Cummins Sees Q1 Income Rise From Sale of Filtration Business
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Engine manufacturer Cummins Inc. said its first-quarter bottom line was lifted by the March completion of its divestiture from filtration business Atmus, while quarterly revenue remained steady.
Columbus, Ind.-based Cummins on May 2 said net income attributable to the company jumped to $2 billion, or $14.03 per diluted share, compared with $790 million, $5.55, in 2023. The results reflect gains related to the Atmus deal net of transaction costs and other expenses of $1.3 billion, $9.08, and restructuring expenses of $29 million, 15 cents, Cummins said. During Q1 2023, Cummins incurred $18 million in costs, 10 cents, related to the Atmus transaction.
The company’s Q1 2024 revenue dipped 1% to $8.4 billion.
“We continued to see strong demand from customers in the first quarter of 2024, reflecting the quality and performance of our products,” CEO Jennifer Rumsey said in a release. “We delivered solid profitability and also completed the separation of Atmus, allowing Cummins to continue its focus on advancing innovative power solutions and positioning Atmus to pursue its own plans for profitable growth. I am deeply appreciative of our Cummins employees across the globe, whose broad expertise and diverse perspectives are driving our ability to innovate for our customers and meet global demand.”
Rumsey
The company’s Engine segment saw sales slide 2% to $2.92 billion compared with $2.98 billion a year ago. Revenue in the on-highway segment increased 1% thanks to continued strong demand in the North American medium-duty truck market and good pricing activity, Cummins said. Still, sales overall were flat in North America and decreased 8% in international markets due to lower demand in China and Europe. International revenue saw a 1% drop.
Cummins said its Components segment saw Q1 sales decline 6% to $3.33 billion compared with $3.55 billion, as North American revenue decreased by 5% and international sales fell 8% primarily because of lower demand in China and Europe.
The company’s Power Systems segment saw Q1 sales rise 3% to $1.38 billion compared with $1.34 billion. Power generation revenue increased 11% thanks to increased global demand, especially for data centers, Cummins said. Industrial revenue fell 8% primarily due to weaker demand in oil and gas markets.
The company’s Accelera joint venture with Daimler Trucks and Paccar saw Q1 sales jump 9% to $93 million because of increased electrolyzer installations. However, costs associated with the development of electric powertrains, fuel cells and electrolyzers — as well as products to support battery-electric vehicles — contributed to a $101 million Q1 EBITDA loss.
Accelera in January selected Marshall County, Miss., as the future site of an advanced battery cell manufacturing plant. The site will handle battery cell production for commercial electric vehicles and is expected to create more than 2,000 jobs, Cummins said, with the option for further expansion. The 21-gigawatt hour factory is expected to launch production in 2027.
“The company continues to make investments to support our customers through the energy transition and deliver future profitable growth,” Cummins said in the earnings release.
For Q1, Cummins said its Distribution segment saw sales rise 5% to $2.53 billion compared with $2.40 billion. Revenue in North America rose 2%, and international sales increased by 14% on the strength of increased demand for power generation products and pricing activity, Cummins said.
Looking ahead, Cummins said it is raising its guidance for 2024 revenue after adjusting for the separation of Atmus. While it expects 2024 revenue to decline 2% to 5% — in line with prior guidance — the earlier guidance assumed the inclusion of Atmus revenue.
Cummins said it remains committed to its long-term strategic goal of returning 50% of operating cash flow back to shareholders and that in the near-term, it will focus on reinvesting for profitable growth, dividends and reducing debt.
“We have raised our expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services,” Rumsey said. “We do still expect slowing demand in some of our key markets in the second half of the year. Despite lower sales, Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.”
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