Cummins(CMI)2025-05-05 18:42Financial Performance - Net sales for the first quarter of 2025 were $8.174 billion, a decrease of 3% compared to $8.403 billion in the same period of 2024[104]. - Net income attributable to Cummins Inc. for Q1 2025 was $824 million, or $5.96 per diluted share, down from $1.993 billion, or $14.03 per diluted share in Q1 2024[104]. - The divestiture of Atmus resulted in a gain of $1.3 billion in Q1 2024, which significantly impacted year-over-year comparisons[104]. - Total net sales for the three months ended March 31, 2025, decreased by $229 million, or 3%, compared to the same period in 2024, totaling $8,174 million[115]. - Consolidated net income attributable to Cummins Inc. was $824 million, a decrease of 59% from $1,993 million in the prior year[115]. - Gross margin increased by $114 million, or 6%, with gross margin as a percentage of net sales rising to 26.4% from 24.3%[115][119]. - Operating income for the three months ended March 31, 2025, was $1,134 million, reflecting a 23% increase compared to $923 million in 2024[115]. Sales Performance by Segment - Engine segment sales decreased by 5% to $2,771 million, while Components segment sales fell by 20% to $2,670 million, primarily due to the Atmus divestiture[116][117]. - Distribution segment sales increased by 15% to $2,907 million, driven by higher demand in power generation markets, particularly in North America[116]. - Power Systems segment sales rose by 19% to $1,649 million, mainly due to increased demand in power generation markets in China and North America[116]. - Engine segment external sales decreased by $200 million (9%) to $2,040 million in Q1 2025, while total sales fell by $157 million (5%) to $2,771 million[134][136]. - Components segment external sales decreased by $572 million (20%) to $2,270 million in Q1 2025, with total sales down by $662 million (20%) to $2,670 million[138][140]. - Power Systems segment external sales increased by $164 million (23%) to $872 million for the three months ended March 31, 2025, compared to $708 million in 2024[146]. - Total sales for the Power Systems segment rose by $260 million (19%) to $1,649 million in Q1 2025, driven by higher volumes and favorable pricing[148]. - Accelera segment total sales increased by $10 million (11%) to $103 million, primarily due to improved sales of electrified powertrains and electrolyzers[149]. Market and Economic Factors - International sales decreased by 5% in Q1 2025, primarily due to lower sales in Latin America and Asia Pacific, partially offset by higher sales in China[106]. - U.S. and Canada net sales declined by 1% in Q1 2025, primarily due to the divestiture of Atmus and lower demand in on-highway truck markets[106]. - Unfavorable foreign currency fluctuations impacted international sales by 4%, primarily affecting the Brazilian real, Euro, and Indian rupee[106]. - The foreign currency translation adjustment resulted in a net gain of $117 million for Q1 2025, compared to a net loss of $60 million in Q1 2024[131]. Operational and Strategic Initiatives - The company is focusing on the development of electrified power systems and related components, including battery and hydrogen production technologies[98]. - The company is actively managing supply chain impacts due to an escalating tariff environment, which may affect future financial results[102]. - The company operates five business segments: Engine, Components, Distribution, Power Systems, and Accelera, with a global service network of approximately 650 locations[97]. Capital and Liquidity - Cash and marketable securities on hand totaled $2.2 billion, with access to $4.0 billion in credit facilities[110]. - The debt to capital ratio at March 31, 2025, was 38.5%, slightly up from 38.4% at December 31, 2024, due to higher debt balances[110]. - Working capital increased to $3,965 million as of March 31, 2025, compared to $3,518 million at the end of 2024, with a current ratio of 1.34[153]. - Total debt increased to $7,488 million as of March 31, 2025, with total debt as a percentage of total capital at 38.5%[153]. - The company maintains strong liquidity, with access to capital markets and existing cash flow to fund various obligations through 2025 and beyond[174]. Pension and Stockholder Returns - The company anticipates making additional defined benefit pension contributions of $39 million during the remainder of 2025[113]. - Global pension plans were 115% funded as of December 31, 2024, with U.S. defined benefit plans at 117% and U.K. plans at 109%[170]. - The Board authorized the acquisition of up to $2.0 billion of common stock, with $218 million remaining available for future purchases under the 2019 program as of March 31, 2025[171]. - The company paid dividends totaling $251 million during the three months ended March 31, 2025[167]. Risk Management and Outlook - Credit ratings from Standard and Poor's and Moody's are A and A2 respectively, both with a stable outlook[173]. - The company has not identified any reasonably likely events that would result in changes to critical accounting estimates in the first three months of 2025[178]. - There have been no material changes in market risk disclosures since the filing of the 2024 Form 10-K[180].