- Fourth quarter revenues of $4.5
billion; GAAP1 Net Income of $378 million
- EBIT of 11.7 percent of sales;
Diluted EPS of $2.25
- Full year revenues of $17.5 billion;
GAAP1 Net Income of $1.39 billion EBIT of 11.4
percent of sales; Diluted EPS of $8.23
- Company expects full year 2017
revenues to be flat to down 5 percent, EBIT expected to be in the
range of 11.0 to 11.5 percent
Cummins Inc. (NYSE: CMI) today reported results for the fourth
quarter of 2016.
Fourth quarter revenues of $4.5 billion decreased 6 percent from
the same quarter in 2015, largely reflecting lower commercial truck
production in North America and weak global demand for industrial
engines and power generation equipment. Currency negatively
impacted revenues by approximately 2 percent compared to the same
period last year, primarily due to a stronger U.S. dollar. Revenues
in North America decreased 13 percent while international sales
improved by 6 percent primarily due to increased revenues in
China.
Net income attributable to Cummins in the fourth quarter was
$378 million ($2.25 per diluted share), compared to $161
million ($0.92 per diluted share) a year ago. Net income
for the fourth quarter of 2015 excluding impairment and
restructuring charges was $355 million ($2.02 per diluted share).
The tax rate in the fourth quarter of 2016 was 22 percent.
Earnings before interest and taxes (EBIT) in the fourth quarter
was $526 million, or 11.7 percent of sales, compared to $230
million or 4.8 percent of sales a year ago. Excluding impairment
and restructuring charges, EBIT for the fourth quarter of 2015 was
$531 million or 11.1 percent of sales.
“Despite weak conditions in a number of our largest markets,
Cummins delivered fourth quarter results that were a little better
than expected due to our strong market share in on-highway markets
in North America and the benefits of our cost reduction work,” said
Tom Linebarger Chairman and CEO. “We made significant progress in a
number of our key initiatives in 2016, including executing our
restructuring actions, completing the acquisition of our
distributors in North America and continuing to invest in new
products, all of which help position the Company for profitable
growth when markets improve. We also returned 75 percent of the
Company’s Operating Cash Flow to shareholders, consistent with our
plan for the year.”
Revenues for the full year 2016 were $17.5 billion, 8
percent lower than 2015. Revenues in North
America decreased 12 percent and international sales decreased
2 percent mainly due to foreign currency movements. Excluding the
impact of the currency movements, international revenues increased
2 percent with growth in China and India being offset by weaker
demand in Latin America, the Middle East and Africa.
Net income attributable to Cummins for the full year was $1.39
billion ($8.23 per diluted share), compared to
$1.4 billion ($7.84 per diluted share) in 2015.
Excluding impairment and restructuring charges, net income was
$1.59 billion ($8.93 per diluted share) in 2015. The full
year tax rate was 24.6 percent in 2016.
EBIT for the year was $2.0 billion or 11.4 percent of
sales, compared to $2.1 billion or 10.9 percent of sales in 2015.
Excluding impairments and restructuring charges, EBIT for 2015 was
$2.4 billion or 12 .5 percent of sales.
2017 Outlook:
Based on the current forecast, Cummins projects full year 2017
revenues to be flat to down 5 percent, and EBIT to be in the range
of 11.0 to 11.5 percent of sales. Results in the first quarter of
the year will continue to be challenged by difficult markets and
are expected to mark the low point of the year. The Company expects
to return at least 50 percent of Operating Cash Flow to
shareholders in 2017 in the form of dividends and share
repurchases.
2016 highlights:
- Cummins partnered with Peterbilt to
develop and demonstrate technologies under the U.S. Department of
Energy's (DOE) SuperTruck II program
- Cummins was recognized with the 2016
United States Overall Best Heavy-Duty Truck Engine Supplier
Leadership Award by Frost and Sullivan
- The Environmental Protection Agency
(EPA) certified Cummins’ full range of heavy- and medium-duty
diesel engines for the 2017 Greenhouse Gas Emission Standards
- The Company returned 75 percent of
Operating Cash Flow to shareholders in the form of dividends and
share repurchases
- For the twelfth straight
year, Cummins Inc. was awarded a perfect score in the
2017 Corporate Equality Index (CEI) from the Human Rights
Campaign
1 Generally Accepted Accounting Principles
Fourth quarter 2016 detail (all comparisons to same period in
2015) excluding restructuring and impairment charges in
2015
Engine Segment
- Sales - $2.0 billion, down 6
percent
- Segment EBIT - $194 million, or 9.9
percent of sales, compared to $160 million or 7.6 percent of
sales
- On-highway revenues declined 9 percent
primarily due to a decline in commercial truck production in North
America, partially offset by an 8 percent increase in off-highway
sales
Distribution Segment
- Sales - $1.7 billion, down 2
percent
- Segment EBIT - $122 million, or 7.3
percent of sales, compared to $111 million or 6.5 percent of
sales
- Weaker sales to off-highway markets and
an unfavorable impact of 1 percent from a stronger US dollar more
than offset 5 percent revenue growth from acquisitions
Components Segment
- Sales - $1.2 billion, down 5
percent.
- Segment EBIT - $140 million , or 11.9
percent of sales, compared to $175 million or 14.2 percent of
sales
- Revenues in North America declined due
to lower commercial truck production, but were partially offset by
higher revenues in China
Power Systems Segment
- Sales - $932 million, down 5
percent
- Segment EBIT - $68 million, or 7.3
percent of sales, compared to $59 million, or 6 percent of
sales
- Revenues declined due to lower power
generation and industrial engine demand in most regions
About Cummins
Cummins Inc., a global power leader, is a corporation of
complementary business units that design, manufacture, distribute
and service diesel and natural gas engines and related
technologies, including fuel systems, controls, air handling,
filtration, emission solutions and electrical power generation
systems. Headquartered in Columbus, Indiana, (USA) Cummins
currently employs approximately 55,400 people worldwide and serves
customers in approximately 190 countries and territories through a
network of approximately 600 company-owned and independent
distributor locations and approximately 7,400 dealer locations.
Cummins earned $1.39 billion on sales of $17.5 billion in 2016.
Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at
www.twittter.com/cummins and on
YouTube at www.youtube.com/cumminsinc.
Forward-looking disclosure statement
Information provided in this release that is not purely
historical are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements regarding our forecasts, guidance, preliminary results,
expectations, hopes, beliefs and intentions on strategies regarding
the future. These forward looking statements include, without
limitation, statements relating to our plans and expectations for
our revenues for the full year of 2017. Our actual future results
could differ materially from those projected in such
forward-looking statements because of a number of factors,
including, but not limited to: the adoption and implementation of
global emission standards; the price and availability of energy;
the pace of infrastructure development; increasing global
competition among our customers; general economic, business and
financing conditions; governmental action; changes in our
customers’ business strategies; competitor pricing activity;
expense volatility; labor relations; and other risks detailed from
time to time in our Securities and Exchange Commission filings,
including particularly in the Risk Factors section of our 2015
Annual Report on Form 10-K. Shareholders, potential investors and
other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements. The
forward-looking statements made herein are made only as of the date
of this press release and we undertake no obligation to publicly
update any forward-looking statements, whether as a result of new
information, future events or otherwise. More detailed information
about factors that may affect our performance may be found in our
filings with the Securities and Exchange Commission, which are
available at http://www.sec.gov or at
http://www.cummins.com in the Investor
Relations section of our website.
Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release, and is defined
and reconciled to what management believes to be the most
comparable GAAP measure in a schedule attached to this release.
Cummins presents this information as it believes it is useful to
understanding the Company's operating performance, and because EBIT
is a measure used internally to assess the performance of the
operating units.
Webcast information
Cummins management will host a teleconference to discuss these
results today at 10 a.m. EST. This teleconference will be
webcast and available on the Investor Relations section of the
Cummins website at www.cummins.com . Participants wishing to view
the visuals available with the audio are encouraged to sign-in a
few minutes prior to the start of the teleconference.
CUMMINS INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (a)
Three months ended In millions, except per share
amounts
December 31, 2016
December 31, 2015 NET SALES $
4,503 $ 4,766 Cost of sales
3,383 3,554
GROSS MARGIN 1,120 1,212
OPERATING EXPENSES AND
INCOME Selling, general and administrative expenses
519
508 Research, development and engineering expenses
158 177
Equity, royalty and interest income from investees
67 75
Loss contingency charge
— 60 Impairment of light-duty diesel
assets
— 211 Restructuring actions and other charges
— 90 Other operating expense, net
(3 ) (12 )
OPERATING INCOME 507 229 Interest income
5 4
Interest expense
18 18 Other income (expense), net
14
(3 )
INCOME BEFORE INCOME TAXES 508 212 Income
tax expense
112 34
CONSOLIDATED NET
INCOME 396 178 Less: Net income attributable to
noncontrolling interests
18 17
NET INCOME
ATTRIBUTABLE TO CUMMINS INC. $ 378 $ 161
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS
INC. Basic
$ 2.26 $ 0.92 Diluted
$
2.25 $ 0.92
WEIGHTED AVERAGE SHARES
OUTSTANDING Basic
167.6 175.5 Diluted
168.1 175.8
CASH DIVIDENDS DECLARED PER COMMON SHARE $
1.025 $ 0.975
(a)
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
Years ended December 31, In millions,
except per share amounts 2016 2015 NET
SALES $ 17,509 $ 19,110 Cost of sales
13,057 14,163
GROSS MARGIN 4,452
4,947
OPERATING EXPENSES AND INCOME Selling, general and
administrative expenses
2,046 2,092 Research, development
and engineering expenses
636 735 Equity, royalty and
interest income from investees
301 315 Loss contingency
charges
138 60 Impairment of light-duty diesel assets
— 211 Restructuring actions and other charges
— 90
Other operating expense, net
(5 ) (17 )
OPERATING
INCOME 1,928 2,057 Interest income
23 24 Interest
expense
69 65 Other income, net
48 9
INCOME BEFORE INCOME TAXES 1,930 2,025 Income tax
expense
474 555
CONSOLIDATED NET INCOME
1,456 1,470 Less: Net income attributable to noncontrolling
interests
62 71
NET INCOME ATTRIBUTABLE TO
CUMMINS INC. $ 1,394 $ 1,399
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic
$ 8.25 $ 7.86 Diluted
$ 8.23 $ 7.84
WEIGHTED AVERAGE SHARES OUTSTANDING Basic
169.0 178.0 Diluted
169.3 178.4
CASH
DIVIDENDS DECLARED PER COMMON SHARE $ 4.00 $ 3.51
(a)
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (a)
In millions, except par value December 31,
2016 December 31, 2015 ASSETS Current
assets Cash and cash equivalents
$ 1,120 $ 1,711
Marketable securities
260 100 Total cash, cash
equivalents and marketable securities
1,380 1,811 Accounts
and notes receivable, net
3,025 2,820 Inventories
2,675 2,707 Prepaid expenses and other current assets
627 609 Total current assets
7,707
7,947 Long-term assets Property, plant and equipment,
net
3,800 3,745 Investments and advances related to equity
method investees
946 975 Goodwill and other intangible
assets, net
812 810 Other assets
1,746 1,657
Total assets
$ 15,011 $ 15,134
LIABILITIES Current liabilities Accounts payable
(principally trade)
$ 1,854 $ 1,706 Loans payable
41 24 Commercial paper
212 — Accrued expenses
2,218 2,073 Total current liabilities
4,325 3,803 Long-term liabilities Long-term
debt
1,568 1,576 Other liabilities
1,944 2,005
Total liabilities
$ 7,837 $ 7,384
EQUITY Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and
222.4 shares issued
$ 2,153 $ 2,178 Retained earnings
11,040 10,322 Treasury stock, at cost, 54.2 and 47.2 shares
(4,489 ) (3,735 ) Common stock held by employee
benefits trust, at cost, 0.7 and 0.9 shares
(8 ) (11
) Accumulated other comprehensive loss
(1,821 )
(1,348 ) Total Cummins Inc. shareholders’ equity
6,875 7,406
Noncontrolling interests
299 344 Total equity
$ 7,174 $ 7,750 Total liabilities and
equity
$ 15,011 $ 15,134
(a)
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
CUMMINS INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (a)
Years ended December 31,
In millions 2016 2015 NET CASH
PROVIDED BY OPERATING ACTIVITIES $ 1,935 $
2,059
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(531 ) (744 ) Investments in
internal use software
(63 ) (55 ) Investments in and
advances to equity investees
(41 ) (7 ) Acquisitions
of businesses, net of cash acquired
(94 ) (117 )
Investments in marketable securities—acquisitions
(478
) (282 ) Investments in marketable securities—liquidations
306 270 Proceeds from sale of equity investees
60 —
Cash flows from derivatives not designated as hedges
(102
) 8 Other, net
26 9 Net cash used in
investing activities
(917 ) (918 )
CASH
FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings
111 44 Net borrowings of commercial paper
212 —
Payments on borrowings and capital lease obligations
(163
) (76 ) Net borrowings (payments) under short-term credit
agreements
19 (41 ) Distributions to noncontrolling
interests
(65 ) (49 ) Dividend payments on common
stock
(676 ) (622 ) Repurchases of common stock
(778 ) (900 ) Acquisition of noncontrolling interests
(98 ) (10 ) Other, net
29 10 Net
cash used in financing activities
(1,409 ) (1,644 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(200 ) (87 ) Net decrease in cash and cash
equivalents
(591 ) (590 ) Cash and cash equivalents
at beginning of year
1,711 2,301
CASH AND
CASH EQUIVALENTS AT END OF PERIOD $ 1,120
$ 1,711
(a)
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
CUMMINS INC. AND SUBSIDIARIESSEGMENT
INFORMATION(Unaudited)
As previously announced, beginning with the second quarter of
2016, we realigned certain of our reportable segments to be
consistent with changes to our organizational structure and how the
Chief Operating Decision Maker monitors the performance of our
segments. We reorganized our business to combine our Power
Generation segment and our high horsepower engine business to
create the new Power Systems segment. Our reportable operating
segments consist of Engine, Distribution, Components and Power
Systems. We began to report results for our new reporting structure
in the second quarter of 2016 and also reflected this change for
historical periods.
We allocate certain common costs and expenses, primarily
corporate functions, among segments. These include certain costs
and expenses of shared services, such as information technology,
human resources, legal, finance and supply chain
management. In addition to the reorganization noted above, we
reevaluated the allocation of these costs, considering the new
segment structure created in April 2016 and adjusted our allocation
methodology accordingly. The revised methodology, which is
based on a combination of relative segment sales and relative
service usage levels, is effective for the periods beginning after
January 1, 2016 and resulted in the revision of our segment
operating results, including segment earnings before interest,
income taxes and noncontrolling interests (EBIT), for all four
segments for the first quarter of 2016 with a greater share of
costs allocated to the Distribution and Components segments than in
previous years. Prior periods were not revised for the new
allocation methodology. These changes had no impact on our
consolidated results.
In millions Engine
Distribution Components
PowerSystems
IntersegmentEliminations
(1)
Total Three months ended December 31, 2016 External
sales
$ 1,424 $ 1,664 $
860 $ 555 $ — $
4,503 Intersegment sales
543 6
317 377 (1,243 ) —
Total sales
1,967 1,670 1,177
932 (1,243 ) 4,503 Depreciation and
amortization (2)
42 30 38 28 —
138 Research, development and engineering expenses
60
3 47 48 — 158 Equity, royalty
and interest income from investees
28 14 12
13 — 67 Interest income
2 1
1 1 — 5 Segment EBIT
194
122 (3) 140 68 (4) 2
526 Segment EBIT as a percentage of total sales
9.9 % 7.3 % 11.9 %
7.3 % 11.7 % Three months
ended December 31, 2015 External sales $ 1,583 $ 1,699 $ 906 $
578 $ — $ 4,766 Intersegment sales 515 8 330
408 (1,261 ) — Total sales 2,098 1,707 1,236 986
(1,261 ) 4,766 Depreciation and amortization (2) 47 27 27 29 — 130
Research, development and engineering expenses 68 2 53 54 — 177
Equity, royalty and interest income from investees 39 18 9 9 — 75
Loss contingency charge 60 — — — — 60 Impairment of light-duty
diesel assets 202 — 9 — — 211 Restructuring actions and other
charges 17 23 13 26 11 90 Interest income 1 1 1 1 — 4 Segment EBIT
(59 ) 88 153 33 15 230 Segment EBIT as a percentage of total
sales (2.8 )% 5.2 % 12.4 % 3.3 % 4.8 %
(1)
Includes intersegment sales, intersegment profit in
inventory eliminations and unallocated corporate expenses. There
were no significant unallocated corporate expenses for the three
months ended December 31, 2016 and 2015.
(2)
Depreciation and amortization as shown on a segment basis excludes
the amortization of debt discount and deferred costs included in
the Condensed Consolidated Statements of Income as "Interest
expense."
(3)
Distribution segment EBIT included a gain of $15 million on the
fair value adjustment resulting from the acquisition of the
controlling interest in a North American distributor for the three
months ended December 31, 2016. See ''ACQUISITION'' for additional
information.
(4)
In the fourth quarter of 2016, we sold our remaining 49 percent
interest in Cummins Olayan Energy for $61 million and recognized a
gain of $17 million.
In
millions Engine Distribution Components
PowerSystems
IntersegmentEliminations
(1)
Total Year ended December 31, 2016 External sales
$ 5,774 $ 6,157 $ 3,514
$ 2,064 $ — $ 17,509
Intersegment sales
2,030 24
1,322 1,453 (4,829 )
— Total sales
7,804 6,181 4,836
3,517 (4,829 ) 17,509 Depreciation and
amortization (2)
163 116 133 115
— 527 Research, development and engineering expenses
226 13 208 189 — 636
Equity, royalty and interest income from investees
148
70 41 42 — 301 Loss contingency
charges
138 — — — — 138
Interest income
10 4 4 5 —
23 Segment EBIT
686 392 (3) 641
263 (4) 17 1,999 Segment EBIT as
a percentage of total sales
8.8 % 6.3 %
13.3 % 7.5 % 11.4 %
Year ended December 31, 2015 External sales $ 6,733 $
6,198 $ 3,745 $ 2,434 $ — $ 19,110 Intersegment sales 1,937
31 1,427 1,633 (5,028 ) — Total sales
8,670 6,229 5,172 4,067 (5,028 ) 19,110 Depreciation and
amortization (2) 187 105 109 110 — 511 Research, development and
engineering expenses 263 10 236 226 — 735 Equity, royalty and
interest income from investees 146 78 35 56 — 315 Loss contingency
charge 60 — — — — 60 Impairment of light-duty diesel assets 202 — 9
— — 211 Restructuring charges and other actions 17 23 13 26 11 90
Interest income 11 4 4 5 — 24 Segment EBIT 636 412 (3) 727 335 (20
) 2,090 Segment EBIT as a percentage of total sales 7.3 %
6.6 % 14.1 % 8.2 % 10.9 %
(1)
Includes intersegment sales, intersegment profit in
inventory eliminations and unallocated corporate expenses. There
were no significant unallocated corporate expenses for the years
ended December 31, 2016 and 2015.
(2)
Depreciation and amortization as shown on a segment basis excludes
the amortization of debt discount and deferred costs included in
the Condensed Consolidated Statements of Income as "Interest
expense." The amortization of debt discount and deferred costs were
$3 million for both the years ended December 31, 2016 and December
31, 2015.
(3)
Distribution segment EBIT included gains of $15 million and $18
million on the fair value adjustments resulting from the
acquisition of the controlling interests in North American
distributors for the years ended December 31, 2016 and December 31,
2015.
(4)
In the fourth quarter of 2016, we sold our remaining 49 percent
interest in Cummins Olayan Energy for $61 million and recognized a
gain of $17 million.
A reconciliation of our segment information to the corresponding
amounts in the Condensed Consolidated Statements of Income is shown
in the table below:
Three months ended Years ended In
millions December 31, 2016 December
31, 2015 December 31, 2016
December 31, 2015 Total segment EBIT
$
526 $ 230
$ 1,999 $ 2,090 Less: Interest
expense
18 18
69 65 Income
before income taxes
$ 508 $ 212
$ 1,930 $ 2,025
CUMMINS INC. AND SUBSIDIARIESSELECT
FOOTNOTE DATA(Unaudited)
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES
Equity, royalty and interest income from investees included in
our Condensed Consolidated Statements of Income for the reporting
periods was as follows:
Three months ended Years ended In
millions December 31, 2016 December
31, 2015 December 31, 2016
December 31, 2015 Distribution entities
Komatsu Cummins Chile, Ltda.
$ 8 $ 8
$
34 $ 31 North American distributors
3 6
21 33
All other distributors
(2 ) 1
— 3
Manufacturing entities Dongfeng Cummins Engine Company, Ltd.
14 11
46 51 Chongqing Cummins Engine Company, Ltd.
10 9
38 41 Beijing Foton Cummins Engine Co., Ltd.
(7 ) 15
52 62 All other manufacturers
29 11
69 52 Cummins share of net
income
55 61
260 273 Royalty and interest income
12 14
41 42 Equity, royalty and
interest income from investees
$ 67 $ 75
$ 301 $ 315
ACQUISITION
The Distribution segment North American distributor acquisition
in the fourth quarter of 2016 was as follows:
Entity Acquired
Date ofAcquisition
AdditionalPercentInterestAcquired
PaymentstoFormerOwners
AcquisitionRelatedDebtRetirements
TotalPurchaseConsideration
Type
ofAcquisition(1)
GainRecognized(1)
GoodwillAcquired
IntangiblesRecognized
Net SalesPreviousFiscal
YearEnded
Cummins Pacific LLC (Pacific) 10/04/16 50% $
30 $ 67 $ 99 (2) COMB $ 15 $ 4 $
8 $ 391
____________________________________________________
(1)
The results from Pacific were included in Distribution
segment results subsequent to the acquisition date. Pacific was
accounted for as business combination (COMB) with gains recognized
based on the requirement to remeasure our pre-existing ownership to
fair value in accordance with GAAP.
(2)
The "Total Purchase Consideration" represents the total amount that
will or is estimated to be paid to complete the acquisition. A
portion of the acquisition payment has not yet been made and will
be paid in future periods in accordance with the purchase contract.
The total outstanding consideration at December 31, 2016, for this
entity was $2 million.
CUMMINS INC. AND
SUBSIDIARIESFINANCIAL MEASURES THAT SUPPLEMENT
GAAP(Unaudited)
Net income and diluted earnings per share (EPS) attributable
to Cummins Inc. excluding special items
We believe these are useful measures of our operating
performance for the periods presented as they illustrate our
operating performance without regard to special items including tax
adjustments. These measures are not in accordance with, or an
alternative for, accounting principles generally accepted in the
United States of America (GAAP) and may not be consistent with
measures used by other companies. It should be considered
supplemental data. The following table reconciles net income
attributable to Cummins Inc. to net income attributable to Cummins
Inc. excluding special items for the following periods:
Three months ended December 31, 2016
December 31, 2015 In millions Net
Income Diluted EPS Net Income
Diluted EPS Net income attributable to Cummins Inc.
$
378 $ 2.25 $ 161 $ 0.92 Add Impairment of
light-duty diesel assets, net of tax (1)
— — 133 0.75
Restructuring actions and other charges, net of tax (2)
—
— 61 0.35 Net income attributable to
Cummins Inc. excluding special items
$ 378
$ 2.25 $ 355 $ 2.02
Years
ended December 31, 2016 December 31, 2015 In
millions Net Income Diluted EPS Net Income
Diluted EPS Net income attributable to Cummins Inc.
$
1,394 $ 8.23 $ 1,399 $ 7.84 Add Impairment of
light-duty diesel assets, net of tax (1)
— — 133 0.75
Restructuring actions and other charges, net of tax (2)
—
— 61 0.34 Net income attributable to
Cummins Inc. excluding special items
$ 1,394
$ 8.23 $ 1,593 $ 8.93
__________________________________________
(1)
In the fourth quarter of 2015, we recorded a $211 million
charge for impairment of our light-duty diesel assets.
(2)
In the fourth quarter of 2015, we recorded a $90 million charge for
restructuring actions and other charges.
Earnings before interest, income taxes, noncontrolling
interests and special items
We define EBIT as earnings before interest expense, income tax
expense and noncontrolling interests in income of consolidated
subsidiaries. We use EBIT to assess and measure the performance of
our operating segments and also as a component in measuring our
variable compensation programs. This measure is not in accordance
with, or an alternative for, GAAP and may not be consistent with
measures used by other companies. It should be considered
supplemental data. Below is a reconciliation of “Net income
attributable to Cummins Inc.” to EBIT for each of the applicable
periods:
Three months ended Years ended In
millions
December 31, 2016
December 31, 2015 December 31, 2016
December 31, 2015 Net income attributable to Cummins Inc.
$ 378 $ 161
$ 1,394 $ 1,399 Net
income attributable to Cummins Inc. as a percentage of net sales
8.4 % 3.4 %
8.0 % 7.3 % Add Net
income attributable to noncontrolling interests
18 17
62 71 Consolidated net income
396 178
1,456 1,470
Add Interest expense
18 18
69 65 Income tax
expense
112 34
474 555
Earnings before interest expense and income taxes
526
230
1,999 2,090 EBIT as a
percentage of net sales
11.7 % 4.8 %
11.4
% 10.9 % Add Impairment of light-duty diesel assets
— 211
— 211 Restructuring actions and other charges
— 90
— 90 Earnings before
interest expense, income taxes and special items
$
526 $ 531
$ 1,999 $ 2,391
Earnings before interest expense, income taxes and
special items as a percentage of net sales
11.7 %
11.1 %
11.4 % 12.5 %
CUMMINS INC. AND SUBSIDIARIESBUSINESS
UNIT SALES DATA(Unaudited)
Engine Segment Sales by Market and Unit Shipments by Engine
Classification
In the second quarter of 2016, in conjunction with the
reorganization of our segments, our Engine segment reorganized its
reporting structure as follows:
- Heavy-duty truck - We
manufacture diesel and natural gas engines that range from 310 to
605 horsepower serving global heavy-duty truck customers worldwide,
primarily in North America, Latin America and Australia.
- Medium-duty truck and bus - We
manufacture diesel and natural gas engines ranging from 130 to 450
horsepower serving medium-duty truck and bus customers worldwide,
with key markets including North America, Latin America, China,
Europe and India. Applications include pickup and delivery trucks,
vocational truck, school bus, transit bus and shuttle bus. We also
provide diesel engines for Class A motor homes (RVs), primarily in
North America.
- Light-duty automotive (Pickup and
Light Commercial Vehicle (LCV)) - We manufacture 105 to 385
horsepower diesel engines, including engines for the pickup truck
market for Chrysler and Nissan in North America, and LCV markets in
Europe, Latin America and Asia.
- Off-highway - We manufacture
diesel engines that range from 48 to 715 horsepower to key global
markets including mining, marine, rail, oil and gas, defense,
agriculture and construction equipment and also to the power
generation business for standby, mobile and distributed power
generation solutions throughout the world.
Sales for our Engine segment by market were as follows:
2016 In millions
Q1 Q2 Q3 Q4 YTD Heavy-duty truck
$ 631 $ 622 $ 625
$ 565 $ 2,443 Medium-duty truck and
bus 549 600 517
606 2,272 Light-duty automotive 433 394 345
409 1,581 Off-highway 363 386 372
387 1,508 Total sales $ 1,976 $ 2,002 $
1,859
$ 1,967 $ 7,804
2015 In millions Q1 Q2 Q3
Q4 YTD Heavy-duty truck $ 757 $ 875 $ 784 $ 700 $
3,116 Medium-duty truck and bus 608 674 585 640 2,507 Light-duty
automotive 381 354 339 401 1,475 Off-highway 399 422
394 357 1,572 Total sales $ 2,145 $ 2,325
$ 2,102 $ 2,098 $ 8,670
2014
In millions YTD Heavy-duty truck $ 3,072 Medium-duty
truck and bus 2,431 Light-duty automotive 1,567 Off-highway 1,897
Total sales $ 8,967
Unit shipments by engine classification (including unit
shipments to Power Systems and off-highway engine units included in
their respective classification) were as follows:
2016 Units
Q1 Q2 Q3 Q4 YTD Heavy-duty
19,700 20,700 20,100
18,500 79,000 Medium-duty 55,400 62,300
53,400
58,000 229,100 Light-duty 61,700 57,100
49,800
60,000 228,600 Total units 136,800
140,100 123,300
136,500 536,700
2015 Units Q1 Q2 Q3
Q4 YTD Heavy-duty 28,700 32,800 28,600 24,300 114,400
Medium-duty 61,200 66,600 59,600 59,700 247,100 Light-duty 51,200
53,400 47,800 56,900 209,300 Total
units 141,100 152,800 136,000 140,900
570,800
2014 Units YTD Heavy-duty
122,100 Medium-duty 266,800 Light-duty 204,400 Total units
593,300
Distribution Segment Sales by Product Line
2016 In millions
Q1 Q2 Q3 Q4 YTD Parts $ 648 $
642 $ 643
$ 694 $ 2,627 Service 299 297 299
320 1,215 Power generation 275 326 291
347 1,239
Engines 241 279 271
309 1,100
Total sales $ 1,463 $ 1,544 $ 1,504
$
1,670 $ 6,181
2015 In millions
Q1 Q2 Q3 Q4 YTD Parts $ 573 $
598 $ 604 $ 648 $ 2,423 Service 284 307 301 330 1,222 Power
generation 298 272 323 397 1,290 Engines 321 318 323
332 1,294 Total sales $ 1,476 $ 1,495 $
1,551 $ 1,707 $ 6,229
Component Segment Sales by Business
2016 In millions
Q1 Q2 Q3 Q4 YTD Emission
solutions $ 607 $ 624 $ 540
$ 546 $ 2,317 Turbo
technologies 265 276 241
254 1,036 Filtration 252 262 244
252 1,010 Fuel systems 113 117 118
125 473 Total sales $ 1,237 $ 1,279 $
1,143
$ 1,177 $ 4,836
2015 In millions Q1 Q2 Q3
Q4 YTD Emission solutions $ 613 $ 679 $ 607 $ 600 $
2,499 Turbo technologies 301 307 266 267 1,141 Filtration 255 266
240 249 1,010 Fuel systems 130 145 127 120
522 Total sales $ 1,299 $ 1,397 $ 1,240
$ 1,236 $ 5,172
Power Systems Segment Sales by Product Line and Unit
Shipments by Engine Classification
In the second quarter of 2016, in conjunction with the
reorganization of our segments, our Power Systems segment
reorganized its reporting structure into the following product
lines:
- Power generation - We design,
manufacture, sell and support back-up and prime power generators
ranging from 2 kilowatts to 3.5 megawatts, as well as controls,
paralleling systems and transfer switches, for applications such as
consumer, commercial, industrial, data centers, health care,
telecommunications and waste water treatment plants. We also
provide turnkey solutions for distributed generation and energy
management applications using natural gas or biogas as a fuel. We
also serve global rental accounts for diesel and gas generator
sets.
- Industrial - We design,
manufacture, sell and support diesel and natural gas
high-horsepower engines up to 5,500 horsepower for a wide variety
of equipment in the mining, rail, defense, oil and gas, and
commercial marine applications throughout the world. Across these
markets, we have major customers in North America, Europe, the
Middle East, Africa, China, Korea, Japan, Latin America, India,
Russia, Southeast Asia, South Pacific and Mexico.
- Generator technologies - We
design, manufacture, sell and support A/C generator/alternator
products for internal consumption and for external generator set
assemblers. Our products are sold under the Stamford, AVK and
Markon brands and range in output from 3 kilovolt-amperes (kVA) to
12,000 kVA.
Sales for our Power Systems segment by product line were as
follows:
2016 In millions
Q1 Q2 Q3 Q4 YTD Power generation
$ 520 $ 597 $ 545
$ 573 $ 2,235 Industrial 215 240
233
275 963 Generator technologies 73 84 78
84 319 Total sales $ 808 $ 921 $
856
$ 932 $ 3,517
2015
In millions Q1 Q2 Q3 Q4
YTD Power generation $ 624 $ 710 $ 621 $ 615 $ 2,570
Industrial 280 295 275 287 1,137 Generator technologies 98
92 86 84 360 Total sales $ 1,002 $
1,097 $ 982 $ 986 $ 4,067
2014
In millions YTD Power generation $ 2,633 Industrial
1,331 Generator technologies 450 Total sales $ 4,414
High-horsepower unit shipments by engine classification were as
follows:
2016 Units
Q1 Q2 Q3 Q4 YTD Power generation
1,800 2,200 2,000
1,900 7,900 Industrial 1,000 1,100
1,000
1,300 4,400 Total units 2,800
3,300 3,000
3,200 12,300
2015 Units Q1 Q2 Q3 Q4
YTD Power generation 2,200 2,500 2,000 1,900 8,600
Industrial 1,300 1,200 1,200 1,500
5,200 Total units 3,500 3,700 3,200 3,400
13,800
2014 Units YTD Power
generation 8,700 Industrial 6,100 Total units 14,800
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170209005204/en/
Cummins Inc.Carole Casto, 317-610-2480Executive Director -
Corporate Communicationscarole.casto@cummins.com
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