Cummins(US:CMI)2025-11-06 17:57Financial Performance - For the three months ended September 30, 2025, net sales were $8.3 billion, a decrease from $8.5 billion in the same period of 2024[122] - Net income attributable to Cummins Inc. for the three months ended September 30, 2025, was $536 million, down from $809 million in the prior year[122] - Earnings per diluted share for the three months ended September 30, 2025, were $3.86, compared to $5.86 in the same period of 2024[122] - For the nine months ended September 30, 2025, net sales were $25.1 billion, a decrease from $25.7 billion in the same period of 2024[124] - Net income attributable to Cummins Inc. for the nine months ended September 30, 2025, was $2.3 billion, down from $3.5 billion in the prior year[124] - The decrease in net income for the nine months was attributed to the absence of a $1.3 billion gain from the divestiture of Atmus in 2024 and lower demand in on-highway commercial truck markets[124] - Total net sales decreased by 2% to $8.317 billion for the three months ended September 30, 2025, compared to $8.456 billion in the same period of 2024[125] - EBITDA for the three months ended September 30, 2025, was $1.166 billion, a decrease of 14% compared to $1.389 billion in 2024[129] Sales and Market Trends - Net sales in the U.S. and Canada declined by 4% to $4.972 billion, primarily due to lower demand in medium-duty and heavy-duty truck markets[125] - International sales increased by 2% to $3.345 billion, driven by higher sales in China and Europe, partially offset by lower sales in Latin America and Asia Pacific[125] - Components segment sales decreased by 15% primarily due to lower demand in North American heavy-duty and medium-duty truck markets and the divestiture of Atmus[142] - Engine segment sales decreased by 11% largely due to lower demand in North American medium-duty and heavy-duty truck markets[143] - Heavy-duty truck sales for the three months ended September 30, 2025, decreased by $249 million (24%) due to weaker demand, with shipments down 36% in North America[174] - Light-duty automotive sales increased by $188 million (48%) for the three months ended September 30, 2025, driven by higher pick-up demand and non-tariff pricing[174] - Distribution segment external sales for Q3 2025 increased by $228 million (8%) compared to Q3 2024, totaling $3,170 million[179] - Power generation sales in the Power Systems segment rose by $225 million (21%) in Q3 2025, driven by higher demand in North America, India, and China[184] Expenses and Charges - The Accelera segment experienced a goodwill impairment charge and inventory write-down, impacting overall performance[122] - The company recorded $240 million in non-cash charges in its electrolyzer business for the Accelera segment in September 2025[132] - Other operating expense, net increased significantly to $(247) million for the three months and $(321) million for the nine months ended September 30, 2025, primarily due to goodwill impairment[157] - Interest expense remained flat at $83 million for the three months but decreased by $34 million (12%) to $247 million for the nine months ended September 30, 2025[158] - Selling, general and administrative expenses decreased by $18 million (2%) for the three months and $135 million (5%) for the nine months ended September 30, 2025[149][150] - Research, development and engineering expenses decreased by $14 million (4%) for the three months and $61 million (6%) for the nine months ended September 30, 2025[151][153] Cash Flow and Capital Management - Cash generated from operations for the nine months ended September 30, 2025, was $2.1 billion, a significant increase from $65 million in the same period of 2024[130] - The company's working capital as of September 30, 2025, was $7,266 million, significantly up from $3,518 million at December 31, 2024[194] - Net cash provided by operating activities for the nine months ended September 30, 2025, increased by $2,022 million compared to the same period in 2024, primarily due to lower working capital requirements[195] - The company had $353 million of commercial paper outstanding as of September 30, 2025, which reduced the available capacity under revolving credit facilities to $3.6 billion[206] - Capital expenditures for the nine months ended September 30, 2025, were $691 million, an increase from $668 million in the same period in 2024, with plans to spend $1.2 billion to $1.3 billion in 2025[211] Dividends and Shareholder Returns - The company authorized a 10% increase in its quarterly dividend from $1.82 to $2.00 per share in July 2025[133] - The company paid dividends of $778 million during the nine months ended September 30, 2025, with a quarterly dividend increase of approximately 10% from $1.82 to $2.00 per share authorized in July 2025[210] Debt and Liquidity - The debt to capital ratio improved to 36.8% as of September 30, 2025, down from 38.4% at December 31, 2024[131] - The company entered into a new 3-year credit agreement allowing it to borrow up to $2.0 billion of unsecured funds prior to June 2, 2028[136] - The company maintains strong credit ratings, with a long-term rating of A from Standard and Poor's and A2 from Moody's, both with a stable outlook[217] - The company assesses its liquidity as strong, with adequate cash flow to fund operating, investing, and financing activities through 2025 and beyond[218] Segment Performance - Engine segment external sales for the three months ended September 30, 2025, decreased by $293 million (13%) to $1,922 million, while total sales decreased by $308 million (11%) to $2,605 million[171] - Engine segment EBITDA for the three months ended September 30, 2025, decreased by $166 million (39%) to $261 million, primarily due to lower volumes and higher material costs[171] - The nine months ended September 30, 2025, saw a decrease in Engine segment sales by $717 million (8%) compared to the same period in 2024[173] - Components segment external sales for Q3 2025 decreased by $301 million (13%) compared to Q3 2024, totaling $1,986 million[175] - Total sales for the Components segment for the nine months ended September 30, 2025, decreased by $1.3 billion (15%) compared to the same period in 2024, totaling $7,704 million[176] - Distribution segment EBITDA for Q3 2025 increased by $122 million (33%) compared to Q3 2024, totaling $492 million[181] - Distribution segment EBITDA for the nine months ended September 30, 2025, increased by $335 million (34%) compared to the same period in 2024, totaling $1,313 million[182] - Power Systems segment external sales for Q3 2025 increased by $214 million (23%) to $1,126 million compared to Q3 2024[183] - Accelera segment total sales for Q3 2025 increased by $11 million (10%) to $121 million, mainly due to higher sales for electrified powertrains[187] - Accelera segment sales for the nine months ended September 30, 2025, increased by $15 million (5%) to $329 million, primarily due to improved sales of electrified powertrains[188] Taxation - Income tax expense increased by $36 million in the third quarter of 2025 due to changes in U.S. federal income tax rules[160] - The effective tax rate for 2025 is expected to be approximately 26.5%, a 2% increase from prior estimates due to The Act and non-deductible goodwill impairment[161] - For the three months ended September 30, 2025, the effective tax rate was 32.7%, compared to 19.2% for the same period in 2024[162] Foreign Currency and Other Adjustments - The foreign currency translation adjustment resulted in a net loss of $67 million for the three months ended September 30, 2025, compared to a net gain of $165 million for the same period in 2024[168]