Components business powers record Q1 for Cummins

Cummins Inc. has reported record results for the first quarter of 2023, led by large gains in its Components business and significant increases in North America.

First quarter revenues of $8.5 billion rose 32% from the same quarter in 2022. Sales in North America increased 39% and international revenues were up 24% due to the addition of Meritor and strong demand across all key global markets.

“The company achieved record revenues, EBITDA and EPS in the first quarter of 2023, with demand for our products remaining strong across most of our key markets and regions,” said Jennifer Rumsey, president and CEO. “We are delivering cycle-over-cycle improvement in financial performance despite persistent supply chain constraints, and we continue to invest in sustainable solutions that will protect our planet for future generations and support the success of our customers.”

Net income attributable to Cummins in the first quarter was $790 million compared to $418 million in 2022, which included $158 million of costs related to the indefinite suspension of operations in Russia.

Results by segment

All of Cummins’ businesses were up in the first quarter compared to the same period in 2022.

Components segment sales were $3.6 billion, up 79%. Revenues in North America increased by 87% and international sales increased by 69% due to the addition of Meritor and increased global demand.

Engine segment sales nudged up 8% to $3.0 billion. On-highway revenues increased 9% driven by strong demand in the North American truck market, pricing actions and strong aftermarket demand. Sales increased 9% in North America and grew 8% in international markets due to an increase in China and India demand.

Distribution segment sales were $2.4 billion, up 14%. Revenues in North America increased 24% and international sales decreased by 5%. Higher revenues were driven by increased demand for parts, service, and whole goods and pricing actions, Cummins said.

Power Systems sales were up 16% to $1.3 billion. Power generation revenues increased 16%, driven by increased global demand and pricing actions. Industrial revenues rose 16% due to strong demand for aftermarket products and increased demand in oil and gas markets.

Accelera by Cummins, formerly the New Power segment, rose 174% to $85 million. Revenues increased due to higher demand for battery electric systems in the North American school bus market and the additions of the electric powertrain portion of the Meritor business and Siemens Commercial Vehicle business. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles contributed to an EBITDA loss of $94 million.

Improved yearly outlook

Based on its current forecast, Cummins is raising its full year 2023 revenue guidance to be up 15 to 20%, an increase from our prior projections of up 12 to 17% due to stronger demand across most markets.

The outlook above includes the projected results of the Meritor business for 2023, but excludes any costs or benefits associated with the planned separation of the Filtration business. Within the Components Segment, Cummins expects revenues of the Meritor business for 2023 to be between $4.7 billion to $4.9 billion, an increase from $4.5 billion to $4.7 billion previously.

“We have raised our guidance on revenue and profitability for 2023 due to continued demand for Cummins’ products and services,” said Rumsey. “We will continue monitoring global economic indicators closely to ensure we are prepared should economic momentum slow.”