The Numbers Game
Cummins Inc. reported first-quarter 2024 earnings that saw a decline from the previous year, falling to $5.10 per share from $5.55. Despite the decrease, the bottom line failed to meet the Zacks Consensus Estimate of $5.11. On the revenue front, Cummins brought in $8.40 billion, slightly lower than the $8.45 billion in the year-ago quarter but beating the Zacks Consensus Estimate of $8.35 billion.
Segment Analysis
Sales within the Engine segment encountered a 2% year-over-year dip to $2.9 billion. Noteworthy was the uptick in on-highway revenues by 1%, attributed to robust demand in the North American truck market and strategic pricing. Conversely, international sales stumbled by 8% due to weakened demand in Europe and China.
The Distribution segment painted a contrasting picture, as sales rose by 5% to $2.5 billion. Strong demand for power generation products and effective pricing strategies fueled revenue growth, with North American sales edging up by 2% and international sales climbing by 14%.
In the Components segment, sales tallied $3.3 billion, down 6% from the prior year. Like other sectors, North American and international sales felt the sting of decreased demand in Europe and China. EBITDA for this segment was $473 million (14.2% of sales).
Sales in the Power Systems department experienced a 3% increase year-over-year to $1.4 billion, though falling slightly short of expectations. Notably, power generation revenues saw an 11% surge in a strong global demand scenario, while industrial revenues slumped by 8% due to weaker conditions in oil and gas markets.
The Accelera segment emerged with a $93 million sales figure, marking a 9% upturn. However, a pretax loss of $101 million was incurred due to investments in electric powertrains, fuel cells, and electric vehicle products.
Financial Health & Future Direction
Cummins showcased $2.54 billion in cash and cash equivalents as of March 31, 2024, witnessing a rise from the previous quarter. However, long-term debt grew to $5.7 billion, up from $4.8 billion as of December 31, 2023.
Looking ahead, Cummins foresees a 2-5% year-over-year decline in revenues for 2024, with EBITDA anticipated to range between 14.5-15.5% of sales. The company remains committed to returning almost 50% of its operational cash flow to shareholders via dividends.
The Industry Landscape
General Motors (GM) surpassed expectations with first-quarter earnings, showcasing solid results in the GMNA segment. Ford (F) displayed resilience with adjusted earnings that outperformed estimates, albeit falling from the previous year. PACCAR (PCAR) also demonstrated growth, with consolidated revenues rising compared to the previous year.
