COLUMBUS, Ind.–Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2020.
- Second quarter revenues of $3.9 billion; GAAP1 Net Income of $276 million
- Second quarter EBITDA of 14.3 percent; Diluted EPS of $1.86
- The company ended the quarter with cash, cash equivalents and marketable securities of $2.1 billion and committed borrowing capacity of $3.5 billion
- The company’s long-term credit ratings remain unchanged at A+ from Standard & Poor’s and A2 from Moody’s with stable outlooks
Second quarter revenues of $3.9 billion decreased 38 percent from the same quarter in 2019. COVID-19 related customer shutdowns and weak economic activity led to lower demand in most end markets and regions except China. Sales in North America declined by 48 percent while international revenues decreased 22 percent. Currency negatively impacted revenues by 2 percent primarily due to a stronger US dollar.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were $549 million (14.3 percent of sales), compared to $1.1 billion (17.0 percent of sales) a year ago.
Net income attributable to Cummins in the first quarter was $276 million ($1.86 per diluted share) compared to $675 million ($4.27 per diluted share) in 2019. The tax rate in the second quarter was 25.7 percent and was negatively impacted by $14 million ($0.09 per diluted share) of discrete tax items.
The company currently expects third quarter revenues to improve from second quarter levels, however, there remains significant uncertainty around how COVID-19 will impact end market demand as well as customer and supplier operations. Due to this uncertainty the company is not providing full year revenue or profitability guidance for 2020.
Chairman and CEO Tom Linebarger
“I want to thank our employees all over the globe for their dedication to our company and to our customers. They continue to work safely and effectively through an incredibly challenging period, with unprecedented disruptions to global demand and supply, to their work processes, and to their daily lives. In the face of the most severe decline in quarterly sales in our history, we delivered solid profitability while meeting commitments to our customers who provide products critical to the functioning of the global economy.”
“Our people demonstrated remarkable flexibility as did our operations and supply chain. A pronounced example of our organization’s agility in this challenging period was our ramp up in China, where many of our facilities went from complete shut down in February and March to producing record volumes in the second quarter.”
“While customer demand did improve in some regions as the quarter progressed, significant uncertainty around the pace of recovery in our markets remains, requiring a continued strong focus on managing expenses and cash flow. Our strong financial position will enable us to continue to prioritize our investments in technology and new products including advanced diesel engines, battery electric powertrains, fuel cells, and hydrogen electrolyzers that will help drive future profitable growth.”
Second Quarter 2020 Highlights:
- Announced an external-facing approach to complement the company’s internal diversity and inclusion activities, including the creation of the Cummins Against Racial Injustice Management Review Group to focus on police reform, criminal justice, social justice, and economic empowerment of Black people in the United States.
- Manufactured more than 14 tons of its filtration media which has been used to produce more than eight million N95 and surgical masks globally.
- Cummins announced a joint venture with NPROXX, a leader in hydrogen storage and transportation, for hydrogen storage tanks. The transaction is expected to close by the end of the first quarter 2021.
- Published the Cummins Work Playbook, a one-stop resource highlighting our health and wellness protocols that ensure the safety of our employees, customers, suppliers and communities during the global COVID-19 pandemic.
- Paid a $1.311 dividend to shareholders. Cummins has paid a dividend for over 70 years.
- 1 Generally Accepted Accounting Principles
Second quarter 2020 detail (all comparisons to same period in 2019):
Sales – $1.4 billion, down 47 percent
Segment EBITDA – $150 million, or 10.5 percent of sales, compared to $416 million or 15.4 percent of sales
On-highway revenues decreased 55 percent and off-highway revenues declined 15 percent
Sales declined in all regions except China, where sales increased by 40 percent due to higher demand in construction markets
Sales – $1.6 billion, down 21 percent
Segment EBITDA – $160 million, or 10.0 percent of sales, compared to $172 million or 8.5 percent of sales
Revenues in North America were down 25 percent and international sales declined by 12 percent
Demand declined in all lines of business and a stronger US dollar negatively impacted revenues by 1 percent
Sales – $1.2 billion, down 38 percent
Segment EBITDA – $141 million, or 12.3 percent of sales, compared to $297 million or 16.1 percent of sales
Revenues in North America decreased by 55 percent and international sales declined by 9 percent due to lower demand in Europe, India, and Brazil
Sales in China increased by 63 percent driven by record levels of truck production
Power Systems Segment
Sales – $777 million, down 35 percent
Segment EBITDA – $91 million, or 11.7 percent of sales, compared to $173 million, or 14.4 percent of sales
Power generation revenues decreased by 37 percent while industrial revenues decreased 33 percent due to lower demand in mining and oil and gas markets
New Power Segment
Sales – $10 million
Segment EBITDA loss – $38 million
Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles are contributing to EBITDA losses
About Cummins Inc.
Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, after treatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 61,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $2.3 billion on sales of $23.6 billion in 2019. See how Cummins is powering a world that’s always on by accessing news releases and more information at https://www.cummins.com/always-on.