Healthy market demand and an ability to cope with supply chain challenges helped Cummins post a 5% year-on-year revenue rise to a new record of US$6.4 billion in the first quarter of 2022.
The off-highway machine engine giant's sales in North America increased 12%, while international revenues decreased 3%, 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 Cummins 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."
Cummins' earnings before interest, taxes, depreciation and amortisation (EBITDA) in the first quarter were $755 million (11.8% of sales), compared to $980 million (16.1% of sales) a year ago.
In the first quarter, net income attributable was $418 million ($2.92 per diluted share) compared to $603 million ($4.07 per diluted share) in 2021. First-quarter results include $158 million ($1.03 per diluted share) related to the indefinite suspension of operations in Russia and $17 million ($0.09 per diluted share) associated with the separation of the Filtration business. The costs incurred relating to the indefinite suspension of our operations in Russia include inventory write-downs, reserves on accounts receivable, the impairment of joint venture investment, and other costs. The tax rate in the first quarter was 26.8%, including $31 million, or $0.22 per share, of unfavourable discrete items.
Based on the current forecast, Cummins is raising its full-year 2022 revenue guidance to up 8%, an increase from up 6% due to stronger demand in North America and other markets. Full-year 2022 EBITDA is expected to be approximately 15.5%, according to our previous guidance. The company plans to return approximately 50% of Operating Cash Flow to shareholders in the form of dividends and share repurchases.
"We delivered solid financial performance in the first quarter in the face of many challenges in our global supply chain. 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," said Cummins president and COO Jennifer Rumsey.
The company announced two significant acquisitions critical to advancing its product decarbonisation 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 in 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.
Cummins was named one of the World's Most Ethical Companies for a 15th consecutive time by Ethisphere, a global leader in defining and advancing the standards of ethical business practices. The company also earned a place on Barron's 100 Most Sustainable U.S. Companies list and received a perfect score on the Human Rights Campaign's 2022 Corporate Equality Index for the 18th consecutive year.
Cummins hosted its biennial analyst day highlighting its long-term decarbonisation growth strategy, Destination Zero, which includes making meaningful reductions in carbon emissions through advanced internal combustion technologies.
In February, Cummins unveiled the industry's first unified, fuel-agnostic internal combustion powertrain platforms. This technology approach will be applied across Cummins' X-Series, L-Series and B-Series product platforms and helps fleets reduce carbon emissions today by enabling vehicles to run on low to zero-carbon fuels. The platform utilises the internal combustion engine technology that fleets are already familiar with while also applying a high level of parts and integration commonality across fuels, including diesel, natural gas, hydrogen or other fuel applications.
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 electrolyser 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.