5 P.M UPDATE
COLUMBUS, Ind. — Cummins stock traded at the highest price ever on Tuesday even after the company announced the largest quarterly drop in revenue in its 101-year history.
The Columbus-based company’s stock closed up 2.1% at a record $195.02 and traded above $200 for much of the day. The stock has roughly doubled in value since March 23, when Cummins was trading at $102.76.
One reason why the company’s stock increased after reporting a historically bad quarter was because Cummins beat Wall Street’s revenue and earnings estimates, local analysts said.
Cummins beat the consensus market estimate of $3.75 billion in revenue by around $150 million and earnings before interest, taxes, depreciation and amortization, or “EBITA,” by $206.5 million, according to figures provided by Roger Lee, senior research analyst with Columbus-based Kirr, Marbach and Co.
For more analyst reaction, see Wednesday’s Republic.
11 A.M. UPDATE
Cummins is reporting its largest quarterly revenue decline in company history.
Industry-wide company shutdowns and weak economic activity due to the coronavirus pandemic drove Cummins Inc. to the largest drop in sales in a decade and the largest revenue decline in the company’s 101-year history, the company said in a conference call to media this morning.
On Tuesday, the Columbus-based company reported second-quarter revenue declined 38% to $3.9 billion, down from $6.2 billion during the same quarter last year, and saw steep drops in sales across much of the world, including a 48% decrease in North America.
For more on this story, see Wednesday’s Republic.
ORIGINAL STORY:
COLUMBUS, Ind. — Cummins Inc. today reported results for the second quarter of 2020.
Second quarter revenues of $3.9 billion decreased 38 percent from the same quarter in 2019. COVID-19 related customer shutdowns and weak economic activity led to lower demand in most end markets and regions except China. Sales in North America declined by 48 percent while international revenues decreased 22 percent. Currency negatively impacted revenues by 2 percent primarily due to a stronger U.S. dollar.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were $549 million (14.3 percent of sales), compared to $1.1 billion (17.0 percent of sales) a year ago.
Net income attributable to Cummins in the first quarter was $276 million ($1.86 per diluted share) compared to $675 million ($4.27 per diluted share) in 2019. The tax rate in the second quarter was 25.7 percent and was negatively impacted by $14 million ($0.09 per diluted share) of discrete tax items.
The company said it expects third quarter revenues to improve from second quarter levels, however, there remains significant uncertainty around how COVID-19 will impact end market demand as well as customer and supplier operations. Due to this uncertainty the company is not providing full year revenue or profitability guidance for 2020.
“I want to thank our employees all over the globe for their dedication to our company and to our customers. They continue to work safely and effectively through an incredibly challenging period, with unprecedented disruptions to global demand and supply, to their work processes, and to their daily lives. In the face of the most severe decline in quarterly sales in our history, we delivered solid profitability while meeting commitments to our customers who provide products critical to the functioning of the global economy,” said Cummins Chairman and CEO Tom Linebarger.
“Our people demonstrated remarkable flexibility as did our operations and supply chain. A pronounced example of our organization’s agility in this challenging period was our ramp up in China, where many of our facilities went from complete shut down in February and March to producing record volumes in the second quarter.”
“While customer demand did improve in some regions as the quarter progressed, significant uncertainty around the pace of recovery in our markets remains, requiring a continued strong focus on managing expenses and cash flow. Our strong financial position will enable us to continue to prioritize our investments in technology and new products including advanced diesel engines, battery electric powertrains, fuel cells, and hydrogen electrolyzers that will help drive future profitable growth.”
Second Quarter 2020 Highlights:
- Announced an external-facing approach to complement the company’s internal diversity and inclusion activities, including the creation of the Cummins Against Racial Injustice Management Review Group to focus on police reform, criminal justice, social justice, and economic empowerment of Black people in the United States.
- Manufactured more than 14 tons of its filtration media which has been used to produce more than eight million N95 and surgical masks globally.
- Cummins announced a joint venture with NPROXX, a leader in hydrogen storage and transportation, for hydrogen storage tanks. The transaction is expected to close by the end of the first quarter 2021.
- Published the Cummins Work Playbook, a one-stop resource highlighting our health and wellness protocols that ensure the safety of our employees, customers, suppliers and communities during the global COVID-19 pandemic.
- Paid a $1.311 dividend to shareholders. Cummins has paid a dividend for over 70 years.
For more on this story, see Wednesday’s Republic.
