Cummins Reports Record Q1 Profits
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Cummins posted a record quarterly profit of $790 million, or $5.55 per diluted share, compared with earnings of $418 million, $2.92, a year earlier. The prior-year quarter’s results took a $158 million hit on the suspension of operations in Russia, it said.
The company’s first-quarter 2023 revenue totaled $8.5 billion, a 32% increase compared with the same period a year earlier, it said. Sales in North America jumped 39% on the back of its acquisition of axles and brakes specialist Meritor and strong demand globally, it added.
Cummins’ earnings per share beat the consensus estimate of $4.81 per share by 15.38% and topped the revenue estimate by 5.28%, according to Zacks Equity Research. Analysts applauded the results on the company’s first-quarter earnings call.
Columbus, Ind.-based Cummins’ components unit, which includes Meritor, posted sales totaling $3.6 billion in the first quarter, up 79% year-over-year, it said. Unit revenue in North America increased 87% year-over-year due to the addition of Meritor and higher global demand, the parent company said.
Meritor’s contribution could be seen most clearly in the components unit’s addition of an axles-and-brakes sales breakdown in the earnings report. There was no such line in the year-ago period. In the most recent quarter, axles-and-brakes revenues totaled $1.272 billion, compared with $1.056 billion in revenue for the largest legacy product — emission solutions. Still, Cummins continues to work on improving performance at Meritor, CEO Jennifer Rumsey said on the earnings call.
The company’s engine segment reported sales of $3 billion in the most recent quarter, up 8% year-over-year, with on-highway revenues up 9% on strong North American truck market demand, price increases and strong aftermarket demand, it said.
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Heavy-duty truck engine revenue totaled $1.114 billion, compared with $908 million in the year-ago period. Heavy-duty truck engine shipments totaled 34,700 in the first quarter, compared with 28,600 in the year-earlier period, Cummins said.
Cummins expects the market size for heavy-duty Class 8 truck engines in North America to be 270,000 to 290,000 in 2023, compared with previous expectations of 260,000 to 280,000 engines, the company said. It revised its market size expectations higher to down 4% to up 4%, from down 5% to up 2%. Cummins raised its full-year 2023 revenue guidance to an increase of 15% to 20%, compared with prior projections of up 12% to 17%, citing stronger demand across most markets.
Within its components segment, Cummins expects revenues of the Meritor business for 2023 to be $4.7 billion to $4.9 billion, an increase from $4.5 billion to $4.7 billion previously, it added.