8-KEarnings & ResultsRegulation FDExhibits & Filings

CUMMINS INC 8-K Report, Financial Results (Oct 26, 2007)

Filed October 26, 2007For Securities:CMI

Summary

Cummins Inc. (CMI) reported strong financial results for the third quarter of 2007, demonstrating significant year-over-year revenue growth of 20% to $3.37 billion. This performance was driven by record sales in three of its four business segments, particularly Engines, Power Generation, and Distribution. The company reaffirmed its full-year 2007 earnings guidance, indicating it is on track for a record profit year with projected earnings per share between $7.15 and $7.65. Despite facing headwinds in the North America heavy-duty truck engine market due to emission regulation changes, Cummins has successfully gained market share, now holding 36% compared to 27% at the end of 2006. The company also highlighted increased cash flow from operations and strategic investments in growth opportunities and capital projects for the coming years. Management expressed confidence in their technological leadership and market positioning to drive continued profitable growth.

Key Highlights

  • 1Q3 2007 revenues reached a record $3.37 billion, a 20% increase compared to Q3 2006.
  • 2Net income for Q3 2007 rose to $184 million, or $1.84 per diluted share, up from $171 million, or $1.69 per diluted share, in Q3 2006.
  • 3Full-year 2007 earnings guidance of $7.15-$7.65 per share was reaffirmed, projecting a record profit year.
  • 4Engine segment sales increased 17% due to strong performance in light-duty automotive and medium-duty truck markets, despite weakness in North America heavy-duty trucks.
  • 5Cummins gained significant market share in the North America Class 8 truck engine market, reaching 36% by August 2007.
  • 6Power Generation and Distribution segments reported record sales and improved EBIT.
  • 7The company is investing significantly in future growth, with plans for $2.5 billion in capital expenditures over the next five years and $1 billion in joint venture growth.
  • 8Cummins repurchased 1.5 million shares of common stock for $174 million as part of its ongoing stock repurchase program.

Frequently Asked Questions

The primary driver of revenue growth was strong performance across most of Cummins' markets globally. Specifically, the Engine segment saw a 17% increase driven by light-duty automotive, medium-duty truck, construction, and mining markets. The Power Generation business achieved record sales, up 24%, and the Distribution business also reported record sales, up 14%.

Cummins is gaining market share in this challenging market, which is down significantly due to emission regulation changes. Their market share in the North America Class 8 truck engine market increased to 36% by August 2007, up from 27% at the end of 2006, reflecting customer preference for their emissions-compliant products.

Cummins plans to invest $2.5 billion in capital expenditures over the next five years to meet current and future product demand. Additionally, they plan to invest another $1 billion with partners to grow joint venture operations globally.

Cummins reaffirmed its full-year 2007 earnings guidance of $7.15 to $7.65 per share. Based on the strong performance through the first nine months and the outlook for the fourth quarter, the company is on track to achieve a record profit for the year.