COLUMBUS, Ind. — The quarter belonged to power generation. Revenue for the three months ended Sept. 30 came to $9.4 billion at Cummins Inc., 13% more than a year earlier. Profit more than doubled, the company said on Thursday.
Cummins made $1.14 billion in the quarter. The same quarter last year brought in $536 million. Diluted earnings per share were $8.25. A year earlier they were $3.86.
EBITDA set a record, too. Cummins put it at $1.8 billion, which is 18.9% of sales. A year earlier the figure was $1.2 billion, or 14.3% of sales.
Jennifer Rumsey, the company’s chair and chief executive, credited the Power Systems business first.
“We delivered record EBITDA and earnings per share in the third quarter, led by continued strength in our Power Systems business.”
Rumsey pointed to the market behind much of that strength. “Global demand for power generation equipment remains exceptionally strong, driven by data center buildout,” she said. Orders in the pickup truck market, by contrast, have weakened, even as the U.S. medium- and heavy-duty truck markets strengthened.
Power systems and engines lead the quarter
Power Systems was the most profitable segment. Sales there reached $2.3 billion, up 15%. The segment kept 25.4 cents of each sales dollar as EBITDA, $582 million in all, against $457 million and 22.9% a year earlier. Data centers did much of the work: Cummins said demand for power generation ran strongest in the United States, China and the Asia Pacific region, with data center markets at the front of it.
Engines brought in $3.1 billion, 20% more than a year earlier, and segment EBITDA was $422 million, or 13.5% of sales. Components did better still on growth, with sales up 23% to $2.9 billion. Distribution sales rose 4% to $3.3 billion, though that segment’s EBITDA eased to $461 million from $492 million. Sales at Accelera, the company’s zero-emissions segment, fell 15% to $103 million, and the segment recorded an EBITDA loss of $56 million.
Across the company, sales in North America grew 15%, while international revenues rose 11%, led by growth in China. The year-earlier quarter included $240 million, or $1.73 per share, of non-cash charges at Accelera, and the latest quarter’s earnings per share included 54 cents of favorable discrete tax items.
Full-year outlook trimmed on pickup demand
Cummins now expects full-year revenue growth of approximately 10%, narrowed from its earlier guidance of 10% to 13%. It expects EBITDA margins of approximately 18.2%, in line with its earlier range of 18% to 18.5%, excluding charges tied to the first-quarter sale of its low-pressure fuel cell business.
“We have adjusted our full-year revenue and profitability guidance primarily due to continued weaker than expected pickup truck demand in North America, which impacted our third quarter and is expected to persist through the end of this year,” Rumsey said. She added that global power generation and North American heavy-duty truck demand remain strong, and that the company expects fourth-quarter revenues to step up from the third quarter and set a new record.
The quarterly dividend went up in July, from $2.00 to $2.20 a share. It was the 17th consecutive year Cummins has raised the quarterly dividend. The company restated its goal of returning 50% of operating cash flow to shareholders and said it plans to keep generating strong operating cash flow. Management was scheduled to discuss the results on a teleconference at 10 a.m. EDT on Thursday.
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