Engine maker and power systems provider Cummins Inc. reported record second-quarter revenue thanks to the full integration of Meritor Inc. But a key earnings measure fell because Meritor’s gross margin percentage trails its new parent.
By the numbers, Cummins reported:
Record second-quarter revenues of $8.6 billion with all five business segments reporting higher sales. Year-ago sales were $6.59 billion..
Net income of $720 million, or $5.05 per diluted share, compared with $702 million, or $4.94, a year ago.
Earnings of $1.3 billion before interest taxes, depreciation and amortization fell to 15.1% of sales compared to income of $1.1 billion, or 16% EBITDA, a year ago.
A one-time earnings hit of $23 million, or 13 cents, related to the separation of Atmus Filtration Technologies Inc.
Maintaining full-year 2023 guidance projecting revenue to be up 15% to 20% and EBITDA of 15% to 15.7%.
Increasing its quarterly common stock cash dividend from $1.57 to $1.68 per share, the 14th consecutive year of increased dividends.
Cummins acquired Meritor for $3.7 billion in 2022. The company expects Meritor to contribute $4.7 billion to $4.9 billion in revenue this year. It projects EBITDA between 10.3% and 11%, lower than the overall company.
“While we see demand remaining strong through 2023 and we are maintaining our guidance on revenue and profitability, we continue to closely monitor global economic indicators,” Jennifer Rumsey, Cummins chair and CEO, said in a news release.
“Should economic momentum slow, Cummins will remain in a strong position to keep investing in future growth, bringing new technologies to customers as we advance our Destination Zero strategy, and returning cash to shareholders.”
Cummins shares (NYSE: CMI) traded 9% lower before markets opened Thursday..
This is a developing story.
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