Cummins Q1 revenues down, but profits up

Indiana, US-based engine builder Cummins Inc released its 2024 first quarter earnings results early Thursday reporting lower revenues but stronger profits following the separation of its Atmus filtration business, which was spun off as a standalone company last year.

For the quarter ended March 31, 2024, Cummins reported net sales of US$8.40bn, down 1% year-over-year from net sales of $8.45bn reported in the first quarter of FY2023.

A corresponding 1% reduction in the cost of sales, to $6.36bn, was offset by increased selling, general and administrative expenses, leaving the company with an operating income of $923m representing a 10% YoY decrease from the $1.02bn reported for the prior Q1.

Additional income of $1.38bn related to the separation of Atmus, offset by approximately $29m in restructuring expenses, left Cummins with a consolidated net income of $2.02bn for the period, for a 151% YoY increase over the $806m reported for the first quarter of FY2023.

EBITDA of $1.30bn, representing 15.5% of sales, fell behind the $1.37bn representing 16.3% of sales reported for the previous first quarter. Diluted EPS for the first quarter was $14.03, up from $5.55 one year ago.

Reporting by segment, Cummins’ engines division, which includes its leisure marine business, reported first quarter revenues of $2.9bn for a 2% YoY decrease. Sales were said to be flat in North America, while decreasing by 8% in international markets due to lower demand in China and Europe.

“Cummins’ engines division, which includes its leisure marine business, reported first quarter revenues of $2.9bn for a 2% YoY decrease”

Segment EBITDA was reported as $414m or 14.1% of sales, compared to $457m and 15.3% of sales one year ago.

“We continued to see strong demand from customers in the first quarter of 2024, reflecting the quality and performance of our products,” said Cummins Inc chair and CEO, Jennifer Rumsey. “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,”

Cummins raised its guidance after adjusting for the separation of its Atmus business, projecting full-year revenues to decline 2% to 5% on a year-over-year basis, and EBITDA in the range of 14.5% and 15.5% of sales. Its prior guidance, which also called for a revenue decline of 2% to 5%, assumed the inclusion of the financial results of Atmus for the full year. Revenue guidance remaining unchanged despite the separation of Atmus reflects strong market demand, said Rumsey.

“We have raised our expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services. We do still expect slowing demand in some of our key markets in the second half of the year,” said Rumsey. “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.”