Cummins Inc (CMI, Financial) released its 8-K filing on February 4, 2025, reporting its fourth quarter and full year 2024 financial results. The company, a leading manufacturer of diesel engines and power generation products, reported fourth quarter revenues of $8.4 billion, surpassing the analyst estimate of $8.07 billion. However, the diluted earnings per share (EPS) of $3.02 fell short of the estimated $4.63.
Company Overview
Cummins Inc (CMI, Financial) is renowned for its production of diesel engines used in commercial trucks, off-highway machinery, and railroad locomotives. The company also offers powertrain components such as transmissions, turbochargers, and fuel systems. Despite facing competition from its primary customers, heavy-duty truck manufacturers, Cummins has maintained its leadership position in the industry.
Performance and Challenges
In the fourth quarter of 2024, Cummins reported a net income of $418 million, or 4.9% of sales, compared to a net loss of $1.4 billion in the same period of 2023. The company's EBITDA was 12.1% of sales, a significant improvement from a loss of 10.3% in the previous year. However, the quarter included $312 million in charges related to the reorganization of its Accelera segment, impacting the overall profitability.
Financial Achievements
For the full year 2024, Cummins achieved record revenues of $34.1 billion, with a net income of $3.9 billion, or 11.6% of sales. The company's EBITDA for the year was 18.6% of sales, highlighting its strong operational performance despite challenges in the North American heavy-duty truck market.
Income Statement and Key Metrics
The income statement reveals a gross margin of $2.034 billion for Q4 2024, with operating income of $732 million. The company's effective tax rate for the quarter was notably high at 132.8%, primarily due to non-deductible costs associated with the Accelera reorganization.
Balance Sheet and Cash Flow
As of December 31, 2024, Cummins reported total assets of $31.54 billion, with total liabilities of $20.23 billion. The company maintained a strong cash position with $1.671 billion in cash and cash equivalents. Net cash provided by operating activities for the year was $1.487 billion, reflecting robust cash generation capabilities.
Segment Performance
| Segment | Sales ($ billion) | EBITDA ($ million) | EBITDA Margin |
|---|---|---|---|
| Engine | 2.7 | 367 | 13.5% |
| Components | 2.6 | 361 | 13.7% |
| Distribution | 3.1 | 400 | 13.0% |
| Power Systems | 1.7 | 314 | 18.0% |
| Accelera | 0.1 | (431) | NM |
Analysis and Outlook
Cummins' performance in 2024 underscores its resilience and ability to navigate market challenges. The company's strategic focus on its Destination Zero strategy and investments in zero-emissions technology position it well for future growth. However, the reorganization of the Accelera segment and associated charges highlight the challenges in adapting to changing market demands.
Looking ahead to 2025, Cummins anticipates a revenue range of down 2% to up 3%, with EBITDA expected between 16.2% and 17.2% of sales. The company remains committed to generating strong cash flows and returning value to shareholders, despite potential headwinds in the North American truck market.
Cummins delivered strong operational results in the fourth quarter and achieved record full year revenues, net income, EBITDA and EPS, despite a decline in heavy duty truck demand in North America," said Jennifer Rumsey, Chair and CEO of Cummins.
Explore the complete 8-K earnings release (here) from Cummins Inc for further details.
