Cummins reports positive Q3 results, new leadership roles
02 November 2023
After seeing record results for the first half 2023, Cummins Inc. reports sales continued to expand in the third quarter, with revenues increasing 15% over the same period in 2022 to $8.4 billion. Sales in North America rose 16% and international sales increased 13%, again on the strength of the Meritor addition as reported in Q1 and Q2, as well as well as strong demand across most global markets. The company noted that the third quarter of 2022 included two months of consolidated operations for Meritor following the acquisitions’ completion in August 2022.
Net income attributable to Cummins in the third quarter was $656 million, compared to $400 million in Q3 2022. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.2 billion, or 14.6% of sales, compared to $884 million, or 12.1% of sales, a year ago.
Following are results by business segment:
- Components – Sales were up 20% to $3.2 billion based on a 21% increase in North America, followed closely by international sales up 19%, both due to an additional month of Meritor operations vs. Q3 2022 and increased global demand.
- Engine – Sales rose 5% to $2.9 billion. The 5% sales growth i North America included an 8% increase in on-highway. International sales rose 7% on increased global demand.
- Distribution – Sales were up 13% to $2.5 billion, with North American revenues rising 14% and international sales up 11%. Higher revenues were attributed to increased demand for whole goods, especially power generation, and pricing actions.
- Power – Sales increased 7% to $1.4 billion, with power generation revenue up 15% and industrial revenue decreasing 2% due to lower mining aftermarket parts demand.
- Accelera – Sales jumped 106% to $103 million for Cummins’ newest business segment. The rise in revenue was attributed to higher demand for battery-electric systems, increased electrolyzer installations and the addition of the Siemens Commercial Vehicle business and the electric powertrain portion of the Meritor business. Revenue growth was offset by an EBITDA loss of $114 million, however, due to costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery-electric vehicles.
Based on its current forecast, Cummins has raised its full year 2023 revenue guidance, projecting to be up 18% to 21% due to strong demand across most markets, especially North America. EBITDA is expected to be in the range of 15.2% to 15.4% of sales, narrowing the range of the previous guidance of 15.0% to 15.7%.
Despite expectations that 2023 will be another record year for revenue growth, there are some signs of slowing activity that will tamper demand in Q4.
“We delivered solid profitability and record operating cash flow in the third quarter,” said Jennifer Rumsey, Cummins Chair and CEO. “While full year revenues are at the high end of our expectations, we are seeing signs of moderating demand in some markets and are taking steps to reduce costs and position the company for success in 2024.
“Our leadership team is experienced in managing through periods of economic uncertainty and will continue to make the decisions that ensure we drive cost improvements and maintain a strong financial position. We’ve announced several major partnerships this quarter as we continue to advance our Destination Zero strategy and remain committed to investing in future growth.”
On the heels of its Q3 report, Cummins issued an announcement of several promotions within the leadership team, effective Jan. 1, 2024.
- Srikanth Padmanabhan – who has more than 30 years at the company and is currently vice president and president, Engine Business – will take on the newly created role of executive vice president and president, Operations. In this role, he will lead work that will define and drive improvements in how the company operates through the energy transition, while leading critical areas of its business operations and regions, as well as ensuring the success of our operational priorities. All Cummins Business Segments will continue reporting to Jennifer Rumsey, Cummins Chair and CEO, in this new structure.
- Brett Merritt – currently vice president of On-Highway Engine Business and Strategic Customer Relations – will assume the role of vice president and president – Engine Business, succeeding Padmanabhan when he takes his new role. Merritt has spent more than 25 years in the automotive and commercial vehicle industry and more than 14 at Cummins – the past 11 spent leading and growing the On-highway business from 800,000 engines in 2012 to 1.2 million last year.
- Bonnie Fetch – currently vice president of Global Supply Chain – will assume the role of vice president and president – Distribution Business, succeeding Tony Satterthwaite, who has been serving as the Distribution Leader since September. Fetch, who previously led supply chain for DBU, has led the Cummins global supply chain and manufacturing organization, including the company’s New and Recon Parts business, since early 2022, where she led her team in navigating the many complex supply chain challenges as well as improving operational and functional performance.
Cummins also recently appointed Amy Davis to assume leadership of both the Accelera and Components Business Segments, serving as vice president and president – Accelera and Components. The move took effect Nov. 1.