Cummins Inc. reported a 23.3% year-on-year increase in its third-quarter profit, driven by strong demand for data center power generators, despite weaker sales of heavy-duty truck engines in North America.
The Columbus, Indiana-based company posted a profit of $809 million, or $5.86 per diluted share, compared to $656 million, or $4.59 per share, in the same period last year.
Revenue for Q3 was $8.456 billion, slightly higher than $8.431 billion in the previous year.
“We saw strong sales and profitability in Q3, especially from our Power Systems and Distribution businesses,” said Jennifer Rumsey, CEO of Cummins.
The results exceeded Wall Street expectations, with analysts forecasting earnings of $4.89 per share and $8.28 billion in revenue, according to Zacks Investment Research.
The company’s distribution unit recorded sales of $2.952 billion, up 16% from $2.535 billion a year ago. North American sales rose 13%, while international sales increased 25%, fueled by higher demand for power generation products, particularly in data centers, and higher pricing.
Power generation sales reached $1.091 billion, up 80% from $606 million in Q3 2023. The Power Systems division saw a 17% increase in sales, reaching $1.687 billion, up from $1.444 billion last year.
Revenue from power generation grew 24%, driven by rising global demand, especially from data centers. Industrial revenue increased by 7%, mainly due to strong mining demand, which offset weaker oil and gas markets.
However, earnings in Cummins’ two largest divisions fell due to weakness in the truck market and disruptions from Hurricane Helene, which led to facility shutdowns.
Sales at the Components unit were $2.724 billion, down 16% from $3.236 billion last year, partly due to the spinoff of Atmus, the filtration business. North American revenue fell 14%, and international sales dropped 18%.
Within the Components division, drivetrain and braking systems sales totaled $1.131 billion, down 3.9% from the previous year.
Production at Cummins’ drivetrain and braking facilities in North Carolina was impacted by Hurricane Helene late in the quarter, costing the company “low tens of millions of dollars.” However, operations have since returned to normal.
In the Engine division, Q3 sales totaled $2.913 billion, down slightly from $2.931 billion last year. Sales in North America dropped by 2%, while international sales increased by 4%, driven by strong demand in the global medium-duty truck market.
Sales of heavy-duty truck engines were $1.021 billion, an 8.5% decrease from $1.116 billion a year ago. The company shipped 32,400 heavy-duty truck engines, a 10.7% drop from the 36,300 units in Q3 2023.
Cummins has maintained its forecast for North American heavy-duty truck production in 2024 at 255,000-275,000 units, reflecting a 7-12% decline from last year.
Rumsey noted that Cummins observed a slowdown in the North American heavy-duty truck market during Q3, with expectations for this trend to continue in Q4.
The company also forecast a “relatively soft” heavy-duty truck market for the first half of 2025, although Rumsey pointed to the expected start of the Environmental Protection Agency’s emissions regulation pre-buy.
Sales in the medium-duty truck and bus engine segment grew by 13.2%, totaling $1.073 billion, compared to $931 million last year.
Cummins reaffirmed its 2024 revenue guidance, expecting a decline of 3% or flat revenue.
“We are confident in our profitability for 2024, driven by improvements in Power Systems and Distribution,” Rumsey said. “While we face slowing demand in the North American heavy-duty truck market, we remain well-positioned for strong financial performance, investment in growth, and delivering returns to shareholders.”
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