Cummins Inc.
CEO : Ms. Jennifer W. Rumsey
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 32.8% YoY | 62.0% | 50.2% | 2023-02-06 |
Jennifer Rumsey says,
Record Revenues and Earnings per Share in 2022
- Significant strides in inorganic growth strategy.
- Made acquisitions of Jacobs Vehicle Systems, Meritor, and Siemens Commercial Vehicles business.
- Record revenues, EBITDA, and earnings per share in 2022.
Decarbonization Growth Strategy
- Launched long-term decarbonization growth strategy, Destination Zero.
- Unveiled the industry’s first unified fuel-agnostic internal combustion powertrain platforms.
- Momentum in electrolyzer technology and green hydrogen production opportunities.
Strong Demand for Products
- Demand for products remains strong across all key markets and regions.
- Notable exception of China.
- Fourth quarter revenues totaled $7.8 billion.
2023 Outlook
- Total company revenues for 2023 expected to increase 12% to 17% compared to 2022.
- EBITDA to be 14.5% to 15.2% of sales.
- Continued strength in North American truck market.
- Improved demand in power generation markets.
- Slow improvement in China on-highway markets.
Meritor Integration
- Confident in ability to achieve $130 million in pretax synergies.
- Incremental tax synergies expected to deliver as business is integrated.
- Expect Meritor to be accretive to earnings per share in 2023.
- EBITDA margins in range of 10.3% to 11%.
Mark Smith says,
CMI Q4 2022 Earnings Call Highlights
- Cummins delivered strong Q4 2022 results, exceeding projected revenue and EBITDA estimates.
- The company made good progress on the integration of Meritor and aims to achieve $130 million of pre-tax synergies by the end of year three.
- Record sales were reported for the full year 2022, with revenues of $26.2 billion, up 9% YoY, and EBITDA of $4 billion or 15.1% for 2022 compared to $3.5 billion or 14.7% of sales in 2021.
- The company returned $1.2 billion to shareholders in 2022 in the form of dividends and share repurchases.
- Guidance for 2023 includes projections for Meritor to add $4.5 billion to $4.7 billion of revenue in 2023, and an expected 12% to 17% increase in company-wide revenues, with EBITDA margins projected to be in the range of 14.5% to 15.2%.
Q & A sessions,
North America Truck Market
- Despite a decrease in spot rates, the company expects a strong North American truck market with healthy freight activity and strong backlogs through the first half of the year.
- Aftermarket demand remains high due to undersupplying to the market demand for the past two years.
Power Systems Business
- The company has a healthy backlog of products and strong demand across many markets.
- Mining market is expected to remain flat, but growth is expected in power generation and oil and gas business.
Uncertainty in China
- China’s recovery is projected to be slow throughout 2023 due to the government’s stringent lockdowns in the past two years.
- The company is well-positioned in China with new products launched, but uncertainty remains on the shape of China’s recovery due to COVID waves and government stimulus into the economy.
Inflation Reduction Act and Hydrogen Market
- The inflation reduction act and the investments around it are expected to drive growth in the hydrogen market in the US between now and 2030.
- However, it will take several years before the incentives translate into actual projects and business, and during the investment phase, the company may need to invest more and consume more cash.
- The company expects good gross margins once the investment phase is over.
Technology Adoption
- The hydrogen market has a long incubation period, and it may take more than a year between headline announcements and putting equipment into place.
- Despite this, the company is encouraged by the strong adoption of their technology, and business is doing well on the development side.
No bad stock 