvements. The marked increase in sales and margins by 2023 suggests a robust recovery and enhanced segment profitability over the observed period.
Segment Profit Margin: Power Systems
Cummins Inc.; Power Systems; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 836) | 596) | 496) | 343) | 512) |
| Sales | 5,673) | 5,033) | 4,415) | 3,631) | 4,460) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 14.74% | 11.84% | 11.23% | 9.45% | 11.48% |
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).
1 2023 Calculation
Segment profit margin = 100 × Segment EBITDA ÷ Sales
= 100 × 836 ÷ 5,673 = 14.74%
- Sales Trends
- Sales demonstrated a cyclical pattern with an initial decline from 4,460 million US dollars in 2019 to 3,631 million in 2020. Following this, there was a consistent year-over-year increase, reaching 5,673 million by the end of 2023, which represents a recovery from the dip and a positive growth trajectory over the latter years.
- Segment EBITDA Analysis
- Segment EBITDA showed a similar trend to sales, with a notable decrease from 512 million US dollars in 2019 to 343 million in 2020. From 2020 onwards, EBITDA increased steadily, reaching 836 million by 2023, indicating enhanced operational profitability and efficiency improvements over time.
- Profit Margin Developments
- The segment profit margin experienced a decline from 11.48% in 2019 to 9.45% in 2020, reflecting margin pressure possibly related to the decrease in sales and EBITDA during that period. However, margins improved in subsequent years, rising to 11.23% in 2021 and continuing upward to 14.74% in 2023. This marks a significant improvement in profitability, suggesting effective cost control and pricing power enhancements.
- Overall Insights
- The data indicates that despite an initial downturn in 2020, likely due to external market challenges, the segment demonstrated resilience with strong recoveries in sales, EBITDA, and profit margins over the 2021 to 2023 period. The upward trends in profitability margins and EBITDA relative to sales growth suggest strengthening operational leverage and value generation within the Power Systems segment over the reviewed timeframe.
Segment Profit Margin: Accelera
Cummins Inc.; Accelera; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | (443) | (340) | (223) | (172) | (149) |
| Sales | 354) | 198) | 116) | 72) | 38) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | -125.14% | -171.72% | -192.24% | -238.89% | -392.11% |
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).
1 2023 Calculation
Segment profit margin = 100 × Segment EBITDA ÷ Sales
= 100 × -443 ÷ 354 = -125.14%
- Sales
- Sales demonstrated strong growth throughout the observed periods, increasing consistently from 38 million US dollars at the end of 2019 to 354 million US dollars by the end of 2023. This represents a substantial expansion in revenue generation within this segment over the five-year timeframe.
- Segment EBITDA
- Segment EBITDA displayed a negative trend over the period, with losses increasing year by year. Starting at -149 million US dollars in 2019, the EBITDA loss deepened to -443 million US dollars by 2023. This indicates escalating operating losses despite the growth in sales.
- Segment Profit Margin
- The segment profit margin, expressed as a percentage, showed improvement but remained negative in all periods. The margin moved from -392.11% in 2019 to -125.14% in 2023. Although the losses relative to sales have narrowed, the margin indicates that the segment has not yet achieved profitability.
- Overall Analysis
- The data reveals a segment experiencing significant sales growth alongside increasing absolute losses as measured by EBITDA. However, the improvement in profit margin percentages suggests a reduction in the loss intensity relative to revenue. This pattern may indicate initial investment phases or scaling challenges, where expanding sales volumes have not yet translated into positive operating earnings but have improved relative efficiency over time.
Segment Return on Assets (Segment ROA)
Cummins Inc., ROA by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 26.42% | 18.42% | 40.16% | 33.39% | 37.68% |
| Engine | 175.27% | 106.20% | 90.80% | 94.56% | 132.91% |
| Distribution | 51.49% | 32.91% | 31.87% | 27.21% | 25.87% |
| Power Systems | 43.14% | 25.02% | 22.03% | 16.07% | 22.81% |
| Accelera | -38.22% | -29.36% | -37.04% | -34.13% | -31.57% |
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).
- Components Segment ROA
- The Components segment demonstrated fluctuating return on assets (ROA) over the five-year period. Starting from a relatively high ROA of 37.68% at the end of 2019, there was a decline in 2020 to 33.39%. It rebounded sharply in 2021 to 40.16%, followed by a significant drop to 18.42% in 2022. The ROA increased again in 2023, reaching 26.42%, though it remained below the initial levels observed in 2019 and 2021.
- Engine Segment ROA
- The Engine segment exhibited considerable volatility but generally maintained strong profitability. The ROA started very high at 132.91% in 2019 and then decreased substantially to 94.56% in 2020 and further to 90.8% in 2021. In 2022, the ROA saw an increase to 106.2%, and this positive trend continued dramatically in 2023, with ROA rising to 175.27%, marking the highest point across all periods analyzed.
- Distribution Segment ROA
- The Distribution segment showed a steady upward trend in ROA. Beginning at 25.87% in 2019, the ROA increased slightly to 27.21% in 2020, then experienced a more marked increase to 31.87% in 2021 and 32.91% in 2022. The most notable rise occurred in 2023, when the ROA surged to 51.49%, indicating significant improvements in asset utilization and profitability within this segment.
- Power Systems Segment ROA
- The Power Systems segment had a relatively low but growing ROA throughout the period. From 22.81% in 2019, the ROA dropped to 16.07% in 2020 but then increased steadily to 22.03% in 2021 and 25.02% in 2022. The largest increase was observed in 2023, when the ROA reached 43.14%, nearly doubling the prior year’s figure and suggesting enhanced operational efficiency or profitability gains.
- Accelera Segment ROA
- The Accelera segment consistently posted negative ROA values throughout the observed years, reflecting ongoing losses or asset inefficiencies. The ROA started at -31.57% in 2019, worsening to -34.13% in 2020 and further to -37.04% in 2021. Though there was a slight improvement in 2022 to -29.36%, the ROA declined again in 2023 to -38.22%, which was the lowest point in the presented timeframe. This trend indicates persistent challenges in this segment.
- Overall Insights
- The data reveals that while most segments experienced fluctuations, segments such as Engine and Distribution showed notable recovery and growth toward the end of the period, particularly in 2023. The Engine segment stands out for its exceptionally high and improving ROA, while the Distribution and Power Systems segments both made solid progress in profitability after some early volatility. Conversely, the Components segment experienced significant variability with a weakening trend compared to earlier years, and the Accelera segment continually underperformed with sustained negative returns, reflecting structural or operational issues requiring attention.
Segment ROA: Components
Cummins Inc.; Components; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,840) | 1,346) | 1,180) | 961) | 1,097) |
| Net assets | 6,965) | 7,306) | 2,938) | 2,878) | 2,911) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 26.42% | 18.42% | 40.16% | 33.39% | 37.68% |
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).
1 2023 Calculation
Segment ROA = 100 × Segment EBITDA ÷ Net assets
= 100 × 1,840 ÷ 6,965 = 26.42%
- Segment EBITDA
- The segment EBITDA exhibited a fluctuating but overall increasing trend over the five-year period. Starting at $1,097 million in 2019, it declined to $961 million in 2020, likely impacted by external challenges. However, it rebounded to $1,180 million in 2021 and continued to grow to $1,346 million in 2022. The most significant increase occurred in 2023, reaching $1,840 million, which indicates a strong improvement in earnings before interest, taxes, depreciation, and amortization within this segment.
- Net Assets
- Net assets remained relatively stable around the $2,900 million mark from 2019 to 2021, with minor fluctuations (2,911 in 2019, 2,878 in 2020, 2,938 in 2021). In 2022, there was a notable increase to $7,306 million, more than doubling the previous years’ values. This was followed by a slight decrease to $6,965 million in 2023. The sharp rise in 2022 suggests significant investment, asset acquisition, or revaluation activities during that year, which was partially reversed or adjusted in the following year.
- Segment ROA (Return on Assets)
- The segment return on assets percentage demonstrated volatility throughout the period. It started relatively strong at 37.68% in 2019 but declined to 33.39% in 2020. It rebounded to a peak of 40.16% in 2021, indicating improved profitability relative to asset base. However, in 2022, ROA dropped sharply to 18.42%, likely influenced by the substantial increase in net assets diluting returns. In 2023, ROA showed recovery to 26.42%, reflecting some operational efficiency improvements despite a still-lower return compared to earlier years.
- Overall Insights
- The data reveals resilience and growth in earnings capacity with increasing EBITDA, particularly strong in 2023. The substantial jump in net assets in 2022 significantly impacted return on assets, causing a marked decrease in ROA that partially recovered the following year. This pattern suggests strategic changes in asset management and capital deployment that influenced profitability measures. The segment’s financial health shows positive momentum in earnings but highlights the importance of optimizing asset utilization going forward.
Segment ROA: Engine
Cummins Inc.; Engine; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,630) | 1,541) | 1,411) | 1,235) | 1,454) |
| Net assets | 930) | 1,451) | 1,554) | 1,306) | 1,094) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 175.27% | 106.20% | 90.80% | 94.56% | 132.91% |
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).
1 2023 Calculation
Segment ROA = 100 × Segment EBITDA ÷ Net assets
= 100 × 1,630 ÷ 930 = 175.27%
The Engine reportable segment exhibits notable variability and growth in its financial performance and asset utilization over the five-year period analyzed.
- Segment EBITDA
- The segment EBITDA shows a downward trend from 2019 to 2020, decreasing from 1,454 million US dollars to 1,235 million US dollars. Subsequently, the EBITDA recovers and increases consistently, reaching 1,411 million US dollars in 2021, 1,541 million US dollars in 2022, and peaking at 1,630 million US dollars in 2023. This pattern suggests an initial contraction likely influenced by external or internal factors in 2020, followed by a period of steady growth and improved profitability.
- Net Assets
- Net assets display a different trend compared to EBITDA, with a general increase from 1,094 million US dollars in 2019 to a peak of 1,554 million US dollars in 2021. However, there is a decline in subsequent years, falling to 1,451 million US dollars in 2022 and then dropping more sharply to 930 million US dollars in 2023. This decrease in net assets in the later years may indicate asset disposals, impairments, or other balance sheet adjustments.
- Segment Return on Assets (ROA)
- ROA experiences a significant decline from a very strong 132.91% in 2019 to 94.56% in 2020, and further down to 90.8% in 2021. Following this decline, the ratio rebounds to 106.2% in 2022 before surging dramatically to 175.27% in 2023. The sharp increase in ROA in 2023, despite the decline in net assets, reflects substantially improved efficiency in generating returns from the asset base, driven by continued growth in EBITDA with a reduced net asset base.
In summary, the segment shows resilience and improvement in profitability and asset efficiency after an initial downturn in 2020. The simultaneous growth in EBITDA and reduction in net assets by 2023 results in a markedly increased ROA, indicating enhanced operational effectiveness or changes in asset composition. This dynamic suggests a strategic focus on maximizing returns relative to asset size during the most recent year.
Segment ROA: Distribution
Cummins Inc.; Distribution; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 1,209) | 888) | 731) | 665) | 656) |
| Net assets | 2,348) | 2,698) | 2,294) | 2,444) | 2,536) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 51.49% | 32.91% | 31.87% | 27.21% | 25.87% |
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).
1 2023 Calculation
Segment ROA = 100 × Segment EBITDA ÷ Net assets
= 100 × 1,209 ÷ 2,348 = 51.49%
- Segment EBITDA
- The Segment EBITDA demonstrates a consistent upward trajectory over the five-year period. Starting at $656 million in 2019, it shows moderate growth in the initial two years, increasing to $665 million in 2020 and $731 million in 2021. Thereafter, growth accelerates notably, reaching $888 million in 2022 and surging to $1,209 million by 2023. This substantial increase in the most recent years indicates improved operational profitability within the segment.
- Net Assets
- Net assets fluctuate throughout the period without a clear upward or downward trend. Beginning at $2,536 million in 2019, they decline modestly over the next two years to $2,444 million in 2020 and $2,294 million in 2021. In 2022, net assets increase to $2,698 million, suggesting an infusion or revaluation of assets, but then decrease again to $2,348 million in 2023. Overall, net assets show variability, indicating potential changes in the asset base or financing structure affecting this segment.
- Segment ROA (Return on Assets)
- The Segment ROA reflects a generally positive trend with increasing profitability relative to net assets. Starting at 25.87% in 2019, it increases steadily to 27.21% in 2020, 31.87% in 2021, and 32.91% in 2022. By 2023, ROA sharply rises to 51.49%, representing a significant improvement in asset efficiency and profitability. This pronounced jump may be attributed to the accelerated growth in EBITDA coupled with the stabilization or reduction in net assets during the same period.
In summary, the segment exhibits robust growth in earnings and improved return on assets over the five years, with EBITDA and ROA reaching their highest levels in 2023. Net assets display variability but do not increase proportionally to earnings, enhancing asset turnover and overall profitability in the segment.
Segment ROA: Power Systems
Cummins Inc.; Power Systems; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | 836) | 596) | 496) | 343) | 512) |
| Net assets | 1,938) | 2,382) | 2,251) | 2,134) | 2,245) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 43.14% | 25.02% | 22.03% | 16.07% | 22.81% |
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).
1 2023 Calculation
Segment ROA = 100 × Segment EBITDA ÷ Net assets
= 100 × 836 ÷ 1,938 = 43.14%
- Segment EBITDA
- Segment EBITDA exhibited a fluctuating trend over the analyzed period. Starting at 512 million US dollars in 2019, it declined substantially in 2020 to 343 million. This was followed by a recovery to 496 million in 2021, further increasing to 596 million in 2022, and culminating in a significant rise to 836 million in 2023. The data indicate a strong upward momentum from 2021 onwards, suggesting improved operational profitability within the segment.
- Net Assets
- Net assets showed relatively minor variations during the period. Initially recorded at 2,245 million US dollars in 2019, net assets slightly decreased to 2,134 million in 2020. They then experienced a modest increase peaking at 2,382 million in 2022 before falling to 1,938 million in 2023. The decline in net assets in the last reported year contrasts with the rising EBITDA, indicating potential changes in asset composition or disposals.
- Segment Return on Assets (ROA)
- Segment ROA demonstrated a generally positive trajectory. Starting at 22.81% in 2019, it decreased to 16.07% in 2020, likely reflecting the impact of the lower EBITDA that year. Subsequently, ROA increased steadily to 22.03% in 2021 and 25.02% in 2022, before sharply rising to 43.14% in 2023. This pronounced increase in ROA in 2023 reflects significantly improved profitability relative to the asset base, despite the reduction in net assets during the same period.
Segment ROA: Accelera
Cummins Inc.; Accelera; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment EBITDA | (443) | (340) | (223) | (172) | (149) |
| Net assets | 1,159) | 1,158) | 602) | 504) | 472) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | -38.22% | -29.36% | -37.04% | -34.13% | -31.57% |
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).
1 2023 Calculation
Segment ROA = 100 × Segment EBITDA ÷ Net assets
= 100 × -443 ÷ 1,159 = -38.22%
- Segment EBITDA
- The Segment EBITDA exhibited a downward trend over the five-year period, starting at a negative value of US$ -149 million in 2019 and deteriorating each year to reach US$ -443 million by 2023. This consistent decline reflects increasing operating losses within the period analyzed.
- Net Assets
- The net assets associated with the segment showed a steady increase from US$ 472 million in 2019 to US$ 1159 million in 2023. The most significant year-over-year growth was observed between 2021 and 2022, where net assets almost doubled, indicating substantial asset accumulation or revaluation.
- Segment Return on Assets (ROA)
- The segment's ROA remained negative throughout the period, reflecting ongoing unprofitability relative to the asset base. The ROA worsened from -31.57% in 2019 to -37.04% in 2021, improved temporarily to -29.36% in 2022, and then declined again to -38.22% in 2023. This volatility suggests fluctuating operational efficiency and challenges in generating returns on the increased asset base.
- Overall Insight
- Despite a substantial increase in net assets, the segment has consistently generated negative EBITDA and ROA, indicating operational difficulties and inefficiencies in utilizing assets profitably. The temporary improvement in ROA in 2022 did not sustain, as losses deepened again in 2023. The trend points to the need for strategic initiatives to address escalating losses and improve asset productivity within this segment.
Segment Asset Turnover
Cummins Inc., asset turnover by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 1.93 | 1.33 | 2.61 | 2.09 | 2.38 |
| Engine | 12.56 | 7.54 | 6.41 | 6.14 | 9.19 |
| Distribution | 4.36 | 3.31 | 3.39 | 2.92 | 3.18 |
| Power Systems | 2.93 | 2.11 | 1.96 | 1.70 | 1.99 |
| Accelera | 0.31 | 0.17 | 0.19 | 0.14 | 0.08 |
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).
The annual reportable segment asset turnover data over the five-year period displays varied trends across the segments, indicating differing operational efficiencies and potentially strategic shifts within each segment.
- Components
- The asset turnover ratio for the Components segment started at 2.38 in 2019 and decreased to 2.09 in 2020, reflecting a slight reduction in asset utilization. It then improved to 2.61 in 2021, followed by a significant decline to 1.33 in 2022. However, the ratio recovered to 1.93 in 2023. Overall, this segment experienced volatility with a notable dip in 2022 but showed signs of recovery by the end of the period.
- Engine
- The Engine segment exhibited the highest asset turnover ratios among all segments, starting at 9.19 in 2019. There was a substantial drop to 6.14 in 2020, possibly reflecting decreased operational efficiency or increased asset base. The ratio stayed relatively stable at 6.41 in 2021 but then increased to 7.54 in 2022. A marked improvement was observed in 2023, with the ratio reaching 12.56, suggesting a significant enhancement in asset utilization or revenue generation from the asset base in that year.
- Distribution
- This segment maintained a relatively stable asset turnover with minor fluctuations, starting at 3.18 in 2019 and decreasing slightly to 2.92 in 2020. It rose to 3.39 in 2021, followed by a small decrease to 3.31 in 2022, then an increase to 4.36 in 2023. The general trend indicates moderate growth in asset turnover with some year-to-year variation but stable operational dynamics over the period.
- Power Systems
- The Power Systems segment presented a generally upward trend, commencing at 1.99 in 2019 and decreasing to 1.70 in 2020. It rebounded to 1.96 in 2021 and continued to improve to 2.11 in 2022, culminating in a more pronounced rise to 2.93 in 2023. This steady increase suggests improving efficiency in using assets to generate sales over time.
- Accelera
- The asset turnover for Accelera stayed at a comparatively low level throughout, beginning at 0.08 in 2019 and rising gradually to 0.14 in 2020 and 0.19 in 2021. There was a slight decrease to 0.17 in 2022, followed by a significant increase to 0.31 in 2023. While the ratios remain low relative to other segments, the data indicates growth and improved asset usage efficiency in the most recent year.
In summary, the data reflects differential performance in asset turnover across segments. The Engine segment stands out for both its high turnover rates and its strong recovery in 2023. Components and Distribution segments experienced fluctuations but show signs of resilience. Power Systems shows consistent improvement, while Accelera, despite low absolute turnover, is trending positively. These trends may be indicative of segment-specific factors such as demand shifts, capital investments, operational efficiencies, or strategic realignments.
Segment Asset Turnover: Components
Cummins Inc.; Components; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales | 13,409) | 9,736) | 7,665) | 6,024) | 6,914) |
| Net assets | 6,965) | 7,306) | 2,938) | 2,878) | 2,911) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 1.93 | 1.33 | 2.61 | 2.09 | 2.38 |
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).
1 2023 Calculation
Segment asset turnover = Sales ÷ Net assets
= 13,409 ÷ 6,965 = 1.93
The analysis of the annual "Components" reportable segment data reveals several notable trends in the financial performance and position over the five-year period from December 31, 2019, to December 31, 2023.
- Sales
- Sales exhibited a fluctuating yet overall increasing trend. After a decline from 6,914 million USD in 2019 to 6,024 million USD in 2020, sales rebounded strongly in subsequent years. The upward momentum continued with sales reaching 7,665 million USD in 2021, 9,736 million USD in 2022, and culminating in a substantial increase to 13,409 million USD by the end of 2023. This pattern suggests resilience and robust growth in demand or pricing power in the later years following an initial downturn, possibly influenced by external factors in 2020.
- Net Assets
- Net assets remained relatively stable between 2019 and 2021, with values of 2,911 million USD, 2,878 million USD, and 2,938 million USD respectively, indicating a consistent asset base in those years. There was a notable surge in net assets in 2022, which more than doubled to 7,306 million USD, followed by a slight decrease to 6,965 million USD in 2023. The significant increase in 2022 suggests a major investment, acquisition, or reassessment of asset values during that year, while the slight reduction in 2023 may indicate asset disposals or adjustments.
- Segment Asset Turnover
- Segment asset turnover, reflecting the efficiency of asset use to generate sales, showed considerable variation. The ratio declined from 2.38 in 2019 to 2.09 in 2020, then increased to 2.61 in 2021, indicating improved efficiency after the initial decline. In 2022, the ratio dropped sharply to 1.33, coinciding with the large increase in net assets, suggesting that the asset base grew faster than sales during that year, thereby reducing turnover. In 2023, the ratio improved to 1.93, reflecting better utilization of the asset base relative to sales but not yet returning to earlier efficiency levels.
In summary, the segment experienced a challenging year in 2020 with decreased sales and asset turnover, followed by strong sales growth through 2023. The substantial increase in net assets in 2022 impacted asset turnover negatively but was partially offset in 2023. Overall, the segment's financial trends demonstrate recovery and expansion, accompanied by asset base adjustments that influence operational efficiency metrics.
Segment Asset Turnover: Engine
Cummins Inc.; Engine; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales | 11,684) | 10,945) | 9,954) | 8,022) | 10,056) |
| Net assets | 930) | 1,451) | 1,554) | 1,306) | 1,094) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 12.56 | 7.54 | 6.41 | 6.14 | 9.19 |
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).
1 2023 Calculation
Segment asset turnover = Sales ÷ Net assets
= 11,684 ÷ 930 = 12.56
The analysis of the annual performance of the "Engine" reportable segment indicates several notable trends across sales, net assets, and asset turnover ratios over the five-year period from 2019 to 2023.
- Sales
- Sales registered a decline from US$10,056 million in 2019 to US$8,022 million in 2020, a decrease likely influenced by external factors affecting demand or operational disruptions. However, the segment experienced a recovery starting in 2021 with sales rising to US$9,954 million and continuing an upward trajectory through 2022 and 2023, reaching US$11,684 million in the most recent period. This rebound and growth demonstrate increasing market demand or improved operational efficiency contributing to higher revenue generation.
- Net Assets
- Net assets showed an initial increase from US$1,094 million in 2019 to a peak of US$1,554 million in 2021, indicating expansion or capital investment during this timeframe. After 2021, net assets declined to US$1,451 million in 2022 and further dropped to US$930 million by the end of 2023. This reduction could suggest divestitures, asset impairments, or more efficient asset management leading to a leaner capital base.
- Segment Asset Turnover
- The segment asset turnover ratio exhibited volatility but overall displayed significant improvement by 2023. Starting at a high of 9.19 in 2019, the ratio declined sharply to 6.14 in 2020, aligning with the sales decrease and asset base changes. It remained relatively stable in 2021 and increased to 7.54 in 2022. Most notably, in 2023, the segment asset turnover jumped substantially to 12.56, suggesting a more efficient use of assets to generate sales. This sharp increase in asset turnover indicates effective asset utilization possibly driven by a combination of rising sales and a smaller asset base.
In summary, the segment faced a challenging environment in 2020 reflected in falling sales and asset turnover. Nevertheless, subsequent years showed recovery and growth in sales, with net assets eventually decreasing after peaking in 2021. The marked improvement in asset turnover by 2023 reveals enhanced operational efficiency, likely amplifying the financial performance of the segment relative to its asset base.
Segment Asset Turnover: Distribution
Cummins Inc.; Distribution; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales | 10,249) | 8,929) | 7,772) | 7,136) | 8,071) |
| Net assets | 2,348) | 2,698) | 2,294) | 2,444) | 2,536) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 4.36 | 3.31 | 3.39 | 2.92 | 3.18 |
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).
1 2023 Calculation
Segment asset turnover = Sales ÷ Net assets
= 10,249 ÷ 2,348 = 4.36
- Sales
- Sales showed a fluctuating trend over the five-year period. Beginning at 8071 million USD in 2019, sales decreased to 7136 million USD in 2020. This was followed by a recovery in 2021, with sales increasing to 7772 million USD. The upward trend continued in 2022 and 2023, reaching 8929 million USD and 10249 million USD respectively, indicating a strong growth momentum in the most recent years.
- Net assets
- Net assets displayed a generally declining trend with some variability. Starting at 2536 million USD in 2019, net assets fell to 2444 million USD in 2020 and further decreased to 2294 million USD in 2021. There was an increase in 2022 to 2698 million USD; however, this was followed by a drop to 2348 million USD in 2023. Overall, net assets remained below the 2019 level by the end of the period.
- Segment asset turnover
- Segment asset turnover experienced a decline from 3.18 in 2019 to 2.92 in 2020. It then improved substantially in 2021 to 3.39 and remained relatively stable in 2022 at 3.31. A significant increase occurred in 2023, where the ratio jumped to 4.36. This indicates a marked improvement in the efficiency of asset utilization in generating sales in the latest year.
- Overall analysis
- While sales demonstrated resilience and growth after the initial decline in 2020, net assets showed inconsistency with a general downward trajectory. The segment asset turnover ratio’s upward trend after 2020 suggests increasing efficiency in using assets to generate sales, especially notable in 2023. The combination of rising sales and improving asset turnover could imply enhanced operational performance, despite fluctuating net asset levels.
Segment Asset Turnover: Power Systems
Cummins Inc.; Power Systems; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales | 5,673) | 5,033) | 4,415) | 3,631) | 4,460) |
| Net assets | 1,938) | 2,382) | 2,251) | 2,134) | 2,245) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 2.93 | 2.11 | 1.96 | 1.70 | 1.99 |
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).
1 2023 Calculation
Segment asset turnover = Sales ÷ Net assets
= 5,673 ÷ 1,938 = 2.93
The analysis of the annual data for the Power Systems segment reveals several notable trends over the five-year period from 2019 to 2023.
- Sales
- Sales demonstrate a fluctuating yet overall increasing trajectory. After a decrease from US$4,460 million in 2019 to US$3,631 million in 2020, sales rebounded significantly to US$4,415 million in 2021. This upward trend continued with sales reaching US$5,033 million in 2022 and further increasing to US$5,673 million in 2023. This indicates a recovery and growth phase following the initial decline in 2020.
- Net Assets
- Net assets show a generally stable pattern with slight variations over the years. The value decreased modestly from US$2,245 million in 2019 to US$2,134 million in 2020, then increased slightly to US$2,251 million in 2021 and US$2,382 million in 2022. However, in 2023, net assets declined significantly to US$1,938 million, indicating a reduction in the asset base in the most recent year.
- Segment Asset Turnover
- The segment asset turnover ratio, which measures the efficiency of using assets to generate sales, shows an improving trend overall. It decreased from 1.99 in 2019 to 1.70 in 2020, reflecting lower efficiency possibly associated with the lowered sales. Thereafter, the ratio increased to 1.96 in 2021, followed by a steady increase to 2.11 in 2022, and then a marked improvement to 2.93 in 2023. This significant rise suggests enhanced asset utilization and operational efficiency over time.
In summary, the Power Systems segment experienced a decline in sales and asset efficiency in 2020, likely linked to external or market-related challenges during that year. Subsequently, the segment showed resilience and growth, with sales surpassing previous levels and asset efficiency improving significantly. The sharp decrease in net assets in 2023, juxtaposed with sharply improved asset turnover, might indicate strategic asset management or divestiture aimed at driving higher sales productivity.
Segment Asset Turnover: Accelera
Cummins Inc.; Accelera; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales | 354) | 198) | 116) | 72) | 38) |
| Net assets | 1,159) | 1,158) | 602) | 504) | 472) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.31 | 0.17 | 0.19 | 0.14 | 0.08 |
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).
1 2023 Calculation
Segment asset turnover = Sales ÷ Net assets
= 354 ÷ 1,159 = 0.31
- Sales Trend
- Sales demonstrated a strong upward trajectory from 2019 to 2023, increasing significantly from US$38 million to US$354 million. This represents a more than ninefold increase over the five-year period, indicating robust growth in the segment's revenue generation capacity.
- Net Assets Trend
- Net assets showed a moderately steady increase from US$472 million in 2019 to US$602 million in 2021, followed by a substantial rise to US$1,158 million in 2022. They then stabilized around US$1,159 million in 2023. This suggests considerable asset investment or acquisition particularly occurring between 2021 and 2022, with stabilization thereafter.
- Segment Asset Turnover Trend
- The segment asset turnover ratio increased from 0.08 in 2019 to 0.19 in 2021, indicating improving efficiency in utilizing assets to generate sales. There was a slight decline to 0.17 in 2022, which may indicate a short-term dip in efficiency despite increasing asset base; however, this was followed by a significant increase to 0.31 in 2023, reflecting enhanced asset productivity and operational improvements.
- Overall Insights
- The data depict a segment experiencing rapid sales growth alongside a proactive asset base expansion. The asset turnover ratio improvements suggest gains in operational efficiency, particularly notable in the latest period. The stabilization of net assets alongside increasing asset turnover in 2023 implies effective asset management and a strengthening capacity to convert assets into revenues.
Segment Capital Expenditures to Depreciation
Cummins Inc., capital expenditures to depreciation by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 0.76 | 0.87 | 1.01 | 0.73 | 0.86 |
| Engine | 2.39 | 1.80 | 1.66 | 0.97 | 1.19 |
| Distribution | 0.90 | 1.00 | 0.79 | 0.73 | 1.18 |
| Power Systems | 0.94 | 0.80 | 0.61 | 0.61 | 0.91 |
| Accelera | 1.33 | 1.95 | 1.54 | 1.00 | 2.17 |
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).
- Components Segment
- The capital expenditures to depreciation ratio exhibited a declining trend from 0.86 in 2019 to 0.73 in 2020, followed by a significant increase to 1.01 in 2021. Afterward, it decreased again to 0.87 in 2022 and further to 0.76 in 2023, indicating fluctuations with an overall contraction in recent years.
- Engine Segment
- This segment showed a generally increasing trend over the period. Starting at 1.19 in 2019, the ratio dipped to 0.97 in 2020 but then strongly increased to 1.66 in 2021, 1.80 in 2022, and reached a peak of 2.39 in 2023. This suggests a growing investment in capital expenditures relative to depreciation.
- Distribution Segment
- The ratio started at 1.18 in 2019, dropped sharply to 0.73 in 2020, and slightly increased to 0.79 in 2021. It then rose to 1.00 in 2022 but decreased again to 0.90 in 2023. Overall, this segment displays some volatility but tends to hover near or just below one.
- Power Systems Segment
- Capital expenditures relative to depreciation in this segment consistently stayed below one for the majority of the period, starting at 0.91 in 2019 and dropping to 0.61 in both 2020 and 2021. There was a gradual recovery to 0.80 in 2022 and 0.94 in 2023, indicating cautious capital spending relative to the depreciation base.
- Accelera Segment
- The ratio in this segment began quite high at 2.17 in 2019 but sharply declined to 1.00 in 2020. It then rebounded to 1.54 in 2021 and further increased to 1.95 in 2022, before falling to 1.33 in 2023. This indicates a pattern of aggressive capital expenditure relative to depreciation, with some recent moderation.
Segment Capital Expenditures to Depreciation: Components
Cummins Inc.; Components; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 373) | 264) | 184) | 140) | 191) |
| Depreciation and amortization | 491) | 304) | 183) | 192) | 222) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.76 | 0.87 | 1.01 | 0.73 | 0.86 |
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).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 373 ÷ 491 = 0.76
- Capital Expenditures
- Capital expenditures exhibited a fluctuating but overall increasing trend over the five-year period. Starting at $191 million in 2019, capex decreased to $140 million in 2020, rebounded to $184 million in 2021, and then saw a significant increase to $264 million in 2022, followed by further growth to $373 million in 2023. This indicates an accelerating investment in assets from 2021 onwards.
- Depreciation and Amortization
- Depreciation and amortization expenses showed a decline from $222 million in 2019 to $183 million in 2021. However, there was a substantial increase beginning in 2022, rising sharply to $304 million and more than doubling to $491 million in 2023. This suggests increased asset base amortization, consistent with the rising capital expenditures in recent years.
- Segment Capital Expenditures to Depreciation Ratio
- This ratio fluctuated around unity during the period, indicating the relationship between investment and asset write-downs. It started at 0.86 in 2019, dropped to 0.73 in 2020, suggesting lower reinvestment relative to asset depreciation. It peaked at 1.01 in 2021, implying capital expenditures slightly exceeded depreciation that year. The ratio then declined to 0.87 in 2022 and further to 0.76 in 2023, suggesting that despite increased capital expenditures, depreciation grew at a faster rate in the last two years.
- Overall Insights
- The data reflects a strategic shift towards increased asset investment beginning in 2021, as evidenced by rising capital expenditure levels. Depreciation expenses saw a delayed but marked increase starting in 2022, indicating earlier investments reaching the depreciation phase or acquiring assets with shorter useful lives. The capex to depreciation ratio's fluctuations highlight periods where reinvestment was either below or above asset aging rates, with the most recent years showing a trend of depreciation outpacing capital expenditures. This may warrant attention to asset replacement cycles and long-term capital strategy alignment to sustain operational capacity.
Segment Capital Expenditures to Depreciation: Engine
Cummins Inc.; Engine; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 538) | 368) | 341) | 202) | 240) |
| Depreciation and amortization | 225) | 205) | 205) | 208) | 202) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 2.39 | 1.80 | 1.66 | 0.97 | 1.19 |
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).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 538 ÷ 225 = 2.39
- Capital Expenditures
- The capital expenditures show a fluctuating yet generally increasing trend over the five-year period. Initially, there is a decline from 240 million USD in 2019 to 202 million USD in 2020. Subsequently, a significant increase occurs in 2021, rising to 341 million USD, followed by a continuous upward trajectory reaching a peak of 538 million USD in 2023. This indicates expanding investment activity, particularly pronounced in the most recent years.
- Depreciation and Amortization
- Depreciation and amortization expenses remained relatively stable from 2019 through 2022, varying only slightly between 202 million USD and 208 million USD. In 2023, there is a modest increase to 225 million USD, suggesting some growth in the asset base or changes in amortization schedules but overall exhibiting low volatility compared to capital expenditures.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation demonstrates a notable upward trend throughout the period. This ratio decreases from 1.19 in 2019 to 0.97 in 2020, reflecting a contraction in capital spending relative to depreciation. However, from 2021 onwards, a marked increase is observed, climbing from 1.66 to 1.8, and further to 2.39 by 2023. This rising ratio suggests a growing reinvestment rate in the segment, implying that capital expenditures are outpacing depreciation significantly, which may indicate expansion or modernization of assets.
- Overall Insights
- The segment's financial data indicates a strategic increase in capital investments starting in 2021 after a dip in 2020, with the latest figures showing substantial escalation. Depreciation has remained stable with a slight increase in the final year, which supports the notion of a growing asset base. The rising capital expenditures to depreciation ratio reinforces the observation of increased investment intensity relative to asset wear and tear or amortization. This pattern may reflect initiatives to enhance productive capacity or upgrade technology within the segment.
Segment Capital Expenditures to Depreciation: Distribution
Cummins Inc.; Distribution; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 103) | 114) | 92) | 89) | 136) |
| Depreciation and amortization | 115) | 114) | 116) | 122) | 115) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.90 | 1.00 | 0.79 | 0.73 | 1.18 |
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).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 103 ÷ 115 = 0.90
- Capital Expenditures
- The capital expenditures fluctuated over the five-year period. Initially, there was a marked decrease from 136 million US dollars in 2019 to 89 million US dollars in 2020. This was followed by a slight increase to 92 million US dollars in 2021. In 2022, capital expenditures rose more significantly, reaching 114 million US dollars, before declining moderately to 103 million US dollars in 2023. Overall, the data indicate a downward adjustment in investment activity after 2019, with some recovery observed in the subsequent years but not returning to the initial peak level.
- Depreciation and Amortization
- Depreciation and amortization values remained relatively stable throughout the period. Starting at 115 million US dollars in 2019, the value increased slightly to 122 million US dollars in 2020, then decreased gradually to 116 million US dollars in 2021, 114 million US dollars in 2022, and returned to 115 million US dollars in 2023. This suggests consistent asset depreciation expense, reflecting a steady asset base or replacement pattern.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation exhibited notable variation over the years. It started at 1.18 in 2019, indicating capital expenditures exceeded depreciation charges. There was a significant decline to 0.73 in 2020, pointing to capital spending falling below asset depreciation. This ratio slightly improved to 0.79 in 2021 and then reached parity at 1 in 2022, suggesting that capital investments matched depreciation. However, it decreased again to 0.9 in 2023, indicating capital expenditures were slightly less than depreciation. The general trend reflects an initial reduced reinvestment intensity after 2019, with a partial recovery towards maintaining asset levels by 2022, followed by a moderate reduction in reinvestment relative to asset depreciation in 2023.
Segment Capital Expenditures to Depreciation: Power Systems
Cummins Inc.; Power Systems; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 115) | 96) | 80) | 79) | 107) |
| Depreciation and amortization | 122) | 120) | 131) | 130) | 118) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.94 | 0.80 | 0.61 | 0.61 | 0.91 |
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).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 115 ÷ 122 = 0.94
- Capital Expenditures
- Capital expenditures exhibited a fluctuating trend over the observed period. Initially, there was a decline from 107 million US dollars in 2019 to 79 million in 2020, followed by a slight increase to 80 million in 2021. From 2021 onwards, capital expenditures rose more substantially, reaching 96 million in 2022 and further increasing to 115 million in 2023, the highest value in the period under review.
- Depreciation and Amortization
- Depreciation and amortization expenses experienced a moderate increase from 118 million US dollars in 2019 to a peak of 131 million in 2021. Subsequently, there was a decline to 120 million in 2022, followed by a slight increase to 122 million in 2023. Overall, the values remained relatively stable with minor fluctuations around the 120 to 130 million range.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of segment capital expenditures to depreciation revealed considerable variation throughout the period. Starting at 0.91 in 2019, the ratio sharply fell to 0.61 and remained at this level in 2020 and 2021. From 2022 onward, the ratio increased again to 0.8 in 2022 and further to 0.94 in 2023, indicating a rising level of capital investment relative to depreciation costs in the latter years.
Segment Capital Expenditures to Depreciation: Accelera
Cummins Inc.; Accelera; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 84) | 74) | 37) | 18) | 26) |
| Depreciation and amortization | 63) | 38) | 24) | 18) | 12) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.33 | 1.95 | 1.54 | 1.00 | 2.17 |
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).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 84 ÷ 63 = 1.33
- Capital Expenditures
- Capital expenditures experienced a decline from US$26 million in 2019 to US$18 million in 2020, followed by a notable increase to US$37 million in 2021. This upward trend accelerated significantly in 2022 and 2023, reaching US$74 million and US$84 million respectively, indicating a strong investment push in recent years.
- Depreciation and Amortization
- There was a consistent rise in depreciation and amortization expenses over the period, starting at US$12 million in 2019 and steadily increasing each year to US$63 million by 2023. This steady growth reflects increased asset base and amortization activities, likely related to prior capital investments.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation showed notable variability. It began at a high value of 2.17 in 2019, sharply dropped to 1.00 in 2020, then rose again to 1.54 in 2021 and 1.95 in 2022 before declining to 1.33 in 2023. These fluctuations suggest changing investment intensity relative to asset depreciation, with the highest capital spending occurring in 2022 relative to the depreciation incurred.
Sales
Cummins Inc., sales by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 13,409) | 9,736) | 7,665) | 6,024) | 6,914) |
| Engine | 11,684) | 10,945) | 9,954) | 8,022) | 10,056) |
| Distribution | 10,249) | 8,929) | 7,772) | 7,136) | 8,071) |
| Power Systems | 5,673) | 5,033) | 4,415) | 3,631) | 4,460) |
| Accelera | 354) | 198) | 116) | 72) | 38) |
| Total segments | 41,369) | 34,841) | 29,922) | 24,885) | 29,539) |
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).
The sales data over the period from 2019 to 2023 reveals several notable trends across the company's reportable segments. Overall, there is a consistent upward trend in total segment sales, with the total increasing from approximately $29.5 billion in 2019 to $41.4 billion in 2023, indicating steady growth over the five-year period.
- Components Segment
- The Components segment experienced a decline from 2019 to 2020, decreasing from $6.9 billion to $6.0 billion. However, this was followed by strong recovery and growth in subsequent years, with sales rising to $7.7 billion in 2021, $9.7 billion in 2022, and reaching $13.4 billion in 2023. The substantial increase in 2023 suggests a significant expansion or increased demand in this business segment.
- Engine Segment
- Sales in the Engine segment also declined sharply from $10.1 billion in 2019 to $8.0 billion in 2020. After this dip, the segment showed gradual recovery and moderate growth: reaching $10.0 billion in 2021 and slightly increasing to $10.9 billion in 2022. Growth slowed in 2023 with sales at $11.7 billion, indicating a stabilization after the initial recovery phase.
- Distribution Segment
- The Distribution segment exhibited a less volatile pattern. There was a decrease from $8.1 billion in 2019 to $7.1 billion in 2020, followed by continuous growth each year: $7.8 billion in 2021, $8.9 billion in 2022, and $10.2 billion in 2023. This steady increase reflects consistent demand and effectiveness in distribution operations.
- Power Systems Segment
- This segment saw a decline from $4.5 billion in 2019 to $3.6 billion in 2020, then a return to growth at $4.4 billion in 2021, progressing to $5.0 billion in 2022 and $5.7 billion in 2023. The rebound and steady increase suggest recovery from a temporary downturn and expanding market opportunities in power systems.
- Accelera Segment
- The Accelera segment, while much smaller in scale compared to others, shows robust growth across the entire period. Starting from $38 million in 2019, sales nearly doubled to $72 million in 2020, then continued to increase to $116 million in 2021, $198 million in 2022, and reached $354 million in 2023. This rapid growth potentially signals a successful new initiative or product line gaining market traction.
In summary, most segments experienced a decline in 2020, likely linked to external factors affecting the overall market or operational disruptions. However, each segment demonstrated recovery starting in 2021, with Components and Accelera showing particularly strong upward momentum. The data indicates broad-based growth across all segments in recent years, contributing to a substantial increase in total segment sales from 2019 through 2023.
Segment EBITDA
Cummins Inc., segment ebitda by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 1,840) | 1,346) | 1,180) | 961) | 1,097) |
| Engine | 1,630) | 1,541) | 1,411) | 1,235) | 1,454) |
| Distribution | 1,209) | 888) | 731) | 665) | 656) |
| Power Systems | 836) | 596) | 496) | 343) | 512) |
| Accelera | (443) | (340) | (223) | (172) | (149) |
| Total segments | 5,072) | 4,031) | 3,595) | 3,032) | 3,570) |
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).
The segment EBITDA data presents a comprehensive overview of financial performance across five business segments over a five-year period ending in 2023. Each segment displays distinct trends, reflecting varying operational dynamics and market conditions.
- Components Segment
- The Components segment shows a fluctuating but generally upward trend in EBITDA. Starting at $1,097 million at the end of 2019, it declined to $961 million in 2020, likely reflecting external challenges during that year. The segment recovered subsequently, with values rising to $1,180 million in 2021 and $1,346 million in 2022, culminating in a substantial increase to $1,840 million by the end of 2023. This represents a strong recovery and growth trajectory over the analyzed period.
- Engine Segment
- The Engine segment exhibits a relative stability mixed with moderate growth. EBITDA decreased from $1,454 million in 2019 to $1,235 million in 2020 but then experienced consistent upward movement, reaching $1,411 million in 2021 and $1,541 million in 2022. The growth slowed somewhat in 2023, with EBITDA at $1,630 million. Overall, the segment shows resilience and a steady expansion trend following the initial dip.
- Distribution Segment
- Distribution shows a steady and pronounced increase in EBITDA throughout the period. Starting at $656 million in 2019, the segment maintained slight growth in 2020 at $665 million, followed by a more noticeable increase to $731 million in 2021, $888 million in 2022, and reaching $1,209 million in 2023. This consistent upward progression indicates strengthening performance and possibly expanding market reach or operational efficiency.
- Power Systems Segment
- This segment exhibited volatility with a downward trend initially, declining from $512 million in 2019 to $343 million in 2020. However, a recovery phase ensued with EBITDA increasing to $496 million in 2021, $596 million in 2022, and $836 million in 2023. The rebound from the 2020 low is significant, suggesting effective strategic adjustments or improved market conditions.
- Accelera Segment
- The Accelera segment is characterized by persistent negative EBITDA, reflecting consistent losses over the period. The losses expanded from -$149 million in 2019 to -$172 million in 2020, progressively increasing in magnitude each year, reaching -$443 million in 2023. This ongoing negative trend highlights challenges in this segment, possibly linked to developmental investments or operational inefficiencies.
- Total Segments
- The combined EBITDA of all segments, excluding any reconciliation or corporate adjustments, declined sharply from $3,570 million in 2019 to $3,032 million in 2020. The total then recovered progressively, achieving $3,595 million in 2021, $4,031 million in 2022, and reaching a peak of $5,072 million in 2023. This overall upward trajectory underscores a solid recovery and robust growth in aggregate segment performance, driven primarily by improvements in Components, Distribution, and Power Systems, despite continued losses in Accelera.
Depreciation and amortization
Cummins Inc., depreciation and amortization by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 491) | 304) | 183) | 192) | 222) |
| Engine | 225) | 205) | 205) | 208) | 202) |
| Distribution | 115) | 114) | 116) | 122) | 115) |
| Power Systems | 122) | 120) | 131) | 130) | 118) |
| Accelera | 63) | 38) | 24) | 18) | 12) |
| Total segments | 1,016) | 781) | 659) | 670) | 669) |
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).
The analysis of the annual reportable segment depreciation and amortization data over the five-year period reveals several noteworthy trends and shifts.
- Components Segment
- The depreciation and amortization expense in this segment exhibits a fluctuating but overall increasing trend. Starting at $222 million in 2019, it dipped to $192 million in 2020 and further to $183 million in 2021. However, in subsequent years, the expense rose sharply to $304 million in 2022 and then significantly increased to $491 million in 2023, indicating accelerated capital investment or changes in asset composition in recent years.
- Engine Segment
- The values show relative stability with minor variation. The expense was $202 million in 2019, slightly increased to $208 million in 2020, then remained steady around $205 million for 2021 and 2022, and finally increased moderately to $225 million in 2023. This suggests consistent asset base and amortization policies within this segment.
- Distribution Segment
- Depreciation and amortization in this segment remains largely stable throughout the period, fluctuating marginally between $114 million and $122 million. The expense started at $115 million in 2019, peaked at $122 million in 2020, and then settled back at $115 million in 2023, pointing to minimal changes in fixed asset investments.
- Power Systems Segment
- This segment shows minor fluctuations but no clear upward or downward trend. The expense increased from $118 million in 2019 to $130 million in 2020 and $131 million in 2021, then decreased slightly to $120 million in 2022 and rose again modestly to $122 million in 2023, suggesting relative stability in asset utilization.
- Accelera Segment
- Shows a consistent and marked upward trend in depreciation and amortization expenses, starting at $12 million in 2019 and increasing steadily each year to reach $63 million in 2023. This indicates significant growth in asset base or capital expenditure in this relatively smaller segment, reflecting expansion or increased focus on this area.
- Total Segments
- The aggregate depreciation and amortization expense across all segments reveals a stable pattern around $670 million from 2019 through 2021 followed by a strong increase to $781 million in 2022 and further to $1,016 million in 2023. This significant increase over the last two years is primarily driven by the sharp rises in the Components and Accelera segments, indicating overall growth in capital assets or changes in depreciation policies.
In summary, the depreciation and amortization expenses reflect an overall expansion in asset bases with substantial increases in Components and Accelera segments, while Engine, Distribution, and Power Systems maintain relatively consistent levels. The total segment expense growth in 2022 and 2023 suggests increased capital investment and asset utilization in recent years.
Net assets
Cummins Inc., net assets by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 6,965) | 7,306) | 2,938) | 2,878) | 2,911) |
| Engine | 930) | 1,451) | 1,554) | 1,306) | 1,094) |
| Distribution | 2,348) | 2,698) | 2,294) | 2,444) | 2,536) |
| Power Systems | 1,938) | 2,382) | 2,251) | 2,134) | 2,245) |
| Accelera | 1,159) | 1,158) | 602) | 504) | 472) |
| Total segments | 13,340) | 14,995) | 9,639) | 9,266) | 9,258) |
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).
- Components Segment Net Assets
- The net assets showed a relatively stable trend from 2019 to 2021, fluctuating slightly between approximately $2,878 million and $2,938 million. However, a significant increase occurred in 2022, rising to $7,306 million, followed by a small decline to $6,965 million in 2023. This indicates a major expansion or revaluation during 2022, slightly moderated in the subsequent year.
- Engine Segment Net Assets
- The Engine segment net assets displayed a consistent upward trend from 2019 ($1,094 million) through 2021 ($1,554 million), peaking in 2021. After this, there was a decline to $1,451 million in 2022 and a more pronounced decrease to $930 million in 2023, pointing to a possible contraction or asset reduction in the last two years.
- Distribution Segment Net Assets
- Values for the Distribution segment reveal a downward movement overall, starting from $2,536 million in 2019 and dropping steadily to $2,294 million in 2021. There was a rebound to $2,698 million in 2022, but this was not maintained, as the figure decreased again to $2,348 million in 2023, indicating volatility or fluctuating asset allocation in this segment.
- Power Systems Segment Net Assets
- Net assets in the Power Systems segment showed minor variability, falling from $2,245 million in 2019 to $2,134 million in 2020, then increasing modestly to $2,251 million in 2021 and $2,382 million in 2022. A noticeable decline took place in 2023, with net assets decreasing to $1,938 million, suggesting some reduction in asset base during the latest period.
- Accelera Segment Net Assets
- The Accelera segment exhibited steady growth over the years, starting from $472 million in 2019, gradually climbing each year, and reaching $1,159 million in 2023. The most significant growth occurred between 2021 and 2022, where the net assets nearly doubled from $602 million to $1,158 million, indicating rapid expansion or increased investment in this segment.
- Total Segments Net Assets
- The aggregated net assets across all segments remained relatively flat between 2019 ($9,258 million) and 2020 ($9,266 million), followed by a moderate increase to $9,639 million in 2021. A substantial surge occurred in 2022, reaching $14,995 million, before falling back to $13,340 million in 2023. This pattern largely mirrors the trends observed in the Components and Accelera segments, which significantly contributed to the peak in 2022.
Capital expenditures
Cummins Inc., capital expenditures by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Components | 373) | 264) | 184) | 140) | 191) |
| Engine | 538) | 368) | 341) | 202) | 240) |
| Distribution | 103) | 114) | 92) | 89) | 136) |
| Power Systems | 115) | 96) | 80) | 79) | 107) |
| Accelera | 84) | 74) | 37) | 18) | 26) |
| Total segments | 1,213) | 916) | 734) | 528) | 700) |
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).
- Overall Capital Expenditures Trend
- There is a clear upward trend in total segment capital expenditures over the five-year period, increasing from $700 million in 2019 to $1,213 million in 2023. After a decline in 2020, expenditures steadily rose each year through 2023, indicating growing investment across segments.
- Components Segment
- The Components segment shows fluctuations, with a decrease from $191 million in 2019 to $140 million in 2020, followed by a recovery and steady growth to $373 million in 2023. This represents almost a 2.7 times increase from its lowest point in 2020, suggesting an expanding focus or increased investment in components manufacturing over the recent years.
- Engine Segment
- The Engine segment experienced variability but with an overall increasing trend. Capital expenditures dropped from $240 million in 2019 to $202 million in 2020, then surged to $538 million by 2023. This segment shows the largest absolute increase in capital expenditures across the years, underlining it as a major area of expenditure growth.
- Distribution Segment
- Expenditures in the Distribution segment decreased sharply from $136 million in 2019 to $89 million in 2020, and saw marginal fluctuations afterwards, ending at $103 million in 2023. The relatively stable but lower investment compared to other segments may indicate a more conservative capital approach or less capital-intensive needs within distribution.
- Power Systems Segment
- The Power Systems segment shows a gradual decline from $107 million in 2019 to $79 million in 2020 and remained fairly stable through 2021 before increasing moderately to $115 million in 2023. While there is a slight recovery, investment levels remain near the lower end of the range seen across the years.
- Accelera Segment
- The Accelera segment displays consistent growth, starting at a low base of $26 million in 2019, dropping slightly in 2020 to $18 million, then increasing steadily to $84 million by 2023. This segment demonstrates a notable percentage increase over the period, reflecting possibly a growing strategic emphasis or expansion efforts.