Cummins Q2 Results Exceed Estimates, Increases Revenue Guidance With Strong North America Demand

Cummins Inc CMI shares are soaring after the company reported better-than-expected second-quarter 2024 results and improved its 2024 revenue guidance.

CMI reported second-quarter sales growth of 1.8% year over year to $8.796 billion, beating the consensus of $8.343 billion.

The Columbus, Indiana-based company stated that sales in North America increased 4% year over year, and international revenues decreased by 2%.

Adjusted EPS of $5.26 compared to $5.05 a year ago, beating the consensus of $4.76.

Sales by segments:

• Components $3 billion (-13% Y/Y)
• Engine $3.2 billion (+5% Y/Y)
• Distribution $2.8 billion (+9% Y/Y)
• Power Systems $1.6 billion (+9% Y/Y)
• Accelera $111 million (+31% Y/Y).

Gross profit increased 2.1% year over year to $2.193 billion, and the margin expanded slightly by 10 bps to 24.9%.

CMI reported an operating income of $1.05 billion (+4.8% Y/Y), and the margin expanded by 34 bps to 11.9%.

Cummins’ operating cash outflow for the quarter totaled $851 million, compared to $483 million in cash provided a year ago. As of June end, CMI held cash and equivalents of $1.59 billion.

EBITDA as a percentage of net sales was 15.3% compared to 15.1% in the same quarter of 2023.

In July, Accelera received a $75 million Department of Energy grant to convert 360,000 sq. ft. of manufacturing space at Cummins’ Columbus, Indiana plant for zero-emissions components. This is Cummins’ largest federal grant, part of the Inflation Reduction Act appropriations.

“We have raised our expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services. We still expect slowing demand in the North America heavy-duty truck market in the second half of the year. Despite the lower outlook for the second half, Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders,” commented Jennifer Rumsey, Chair and CEO of Cummins.

2024 Outlook: Cummins raised its revenue guidance to be down 3% to flat, driven by stronger demand, especially in North America. EBITDA is now expected to be 15.0% to 15.5%, up from the previous range of 14.5% to 15.5%.

Price Action: CMI shares are trading higher by 8.42% at $316.16 at the last check Thursday.

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