Cummins Inc. recorded a massive one-time gain from the split-off of its filtration business. But first-quarter revenue dropped as weakening business conditions impacted the engine maker and power distribution giant.
The Tier 1 supplier of truck engines and power systems for data centers and other businesses reported Q1 revenue of $8.4 billion. That was down 1% from a year ago. The number missed analyst estimates by $50 million. Sales in North America were flat. International revenues fell 1% due to lower demand in China and Europe.
Net income of $2 billion, or $14.03 per diluted share, included a net gain of $1.3 billion, or $9.08, from separating Atmus Filtration Technologies Inc. That compared to $790 million, or $5.55, in Q1 2023.
Atmus, which makes engine filters and specialty materials, was no longer seen as a strategic fit within Cummins. In standing up Atmus, Cummins positioned itself for a nontaxable share swap of equity. The former division is based in Nashville, Tennessee.
Cummins is heavily investing in future powertrain technologies. That includes fully integrated electric systems, partly made possible by its acquisition of Meritor Inc. in August 2022. It continues to see higher sales but still books EBITDA losses in Accelera by Cummins, the rebrand of its New Power division.
Cummins reiterates lower revenue projection
Columbus, Indiana-based Cummins maintained an earlier projection that full-year revenues would fall 2% to 5%. But it noted the earlier projection included a full year of Atmus revenues, which now will be part of the stand-alone company.
The company raised its full-year estimate for earnings before interest, taxes, depreciation and amortization to 14.5% to 15.5%, an increase from previous guidance of 14.4% to 15.4% which also included Atmus for the full year.
“We have raised our expectations on revenue and profitability for 2024 due to continued demand for Cummins’ products and services,” Cummins CEO and Chair Jennifer Rumsey said in a statement. “We do still expect slowing demand in some of our key markets in the second half of the year.”
Sales in the engines and components divisions fell by 2% and 6%, respectively. Revenues rose 5%, 3% and 9%, respectively, in the power distribution, power systems and Accelera divisions.
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