Engine maker Cummins Inc. (NYSE: CMI) soundly thrashed estimates for its sales and profits in the second quarter, riding a rebound in demand as the Chinese economy bounced back from the coronavirus pandemic.
“Many of our [Chinese] facilities went from complete shutdown in February and March to producing record volumes in the second quarter,” CEO Tom Linebarger said in a statement.
Cummins’ earnings before interest, taxes, depreciation and amortization (EBITDA) was $549 million, or $1.86 per fully diluted share. That beat a $356.1 million consensus of analysts who cover the company by 88 cents per fully diluted share.
EBITDA was 14.3% of sales compared to $1.1 billion, or 17%, of sales a year ago.
Second-quarter revenues of $3.9 billion were down $38.1%. But that was $170 million better than expected.
“In the face of the most severe decline in quarterly sales in our [101-year] history, we delivered solid profitability while meeting commitments to our customers who provide products critical to the functioning of the global economy,” Linebarger said.
China was the exception to a brutal quarter. Shutdowns by truck manufacturers led to lower demand in most markets and regions. Sales in North America declined by 48% while international revenues fell 22%.
Cummins said it expects third-quarter revenues to improve from second-quarter levels. But it withheld financial guidance because of uncertainty around how COVID-19 will impact demand.
The company ended the quarter with$2.1 billion in cash, cash equivalents and marketable securities. It also can borrow $3.5 billion.
“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,” Linebarger said.
Cummins’ shares traded up more than 6% at $203.45 intraday.