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Cummins Inc. reported first-quarter net income fell as it posted all-time record quarterly revenue.
Its results, which beat analysts’ expectations, also reflected the indefinite suspension of its operations in Russia over its war in Ukraine.
Consolidated net income for the period, ended March 31, was $423 million, or $2.92 per diluted share, compared with $611 million, $4.07, in the 2021 period.
The company noted quarterly results included costs of $158 million, $1.03, related to the indefinite suspension of operations in Russia, and $17 million, 9 cents, related to the separation of its filtration business. The costs incurred relating to the indefinite suspension of its operations in Russia include inventory write-downs, reserves on accounts receivable, the impairment of a joint venture investment, and other costs.
Revenue rose to $6.3 billion compared with $6 billion a year earlier, the Columbus, Ind.-based company reported.
It reported $155 million in income tax expense compared with $172 million a year before.
“Demand for our products remains strong across many of our key markets and regions, resulting in record revenues in the first quarter of 2022,” said Chairman and CEO Tom Linebarger. “We have implemented pricing actions to counter rising input costs, which contributed to solid profitability in the first quarter. Supply chain constraints continue to be a challenge and are limiting growth in our industry.”
The company expects continued pricing actions and supply chain constraints in 2022.
Research, development and engineering expenses climbed to $298 million compared with $260 million a year earlier — with $109 million spent on engines, $76 million on components, $64 million on power systems, $36 million on new power and $13 million on distribution.
At its engine segment, its largest business, revenue increased to $2.7 billion compared with $2.4 billion a year earlier.
Heavy-duty truck revenue was $908 million, compared with $827 million a year earlier. Medium-duty truck and bus revenue was $848 million compared with $674 million a year earlier. On-highway revenue was driven by pricing actions and strong demand in the North American truck markets, and recovery in the bus market, which was severely impacted by COVID-19.
Off-highway revenue increased to $499 million compared with $477 million a year earlier. Light-duty automotive revenue rose to $498 million compared with $481 million in the 2021 period.
Engine shipments in the quarter — including to power systems and off-highway units — slipped to 167,700, of which medium-duty accounted for the most, 72,600, light-duty 66,500 and heavy-duty was 28,600.
A year earlier engine shipments were 172,300 — with 73,100 medium-duty, 68,500 light-duty and 30,700 heavy-duty.
In its distribution segment revenue increased to $2.1 billion compared with $1.8 billion in the 2021 period. The parts revenue increased to $924 million compared with $757 million a year earlier.
The component segment’s revenue slipped to $1.9 billion compared with $2.1 billion year earlier. Emissions solutions, turbo technologies, and electronics and fuel systems all had lower revenue. Revenue increased in the filtration and automated transmissions segments.
Power systems posted revenue of $1.1 billion compared with $1 billion a year earlier.
Quarterly highlights included:
- On Feb. 7, it purchased Westport Fuel System Inc.’s stake in the Cummins Westport Joint Venture for natural gas engines. It will continue to operate the business as the sole owner. The purchase price was $42 million. The results of the business were reported in its engine segment.
- On Feb. 9, it reached an agreement with Altra Industrial Motion Corp. to acquire its Jacobs Vehicle Systems business and closed the transaction in April. Sales of this business were $194 million in 2021. This acquisition, which is off and running, will be reported in its components segment.
- On Feb. 21, it entered into a merger agreement with Meritor Inc. and agreed to acquire Meritor, a global leader of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets. The total transaction value is $3.7 billion. Cummins plans to fund this acquisition with a combination of cash, commercial paper and long-term debt, and so far sees no “curveballs” coming its way.
The company said its products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products.
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