Watch Now


Cummins reports higher Q2 sales and income

Meritor integration helps top line but dings key earnings metric

Cummins Inc. reported higher sales and earnings in the second quarter but missed analysts estimates on earnings. (Photo: Cummins Inc.)

Engine maker and power systems provider Cummins Inc. reported record second-quarter revenue thanks to the full integration of Meritor Inc. But a key earnings measure fell because Meritor’s gross margin percentage trails its new parent.

By the numbers, Cummins reported:

  • Record second-quarter revenues of $8.6 billion with all five business segments reporting higher sales, 31% above $6.59 billion a year ago. Gross margins also rose.
  • Net income of $720 million, or $5.05 per diluted share, compared with $702 million, or $4.94, a year ago.
  • Earnings of $1.3 billion before interest taxes, depreciation and amortization fell to 15.1% of sales compared to income of $1.1 billion, or 16% EBITDA, a year ago.
  • A one-time earnings hit of $23 million, or 13 cents, related to the separation of Atmus Filtration Technologies Inc. In the year-ago quarter, Cummins booked a one-time gain.
  • Maintaining full-year 2023 guidance projecting revenue to be up 15% to 20% and EBITDA of 15% to 15.7%.
  • Its quarterly common stock cash dividend rose from $1.57 to $1.68 per share, the 14th consecutive year of increased dividends.

Cummins acquired Meritor for $3.7 billion in 2022. The company expects Meritor to contribute $4.7 billion to $4.9 billion in revenue this year with EBITDA between 10.3% and 11%, lower than that of the overall company. Meritor’s Q2 EBITDA came in at 12.2% compared to about 9% in Q1, CFO Mark Smith said on Cummins’ earnings call with analysts.

Cummins shares (NYSE: CMI) closed 7.48% lower Thursday at $242.61.


Minor Q4 downturn seen

Cummins expects a downturn in heavy-duty truck production in Q4 but not a major one, CEO and Chair Jennifer Rumsey said on the analysts’ call.

“This is going to likely be a more gentle cycle across markets than what we’ve typically seen,” she said. “But we do see some softening in the aftermarket, some anticipated down days on heavy-duty truck [production.]”

Aftermarket sales have been ablaze in recent quarters to meet parts demand created by  extended trade-in cycles. The softening results from a normalization of truck production with fewer supply chain disruptions.

“The overall aftermarket demand has come down a little bit, but it’s still very healthy,” Rumsey said. “Customers couldn’t buy new trucks, so they were using trucks that drove more aftermarket demand.”


The Columbus, Indiana-based company still projects industry production of 270,000-290,000 heavy-duty trucks this year. Class 6-8 medium-duty trucks should grow 10%-15% this year to 135,000 to 150,000 units. Cummins grew medium-duty engine sales by 27% in Q2 to 34,000.

“We think Q2 is going to be our revenue peak. We’re taking actions to make sure we’re prioritizing the places we need to invest while managing head count, discretionary spending and SG&A [sales, general and administrative],” Rumsey said.

Cummins charged 3.5%-3.75% more for its products in the quarter while costs rose 1%-1.5%, Smith said.

Higher spending on electrolyzers

Spending on electrolyzer production came in $50 million higher than projected, leading to a revised EBITDA loss of $420 million-$440 million at the Accelera by Cummins business unit. Cummins still expects the rebranded New Power division to achieve full-year sales of $350 million to $400 million this year and reach EBITDA breakeven by 2027.

Electrolyzers use electricity to split water into hydrogen and oxygen. The hydrogen has multiple uses including as fuel to power fuel cell trucks.

“The issue is not demand,” Smith said. “It’s making sure that we’re ready. There aren’t that many new electrolyzers out in the field yet. We’re still building that capability. History shows that an investment now pays off multiple times in the long run.”

Greater interest in ‘bridge technologies’

Cummins is also seeing greater interest in what Rumsey called “bridge technologies” — engines designed for alternate drop-in fuels such as natural gas and hydrogen. Modifications to its main engine families are underway to make the products available.

“It’s slow going because of the infrastructure buildout that’s required,” she said. “We’re really investing to have the right products at the right time. We’re still going to see a lot of demand for diesel in the next [few] years.”


The recent California Air Resources Board compromise with the Engine Manufacturers Association aligning the timing for tougher oxygen nitrates regulations with the Environmental Protection Agency is a big win for Cummins.

“We’ll focus on a nationwide solution, and some of these bridge and zero-emission solutions [will] start to get adopted in places where the infrastructure exists,” Rumsey said.

Editor’s note: Updates with closing share price.

Cummins posts record 2022 results as it integrates Meritor business

Rumsey succeeds Linebarger as chair of Cummins

CARB and engine manufacturers compromise on emissions timing

 Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.