Cummins is reporting healthy financial results for the second quarter of 2022, with revenues reaching US$6.6 billion. This represents an 8% increase from the same quarter in 2021. Sales in North America increased 15% while international revenues decreased 2%, driven primarily by a slowdown in China and the indefinite suspension of operations in Russia.
“The company achieved record revenues and solid profitability in the second quarter of 2022, with demand for our products remaining strong across most of our key markets and regions, apart from China,” said president and CEO Jennifer Rumsey. “Employees across our organisation have worked tirelessly in the face of supply chain challenges and rising costs that continue to impact our industry. While navigating these challenges, we will continue to focus on enabling our customers’ success, driving cycle over cycle improvement in financial performance, investing in sustainable solutions that will protect our planet for future generations and returning excess cash to shareholders.”
Net income attributable to Cummins in the second quarter was $702 million ($4.94/diluted share) compared to $600 million ($4.10/diluted share) in 2021.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) in the second quarter were $1.1 billion (16% of sales), compared to $974 million (15.9% of sales) in 2021. Second quarter results include costs of $29 million ($0.16/diluted share) related to the separation of the Filtration business, and a $47 million benefit ($0.33/diluted share) from adjusting the reserves related to the indefinite suspension of our operations in Russia. The firm also experienced $48 million ($0.34/diluted share) of mark to market losses on investments that underpin our unqualified benefit plans in the second quarter, which compares to gains of $20 million a year ago. The tax rate in the second quarter was 17.3% including $36 million, or $0.25/diluted share, of favourable discrete items.
Based on the current forecast, Cummins is maintaining its full year 2022 guidance, expecting revenue to be up 8% and EBITDA of approximately 15.5%. The company plans to return approximately 50 percent of Operating Cash Flow to shareholders in the form of dividends and share repurchases.
Any expenses outside of the normal course of business associated with the separation of the Filtration business, the pending acquisition of Meritor, or indefinite suspension of our operations in Russia have been excluded from the outlook provided.
“High inflation and rising global interest rates have increased uncertainty about the pace of growth in the global economy. Demand for Cummins’ products and services remains strong, and as a result we have maintained our projection for full year revenues and profitability from three months ago,” said Rumsey. “We continue to monitor economic conditions closely and will adjust our operating plans should the outlook for our core markets weaken.”
The company achieved significant milestones related to two previously announced acquisitions, Jacobs Vehicle Systems (JVS) and Meritor. In April 2022, Cummins completed the acquisition of JVS, adding engine braking and cylinder deactivation technologies which are key components to meeting current and future emissions regulations. On May 26th, Meritor’s shareholders voted in favor of the Cummins acquisition bid, further validating the potential of what Cummins and Meritor can achieve together.
Cummins announced several collaborations that further enable our customers to achieve their decarbonisation goals. During the second quarter, the firm announced collaborations with Daimler Truck North America and Scania to deliver fuel cell electric powertrains for heavy-duty truck applications, and with Komatsu on the development of zero-emissions haulage equipment, including hydrogen fuel cell solutions for large mining haul truck applications. Cummins, Chevron, and Walmart are also working together to integrate Cummins X15N natural gas engine, powered by renewable natural gas, into Walmart’s heavy-duty truck fleet.
The Engine, Distribution, Components and Power Systems results were all impacted by adjustments to the reserves related to the indefinite suspension of operations in Russia.