Greetings, and welcome to the Cummins Inc. first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you would like the opportunity to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Clulow, Vice President of Investor Relations. Thank you. Please go ahead. Thank you, Donna. Good morning, everyone, and welcome to our teleconference today to discuss Cummins results for the Q1 of 2023. Participating with me today are Jennifer Rumsey, our President and Chief Executive Officer, and Mark Smith, our Chief Financial Officer. We will all be available to answer questions at the end of the teleconference. Before we start, please note that some of the information that you will hear or be given today will consist of forward-looking statements within the meaning of the Securities Exchange Act of 1934. Such statements express our forecasts, expectations, hopes, beliefs, and intentions on strategies regarding the future. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the forward-looking disclosure statements in the slide deck and our filings with the Securities and Exchange Commission, particularly the Risk Factors section of our most recently filed annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. During the course of this call, we will be discussing certain non-GAAP financial measures and we'll refer you to our website for the reconciliation of those measures to GAAP financial measures. Our press release with a copy of the financial statements and a copy of today's webcast presentation are available on our website within the Investor Relations section at cummins.com. With that out of the way, I will turn you over to our President and CEO, Jennifer Rumsey, to kick us off. Thank you. Thank you, Chris. Good morning. I'll start with a summary of our Q1 financial results, then I will discuss our sales and end market trends by region. I will finish with a discussion of our outlook for 2023. Mark will then take you through more details of both our Q1 financial performance and our forecast for the year. Before getting into the details on our performance, I wanna take a moment to highlight a few major events from the Q1. In March, Cummins announced the launch of Accelera by Cummins, a new brand for our new power business unit. Accelera provides a diverse portfolio of zero-emission solutions for many of the world's most vital industries, empowering customers to accelerate their transition to a sustainable future. Coupled with our brand announcement, Accelera shared that it will supply a 90-megawatt PEM electrolyzer system for Varennes Carbon Recycling plant in Quebec, Canada. This will be the largest PEM installation in North America and a key step in advancing the green hydrogen economy. Accelera and Blue Bird also announced we will increase production of electric school buses, more than doubling the zero-emission school buses that we've collectively put into operation over the next 12 to 18 months. Progress continues to be made on the planned separation of the Filtration business. In February, we announced that our Filtration business, Atmus Filtration Technologies, filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed underwritten IPO of newly issued common stock. Now I will comment on the overall company performance for the Q1 of 2023 and cover some of our key markets, starting with North America before moving on to our largest international markets. Demand for our products continued to be strong across all of our key markets and regions, with a slow improvement in China, resulting in record revenues in the Q1 of 2023. Revenues for the Q1 were $8.5 billion, an increase of 32% compared to the Q1 of 2022. Driven by the addition of Meritor, strong demand and improved pricing, EBITDA was a record $1.4 billion or 16.1% compared to $755 million or 11.8% a year ago. Q1 2023 results include $18 million of costs related to the separation of the Filtration business, while the Q1 of 2022 results include $158 million related to the suspension of operations in Russia and $17 million related to the separation of the Filtration business. Excluding these costs, EBITDA percentage increased in the Q1, driven by higher volumes and improved pricing, offset by supply chain and compensation cost increases. Research and development expenses also increased in the Q1 of 2023 as we continued to invest in products and technologies that will create advantages in the future, particularly in the Engine, Components, and Accelera segments. Gross margin dollars improved compared to the Q1 of 2022 as the benefits of higher volume, pricing, and the acquisition of Meritor exceeded the supply chain cost increases. As we noted previously, Meritor results are included in our overall guidance for 2023, and we will continue to provide updates on the progress of our value capture initiatives, which will be focused on the portion of the business within our Components segment. In the Q1, Meritor operating performance and financial results showed improvement, with sales of $1.3 billion and EBITDA of 9.4%. The improvement in profitability from the comparable EBITDA margin of 7.2% in 2022 was driven by improved pricing, operational improvements, and cost reduction activities aligned with our value capture initiatives. Our Q1 revenues in North America grew 39% to $5.1 billion, driven by the addition of Meritor and strong demand. Industry production of heavy-duty trucks in the Q1 was 76,000 units, up 17% from 2022 levels, while our heavy-duty unit sales were 29,000, up 27% from 2022. Industry production of medium-duty trucks was 33,000 units in the Q1 of 2023, an increase of 11% from 2022, while our unit sales were 30,000, up 13% from 2022. We shipped 39,000 engines to Stellantis for use in their Ram pickups in the Q1 of 2023, down 5% from 2022 levels. Engine sales to construction customers in North America decreased by 6% as volumes declined, partially offset by positive net pricing. Revenues for North America power generation increased by 14% as industrial and data center demand improved and supply chain constraints began to ease. Our international revenues increased by 24% in the Q1 of 2023 compared to a year ago, with the addition of Meritor and strong demand across most markets. Q1 revenues in China, including joint ventures, were $1.7 billion, an increase of 16% as on-highway markets began to recover. Industry demand for medium and heavy-duty trucks in China was 268,000 units, an increase of 2% from last year. Our sales in units, including joint ventures, were 46,000, an increase of 31%, due to increased penetration within our joint venture partners and new product launches to meet NS6 standards. The light-duty market in China was up 2% from 2022 levels at 476,000 units, while our units sold, including joint ventures, were 36,000 units, an increase of 6%. Industry demand for excavators in the Q1 was 57,000 units, a decrease of 26% from 2022 levels. The decrease in the market size is due to the change in emissions regulations and related adjustments in inventory levels. Our units sold were 9,000 units, a decrease of 8%. The decrease in the excavator market was offset by improved share with the new and expanded customer relationships and Q1 engine sales to replenish inventory levels at construction OEMs. Sales of power generation equipment in China decreased 28% in the Q1, primarily driven by a decline in data center activity. Q1 revenues in India, including joint ventures, were $752 million, an increase of 21% from Q1 a year ago. Industry truck production increased by 26%, while our shipments increased 7%. Power generation revenues increased by 30% in the Q1 as economic activity remained strong. In Brazil, our revenues increased 48%, driven by improved demand in most end markets. Let me provide our outlook for 2023, including some comments on individual regions and end markets. We have raised our forecast for total company revenue in 2023 to be up 15%-20% compared to our prior guidance of up 12%-17%. This guidance reflects an improved outlook in North America, including stronger demand for Meritor. We are forecasting higher demand in heavy-duty truck and power systems markets and expect aftermarket revenues to increase compared with 2022. We are increasing our forecast for heavy-duty trucks in North America to be 270,000-290,000 units in 2023 compared with our prior guide of 260,000-280,000. While supply chain constraints continue to limit our industry's collective ability to produce, end customer demand remains strong. In the North America medium-duty truck market, we are continuing to project the market size to be 125,000-140,000 units, flat to up 10% from 2022. Similar to heavy-duty, supply chain constraints continue to limit our ability to produce and fully meet end customer demand. Consistent with our prior guidance, our engine shipments for pickup trucks in North America are expected to be 140,000 to 150,000 in 2023, volume levels consistent with 2022. In China, we project total revenue, including joint ventures, to increase 16% in 2023, an improvement from the previous guidance of up 7% driven by share growth, better than expected construction volumes, and content increase. We project a 15%-25% improvement in the heavy and medium-duty truck demand, and a 10%-20% improvement in the demand in the light-duty truck market, coming off the low market levels in 2022, consistent with the prior guide. We expect China construction volume to be flat to down 10%, improved from our prior guidance of a decline of 25%-30%. While the market is adjusting to new emissions regulations, shipments to replenish inventory and export demand exceed our prior expectations. As we discussed previously, our guidance assumes a slow recovery and demand in China this year. We have continued to improve our presence in the region through the down cycle of 2022 and are well positioned for continued outgrowth. Our technological expertise and emissions experience positions us well to outgrow the market and support our partners. We are seeing this in 2023 with improved on-highway share now that NS6 is fully implemented, along with higher share in the construction market as we expand our partnerships. We also continue to ramp production and expand our presence in automated manual transmissions as our market share increases and the heavy duty market is increasingly adopting this technology. In India, we project total revenue, including joint ventures, to be up 1% in 2023. We expect industry demand for trucks to be flat to up 5% for the year. We project our major global high horsepower markets to remain strong in 2023. Sales and mining engines are expected to be down 5%-5%, consistent with the prior guidance. Demand for new oil and gas engines is expected to increase by 15%-25% in 2023, driven by increased demand in North America. Revenues in global power generation markets are expected to increase 10%-15%, driven by increases in non-residential construction and improvement in the data center market. For Accelera, we are expecting full year sales to be $350 million-$400 million, consistent with our prior guidance. Revenues are expected to approximately double from 2022 due to higher battery demand in North America school bus market and the additions of the electronic powertrain portion of the Meritor business and Siemens commercial vehicle business. The Electrolyzer market continues to gain momentum as well, with the near term forecast on expanding capacity to meet the growing demand. As mentioned on our previous call, Meritor results are included in our overall guidance for 2023. Within components, Cummins expects revenue contributed by the Meritor business for 2023 to be between $4.7 billion-$4.9 billion, an increase from $4.5 billion-$4.7 billion in our previous guidance. EBITDA is expected to be in the range of 10.3%-11% of sales, consistent with prior guidance. In summary, coming off a very strong Q1 with visibility to strong demand beyond the first half of the year, we have raised our sales growth outlook for the year to 15%-20%. We have also revised our forecast for EBITDA to be in the range of 15%-15.7% from our previous guidance of 14.5%-15.2%. Reflecting very strong incremental margins, we'll continue to invest for the future within our core business and Accelera. Demand in most of our core markets is strong, our pro-products are performing well. We are excited about the investments we are making in the future. During the quarter, we returned $222 million to shareholders in the form of dividends, consistent with our long-term plan to return approximately 50% of operating cash flow to shareholders. Strong execution resulted in record sales, EBITDA, net income, and earnings per share in the Q1, despite the continued challenging operating environment. I'm impressed and grateful for the commitment of our employees and leaders around the world who are delivering for our customers and generating strong financial performance at the same time. Our excellent results further enhance Cummins' ability to keep investing in future growth, bringing sustainable solutions that will protect the planet for future generations and return cash to our shareholders. Now let me turn it over to Mark. Thank you, Jennifer, good morning, everyone. We had a strong Q1 with organic revenue growth of 12%, record quarterly EBITDA, net income and earnings per share, and improved operating cash flow compared to a year ago. Given the strength of the Q1 results and improved outlook, we have raised our full-year expectations for sales and profitability. Let me go into some more details of the Q1 performance. Revenues were a record $8.5 billion, up 32% from a year ago. Sales in North America increased 39%, and in-international revenues increased 24%. Of the total increase, 20% was driven by the addition of Meritor. Organic growth was driven by strong demand for products in all segments and improved pricing. Foreign currency fluctuations negatively impacted sales by 2%. EBITDA was a record $1.4 billion or 16.1% of sales for the quarter, including $18 million of costs related to the planned separation of the filtration business. EBITDA for the Q1 of 2022 was $755 million or 11.8% of sales, including $158 million of costs related to the suspension of our operations in Russia and $17 million of costs related to the separation of the filtration business. Excluding these items, the higher EBITDA percent was driven by higher volumes and improved pricing, partially offset by increased investment in new products and capabilities. To provide clarity on the Q1 operational performance of our business and allow comparison to prior year and guidance, I'm excluding the costs related to the separation of the filtration business and the suspension of our operations in Russia in my following comments. Let's look a little more detailed by line item. Gross margin of $2 billion increased $440 million, but as a percent of sales decreased by 90 basis points as the benefits of higher volumes and improved pricing were offset by the dilutive effect of Meritor. Across our businesses, we saw mixed trends on input costs, with the engine business experiencing some increases while other segments saw some benefits in freight and commodity costs. Results for Meritor improved from prior quarters due to improved pricing and operational improvements. Selling admin and research expenses increased by $191 million, driven by the addition of Meritor, higher variable compensation, and research costs as we continue to invest in new products and capabilities to support future profitable growth. Selling admin and R&E decreased 110 basis points as a% of sales. Joint venture income of $119 million decreased $8 million from the prior year, with higher earnings from joint ventures operations offset by lower technology fees. In China, we did see higher earnings than anticipated as truck OEMs increased build rates to restock channels after a very challenging 2022. We are not yet seeing signs of sustained improvement in end user demand, however. Other income was $71 million, an increase of $123 million from a year ago. The improvement in other income is driven by a gain of $19 million in mark-to-market investments compared to a loss of $37 million a year ago. We also a year ago incurred an asset write-down of $36 million. Interest income and gains on foreign exchange also increased year-over-year in this line item. Interest expense increased by $70 million due to financing costs related to the acquisition of Meritor and rising interest rates. The all-in effective tax rate in the Q1 was 21.7%, including $3 million or $0.02 per diluted share of favorable discrete items. All in net earnings for the quarter was $790 million or $5.55 per diluted share, up 90% from the $418 million or $2.92 per diluted share a year ago. Our strong performance in Q1 continues our trend of raising performance over successive cycles. All in operating cash flow was an inflow of $495 million, $331 million higher than the Q1 last year, primarily due to higher earnings. I'll now comment on segment performance and our guidance for 2023. As a reminder, 2023 guidance includes the impact of Meritor all year and assumes that the operations of the filtration business will be included in our consolidated results for the full year. Segment results and guidance exclude the costs or benefits related to the separation of the filtration business as and when that occurs. Component segment revenue was a record $3.6 billion, an increase of 79%, while EBITDA decreased from 16.4% of sales to 14.6%, primarily driven by the addition of Meritor. Meritor revenues in the Q1 in the segment were $1.3 billion, and EBITDA was $120 million or 9.4% of sales up from last quarter and in line with our expectations. Components, we expect total 2023 revenues to increase between 32%-37%, up 4% from prior guidance, and EBIT margin to be in the range of 14.1%-14.8%, unchanged from three months ago. For the engine segment, Q1 revenues were a record $3.3 billion, an increase of 8% from a year ago. EBITDA was 15.3% flat with a year ago as the benefit from pricing was offset by higher material and variable compensation expenses. In 2023, we expect revenues for the engine business to grow between 2% and 7%, up 2% at the midpoint from our prior guide, driven by continued strength in the North American truck market and a lower pace of deceleration in the China construction market. 2023 EBITDA is projected to be in the range of 13.8%-14.5% of sales, flat with previous guidance. Our overall projections for the engine business include a modest tapering in both the top line and the bottom line in the Q4. In the distribution segment, revenues increased 14% from a year ago to a record $2.4 billion. EBITDA also increased to 13.9% of sales, compared to 9.9% a year ago, driven by higher volumes in both whole goods and aftermarket, as well as improved net pricing. We expect 2023 distribution revenues to be up 5%-10% and EBITDA margins in the range of 11.3%-12%. We've raised our guidance for sales by 3% at the midpoint and margins by 100 basis points. In the power systems business, we also had a strong quarter, with the revenues at $1.3 billion, up 16% year-over-year. EBITDA increased from 9.5% to 16.3% of sales driven by higher volumes, strong parts business, and higher pricing. In 2023, we expect revenues to be up 5%-10%, consistent with our prior guidance. EBITDA is projected to be approximately 13.7%-14.4%, an increase of 70 basis points from our prior projections. Accelera revenues more than doubled to $85 million, driven by higher demand for battery electric systems in the North American school bus market and the additions of the electric powertrain portion of Meritor and Siemens commercial vehicle business. Our EBITDA loss was $94 million as we continue to invest in the products, infrastructure, and capabilities to support strong future growth. In 2023, we anticipate Accelera revenues to increase to the range of $350 million-$400 million, and net losses to be in the range of $380 million at the midpoint, entirely consistent with our projections from three months ago. As Jen mentioned, given the strong performance in the Q1 and the outlook in our key regions and end markets, we are raising the full year company guidance. We now project 2023 company revenues to be up 15%-20%, a 3% increase from our prior guides. Company EBITDA margins are now expected to be approximately 15%-15.7%, up 50 basis points from our prior projections. Our effective tax rate is expected to be approximately 20%-22% in 2023, excluding any discrete items. Capital investments will be in the range of $1.2 billion-$1.3 billion consistent with our prior forecast as we continue to make the critical investments necessary to bring to market new products and capacity expansion to support future growth. We remain committed to our long-term goal of returning 50% of operating cash to shareholders over time. As we said last time, in 2023, our primary focus will be on dividends and strengthening our balance sheet by reducing debt for this year, whilst we continue to deliver profitable growth for our shareholders. In summary, we delivered record sales, EBITDA, net income, and earnings per share in a very strong Q1. Our customers are indicating stronger visibility into the second half of the year, giving us confidence to raise our forecast. We will continue to focus on delivering strong incremental margins in our core business, driving improvements in the performance of Meritor, reducing inventory levels, and investing in the products and technologies that position us to lead in the adoption of new technologies. There is one last matter I would like to bring to your attention. You will see in our Form 10-Q to be filed later today that we have updated our risk factor disclosure related to our ongoing discussions with the EPA and CARB on their review of our emission systems, most notably our pickup truck applications. We understand that these agencies are likely to propose resolving this matter by requesting, in the relatively near future, that we agree to one or more consent decrees and pay certain civil penalties. We are not able to estimate the amount of these penalties today. We anticipate that the amount is likely to be material. We look pro-forward to providing additional information on this topic when we reach a resolution. Thank you for joining us today. Now I'll turn it back over to Chris. Thank you, Mark. Out of consideration to others on the call, I would ask that you limit yourself to one question and a related follow-up. If you have an additional question, please rejoin the queue. Operator, we're ready for our first question. Thank you. The first question today is coming from Jerry Revich of Goldman Sachs. Please go ahead. Yes. Hi. good morning, everyone. Good morning, Jerry. Congratulations on the really strong quarter. I just wanted to ask for the power systems and distribution businesses, outstanding Q1, you know, the guidance is for margins to decline significantly off of the Q1 run rate. Can you just step through, is that just early in the year, and we wanna make sure the results are sustainable? Or are there any discrete items that you think declined sequentially for these two businesses? We've definitely been asking those questions internally as well, Jerry. Really strong results from both. I think pricing, of course, has been positive. I think in both those businesses, we haven't yet seen some of the cost increases that we anticipated for the full year. We had some beneficial moves in commodities that helped power systems, so we're not assuming that they continue. In distribution, of course, very strong parts margins and some lag effect before some of the cost increases take place. We're still expecting strong full-year results. Of course, we'll continue to push for improvement everywhere we can. Again, there was modest benefits from one or two corporate items that improved all of the segments. I think the main takeaway I want you to leave with, we're really pleased with the performance, in particular of those businesses. The distribution business now has established quite a track record of improving margins over time. We're really encouraged over the last three or four quarters by the progress in the power systems business. We'll keep pushing for more. I think one or two factors that we're not certain can continue through subsequent quarters. We are trying to drive down inventory a little bit, which, you know, may have some absorption impact in the power systems business a little bit. Super. Thank you, Mark. Can I just shift gears? Jennifer, you folks do a really good job of expanding your market share every time we have new regulations. I'm wondering, can you just expand on the comments that you folks made in the prepared remarks and just talk about the opportunities that you folks have in terms of potential market share gains as we do see rising content and rising complexity on these engines, particularly within the context of the EPA's electric vehicle plans laid out recently as well. Thanks. Yeah. Yeah. Great. Thanks for the question, Jerry. You know, as I commented and you saw start to come through in Q1, you know, our pattern of leveraging emissions regulation change to drive outgrowth and market position as well as added content is playing out in China now, following the launch of the NS6, we've seen that playing out in India with BS VI regulation, previously, and we do believe that there's continued opportunity, both the, you know, in the, in the engine space with future EPA regulations or the ultra-low NOx build rule to some degree, increase our position in the market, although of course, we have a strong position today in the U.S. market. Content expansion. That continues to be a tailwind and outgrowth opportunity, slow into some degree in North America on highway, but there continues to be upside there. You know, we are working clearly in our Accelera business to establish a position in the electrified powertrain and in particular position and key components and as well as integrated powertrain. Batteries, power electronics and motor generators, eAxles, fuel cells. We feel like we've got the right portfolio of technologies and are forming partnerships and getting experience in the market to position ourselves over time as that market starts to electrify. Thank you. The next question is coming from Tim Thein of Citi. Please go ahead. Thank you. Good morning. Mark, maybe just one on to start on the engine segment, you know, taking up the full year revenue outlook and as well as, JV income in the margin guidance, I believe was unchanged. What, what's working against the top line there, in terms of the profit or the EBITDA guidance? Yeah, in the near term, that's the one segment where we've actually faced more pressure on the cost front on input cost inflation. We made quite a bit of progress in some of the other areas. That's probably the biggest single factor in there. The JV income, we're not sure we've found the footing in the market yet. Tim, you know, it was better than we expected in Q1. It wasn't exceptional. It was just better than we expected. We're just not-- We don't have a clear sight into the improving end user demand. I mean, eventually that will pick up and that'll be an upside. We just don't have visibility to it right now. Basically that's the one business that's still wrestling with. I wouldn't say the other businesses don't have challenges, but that's the ones that continues to have some challenges on the supply side. That's the biggest factor. Got it. Okay. Then just on, wouldn't be a Cummins call without an update on China. You mentioned that, you know, on the on-highway side, you've seen a pickup from a production standpoint, but it's not translating yet on the retail side. What is the team, you know, seeing and hearing, not just on the on-highway, but maybe some of the other key end markets for you? You mentioned excavators, but maybe some of the other ones in China and just kind of what's baked in into the balance of the year for the China operations as a whole. Thank you. Yeah, I'll start and then Mark can add additional points that he'd like to. You know, as Mark alluded to in the on-highway business, we're forecasting and believe we're seeing a slow recovery in the market and that there was some inventory buildup in the, in the quarter, not significant increase in user demand. Slow recovery and opportunity for outgrowth, as we've already talked about. In off-highway, in construction, we have this emissions changeover that is negatively impacting the China market, less so than our previous guide because we've seen, again, some stocking up in the channel as well as higher export demand. We continue to see markets holding up in mining and oil and gas. You know, overall, a little bit of upside in on-highway, kind of a mixed story in off-highway construction and power gen. Thank you. The next question is coming from Jamie Cook of Credit Suisse. Please go ahead. Hi, good morning and congrats on a nice quarter. I guess, Mark, first question similar to engines on components too. We're increasing our sales guidance, marginally, but the margins are unchanged. What would be the reason behind that? Then Jen, I guess, you know, based on what you're saying, it sounds like you're seeing fairly good demand trends everywhere and your order book is pretty good for 2023. Are there any areas where you're sort of seeing red flags? In the event, you know, of a recession or downturn, you know, how do we think about decrementals or is there any other self-help that Cummins could do to sustain higher earnings, assuming the macro weakens? Thank you. Yeah, I think, Jamie, components continues to do well. The main factor is just really the mix in the business. The underlying businesses are performing well. Again, not such a big help from price cost in this segment relative to power systems and components. I think really it's really some minor changes in the mix going forward. We've obviously got strong North America. Meritor continues to improve, but it's still dilutive to that overall segment, but no fundamental. I'll just add, I mean, from a, you know, from a margin performance perspective, we're really focused on improving the Meritor business performance consistent with what we said when we did the acquisition, driving the incremental margin improvement across our other core businesses and then scaling up, investing in a sustainable way and moving towards break even in the Accelera business. You know, we're paying attention to each of those items to track that we're driving towards our targets. In terms of the broader picture, Jamie, to your question, you know, The end market demand, the order boards that, you know, our customers have, the comments that we continue to get from end customers remains fairly strong. Our confidence, as we said, is growing, you know, into the second half of the year. We continue to watch these broader macroeconomic indicators, you know, and understand that we're in a cyclical business. While this hasn't been a typical cycle because of the supply constraints, you know, we are preparing, you know, and we'll take action to deliver incremental margins and outperform through the down cycle as we have in the past. Already this year, you know, we are making investments in key areas for our future, but also limiting investment and headcount growth in other areas and continuing to monitor plant operations and operate at the level appropriate for the demand that we're seeing. We'll continue to watch that closely and adjust as we need to. Okay, thank you. I appreciate it. Appreciate it. Thank you. The next question is coming from David Rasso of Evercore ISI. Please go ahead. Hi. Sort of picking up on trying to look beyond 2023. I'm just curious, the conversations you're having with your off-highway customers for initial thoughts on what they need from you in 2024 relative to on-highway. Just curious if you have any distinguishing features between those different conversations? David, is it in the construction area or more in the high horsepower markets? Just to make sure we're answering your question correctly. Open question on purpose. Take it all in. Anything off-highway versus on-highway. Yeah. I would say we haven't given guidance, of course, for 2024. We haven't seen any weakening in the construction markets in North America, similar to what we're seeing in on-highway, though we're, you know, watching this one closely. I think it's in a probably a very similar state as we look at construction versus on-highway. Cautious probably as we move into the Q4, but good visibility now that that's probably well into the Q3 now. I'll just add, of course, in China, you talked about the emissions changeover. There's a dynamic in that market and a question on, you know, does China do any action in the economy there that we'll pay attention to. You know, in power systems, same in terms of broader macroeconomic indicators and watching that. You know, we do have places where we're starting to take orders into 2024, and so it's a space that we're just watching closely at this point. I appreciate that. People also are just curious about truck historically hasn't been the best market for maintaining price, but it's also been a pretty unique pricing power, era we're living through right now. I'm just curious, how are you thinking about or what are the early conversations like for 2024? I'm not saying if you have to give back price, there can't be commensurate offset and lower cost for you, but just trying to think about pricing in isolation. What are the initial conversations for 2024, given the pricing levels we've been coming up to the last, you know, 12, 18 months? We have emissions changeover coming in some of our markets in 2024, so of course that's a factor. What I would say is, you know, we have long-term agreements with some of our customers. You know, we price, you know, more regularly with some other customers in the market. We're continuing to pay attention to what's going on with price cost. As Mark said, it's still a mixed picture, we're committed to continuing to deliver strong returns and stay on top of price cost as that moves. Right now, this year, we're seeing improvements in some areas, and we're still seeing inflationary pressure in other areas. It's a little bit difficult to see into 2024. I'm just curious, any price concessions? When we hear some component suppliers or I mean, they were even being asked for concessions mid-year because I guess the answer would be why not if you're the OEM. I'm just curious more kind of structural for 24, are we getting some price concession requests? Should that be base case, and then it's about getting the cost down even more ideally? I think there's a lot of factors. A lot of factors go into pricing, David, including input costs, agreements with customers, supplier availability, a lot of those things. That's not a main topic of conversation right now at all. I think the thing we're most thinking about is the how long does this cycle run on and off-highway. Right now, customers are telling us their confidence for the rest of the year is, on average, has gone up, not stayed the same. We recognize and appreciate the same questions really about demand level for 2024. That's our radars mostly upon any signals around demand. That's gonna be the biggest driving factor of our performance. Thank you. The next question is coming from Rob Wertheimer of Melius Research. Please go ahead. Hi. almost just following up on that question with maybe a slightly different slant. Your, your businesses where you, I think have more pricing control and distribution power systems, you know, did really well on margin. In the OEMs that you serve and on-highway truck have had a really good quarter as well. Just overall, is your general sense that your pricing to those OEMs and components should catch up over time and there's still multi-year runway to go, or is that too strong? First of all, you know, we're not aware of all the dynamics of the OEM pricing. That's really their business. We really have to look at the costs and the, you know, the performance of our business. The other thing that's going on within our margins, of course, quite significant investment. We've got a lot of new products that we're excited about and some of our customers are excited about. The engineering costs have elevated. That is the other factor that's really particularly in the engine and components. I mean, Accelera, everything's new and doesn't come with an enormous amount of revenue today. In the engines and components, we have secured more business for the future, right? We plan to secure even more with the new technologies that we're bringing forwards. With price costs positive for this year, that's clearly a factor in our results. Where we can get pricing, you know, we will do that. Aftermarket is obviously a stronger source of pricing for us generally, Rob. I think looking at the margins, you've got to take into effect how much are we investing, because I think how much others are investing is also a signal, you know, about, you know, who's investing for more growth. Right now we are putting more into the engineering across the business because we're excited about the future. That's a helpful answer. Thank you. If I can, I think I've asked this before and I'm not easy to answer, but in Accelera, how should we think about as revenues start to ramp, what margins do? I mean, are project level economics, you know, gonna be consistently positive on the margin line and maybe invest more in R&E? Are we still, you know, are you still bidding loss making, you know, deliveries, as your volumes to come through? How do we sort of think about what the underlying dynamics are of the margin there? I'll stop. I think there have been some higher fixed costs on the battery electric side. On the electrolyzers, you know, we are gonna expect to have positive gross margins as we ramp up. We've stated previously that based on our current strategy, you know, we're aiming to get at or around EBITDA neutral by 2027. Yes, as revenues go up, we're going to expect to see those losses clearly come down over time. We're building momentum on the sales, particularly yesterday, the Q1, most of the sales growth was on battery electric, excuse me. As we've talked about recently, the electrolyzer backlog is really, I won't use the word accelerate, has picked up quite a lot. We're, we're bullish about that. Yes, very focused on the margins as the volumes come up. The battery is a little bit higher fixed cost right now. Thank you. The next question is coming from Tami Zakaria of J.P. Morgan. Please go ahead. Hi, this is Ishan on behalf of Tami. Congratulations on the great print. My first question is, are you preparing to ramp production, assuming 2025 or 2026 could be pre-buy years ahead of the emission regulations in 2027? If I may ask a second on that as well. Are you able to pass on cost inflation as anticipated or are customers pushing back? Thanks. Yeah. What I'd say is we are making planned investments because we're irrespective of the economic cycle, we're expecting to pick up more business or we're increasing capacity in parts of our business and launching new products. But the nature of our business is such that we have to be prepared to ramp up and ramp down, you know, based on the economic cycle. It's hard to predict with great certainty two or three years out. But as a general statement, yes, our CapEx is up this year because we're kind of bullish on our longer term prospects. Then on price and cost, of course, it's always competitive and challenging. I think we're all aware that there's been significant inflation across the industrial space over time, and that's what's really necessitated the price increases. Quite frankly, earlier on in the cycle, late in 2021, it took us a while before we were able to increase prices. To an extent, we've been kind of catching up with the trends there. Yeah. That's an ongoing. You saw some of that Meritor specifically reflected in the EBITDA improvement. Thank you. The next question is coming from Steven Fisher of UBS. Please go ahead. Thanks. Good morning. Wanted to just follow up, if I could, on the EPA and CARB legal situation that you mentioned. If there's any color on the potential timing of resolution that you can offer. I know this is obviously sensitive, and I suspect you don't want to negotiate with yourself on a conference call, but just, you know, how to think about framing the size of what this might be. Is this something that might be in sort of the $multi hundreds of millions? You know, is this something that, you know, you could fund within your just ongoing cash flow? Might it affect any other investment plans or spending plans that you might have? First, thanks for the question. I do wanna start by saying that Cummins is fully committed to emissions compliance. We have been, and will continue to cooperate with agencies all along and work through this matter to the best of our abilities. You know, our updated disclosure today is consistent with what we've done since we first announced our voluntary internal review in 2019 of disclosing transparently throughout this process. You know, as Mark said, we think that we are nearing the end. It's premature to speculate, though, exact timing or exact amount at this point. We feel like the business is well positioned in a strong financial position and continuing to generate strong returns. Okay. That's helpful. I'm wondering just to follow up on. Some of the price versus cost discussions, are you able to actually quantify, the price versus cost, kind of cadence for this year and sort of the margin cadence for, the rest of the year? I'm thinking about the whole company, but if it makes sense to talk about, you know, highlight any specific segments, that would be helpful. Thank you. Well, in Q1, we were about 2% net positive between price and cost. As we said in the earlier remarks, it very much varied by business. In fact, you can see it since you're asking a lot of questions about the different margins in the business, you can see that. I mean, the pricing's pretty much set. The aftermarket's one area where we have the potential to adjust prices more frequently. That's the nature of the aftermarket business. Don't think that's unique to Cummins. Pretty much I think the course is largely set for this year, then it's really, you know, looking for efficiencies in every part of operations, working with customers, working with suppliers. You know, we all enjoy it when the costs are lower. That's just not what we've been. It's been an unprecedented period of supply constraints, some of which, frankly, we're not out of yet. It's been a period of unprecedented complexity and very, very robust demand. We've continued to grow our business faster than some of the underlying markets. That's been a positive, but also been a lot of work for our supply chain teams. I think largely, you know, it's gonna be a net positive for this year, Steve. I don't imagine dramatic changes quarter to quarter. The commodities can ebb and flow a little bit, and we saw some benefit copper prices in the power systems business. Again, we're using hedging and other techniques to try and smooth out those costs. I don't expect fundamental changes to be the reason for variation in earnings. We're really focused on this demand side. Right now, our confidence has gone up based on the confidence of our customers through the rest of this year. Just, you know, to keep in mind as context here, over the last couple of years, as we saw that rapid increase in demand, there's really been two factors at play with the inflationary pressure and supply challenges. One is cost versus our ability to pass that on in price, and we made a lot of progress through 2022, and you see that continue in 2023 to offset the inflationary pressure. Then it's operating leverage. Because of all the supply disruptions we didn't see in those early quarters, the normal operating leverage that we would. That has also improved and is reflected in some of the numbers that you see in Q1. Just to give you a sense of what that's like for us now in our Rocky Mount Engine Plant, which produces mid-range engines. Last year, our on-time delivery from our suppliers was at 60%. In Q1, it was at 70%, historically we would expect something closer to 80%. That plays out in operating efficiency for us in our plant. It's improved. There's still a little bit of opportunity. At running at the rate that we are continuing to be constrained by a couple of our supplier components. I'm shocked we've made it this far into the call without anybody asking me about the supply chain. Yes, chips and electronics have improved, but they're still operating at capacity, which means small disruption has an impact. Overall underlying operating leverage is improved. Thank you. The next question is coming from Matt Elkott of TD Cowen. Please go ahead. Good morning. Thank you. On the rail side, wondering if you see any potential long-term content opportunities from the new locomotive rule that California issued on Thursday, which includes mandates on freight, passenger, and industrial locomotives. You know, if it stands and goes national, there could be a big build cycle as well as a lot of new technology upgrades. Is there any opportunity for you guys from that? You know, it's still early for me to add a lot of response here. We, of course, now are in the passenger rail business with our 95-liter engine. We have a Tier 4 compliant product. We've also entered the rail market with certain customers with fuel cells. We'll continue to explore opportunities with the product offerings that we have in that market. Got it. Just one higher level question in light of your strong results and improved outlook. Do you see this, you know, bifurcation between your strength and the strength of the machinery sector as a whole on one hand and the rest of the economy being weak? Is that merely a function of just catching up to demand from the last, you know, two and a half years or so, while disruptions hampered production levels? Is this, yo u mentioned, Jen, that this is not your a typical cycle. Is there something more than that, more than just catching up to demand? Well, I mean, definitely what you said is a factor. Limitations in supply and high use, right? High, you know, at high use. New products are more fuel efficient. There's still a lot of factors that are causing customers to, you know, in commercial trucking to continue to wanna buy. You've, you know, there's investments in infrastructure that's driving demand and construction. There's, you know, growing investments in the cloud that's driving data center demand. There are some, you know, specific indicators for our business that maybe are decoupled from the broader economy. That said, you know, the broader economy does have some influence, which is why we continue to be cautious about where we're making investments and increasing our headcount. Yeah. Well, we do sit as a, just like you, an observer of other parts of the economy. Sometimes you wonder at the rate of hiring and resources being added into new areas, and then you get retrenchment. Sometimes it's, you know, that's very different from the business model that we operate in. We work with very efficient customers. A lot of efficiency is the focus, right? Even when it's growing or going through strong cycles. In other sectors of the economy, you see some very different dynamics that, yeah, just don't translate well to what we experience. Thank you. Ladies and gentlemen, unfortunately, we have run out of time for questions. I would like to turn the floor back over to Mr. Clulow for closing comments. Thanks very much, Donna. Before we conclude, I want to turn it back over to Jennifer for a few closing comments. Yeah. Thanks, Chris. You know, just to wrap up today, I wanna, again, recognize the strong performance of the company in the Q1, delivering record revenue, EBITDA, net income, and earnings per share. We're in a strong financial position and are confident in our strategy, and our leaders in the future of the company and look forward to continuing to update you on our progress in future calls. Thank you. That concludes our teleconference for the day. Thank you all for participating and your continued interest. As always, the Investor Relations team will be available for questions after the call. Have a good day. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time or log off the webcast and enjoy the rest of your day.