Cummins announces $2 billion senior notes offering

Cummins Inc . (NYSE:CMI), a global power leader in engines and turbines with a market capitalization of $42.3 billion, announced the successful completion of a significant public offering of senior notes on Friday, May 9, 2025. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation. The offering comprised $300 million of 4.250% Senior Notes due in 2028, $700 million of 4.700% Senior Notes due in 2031, and $1 billion of 5.300% Senior Notes due in 2035, collectively referred to as the "Notes."

The Notes were issued under an existing indenture, with the terms established by supplemental indentures, all dated May 9, 2025. These notes will pay semi-annual interest, with the first payment for each series due on November 9, 2025, except for the 2031 Notes, which will begin on February 15, 2026.

Cummins has stated that the proceeds from the offering will be used for general corporate purposes, which may include repaying, refinancing, or otherwise addressing existing debt. InvestingPro data shows the company operates with a moderate level of debt, maintaining a healthy debt-to-equity ratio of 0.74 and a solid current ratio of 1.34. The company also retains the option to redeem these notes at any time, with the redemption price equating to the principal amount plus a make-whole premium if redeemed before a specified date close to their respective maturity dates.

The notes offering was registered under the Securities Act of 1933, as amended, and the company is filing the related supplemental indentures as part of its current report on Form 8-K for the purposes of the registration statement.

Cummins’ decision to issue these notes reflects a strategic move to strengthen its financial position and provide flexibility for future corporate initiatives. The company has demonstrated strong financial discipline, maintaining dividend payments for 55 consecutive years and achieving a robust EBITDA of $5 billion in the last twelve months. Investors and stakeholders can refer to the company’s Form 8-K filed with the SEC for detailed information regarding the terms and conditions of the notes offering. For comprehensive analysis and additional insights, including 10 more exclusive ProTips and detailed financial metrics, check out the Pro Research Report available on InvestingPro.

In other recent news, Cummins Inc. reported its Q1 2025 earnings, revealing an impressive earnings per share (EPS) of $5.96, which exceeded the forecast of $5.02. Despite this, the company’s revenue was slightly below expectations, coming in at $8.17 billion against a forecast of $8.24 billion. The Power Systems segment showed remarkable growth, with EBITDA increasing by 64% year-over-year to $389 million, driven by demand from data centers and efficiency gains. However, Cummins has withdrawn its annual guidance due to uncertainties surrounding trade tariffs, which has introduced caution among investors.

Additionally, BofA Securities analyst Michael Feniger raised Cummins’ stock price target to $326 from $313 while maintaining a Neutral rating. This adjustment follows Cummins’ strong start to the year, with a 12% year-over-year increase in first-quarter EBITDA to $1.46 billion, despite a 3% drop in revenue. The Engines segment experienced a margin expansion, attributed to joint venture income from technology fees and strong aftermarket sales. The company’s strategic acquisitions and product innovations are expected to position it well for future growth, particularly in the mining and rail sectors.

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