Cummins Inc. Reports 3% Decline in Net Sales and Significant Drop in Net Income for Q1 2025

Cummins Inc. reported a decline in financial performance for the first quarter of 2025, with net sales of $8.17 billion, a decrease of 3% from $8.40 billion in the same period of 2024. The company's net income attributable to Cummins Inc. was $824 million, or $5.96 per diluted share, compared to $1.99 billion, or $14.03 per diluted share, in the prior year. The decrease in net income was primarily attributed to the absence of a $1.3 billion gain from the divestiture of Atmus Filtration Technologies, which was completed in March 2024. However, the gross margin improved to 26.4% from 24.3%, driven by favorable pricing and lower material costs.

The company's operational segments showed varied performance. The Engine segment experienced a 5% decline in sales, primarily due to reduced demand in North American heavy-duty truck markets. Conversely, the Distribution segment saw a 15% increase in sales, largely due to heightened demand in power generation markets, particularly in North America. The Power Systems segment also reported a 19% increase in sales, driven by strong demand in China and North America. The Components segment faced a significant 20% decline in sales, largely due to the impact of the Atmus divestiture.

In terms of strategic developments, Cummins completed the divestiture of its remaining 80.5% ownership of Atmus in March 2024, which resulted in a significant gain recorded in the previous fiscal year. The company continues to focus on its five business segments: Engine, Components, Distribution, Power Systems, and Accelera, which is dedicated to electrified power systems. The Accelera segment reported a modest increase in sales, reflecting ongoing efforts to commercialize new technologies.

Operationally, Cummins reported a decrease in cash flow from operations, with a net cash outflow of $3 million for the first quarter of 2025, compared to a cash inflow of $276 million in the same period last year. The company had $1.53 billion in cash and cash equivalents at the end of the quarter, alongside access to $4.0 billion in credit facilities. The total debt to capital ratio stood at 38.5%, slightly up from 38.4% at the end of 2024. Looking ahead, Cummins anticipates challenges due to an escalating tariff environment and ongoing geopolitical uncertainties, which may impact demand for its products and overall financial performance.