CUMMINS INC

Previous wording

•any adverse consequences resulting from entering into agreements with the U.S. Environmental Protection Agency, California Air Resources Board, the Environmental and Natural Resources Division of the Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements), including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions;

Current wording

•any adverse consequences resulting from entering into agreements with the U.S. Environmental Protection Agency, California Air Resources Board, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements), including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions;

Previous wording

We are a global power solutions leader comprised of five business segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems, including battery, fuel cell and electric power technologies and hydrogen production technologies. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc., Traton Group, Daimler Trucks North America and Stellantis N.V. We serve our customers through a service network of approximately 650 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.

Current wording

We are a global power solutions leader comprised of five business segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems, including battery, fuel cell and electric power technologies and hydrogen production technologies. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc., Traton Group, Daimler Trucks AG and Stellantis N.V. We serve our customers through a service network of approximately 650 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.

Previous wording

As disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, we operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs and trade disruptions (such as embargoes, sanctions and export controls), could adversely impact the demand for our products and our competitive position. The escalating tariff environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. This volatility accelerated late in the first quarter of 2025. We are proactively taking steps in our supply chain to mitigate impacts where possible and we are working with our customers to pass through incremental costs. This escalation in market volatility did not have a material impact on our first quarter results, but may materially and adversely affect our results of operations, financial condition and cash flows in the future. We will continue work to minimize the related impacts to our business to the extent possible. See the "OUTLOOK" section for a discussion of the potential tariff impacts for the remainder of 2025.

Current wording

As disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, we operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs and trade disruptions (such as embargoes, sanctions and export controls), could adversely impact the demand for our products and our competitive position. The uncertain tariff environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. Our primary risks include reduced global movement of goods impacting freight activity, increased costs for suppliers and end-users and uncertainty around the availability of supply, all of which could contribute to a decline in business confidence, a reduction in demand for our products and increased product costs. Our tariff related costs increased during the second quarter. We have and continue to look for ways to mitigate these costs including discussions with our suppliers, sourcing alternatives and agreements with our customers to recover these costs. The financial impact of tariffs, net of mitigation actions, was immaterial to our profitability and operating cash flows in the second quarter of 2025. We expect tariff-related costs and recoveries to increase from second quarter levels, assuming that the current level of tariffs remain in place. The continued tariff costs, the effectiveness of our mitigation efforts and the resulting market volatility could materially and adversely affect our results of operations, financial condition and cash flows in the future. We will continue work to minimize the related impacts to our business to the extent possible. See the "OUTLOOK" section for a discussion of the potential tariff impacts for the remainder of 2025.

Previous wording

Net income attributable to Cummins Inc. was $824 million, or $5.96 per diluted share, on sales of $8.2 billion for the three months ended March 31, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $2.0 billion, or $14.03 per diluted share, on sales of $8.4 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were driven by the absence of the $1.3 billion gain recognized on the divestiture of Atmus, partially offset by improved gross margin. The increase in gross margin was primarily due to favorable pricing and lower material costs, partially offset by the absence of Atmus sales, lower sales and unfavorable mix. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Net income attributable to Cummins Inc. was $1.7 billion, or $12.38 per diluted share, on sales of $16.8 billion for the six months ended June 30, 2025, versus the comparable prior year period net income attributable to Cummins Inc. of $2.7 billion, or $19.42 per diluted share, on sales of $17.2 billion. The decreases in net income attributable to Cummins Inc. and earnings per diluted share were driven by the absence of the $1.3 billion gain recognized on the divestiture of Atmus in the first quarter of 2024 and lower demand in on-highway truck markets, partially offset by the strong growth in power generation markets, especially data center and commercial markets, favorable non-tariff pricing mainly related to the launch of updated engine products in light-duty markets and lower compensation expenses. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

Worldwide revenues decreased by 3 percent in the three months ended March 31, 2025, compared to the same period in 2024, primarily due to the divestiture of Atmus and weaker demand in on-highway truck markets, partially offset by higher demand in power generation markets, especially data center and commercial markets. International sales (excludes the U.S. and Canada) declined 5 percent primarily due to lower sales in Latin America and Asia Pacific, partially offset by higher sales in China. The decrease in international sales was primarily due to the divestiture of Atmus and lower drivetrain and braking systems sales driven by a weaker European truck market, partially offset by higher power generation demand. Net sales in the U.S. and Canada declined 1 percent primarily due to the divestiture of Atmus and lower demand in on-highway truck markets, partially offset by higher sales in power generation markets, especially data center and commercial markets. Unfavorable foreign currency fluctuations impacted international sales by 4 percent (primarily the Brazilian real, Euro and Indian rupee). See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Worldwide revenues decreased by 2 percent in the six months ended June 30, 2025, compared to the same period in 2024, mainly due to weaker demand in on-highway truck markets and the divestiture of Atmus, partially offset by higher demand in power generation markets, especially data center and commercial markets. Net sales in the U.S. and Canada declined 3 percent mainly due to lower demand in on-highway truck markets and the divestiture of Atmus in the first quarter of 2024, partially offset by higher sales in power generation markets. International sales (excludes the U.S. and Canada) remained flat primarily due to lower sales in Latin America, offset by higher sales in China. Weaker demand in on-highway truck markets and the divestiture of Atmus were offset by higher power generation demand. Unfavorable foreign currency fluctuations impacted international sales by 2 percent (primarily the Brazilian real and Indian rupee). See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

The following table contains sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by operating segment for the three months ended March 31, 2025 and 2024. See NOTE 15, "OPERATING SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Current wording

The following tables contain sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by reportable segment for the three and six months ended June 30, 2025 and 2024. See NOTE 15, "REPORTABLE SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Previous wording

We used $3 million of cash in operations for the three months ended March 31, 2025, compared to generating $276 million for the comparable period in 2024. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows.

Current wording

We generated $782 million in cash from operations for the six months ended June 30, 2025, compared to using $575 million for the comparable period in 2024. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows.

Previous wording

Our debt to capital ratio (total capital defined as debt plus equity) at March 31, 2025, was 38.5 percent, compared to 38.4 percent at December 31, 2024. The increase was primarily due to higher debt balances at March 31, 2025, partially offset by increased equity balances from strong earnings since December 31, 2024. At March 31, 2025, we had $2.2 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $1.7 billion of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.

Current wording

Our debt to capital ratio (total capital defined as debt plus equity) at June 30, 2025, was 38.7 percent, compared to 38.4 percent at December 31, 2024. The increase was primarily due to higher debt balances at June 30, 2025, partially offset by increased equity balances from strong earnings since December 31, 2024. At June 30, 2025, we had $3.1 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $353 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.

Previous wording

In the first quarter of 2025, we entered into a series of interest rate lock agreements including 5-year and 10-year locks, with notional amounts totaling $200 million and $400 million, respectively, to reduce variability of cash flows of interest payments on debt forecast to be issued in 2025 to replace our senior notes at maturity and for other general purposes. See NOTE 13, "DERIVATIVES," to our Condensed Consolidated Financial Statementsfor additional information.

Current wording

In the first six months of 2025, we entered into a series of interest rate lock agreements including 5-year and 10-year locks, with notional amounts totaling $200 million and $500 million, respectively, to reduce variability of cash flows of interest payments on debt forecasted to be issued in 2025 to replace our senior notes at maturity and for other general purposes. In the second quarter of 2025, with the issuance of senior unsecured notes, we settled all $700 million of interest rate lock agreements. The immaterial net losses from settlement will be amortized over the remaining term of the related debt. See NOTE 13, "DERIVATIVES," to our Condensed Consolidated Financial Statementsfor additional information.

Previous wording

In the first three months of 2025, the investment gain on our U.S. pension trusts was 1.6 percent, while our U.K. pension trusts' loss was 1.3 percent. We anticipate making additional defined benefit pension contributions during the remainder of 2025 of $39 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our 2025 annual net periodic pension cost to approximate $79 million.

Current wording

In the first six months of 2025, the investment gain on our U.S. pension trusts was 4.6 percent, while our U.K. pension trusts' loss was 0.8 percent. We anticipate making additional defined benefit pension contributions during the remainder of 2025 of $22 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our 2025 annual net periodic pension cost to approximate $79 million.

Previous wording

Net sales for the three months ended March 31, 2025, decreased by $229 million versus the comparable period in 2024. The primary drivers were as follows:

Current wording

Net sales for the three months ended June 30, 2025, decreased by $153 million versus the comparable period in 2024. The primary drivers were as follows:

Previous wording

•Engine segment sales decreased 5 percent largely due to lower demand in North American heavy-duty truck markets.

Current wording

•Engine segment sales decreased 8 percent largely due to lower demand in North American heavy-duty truck markets.

Previous wording

•Power Systems segment sales increased 19 percent primarily due to higher demand in power generation markets, especially in China and North America.

Current wording

•Power Systems segment sales increased 19 percent primarily due to higher demand in power generation markets, especially in North America and China.

Previous wording

•Unfavorable foreign currency fluctuations of 2 percent of total sales, primarily in the Brazilian real, Euro and Indian rupee.

Current wording

•Unfavorable foreign currency fluctuations of 1 percent of total sales, primarily in the Brazilian real and Indian rupee

Previous wording

Sales to international markets (excludes the U.S. and Canada), based on location of customers, for the three months ended March 31, 2025, were 38 percent of total net sales compared with 39 percent of total net sales for the comparable period in 2024. A more detailed discussion of sales by segment is presented in the “OPERATING SEGMENT RESULTS” section.

Current wording

Sales to international markets (excludes the U.S. and Canada), based on location of customers, for the three and six months ended June 30, 2025, were 40 percent and 39 percent of total net sales compared with 37 percent and 38 percent of total net sales for the comparable periods in 2024. A more detailed discussion of sales by segment is presented in the “REPORTABLE SEGMENT RESULTS” section.

Previous wording

Gross margin increased $114 million for the three months ended March 31, 2025, and increased 2.1 points as a percentage of net sales versus the comparable period in 2024. The increases in gross margin and gross margin as a percentage of sales were primarily due to favorable pricing and lower material costs, partially offset by the absence of Atmus sales, lower sales and unfavorable mix. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Gross margin increased $202 million for the six months ended June 30, 2025, and increased 1.8 points as a percentage of sales versus the comparable period in 2024. The increases in gross margin and gross margin as a percentage of sales were primarily due to favorable non-tariff related pricing mainly due to the launch of updated engine products in light-duty markets, partially offset by lower volumes and the absence of Atmus sales. The net impact of tariff costs and related recoveries was immaterial for the six month period ended June 30, 2025. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

The provision for base warranties issued as a percent of sales for the three months ended March 31, 2025, was 1.9 percent compared to 1.9 percent for the comparable period in 2024.

Current wording

The provision for base warranties issued as a percentage of sales for the three and six months ended June 30, 2025, was 1.9 percent and 1.9 percent, respectively, compared to 1.9 percent and 1.9 percent for the comparable periods in 2024.

Previous wording

Selling, general and administrative expenses decreased $68 million for the three months ended March 31, 2025, and decreased 0.6 points as a percentage of net sales versus the comparable period in 2024. The decreases were mainly due to lower compensation and consulting expenses, primarily due to the divestiture of Atmus. Compensation and related expenses included salaries, fringe benefits and variable compensation. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Selling, general and administrative expenses decreased $49 million and $117 million and decreased 0.4 and 0.5 points as a percentage of net sales, respectively, for the three and six months ended June 30, 2025, versus the comparable periods in 2024. The decreases were mainly due to lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Previous wording

Research, development and engineering expenses decreased $25 million for the three months ended March 31, 2025, and decreased 0.2 points as a percentage of net sales versus the comparable period in 2024. The decreases were mainly due to lower compensation expenses, primarily due to the divestiture of Atmus. Compensation and related expenses included salaries, fringe benefits and variable compensation. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Research, development and engineering expenses decreased $22 million and $47 million and decreased 0.2 and 0.1 points as a percentage of net sales, respectively, for the three and six months ended June 30, 2025, versus the comparable periods in 2024. The decreases were mainly due to lower compensation expenses. Compensation and related expenses included salaries, fringe benefits and variable compensation.

Previous wording

Equity, royalty and interest income from investees increased $8 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to higher royalty and interest income from investees and increased earnings at Chongqing Cummins Engine Co., Ltd., partially offset by the absence of joint venture earnings from the divestiture of Atmus and lower earnings at Sistemas Automotrices de Mexico S.A. de C.V. See NOTE 4, "EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES," and NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Equity, royalty and interest income from investees increased $23 million for the six months ended June 30, 2025, versus the comparable period in 2024, mainly due to the absence of a joint venture consolidated in the first quarter of 2025 with prior year losses, higher royalty and interest income from investees and increased earnings at Chongqing Cummins Engine Co., Ltd. and Beijing Foton Cummins Engine Co., Ltd., partially offset by lower earnings at Sistemas Automotrices de Mexico S.A. de C.V., the absence of joint venture earnings from the divestiture of Atmus and higher start-up costs from Amplify Cell Technologies LLC. See NOTE 4, "EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES," and NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Previous wording

Interest expense was $77 million for the three months ended March 31, 2025, versus $89 million for the comparable period in 2024. The $12 million decrease was primarily due to lower average debt balances and lower weighted-average interest rates.

Current wording

Interest expense was $87 million and $164 million for the three and six months ended June 30, 2025, versus $109 million and $198 million for the comparable periods in 2024. Interest expense decreased $22 million and $34 million, respectively, primarily due to lower weighted-average interest rates, partially offset by higher debt balances.

Previous wording

Our effective tax rate for 2025, excluding discrete items, is expected to approximate 24.5 percent.

Current wording

Our effective tax rate for 2025 is expected to approximate 24.5 percent, excluding any discrete items that may arise and potential adjustments for the "One Big Beautiful Bill Act" signed into law on July 4, 2025.

Previous wording

The three months ended March 31, 2025, contained net favorable discrete tax items of $7 million, primarily due to $8 million of favorable share-based compensation tax benefits, partially offset by $1 million of other unfavorable tax items.

Current wording

The three months ended June 30, 2025, contained net favorable discrete tax items of $3 million primarily due to $4 million of favorable adjustments for uncertain tax positions, partially offset by $1 million of other unfavorable tax items.

Previous wording

The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

The six months ended June 30, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $30 million favorable primarily due to adjustments related to audit settlements and share-based compensation tax benefits.

Previous wording

Noncontrolling interests eliminate the income or loss attributable to non-Cummins ownership interests in our consolidated entities. Noncontrolling interests in income of consolidated subsidiaries for the three months ended March 31, 2025, decreased $9 million versus the comparable period in 2024, primarily due to the inclusion of noncontrolling interest associated with Atmus through March 18, 2024, and lower earnings at Cummins India Limited. See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.

Current wording

Noncontrolling interests eliminate the income or loss attributable to non-Cummins ownership interests in our consolidated entities. Noncontrolling interests in income of consolidated subsidiaries for the three and six months ended June 30, 2025, increased $12 million and $3 million versus the comparable periods in 2024. The increase for the three months ended June 30, 2025, was primarily due to higher earnings at Cummins India Limited. The increase for the six months ended June 30, 2025, was mainly due to higher earnings at Eaton Cummins Joint Venture and Cummins India Limited, partially offset by the divestiture of Atmus and losses from a former joint venture consolidated in the first quarter of 2025.

Previous wording

The foreign currency translation adjustment was a net gain of $117 million for the three months ended March 31, 2025, compared to a net loss of $60 million for the three months ended March 31, 2024, driven by the following:

Current wording

The foreign currency translation adjustment was a net gain of $197 million and $314 million, for the three and six months ended June 30, 2025, respectively, compared to a net loss of $83 million and $143 million, for the three and six months ended June 30, 2024, respectively, driven by the following:

Previous wording

Our reportable operating segments consist of the Engine, Components, Distribution, Power Systems and Accelera segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBITDA as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable operating segments. We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Segment amounts exclude certain expenses not specifically identifiable to segments. See NOTE 15, "OPERATING SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Current wording

Our reportable segments consist of the Engine, Components, Distribution, Power Systems and Accelera segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBITDA as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable segments. We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Segment amounts exclude certain expenses not specifically identifiable to segments. See NOTE 15, "REPORTABLE SEGMENTS," to our Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Previous wording

Following is a discussion of results for each of our operating segments.

Current wording

Following is a discussion of results for each of our reportable segments.

Previous wording

Engine segment EBITDA for the three months ended March 31, 2025, increased $44 million versus the comparable period in 2024, primarily due to favorable pricing related to the launch of updated products in light-duty markets, partially offset by lower volumes and unfavorable mix.

Current wording

Engine segment EBITDA for the six months ended June 30, 2025, decreased $1 million versus the comparable period in 2024, due to lower volumes, primarily offset by favorable pricing related to the launch of updated products in light-duty markets.

Previous wording

•Drivetrain and braking systems sales decreased $176 million primarily due to lower demand in North America and Western Europe.

Current wording

•Drivetrain and braking systems sales decreased $161 million primarily due to lower demand in North America and lower sales in India due to changes in our business model.

Previous wording

Components segment EBITDA for the three months ended March 31, 2025, decreased $91 million versus the comparable period in 2024, mainly due to lower volumes and the divestiture of Atmus, partially offset by decreased product coverage costs and lower material costs.

Current wording

Components segment EBITDA for the six months ended June 30, 2025, decreased $100 million versus the comparable period in 2024, primarily due to lower volumes and the divestiture of Atmus, partially offset by favorable product coverage costs, decreased compensation expenses and lower material costs.

Previous wording

Distribution segment EBITDA for the three months ended March 31, 2025, increased $82 million versus the comparable period in 2024, primarily due to increased power generation volumes in North America.

Current wording

Distribution segment EBITDA for the six months ended June 30, 2025, increased $213 million versus the comparable period in 2024, primarily due to increased power generation volumes in North America, favorable pricing, decreased compensation expenses and lower material costs.

Previous wording

•Power generation sales increased$148 million mainly due to higher demand in China, North America and Western Europe.

Current wording

•Power generation sales increased $366 million mainly due to higher demand in North America and China.

Previous wording

•Industrial sales increased $78 million primarily due to stronger demand in global mining markets (including higher aftermarket sales) and improved defense sales in North America.

Current wording

•Industrial sales increased $106 million primarily due to stronger demand in global mining markets (including higher aftermarket sales) and higher demand in rail markets (including higher aftermarket sales), especially in India.

Previous wording

Power Systems segment EBITDA for the three months ended March 31, 2025, increased $152 million versus the comparable period in 2024, mainly due to higher volumes and favorable pricing.

Current wording

Power Systems segment EBITDA for the six months ended June 30, 2025, increased $281 million versus the comparable period in 2024, mainly due to higher volumes and favorable pricing.

Previous wording

Accelera segment sales for the three months ended March 31, 2025, increased $10 million versus the comparable period in 2024 primarily due to improved sales of electrified powertrains and electrolyzers.

Current wording

Accelera segment sales for the six months ended June 30, 2025, increased $4 million versus the comparable period in 2024, primarily due to improved sales of electrified powertrains, partially offset by lower sales for electrolyzers.

Previous wording

The increase in tariffs has impacted the global movement of goods and introduced uncertainty around future demand for capital goods. Given the breadth, severity and uncertainty about the duration of global tariffs it is not possible to confidently predict market demand for the remainder of this year. We are proactively taking steps in our supply chain to mitigate impacts where possible and we are working with our customers to pass through incremental costs.

Current wording

The uncertain tariff environment has created significant market volatility while introducing uncertainty around future demand for capital goods as well as potential impacts to our supply chain and our related product costs. Given the breadth, severity and uncertainty about the duration of global tariffs, our outlook presented below could be negatively impacted by tariff related volatility. We are proactively taking steps in our supply chain to mitigate impacts where possible and we are working with our customers to pass through incremental costs.

Previous wording

Net cash used in operating activities increased $279 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to higher working capital requirements of $375 million. The higher working capital requirements resulted in a cash outflow of $981 million compared to a cash outflow of $606 million in the comparable period of 2024, mainly due to unfavorable changes in accounts and notes receivable.

Current wording

Net cash provided by operating activities increased $1.4 billion for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to lower working capital requirements of $1.2 billion. The lower working capital requirements resulted in a cash outflow of $1.3 billion compared to a cash outflow of $2.5 billion in the comparable period of 2024, mainly due to $1.9 billion of payments in 2024 required by the Settlement Agreements, partially offset by unfavorable changes in accounts and notes receivable.

Previous wording

Net cash used in investing activities decreased $160 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to the absence of cash associated with the Atmus divestiture.

Current wording

Net cash used in investing activities decreased $191 million for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to the absence of cash associated with the Atmus divestiture.

Previous wording

Net cash provided by financing activities decreased $407 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to lower proceeds from borrowings of $2.3 billion (principally related to our 2024 note issuance), partially offset by increased net borrowings of commercial paper of $1.4 billion and lower payments on borrowings and finance lease obligations of $604 million (largely related to early payments of $650 million on our term loan, due 2025, in the prior year).

Current wording

Net cash provided by financing activities decreased $383 million for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to increased net payments of commercial paper of $991 million and lower proceeds from borrowings of $336 million, partially offset by lower payments on borrowings and finance lease obligations of $1.0 billion (largely related to early payments of $1.1 billion on our term loan, due 2025, in the prior year).