10-KPeriod: FY2021

CUMMINS INC Annual Report, Year Ended Dec 31, 2021

Filed February 8, 2022For Securities:CMI

Summary

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.

Financial Highlights

57 data points
Beta

Revenue

$24.02B

23.7% Gross Margin

Net Income

$2.13B

8.9% Net Margin

EPS (Diluted)

$14.61

Total Assets

$23.71B

Cash & Equivalents

$2.59B

Free Cash Flow

$1.52B

Financial Statements
Beta
Revenue$24.02B
Cost of Revenue$18.33B
Gross Profit$5.70B
R&D Expenses$1.09B
SG&A Expenses$2.37B
Operating Income$2.71B
Interest Expense$111.00M
Net Income$2.13B
EPS (Basic)$14.74
EPS (Diluted)$14.61
Shares Outstanding (Basic)144.60M
Shares Outstanding (Diluted)145.90M

Key Highlights

  • 1Net sales increased by 21% to $24.02 billion in 2021, driven by strong demand across all operating segments and geographic regions.
  • 2Net 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.
  • 3The company experienced significant sales growth in its Power Systems (22%), Components (27%), and Engine (24%) segments, indicating robust market demand.
  • 4Despite global supply chain disruptions leading to increased costs, Cummins managed its operations effectively, with a focus on mitigating impacts on production and customers.
  • 5The company is strategically investing in its New Power segment, focusing on electrified and hydrogen power solutions, signaling a commitment to future growth and sustainability.
  • 6Cummins 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.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.

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.