Cummins Clocks 23% Revenue Growth In Q3 Helped By Meritor Business, North American Demand

Cummins Inc CMI reported third-quarter sales growth of 23% year-over-year to $7.33 billion, beating the consensus of $6.80 billion.
Excluding the contribution of the Meritor business acquisition, which was completed on August 3, 2022, Q3 revenues were $6.6 billion, up 11% Y/Y.
The company reported GAAP net income attributable of $400 million or $2.82 per share. Adjusted EPS would have been $3.70, missing the consensus of $4.85.
Sales in North America increased 19% and international decreased 1%, 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.
Sales by segments: Engine $2.8 billion (+8% Y/Y), Distribution $2.2 billion (+14% Y/Y), Components $2.7 billion (10% Y/Y), Power Systems $1.3 billion (+16% Y/Y), and New Power $50 million (+96% Y/Y).
Cummins generated an operating cash flow of $382 million, compared to $569 million a year ago.
The EBITDA margin contracted 230 bps to 12.1%.
FY22 Outlook, excluding Meritor business: Cummins reiterated revenue to the growth of 8%. It reduced the EBITDA guidance to 15% from the previous ~15.5%.
The company plans to return ~50% of operating cash flow to shareholders through dividends and share repurchases.
Price Action: CMI shares are trading lower by 3.84% at $231.99 on the last check Thursday.
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