Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

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REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer
NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, as of September 30, 2024, was $3.8 billion. We expect to recognize the related revenue of $2.1 billion over the next 12 months and $1.7 billion over periods up to 10 years. See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.
Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
In millions September 30,
2024		 December 31,
2023
Unbilled revenue $ 346  $ 303 
Deferred revenue 2,315  2,186 
We recognized revenue of $184 million and $682 million for the three and nine months ended September 30, 2024, compared with $126 million and $510 million for the comparable periods in 2023, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three and nine months ended September 30, 2024 or 2023.
Disaggregation of Revenue
Consolidated Revenue
The table below presents our consolidated net sales by geographic area based on the location of the customer:
Three months ended Nine months ended
  September 30, September 30,
In millions 2024 2023 2024 2023
United States $ 4,825  $ 4,886  $ 14,729  $ 14,625 
China 727  721  2,197  2,273 
India 416  374  1,285  1,198 
Other international 2,488  2,450  7,444  7,426 
Total net sales $ 8,456  $ 8,431  $ 25,655  $ 25,522 
Segment Revenue
As previous announced, beginning in the second quarter of 2024, we realigned certain businesses within our Components segment to be consistent with how our segment manager now monitors performance. We reorganized the businesses to combine the engine components and software and electronics businesses into the newly formed components and software business. In addition, we rebranded our axles and brakes business as drivetrain and braking systems. We began reporting results for these changes within our Components segment effective April 1, 2024, and reflected these changes in the historical periods presented. The change had no impact on our consolidated results.
Components segment external sales by business were as follows:
Three months ended Nine months ended
September 30, September 30,
In millions 2024 2023 2024 2023
Drivetrain and braking systems $ 1,131  $ 1,177  $ 3,618  $ 3,698 
Emission solutions 759  803  2,437  2,584 
Components and software 249  289  828  913 
Automated transmissions 148  187  475  545 
Atmus —  324  289 
(1)
 1,007 
Total sales $ 2,287  $ 2,780  $ 7,647  $ 8,747 
 (1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.
Engine segment external sales by market were as follows:
Three months ended Nine months ended
September 30, September 30,
In millions 2024 2023 2024 2023
Heavy-duty truck $ 781  $ 885  $ 2,560  $ 2,601 
Medium-duty truck and bus 806  656  2,336  1,960 
Light-duty automotive 400  451  1,292  1,336 
Total on-highway 1,987  1,992  6,188  5,897 
Off-highway 228  244  735  854 
Total sales $ 2,215  $ 2,236  $ 6,923  $ 6,751 
Distribution segment external sales by region were as follows:
Three months ended Nine months ended
September 30, September 30,
In millions 2024 2023 2024 2023
North America $ 1,947  $ 1,719  $ 5,568  $ 5,195 
Asia Pacific 342  292  937  796 
Europe 307  200  830  607 
China 118  110  346  323 
Africa and Middle East 80  77  194  219 
India 77  66  223  186 
Latin America 71  55  194  168 
Total sales $ 2,942  $ 2,519  $ 8,292  $ 7,494 
Distribution segment external sales by product line were as follows:
Three months ended Nine months ended
September 30, September 30,
In millions 2024 2023 2024 2023
Power generation $ 1,088  $ 601  $ 2,743  $ 1,701 
Parts 1,000  991  2,985  3,054 
Service 453  420  1,305  1,249 
Engines 401  507  1,259  1,490 
Total sales $ 2,942  $ 2,519  $ 8,292  $ 7,494 
Power Systems segment external sales by product line were as follows:
Three months ended Nine months ended
September 30, September 30,
In millions 2024 2023 2024 2023
Power generation $ 499  $ 420  $ 1,349  $ 1,247 
Industrial 293  263  809  670 
Generator technologies 120  115  350  354 
Total sales $ 912  $ 798  $ 2,508  $ 2,271