Cummins Reports Strong Q3 Results; Meritor Now Part of Company
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Cummins Inc. reported lower net income and higher revenue in the third quarter as business in North America was strong and its growth strategy added costs.
Demand from customers, especially in North America, remains solid and the company has a nine-month North American backlog of engine orders with truck makers, CEO Jennifer Rumsey said during the earnings call.
“Our products are performing well, leading to record demand from customers and rising market share in some of our core markets,” she said. “This is direct result of the contribution from our outstanding workforce.”
The Columbus, Ind.-based manufacturer reported net income of $400 million attributable to it in the quarter, or $2.82 per diluted share, compared with $534 million, $3.69, a year earlier.
That reflected weaker joint venture earnings in China, the company said, a one-time bonus to employees to recognize their “relentless” commitment to meeting customer demand in challenging conditions, and costs associated with both the Meritor Inc. acquisition and the planned separation of its filtration business.
Revenue jumped to $7.3 billion compared with $5.9 billion in the 2021 period. [Excluding the contribution of the Meritor business,third-quarter revenues were $6.6 billion, an increase of 11% from the same quarter in 2021, the company reported.
Revenue in North America increased 19%, and international revenues decreased 1% compared with the year-ago period as strong demand across all global markets was offset by a market slowdown in China, as well as Russia, where Cummins suspended operations indefinitely, the company noted.
Heavy-duty truck engine sales were $972 million compared with $861 million a year earlier. It shipped 30,200 units, up from 29,200.
Medium-duty truck and bus engine sales rose to $868 million compared with $713 million a year earlier. It shipped 69,800 units, up from 68,000.
During the third quarter, Cummins announced collaborations with Werner Enterprises, Transport Enterprise Leasing and Versatile to deliver its 15-liter hydrogen internal combustion engines. The X15H is part of Cummins’ fuel agnostic platform.
Earnings Release: @Cummins ($CMI) reports Q3 2022 results. — Cummins Inc. (@Cummins) November 3, 2022
Werner Enterprises ranks No. 17 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Recent federal legislation is strengthening the outlook for hydrogen in the United States, Rumsey said.
Research and development expenses in the quarter were $348 million compared with $266 million a year earlier.
The increases largely covered work on fuel agnostic engine platforms and electrolyzers, which produce hydrogen, and other new key power technologies, she said.
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“We will continue to make those investments. And, as we have in the past, we are looking closely at our priorities for next year. We are starting to more closely manage any headcount additions,” she said, “for a potential downside scenario.”
Rumsey also addressed the ]supply chain side.
“We continue to see improvement and we also still have issues,” she said. “At this point, electronic components continues to be our biggest disruptor,” Rumsey said, noting COVID-related dynamic lockdowns in China and congestion in certain ports, including on the East Coast and in Europe.
“But we have been able to take build rates up and been able to drive some operational improvements,” she said.
Cummins completed the acquisition of Meritor Inc. on Aug. 3. In the quarter, brake and axle revenue — a strength of Meritor — was $732 million. A year earlier, there was none.
The company’s 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, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products.
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