Emissions Sensors Settlement Leaves Cummins Nursing Q4 Loss

Quarterly Revenue Rises 10% on North American Truck Market Strength, Chinese Components Rebound
Cummins engine plant in Columbus, Ind.
Cummins' Columbus, Ind., engine plant. Cummins posted a loss of $1.4 billion in the quarter compared with a profit of $631 million in the same period a year earlier. (Cummins Inc.)

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A December settlement between Cummins Inc. and the federal government pushed the engine and component manufacturer’s results into the red in the fourth quarter of 2023, it said Feb. 6.

Columbus, Ind.-based Cummins posted a loss of $1.4 billion, or $10.01 per diluted share, in the quarter compared with a profit of $631 million, or $4.43 per diluted share, in the same period a year earlier.

Results for the most recent quarter took a hammering from a $2.04 billion penalty Cummins agreed to pay — while admitting no wrongdoing — to resolve a Department of Justice probe into devices that bypassed emissions sensors installed on engines in hundreds of thousands of Class 2B and Class 3 trucks.

Class 2 is subdivided into 2A (6,001-8,500 pounds) and 2B (8,501-10,000 pounds), which are mostly pickup trucks.

“Reaching an agreement was the best way to move forward,” CEO Jennifer Rumsey said during the company’s Feb. 6 analyst call.

Following the release of the earnings, Cummins’ share price rose, topping $244 just after the earnings call finished. The stock opened below $242 after closing just above $241 on Feb. 5.

Revenue totaled $8.543 billion in the fourth quarter, an increase of 10% from $7.77 billion in the same quarter in 2022. It said sales in North America rose 8%, and international revenue climbed 13%.

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Cummins’ Components division, which supplies axles, brakes and aftertreatment products for commercial vehicle applications as well as being a major supplier of turbochargers, is the company’s largest since the acquisition of Meritor, which closed in August 2022. Sales for the Components unit totaled $3.191 billion in the most recent quarter, up 3% from $3.095 billion a year earlier, driven by price increases and strong demand in the global truck market, it said. Revenue at the division in North America decreased 2%, and international sales rose 10%, largely because of increased demand in China, which had weak markets in 2022, the company said.



Meritor (the company’s axles and brakes operations) posted Q4 sales of $1.124 billion, down 2% compared with $1.147 billion in the same period a year earlier.

Engine components contributed $519 million in revenue in the most recent three months, compared with $493 million in the year-ago period. Automated transmissions brought in $169 million in Q4, compared with $157 million in the year-ago period.

Cummins’ Engine division posted $2.779 billion in sales in the three months that ended Dec. 31, up 5% from $2.638 billion a year earlier.

On-highway revenue increased 10%, driven by strong demand in the North American truck market and pricing actions, the company said. Sales rose 5% in North America and grew 8% elsewhere, it added.

The company’s heavy-duty truck engine sales in the most recent quarter totaled $1.052 billion, a 9% increase compared with $966 million in the year-ago period. Cummins shipped 34,500 heavy-duty truck engines in Q4, compared with 31,000 in the year-ago period. Cummins’ medium-duty truck and bus engine sales in Q4 totaled $894 million, a 3% increase compared with $869 million in the year-ago period.


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Revenue in the quarter at the zero-emission, products-focused Accelera division totaled $81 million in Q4, up 8% from $75 million a year earlier.

For full-year 2023, Cummins’ profit plunged to $735 million, or $5.15 per diluted share, down 67% compared with $2.2 billion, or $15.12 per diluted share, in 2022. However, revenue totaled $34.07 billion in 2023, 21% higher than 2022’s $28.07 billion.

Looking ahead, Cummins projects full-year revenue will decline 2% to 5% on a year-over-year basis in 2024.

“In 2024, we anticipate that demand will slow, particularly in the North America heavy-duty truck market, partially offset by strength in other key markets, and have already taken some actions to reduce cost,” Rumsey said in a statement. “We will continue to monitor global economic indicators closely and will ensure we are prepared to adjust our business should economic momentum slow further.”

During the earnings call, Rumsey said the start of 2024 would see much the same demand as the end of 2023, with softness accelerating in the second half of the year.

A 6.7-liter Cummins diesel engine

A 6.7-liter Cummins diesel engine (Associated Press/Nam Y. Huh, File) 

“It’s what’s happening in the underlying freight market that is concerning to us,” added Chief Financial Officer Mark Smith, noting that how carriers were affected by the ongoing freight weakness would be the key determinant when it came to demand.

The company is forecasting overall North American heavy-duty on-highway truck sales will fall between 10% and 15% year-over-year in 2024 to 245,000-265,000 units.

Sales of North American medium-duty on-highway trucks are expected to be flat to down 5% at 140,000-150,000 units, it said. Cummins expects revenue to fall between 2% and 7% at its two largest divisions: Components and Engine.

Still, Rumsey told analysts Cummins was in peak engine investment mode, particularly when it came to development of products that accept alternative fuels, such as natural gas or hydrogen.

RELATED: Cummins' 15-Liter Natural Gas Engine in Customer Testing

Cummins’ X15N engine will go on sale later in 2024. Rumsey said Cummins was continuing to see strong interest from original equipment manufacturers.

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