Cummins (CMI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues reached $8.8 billion, up 2% year-over-year, with GAAP net income of $726 million and diluted EPS of $5.26, driven by strong North American and Power Systems demand, partially offset by Atmus separation and international softness.

• EBITDA was $1.35 billion (15.3% margin), reflecting higher volumes, pricing, and absence of Atmus separation costs.

• The Atmus Filtration Technologies divestiture in March 2024 resulted in a $1.3 billion gain, significantly impacting year-to-date results.

• $1.9 billion in payments were made in Q2 2024 to resolve regulatory civil claims related to emissions certification and compliance.

• Partnerships advanced with Isuzu (new engine and battery-electric powertrain launches) and the formation of Amplify Cell Technologies JV with Daimler Truck and PACCAR for battery cell production.

Financial highlights

• Gross margin was $2.19 billion (24.9% of sales), flat year-over-year; operating income rose to $1.05 billion.

• Net earnings were $726 million ($5.26 per diluted share), up from $720 million ($5.05 per share) in Q2 2023.

• Operating cash flow was an outflow of $851 million due to a $1.9 billion regulatory settlement; excluding this, inflow was $1.1 billion.

• Return on average net assets (ROANA) was 29%, and return on invested capital (ROIC) was 17% for the last twelve months.

• Quarterly dividend increased to $1.82 per share, marking 15 consecutive years of increases.

Outlook and guidance

• Raised 2024 revenue guidance to down 3% to flat (previously down 2% to down 5%).

• EBITDA margin guidance increased to 15%-15.5% (prior 14.5%-15.5%).

• North America heavy-duty truck forecast unchanged at 255,000-275,000 units; medium-duty truck forecast raised to 150,000-160,000 units.

• Power Generation market guidance raised to up 15%-20% for 2024.

• Capital expenditures projected at $1.2–$1.3 billion for 2024.