Stock Analysis on Net
AI Tokens
Stock Analysis on Net

Cummins Inc. (NYSE:CMI)

This company has been moved to the archive! The financial data has not been updated since May 2, 2024.

Common-Size Income Statement

Cummins Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of sales -75.78 -76.07 -76.29 -75.30 -74.63
Gross margin 24.22% 23.93% 23.71% 24.70% 25.37%
Selling, general and administrative expenses -9.78 -9.57 -9.88 -10.73 -10.41
Research, development and engineering expenses -4.40 -4.55 -4.54 -4.57 -4.25
Equity, royalty and interest income from investees 1.42 1.24 2.11 2.28 1.40
Restructuring actions 0.00 0.00 0.00 0.00 -0.50
Other operating expense, net -6.28 -0.62 -0.13 -0.23 -0.15
Operating income and expenses -19.05% -13.50% -12.44% -13.25% -13.92%
Operating income 5.17% 10.43% 11.27% 11.45% 11.45%
Interest expense -1.10 -0.71 -0.46 -0.50 -0.46
Other income, net 0.70 0.32 0.65 0.85 1.03
Income before income taxes 4.77% 10.04% 11.45% 11.80% 12.02%
Income tax expense -2.31 -2.27 -2.44 -2.66 -2.40
Consolidated net income 2.47% 7.78% 9.01% 9.14% 9.62%
Net income attributable to noncontrolling interests -0.31 -0.11 -0.14 -0.11 -0.03
Net income attributable to Cummins Inc. 2.16% 7.66% 8.87% 9.03% 9.59%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The common-size income statement reveals a significant compression in overall profitability between 2019 and 2023. While gross margins and core operating expenses remained relatively stable for much of the period, a sharp increase in non-core operating expenses in the final year led to a substantial reduction in both operating and net income margins.

Gross Profitability and Cost of Sales
Gross margins experienced a slight decline from 25.37% in 2019 to a low of 23.71% in 2021, followed by a modest recovery to 24.22% by 2023. This indicates a relatively consistent ability to manage the cost of sales, which fluctuated within a narrow range between 74.63% and 76.29% of net sales over the five-year period.
Operational Expense Trends
Selling, general, and administrative expenses demonstrated a general downward trend, decreasing from 10.41% in 2019 to 9.78% in 2023, suggesting improvements in operational efficiency. Similarly, research, development, and engineering expenses remained stable, fluctuating between 4.25% and 4.57% of net sales, indicating a consistent level of investment in innovation relative to revenue.
Operating Income and Anomalies
Operating income remained stable between 10.43% and 11.45% from 2019 through 2022. However, a sharp contraction occurred in 2023, with operating income falling to 5.17%. This decline is primarily driven by a significant surge in other operating expenses, which rose to 6.28% of net sales in 2023, compared to 0.62% in 2022 and an average of approximately 0.21% in the preceding three years.
Net Income and Financial Burden
Interest expenses as a percentage of net sales showed a steady increase, rising from 0.46% in 2019 to 1.10% in 2023. This increasing financial cost, coupled with the drop in operating income, contributed to a severe erosion of the bottom line. Net income attributable to Cummins Inc. declined from 9.59% in 2019 to 2.16% in 2023, representing a significant reduction in the percentage of sales converted into profit for shareholders.

AI Ask an analyst for more

My previous chats

Add tokens

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?