Summary
Cummins Inc. (CMI) reported its third quarter 2010 financial results on October 26, 2010. The company demonstrated significant year-over-year improvement, with net sales increasing by 34% to $3.4 billion for the third quarter and by 23% to $9.1 billion for the nine months ended September 26, 2010. This robust sales growth translated into substantial earnings per share increases, with diluted EPS rising to $1.44 for the third quarter and $3.43 for the year-to-date period, a marked improvement from $0.48 and $0.80 respectively in the prior year. The company's financial health appears to be strengthening, as evidenced by an increase in cash and cash equivalents to $937 million from $930 million at the end of 2009. Furthermore, the balance sheet shows healthy growth in inventories and accounts receivable, suggesting increased business activity. Cummins also declared a cash dividend of $0.2625 per common share for the third quarter, an increase from the $0.175 declared in the previous two quarters, indicating confidence in future performance and a commitment to returning value to shareholders.
Key Highlights
- 1Q3 2010 Net Sales increased by 34% to $3.401 billion compared to Q3 2009 ($2.530 billion).
- 2Year-to-date (nine months) Net Sales increased by 23% to $9.087 billion compared to the same period in 2009 ($7.400 billion).
- 3Diluted Earnings Per Share (EPS) for Q3 2010 was $1.44, a significant increase from $0.48 in Q3 2009.
- 4Year-to-date Diluted EPS was $3.43, a substantial improvement from $0.80 in the prior year's nine-month period.
- 5Gross Margin improved to $830 million in Q3 2010 from $503 million in Q3 2009, indicating better operational efficiency or pricing power.
- 6Operating Income for Q3 2010 was $435 million, a significant rebound from $147 million in Q3 2009.
- 7Cash and cash equivalents increased to $937 million as of September 26, 2010, compared to $930 million as of December 31, 2009.