Cummins Stock Gains After Q2 Earnings Beat, Seeks Strategic Alternatives For Filtration Unit

Cummins Inc. CMI reported second-quarter sales growth of 58.6% year-over-year to $6.11 billion, beating the consensus estimate of $5.99 billion.
Sales by segments: Engine $2.5 (+75% Y/Y), Distribution $1.9 billion (+20% Y/Y), Components $2 billion (+73% Y/Y), Power Systems $1.1 billion (+47% Y/Y), and New Power $24 million (+140% Y/Y).
EPS improved to $4.10 from $1.86 in 2Q20, beating consensus estimates of $4.03.
The gross margin expanded by 108 bps to 24.2%, operating income increased by 118.7% Y/Y to $735 million, and the margin expanded by 330 bps to 12%.
Cummins generated a year-to-date operating cash flow of $955 million, compared to $357 million a year ago.
EBITDA was $974 million compared to $549 million in 2Q20, with the margin expanding by 170 bps to 15.9%.
Cummins announced that it is exploring strategic alternatives for its Filtration business unit, including the possibility of separation of the business into a stand-alone company.
FY21 Outlook: Cummins maintains revenue guidance of up 20 to 24% growth year-over-year. EBITDA of 15.5 to 16%, and it expects to return 75% of Operating Cash Flow to shareholders in the form of dividends and share repurchases.
Price Action: CMI shares traded higher by 1.28% at $232.00 during the premarket session on the last check Tuesday.

Earnings Calendar