Data Center Market Growth and Capacity
Q: Can you update us on the data center and large engine market dynamics?
A: The data center market continues to show strong demand, driven by cloud storage and AI investments. We expect 10–15% growth in this sector, with a very strong backlog. We're confident in our capacity to meet this demand and are evaluating our capacity to support growth into 2025 and 2026.

Cost Outlook and Margin Improvement Plans
Q: Do you foresee costs receding or consider significant cost-out programs?
A: We are in a period of peak investment, particularly in fuel-agnostic engine platforms. We expect these investments to position us for profitable growth when launched in '26–'27. We're also focusing on improving operating performance and have taken voluntary reduction actions to manage costs as revenue declines.

Accelera Backlog and Profitability Outlook
Q: What's the outlook for Accelera's backlog and profitability as you deliver electrolyzers?
A: Accelera is experiencing record backlog for electrolyzers. As production ramps up, we expect revenue growth to improve margin performance in this business. We're also investing in a battery cell joint venture to ensure leading solutions and domestic supply.

Engine Segment Margin Outlook and Warranty Costs
Q: What factors affect the Engine segment's margins in '24?
A: We anticipate slightly higher product coverage or warranty costs as a percentage of sales in the Engine business. Parts headwinds were pronounced in '23, and while we're not expecting significant changes, these factors are included in our margin guidance.

China Truck Market Outlook
Q: Can you walk us through your wide China truck market guidance?
A: The outlook is cloudy, with low visibility. We're coming off a very weak base, and while we don't foresee a significant drop, the pace of the economy is sluggish. Upside would depend on unexpected stimulus, but we remain poised to outperform the market.

Capital Allocation Priorities and Atmus Spin-Off
Q: What are your capital allocation priorities in 2024, especially regarding Atmus?
A: We're focusing on investing in the business, maintaining dividends, and further deleveraging. With the Atmus separation, we expect our share count to decrease as we exchange Cummins shares for Atmus shares.

North America Engine Shipment Forecast
Q: Is the engine shipment decline relative to heavy or medium-duty market?
A: For medium-duty, we forecast down 5% to flat, totaling 140,000 to 150,000 units. In heavy-duty, we project a 10–15% decline. The market has been unusual, with strong demand and supply constraints easing.

Medium-Duty Market Outlook
Q: Does medium-duty have inherent demand beyond constrained production?
A: We expect the medium-duty market to remain flat and strong. Despite prior supply chain constraints, there's continued demand and pent-up demand from customers.

Aftermarket Outlook and Second Half Slowdown
Q: What gives you confidence in the second-half slowdown amid aftermarket trends?
A: We saw a pronounced drop in parts demand in Q4, attributed to customer cash flow management. We expect parts demand to recover and be steady throughout the year. Concerns about freight activity and spot rates contribute to our cautious outlook.

Accelera Revenue Targets and Adoption Scenarios
Q: Which adoption scenario for Accelera seems more likely now?
A: Current trends lean towards the lower end of our adoption scenarios. Regulations and incentives are driving adoption, but we continue to pace our investments accordingly.

Meritor Performance and Components Segment Outlook
Q: How will Meritor's 2023 performance trend in 2024 within Components?
A: Meritor achieved its goals for 2023, with further improvement expected in 2024. It's contributing positively to the Components segment, and we're excited about its future performance.

Cash Flow Dynamics and Deleveraging
Q: How should we think about cash flow and leverage going forward?
A: We'll start the year focusing on investing in the business, dividends, and deleveraging. We expect to delever by the end of the year while evaluating opportunities for returns to investors.

New Engine Regulations and Margin Impact
Q: How will new engine regulations affect margins compared to prior cycles?
A: As we launch new products for upcoming emissions regulations, we typically see content increases and opportunities to price accordingly. However, we also expect a bump up in warranty costs until we demonstrate the capability of new platforms.

Labor Efficiency and Cost Outlook
Q: Are high logistics costs affecting labor efficiency and offering upside?
A: We're driving more efficiency as supply chain hiccups iron out. Costs per labor hour are improving, and overall labor costs have leveled out. However, near-term concerns like shipping delays due to events in the Middle East may impact logistics costs.

North America Truck Market Decline Cadence
Q: Can you detail the cadence of the North America truck market decline?
A: We expect current levels to hold steady in the first part of the year, with softening anticipated in the second half. Our engine build rates slightly lead truck build rates, and we're forecasting a shallow cycle.