Cummins (CMI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues were $8.5 billion, flat year-over-year, with GAAP net income of $809 million and diluted EPS of $5.86, up from $4.59 in Q3 2023, driven by improved gross margin and strong Power Systems and Distribution segments despite North American heavy-duty truck softness.

• EBITDA was $1.4 billion (16.4% margin), up from $1.2 billion (14.6%) last year, with net income margin rising to 9.6%.

• The Atmus Filtration Technologies divestiture was completed in March 2024, resulting in a $1.3 billion non-taxable gain and a reduction of 5.6 million shares outstanding.

• Launched full production of the X15N natural gas engine and opened a new electrolyzer plant in Spain, advancing decarbonization strategy.

• Returned $250 million to shareholders via dividends in Q3, with the quarterly dividend increased to $1.82 per share.

Financial highlights

• Gross margin was $2.2 billion (25.7% of sales), up from $2.1 billion (24.6%); operating income for Q3 was $1.05 billion, up 11% year-over-year.

• Net earnings were $809 million ($5.86 per diluted share), up from $656 million ($4.45 per share) in Q3 2023.

• Operating cash flow for Q3 was $640 million; year-to-date operating cash flow was $65 million, impacted by $1.9 billion regulatory settlement payments.

• Net debt to capital increased to 28.2% from 23.0% year-over-year; debt to capital ratio was 40.1% at September 30, 2024.

• Cash and marketable securities at quarter-end totaled $2.3 billion, with $4.0 billion in credit facilities.

Outlook and guidance

• 2024 revenue outlook remains down 3% to flat; EBITDA margin guidance raised to approximately 15.5%, the top end of prior range.

• Capital expenditures for 2024 projected at $1.2–$1.3 billion; effective tax rate expected at 23.5%.

• North America heavy-duty truck forecast: 255,000–275,000 units; medium-duty: 150,000–160,000 units.

• Distribution and Power Systems segments both forecasted to grow sales 8% to 11%, with EBITDA margins of 11.5% to 12.0% and 18.3% to 18.8%, respectively.

• China revenue expected to decrease 4% in 2024; India revenue to increase 1%.