Thank you, everybody. I'm excited to have Cummins, the best for last. This is our last official presentation today. Thanks. For the two-day conference. Very excited to have Cummins. So much to always talk about with Cummins, just given all the different end markets you're in on highway, off highway, every aspect of technology evolution for emissions. A lot we can discuss. Who better than having Brett Merritt here, who runs the on-highway engine biz. You touch it all. Thank you. Chris Clulow, obviously investor relations now for a few years, but spent five years at Cummins even before that. You have reached veteran status. Cummins can challenge anybody's, like, longevity argument. There's some real, real lifers at Cummins. Yeah. For sure. You're now a veteran. With that, I do wanna kick off more of an emissions question. First I'll let you, if you want to, comment about this morning's announcements or anything we really should dive into. I would say nothing struck me as quite as dramatic as the we're making a major announcement yesterday. Probably not as meaningful for investors. It's really meaningful that for the 2,000 people who work in that segment. We've bought a series of companies, and so the identity of that group wasn't exactly one. A variety, whether it be Siemens, whether it be, you know, EDI and a variety of others. This brings all that together, and kinda think of it what was called New Power is now Accelera. Yeah. Yeah, there was a nice build-up. Likewise with customers. Customers are, "Okay, this is Accelera by Cummins." Same strategy? Yes, same strategy. It's working with the same people. It's still one Cummins. I think it'll be a good brand that people can rally behind and a much better name than what we were previously using. Sure, sure. On that front about, you know, to decarbonization, carbon neutral. In-cylinder hydrogen, that combustion engine hydrogen solution. Happen to see it with Tom and Jen, like, maybe kicking around the Germany truck show a few months ago. It got the green label in Europe. I think that's a major milestone to think, could this be the long-haul solution? The U.S., where are we on the EPA deciding is combustion engine hydrogen can really be deemed green? If you want to provide your view on what is the chances of success for that to get deemed green in the U.S.? Yeah, and a few things. Hydrogen Internal Combustion Engine or Hydrogen ICE is a really good concept in our view, for particular parts, segments and/or regions of the world whereby hydrogen economy will happen. Places like India where they could potentially have their own fuel source rather than importing, likewise heavy-duty truck, which line haul battery electric's gonna be a difficult application necessarily. We've gone down our path of our fuel-agnostic engines, and therefore this can build upon our same base diesel plus natural gas now hydrogen platform in the 15L segment, as we've announced. You've seen some customer announcements where they're saying, "Hey, we're interested in this." It's primarily for that. As far as the EPA is concerned, I think we've got a little bit of time to figure out. They're busy with quite a few other regulatory rulemaking activity that'll happen. I think we'll learn later whether it truly is given the ZEV status will be the important status in the U.S. That said, either way, this could be a really good option as we look towards the future, primarily for heavy-duty truck, because, you know, it fits in the same chassis. It is a little bit similar to some of the natural gas systems that are already out there. We are already in development. There are engines and test cells, and I think it's something you'll hear more about in the future. Am I overplaying it if it was deemed green for long haul in North America? Does it take the pole position as that might be the winner if it's deemed green? I think a lot of things need to prove out. Obviously you have Hydrogen ICE, you have fuel cell, and you have renewable natural gas. Today, we would say diesel will be the pole sitter for some time. Sure. The question will be, at what point do we truly have a hydrogen infrastructure by which it could be that? We would say it would start much more like natural gas did originally with those who have made investments in that type fueling system. They'll start to use more point to point, and then you'll see it go more widespread once infrastructure comes. I think that becomes a bit of an infrastructure and timing question. diesel, natural gas today. When I think of China and the recent PMI getting people a little bit, you know. Maybe there's a real recovery, the government puts out a 5% target, which we can debate what they're trying to message there, obviously not on the robust side. It was a little bit less than they thought. Nobody's probably been in China longer than you. Nobody has. I mean, the brand equity you have there is probably pretty similar. Maybe India is a little stronger, but it's a really strong brand equity. Your relationships run deep with the indigenous players to the global brands. Are you seeing a 53 PMI in China? How would you describe? Your guidance, and I know truck you have up 15- 25. Total China up 7% off of some of these comps is nothing, right? Right. You're basically saying, "We're not seeing any recovery. Slow, steady recovery. Some- Got it. Barely even a recovery, I mean. Exactly. To be honest. When you saw a 53 PMI, was that of surprise to you, and how would you interpret that? I'll talk a little bit about kinda on-highway market, and then Chris can chime in at the overall company level. What we're seeing is definitely more build and activity on engines and systems right now than we had last year. That's an easy comparable given it was abysmal. We are seeing that, and then you're gonna see truck inventory build in the system. This is the general historical selling cycle of China, kinda Chinese New Year till, call it April, May timeframe. I think we should all really watch that. If you truly see demand come back and trucks are selling, I think you'll see a more robust cycle. Early days is what we would say. We've seen probably part of the sentiment, but we also need to see that all the way through to the people that are actually in the end users using the truck, and then I think we'll be able to tell what the rest of the year maintains. A lot of that's just because we're coming from such a low base. More activity, no doubt, and we're prepared should that come. Post-Chinese New Year, you usually would know at this stage. You would, yes, but then it was already a robust sell cycle. You're building up some inventory of trucks that they just frankly don't have right now. Let's see how that sell comes through. I think in a few months. Your builds are reflecting traditional post-Chinese New Year to some degree. More than where we were. Okay. Yeah. Yeah. Yeah. The sell-through is still debatable. That is the question. That's the question. Yeah. Okay. Off-highway? Yeah. on the off-highway side, I'd say for our power systems, we have a large joint venture there. That's more flattish year-over-year, but it was also flattish from 2021 to 2022. It wasn't down. Yeah. That's power generation, mining, oil and gas, all very strong. Then on the excavator side, that's coming off emissions change December first last year that basically just takes the buy cycle out. It'll just be down this year. We expect it to maybe recover next year. I think the reforms they did in terms of real estate development have really taken away that speculative build, which is a healthy thing long term, but that's just not. We don't think the excavator's gonna really bounce back until next year. What do you have for excavators down this year, roughly? About 30%. it's another step down from what we had last year. a step down last year, but obviously. They sold three excavators last year, now two. I mean, that was. It's a pretty easy comp t o be down another 30%. It is. It does continue to do. We've seen that drop in the past. I mean, excavators cycles in China have tend to be more drastic than the on-highway cycles. We've seen it drop 86% in one year, I recall when I was in the engine business. Meritor. I assume obviously you were deeply involved in that conversation. Very much. What's really the value of an electrified axle and so forth? Maybe a quick little update on that, but more importantly, where do you see further needs to win in a BEV solution? At least I'll say it feels like the companies wouldn't mind if hydrogen ended up being a little bit bigger part of the transition. I think BEV has been harder for the whole industry, to be honest, to come up with a clear superior mousetrap. Feels a little more commodity at the moment. When you think of what you would need if it was more BEV, or even if you need something on the hydrogen side, are there other key components that you would say we're starting to learn that's an incremental component that allows that package sell to really win the drivetrain? I think the Siemens acquisition was one within Meritor that helps us on the traction side. battery management system is one we'll continue to look at. Can you elaborate on that? Just how you're controlling the cells and packs, there's a lot of learning to go from where we are today, early days, not that many electric vehicles, in a commercial cycle, to how do you last X number of years in the duty cycles we all know they need to last. We'll use both our own and we've made acquisitions in the space. I don't think there's tons of acquisitions that we need from a talent perspective, and now you'll need to see us position of where is our space in BEV. I think there'll be, you know, there'll be more positions to come. What I would say is the early wins are not necessarily where the, the later wins will be. I mean, you know, these trucks are in the tens. At some point they're gonna be in the thousands and we'll be positioned when it does move for that. That's a long way to say I think we can win in hydrogen and/or BEV, and our plan is that we'll be in a big way in both. I think just to add there, I think with the acquisitions we made last year, we're certainly digesting those and really the focus as we go into this year and next year's execution. You know, we have the portfolio, we know what we need to do, and it's now executing, integrating Meritor, moving forward with ZEV, delivering the fuel-agnostic engine and the EBU. I think those are all big tasks that we need to focus on. That's. We'll do some acquisitions. You know, we'll be opportunistic in the New Power segment as maybe some of the smalls don't make it through from a capital perspective, or bolstering our supply chain. I think that's the other piece like we did with Jacobs last year. Speaking of the battery side, early days, big marketer though, Tesla. Early days, I was at SpaceX 5, 6 years ago, and it was supposed to be coming soon, so I'm not sure how much traction we're really gonna see in volume. They're obviously talking about having, you know, not material, but share by 2030 that at least debatable if they're really gonna have 10% share. Right. What are you hearing early feedback on that business proposition of their truck? Yeah, I mean, early feedback, one, not many people have them. There are a few. And I'd encourage, you know, all of you to go talk to those customers who have them in hand. Typically, they'll have a variety of other BEV systems in hand. We look at it, you know this, there's no one silver bullet. We need to look at the correct applications and usages for BEV and then see which is the best system that we can provide. You know, we'll I'm sure it's they've done lots of work on this. I just believe there will be there's more pages in this BEV chapter than just the latest Tesla announcement. Just to understand, well, let me first ask about hydrogen, but I want to get back to BEV. I mean, obviously, you've looked at it for years. I mean, you're not a newcomer. It is interesting, and I know your balance sheet can go out, and you could have bought anybody, Romeo, whoever, over the years, but you weren't finding a differentiated enough technology. Now that some years have gone on, right, the way you're configuring the cells in the battery pack, you're learning every day. It's interesting, it still feels like there is not a clear mousetrap that's winning. I'm just curious what gets us to the point, maybe you wanna answer the BEV question first. What are we trying to figure out? The initial one maybe was a little too, we're trying to be the most durable. People weren't willing to pay for it. Yeah. Now we're trying to figure out the right value proposition. Excuse my ignorance, but is it trying to figure out truly the heat rejection issues on durability and what people are willing to pay for and how it impacts performance? What is causing the inability to figure out, we're just gonna go buy that is the best technology, versus we can do it ourselves? Is it just not known yet, what is the best mousetrap solution? I think there's two different sides, and then you can chime in. One is the battery chemistry itself. I think you will see us come out with a specific battery chemistry, but I don't think the battery chemistries we were working with three or four years ago are the ones that we'll come out with now. I do think there's an idea that you can have a really good mousetrap that will come out, particularly medium duty truck, North America. Second is there is still a lot of infrastructure and business system work that has to be done in the market. You know, almost no one could go 100% BEV today. That would be very, very difficult. We have BEV in school bus. T hat Cummins makes, as well as transit bus. Those are probably the best equipped to start to go there. If you just look at it from an infrastructure, from a grid, from a who could operate, and then can you make money from it at the end customer, I think are the ones that'll have to be answered in addition to us coming out with the right platform. That will take a little bit of time. You know, the initial are just initial seeds into the market. For it to become a real business, we need those businesses making money off of BEV and operating well. We've got our mousetrap to figure out, and then we've got the business model for the end customer to figure out as we go. On the hydrogen side, you need to have both electrolyzer and fuel cell, so it's a differentiating feature. As we've evolved, obviously, you're adding capacity for the electrolyzer, so you're showing that confidence in the facility in Spain, you name it. You seem to have a big belief in the industrial but competitively, maybe lean a little more on highway, but I'm happy to hear. I ndustrial. Is there anything you need to win in hydrogen or this is simply let's just hope the evolution of the industry works in your favor? Is that really where we are, where it's more about, you know, regulation and adoption, but competitively you feel pretty well set? Yeah. I mean, for on highway, we'll feel really good on the hydrogen combustion engine because it'll be a part of the fuel-agnostic platform. We don't think anybody can scale that as well as we can. The, the base idea is make a mass investment around the platform, and then the small variants or sisters by fuel are much less than the initial, all running down the same production facility. We've shown with our diesel growth, whether it's many of the medium duty announcements, that scale can help us win in that segment based on the synergies of the investment and the manufacturing side. I feel great on that. On the fuel cell side, we also feel good. We're making money in the areas of fuel cell that you can today. Whether it's train, whether it's some of the learning off of electrolyzers, but there's a lot of learning to be done. For fuel cell to be, well, for both to be viable, we need then the business model for that to work and the infrastructure of hydrogen out there. I think both have a, have a real opportunity. You'll have to come down in price for fuel cell, no doubt, but we would feel well-positioned given our scale and ability to use on the industrial side of hydrogen, that for on highway, I think we're well prepared. Chris can speak on those. Yeah. I think played out opposite from what we have in engines where our scale and on highway enables us to do off highway. Our scale and electrolyzers gets you to scale because it's the same technology at its core, whether electrolyzer or a fuel cell. We build up the electrolyzer scale as we're doing now with the four announcements last year and continue to drive that, replacing industrial hydrogen as well as driving towards, you know, more utility hydrogen, not even getting into transport yet. Building up that scale to a, you know, a multi-billion dollar business by 2030, then taking that scale and you drive it into fuel cells. That gets us to the cost point. That's the big piece. You know, infrastructure is one big piece, but getting our cost down, I think is a big element that we need to continue to work on, for the fuel cells. When you scale electrolyzers, 2030 is a bit far away. When you scale the electrolyzer business, what kind of competitive advantage do you think you'll have on fuel cell cost base? I don't think we've quantified it today, but you can see the direction we're going. You've been able to see a scale engine on and apply it to off. That would be, you know, that'll be similar, but I don't think we've quantified it today. Don't underestimate the learning also. In all aspects of the technology just by being that much more exposed to hydrogen. Different direction, filtration. Yeah. Can you give us an update on how that's proceeding? What's the financial impact on the remaining Cummins legacy business? Sure. The thought process and everything else? Yeah. We're in the, you know, public S-1 process. I'll speak in generalities versus specific numbers, based on the guidance from our legal team, strong guidance. I think at the turn, when we do the first IPO, which is, you know, coming soon, we have the public out there. We'll sell off about 19.5%-19.9% of the company, about 20%. Take those IPO proceeds, as well as take out some debt on filtration. We'll still be consolidated, so that'll still be on Cummins' balance sheet. That's where the bump in interest comes, as we've talked about. In the second step, which is gonna be six months later, it's a share exchange. It'll reduce Cummins shares in exchange for the Atmus shares. Those are the two benefits really that we see. One, certainly the proceeds that we get from the initial public offering and giving them the gift of some debt, and then reducing our share count. Most of the proceeds we expect this year is gonna be into debt reduction from Meritor. Given where interest rates are, we think that's the best use of the funds currently. Long term, we're still committed to our, you know, our base case, 50% of cash, operating cash back to shareholders. Speaking of the balance sheet, which hasn't had leverage since the Dakota engine model in 2000 that was canceled. To date myself. Big time, yeah. How is the C-suite viewing the appropriate balance sheet? I think you've alluded to it. We have a more conservative balance sheet than most in the industry, I will say. At this point, I think we have more leverage than we'd like. We're not gonna get back, our belief, to the point before Meritor. We were kind of building up to that. Some kind of figures. It's somewhere in between, like in the middle there. With Meritor, this is not trying to get back to- No. It was underleveraged for 20 years. Yeah, it was kinda we were building up to that Meritor acquisition over time. Of course, we were going through the pandemic, so conserving cash was the smart move. Yeah, we're not gonna get back to that point. It's gonna have a happy medium that we hope to get to in, you know, mid of next year 'cause we're... You know, cash from operations, we expect $2.5 billion-$3 billion this year. Good cash from operations will help us. It's not like a one-off, get the leverage up, but we don't have to bring it all the way back down to almost net cash, necessarily. Right. Clearly, debt reduction is the focus going forward. Yep. Okay. Speaking a little more near term, the second half of the year guide does imply, you know, basically negative. Right. Can you take us through that thought process and what got us there? A lot of companies admit, like you start the year, you're just being prudent and things are good to start the year. Wanna know where pricing will be, volume demand. You seem to be a little more specific on, well, North American truck builds could be down second half versus second half 2022. If you can just take us through and level set how we came to that implied second half guide. Sure. Sure. Like we talked to in our Q4 earnings call, we expect about 52% of revenue in first half, 48% back half, really driven by the truck cycle. Brett can talk a little bit more to this. I think it's expecting some moderation in Q4. I will say we're not seeing any warning signs yet. Orders in February were strong. If we continue to see that, it continues to push out. This is the certainly the most interesting cycle we've seen in quite some time. It's all of our rules of thumb are kinda out the window. Medium duty truck, as an example, usually the canary in the coal mine, turns down first. We expect to hold on for quite some time 'cause that's been underprioritized and the demand is quite strong. I'll let Brett talk a little bit more on heavy. Yeah. On the heavy cycle, you all follow the same we do, but it's the backlog is high. Large fleets can't get all that they've wanted for some time, but you're not seeing any cancellation. What cancellation you are seeing is being refilled. The resale value of trucks have stayed relatively high. It's down from a huge peak, but probably appropriately so. As long as we keep seeing that, I think you'll see, as Chris said, we keep bumping out. We had some concerns with interest rates, with a variety of others. Would that start to dovetail down in the Q4? I will say our demand is robust right now. We're building a lot of engines. It's an exciting time, but a little bit of an unprecedented time from a cycle perspective. It was always a little more of a understandable theory than it was you ever were getting build schedules. Like, did you actually get build schedules that really supported that it would be down and they've had to bump them up? Or was it, "Hey, a lot of people give us build schedules. We, we model what we think is really gonna happen? Yeah. We model what we think is gonna happen, and you won't get a build schedule for Q4 yet anyway. Okay. It's a 90-day look out. The hard data look out is 90 days. You have indications. The other reality is the industry can't take huge steps right now. Yeah. Gradual steps are possible from a, from a supply perspective, but you couldn't say the whole industry could make another 20% right now. It's just not gonna happen. Sorry. Nope. Had an interesting conversation with, a large customer, very large customer, and the conversation of the shape of the cycle. I think most investors would say 2024 down, pre-buy 2025. This OEM CEO said, "I don't know. Maybe some people would like to have the better miles per gallon on the 2027 model. Some might not like the incremental complexity, but there might be enough people saying, 'I like the better fuel economy. I'm not gonna pre-buy them. I'm happy to get the 2027 model year.'" They're almost feeling like higher for longer, not a hockey stick up on a pre-buy, but not necessarily down in 2024. Yeah. You look young, but you've been around a little bit. I think it was gonna be a few cycle perspectives. 20, 24 years. Yeah. Yeah. It'll be interesting. Two things I think. One is, I don't know if the industry can flex up enough to really give a hard pre-buy. If you were gonna have a pre-buy for 2024 today, it's muted by the fact that you just- 2025 pre-buy, 2024 down. Correct. You're saying whatever. We're at 300,000-ish. We've never built more than 367,000. Yeah, I don't know if you get back to... You say, "I don't think." Is that I don't think 400, or I don't even think 350? I think 350 would be quite difficult for this platform. Okay. Not necessarily Cummins. I just think industry-wide, to flex it would take some time. Second is it matters how much the stairstep is on truck price. You've seen different cycles, right? 2007 and 2010 were huge truck price increases. 2013, 2017, more muted, and the corresponding pre-buy, you know, the market's pretty smart. They'll figure that out. Even more than complexity, it'll be that price, because of the addition. But undoubtedly people like the fuel economy and how long are we gonna underserve that market? Those are probably the three factors. Underserving the how much we can go and then what's the price. You're the, probably the best person to ask this. The 2027 model year. Right. The technology, not new necessarily. No. Having to increase your warranty is the big debate, right? To add those incremental miles and years of all the aftertreatment's going to work, and we know from that. That's right. The doser clogging to the, all the, you know, regeneration of the, of the NOx, right? Can you give us some sense of what are you looking at, if you mind give us a sense of the price increase too? Yeah. To increase the warranty to take on the economic risk of an extended warranty, is that. What are you all in on a truck nowadays? $50,000 with the aftertreatment, $45,000 for a 15-liter? What are we adding on to it? Engine plus the aftertreatment. Your content's $45,000-$50,000? It'd be less than that. Even less. Yeah, yeah. it's about $40? Less than that. 35? I can't do it. It's in the range of 30 to 40. Okay. Depending on the truck. When I think about the pre-buy cost, I was like, "Well, the technology is not that new." We'll call it 30, 40, not even 40, 50. How much of an increase would you need on a higher warranty to make the price of the overall truck go up enough to be like, "Oh, I have to pre-buy that. It's so expensive." That was interesting you just said, "Oh, it'll be the price that creates the pre-buy, not the complexity. It'll be- How much could the price go up? Well, it'll be both. A lot of it depends on what's the answer. I think there'll be a couple different answers. It could be a big number, you said what's the answer? There could be a big number out there depending on what your answer is. Second is people. We always say heavy duty truck's a big monolith. It's hundreds of thousands of customers. You've got some who just don't wanna try new stuff, right? They'll wait for you to. That's the complexity issue. That's the complexity issue. Yeah. There are some that are very economically driven, right? It's why they're still buying a 13-liter, not a 15-liter. It's $2,000 difference. That'll tell you right there, it's $2,000 difference, there is a different buying pattern, even though on a $150,000 truck, you and I say that's not a huge difference. I do think there is some of that. What we're doing internally is there's a lot of testing. The good news is we have a lot more data. We have a lot more connected trucks. We do a lot more predictive analytics. Essentially not only is the duration going, but there are more parts covered in that warranty than before. Okay. We'll have to do that analysis over the next two years or so. To be honest, unfortunately for everybody here, that pricing will not be settled until 2025, probably. The lack of knowing the price, it depends on the economy, of course. Could put unknown into where you'd wanna be. The unknown might be like, "You know, I better pre-buy. For sure. For sure. Yeah. The question is, can you pre-buy? I think the other ad I'd say, well, essentially it's gonna be the same structure engine. I mean, we're doing all new platforms. The tolerances of these engines to get to that low NOx level has got. I mean, we're talking millimeters. It getting smaller and smaller and smaller. Yeah. That takes more buying machinery, takes more work to go into it. There is incremental costs of the engine itself, plus probably more aftertreatment most likely to get there. There is some content add as well. Okay. it's not warranty as a piece, but... It's not just warranty, it is incremental content that... There's some content too. ...has to be also given a longer- For sure. For sure. Okay. We're about out of time. There's so much you can discuss with Cummins on off-highway technology, emerging markets. Anybody have a question or two for Cummins? All right. We're just about out of time. Thank you so much. Thanks, David. Always an interesting conversation with Cummins, so appreciate it. Thank you. Thanks, David.