First quarter 2021 revenues of $6.1 billion increased 22 percent from the same quarter in 2020. Sales in North America increased 7 percent while international revenues increased 45 percent driven by strong demand across all global markets as well as new product sales in China and India.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $980 million (16.1 percent of sales), compared to $846 million (16.9 percent of sales) a year ago. Net income attributable to Cummins in the first quarter was $603 million ($4.07 per diluted share) compared to $511 million ($3.41 per diluted share) in 2020.
“Demand accelerated in the first quarter, as the global economy continued to improve, driving strong sales growth across most businesses and regions and resulting in solid profitability,” said chairman and CEO Tom Linebarger. “The strength and breadth of the rebound in demand has surpassed our original expectations and we have raised our full year outlook. While we are encouraged by the rising demand, the pace of recovery has placed a strain on global supply chains leading to increased costs and challenges in fulfilling end-user demand. The shortage of key components such as semiconductor chips has been the primary challenge, with adverse weather conditions impacting the U.S., and bottlenecks in global logistics further adding to order backlogs. The ability to supply is our key focus now and we are doing everything we can to mitigate the impact.”
- Cummins was named to Ethisphere’s World’s Most Ethical Companies list for a 14th consecutive year.
- The company announced a global strategic partnership with Daimler to provide medium duty powertrain systems for Daimler Trucks and Buses, allowing both companies to be more competitive, drive global innovation, expand offerings to customers and reduce emissions.
- Cummins continued its commitment to gender equality on International Women’s Day. With a goal of having 24 hours of continuous conversations on gender equity, more than 5,000 employees participated in 47 conversations hosted in 22 countries around the world. The Cummins Powers Women program also continued its progress by forming a new partnership with Promundo in Europe to prevent violence against women.
- Cummins vice chairman, Tony Satterthwaite, testified before Congress in the Hearing on Transportation Technologies, reinforcing Cummins’ commitment to achieve a net zero carbon emissions future through continued innovation in advanced internal combustion, battery, and fuel cell technologies. Satterthwaite urged the government to make the infrastructure investments required to support the successful market adoption of zero carbon emission technologies.
- Cummins announced employees, contingent workers and their spouses and dependents (ages 16+) could receive the Pfizer-BioNTech COVID-19 vaccine at several locations across the United States. Cummins continues to collaborate with health officials around the world to provide employees with access to COVID-19 vaccines.
First quarter 2021 detail (all comparisons to same period in 2020):
Engine Segment
- Sales - $2.5 billion, up 14 percent
- Segment EBITDA - $354 million, or 14.4 percent of sales, compared to $365 million or 16.9 percent of sales
- On-highway revenues increased 15 percent driven by strong demand in the North American truck and pickup markets and off-highway revenues increased 9 percent driven by strong demand in international construction markets
- Sales increased 10 percent in North America and 24 percent in international markets
Distribution Segment
- Sales - $1.8 billion, up 1 percent
- Segment EBITDA - $160 million, or 8.7 percent of sales, compared to $158 million or 8.7 percent of sales
- Revenues in North America were down 6 percent and international sales increased by 17 percent
- Increased demand in power generation and engine markets offset by declines in parts and service as a result of supply chain constraints
Components Segment
- Sales - $2.2 billion, up 43 percent
- Segment EBITDA - $421 million, or 19.6 percent of sales, compared to $279 million or 18.6 percent of sales
- Revenues in North America increased by 15 percent and international sales increased by 82 percent due to higher demand in China and India
Power Systems Segment
- Sales - $1.0 billion, up 16 percent
- Segment EBITDA - $126 million, or 12.3 percent of sales, compared to $77 million, or 8.7 percent of sales
- Power generation revenues increased by 18 percent driven by growth in recreational vehicle and datacenter markets while industrial revenues increased 9 percent due to stronger demand in mining markets
New Power Segment
- Sales - $35 million, up 250 percent
- Segment EBITDA loss - $51 million
- Revenues increased due to greater demand in transit and school bus markets in addition to the commissioning of electrolyzer projects and shipments of fuel cell systems to the rail market
- Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles are contributing to EBITDA losses
Based on the current forecast, Cummins is raising its full year 2021 revenue guidance to 20 to 24 percent, an increase from 8 to 12 percent because of stronger demand across all markets. EBITDA is expected to be in the range of 15.5 to 16.0 percent, an increase from the prior range of 15.0 and 15.5 percent of sales, primarily due to increased demand. The company expects to return 75 percent of operating cash flow to shareholders in 2021 in the form of dividends and share repurchases.
“We are raising our guidance for 2021 on both revenue and profitability,” said Linebarger. “We continue to take necessary precautions at all our facilities to mitigate the spread of COVID-19 and our focus remains on the health and safety of our employees. We are optimistic that continued vaccination distribution globally will reduce the impact of the virus in the second half of the year, but there is still a risk of an increase in cases and the potential for new virus variants that could result in lower customer demand, additional facility shutdowns or additional supply chain constraints in the future. Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders.”
