01—Abstract
Summary
Summary of the 10-Q filed October 30, 2013. Cited figures are marked; the original filing is the authoritative source.
Cummins Inc. (CMI) reported third-quarter 2013 results with a slight increase in net sales to $4.3 billiona, up 4% year-over-year, primarily driven by acquisitions in the Distribution segment and improved demand in the North American on-highway market for the Components segment.
However, engine segment sales saw a slight decline due to weaker demand in industrial and power generation markets. Net income attributable to Cummins Inc. was $355 millionb, or $1.90 per diluted share, a modest increase from the prior year, showing resilience despite global economic uncertainty. For the first nine months of 2013, revenue decreased by 3% to $12.7 billion, impacted by a decline in the Engine and Power Generation segments, partially offset by growth in Distribution and Components.
Diluted earnings per share for this period saw a significant decrease to $5.60c from $6.72 in the prior year, reflecting lower overall profitability. The company highlighted strong operating cash flow generation and a robust liquidity position, supported by a substantial cash balance and available credit facilities, and continued its commitment to shareholder returns through dividend increases and share repurchases.
02—Key points
Key Highlights
- For the third quarter of 2013, net sales increased by 4% to $4.3 billion compared to the same period in 2012, primarily driven by acquisitions and improved North American demand.
- Net income attributable to Cummins Inc. for the third quarter was $355 million ($1.90 per diluted share), a slight increase from $352 million ($1.86 per diluted share) in the prior year.
- For the first nine months of 2013, net sales decreased by 3% to $12.7 billion, with notable declines in the Engine and Power Generation segments.
- Diluted earnings per share for the nine months ended September 29, 2013, decreased to $5.60 from $6.72 in the prior year.
- Operating cash flow improved significantly in the first nine months of 2013, reaching $1.33 billion compared to $787 million in the prior year.
- The company completed a $1 billion senior notes issuance in September 2013, strengthening its liquidity position. As of September 29, 2013, cash and cash equivalents stood at $2.5 billion.
- The company increased its quarterly dividend by 25% in July 2013, demonstrating confidence in its financial health and commitment to shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Cummins Inc kept $0.08.
- Revenue$4.27B100.0%
- Cost of revenue−$3.19B74.7%
- Gross profit$1.08B25.3%
- Operating costs−$557.0M13.1%
- Operating income$524.0M12.3%
- Interest, other & tax−$169.0M4.0%
- Net income$355.0M8.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed October 30, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $4.27B$4.12B | +3.6% |
| Cost of Revenue | $3.19B$3.08B | +3.5% |
| Gross Profit | $1.08B$1.04B | +3.7% |
| R&D Expenses | $173.00M$186.00M | −7.0% |
| SG&A Expenses | $464.00M$456.00M | +1.8% |
| Operating Income | $524.00M$493.00M | +6.3% |
| Interest Expense | $8.00M$9.00M | −11.1% |
| Net Income | $355.00M$352.00M | +0.9% |
| EPS (Basic) | $1.91$1.87 | +2.1% |
| EPS (Diluted) | $1.90$1.86 | +2.2% |
| Shares Outstanding (Basic) | 186.00M188.60M | −1.4% |
| Shares Outstanding (Diluted) | 186.50M189.00M | −1.3% |
05—Questions
Frequently Asked Questions
How did CMI's revenue perform in the third quarter of 2013 compared to the previous year?
CMI's net sales for the third quarter of 2013 increased by 4% to $4.3 billion compared to $4.1 billion in the third quarter of 2012. This growth was primarily driven by acquisitions in the Distribution segment and improved demand in the North American on-highway market for the Components segment, although engine segment sales experienced a slight decline.
What was the net income and earnings per share for the nine-month period ended September 29, 2013?
For the first nine months of 2013, Cummins Inc. reported a consolidated net income of $1,127 million. Net income attributable to Cummins Inc. was $1,051 million, which translated to $5.60 per diluted share, a decrease from $1,276 million or $6.72 per diluted share in the comparable period of 2012.
How has CMI's liquidity position changed, and what actions has it taken regarding capital structure?
CMI maintained a strong liquidity position, with cash and cash equivalents of $2.5 billion as of September 29, 2013, a significant increase from $1.4 billion at the start of the year. This was bolstered by operating cash flows and a $1 billion senior notes issuance in September 2013. The company also had $1.7 billion available under its revolving credit facility. The debt-to-capital ratio increased to 19.4% from 10.0% at year-end 2012 due to the new debt issuance.
What were the key drivers of performance in CMI's operating segments during the third quarter?
The Distribution segment saw an 18% sales increase primarily due to the consolidation of acquired distributors. The Components segment grew by 14%, driven by emission solutions and improved North American on-highway demand. The Engine segment experienced a 1% sales decrease due to weaker demand in industrial and power generation markets, while the Power Generation segment declined by 13% across its businesses due to reduced demand in various regions.
06—Continue