Cummins Inc. Reports Modest Net Sales Growth, Significant Profitability Increase in Q3 2024

Cummins Inc. reported its financial results for the third quarter and the first nine months of 2024, highlighting a modest increase in net sales and significant changes in profitability compared to the previous fiscal period. For the three months ended September 30, 2024, net sales reached $8,456 million, a slight increase from $8,431 million in the same period of 2023. For the nine months, net sales totaled $25,655 million, up from $25,522 million year-over-year.

The company's gross margin for the third quarter was $2,171 million, reflecting an increase of $100 million compared to the same quarter in 2023. Operating income for the third quarter was $1,050 million, while consolidated net income was $843 million, translating to earnings per share of $5.90, up from $4.63 in the prior year. For the nine months, net income attributable to Cummins Inc. was $3,528 million, significantly higher than $2,166 million in the same period of 2023.

The increase in profitability was attributed to improved gross margins driven by favorable pricing and higher volumes, despite challenges such as the divestiture of Atmus Filtration Technologies, which impacted the Components segment. The Components segment reported a 16% decline in sales for the third quarter, primarily due to this divestiture, while the Engine segment saw a slight decrease of 1% in sales, largely due to lower demand in North American heavy-duty and light-duty truck markets.

Strategically, Cummins completed the divestiture of its 80.5% ownership in Atmus on March 18, 2024, resulting in a gain of approximately $1.3 billion recorded in other income. The company also incurred $1.9 billion in payments related to regulatory settlement agreements concerning emissions certification, which were settled in Q2 2024. Additionally, Cummins made significant investments, including the acquisition of Engendren Corporation for $65 million and the formation of a joint venture, Amplify Cell Technologies LLC, to produce battery cells for electric commercial vehicles.

Cash flow from operating activities for the nine months ended September 30, 2024, was $652 million, a notable decrease from $2.5 billion in the same period of 2023, primarily due to higher working capital requirements. As of September 30, 2024, Cummins had $1.6 billion in commercial paper outstanding and maintained a strong liquidity position with $2.3 billion in cash and marketable securities. The company also increased its quarterly dividend by approximately 8% to $1.82 per share in July 2024.