Cummins’ second-quarter profit rises on higher generator and engine sales

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Growth in sales of power generators and truck engines boosted Cummins Inc.’s profit in the second quarter of 2024, the company said Aug. 1.

Columbus, Indiana-based Cummins reported net income of $726 million in the second quarter, up 0.83% from $720 million in the same period in 2023.

The company’s second-quarter revenue was $8.796 billion, up 2% from $8.638 billion in the same quarter of 2023. North American sales rose 4% year over year, but international revenue fell 2%, Cummins said, without providing further details.

“We delivered record quarterly sales and solid profitability in the second quarter, driven by significant improvement in our Power Systems business,” Chief Executive Officer Jennifer Rumsey said in a statement accompanying the results.

Total sales for the Power Systems division were $1.589 billion, up 9.1% from $1.457 billion in the same period in 2023.

The unit’s power generation revenue totaled $987 million in Q2, up 15.6% from $854 million a year earlier. Cummins sold 3,700 power generation units in the quarter, up 12.1% from 3,300 in Q2 2023.

Cummins Engines sales rose 5% year over year to $3.151 billion from $2.988 billion. The division’s heavy-duty engine revenues totaled $1.184 billion in the second quarter, up 6% from $1.117 billion in the same period last year.

Cummins heavy-duty engine deliveries totaled 37,500 units in the latest quarter, up 3% from 36,400 units in the same period a year earlier and up 11.6% from 33,600 units in the first three months of 2024.

Cummins heavy-duty engine sales in North America totaled 31,000 units, up 7% from a year earlier, Rumsey said during the company’s quarterly earnings conference. He also said the Jamestown Engine plant in New York produced more heavy-duty engines than ever before.

Meanwhile, sales at the company’s components division fell 13% year over year to $2.982 billion from $3.425 billion. That was largely due to the spinoff of its Atmus filtration division, the sale of which was closed in March.

Analysts were impressed with the results.

“Cummins’ results are a breath of fresh air in what has been a somewhat tepid earnings season (for the machinery sector),” said Rob Wertheimer, founding partner of Melius Research.

“This is a short-term and long-term comment: the company had a strong near-term result in the face of what we thought could be strengthening headwinds in the trucking industry. We thought the quarter carried some risk of potential cuts in truck production, but instead saw a modest increase in the short term,” Wertheimer said in an Aug. 1 research note.

“The long-term outlook is also gradually strengthening. Cummins’ data center exposure is very good, and the company is taking orders through 2027 (with capacity builds taking some time, largely due to supplier capacity issues),” he said. “We still don’t know how to support data centers scaling to hundreds of megawatts (that’s a lot of diesel engines strung together), but it looks like the reliability and instantaneous power delivery of diesel engines is at least part of the answer, with nothing else easily imagined.”

As a result of the better-than-expected quarter, Cummins raised its full-year 2024 revenue forecast from 2% to 3% at zero, due to stronger-than-expected demand in several markets, particularly in the North American on-highway truck segment and the power generation segment.

Still, Rumsey noted that “we continue to expect a slowdown in demand in the North American heavy-duty truck market in the second half of the year.”

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