Cummins and Komatsu will collaborate on the development of zero-emissions equipment, with and initial focus on zero-emissions power technologies for large mining haul truck applications. Photo courtesy Komatsu

Sales in North America are a key driver of Cummins Inc.’s 8% increase in second quarter revenues.

Cummins officials announced an increase in revenues in the second quarter to $6.6 billion, driven by a 15% increase in North American sales while international revenues decreased 2%, driven primarily by a slowdown in China and the indefinite suspension of Cummins’ operations in Russia in response to Russia’s invasion of Ukraine.

“The company achieved record revenues and solid profitability in the second quarter of 2022, with demand for our products remaining strong across most of our key markets and regions, apart from China,” said Jennifer Rumsey, Cummins president and CEO. “Employees across our organization have worked tirelessly in the face of supply chain challenges and rising costs that continue to impact our industry. While navigating these challenges, we will continue to focus on enabling our customers’ success, driving cycle over cycle improvement in financial performance, investing in sustainable solutions that will protect our planet for future generations and returning excess cash to shareholders.”

Net income attributable to Cummins in the second quarter was $702 million ($4.94 per diluted share) compared to $600 million ($4.10 per diluted share) in 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were $1.1 billion (16% percent of sales), compared to $974 million (15.9% of sales) a year ago.

Second quarter results include costs of $29 million ($0.16 per diluted share) related to the separation of the Filtration business, and a $47 million benefit ($0.33 per diluted share) from adjusting the reserves related to the indefinite suspension of our operations in Russia. We also experienced $48 million ($0.34 per diluted share) of mark to market losses on investments that underpin our unqualified benefit plans in the second quarter, which compares to gains of $20 million a year ago. The tax rate in the second quarter was 17.3% including $36 million, or 25 cents per diluted share, of favorable discrete items.

Based on the current forecast, Cummins is maintaining its full year 2022 guidance, expecting revenue to increase 8% and EBITDA of 15.5%. The company plans to return 50% of Operating Cash Flow to shareholders in the form of dividends and share repurchases.

Any expenses outside of the normal course of business associated with the separation of the Filtration business, the pending acquisition of Meritor, or indefinite suspension of operations in Russia have been excluded from the outlook provided.

“High inflation and rising global interest rates have increased uncertainty about the pace of growth in the global economy. Demand for Cummins’ products and services remains strong, and as a result we have maintained our projection for full year revenues and profitability from three months ago,” Rumsey said. “We continue to monitor economic conditions closely and will adjust our operating plans should the outlook for our core markets weaken.”

In April, Cummins completed the acquisition of JVS, adding engine braking and cylinder deactivation technologies which are key components to meeting current and future emissions regulations. On May 26, Meritor’s shareholders voted in favor of the Cummins acquisition bid. The companies are working together to complete the acquisition this week now that all regulatory approvals to close the transaction have been received.

During the second quarter, Cummins announced collaborations with Daimler Truck North America and Scania to deliver fuel cell electric powertrains for heavy-duty truck applications, and with Komatsu on the development of zero-emissions haulage equipment, including hydrogen fuel cell solutions for large mining haul truck applications. Cummins, Chevron, and Walmart are also working together to integrate Cummins X15N natural gas engine, powered by renewable natural gas, into Walmart’s heavy-duty truck fleet.