Cummins Q3 revenues up 11%
By Mike Brezonick03 November 2022
Cummins Inc. reported a solid third quarter even as it at it completed its $3.7 billion acquisition of Meritor. Third quarter revenues were $7.3 billion, the company said. Excluding the contribution of the Meritor business, the acquisition of which was completed on August 3, 2022, third quarter revenues were $6.6 billion, representing an increase of 11% from the same quarter in 2021.
Sales in North America increased 19% and international revenues decreased 1% compared to the same quarter in 2021, as strong demand across all global markets was offset by a market slowdown in China, as well as Russia, where operations have been suspended indefinitely.
“During the third quarter of 2022, Cummins advanced its growth strategy most notably with the completion of the acquisition of Meritor, and we have been excited to welcome our new colleagues into our company,” said President and CEO Jennifer Rumsey. “Demand from customers remains strong, reflecting the quality and performance of our products and robust conditions in most markets except China.
“EBITDA for the third quarter improved year-over-year but declined compared to the second quarter of 2022, reflecting weaker joint venture earnings in China, 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 acquisition and the planned separation of our Filtration business. We expect results for Meritor and Cummins in total to improve in the fourth quarter.”
Net income attributable to Cummins in the third quarter was $400 million. Excluding the Meritor business and related acquisition and integration costs, net income in the third quarter was $456 million, compared to $534 million in 2021.
Third quarter segment results
Engine segment sales were up 8% to $2.8 billion. On-highway revenues increased 10%, driven by strong demand in the North American truck market, pricing actions and strong aftermarket demand, the company said. Off-highway revenues fell 3%, driven by a slowdown in China construction.
Sales increased 14% in North America and dropped 8% in international markets due to a decline in China demand and the indefinite suspension of operations in Russia.
Distribution segment sales were $2.2 billion, up 14%. Revenues in North America rose 22% and international sales ticked up by 1%. The higher revenues were primarily driven by increased demand for parts and service.
Components segment sales were $2.7 billion (excluding Meritor), up 10%. Excluding Meritor, revenues in North America increased by 19% and international sales were down 1 percent due to lower demand in China.
The Power Systems segment saw sales rise 16% to $1.3 billion. Power generation revenues increased 11% driven by pricing actions and increased global demand. Industrial revenues increased 17% due to strong demand for aftermarket products and increased demand in oil and gas markets.
Sales in the New Power segment were $50 million excluding Meritor, a 96% increase from the same period last year. Revenues increased due to higher battery demand in the North American school bus market in addition to the shipments of fuel cell systems to the bus market in China, the company said. But costs associated with the development of fuel cells and electrolyzers, as well as products to support battery electric vehicles are contributed to an EBITDA loss of $96 million.
Updated 2022 Outlook
Based on its current forecast, excluding the Meritor business, Cummins said its full year 2022 revenue guidance is being maintained, with revenue expected to riser 8% from last year.