Summary
Cummins Inc. reported a significant turnaround in the first quarter of 2010 compared to the same period in 2009. Net income attributable to Cummins Inc. surged to $149 million, or $0.75 per diluted share, from just $7 million, or $0.04 per diluted share, in the prior year. This dramatic improvement was driven by a substantial increase in gross margin, up 35% year-over-year, attributed to operational efficiencies from prior restructuring efforts, favorable pricing, and lower material and warranty costs. Total sales saw a modest increase of 2% to $2.5 billion. The company highlighted signs of economic recovery, particularly in emerging markets, which helped offset weaker demand in North America. However, North American on-highway product demand was significantly down due to customers stocking up in advance of new emissions standards implemented in late 2009. Cummins expects demand to continue improving throughout 2010, with emerging markets remaining strong. The company maintained a strong liquidity position with $885 million in cash and cash equivalents and significant availability under its credit facilities.
Financial Highlights
52 data points| Revenue | $2.48B |
| Cost of Revenue | $1.88B |
| Gross Profit | $601.00M |
| R&D Expenses | $92.00M |
| SG&A Expenses | $335.00M |
| Operating Income | $246.00M |
| Interest Expense | $9.00M |
| Net Income | $149.00M |
| EPS (Basic) | $0.75 |
| EPS (Diluted) | $0.75 |
| Shares Outstanding (Basic) | 198.40M |
| Shares Outstanding (Diluted) | 198.70M |
Key Highlights
- 1Net income attributable to Cummins Inc. jumped to $149 million ($0.75/share) in Q1 2010, a substantial increase from $7 million ($0.04/share) in Q1 2009.
- 2Gross margin improved significantly, increasing by 35% to $601 million (24.3% of sales) compared to $445 million (18.2% of sales) in the prior year.
- 3Total net sales increased by 2% to $2.48 billion in Q1 2010, driven by growth in the Components and Distribution segments.
- 4The company experienced a substantial decline in North American heavy-duty truck sales (-80% year-over-year) due to pre-compliance purchasing in late 2009 for new emissions standards.
- 5Emerging markets, particularly China, India, and Brazil, showed signs of recovery and strengthened demand, helping to offset declines in other regions.
- 6Cummins returned $71 million in net cash to investors through dividends and share repurchases.
- 7The company maintained a strong liquidity position with $885 million in cash and cash equivalents and $1.07 billion available under its revolving credit facility.