Incoming Cummins Inc. CEO Jennifer Rumsey could not have scripted a better quarterly earnings debut last week.
It was record territory for a company in transition in more ways than its leadership. The results were positive indicators that the dynamism driving the Columbus area’s largest employer shows no sign of slowing down.
As The Republic’s Andy East reported, Cummins’ second-quarter earnings of $6.6 billion and earnings per share of $4.94 beat Wall Street expectations.
“Demand for our products remain strong across all of our key markets and regions with the notable exception of China, resulting in record revenues in the second quarter,” Rumsey told analysts during an earnings conference call last week.
Rumsey succeeds former CEO Tom Linebarger, who stepped down from his CEO role but continues to serve as chairman of the board and executive chairman of the company.
“… I believe this is my 70th earnings call. It’s also going to be my last,” Linebarger said. “… I’m very proud to have served as the CEO for this company for 10 years (and) as a senior executive for more than 20 years. It was an honor and a privilege.”
That Cummins finds itself in such remarkable shape in these tumultuous times is a testament to the leadership of Linebarger, Rumsey, and the thousands of local employees and those globally.
Cummins has had to navigate a pandemic and the resulting broken links in the global supply chain. It also is undergoing a fundamental revolution in its core business, developing greener energy systems and boldly betting big on eventual decarbonization.
Clearly, from the earning report and the company’s performance, the market likes where Cummins is headed. That’s terrific news for an industry more associated with our region than any other.
And there are good reasons to be optimistic that Cummins’ performance will continue to impress. Linebarger was among a cadre of corporate leaders who strongly advocated for legislation recently signed into law by President Joe Biden that will result in a surge of US production of computer chips, microprocessors and other indispensable high-tech widgets.
Linebarger had told Biden that Cummins was sometimes paying 10 times more than it had been to acquire such goods. The federal boost in this sector of the economy ultimately will allow Cummins and other manufacturers a more dependable and secure supply chain for these components.
Craig Kessler, president and chief investment officer at Columbus-based Kessler Investment Group, told East that Cummins did a “fantastic job” this past quarter of adapting to a difficult global business environment.
“It’s hard not to be impressed with what they were able to deliver in a very difficult environment,” Kessler said. “We’ve got rising input costs, global supply chain stress, obviously, the war in Ukraine, any number of obstacles and hurdles, and they really did a fantastic job of clearing them this quarter and delivering something that was better than what Wall Street expected.”
Cummins still faces challenges, just as every global industry always does. But for a company in the process of reinventing itself while staying true to its fundamentals, last week’s record earnings report was an encouraging milestone.