Cummins (CMI) sees $2.04B charge in Q4 related to environmental claims resolution

On December 22, 2023, Cummins (NYSE: CMI) issued a press release announcing that the Company has reached an agreement in principle with the U.S. Environmental Protection Agency, the California Air Resources Board (“CARB”), the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General’s Office to resolve civil claims regarding the Company’s emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the United States (collectively, the “Agreement in Principle”). The Agreement in Principle relates to the ongoing formal review of the Company’s emissions certification process and compliance with emissions standards for certain pickup truck applications. The Company first announced this review on April 29, 2019, has since provided regular updates in periodic filings with the Securities and Exchange Commission and is continuing to cooperate with Environment and Climate Change Canada (“ECCC”) with respect to ECCC’s requests for certification-related information for certain pick-up truck applications.

The Company expects to record a charge of approximately $2.04 billion in the fourth quarter of 2023 to resolve these claims and related matters. Certain additional related immaterial charges will likely be incurred as these matters are fully concluded. The Company is in a strong financial position with existing liquidity and access to capital to satisfy obligations associated with the settlement, support ongoing obligations and execute its growth strategy.

The settlements contemplated by the Agreement in Principle are subject to certain regulatory and judicial approvals.

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