Cummins Inc. reported first-quarter revenues increased 21% to $5.6 billion, lifted by strong demand for trucks, construction and mining equipment.
Sales in North America improved by 22% while international revenues increased by 20% led by strong growth in Europe, Latin America, China and India.
“Improving demand in a number of the company’s core markets, combined with our strong global market share and the success of new products aimed at lowering emissions, resulted in sales growth of 21% in the first quarter,” said Chairman and CEO Tom Linebarger.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $700 million, or 12.6% of sales, down from $705 million or 15.4% of sales a year ago. Excluding the impact of the campaign charge, EBITDA for the first quarter of 2018 was $887 million or 15.9 percent of sales.
Net income attributable to Cummins in the first quarter was $325 million ($1.96 per diluted share), compared to $396 million ($2.36 per diluted share). First-quarter results included $78 million in discrete tax charges, primarily related to U.S. tax reform. Excluding the discrete tax charges, net income attributable to Cummins in the first quarter was $403 million ($2.43 per diluted share), reflecting a 23 percent tax rate.
“Cummins delivered solid operating performance in the first quarter led by strong incremental margins in the Power Systems segment,” continued Linebarger. “As a result of rising demand and continued benefits from cost reduction initiatives, we have raised our full year outlook for sales and EBITDA.”
Based on the current forecast, Cummins expects full year 2018 revenues to be up 10% to 14% compared to prior guidance of up 4% to 8%.
Results by segment showed:
- Sales – $2.4 billion, up 21%
- Segment EBITDA – $286 million, or 11.7% of sales, compared to $273 million or 13.5% of sales
- Segment EBITDA reflects a charge of $93 million reflecting the expected costs of a campaign to address the performance of an aftertreatment component
- On-highway revenues increased 20%, and off-highway revenues increased 23% primarily due to increased global demand in truck and construction markets
- Sales – $1.9 billion, up 13%
- Segment EBITDA – $123 million, or 6.6% of sales, compared to $130 million or 7.9% of sales
- Revenues in North America increased by 15 percent and in international markets by 8%
- Sales – $1.8 billion, up 30%
- Segment EBITDA – $227 million, or 12.9% of sales, compared to $216 million or 16.1% of sales
- Segment EBITDA reflects a charge of $94 million which represents the expected costs of a campaign to address the performance of an aftertreatment component
- The Eaton Cummins Automated Transmission joint venture recorded sales of $117 million and an EBITDA loss of $3 million in the first quarter
- Revenues in North America increased by 35 percent, and international sales grew by 25% due to higher commercial truck production in North America as well as additional content in India with the introduction of Bharat Stage IV in 2017 and a weak U.S. dollar
Power Systems Segment
- Sales – $1.1 billion, up 22%
- Segment EBITDA – $142 million, or 13.2% of sales, compared to $85 million, or 9.6% of sales
- Increased demand in mining, oil and gas and power generation markets drove the growth in sales
Electrified Power Segment
- Sales – $2 million
- Segment EBITDA loss: $10 million