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Cummins' (CMI) Q4 Earnings & Sales Beat Estimates, Rise Y/Y

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Cummins Inc. (CMI - Free Report) reported fourth-quarter 2020 earnings of $3.36 per share, surpassing the Zacks Consensus Estimate of $2.74. Higher-than-expected contributions from Engine and Components Systems segments led to the outperformance. EBITDA from said segments came in at $338 million and $280 million, which topped the consensus mark of $285 million, and $199 million, respectively.

The bottom line, moreover, compared favorably with the fourth-quarter 2019 earnings of $2.56 a share. Cummins’ revenues also increased 5% year over year to $5,830 million. The reported figure also beat the Zacks Consensus Estimate of $5,182 million.

Cummins Inc. Price, Consensus and EPS Surprise

Cummins Inc. Price, Consensus and EPS Surprise

Cummins Inc. price-consensus-eps-surprise-chart | Cummins Inc. Quote

Key Takeaways

For the December-end quarter, sales for the Engine segment moved up 2% year over year to $2,329 million. The segment’s EBITDA rose to $338 million (accounting for 14.5% of sales) from the $277 million (12.1% of sales) a year ago. On-highway revenues inched up 1% while off-highway revenues increased 4%. Sales were flat in North America but surged 8% in international markets primarily due to increased demand in China and India.

Sales for the Distribution segment totaled $1,996 million, down 2% year over year. Revenues from North America declined 7% but international sales increased 8% from the year-ago quarter. The segment’s EBITDA came in at $165 million (8.3% of sales), marginally increasing from $164 million (8% of sales) a year ago. This was on account of increased demand in power generation markets, offset by declines in parts and service. The reported EBITDA figure, however, lagged the consensus mark of $169 million.

Sales for the Components segment jumped 18% from the prior-year quarter to $1,831 million. The segment’s EBITDA was $280 million (15.3% of sales) compared with the year-ago figure of $209 million (13.4% of sales). Sales in North America markets edged up 1% while international sales climbed 40% year over year amid higher demand from China and India.  

Sales for the Power Systems segment declined 6% from the year-ago quarter to $989 million. The segment’s EBITDA increased to $74 million (7.5% of sales) from $55 million (5.2% of sales) in the year-ago period. Power generation and industrial revenues fell 2% and 12%, respectively, from a year ago. Lower demand in mining and oil/gas markets dented the segment’s sales.

Sales for the New Power segment were $34 million, marking a whopping 89% rise year on year. This was chiefly due to rising demand in transit and school bus markets along with 29 megawatts of electrolyzer projects commissioned. The segment recorded EBITDA of negative $51 million amid high product and technology-related expenses.

Cummins’ cash and cash equivalents were $3,401 million as of Dec 31, 2020, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $3,610 million, up from $1,576 million on Dec 31, 2019.

2021 Outlook

Cummins projects full-year 2021 revenues to be up 8-12% and EBITDA to be in the range of 15-15.5% of sales. The company expects revenues to increase in all regions and major markets except China. In fact, the company anticipates returning 75% of operating cash flow to shareholders in the form of dividends and share repurchases in 2021.

Zacks Rank & Other Key Picks

Cummins currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the auto space are Adient Plc (ADNT - Free Report) , American  Axle & Manufacturing Holdings (AXL - Free Report) and Magna International (MGA - Free Report) , all of which currently flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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