Energy, Automobile, EV, Renewable News | Cummins Reports Strong Third Quarter 2024 Results

Cummins Reports Strong Third Quarter 2024 Results

November 5, 2024

Third quarter revenues of $8.5 billion; GAAP¹Net Income of $809 million, or 9.6% of sales
EBITDA in the third quarter was 16.4% of sales; Diluted EPS of $5.86
The company is maintaining its full year 2024 revenue guidance of down 3% to flat.
EBITDA is now expected to be approximately 15.5% compared to previous guidance of 15.0% to 15.5%.

COLUMBUS, Ind.–(BUSINESS WIRE)–Cummins Inc. (NYSE: CMI) today reported results for the third quarter of 2024.

“We achieved strong sales and profitability in the third quarter, led by improvement in our Power Systems and Distribution businesses, and have adjusted our full year projection for EBITDA percentage to be at the top end of the prior range,” said Jennifer Rumsey, Chair and CEO of Cummins. “We continue to advance our Destination Zero strategy as we deliver innovative technologies for our customers, strengthen our position in key markets and drive improvement in our financial performance.”

Third quarter revenues of $8.5 billion were flat to the same quarter in 2023. Sales in North America decreased 1% while international revenues increased 2%.

Net income attributable to Cummins in the third quarter was $809 million, or $5.86 per diluted share, compared to $656 million, or $4.59 per diluted share, in 2023. The tax rate in the third quarter was 19.2% including $36 million, or $0.26 per diluted share, of favorable discrete tax items. The third quarter of 2023 included costs related to the separation of Atmus of $26 million, or $0.14 per diluted share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter were $1.4 billion, or 16.4% of sales, compared to $1.2 billion, or 14.6% of sales, a year ago. EBITDA for the third quarter of 2023 included the costs related to the separation of Atmus noted above.

2024 Outlook:

Based on its current forecast, Cummins is maintaining its full-year 2024 revenue guidance to be in the range of down 3% to flat. EBITDA is expected to be approximately 15.5%; at the top end of the previous guidance of 15.0% to 15.5%.

Cummins plans to continue generating strong operating cash flow and returns for shareholders and is committed to our long-term strategic goal of returning 50% of operating cash flow back to shareholders. In the near term, we will focus on reinvesting for profitable growth, dividends and reducing debt.

“We solidified our expectations on profitability for 2024 to the top end of our prior range thanks to continued improvements in Power Systems and Distribution segments. Although we faced slowing demand in the North American heavy-duty truck market during the third quarter and anticipate this trend to persist into the fourth quarter, Cummins remains well-positioned to deliver strong financial performance, invest in future growth and return cash to shareholders,” said Rumsey.

Third Quarter 2024 Highlights:

Cummins increased its quarterly common stock cash dividend from $1.68 to $1.82 per share. The company has increased the quarterly dividend to shareholders for 15 consecutive years.

Cummins started full production of the X15N™ natural gas engine at its Jamestown Engine Plant, which celebrated its 50^th anniversary in the third quarter. The Cummins X15N is part of the X-series Cummins’ HELM™ lineup, a global engine platform that is derived from a common base and offers multiple fuel types including natural gas, advanced diesel and hydrogen.

Cummins attended IAA Transportation 2024 in Hannover, Germany, to showcase a diverse portfolio of powertrain and component technologies as part of the company’s Destination Zero strategy to progress industry decarbonization. Highlighted products at the booth included Euro-7 ready X10 and the X15H hydrogen internal combustion engines, a hydrogen fuel cell engine, next-generation lithium iron phosphate battery solutions, eAxles, eTurbocharger, eCompressor and hydrogen fuel storage solutions, as well as fully integrated powertrains.

Accelera™ by Cummins celebrated the opening of its new electrolyzer manufacturing plant in Guadalajara, Castilla-La Mancha, Spain. The plant has the capacity to produce 500 megawatts (MW) of electrolyzers per year, scalable to more than 1 gigawatt (GW) per year in the future.

Cummins was recognized as one of the 2024 100 Best Companies by Seramount, an organization focused on empowering inclusive workplaces; named a Veteran Friendly Employer by U.S. Veterans Magazine; and ranked #55 on Glassdoor’s Best Places to Work in 2024.

¹ Generally Accepted Accounting Principles in the U.S.

Third quarter 2024 detail (all comparisons to same period in 2023):

Components Segment

Sales – $2.7 billion, down 16%
Segment EBITDA – $351 million, or 12.9% of sales compared to $441 million, or 13.6% of sales, which included the operating results of the Atmus business and $20 million of costs related to its separation
Revenues in North America decreased by 14% and international sales decreased by 18% primarily due to the separation of Atmus and lower demand in heavy-duty truck.

Engine Segment

Sales – $2.9 billion, down 1%
Segment EBITDA – $427 million, or 14.7% of sales, compared to $395 million, or 13.5% of sales
Revenues decreased 2% in North America and increased 4% in international markets due to softening demand in the North American heavy-duty truck market and strength in global medium-duty truck markets.

Distribution Segment

Sales – $3.0 billion, up 16%
Segment EBITDA – $370 million, or 12.5% of sales, compared to $306 million, or 12.1% of sales
Revenues in North America increased 13% and international sales increased by 25% driven by increased demand for power generation products, particularly for data center applications, and pricing actions.

Power Systems Segment

Sales – $1.7 billion, up 17%
Segment EBITDA – $328 million, or 19.4% of sales, compared to $234 million, or 16.2% of sales
Power generation revenues increased 24% driven by increased global demand, particularly for the data center market. Industrial revenues increased 7% primarily due to strong mining demand more than offsetting weaker oil and gas markets.

Accelera Segment

Sales – $110 million, up 7%
Segment EBITDA loss – $115 million
Revenues increased due to increased electrolyzer installations. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles, are contributing to EBITDA losses.

About Cummins Inc.

Cummins Inc., a global power solutions leader, is comprised of five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company’s commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment, and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $735 million on sales of $34.1 billion in 2023. See how Cummins is powering a world that’s always on by accessing news releases and more information at https://www.cummins.com/.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues, EBITDA and the Settlement Agreements to resolve regulatory proceedings regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse consequences resulting from entering into the Settlement Agreements, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc.; raw material, transportation and labor price fluctuations and supply shortages; aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers’ and original equipment manufacturers’ customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2023 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release, except for forward-looking measures of EBITDA where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash items that are excluded from the non-GAAP outlook measure. Cummins presents this information as it believes it is useful to understanding the Company’s operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these results today at 10 a.m. EDT. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited) (a)

	Three months ended
	September 30,
In millions, except per share amounts	2024		2023
NET SALES	$	8,456	$	8,431
Cost of sales		6,285		6,360
GROSS MARGIN		2,171		2,071
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses		807		831
Research, development and engineering expenses		359		376
Equity, royalty and interest income from investees		99		118
Other operating expense, net		54		32
OPERATING INCOME		1,050		950
Interest expense		83		97
Other income, net		76		25
INCOME BEFORE INCOME TAXES		1,043		878
Income tax expense		200		188
CONSOLIDATED NET INCOME		843		690
Less: Net income attributable to noncontrolling interests		34		34
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	809	$	656

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	5.90	$	4.63
Diluted	$	5.86	$	4.59

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic		137.2		141.8
Diluted		138.1		142.8

^(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited) (a)

	Nine months ended
	September 30,
In millions, except per share amounts	2024		2023
NET SALES	$	25,655	$	25,522
Cost of sales		19,250		19,274
GROSS MARGIN		6,405		6,248
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses		2,474		2,457
Research, development and engineering expenses		1,107		1,110
Equity, royalty and interest income from investees		325		370
Other operating expense, net		131		78
OPERATING INCOME		3,018		2,973
Interest expense		281		283
Other income, net		1,504		166
INCOME BEFORE INCOME TAXES		4,241		2,856
Income tax expense		618		623
CONSOLIDATED NET INCOME		3,623		2,233
Less: Net income attributable to noncontrolling interests		95		67
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	3,528	$	2,166

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	25.47	$	15.29
Diluted	$	25.31	$	15.19

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic		138.5		141.7
Diluted		139.4		142.6

^(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)

In millions, except par value	September 30, 2024			December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	1,733		$	2,179
Marketable securities		518			562
Total cash, cash equivalents and marketable securities		2,251			2,741
Accounts and notes receivable, net		5,387			5,583
Inventories		6,134			5,677
Prepaid expenses and other current assets		1,544			1,197
Total current assets		15,316			15,198
Long-term assets
Property, plant and equipment, net		6,176			6,249
Investments and advances related to equity method investees		1,922			1,800
Goodwill		2,412			2,499
Other intangible assets, net		2,462			2,519
Pension assets		1,208			1,197
Other assets		2,556			2,543
Total assets	$	32,052		$	32,005

LIABILITIES
Current liabilities
Accounts payable (principally trade)	$	4,206		$	4,260
Loans payable		441			280
Commercial paper		1,636			1,496
Current maturities of long-term debt		654			118
Accrued compensation, benefits and retirement costs		1,011			1,108
Current portion of accrued product warranty		685			667
Current portion of deferred revenue		1,225			1,220
Other accrued expenses		1,745			3,754
Total current liabilities		11,603			12,903
Long-term liabilities
Long-term debt		4,856			4,802
Deferred revenue		1,090			966
Other liabilities		3,162			3,430
Total liabilities	$	20,711		$	22,101

EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued	$	2,612		$	2,564
Retained earnings		20,660			17,851
Treasury stock, at cost, 85.4 and 80.7 shares		(10,783	)		(9,359	)
Accumulated other comprehensive loss		(2,174	)		(2,206	)
Total Cummins Inc. shareholders’ equity		10,315			8,850
Noncontrolling interests		1,026			1,054
Total equity	$	11,341		$	9,904
Total liabilities and equity	$	32,052		$	32,005

^(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)

	Three months ended
	September 30,
In millions	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	843		$	690
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization		266			257
Deferred income taxes		(7	)		(106	)
Equity in income of investees, net of dividends		12			13
Pension and OPEB expense		9			1
Pension contributions and OPEB payments		(13	)		(12	)
Changes in current assets and liabilities, net of acquisitions
Accounts and notes receivable		270			188
Inventories		(257	)		85
Other current assets		(219	)		(54	)
Accounts payable		(236	)		(22	)
Accrued expenses		(67	)		282
Other, net		39			207
Net cash provided by operating activities		640			1,529

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(259	)		(280	)
Acquisition of businesses, net of cash acquired		—			7
Investments in marketable securities—acquisitions		(349	)		(328	)
Investments in marketable securities—liquidations		428			382
Other, net		(83	)		(35	)
Net cash used in investing activities		(263	)		(254	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		141			42
Net borrowings of commercial paper		55			92
Payments on borrowings and finance lease obligations		(163	)		(163	)
Dividend payments on common stock		(250	)		(238	)
Payments for purchase of redeemable noncontrolling interests		—			(175	)
Other, net		(26	)		(24	)
Net cash used in financing activities		(243	)		(466	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		9			1
Net increase in cash and cash equivalents		143			810
Cash and cash equivalents at beginning of period		1,590			1,802
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,733		$	2,612

^(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)

	Nine months ended
	September 30,
In millions	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	3,623		$	2,233
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Gain related to divestiture of Atmus		(1,333	)		—
Depreciation and amortization		794			760
Deferred income taxes		(106	)		(238	)
Equity in income of investees, net of dividends		(74	)		(100	)
Pension and OPEB expense		28			4
Pension contributions and OPEB payments		(72	)		(115	)
Changes in current assets and liabilities, net of acquisitions and divestiture
Accounts and notes receivable		109			(447	)
Inventories		(726	)		(318	)
Other current assets		(370	)		(191	)
Accounts payable		27			43
Accrued expenses		(2,000	)		543
Other, net		165			333
Net cash provided by operating activities		65			2,507

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(668	)		(694	)
Acquisition of businesses, net of cash acquired		(58	)		(127	)
Investments in marketable securities—acquisitions		(1,062	)		(976	)
Investments in marketable securities—liquidations		1,113			1,002
Cash associated with Atmus divestiture		(174	)		—
Other, net		(220	)		(65	)
Net cash used in investing activities		(1,069	)		(860	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		2,623			779
Net borrowings (payments) of commercial paper		140			(566	)
Payments on borrowings and finance lease obligations		(1,386	)		(391	)
Dividend payments on common stock		(719	)		(683	)
Payments for purchase of redeemable noncontrolling interests		—			(175	)
Other, net		(94	)		(33	)
Net cash provided by (used in) financing activities		564			(1,069	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(6	)		(67	)
Net (decrease) increase in cash and cash equivalents		(446	)		511
Cash and cash equivalents at beginning of year		2,179			2,101
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,733		$	2,612

^(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)

In millions	Components				Engine			Distribution			Power Systems			Accelera			Total Segments			Intersegment Eliminations ⁽¹⁾			Total
Three months ended September 30, 2024
External sales	$	2,287			$	2,215		$	2,942		$	912		$	100		$	8,456		$	—		$	8,456
Intersegment sales		437				698			10			775			10			1,930			(1,930	)		—
Total sales		2,724				2,913			2,952			1,687			110			10,386			(1,930	)		8,456
Research, development and engineering expenses		85				147			13			57			57			359			—			359
Equity, royalty and interest income (loss) from investees		12				53			25			20			(11	)		99			—			99
Interest income		4				2			7			1			—			14			—			14
EBITDA ⁽²⁾		351				427			370			328			(115	)		1,361			28			1,389
Depreciation and amortization ⁽³⁾		121				62			31			33			16			263			—			263

EBITDA as a percentage of segment sales		12.9	%			14.7	%		12.5	%		19.4	%		NM			13.1	%					16.4	%

Three months ended September 30, 2023
External sales	$	2,780			$	2,236		$	2,519		$	798		$	98		$	8,431		$	—		$	8,431
Intersegment sales		456				695			16			646			5			1,818			(1,818	)		—
Total sales		3,236				2,931			2,535			1,444			103			10,249			(1,818	)		8,431
Research, development and engineering expenses		93				159			14			60			50			376			—			376
Equity, royalty and interest income (loss) from investees		26				62			22			11			(3	)		118			—			118
Interest income		8				4			9			3			—			24			—			24
EBITDA ⁽²⁾		441		⁽⁴⁾		395			306			234			(114	)		1,262			(32	)		1,230
Depreciation and amortization ⁽³⁾		120				59			28			30			18			255			—			255

EBITDA as a percentage of segment sales		13.6	%			13.5	%		12.1	%		16.2	%		NM			12.3	%					14.6	%

“NM” – not meaningful information
⁽¹⁾Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended September 30, 2024 and 2023, except for $6 million of costs associated with the divestiture of Atmus Filtration Technologies Inc. (Atmus) in 2023.
⁽²⁾EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests. We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors.
⁽³⁾Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as interest expense. A portion of depreciation expense is included in research, development and engineering expenses.
⁽⁴⁾Included $20 million of costs associated with the divestiture of Atmus.