Summary
Cummins Inc. reported strong third-quarter and year-to-date results for the period ending September 25, 2011, demonstrating significant growth across its key business segments. Net sales surged by 36% for the quarter and 44% for the nine-month period, driven by a robust recovery in North American on-highway markets and continued strong demand in emerging markets, particularly China, India, and Brazil. The company's Engine and Components segments showed substantial year-over-year improvements, reflecting increased demand and improved product mix. Profitability also saw a significant boost, with diluted earnings per share more than doubling for both the quarter and the year-to-date period, benefiting from higher volumes, improved gross margins, and a lower effective tax rate. Operationally, Cummins is experiencing a strong rebound in its core markets, especially in heavy-duty and medium-duty trucks in North America. The company also highlighted investments in new product development and a disciplined approach to managing expenses, even as R&D and SG&A increased to support growth. Financially, Cummins maintained a strong liquidity position with substantial cash and cash equivalents and available credit facilities, enabling continued share repurchases and a recent increase in quarterly dividends. The company's outlook for the remainder of 2011 remains positive, anticipating continued strength in North American on-highway markets and global oil, gas, and mining sectors, though it acknowledges potential softening in certain emerging markets and pressures from increasing commodity costs.
Financial Highlights
51 data points| Revenue | $4.63B |
| Cost of Revenue | $3.44B |
| Gross Profit | $1.19B |
| R&D Expenses | $164.00M |
| SG&A Expenses | $489.00M |
| Operating Income | $639.00M |
| Interest Expense | $11.00M |
| Net Income | $452.00M |
| EPS (Basic) | $2.35 |
| EPS (Diluted) | $2.35 |
| Shares Outstanding (Basic) | 192.10M |
| Shares Outstanding (Diluted) | 192.70M |
Key Highlights
- 1Significant revenue growth: Net sales increased by 36% year-over-year for the quarter to $4.6 billion and by 44% for the nine-month period to $13.1 billion.
- 2Robust earnings per share growth: Diluted EPS rose to $2.35 for the quarter (up from $1.44) and $6.69 for the nine months (up from $3.43), reflecting strong operational performance.
- 3Market recovery driving sales: Strong rebound in North American on-highway markets, coupled with demand in emerging economies, fueled sales growth across most segments.
- 4Improved gross margins: Gross margin expanded by 1.3 percentage points to 25.7% for the quarter and 1.5 percentage points to 25.5% for the nine months, driven by higher volumes and price realization.
- 5Strategic divestiture and gain: Completed the sale of the exhaust business in Q2 2011, recognizing a pre-tax gain of $68 million.
- 6Strengthened balance sheet and liquidity: Increased cash and cash equivalents to $1.2 billion, maintained a strong debt-to-capital ratio of 12.6%, and had $1.2 billion available under its revolving credit facility.
- 7Increased shareholder returns: Raised the quarterly dividend to $0.40 per share and continued aggressive share repurchases, buying back $546 million in the first nine months of 2011.