Cummins Profit Soars as Meritor Deal Boosts Revenue

Sales in North America Increase 16% and International Revenues Rise 13%
Cummins headquarters in Columbus, Ind.
Cummins' headquarters in Columbus, Ind. (Cummins Inc.)

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Cummins Inc. posted a 64% year-over-year jump in profits in the third quarter of 2023, beating analyst revenue expectations, as the acquisition of axles and brakes specialist Meritor continued to boost the company’s bottom line.

The company reported Q3 net income of $656 million, or $4.59 per diluted share, compared with a profit of $400 million, $2.82, in 2022.

Columbus, Ind.-headquartered Cummins turned in third-quarter revenues of $8.431 billion, an increase of 15% from $7.333 billion in the same quarter in 2022.

Cummins beat consensus analyst expectations for revenues of $8.14 billion, according to Zacks Equity Research, although EPS fell slightly short of the consensus forecast of $4.63 per share.

The company said sales in North America increased 16% and international revenues rose 13% due to the addition of Meritor and strong demand across most global markets. The third quarter of 2022 included two months of consolidated operations for Meritor. Cummins does not break out sales figures regionally.

Jennifer Rumsey


“We delivered solid profitability and record operating cash flow in the third quarter,” CEO Jennifer Rumsey said in a statement accompanying the results. “While full-year revenues are at the high end of our expectations, we are seeing signs of moderating demand in some markets and are taking steps to reduce costs and position the company for success in 2024.”

Cummins’ Engine unit posted sales of $2.931 billion in Q3, up 5% from $2.779 billion in the same period a year earlier, it said.

On-highway revenues rose 8% on the back of strong demand in the North American truck market and price increases, the company said, adding that overall Q3 segment sales increased 5% in North America and 7% in international markets.

Of those engine sales, $1.116 billion were for heavy-duty trucks in the most recent quarter, up 15% compared with $972 million in the year-ago period. An additional $931 million came in the medium-duty truck and bus sector, compared with $868 million a year earlier.

Cummins shipped 36,300 heavy-duty engines in the most recent quarter, compared with 30,200 in the year-ago period. Through the first three quarters of 2023, the company shipped 107,400 heavy-duty engines, compared with 89,700 units in the year-ago period.

During the company’s quarterly earnings call, Rumsey said Cummins expects heavy-duty truck production to fall in Q4 compared with the third quarter, citing component supply shortages, inventory management and fewer production days in the period.


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Still, Cummins raised its North American heavy-duty truck sales forecast to be between 280,000 and 300,000 as a result of a strong Q3, a range of flat to up 8% compared with 2022. Previously, the company had expected 270,000-290,000 in regional sales.

At the company’s Components unit, Q3 sales jumped 20% year-over-year to $3.236 billion compared with $2.703 billion as a result of the addition of Meritor. Segment revenue in North America increased by 21% and international sales rose 19% due to an additional month of Meritor operations and higher global demand, it said.

Breaking that down further, axles and brakes accounted for $1.177 billion in Q3 sales, compared with $732 million in the year-ago period. Emissions solutions sales totaled $893 million in Q3, compared with $853 million a year earlier.

Engine component sales for Q3 totaled $532 million, compared with $509 million in Q3 2022. Automated transmission sales totaled $187 million in Q3, compared with $159 million a year earlier.

At the company’s Distribution unit, sales in the most recent three-month period totaled $2.535 billion, up 13% from $2.239 billion a year earlier. Revenues in North America increased 14% year-over-year and international sales climbed 11%.

The company’s sustainable energy business, Accelera, posted sales of $103 million in Q3, up 106% from $50 million in the year-ago period. Revenues increased due to higher demand for battery-electric systems, increased electrolyzer installations, and the additions of the Siemens Commercial Vehicle business and electric powertrain portion of the Meritor business, it said.

However, costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery-electric vehicles, saw an EBITDA loss of $114 million in Q3, compared with $95 million a year earlier. Cummins launched the Accelera brand in March.

Looking forward, while Cummins expects 2023 to be a record year for revenue growth, Rumsey said company leaders were “seeing some signs of slowing activity and are expecting lower demand in the fourth quarter.”

Cummins raised its full-year 2023 revenue guidance to $4.7 billion-$4.9 billion, up 18%-21%, due to strong demand across most markets, particularly North America.

Also Nov. 2, Cummins said Srikanth Padmanabhan, currently head of the company’s Engine unit, is to take a wider role in the company in the newly created role of operations president. Padmanabhan will be replaced by Brett Merritt, currently head of the company’s on-highway engine business.

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