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Cummins Inc. reported lower net income and revenue in the third quarter, mirroring in part the drop in truck production.
Net income fell to $501 million, or $3.36 per diluted share, compared with $622 million, or $3.97, a year earlier.
Revenue dropped 11% to $5.1 billion compared with $5.7 billion in the 2019 period.
In the engine segment, sales fell 13% on lower North American truck production to $2.1 billion compared with $2.4 billion a year earlier. Heavy-duty engine sales fell 18% to $694 million, and medium-duty truck and bus sales fell 24% to $492 million.
Off-highway engine sales dropped 9% to $404 million due to lower demand in construction markets, according to the Columbus, Ind.-based company.
Sales in the component segment fell 7% to $1.5 billion.
Revenue in its new power segment was $18 million and more than double a year earlier. The segment posted a loss of $40 million before interest, taxes, depreciation and amortization. It reported costs associated with the development of fuel cells and electrolyzers as well as products to support battery-electric vehicles contributed to EBITDA losses.
“Over the last six months we have faced both the most severe decline in quarterly sales in our history as well as the largest sequential increase,” CEO Tom Linebarger said, referring to the coronavirus pandemic.
He said North American production of heavy-duty trucks fell 35% in the quarter compared with a year ago, but rose 119%, sequentially. Year-to-date, Cummins’ market share is 33%.
Medium-duty production decreased 33% in the quarter compared with a year ago, but increased 76% from second-quarter levels. “We continue to maintain our clear market share leadership in the medium-duty truck market with over 80% of new trucks powered by Cummins powertrains in 2020,” Linebarger said during an earnings call.
Looking out, he said the company is encouraged by the recovery in demand across its markets in the third quarter.
“[But]we will continue to manage cautiously through the remainder of the year as visibility on future orders remains low and the impact of the virus on economies around the world remains difficult to predict,” he said.
Cummins noted record quarterly cash flow was $1.2 billion.
“We continue to advance existing products and invest in new technology while returning cash to shareholders,” Chief Financial Officer Mark Smith said. “In October, we announced a 3% increase to our quarterly dividend, which will make 2020 the 11th consecutive year of increases to Cummins’ dividend.”
Among the quarterly highlights were:
- A collaboration with the Department of Energy’s Oak Ridge National Laboratory resulted in the ability to produce enough filter media to supply more than 1 million face masks and respirators per day to U.S. health care facilities.
- The Department of Energy awarded Cummins $12 million for five separate DOE projects related to proton exchange membrane and solid oxide fuel cell and electrolyzer technologies.
“Our employees have done a remarkable job of supporting our customers through this period while maintaining a safe work environment,” Linebarger said. “In the third quarter, our supply chain organizations continue to support near-record levels of truck production in China, as well as ramping up production to meet significantly increased demand in the North American heavy-duty trucks and pickup markets.”
The company’s products include diesel, natural gas, electric and hybrid powertrains and powertrain-related components..
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