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Cummins (CMI) Q3 Earnings Miss Estimates, Deteriorate Y/Y
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Cummins Inc. (CMI - Free Report) reported third-quarter 2022 earnings of $3.21 per share, which declined from $3.69 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $4.88. Weaker-than-expected EBITDA in the Engine, Distribution, Components and New Power segments resulted in the underperformance. Cummins’ revenues totaled $7,333 million, up 22.8% from $5,968 million recorded in the year-ago quarter. The top line also beat Zacks Consensus Estimate of $6,958.2 million.
In the reported quarter, sales in the Engine segment were up 8% year over year to $2,779 million. The metric missed the Zacks Consensus Estimate of $2,824 million. The segment’s EBITDA declined to $363 million (accounting for 13.1% of sales) from $391 million (15.2% of sales). The metric also lagged the Zacks Consensus Estimate of $421 million. On-highway revenues climbed 10%, driven by pricing actions and strong demand in the North American truck markets, strong aftermarket demand and smart pricing actions. Off-highway revenues declined 3% as a result of a slowdown in China construction. Sales increased 14% in North America but fell 8% in international markets.
Sales in the Distribution segment totaled $2,239 million, up 174% year over year and beat the consensus mark of $2,118 million. The segment’s EBITDA came in at $225 million (10% of sales), up from the previous year’s $192 million (9.8% of sales). The metric, however, missed the consensus mark of $240 million. Revenues from North America jumped 22%, while international sales rose 1%. Higher revenues were driven by increased demand for parts and services.
Sales in the Components segment were up 10% from the prior-year quarter to $2,703 million and surpassed the consensus mark of $2,486 million. Sales in North America were up 19%, while the same in international markets inched down 1% amid weak demand from China. The segment’s EBITDA was $297 million (11% of sales) compared with the year-ago figure of $253 million (14.1% of sales). The metric missed the Zacks Consensus Estimate of $374 million.
Sales in the Power Systems segment rose 16% from the year-ago quarter to $1,349 million and topped the consensus mark of $1,252 million. The segment’s EBITDA increased to $193 million (14.3% of sales) from $134 million (11.5% of sales) and beat the consensus mark of $152 million. Power generation revenues were up 11% and industrial revenues rose 17%.
Sales in the New Power segment came in at $50 million, soaring 96% from the year-ago level but lagging the consensus metric of $59 million. The segment incurred a pretax loss of $96 million, which was wider than the consensus mark of $74 million.
Financials
Cummins’ cash and cash equivalents were $2,499 million as of Sep 30, 2022, down from $2,592 million on Dec 31, 2021. Long-term debt totaled $5,490 million, up from $3,579 million on Dec 31, 2021.
2022 Outlook
Cummins maintained its 2022 guidance for revenues. It continues to expect revenues to grow 8% year over year. EBITDA is now forecast at 15% of sales, down from 15.5% of sales guided earlier. Cummins continues to stick to its plans of returning nearly 50% of operating cash flow to shareholders in the form of dividends and share repurchases.
IAA has an expected earnings growth rate of 7.2% for 2023. The Zacks Consensus Estimate for IAA’s next-year earnings has been revised 3 cents upward in the past 90 days.
BMW has an expected earnings growth rate of 10% for the current year. The Zacks Consensus Estimate for current-year earnings has moved up 35 cents over the past 30 days.
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Cummins (CMI) Q3 Earnings Miss Estimates, Deteriorate Y/Y
Cummins Inc. (CMI - Free Report) reported third-quarter 2022 earnings of $3.21 per share, which declined from $3.69 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $4.88. Weaker-than-expected EBITDA in the Engine, Distribution, Components and New Power segments resulted in the underperformance. Cummins’ revenues totaled $7,333 million, up 22.8% from $5,968 million recorded in the year-ago quarter. The top line also beat Zacks Consensus Estimate of $6,958.2 million.
Cummins Inc. Price, Consensus and EPS Surprise
Cummins Inc. price-consensus-eps-surprise-chart | Cummins Inc. Quote
Key Takeaways
In the reported quarter, sales in the Engine segment were up 8% year over year to $2,779 million. The metric missed the Zacks Consensus Estimate of $2,824 million. The segment’s EBITDA declined to $363 million (accounting for 13.1% of sales) from $391 million (15.2% of sales). The metric also lagged the Zacks Consensus Estimate of $421 million. On-highway revenues climbed 10%, driven by pricing actions and strong demand in the North American truck markets, strong aftermarket demand and smart pricing actions. Off-highway revenues declined 3% as a result of a slowdown in China construction. Sales increased 14% in North America but fell 8% in international markets.
Sales in the Distribution segment totaled $2,239 million, up 174% year over year and beat the consensus mark of $2,118 million. The segment’s EBITDA came in at $225 million (10% of sales), up from the previous year’s $192 million (9.8% of sales). The metric, however, missed the consensus mark of $240 million. Revenues from North America jumped 22%, while international sales rose 1%. Higher revenues were driven by increased demand for parts and services.
Sales in the Components segment were up 10% from the prior-year quarter to $2,703 million and surpassed the consensus mark of $2,486 million. Sales in North America were up 19%, while the same in international markets inched down 1% amid weak demand from China. The segment’s EBITDA was $297 million (11% of sales) compared with the year-ago figure of $253 million (14.1% of sales). The metric missed the Zacks Consensus Estimate of $374 million.
Sales in the Power Systems segment rose 16% from the year-ago quarter to $1,349 million and topped the consensus mark of $1,252 million. The segment’s EBITDA increased to $193 million (14.3% of sales) from $134 million (11.5% of sales) and beat the consensus mark of $152 million. Power generation revenues were up 11% and industrial revenues rose 17%.
Sales in the New Power segment came in at $50 million, soaring 96% from the year-ago level but lagging the consensus metric of $59 million. The segment incurred a pretax loss of $96 million, which was wider than the consensus mark of $74 million.
Financials
Cummins’ cash and cash equivalents were $2,499 million as of Sep 30, 2022, down from $2,592 million on Dec 31, 2021. Long-term debt totaled $5,490 million, up from $3,579 million on Dec 31, 2021.
2022 Outlook
Cummins maintained its 2022 guidance for revenues. It continues to expect revenues to grow 8% year over year. EBITDA is now forecast at 15% of sales, down from 15.5% of sales guided earlier. Cummins continues to stick to its plans of returning nearly 50% of operating cash flow to shareholders in the form of dividends and share repurchases.
Zacks Ranks and Key Picks
Some better-ranked players in the auto space are Insurance Auto Auctions, aka IAA, Inc. and BMW AG (BAMXF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
IAA has an expected earnings growth rate of 7.2% for 2023. The Zacks Consensus Estimate for IAA’s next-year earnings has been revised 3 cents upward in the past 90 days.
BMW has an expected earnings growth rate of 10% for the current year. The Zacks Consensus Estimate for current-year earnings has moved up 35 cents over the past 30 days.