Cummins Sails Through Market Turbulence: Posts Revenue Uptick While Bracing For A Challenging 2024

Cummins Inc CMI reported fourth-quarter fiscal 2023 sales growth of 10% year-over-year to $8.54 billion, beating the consensus of $8.14 billion.

The Columbus, Indiana-based company stated that sales in North America increased 8% and international revenues increased 13%, reflecting strong demand across most global markets. 

Adjusted EPS of $4.14 missed the consensus of $4.48.

The results include a $2.04 billion charge related to the previously announced agreement to resolve U.S. regulatory claims, $42 million in costs associated with the implementation of voluntary retirement and separation programs, and $33 million in expenses related to the separation of Atmus.

Sales by segments: Components $3.2 billion (+3% Y/Y), Engine $2.8 billion (+5% Y/Y), Distribution $2.7 billion (+17% Y/Y), Power Systems $1.4 billion (+8% Y/Y), and Accelera $81 million (+8% Y/Y).

Gross profit increased 10% Y/Y to $2 billion, and the margin was flat at 23.4%.

CMI reported an operating loss of $(1.21) billion, compared to operating income of $802 million a year ago.

Also Read: Why This Cummins Analyst Is Downshifting On The Stock

Cummins’s operating cash flow for the quarter totaled $1.46 billion, compared to $817 million a year ago. CMI held cash and equivalents of $2.18 billion as of December 31, 2023.

EBITDA as a percentage of net sales was negative (10.3)%, compared to 14.2% in the same quarter of 2022.

“In 2024, we anticipate that demand will slow particularly in the North America heavy-duty truck market, partially offset by strength in other key markets, and have already taken some actions to reduce cost. We will continue to monitor global economic indicators closely and will ensure we are prepared to adjust our business should economic momentum slow further,” commented Jennifer Rumsey, Chair and CEO.

2024 Outlook: Cummins projects revenues to decline 2%-5% on a year-over-year basis and EBITDA margin to be in the range of 14.4%-15.4%.

Price Action: CMI shares are trading higher by 3.07% at $248.51 at the last check Tuesday.

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