Cummins Inc. posted $6.385 billion in first quarter revenue compared to $6.092 billion in the first quarter of 2021, a 4.8-percent increase. Cost of sales for the quarter were $4.853 billion compared to $4.606 billion a year ago. Gross margin was $1.532 billion compared to $1.486 in the first quarter of 2021. First quarter results include costs of $158 million related to the indefinite suspension of operations in Russia, as well as $17 million related to the separation of the filtration business.
Sales in North America increased 12 percent, while international revenue decreased 3 percent, driven primarily by a slowdown in China.
“Demand for our products remains strong across many of our key markets and regions, resulting in record revenues in the first quarter of 2022,” said chairman and CEO Tom Linebarger. “We have implemented pricing actions to counter rising input costs, which contributed to solid profitability in the first quarter. Supply chain constraints continue to be a challenge and are limiting growth in our industry.”
EBITDA in the first quarter was $755 million (11.8 percent of sales), compared to $980 million (16.1 percent of sales) a year ago.
“We delivered solid financial performance in the first quarter in the face of many challenges in our global supply chain,” said president and chief operating officer Jennifer Rumsey. “The ongoing impact of COVID-19, especially in China, and the effect of the conflict in Ukraine continue to present challenges to our global operations. I am impressed with the resiliency of our employees to navigate through these difficulties and deliver for our customers. Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.”
Cummins raises guidance to up 8 percent
Based on the current forecast, Cummins is raising its full year 2022 revenue guidance to up 8 percent, an increase from up 6 percent because of to stronger demand in North America and other markets. Full-year 2022 EBITDA is expected to be approximately 15.5 percent, in line with previous guidance.
During the quarter, Cummins announced two significant acquisitions critical to advancing its product decarbonization goals while expanding its product portfolio: the acquisition of Jacobs Vehicle Systems (JVS) and the intent to acquire Meritor. JVS is a supplier of engine braking, cylinder deactivation, start and stop and thermal management technologies which are key components to meeting current and future emissions regulations. The integration of Meritor, a global leader of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets will position Cummins as one of the few companies able to provide integrated powertrain solutions across combustion as well as electric power applications through Meritor’s eAxle product.
The New Power business continued to expand its green hydrogen presence globally. In North America, Florida Power & Light Company announced Cummins will supply a 25-megawatt electrolyzer system for the groundbreaking FPL Cavendish NextGen Hydrogen Hub – Florida’s first of its kind “green” hydrogen plant. The FPL Cavendish NextGen Hydrogen Hub will leverage solar energy to power the electrolysis process that produces “green,” or carbon-free, hydrogen from water.
In the engine segment, sales were $2.8 billion, up 12 percent. Segment EBITDA was $392 million, or 14.2 percent of sales, compared to $354 million or 14.4 percent of sales. EBITDA includes $32 million of costs related to the indefinite suspension of operations in Russia. On-highway revenues increased 14 percent driven by pricing actions and strong demand in the North American truck markets, and recovery in the bus market which was severely impacted by Covid-19. Off-highway revenues increased 5 percent. Sales increased 15 percent in North America and 4 percent in international markets.
Distribution and power segments jump
In the Distribution segment, sales were $2.1 billion, up 15 percent. Segment EBITDA was $110 million, or 5.2 percent of sales, compared to $160 million or 8.7 percent of sales. EBITDA includes $100 million of costs related to the indefinite suspension of operations in Russia. Revenues in North America increased 17 percent and international sales increased by 13 percent. Higher revenues were primarily driven by increased demand for parts and whole goods.
In Components, sales were $2.0 billion, down 8 percent. Segment EBITDA was $320 million, or 16.1 percent of sales, compared to $421 million or 19.6 percent of sales. EBITDA includes $6 million of costs related to the indefinite suspension of operations in Russia. Revenues in North America increased by 8 percent and international sales decreased by 21 percent because of lower demand in India and China compared to record demand in the first quarter of 2021.
In the Power Systems segment, sales were $1.2 billion, up 14 percent. Segment EBITDA was $90 million, or 7.8 percent of sales, compared to $126 million, or 12.3 percent of sales. EBITDA includes $20 million of costs related to the indefinite suspension of operations in Russia. Power generation revenues increased by 9 percent driven by strong demand in China. Industrial revenues increased 21 percent because of stronger demand in mining and oil and gas markets.