Cummins Announces Strong First Quarter Results; Raises Full Year Profit Outlook
Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2019.
Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2019.
First quarter revenues of $6.0 billion; GAAP1 Net Income of $663 million
EBITDA in the first quarter was 17.2 percent of sales; Diluted EPS of $4.20
The company is maintaining its full year 2019 revenue guidance of flat to up 4 percent
EBITDA now expected to be in the range of 16.25 to 16.75 percent; up from 15.75 to 16.25 percent
First quarter revenues of $6.0 billion increased 8 percent from the same quarter in 2018. Increased truck production in North America and stronger demand in global construction and North American power generation markets drove the majority of the revenue increase. Currency negatively impacted revenues by 2 percent primarily due to a stronger US dollar.
First quarter sales in North America improved by 13 percent while international revenues increased by 1 percent.
"The company shipped a record number of truck engines in North America during the first quarter" said Chairman and CEO Tom Linebarger. "Our market-leading position in this region reflects our close partnerships with our customers who rely on us to provide a broad range of power solutions for their needs."
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were a record $1.0 billion, or 17.2 percent of sales, compared to $700 million or 12.6 percent of sales a year ago. First quarter results include a non-segment and non-taxable gain of $37 million ($0.23 per diluted share) related to the mark to market impact on assets related to our non-qualified benefit plans.
Net income attributable to Cummins in the first quarter was $663 million ($4.20 per diluted share), compared to net income of $325 million ($1.96 per diluted share), or $403 million ($2.43 per diluted share) excluding the impact of tax legislation in the first quarter of 2018.
"We achieved record EBITDA in the first quarter while also celebrating our 100th anniversary," Linebarger said. "We are on track to deliver record results for the year and return significant capital to investors, and will continue to invest across our broad portfolio to power a strong future for our stakeholders."
2019 Outlook:
Based on the current forecast, Cummins is maintaining its 2019 revenue guidance of flat to up 4 percent driven primarily by increased demand in North America on-highway markets. EBITDA is expected to be in the range of 16.25% to 16.75% of sales, an increase from the prior range of 15.75% to 16.25% of sales, primarily due to lower projected material costs. The Company expects to return 75 percent of Operating Cash Flow to shareholders in 2019 in the form of dividends and share repurchases.
Our outlook does not include any potential impact of the company’s recently announced review of its emission certification process and compliance with emissions standards.
First Quarter 2019 Highlights:
- Cummins was named to Ethisphere’s list of the World’s Most Ethical Companies for a 12th consecutive year.
- Barron’s magazine announced that Cummins made its 100 Most Sustainable Companies list, moving from No. 60 in its inaugural ranking in 2018 to No. 14 in its 2019 list.
- The Human Rights Campaign (HRC) announced that Cummins received a perfect score for a 14th consecutive year in its Corporate Equality Index.
- Amtrak announced that it will be purchasing 75 Charger locomotives for delivery starting in 2021 which will use Cummins’ QSK95 Tier 4 engine systems to help deliver clean, efficient power for passenger trains.
1 Generally Accepted Accounting Principles
Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues, EBITDA and agreement in principle to settle regulatory proceedings regarding our emissions certification and compliance process for pick-up truck applications. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse consequences resulting from entering into the Agreement in Principle, including required additional mitigation projects, adverse reputational impacts and potential resulting legal actions; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; evolving environmental and climate change legislation and regulatory initiatives; changes in international, national and regional trade laws, regulations and policies; changes in taxation; global legal and ethical compliance costs and risks; future bans or limitations on the use of diesel-powered products; failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc. (Meritor); raw material, transportation and labor price fluctuations and supply shortages; aligning our capacity and production with our demand; the actions of, and income from, joint ventures and other investees that we do not directly control; large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control; product recalls; variability in material and commodity costs; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; product liability claims; our sales mix of products; uncertainties and risks related to timing and potential value to both Atmus Filtration Technologies Inc. (Atmus) and Cummins of the planned separation of Atmus, including business, industry and market risks, as well as the risks involving the anticipated favorable tax treatment if there is a significant delay in the completion of the envisioned separation; climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; increasing interest rates; challenging markets for talent and ability to attract, develop and retain key personnel; exposure to potential security breaches or other disruptions to our information technology environment and data security; political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; labor relations or work stoppages; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates; the price and availability of energy; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2023 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.
Cummins Inc., a global power solutions leader, comprises five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company’s commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $735 million on sales of $34.1 billion in 2023.
