For the full year 2023, sales were $34.1 billion and net income was $735 million
Full-year EBIT margin was 8.9%, or $5.15 per diluted share
The company expects full-year 2024 revenue to decline 2%-5% and EBIT margin of 14.4%-15.4%
Cummins China achieved sales of $6.9 billion including joint ventures
Cummins (NYSE:CMI) today announced its fourth-quarter and full-year 2023 results.
Jennifer Rumsey, Chairman and Chief Executive Officer, commented, "High global demand for Cummins' diverse and innovative products drove record revenue and operating cash flow for the full year 2023. Excluding the impact of U.S. regulatory settlements, 2023 was a record year for Cummins in EBIT, net income and earnings per share. EBIT also increased year-on-year. Thank you to all our staff for providing our customers with high-quality products and ensuring a successful end to 2023. ”
Revenue for the fourth quarter of 2023 was $8.5 billion, up 10% sequentially from 2022. North American sales increased 8 percent and global revenue increased 13 percent, reflecting strong demand in most of Cummins' global markets during the period.
Net loss of $1.4 billion, or $10.01 per diluted share, for the fourth quarter of 2023, compared to net income of $631 million, or $4.43 per diluted share, for the fourth quarter of 2022.
Factors influencing this outcome include the payment of settlements from U.S. regulators, costs associated with the voluntary separation program, and costs associated with the Atmus divestiture. The fourth quarter of 2022 included costs related to the divestiture of Amaset.
Full-year 2023 revenue was $34.1 billion, up 21% year-over-year. Due to the addition of Meritor and strong demand in most markets around the world, North American sales increased by 22% and global revenue increased by 20% compared to 2022.
Net income for the full year 2023 was $735 million, or $5.15 per diluted share, compared to net income of $2.2 billion, or $15.12 per diluted share, for 2022. The 2023 results include $2.04 billion and $13.78 diluted U.S. equities related to the payment of U.S. regulatory settlements, $100 million per diluted share related to the impact of the Amiser divestiture, and $42 million, or $0.22 per diluted share, related to the voluntary separation plan. The full-year 2022 results include $81 million, or $0.45 per diluted share, related to the divestiture of Amicel. The 2023 tax rate of 48.3% is higher than the external guidance rate, primarily due to non-deductible costs associated with the payment of U.S. regulatory settlements.
Pretax earnings were $3.0 billion, or 8.9% of sales, in 2023, compared to $3.8 billion, or 13.5% of sales, in 2022. EBIT in 2023 and 2022 includes these costs.
As Cummins continues to focus on working capital management for the business, operating cash flow inflows reached a record $4 billion in 2023, compared to $2 billion in 2022.
Outlook for 2024
Based on current forecasts, Cummins' full-year 2024 revenue will decline 2%-5% year-over-year, and EBIT will account for 14.4%-15.4% of sales.
"We expect demand to slow in 2024, particularly in the North American heavy-duty truck market, but this will be partially offset by growth momentum in other key markets, and the company has already taken some cost reduction initiatives. We will continue to closely monitor global economic indicators and be prepared to adjust our business in the event of a further slowdown in economic momentum," Rong said.
"We will continue to adopt the same management approach as before, in line with the company's 'Zero Carbon Goal' strategy, and in 2024 we will continue to invest in new technologies and products. This continued investment will ensure strong growth and profitability for the company, both in the short and long term. ”
The 2024 outlook includes AMEX's earnings estimates, but does not include costs or benefits related to its divestiture. Subject to market conditions, the Company will divest its remaining ownership of AMX through an equity exchange. Cummins results will continue to include Amax-related costs or benefits until the share exchange is executed.
Cummins plans to continue to generate strong operating cash flow and returns for shareholders and is committed to its long-term strategic goal of returning 50% of operating cash flow to shareholders. In the short term, Cummins' capital allocation strategy will focus on paying dividends and reducing debt, and continue to generate profit growth.
2023 Performance Highlights:
Announced the launch of the new Accelera™ brand for the New Energy Power Division, which provides a wide range of zero-emission solutions for key industries around the world and helps customers accelerate their progress towards a sustainable future.
Cummins' zero-carbon business brand, Accelera, Daimler Trucks & Buses, PACCAR and EVE Energy announced a joint venture in September of that year to accelerate the localization of fuel cell production and battery supply chains in the United States. The planned joint venture plant will produce electric commercial vehicles and industrial batteries with a capacity of 21 gigawatt-hours (GWh) and is expected to total a total investment of between $2 billion and $3 billion, with production expected in 2027. On April 28, 2023, the proton exchange membrane (PEM) water electrolysis hydrogen production equipment production base of Cummins Enze (Guangdong) Hydrogen Energy Technology Co., Ltd. was put into operation, and the world's first localized HyLYZER-1000® product of Cummins Accelera for the Chinese market was officially rolled off the production line on January 29, 2024.
Cummins completed the acquisition and related operations of two Faurecia commercial vehicle manufacturing plants, one in Columbus, Indiana, USA, and the other in Roermond, the Netherlands. The acquisition provides Cummins Emissions Systems with continued access to the technology and facilities it needs to meet current and future demand for low-emission products. On December 15, 2023, Cummins China and Zhuopin Intelligent Technology Wuxi Co., Ltd. established a joint venture in Wuxi, Kangzhuo Electronics (Wuxi) Co., Ltd., to continue to provide flexible, efficient, high-performance products and services to local customers in China.
Cummins has announced several collaborations designed to further help customers achieve their decarbonization goals. Freightliner announced a partnership with Cummins that its heavy-duty truck, Cascadia, will feature the new Cummins X15N natural gas engine. Cummins and trucking giant Knight announced that Cummins' new X15N engine has been successfully tested by its large truckload carrier to reduce NOx and greenhouse gas emissions without compromising performance through the use of renewable natural gas. The X15N engine, which will be available in North America in 2024, is Cummins' first natural gas series tailored for heavy-duty and on-highway trucks, and is performing well and in strong demand in China's heavy-duty truck market.
The divestiture plan for the filtration business is progressing gradually. On May 26, 2023, as part of its initial public offering (IPO), Atmus Filtration Technologies Inc. was listed on the New York Stock Exchange (NYSE) under the ticker symbol "ATMU". Upon completion of the IPO, Cummins retains approximately 80.5% of the outstanding shares of Amiset. Based on market conditions, Cummins plans to divest its remaining ownership of Amix through an equity exchange.
Cummins has received several awards over the past year in recognition of its sustainability and impact efforts, including being named to Ethisphere's Global Business Ethics List, Sustainalytics 2023 Most Rated Companies list, S&P Dow Jones Global and North America Sustainability Indices list, and being named to the top of Newsweek's annual list of America's Most Responsible Companies in the Automotive and Parts Industry.
In addition, Cummins has received numerous accolades for fostering a caring and inclusive work environment, including being named one of the 66 Best American Business Enterprises for Women in 2023, the National Association of Corporate Directors 2023 Diversity, Equity and Inclusion Recognition, the 2023 Best Disability Inclusive Workplaces, the Best Hispanic Employer by DiversityComm magazine, and the Financial Times European Diversity Leaders List, Glassdoor Best Places to Work 55th, and 2023-2024 Corporate Equality Index score of 100. In China, Cummins has been recognized as a Best Employer by the Human Resources Association of Chinese and Foreign Enterprises (HRA) in Beijing, CIIC and other industry organizations.
For the 14th consecutive year, the company increased its cash dividend and returned a total of $921 million to shareholders through dividends.