COLUMBUS, Ind. – Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2023.
Second quarter revenues of $8.6 billion increased 31% from the same quarter in 2022. Sales in North America increased 31% and international revenues increased 32% due to the addition of Meritor and strong demand across most global markets.
“Strong demand across most of our key markets and regions resulted in record revenues and solid profitability for the company in the second quarter of 2023,” said Jennifer Rumsey, chair and CEO. “We are committed to delivering cycle-over-cycle improvement in financial performance, returning cash to our shareholders and prioritizing investments to continue building our product portfolio to power our customers’ success around the world. I want to thank our Cummins employees who continue to work tirelessly to meet customer needs and respond to the strong demand levels by ensuring quality products, strengthening our customer relationships, and navigating continued supply chain constraints.”
Net income attributable to Cummins in the second quarter was $720 million, or $5.05 per diluted share compared to $702 million, or $4.94 per diluted share in 2022. Results included costs associated with the separation of Atmus of $23 million, or $0.13 per diluted share, in the second quarter of 2023, and $29 million, or $0.16 per diluted share, in the second quarter of 2022. The second quarter of 2022 also included $47 million, or $0.33 per diluted share, of benefit from adjusting the reserves related to the indefinite suspension of our operations in Russia. The tax rate in the second quarter was 22.3% including $3 million, or $0.02 per diluted share, of unfavorable discrete tax items.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were $1.3 billion, or 15.1 percent of sales, compared to $1.1 billion, or 16.0% of sales, a year ago. EBITDA for the second quarter of 2023 included the costs related to the separation of Atmus and the second quarter 2022 EBITDA included the reserve release related to the indefinite suspension of operations in Russia and costs related to the separation of Atmus as noted above. EBITDA percentage decreased in the second quarter principally due to the dilutive impact of Meritor, which currently has a lower gross margin percentage than our company average.
Based on its current forecast, Cummins is maintaining its full year 2023 revenue guidance to be up 15% to 20% due to strong demand across most markets, especially North America. EBITDA is still expected to be in the range of 15.0% to 15.7% of sales.
The outlook above includes the projected results of the Meritor business for 2023. The outlook assumes the inclusion of Atmus for the entirety of 2023, but excludes any costs or benefits associated with the planned separation of the business. Within the Components Segment, Cummins expects revenues of the Meritor business for 2023 to be between $4.7 billion to $4.9 billion and EBITDA to be in the range of 10.3% to 11.0% of sales, consistent with prior guidance.
The company plans to continue to generate strong operating cash flow and returns for shareholders and is committed to our long-term strategic goal of returning 50 percent of operating cash flow back to shareholders. In the near term, we will focus on reinvesting for profitable growth, advancing dividends and reducing debt.
“While we see demand remaining strong through 2023 and we are maintaining our guidance on revenue and profitability, we continue to closely monitor global economic indicators. Should economic momentum slow, Cummins will remain in a strong position to keep investing in future growth, bringing new technologies to customers as we advance our Destination Zero strategy, and returning cash to shareholders,” said Rumsey.
- Progress continues to be made on the separation of the Filtration business. On May 26, Atmus Filtration Technologies Inc. shares began trading on the New York Stock Exchange (NYSE) under the ticker symbol “ATMU” in connection with the initial public offering (IPO). Upon completion of the IPO, Cummins retained approximately 80.5% of Atmus’ outstanding shares. The Atmus IPO generated $299 million of net proceeds and Atmus added $650 million of debt. Cummins realizes the benefits of the IPO proceeds and the debt issuance, as Atmus will hold the debt at full separation.
- Cummins announced two significant milestones with the 5 millionth engine produced at its Rocky Mount Engine Plant (RMEP) in North Carolina and the 2.5 millionth engine produced at its Jamestown Engine Plant (JEP) in New York. The 5 millionth milestone engine was a B6.7, which was received by Daimler, who provided it to Penske. The 2.5 millionth engine at JEP was the new 15-liter natural gas product and provided to Kenworth.
- On April 3, United States President Joe Biden visited company facilities in Fridley, Minn., to tour Accelera by Cummins’ first U.S. manufacturing location for electrolyzers, a key technology to produce low- and no-carbon hydrogen. The official ribbon cutting on May 19 marked the start of electrolyzer production in the United States. Accelera is initially dedicating 89,000 sq. ft. of the existing Cummins power generation facility in Fridley to electrolyzer production.
- In the second quarter, Accelera reached a milestone of backlog electrolyzer orders totaling over $500 million. The Fridley facility will help address that growing demand along with other capacity being added globally.
- Cummins signed a definitive agreement with Tata Motors Limited (TML), to manufacture a range of low- to zero-emissions technology products in India over the next few years. As a part of this agreement, Cummins and TML have set up a new business entity called TCPL Green Energy Solutions Private Limited (GES), a wholly owned subsidiary under the existing joint venture with a focus on the development and manufacturing of sustainable technology products that will include hydrogen-powered internal combustion engines, fuel delivery systems, and battery electric powertrains and fuel cell electric systems through the Accelera™ by Cummins brand.
- Cummins received a 2023 Energy Management Insight Award from the Clean Energy Ministerial. The award recognizes organizations demonstrating the benefits of energy management systems and meeting the ISO 50001 international energy standard.
- Cummins announced an increase in the quarterly common stock cash dividend from $1.57 to $1.68 per share. The company has increased the quarterly dividend to shareholders for 14 consecutive years.
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