Cummins sees fourth quarter loss with regulatory payout

Cummins is reporting a loss in the fourth quarter of 2023 after a $2 billion dollar charge to settle regulatory actions, voluntary retirement costs and the separation of Atmus — the company’s former filtration component.

According to the Columbus-based engine manufacturer’s financial filings for the quarter and year, the company had record full-year revenues and operating cash flow. Looking at the year as a whole, Cummins revenues of $34.1 billion were 21 percent higher than in 2022.

Earnings for the full year of 2023, before interest, taxes, depreciation and amortization, were $3.0 billion, compared to $3.8 billion a year ago. Net income for the year was $735 million compared to $2.2 billion in 2022.

The company had fourth quarter revenues of $8.5 billion, which was up 10 percent from the same quarter in 2022. However, once the regulatory, retirement and filtration costs are taken into account, Cummins had a net loss of $1.4 billion last quarter, compared to net earnings of $631 million in the 2022 quarter. Earnings before interest, taxes, depreciation and amortization showed a $878 million loss in the fourth quarter of 2023, compared to a positive $1.1 billion a year ago.

In December, the company announced a settlement with regulators of more than $1.6 billion, the largest ever penalty for violations of the Clean Air Act. Authorities say that Cummins installed emissions defeat devices on nearly a million pickup engines between 2013 and 2023.

The company did not admit wrongdoing to the accusations.

Company press release

Cummins Inc. (NYSE: CMI) today reported fourth quarter and full year 2023 results.

“High global demand for Cummins’ diverse set of innovative products drove record full year revenues and operating cash flow in 2023,” said Jennifer Rumsey, Chair and CEO. “Excluding the impacts related to the agreement to resolve U.S. regulatory claims, 2023 was a record year for EBITDA, Net Income and EPS for Cummins. Also, EBITDA percent improved year over year in the Components, Distribution and Power Systems segments. I want to thank all our employees for delivering high-quality products to our customers and making 2023 a successful year.”

Fourth quarter 2023 revenues of $8.5 billion increased 10% from the same quarter in 2022. Sales in North America increased 8% and international revenues increased 13% reflecting strong demand across most of Cummins’ global markets during the period.

In the fourth quarter of 2023, net loss was $1.4 billion, or $(10.01) per diluted share, compared to net earnings of $631 million, or $4.43 per diluted share, in 2022. The results reflect the recording of a charge related to the agreement to resolve U.S. regulatory claims previously announced in December of $2.04 billion, or $13.76 per diluted share; costs related to the voluntary retirement and separation programs of $42 million, or $0.22 per diluted share; and costs related to the separation of Atmus of $33 million, or $0.17 per diluted share. The fourth quarter of 2022 included $19 million, or $0.11 per diluted share, of costs related to the separation of Atmus. The tax rate in the fourth quarter of 2023 was negative 13.3% due primarily to the non-deductible costs related to the agreement to resolve U.S. regulatory claims.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of 2023 was a loss of $878 million, or negative 10.3% of sales, compared to positive $1.1 billion, or 14.2% of sales, a year ago. EBITDA for the fourth quarter of 2023 and the fourth quarter of 2022 included the costs noted above.

Revenues for the full year 2023 were $34.1 billion, 21% higher than 2022. Sales in North America increased 22% and international revenues increased 20% compared to 2022 due to the addition of Meritor and strong demand across most global markets.

Net income for the full year 2023 was $735 million, or $5.15 per diluted share, compared to $2.2 billion, or $15.12 per diluted share, in 2022. 2023 results included costs related to the agreement to resolve U.S. regulatory claims of $2.04 billion, or $13.78 per diluted share, costs related to the separation of Atmus of $100 million, or $0.54 per diluted share, and costs related to the voluntary retirement and separation programs of $42 million, or $0.22 per diluted share. Full year 2022 results included costs related to the indefinite suspension of operations in Russia of $111 million, or $0.72 per diluted share and costs related to the separation of Atmus of $81 million, or $0.45 per diluted share. The tax rate in 2023 was 48.3%, which is higher than our external guidance, primarily due to the non-deductible costs related to the agreement to resolve U.S. regulatory claims.

EBITDA in 2023 was $3.0 billion, or 8.9% of sales compared to $3.8 billion, or 13.5% of sales, a year ago. EBITDA for 2023 and 2022 included the costs noted above.

Operating cash flow for 2023 was a record inflow of $4.0 billion, compared to $2.0 billion in 2022, as Cummins continues to focus on working capital management within the business.

You can see more here: https://investor.cummins.com/news/detail/635/cummins-reports-fourth-quarter-and-full-year-2023-results