• Q4 2024 Revenue: $8.4 billion, a decrease of 1% compared to 2023.
• Q4 2024 EBITDA: $1 billion, or 12.1% of sales.
• Q4 2024 Adjusted EBITDA: $1.3 billion, or 15.8% of sales, excluding charges.
• Full Year 2024 Revenue: $34.1 billion, flat compared to 2023.
• Full Year 2024 EBITDA: $6.3 billion, or 18.6% of sales.
• Full Year 2024 Adjusted EBITDA: $5.4 billion, or 15.7% of sales, excluding non-routine items.
• Power Systems Segment EBITDA: 18.4% of sales, up from 14.7% in 2023.
• Net Earnings Q4 2024: $418 million or $3.02 per diluted share.
• Net Earnings Full Year 2024: $3.9 billion or $28.37 per diluted share.
• Operating Cash Flow Q4 2024: $1.4 billion.
• Capital Expenditures 2024: $1.2 billion.
• Shares Outstanding Reduction: Approximately 5.6 million shares due to Atmus separation.

• Warning! GuruFocus has detected 11 Warning Signs with CMI.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cummins Inc (NYSE:CMI) delivered record financial results in 2024, with revenues reaching $34.1 billion and EBITDA at $6.3 billion, reflecting strong demand and operational efficiency.
• The company successfully introduced the Cummins HELM engine platform, offering fuel flexibility and reduced emissions, which positions it well for future growth.
• Cummins Inc (NYSE:CMI) completed the separation of its Filtration business, Atmus Filtration Technologies, resulting in a tax-free exchange of shares and reducing shares outstanding by approximately 5.6 million.
• The Power Systems segment achieved record full-year EBITDA of 18.4% of sales, driven by strong demand in power generation, particularly for data centers.
• The company is investing $200 million to expand manufacturing capacity across the US, England, and India to meet rising power generation demand, indicating confidence in future growth prospects.

Negative Points

• Revenues for the fourth quarter of 2024 decreased by 1% compared to 2023, primarily due to lower North America heavy-duty and pickup truck volumes and the separation of Atmus.
• The Accelera business segment underwent a strategic reorganization, resulting in $312 million in charges, which impacted overall profitability.
• The North America heavy-duty truck market is expected to remain weak in the first half of 2025, with industry production projected to be flat to down 10% year over year.
• The medium-duty truck market is anticipated to decline by 5% to 15% in 2025, driven by weaker-than-expected recent net orders and a depleting backlog.
• The Accelera segment continues to face challenges, with expectations of net losses reducing but not reaching EBITDA breakeven by 2027 as initially planned.

Q & A Highlights

Q: Can you elaborate on the power generation guidance of 5% to 15% growth and the $200 million investment in power generation? A: We are investing $200 million across our plants in Minnesota, the U.K., and India to increase capacity to meet growing demand for power generation products. The guidance reflects both capacity ramp-up and strategic pricing. We are on track to double our capacity by the end of this year, focusing on larger engines for the power generation and data center markets.

Q: What are your thoughts on the EPA27 regulations and the potential for a prebuy in the North America trucking market? A: We expect the EPA27 regulations to remain in place, and we anticipate a prebuy in the North America trucking market, which should lead to higher revenue in the second half of this year and into next year. There may be more discussions and potential challenges regarding greenhouse gas regulations for 2030 and beyond.

Q: Can you discuss the restructuring of the Accelera business and its focus moving forward? A: The Accelera business is being streamlined to focus on areas where we see market movement, such as battery electric vehicles and electrolyzers. We are pacing investments in fuel cells and other technologies where adoption is slower. This restructuring positions us strategically as the market and technology evolve.

Q: How is the HELM platform performing, and what are your expectations for natural gas and other fuel options? A: The HELM platform offers fuel flexibility, and while diesel remains a significant part of sales, we aim for 8% adoption of the natural gas version. Adoption rates depend on diesel prices, regulations, and customer CO2 goals. PACCAR and Daimler Trucks are launching natural gas versions, and fleets are testing them.

Q: What is the outlook for the China truck market, and how does it impact Cummins' profitability? A: China typically contributes 15% to 20% of our earnings, with on-highway being more than half. We expect attractive incremental margins if demand improves, although we currently lack visibility into a recovery. The Engine and Components segments performed well despite weaker China demand in 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.