Cummins Q1 revenues jump 22% from 2020

Cummins Inc. reported results for the first quarter of 2021 and it was a lot of good news.

First quarter revenues of $6.1 billion increased 22% from the same period in 2020. Sales in North America increased 7% while international revenues increased 45%, driven by strong demand across all global markets as well as new product sales in China and India.

“Demand accelerated in the first quarter, as the global economy continued to improve, driving strong sales growth across most businesses and regions and resulting in solid profitability,” said Cummins Chairman and CEO Tom Linebarger. “The strength and breadth of the rebound in demand has surpassed our original expectations and we have raised our full year outlook.

“While we are encouraged by the rising demand, the pace of recovery has placed a strain on global supply chains leading to increased costs and challenges in fulfilling end user demand. The shortage of key components such as semiconductor chips has been the primary challenge, with adverse weather conditions impacting the U.S., and bottlenecks in global logistics further adding to order backlogs. The ability to supply is our key focus now and we are doing everything we can to mitigate the impact.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $980 million (16.1% of sales), compared to $846 million (16.9% of sales) a year ago.

Net income in the first quarter was $603 million compared to $511 million in 2020.

2021 Outlook

Based on the current forecast, Cummins is raising its full year 2021 revenue guidance to 20 to 24%, an increase from 8 to 12% due to stronger demand across all markets.

Tom Linebarger

“We are raising our guidance for 2021 on both revenue and profitability,” Linebarger said. “We continue to take necessary precautions at all our facilities to mitigate the spread of COVID-19 and our focus remains on the health and safety of our employees.

“We are optimistic that continued vaccination distribution globally will reduce the impact of the virus in the second half of the year, but there is still a risk of an increase in cases and the potential for new virus variants that could result in lower customer demand, additional facility shutdowns or additional supply chain constraints in the future.”

Here are the first quarter results, by segment.

Engine Segment: Sales were $2.5 billion, up 14% from the same period the previous year. On-highway revenues increased 15%, driven by strong demand in the North American truck and pickup markets and off-highway revenues increased 9%, driven by strong demand in international construction markets. Sales increased 10% in North America and 24% in international markets

Distribution Segment: First quarter sales were $1.8 billion, 1% ahead of Q1 of 2020. Revenues in North America were down 6% and international sales increased by 17%. Increased demand in power generation and engine markets offset by declines in parts and service as a result of supply chain constraints, the company said.

Components Segment: Sales were $2.2 billion, up 43% from last year’s Q1. Revenues in North America increased by 15% and international sales jumped 82% due to higher demand in China and India.

Power Systems Segment: Sales were up 16% from 2020, to $1.0 billion. Power generation revenues increased by 18%, driven by growth in recreational vehicle and datacenter markets while industrial revenues increased 9% due to stronger demand in mining markets.

New Power Segment: Sales were $35 million, up 250% from the same period in 2020. Revenues increased due to greater demand in transit and school bus markets in addition to the commissioning of electrolyzer projects and shipments of fuel cell systems to the rail market, the company said. Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles contributed to an EBITDA loss of $51 million.