01—Abstract
Summary
Summary of the 10-K filed February 8, 2022. Cited figures are marked; the original filing is the authoritative source.
Cummins Inc. (CMI) reported a strong financial performance for the fiscal year ended December 31, 2021, with a significant increase in net sales and net income compared to the previous year.
This growth was driven by broad-based demand across its operating segments and geographic regions, reflecting an improving economic environment post-COVID-19. Despite facing ongoing supply chain disruptions and related cost pressures, the company demonstrated resilience and operational effectiveness. The company continues to invest in future growth areas, particularly in new power solutions including electrification and hydrogen technologies, aligning with global trends towards sustainability.
While the near-term outlook acknowledges persistent supply chain challenges and material cost inflation, Cummins' diversified business model, strong customer relationships, and commitment to innovation position it well for continued market leadership and shareholder value creation. The company also actively manages its capital structure, returning value to shareholders through repurchases and dividends, and maintains a solid liquidity position.
02—Key points
Key Highlights
- Net sales increased by 21% to $24.02 billion in 2021, driven by strong demand across all operating segments and geographic regions.
- Net income attributable to Cummins Inc. rose by 19% to $2.13 billion, with diluted earnings per share increasing to $14.61 from $12.01 in 2020.
- The company experienced significant sales growth in its Power Systems (22%), Components (27%), and Engine (24%) segments, indicating robust market demand.
- Despite global supply chain disruptions leading to increased costs, Cummins managed its operations effectively, with a focus on mitigating impacts on production and customers.
- The company is strategically investing in its New Power segment, focusing on electrified and hydrogen power solutions, signaling a commitment to future growth and sustainability.
- Cummins returned approximately $2.2 billion to shareholders in 2021 through share repurchases ($1.4 billion) and dividends ($809 million), demonstrating a commitment to shareholder returns.
- The company maintained a strong liquidity position with $3.2 billion in cash, cash equivalents, and marketable securities at year-end 2021, and access to $3.5 billion in credit facilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Cummins Inc kept $0.09.
- Revenue$24.02B100.0%
- Cost of revenue−$18.33B76.3%
- Gross profit$5.70B23.7%
- Operating costs−$2.99B12.4%
- Operating income$2.71B11.3%
- Interest, other & tax−$575.0M2.4%
- Net income$2.13B8.9%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 8, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $24.02B$19.81B | +21.3% |
| Cost of Revenue | $18.33B$14.92B | +22.9% |
| Gross Profit | $5.70B$4.89B | +16.4% |
| R&D Expenses | $1.09B$906.00M | +20.3% |
| SG&A Expenses | $2.37B$2.13B | +11.7% |
| Operating Income | $2.71B$2.27B | +19.3% |
| Interest Expense | $111.00M$100.00M | +11.0% |
| Net Income | $2.13B$1.79B | +19.1% |
| EPS (Basic) | $14.74$12.07 | +22.1% |
| EPS (Diluted) | $14.61$12.01 | +21.6% |
| Shares Outstanding (Basic) | 144.60M148.20M | −2.4% |
| Shares Outstanding (Diluted) | 145.90M149.00M | −2.1% |
05—Questions
Frequently Asked Questions
What was Cummins' overall financial performance in 2021?
Cummins Inc. experienced robust financial performance in 2021. Net sales grew by 21% to $24.02 billion, and net income attributable to Cummins Inc. increased by 19% to $2.13 billion, resulting in diluted earnings per share of $14.61. This growth was supported by strong demand across its diverse business segments and geographic markets.
What are the primary drivers of Cummins' revenue growth in 2021?
The revenue growth was driven by a broad increase in demand across all operating segments: Engine, Distribution, Components, and Power Systems. Key factors include higher volumes in medium-duty and heavy-duty truck markets, increased demand for emission solutions, and strong performance in power generation and industrial markets, particularly in China and India. Favorable foreign currency fluctuations also contributed positively.
What challenges did Cummins face in 2021, and how did they manage them?
Cummins faced ongoing supply chain disruptions and related financial impacts, such as increased cost of sales, higher freight costs, and material cost inflation. The company actively managed these challenges by enhancing supplier collaboration, implementing countermeasures to mitigate risks, and working closely with customers to meet demand despite longer lead times.
How is Cummins positioning itself for future growth, especially in new technologies?
Cummins is significantly investing in its New Power segment, which focuses on hydrogen production solutions and electrified power systems (electric and hybrid). This strategic investment demonstrates the company's commitment to adapting to evolving market demands and the global transition towards more sustainable energy solutions.
How did Cummins return value to shareholders in 2021?
In 2021, Cummins actively returned value to shareholders through its share repurchase program, buying back approximately $1.4 billion of its common stock. Additionally, the company increased its quarterly dividend by 7.4% to $1.45 per share, distributing a total of $809 million in dividends during the year.
06—Continue