Cummins Inc. (CMI) Earnings Call Transcript & Summary

Good morning, everyone. Great to see you all. Well, we were last together for Analyst Day 2 years ago, I was President and Chief Operating Officer. And it's great to be back together today to be able to have many of you in the room this time with us and now to be Chair and CEO of Cummins. This is my 25th year with Cummins. And I would have never imagined growing up in Columbus, Indiana, where Cummins is headquartered or when I started my career at Cummins that I would be CEO of this amazing company. And I'm honored and incredibly motivated by the role that Cummins plays in powering some of the world's most demanding and economically vital applications. The vision and strategy we have to evolve the company as our industry evolves and to continue to grow and deliver prosperity to all of our stakeholders as we do that. So we look forward to sharing with you today the progress that we've made since we were last together and what you can expect from Cummins and from me as CEO, between now and 2030. There's 3 things that I think will become clear this morning. First, our Destination Zero strategy is the right strategy, and Cummins is well positioned to continue to grow regardless of the pace of the energy transition. Second, we have continued to strengthen our position, deliver on our strategy and our commitments. And third, we are raising the financial expectations for the company from what we shared with you at our last Analyst Day. We first introduced our Destination Zero strategy 2 years ago, and it continues to be clear that this is the right strategy for our customers, for the environment and to continue to grow comments. As a reminder, our Destination Zero strategy is a multi-solution strategy that takes our entire business, continuing to advance engine-based solutions, while also investing to bring to market and advance 0 emissions-based solutions through our Accelera by Cummins business. And this strategy ensures we can meet our customers' needs today and as they evolve through the energy transition and enable them to do the real work and run the businesses that are critically important. It also delivers real world environmental improvements today and in the future, and it enables us to grow Cummins for all of you. And we're well positioned with this strategy to succeed. We have a wide range of innovative solutions and a unique understanding of our customers' power needs and how they use those power solutions. We've continued to build strong partnerships, strengthen some of the long-standing partnerships that we've had and create new ones. We also have a strong financial position that allows us to invest in the right solutions at the right time, and our customers know that Cummins is going to be there to support their needs in the future. And lastly is our incredible workforce that's now more than 70,000 strong and the unique way that Cummins invest in building the capability of our people and strong leaders that enable us to deliver on this strategy. So 2 years ago, we told you that the transition will be long and messy, and that truly is the case. Those key factors that I said would shape how the transition occurred, the availability of charging and alternate fuel infrastructure, the economics of these new technologies, the ability for them to meet our customers' different application needs as well as regulation and incentives that help to drive adoption and the scale-up are evolving and generally evolving slower than what we anticipated 2 years ago. So what does this look like? Between now and 2030, we continue to believe that we'll invest significantly in engine-based solutions and then in a targeted way in the zero-emissions technologies for applications where they're beginning to make sense. You'll see that the infrastructure will build out, and this is a real issue. So in conversations that I have with our customers, the infrastructure challenges, the economic realities, the application realities are often at the forefront, but it will advance. We've seen advancements in incentives such as through the Inflation Reduction Act that are helping to start drive adoption and make these technologies more viable. Between 2030 and 2040, we'll see a range of different solutions existing based on how regulation and infrastructure evolves. And this position -- during this time period, Cummins position in a variety of different markets and regions will allow us to build scale and also be sure that we can service and support our customers' evolving needs. And then as we get into the 2040 to 2050 time frame, we'll see more broad adoption of zero-emission solutions as we work to reach that ultimate destination of 0, a broad infrastructure available to support them and also a robust supply chain behind that. And I want to remind you that even in this final state for our applications, commercial and industrial, we expect a variety of different solutions will be required. So I'm pleased to share that based on our strengthening position and the opportunities that we see in the market, we are raising our financial outlook for 2030. We are increasing our base business revenue outlook to be $39 billion to $42 billion, and that's up $6 billion to $7 billion from what we shared 2 years ago. We are also increasing our projections for cash flow from operations to be up $5 billion to greater than $35 billion in our base business. And we're committing to an incremental EBITDA growth of 25% compared to the 20% that we had previously shared. For our Accelera business, we are lowering our revenue guidance based on how we see those markets and solutions evolving today. And projecting revenue to be in the range of $3 billion to $9 billion, which is down $3 billion to $4 billion from our previous expectation. We continue to be committed to breakeven for that Accelera business by 2027. And overall Cummins is raising our revenue outlook by $2 billion to $43 billion to $48 billion by 2030, and committing to an EBITDA in the range of 17% to 18%. So let me talk more about how we've strengthened our position over the last couple of years. On Leap Day this year, we re-branded, what we previously called, our fuel-agnostic engine platforms to HELM, which stands for high efficiency, low emissions, multi-fuel. And we see this as an integral part of our strategy to meet our customers' evolving needs by bringing these best-in-class high-efficiency diesel engines into the market with the ability to evolve to use alternate fuels, such as natural gas and hydrogen. We've announced that we're beginning production this year with a natural gas version of the X15, specifically designed for the heavy-duty market. And we've also announced the next in the series to be brought to the market, the diesel version of that 15-liter as we move towards the 2027 EPA and CARB regulations. We've continued to grow and strengthen our position in our Accelera by Cummins business. And of course, you're going to hear a lot more from Amy about that. Today, we have an e-mobility business that is able to offer our customers a range of different electrified components, batteries, eAxles, power electronics and controls as well as an integrated electrified powertrain to meet their needs. We've also continued to strengthen and begun to scale our electrolyzer business, which is by far the greatest adjacent growth opportunity for Cummins taking advantage of the growing demand for green hydrogen production. Just before our last Analyst Day, we announced that we were going to acquire the Meritor business, and this positions Cummins as a leading provider of integrated power trade solutions in both engine-based and electrified solutions. Since that time, we fully integrated the Meritor business into Cummins. And in 2020, we achieved record sales and EBITDA for that business. We are 60% of the way through our value capture commitment and confident in delivering our 3-year commitment for value capture. And then lastly, our Power Systems business. We really repositioned this business through a transformation effort that Jenny will talk more about over the last 18 months that's improved the financial performance of that business and positioned us to continue to capture growth opportunities. Most notably, the data center growth, which is our largest opportunity in our power generation business today and secular growth opportunity. I talked about the importance of partnerships. And this continues to play out to be a critical need through this evolving period of time in both our base -- traditional engine-based solutions as well as these new zero-emission solutions. So Cummins strength in this is really providing a benefit for us. You've seen us announce continued expansion of some of our long-standing partnerships like Daimler as we serve their medium-duty engine needs globally going forward. And the partnership that we announced with Daimler, PACCAR and EVE Energy, where together will form a joint venture to bring battery cell manufacturing to the United States focused on commercial vehicle applications. In addition to strengthening our existing partnerships, you've also seen new partnerships being formed. In 2019, we announced a collaboration with Isuzu, both on engine-based solutions as well as zero-emissions based solutions. And earlier this week, we announced that we're now in production with Isuzu in their medium-duty truck now using our B engine in Japan. This is the first time in Cummins history that we are in the Japanese on-highway, commercial vehicle market. So an exciting milestone for us as we continue to partner and grow together. In addition to OEM partnerships, our end customer partnerships continue to be critical as they look to Cummins to help them understand and navigate evolving technologies in the energy transition. And you've seen us collaborating and partnering with those that have sustainability goals to test and advance solutions and help them meet those goals. One notable example of that is with Walmart, where together, we tested and demonstrated the natural gas X15 engine that we're now bringing into the market. And in partnership with Chevron to help them deliver renewable natural gas that's a zero-emission solution and a key part of Walmart's plan to have a zero-emissions fleet. And then we're also partnering across the infrastructure. So in addition to that partnership with Chevron that I just alluded to, we're also partnering with other fueling and charging providers like Clean Energy, Love's and Trillium to help our customers ensure that they have the infrastructure that they need to support these new technologies. One of the key growth trends for Cummins over the last 20 years, during my career at Cummins has been our continued addition of content to the powertrain and engine solution and our ability to leverage that content in addition to continue to grow our share in the market as well as our profitability. And this trend is continuing. So I thought I'd bring that to light for you by illustrating it through an example of a heavy-duty truck. So here, you see a heavy-duty truck with our next-generation X15 engine and after treatment system. And these components that we have on the engine and after treatment system continue to be critical to meet evolving emissions regulations and customer performance requirements. In addition, following the formation of the Eaton Cummins joint venture in 2017, we're now providing indirect transmission in many of these applications that allows us to further optimize efficiency and performance of this powertrain. And then in 2022, with the addition of Meritor to our business, we now are also providing brakes and axles and the full drivetrain solution to our customers, again, further optimizing performance and uptime for these customers. So if you put this together, first, it's a lot of red. There's a lot of red on this truck. And we're unique in our ability to offer all of these key components as well as an integrated powertrain that translates fuel to power to the wheels and really optimize that system, invest in that system, as our industry evolves. And as our customers determine what they want to continue to do themselves versus where they want to partner with Cummins to provide these components or this powertrain solution to them. And if you look at some of these bridge solutions like a natural gas solution or even as we start thinking about hybrid and hydrogen engines, we'll have further content and growth in the solutions that we're providing to our customers. So here, you see the fuel delivery system, that's supplied by Cummins Clean Fuel Technologies. This is a joint venture we formed with Rush Enterprises in 2022 to provide this fuel delivery system into our X15 natural gas power train. And as the pace of the transition to the some of these full zero solutions begins to extend, we see increasing opportunity for these bridge solutions. So if you step back from that and you look at the key trends that are driving growth opportunities for Cummins. Certainly, this content expansion that I just walked you through as a result of emissions regulations is going to continue to grow. We see continued OEM outsourcing to Cummins. So today, just with Daimler, we're in production, they're using many of our engines in the U.S. And now in India, that will expand also to be Europe and Brazil, and we expect continued OEM partnerships like the one we have with Daimler in the coming years. We already have a large installed base in the field, and that installed base and population continues to grow, generating continued aftermarket opportunities. And keep in mind for these applications, they're used for many years. So it's a very long aftermarket tail. Cummins has diversified a lot from what originally was very heavy U.S. on-highway focused business. And one of the largest growth opportunities that we see now as we've diversified globally is in the data center market. And Jenny is going to talk more about how we're positioned today, and how we're positioned to continue to take advantage of that opportunity. And then, of course, in Accelera, our zero-emissions technologies are a relatively small portion of our revenue today. And as technology adoption of those solutions grows, we'll see growth in that business as well. In addition to growth, we're also focused on profitability and continuing to expand our margins. And to get to that 17% to 18% EBITDA range, we will improve margins in our base business as well as our Accelera business through content expansion and value-based pricing, through efficiency improvements in our businesses, a normalization of R&D, which is at a high level right now and getting our Accelera business to breakeven. So I wanted to share a little bit more detail in each of our businesses on where we're focused to improve profitability. In our Power Systems business, we're going to build off of the focused transformation effort over the last 18 months to continue to improve operating efficiency of that business, to focus on pricing for value and delivering value to our customers and rationalizing the product portfolio, investing in the places that we can profitably grow. In our Engine business, we'll see content expansion as regulations continue to evolve, and we believe that, that plus this continued trend toward OEM outsourcing will result in ongoing share gains, that will translate to profitability. We're investing at a very high level right now in our engine business in these fuel-agnostic engine platforms. And as we get to 2027, we'll see more normal levels of R&D spend. And then the China market has been relatively low for us for the last couple of years, and we'll see improvement in that market and continued strengthening of Cummins' position there. The components business really matches closely to what's happening in business with content expansion, share gains and improvement in the China market. And then, of course, we're going to continue to deliver on the value capture of our Meritor business to improve margin performance of that business. In our distribution business, as we continue to see growth in the aftermarket, we'll see margin expansion. And we're looking at ways we continue to leverage what's really a unique and unrivaled global footprint to profitably grow that business. And lastly, of course is, Accelera, where we're going to demonstrate that as we scale, we reach profitability and we'll pace investments to make sure that we're investing in the right technologies at the right time. Underpinning all of this has been a focused effort by my team to look at opportunities to simplify and clarify how Cummins operates and further improve performance of our business. We've had a lot of complexity that's happened in Cummins in recent years through our growth and acquisitions. And so the restructuring charge, you saw us take in the first quarter is an example of the work we're doing to really step back and say, how do we want to shift what the company looks like and how we focus on profitable growth for the future. And with that, I'm really honored to introduce Jenny Bush. Jenny is an excellent example of how Cummins invests in our people and growing people to their full potential. She has grown from a technician to now President of the Power Systems business for Cummins over the course of her career. Jenny has extensive experience in our distribution business prior to leading the Power Systems business. And as you'll hear from her, those 2 businesses are closely intertwined, and that creates a real benefit for us with Jenny leading the business. She's a very customer-focused, result-oriented leader, and she has driven tremendous transformation and improvement in our North America distribution business after we acquired those different businesses when she was there in the role leading that business and then more recently in her role leading the Power Systems business. So I know you're looking forward to hearing more. We noted in our last earnings call, an unusual number of questions about the Power Systems business, and so Jenny is really excited to share more about what's happening there.

Good morning, and thank you, Jennifer, for such a warm introduction. I am incredibly excited to be here with you today. And I'm super energized to share with you what we've been doing in Power Systems. We've been a little busy over the last 18 to 24 months. But before I do that, let me remind you who we are, and what we do. This business serves some of the hardest and most difficult customer needs in the industry. These markets are highly fragmented, complicated and the users of these products and applications need a lot from us. There are very few companies actually in the industry that can serve these markets, and that's, frankly, because it's really hard to do. Our products range from very small consumer gen sets. You can see these up on the screen behind me, to the application of our largest diesel and natural gas engines into data centers, rail, marine and mining applications. The application of the diesel engine will be here the longest at Cummins in this segment. And while our segments are diverse and complex, and we serve a wide array of markets across many sectors of the economy, ultimately, we have to win in mining and power generation. So why is that the case for us? Every company that makes very large engines have something that provides scale. For us, that is power generation, where we sell over 18 gigawatts of energy every single year. The combination of market-leading technology and our global distribution footprint enables us to compete in those power generation markets and provides us a scale advantage to win in large industrials like mining. Over the last 8 to 10 years, this business has struggled to find meaningful growth. And this has resulted in declining profitability and, frankly, sluggish performance. My team and I have worked really, really hard over the last 18 to 24 months, making tough decisions that have enabled us to focus on harnessing the potential and reenergizing this business for growth. This is a truly global business. Over 60% of our revenue resides outside of the U.S. and Canada. And as Jen mentioned, data centers is a critical element and one of the largest secular growth opportunities for Cummins today. Many of you might think that we're just a power generation business. In fact, we're much more than that and underpinned by our capability in our large industrials. Over the last 18 months, we have successfully transformed this business from delivering below average profitability to leading our Cummins business segments. Power Systems is a big part of the Cummins margin improvement story. We have more we can and will do to sustain this trajectory in the future. In 2022, we kicked off a global transformation, focused on improving profitability and enabling growth. To do this, we have to simplify our business and address our complex product portfolio. We have to build more efficiency and resiliency in our global supply chains. And we must enable the release of capital for focused investment for our future. Over the last 2 years, we've already been able to significantly expand our margins, adding $200 million of incremental EBITDA in that time period. We've done that through 2 focused efforts, pricing, not only matching inflation, but also enabling value-based pricing to align the degree of tailoring needed by our customers to the value that we deliver. We have also unlocked efficiency, restructuring our business to drive better execution and rigor as well as enabling more throughput through our manufacturing footprint and reducing lead times. As we look to 2024 and beyond, there is more we can do to create further improvement in our margin performance. Firstly, we are simplifying and optimizing our manufacturing footprint, aligning those locations to lower-cost regions and also better meeting the needs of where our customers live and work. For example, we are moving capacity into India and China from some of our higher-cost locations because our customer base is residing in those countries. We are also simplifying our U.S. Genset production, making our factories in Fridley, Minnesota, more efficient and capable, but also making room for the expansion of the Accelera business into our facilities and transitioning the skills of our workforce. We have regionalized our power generation business from being a globally-led centric business from the U.S. into more of a global -- into more of a local model into fit-for-market tailored needs, specifically for the regions that they serve. This enables us to harness the power of our organization in India and China, where we have the highest market presence of any of our competitors. And lastly, reducing profit proliferation. We are streamlining our product offerings to reduce the complexity in our supply chains, further improving our throughput as well as making sure that we focus on our highest growth opportunities. It's not all cost and rationalizations though. There are exciting growth opportunities in this business. Data centers are the fastest secular growth opportunity for Cummins, as Jen mentioned, as she spoke this morning. The chart behind me shows our expectation for growth in this market as well as where we are positioning Cummins to win through 2030. This market is rapidly growing due to the continued growth of the consumer Internet demand, digitization and the rise of artificial intelligence. The use of AI is driving more and more power usage across the world, and that is a fantastic opportunity for our business. Customers in this segment are incredibly sophisticated buyers, and very few companies have the ability to serve them globally. Cummins is uniquely positioned to capitalize on that market growth. We have recently launched new platforms to improve our power density under our Centum brand and also tailored our products to enable rapid customer installation. We're seeing a significant change in our order profile as data centers are the predominant new source of order requests, and we've recently won several multiyear global contracts with hyperscalers. How we service this market gives a unique opportunity. The ownership of the distribution business in Cummins enables an ability to serve not only the product needs, but also the installation and start-up capability of these data centers and further ongoing contracts that provides a revenue opportunity for Cummins. We are doubling our capacity to meet our order book in this high-growth market, particularly in our large engine facility in Seymour, Indiana on some of our highest diesel engines. We've invested vertically to integrate most of our critical components for our data center products. For example, we recently acquired cooling technology that is critical in this space. and that allows us to own all of the needed technology to apply data centers into our markets. We've also significantly lowered the cost whilst further expanding our global capacity in our large alternator business. This further enhances our competitiveness and ownership in the portfolio. These elements enable us to drive a focused approach that will provide Cummins with a multibillion-dollar growth opportunity over the next few years. And although data centers are clearly the talk of the town these days, we do have a few other things going on in Power Systems. We expect steady growth in our mining business. I was recently in Chile, Peru and Australia. And our miners told us that power and efficiency is a real increase in value for them in their operations. They are moving more dirt to get to the minerals that you and I use every single day and aspire to use for our future environment over 5x more earth than they would have moved 10 years ago. The application of the 95-liter engine into our whole truck market enables efficiency for them on the haul road, moving truck speeds from 11 to 12 miles an hour to 17 to 20 miles an hour on the haul road, greatly improving the speed of recovery of the minerals. Mining customers will keep up cycling diesel as long as they possibly can. Through engine retrofit and replacement predominantly done by our Cummins own distribution channel, enabling us to realize the full margin opportunity and some of the highest availability in the network today. We are also seeing the competitive landscape in mining shift as emerging OEMs, particularly from Asia, disrupt the position of the traditional incumbents. Our independence here allows us to capitalize on this new trend. Microgrids is a new frontier for us. This is the next frontier of growth in power generation. This rapidly expanding growth space is where customers are testing lots of different power combinations to support either an absent grid or to solve power needs where the grid is insufficient and failing. We are exploring how to maximize our participation in this new frontier, leveraging our current product portfolio as well as defining investment choices that are needed in new technologies. We do know that our regionalized power generation business model, coupled with our global distribution footprint allows us to adapt to local customer needs specific to the energy challenges in each of these regions. We hope you are now as excited as I am and as we are about the future of Power Systems. This business is now a much bigger part of the Cummins story than ever before. And we are confident in our ability to secure top line growth and further expand our margins. We will invest in the right products to serve the most demanding applications and deliver profitable growth for Cummins. Next, I'm excited to introduce Amy Davis to the stage. She has been in this company for almost 30 years and has worked in almost every part of it. She is a leading light and better -- best positioned to help Cummins win in the transition to new technology. She is also one of the trendsetters of the team. So Amy, please join me in a minute. But before she takes us and takes the stage, we invite you to watch a brief video about what she's been doing with her team in Accelera. [Presentation]

Thanks, Jenny. I have to explain the trendsetter comment because Jen called me and said she was going to wear Accelera colors. So I said, fine, then I will wear Cummins colors. As you can see from the video, we've had a really exciting few years building momentum and growing our presence in the zero-emission space. We've expanded our position with major OEMs in e-mobility. OEMs are realizing firsthand the challenges of operating zero-emissions vehicles in the commercial environment, and they're looking at partners like Cummins more and more. And we are scaling electrolyzers in a systematic and pragmatic way together with global partners. And while we've lowered our revenue projections for 2030, we have grown market share, we are improving margins, and we are committed to a breakeven in 2027. Our mission is clear and focused, to accelerate the shift to by pursuing the most promising paths forward. Launching the Accelera brand has really done 3 important things for us at Accelera. It's helped us stand out. It's a crowded market, lots of people trying to get in, lots of new entrants, startups, and this gives us a way to really stand out. But it focused on our employees as well and inspired them to accelerate innovation. And finally, it's really articulated a clear mission and technical focus for us. Commercial segments are unique. Products need to work under tough demands and unique duty cycles, and we are investing in these various specific solutions. Accelera is a growth opportunity for the company and the brand gives us a banner to rally around. When we were last together in 2022, we shared how we would win in this market, and I'm here to tell you it's really working. We wanted to combine the innovation, agility of a startup with the strength of our incumbency. And the way we're doing that is really focusing on a unique culture. Keeping a culture that's a little bit separate from Cummins, giving us the latitude to invest in faster processes, new business models with our OEMs and end customers. But the incumbency is important too. We've been able to leverage our key relationships with global customers, the duty cycle knowledge that we have and put it into our products. And also, like Jenny mentioned, tap into some of our manufacturing and supply chain expertise as we really productionize these products. And finally, as the products are out there, customers are starting to really value our service and support channel. There's somebody they can go to, who can support them and help them figure out how to navigate this. It's also been a real help for our electrolyzer business as we're doing commissioning of projects now more and more. The complementary broad portfolio also has proven to open doors and expand opportunities for us. Having both electrolyzers and e-mobility solutions enables us to address the chicken and the egg problem with many of our big global customers, but also the broad portfolio of the axles, batteries, motors, inverters, it gives us the opportunity to get a foot in the door with just one component with a customer. And then as they're starting to think about their full product plan, how we bring more and more to bear on that and expand our share of wallet. And our strategic focus on commercial applications is proving out. A lot of the people who entered the market with passenger kind of batteries haven't really worked. And so they're going out of business, some and also, we're working closer with customers to say how do we replace those, how do we help them get back up and running in some of these truck applications. It's also helped us pace because having this broad portfolio, some of the things aren't panning out the way we thought they would in terms of how fast people are moving. An example of this might be eAxles, but we have motors and inverters. So we are selling some traction central systems. And that gives us the foot in the door again as we navigate to eAxles, slowing our pace of investment there and putting it on something that we already have in the market. Our thesis still holds true. Accelera is best positioned because of our broad portfolio of technologies, our knowledge and experience in the market, in the industries that we serve and our strong global relationships. Over the past couple of years, we've clearly structured the business into 2 distinct businesses, e-mobility and electrolyzers. They have complementary aspects, but the technologies, the project approach and the scaling requirements are distinct. So the way I'm going to talk about this today is go through each of these so you can see how they're playing out for us. We will start with e-mobility, where we have over 100 years' history with customers around the world. Jen talked about content. So this slide is an electric version of the content slide that Jen showed. I want to make 3 points here. We have the component set that positions us for a variety of ZEV architecture scenarios. So we can do components, as I mentioned before, or complete systems. So if BEV is taking off in 1 segment faster, we can provide the components for that or we can add a fuel cell to make it a fuel cell EV, but also many of these components play into hybrid, which is becoming more interesting with some of the new 2027 regulations that people are trying to deal with. Also having the portfolio breadth is opening doors for us. OEMs don't have resources to do it all. This is playing into electrification as well. There's a lot of different options and things they need to invest in and they're looking to us to be their innovator. The third point I want to make is content growth is real here, too, if you look at an electric drivetrain for a medium duty, the revenue opportunity is plus 50% that of a medium-duty conventional truck and for heavy duty, it's more than 100%. So the revenue growth in itself is huge. Now I want to highlight how our position has advanced. We're working with every customer that you see on here. We're providing some portion of their electrified powertrain. We are leading in market share in commercial vehicle in the U.S. We now have more than 1.5 billion miles in the field on our e-mobility products. We have a strong position in bus, and this is important because it's really the earliest adopting segment, and it's a tough duty cycle. So we're getting a lot of learnings, and it's giving us volumes as we ramp up. We have more than 24,000 traction systems deployed to date. We have serial production traction systems for customers like IVECO and New Flyer, and we provide full powertrain solutions to Bluebird and GILLIG, and we are powering more than 1,500 bus in communities across North America. We've partnered with nearly every truck OEM that you see on here, from pilots, demonstration products to production. You saw this week, I hope, our announcement with Isuzu that we reached agreement to do a medium-duty truck with them, their F-Series here in North America, which will only leverage Accelera LFP battery technology, but also will be doing the full powertrain. With Scania, we've been working on fuel cell demonstration project in Europe. We are delivering our next-gen fuel cells later this year into fleets, strategic fleets across Europe that we'll be learning with together with Scania. And with PACCAR, we sell eAxles and integrated accessory systems for their production heavy-duty trucks here in North America. And just 1 more example, next week at ACT Expo will be displaying a fuel cell engine truck with Navistar for Werner. This will be 1 of our latest pilots of fuel cells, again, an example of partnering with the fleet to get real live experience and help them transition. We've made huge advancements in our position, and we are ready to capitalize as the volumes ramp up. I just want to touch on the joint venture that Jen mentioned. But together with PACCAR, Daimler and EVE, this venture to localize and manufacture battery cells in the U.S., leveraging IRI funding is really exciting for us. Our partners are the biggest players in the North America truck market. And we have a shared view that LFP is the right technology for commercial vehicle and that by investing in a unique cell technology for commercial vehicle, we will be able to differentiate. This will set a performance standard in the market that the others will have to match. This also enables us to share this big investment with really credible partners. And finally, with uncertain adoption, it helps us create scale together. And just a plug, we're doing a groundbreaking event on June 28 at the site in Mississippi together with our partners and some government partners as well. So that will be an exciting next milestone. Now I'd like to shift gears and start to talk about electrolyzers. This remains a significant outgrowth opportunity. Let's take a look at how the market is shaping up. You can see there's still a lot of growth in this market. These are several different third-party views showing the curve of growth that they see in green hydrogen production. But the challenges we are seeing is what's impacting our guidance in this area. The projects are taking longer to materialize. This is true. And the incentive availability and access is an issue in Europe and in particular, the uncertainty on the 45V tax credits as part of the IRA is keeping some U.S. players waiting on the sidelines. The industry as a whole is also working through the challenges as projects grow in scale and volume. For example, you've heard announcements over the past couple of years of 100-, 200-, 500-megawatt projects of green hydrogen, they've never been done before. So actually bringing those an investment, getting the site ready, all of the complications is creating a bit of a bottleneck in terms of the industry and the overall supply chain is really maturing. This sounds a bit negative. It's true. It adds up to a slower ramp up, but that's all right. From our perspective, this slowing pace plays really well into our deliberate growth strategy in this area. In electrolyzers, we are really leveraging the strength of our core. Our ability to actually scale products and have global strategic relationships has been fundamental to what we're doing here. From a product standpoint, we acquired leading PEM technology and are investing in a clear product development plan that is scalable. This is exactly the slide we showed you 2 years ago. We have not deviated from it. We're systematically building this out. We're standardizing these product designs and the manufacturing processes. And we're systematic in how we're launching these in the market with a keen focus on using building blocks. With each new product iteration, we improved both technical and financial performance. And from a partnership standpoint, here's just an example of some of the strategic relationships that we formed with global players around the world. Partners like NextEra, Iberdrola, Linde, BP, Chevron, all of these customers are like-minded. They're looking at how they scale up. They want to be systematic in how they do it, and they want to advance the industry together with us. These strategic relationships have been key to some of our project wins. And from a project standpoint, we're being pragmatic in how we go about it and how we deliver in order to build trust and credibility in the marketplace. We advanced from our 20-megawatt, first of its kind, Bécancour plant that we talked about a few years ago and have commissioned a 25-megawatt with Florida Power & Light that's producing hydrogen today. And we also have a 90-megawatt project currently today being built in our Fridley, Minnesota facility and 100 megawatt project being built in our Spain facility, so these are in production, getting ready to be commissioned and delivered at the end of this year and next year. So just like we've done with e-mobility, we're taking a long-term view, and we're capitalizing on the significant growth opportunity from a systematic approach, building credibility with partners. Overall, hydrogen and electrification, it's a long uncertain transition as Jen talked about. We have a broad portfolio, though, that positions us well across many adoption scenarios. And we're applying a disciplined focus in how we pace our investments as we see changes in the market. So I want to give you a few examples of this. So you can really have confidence that last year was our highest EBITDA losses and will continue to drive revenue growth. We took a pause on our investment in solid oxide fuel cells. We talked a lot about this a few years ago. We saw that slowing down, and that technology not really going where we wanted to. And in general, in fuel cells, we've seen some slowdown across some of the adoption rates. So we've slowed the way we're scaling that to save money and put it elsewhere. We divested our low-voltage battery business, which removed costs and focus resources on bus and medium-duty opportunities that we have. And we really focused our efforts on PEM electrolysis, where we see that we have a real differentiation and an opportunity to lead in the market. We've also strategically consolidated our manufacturing footprint and subsequent overhead. After 7 acquisitions, our footprint grew quite quickly, we've now assessed and adjusted that across more than 5 sites for real tangible savings. And we're leveraging our core manufacturing capability on Cummins footprint to do that. So a couple of examples of this. You've heard about how we're putting electrolyzer manufacturing at Fridley, Minnesota, leveraging that capability. We've also put our e-mobility manufacturing in our Columbus, Indiana site and consolidated much of that footprint there. This has allowed us to funnel our investment to where it matters most, which is the technology. Finally, we're making a real shift in gross margin performance. The market is maturing with industry consolidation, and more realistic expectations on price and performance. And as we move from first generation product into the second and third generation, we're seeing improved cost standardization and predictability and overall lower warranty costs. This very deliberate and disciplined approach sets us up well as the demand materializes into more consistent and predictable volumes. Let me share the details of how we see revenue playing out to 2030. Broadly speaking, there are still many unknowns. So we have a broad range still of revenue guidance from $3 billion to $9 billion. For the e-mobility business, we have a much clearer view than we had 2 years ago. We've been bringing businesses together, collaborating with OEMs, and we've leveraged our foot in the door to win opportunities. So we see a range of $2 billion to $4 billion in revenue by 2030. This will be achieved through growing our current business and executing on the program wins we have in bus and truck. In electrolyzers, there is, frankly, a broader range of outcomes. We have more uncertainty. There was lots of hype driving us before, but the many challenges that we've seen in launching large-scale projects is driving us to a more conservative scenario. We are in a strong position with the right partners and products, which will create the projects we need. And so we see a revenue opportunity of $1 billion, underpinned by a combination of strong pipeline of bids, [ FEED ] studies we're involved with and firm backlogs. This could be up to $5 billion, depending on particularly the decisions in the regulatory environment and other areas of supply chain development. Across our footprint, we have the capability to deliver to the demand levels at the high end of this, and we're focused very carefully on pacing that to match the market need. By strategically pacing investments overall, our overhead consolidation and the clear road map we have for gross margin positive products, we will reduce our losses and hit breakeven in 2027. While there remains a lot of external factors driving market uncertainty to a range of revenue outcomes, Accelera is a growth business for the company through new markets, partnerships and expanding share of wallet with core customers. We are navigating this transition well, earning credibility and market share by systematically scaling products and advancing our strategic partnerships. I would now like to introduce someone I guess you know well, our CFO, Mark Smith, who also, I just would say, is a trendsetter, we heard that he pulled out a new white shirt for today.

Thank you, and good morning, everybody. If it's fashion, you're looking for, I'm on the wrong stage. But what I do know is that earnings growth and cash flow generation should never go out of fashion and that's our key message today. Let's start with a quick reminder of our long track record of performance improvement at Cummins. Managing through cycles is a key attribute for a company like Cummins, it's in cyclical industries, and we're proud of our record of improving performance cycle over cycle. The simplest way we measure that is to look at our performance over successive trough, trough to trough and successive peaks. And you can see how we've improved earnings per share over the last 4 cycles. While it's always exciting to talk about new technologies and competitive dynamics, cyclical management really is an important part of maintaining strength for the future. And several of us here have been here at Cummins long enough to -- including me to live through all of these cycles. I do want to point out that these numbers have been adjusted to remove the impact of Atmus from our financials for illustration purposes. It doesn't change the trend. We will provide a reconciliation between the full results and actuals, but I just wanted to point that out for consistency on a go-forward basis, we've adjusted Atmus out. This growth in earnings per share is really been driven by expansion in the profitability of our core business, as you've heard from Jenny -- Jen and as you can see here over the last 3 downturns. We've tripled our EBITDA between 2014 and 2023. Our EBITDA has gone from just under $3 billion to over $5 billion, of course, partly helped by the acquisition of Meritor. And whilst we've been significantly improving the profitability of our core business, as you've heard from Amy, we've been proactive in investing in new technologies ahead of widespread market adoption. It's important that we continue to develop, sell and get experience with these new technologies ahead of a more faster transition to adoption. And while we've done that, it's been necessary to invest and incur losses as we've expanded our capabilities and increased the suite of portfolio of our products. It's great, though, to share that we believe now we've passed that peak of those EBITDA losses, as you've heard from Amy, we see some improvement in our EBITDA yet in 2024 on this journey to EBITDA breakeven in 2027. And whilst we've been improving profitability in our core business and investing significantly in the Accelera business, we've been able to convert that performance into record levels of cash flow. So again, here, you can see the actual cash generated by our business over the last 3 downturns on the left and the last 3 peaks on the right, resulting in a record $4 billion of operating cash flow in 2024 -- and these -- 2023 -- and these numbers are all inclusive, no adjustments. And because of the expansion in profitability and the strong cash generation, we've been able to deliver return on invested capital above our peer group average over the 1-, 3- and 5-year periods, and that's been whilst we've absorbed and improved a significant acquisition in Meritor. Capital discipline is an important focus at Cummins, has been for a long time and has to be married with our ambition for earnings growth. Because we've had strong financial results, we've been able to return more to shareholders. Here is a simple chart that summarizes our cash dividends on the bottom half of each of these bar charts and on the top half of the bar chart, you can see the cash repurchases. In 2024, I have added the fair value of the noncash share exchange for Atmus which had a fair value of $1.5 billion and reduced Cummins share count by almost 5.6 million shares on a tax-free basis. And whilst I'll be cheering on our friends and colleagues at Atmus, in their successful journey for the future. I want to let you know that I held on to all of my Cummins shares and did not participate in the exchange. What's more interesting than what we've done is what we're going to do and that is drive a lot more improvement. Fundamental, of course, is continued margin expansion in the core. And you've heard from Jen, you've heard from Jenny about that. Continue to drive operational improvements. That's an everyday activity at Cummins. We expect to deliver strong returns on new products. And then as Jen mentioned, we're expecting to reach the peak of our investment cycle in R&D and CapEx in 2026 and start to see the financial spend on those investments taper off post 2026, which are going to help our incremental margins. And then Amy has already talked about successfully transitioning Accelera at a breakeven. And the good news is we expect to convert those expanded margins into more cash. And cash is really important. That's what allows us to keep investing through the economic cycles and continue to have that flexibility to invest in growth and return more cash to shareholders. So we think we can move up our record operating cash flow of $4 billion in 2023 to enter the $5 billion to $6 billion range in 2030. To summarize our capital allocation priorities, reinvesting for growth has always been the #1 priority at Cummins. We've been on a program of deleveraging post Meritor acquisition. We're coming towards the end of that journey of deleveraging. We've continued to grow the dividend. We paused returning excess cash to shareholders through share repurchases as we work through our deleveraging. But the main thing I want you to take away from 2025 to 2030 stronger cash generation gives us more flexibility to return more cash to shareholders whilst not only supporting the growth activities of the company. Jen shared with you the dollar targets for the base business for Accelera and the company in total. This is your elevator slide. This is the one you need on your screen saver when you're walking around thinking about how much to invest in Cummins or recommend to others. We believe we can generate a CAGR in revenue growth of 5% to 7%, almost -- mostly organic. That's supported by the secular things you heard earlier today from Jen, from Jenny and of course, more transition to zero-emission vehicles in the future through our Accelera business. EBITDA, we can grow in the 7% to 9% range. And then we believe earnings per share can expand at a higher rate driven by the profit growth, enhanced by more cash return to shareholders. So to summarize, I hope you leave here today knowing that Cummins is the best place to serve global OEMs in their growth aspirations. We've got the portfolio of products. We've got the talent, and we've got the financial wherewithal to keep investing to support those OEMs wherever they are in the world. We believe these secular themes can allow us to grow at 1.5x GDP. The combination of margin improvement and disciplined capital investment will lead us to higher returns. I do want to reinforce that our outlook for 2024 is unchanged. We expect a stronger first half, a modest slowdown, particularly in North American truck starting in Q3, but our full year outlook is unchanged. That's my summary. Thank you for your time. I'll turn it back to Jen.

Thank you, Mark. So I think Mark rounded out our presentation nicely, illustrating our track record of delivering on improving financial results and how our strategy translates into continued growth and profitable growth for Cummins. I hope that my 3 points I started with have become clear through this presentation. Our Destination Zero strategy is the right strategy, and Cummins is well positioned to continue to grow regardless of the pace of the energy transition. We've strengthened our position, and we're executing on our strategy and the commitments that we've made. And we're raising our financial expectations for 2030. So it's been a pleasure to share all this with you. And I think you've also had an opportunity to see that investment in building capability and strong leaders. We have an incredibly talented leadership team that's behind the strategy, the work that we're doing and committed to continuing to deliver for all of you. So we're going to take a 15-minute break now. When we come back, as Chris noted, we'll have Brett Merritt, our Vice President of Engine Business, joining us as well as Bonnie Fetch, the Vice President of our Distribution business. We'll take questions at that point. And then following that, we'll have a lunch. And we have some other Cummins leaders here as well, including Jon Wood, our Chief Technical Officer. Jeff Wiltrout, our Strategy Leader, Srikanth Padmanabhan, our Operations, Executive VP and Carole Casto, our VP of Communications. So you will get a chance to enact with all of us during the lunch time. And the food here is excellent if you haven't tried it already. So please take a break, and we'll resume in 15 minutes for Q&A.

Ladies and gentlemen, the Q&A will begin in 5 minutes. Ladies and gentlemen, the Q&A will begin in 3 minutes. We're live now. Here we go.

Okay. Let's move into the Q&A. We've got lots of time for Q&A. We're going to -- [ Collin ] and [ David ] are going to assist with the microphones. [Operator Instructions] We will start with Steve.

All right. Thank you. I'm not used to being first. So can we just talk a little bit about how you're looking at margins kind of by segment as we go up through 2030. Where is kind of the most opportunity? And maybe I don't know if there's headwinds in some area, but just any color you can give us by segment.

I'll start off and the others can chime in. But I think we see margin improvement in all of the businesses. Jen tried to give you the headlines of what the drivers are. The biggest single headwind, I think, if you like, is the investment profile in the engine business, coupled with what's been a depressed China market. I realize China is a market thing, not a self-help thing, but it's really that investment profile in the engine business is probably the single biggest headwind. And then, of course, key to the Accelera improvement to breakeven, which is a significant driver, there's over 1% margin improvement there. It's all the factors that Amy talked about, really the rollout of the new versions of the products combined with all the consolidation work that we've done. So those are probably the biggest things to work through. You've seen the momentum already in the Power Systems business. We've already raised the guidance this year. We've got a lot of momentum. So we're really pleased after quite a period of below par performance in that business. So I think that aftermarket growth should come naturally in the distribution business. It's really getting over this investment [ on speed ] and, of course, delivering those products that make our customers successful. I think what could make it the big assumption here is this rate of transition, which we thought was going to be messy is messier. Sometimes it's good to be hedged on both sides. And so we can see more or less acceleration between engines and components and Accelera, depending on that rate of transition. But we feel confident in margin expansion opportunities in all areas. And you heard from Jenny like the data centers, it's not just an ambition in data centers, she said, her and her team have secured large customer orders. exact delivery dates and everything can vary. But we've got commitments. We've got commitments on OEM outsourcing. We've got commitments on the data center business. So we're really talking about things that we've got pretty high confidence in driving the top line, and it's up to us to convert that to the margin improvement and managing the investments.

Okay. Great. And my follow-up, I actually asked this on the conference call and you guys [ punted ] it, so I'm going to do it again now. How much exactly are we increasing capacity for power gen? How much is that cost? What's the time frame?

Yes, I'll take a stab at that one, I should not, but we are doubling our large engine capacity, particularly here in the U.S. So we've got our asset footprint. We've got room in the utilization of that to continue to expand and increase where we have bottlenecks is in our supply base as well as in our capacity in the Seymour, Indiana place specifically. So we're doubling that in the engine space.

But it's -- we're talking tens of millions, not hundreds of millions of dollars.

Correct.

It's fairly easy math given the size of the revenue growth. for the amount of investment as required. Yes.

It's Chad Dillard from Bernstein. So my first question is on just how you're thinking about pricing power in the '26 and beyond as you think about your opportunity to renegotiate your long-term [indiscernible] supply agreements, and then some of the more productive engines that you plan to introduce over that time frame?

Who wants to start with that?

So I'll start with that one. It does present an opportunity. This is the reason that we're bringing the HELM platform to the market. And so you'll see both a content expansion, which I think Jen highlighted but that obviously allows us a new opportunity to make sure we get value within the long-term agreements. You pretty much know how we position ourselves, and we feel very confident about that. And as long as we're delivering the value, I believe there is some pricing opportunity yet, but obviously, it won't be defined for the next couple of years.

I would say it's also an important theme for the components business as well. We sell to third-party engine manufacturers also who are making their last iteration of technology. And so having the right position there is a focus area for us.

Great. And then the second question is just on the Power Systems and specifically on data centers. So you had that slide out that shows your growth potential through 2030, I was hoping you could talk a little bit, not just about your OE opportunity, but the service tail that ensues afterwards.

Yes. Let me start there. So I'll tell you a little bit about how we go to market and then Bonnie really owns the ability to place it into the market and long term take care of it. So we sell the Genset, which is the engine, the alternator, the radiator, all the stuff that goes around in controls into the market through our distribution business. So wherever we are in the world, that is consistent. And then that application of those sets goes out. And from a data center perspective, we've launched this new Centum range, which is all about extending power density. So for the same footprint, you get more power output than traditional power generation would have been. And that's been a big benefit of adoption in those markets because you sell a lot of backup capacity to the customer. They will take 20, 30 of these large units, 4 megawatts of power in each single one to back up those data centers on a rapid start application. Bonnie, do you want to take it?

Yes. And so when we get the Genset from Jenny's business, we obviously have to balance the plant opportunities, commissioning and then the aftermarket maintenance contracts, aftermarket parts sales and an opportunity to build the relationship with customers to continue the buying decisions into the future. So significant opportunity as we continue to grow.

Let's go to Steve, and then we'll come back to [ Chris ].

Steve Fisher, UBS. In terms of the outsourcing that customers are doing to you -- with you, how do these discussions go in terms of what types of things they're still considering outsourcing to you versus the things they want to keep internal, and should we think that there are still major programs and components that can really move the needle from here? Or is it more kind of at the margin type things?

Let me start and then I want to have Brett comment on that as well. So really the biggest driver for the conversations on outsourcing where to come in is when we have a regulatory change. So that's what drives the next need to make an investment. And then a decision on, do I want to invest in my own? Does that make business sense? What do I want to [Indiscernible]. So you've seen a lot of those conversations in the medium-duty space, which is the first of our markets that we expect to electrify, heavy duty is going to take longer. That application is more challenging to move to zero-emission solutions. Jenny noted, Power Systems is going to be -- many of those applications will be even the longest. But it's really regulatory shifts and the need to invest that is the biggest factor in that. In some cases, it's been announced. In other cases, customers don't want to talk about those things. But what I would say is those are regular conversations and also in the Accelera Technologies as well because as things start to move but at a more slow pace. Do I want to invest, when do I want to invest? So we see an opportunity to build scale, to build a technology leadership position that will then position us in a stronger place as things continue to evolve. Startups are increasingly not able to continue through this long messy transition. OEMs are trying to figure out their places. And so we think that gives us a position of strength both in the Accelera side of our business as well as Engine business. Brett, why don't you talk more about the engine customers?

Yes, I'll talk about it from an engine perspective, but Amy and I work a lot on this, both on Accelera and the Components business. So if there isn't the large engine opportunity, many times we're having those same discussions regarding components, for whatever engines our various customers would like to continue to maintain. And so if you think about the difficult regulatory environments around the world that continue to get tougher and the product demands by end users we believe we can meet them better and with greater scale. And so for those OEMs who are starting to look to invest the hundreds of millions of dollars it takes to put an engine system into the market. They have to look at can they bring that to scale at a cost that's better than buying from Cummins and at a value to the end customer that's better than if they chose Cummins. And we've been in these discussions with large OEMs for a long, long time. We have announced the Daimler partnership when we think about medium duty, you're now seeing the Isuzu partnership come to fruition, which we've worked a long time at. I actively anticipate you'll continue to see these, particularly in those areas where the customer is serving a niche and they themselves cannot invest in that niche as well as we can who bring 1.3 million engines and/or component systems to bear that gives us a huge scale and performance advantage. And we would anticipate this continues. We typically think about this in the on-highway market, where these tough emissions have already driven some of this discussion. You're also going to see this happen in off-highway, whether it be agriculture, construction and others because those emission standards are now coming to fruition at the end of this decade. And I think you'll see continued movement in this space from us. We obviously don't necessarily announce them. We usually wait on our customers to announce this, but I think it's an exciting outgrowth opportunity for us to continue.

Maybe to put it in a nutshell, the transition is not accelerating, and there are already established scale advantages being reinforced. So that's the good news for Cummins, and who would have thought even 10, 15 years ago, we'd be talking about clear line of sight to more OEM outsourcing. So that's an exciting trend.

And just a follow-up on Meritor, I think, you mentioned you're 60% of the way through the value capture there. Can you talk about what still needs to be done ahead of you? And then from a timing perspective, and do you think that can align with perhaps if we have a prebuy to a next peak in say, 2026, is that sort of the stars aligning to having all that value captured by then and then driving some notable upside in the engine -- or in the business by then?

I hope the value capture is before 2026. And I think some of the stars have been aligning. We had a rough start when we acquired the business, but we continue to see steady improvement in the profitability in that business. Jen, anything else you would add?

I would just say the -- really, the only things remaining are just some of those structural things that took the systems to come through. And once those are implemented this year, really, the bulk of this should be done this year. And then I think the growth opportunity like we're starting to structure, to bring some things together, to get more synergy between, let's say, the EC JV and our Meritor business or, let's say, in our distribution business and some of the growth opportunity there. And then we are making moves in really important ways into the sites, the plants, making sure we're keeping those updated and really well prepared for the capacity needs of the market.

This is Tami Zakaria from JPMorgan. So my first question is to Amy. What do you think the EBITDA margin for the Accelera business could look like at the low end of $3 billion and at the high end of the $9 billion sales target.

Yes, it's a really tough question, of course, because there are so many still uncertainties in terms of the mix of that. What I would just say at a high level, the trend would say that our e-mobility business is just a bit ahead on the margin profile. We're close -- we're already launching this year our third generation of batteries. So we're as I talked about at each generation, we're learning and being able to apply that learning. And so as that mix shifts there versus the electrolyzer business, which is still a bit bumpy, as the scale of some of these projects we're learning from. So I would say that would be -- the mix will be a big driver in terms of where that is. But the projects that we're quoting, and the work that we're quoting now is all in the gross margin positive range. And so really, the scale is also going to matter to get some of the consistency that we need and volumes to really get to the high end of an EBITDA profile.

That's very helpful. And my follow-up question is on the Engine segment. What's really embedded in terms of heavy-duty and medium-duty engine market share by 2030 when we think about the base business, $39 billion to $42 billion.

Yes, I don't think we've given share guidance necessarily through 2030. Mark can comment here in a second. What we'd say is we have -- we feel very strong with our medium-duty penetration and participation in the North American market. We believe that continues, if not continues to strengthen. And on heavy duty, I think we've shown where a few years ago, we were in the mid-20s and we've now climbed into near 40. That we'll continue to introduce new product platforms that will perform very well. So you heard we're launching the natural gas product in the 15-liter range. right now and will be sold this year. We think that strengthens our portfolio there because it gives some options that end customers didn't have today to utilize in a variety of applications for natural gas. And then second, we'll continue to come out with an even stronger 10-liter platform that will participate on the bottom end of heavy duty. So if you combine those with our diesel and then later hydrogen 15-liter programs, we would say that heavy duty continues to strengthen above where our range is today, but we obviously haven't given guidance on share per se for that long, pretty strong.

Okay. We'll get to you next.

Angel Castillo from Morgan Stanley. Just wanted a quick clarifier on the pricing question around engines, particularly around 2026. Just to be clear, is that embedded in guidance as you think about 2030, would that be given that it's something that's somewhat to be determined. Is that something that would be incremental to how you kind of view in the market?

Well, our expected returns on those new investments are embedded in our guidance.

Okay. And I guess then shifting over to, again, or maybe continuing with EPA '27, to the extent that there's any potential for -- from a presidency dynamic that there's a push out on EPA '27. Can you talk about how that impacts your rollout of the product? I think it's expected in '26 and kind of your expectations around profitability and overall kind of dynamics for engines.

So I just want to make a couple of points as it relates to potential presidential change in the U.S. First, Cummins is always working across both parties, advocating for what we think are the right priorities and capability to advance our industry, and we'll continue to do that. And in fact, the industry has generally worked very collaboratively with the EPA on regulation and what that looks like and supported EPA regulation, which means that typically, we don't see regulation lining and writing, the work that's underway right now to try to firm up some of the IRA funding, I think it's critical to ensure that, that continues. I think it's unlikely that we'll see a change in the EPA '27 regulation. And the big thing we're watching is what does CARB do. [Indiscernible] EPA and CARB, NOx regulation with '27 with EPA greenhouse gas Phase III, does that influence in any way CARBs, CO2 and ZEV regulation? That's the thing to watch.

We will go to Jeff. We'll keep working our way around.

Jeff Kauffman from Vertical Research Partners. Mark, I just want to come back to you on the long-term CAGR guidance. You said 7% to 9% EBITDA and 7% to 9% earnings. But at the same time, you're talking about not needing to deleverage as much after 2025. You're talking about kind of hitting a peak on investment in 2026 on the R&D after the HELM platform, I guess, comes out. The implication would be free cash flow would get a little bit better. I think there would be return to shareholders. Why isn't that earnings per share guidance a little higher?

It's greater than -- so again, we've got to deliver the cash, and then that gives us the flexibility. But the greater than it was.

All right. But we're thinking about it the right way.

Absolutely. Okay, we're all on this side. We're just going to work our way back. It's the simplicity.

Noah Kaye with Oppenheimer. First, thank you for keeping the framework for the long-term targets comparable to 2022, so we can ask these questions and make these comparisons. But at a high level, taking up the total revenue outlook by more than the shift between the base business and Accelera, I want to make sure that we unpack that and understand the bridge. And one observation here is to go to one of the comments earlier, you have higher content on Accelera. And so the fact that you're taking up revenue more than the shift in Accelera suggests that there's multiple growth drivers within the business. And we just want to have that bridge. You've given us some nuggets, but if we think about the delta, how do we think about how much is data center, how much is market share gains, content growth opportunities? Just help us understand the bridge.

Yes. I think the biggest single thing or where we've got more line of sight is on the data center side. If you had asked this 2 years ago, we would not have anticipated the level of enthusiasm and beyond enthusiasm, actual customer commitment. So that's the biggest single factor, and then, yes, generally, our market share has been growing. We have been solidifying more customer commitments over time that's given us confidence to boost the revenues across the segments.

So it's sort of like half and half. Is that a...

Yes. That's the right way to think about it.

All right. And then just a quick clarifying question. Did doubling of capacity in large engine, is that over a 2030 time frame or more near term?

That's already underway. So we started that work last year, at the back end of last year, and that will continue over the next couple of years. It's a significant uplift in the supply chain to enable that to happen. So it's not just within our walls of our facilities, it's also within our suppliers.

So by like 2026, you said.

When the business -- Power Systems business wasn't performing as well, then we weren't spending as much capital. Now we've got line of sight. We're obviously happy to do that with the rising margin profile and the customer commitments. Okay. We will move to Jamie, will do the middle ground.

Jamie Cook from Truist. I guess first question, could you just, Jenny, elaborate on the microgrids opportunity, what's like your sort of positioning there, what you need to get to that $1 billion extra, and is that contemplated in the doubling of capacity? And then I guess a follow-up would be anything you feel like you need to do inorganic -- inorganically to complete the Power Systems business. And then I have a follow-up for Mark after that. Sorry...