Cummins posts quarterly loss but full-year profit
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Cummins Inc. posted a rare quarterly loss in the fourth quarter despite strong revenue growth, largely due to the company’s previously announced $2.04 billion environmental settlement with the federal and California governments.
Columbus, Indiana-based Cummins reported a loss of $1.4 billion, or $10.01 per share, in the fourth quarter, compared with a profit of $631 million, or $4.43 per share, during the same period a year earlier.
Quarterly revenue totaled $8.5 billion, up 10% from the year-ago period.
The company fell short of analysts’ consensus expectation for a quarterly profit of $4.48 per share, but it beat expectation of $8.14 billion in quarterly revenue.
Despite the fourth-quarter loss, Cummins did report a profit for the full year.
Full-year profit was $735 million, or $5.15 per share, compared with $2.2 billion, or $15.12 per share, in 2022. Annual revenue was $34.1 billion, up 21% from 2022.
Cummins said the environmental settlement, which it recorded in the fourth quarter, affected both its quarterly and full-year financial results.
In December, Cummins announced it had reached a proposed settlement with the U.S. Environmental Protection Agency and California officials regarding alleged violations of the Clean Air Act. Authorities said Cummins had unlawfully altered hundreds of thousands of pickup truck engines to bypass emissions tests.
The settlement is the largest ever under the Clean Air Act and the second largest of any environmental penalties, according to the U.S. Department of Justice. Cummins has not admitted any wrongdoing.
“After four and a half years of working diligently with the regulators, reaching an agreement was the best way to us to achieve certainty on this matter and move forward with certifying our new products and advancing our Destination Zero [zero emissions] strategy,” CEO Jennifer Rumsey told analysts during a Tuesday morning call.
Other factors affecting fourth-quarter earnings, the company said, included $100 million in costs related to the separation of Atmus, the former Cummins filtration business that was spun out into a separate company in an initial public offering last year. Also affecting financial results was $42 million in costs related to the company’s previously announced voluntary retirement and separation programs.
Looking ahead, Cummins said it expects sales to slow this year, with 2024 revenues down between 2% and 5% compared with 2023.
Shares of Cummins were trading at $246.35 each Tuesday morning, up 2% from Monday’s closing price.