• | First quarter revenues of $6.0 billion; GAAP1 Net Income of $663 million |
• | EBITDA in the first quarter was 17.2 percent of sales; Diluted EPS of $4.20 |
• | The company is maintaining its full year 2019 revenue guidance of flat to up 4 percent |
• | EBITDA now expected to be in the range of 16.25 to 16.75 percent; up from 15.75 to 16.25 percent |
• | Cummins was named to Ethisphere’s list of the World’s Most Ethical Companies for a 12th consecutive year. |
• | Barron’s magazine announced that Cummins made its 100 Most Sustainable Companies list, moving from No. 60 in its inaugural ranking in 2018 to No. 14 in its 2019 list. |
• | The Human Rights Campaign (HRC) announced that Cummins received a perfect score for a 14th consecutive year in its Corporate Equality Index. |
• | Amtrak announced that it will be purchasing 75 Charger locomotives for delivery starting in 2021 which will use Cummins’ QSK95 Tier 4 engine systems to help deliver clean, efficient power for passenger trains. |
• | Sales - $2.7 billion, up 8 percent |
• | Segment EBITDA - $438 million, or 16.5 percent of sales, compared to $286 million or 11.7 percent of sales |
• | On-highway revenues increased 9 percent and off-highway revenues increased 6 percent primarily due to increased demand in North America truck and global construction markets |
• | Sales - $2.0 billion, up 8 percent |
• | Segment EBITDA - $171 million, or 8.5 percent of sales, compared to $123 million or 6.6 percent of sales |
• | Revenues in North America increased by 10 percent and international sales grew by 4 percent |
• | Strong demand across all product lines in North America, especially data centers, was partially offset by the unfavorable impact from a stronger US dollar, which impacted sales by 2 percent |
• | Sales - $1.9 billion, up 6 percent |
• | Segment EBITDA - $325 million, or 17.5 percent of sales, compared to $227 million or 12.9 percent of sales |
• | Revenues in North America increased by 17 percent due to higher heavy and medium-duty truck production while international sales declined by 8 percent |
• | Sales - $1.1 billion, flat versus prior year |
• | Segment EBITDA - $138 million, or 12.8 percent of sales, compared to $142 million, or 13.2 percent of sales |
• | Industrial revenues increased 1 percent while Power generation revenues decreased 1 percent |
• | Sales - $3 million |
• | Segment EBITDA loss - $29 million |
Three months ended | ||||||||
In millions, except per share amounts | March 31, 2019 | April 1, 2018 | ||||||
NET SALES | $ | 6,004 | $ | 5,570 | ||||
Cost of sales | 4,472 | 4,370 | ||||||
GROSS MARGIN | 1,532 | 1,200 | ||||||
OPERATING EXPENSES AND INCOME | ||||||||
Selling, general and administrative expenses | 593 | 577 | ||||||
Research, development and engineering expenses | 237 | 210 | ||||||
Equity, royalty and interest income from investees | 92 | 115 | ||||||
Other operating income (expense), net | 5 | 2 | ||||||
OPERATING INCOME | 799 | 530 | ||||||
Interest income | 12 | 7 | ||||||
Interest expense | 32 | 24 | ||||||
Other income, net | 66 | 10 | ||||||
INCOME BEFORE INCOME TAXES | 845 | 523 | ||||||
Income tax expense | 176 | 198 | ||||||
CONSOLIDATED NET INCOME | 669 | 325 | ||||||
Less: Net income attributable to noncontrolling interests | 6 | — | ||||||
NET INCOME ATTRIBUTABLE TO CUMMINS INC. | $ | 663 | $ | 325 | ||||
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. | ||||||||
Basic | $ | 4.22 | $ | 1.97 | ||||
Diluted | $ | 4.20 | $ | 1.96 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||
Basic | 157.2 | 164.9 | ||||||
Diluted | 157.7 | 165.7 | ||||||
(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. |
In millions, except par value | March 31, 2019 | December 31, 2018 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 1,328 | $ | 1,303 | ||||
Marketable securities | 246 | 222 | ||||||
Total cash, cash equivalents and marketable securities | 1,574 | 1,525 | ||||||
Accounts and notes receivable, net | 4,025 | 3,866 | ||||||
Inventories | 3,893 | 3,759 | ||||||
Prepaid expenses and other current assets | 599 | 668 | ||||||
Total current assets | 10,091 | 9,818 | ||||||
Long-term assets | ||||||||
Property, plant and equipment, net | 4,066 | 4,096 | ||||||
Investments and advances related to equity method investees | 1,303 | 1,222 | ||||||
Goodwill | 1,125 | 1,126 | ||||||
Other intangible assets, net | 895 | 909 | ||||||
Pension assets | 939 | 929 | ||||||
Other assets | 1,427 | 962 | ||||||
Total assets | $ | 19,846 | $ | 19,062 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable (principally trade) | $ | 3,018 | $ | 2,822 | ||||
Loans payable | 70 | 54 | ||||||
Commercial paper | 709 | 780 | ||||||
Accrued compensation, benefits and retirement costs | 364 | 679 | ||||||
Current portion of accrued product warranty | 762 | 654 | ||||||
Current portion of deferred revenue | 509 | 498 | ||||||
Other accrued expenses | 958 | 852 | ||||||
Current maturities of long-term debt | 37 | 45 | ||||||
Total current liabilities | 6,427 | 6,384 | ||||||
Long-term liabilities | ||||||||
Long-term debt | 1,605 | 1,597 | ||||||
Pensions and other postretirement benefits | 520 | 532 | ||||||
Accrued product warranty | 682 | 740 | ||||||
Deferred revenue | 697 | 658 | ||||||
Other liabilities | 1,188 | 892 | ||||||
Total liabilities | $ | 11,119 | $ | 10,803 | ||||
EQUITY | ||||||||
Cummins Inc. shareholders’ equity | ||||||||
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued | $ | 2,273 | $ | 2,271 | ||||
Retained earnings | 13,401 | 12,917 | ||||||
Treasury stock, at cost, 64.9 and 64.4 shares | (6,111 | ) | (6,028 | ) | ||||
Common stock held by employee benefits trust, at cost, 0.3 and 0.4 shares | (4 | ) | (5 | ) | ||||
Accumulated other comprehensive loss | (1,739 | ) | (1,807 | ) | ||||
Total Cummins Inc. shareholders’ equity | 7,820 | 7,348 | ||||||
Noncontrolling interests | 907 | 911 | ||||||
Total equity | $ | 8,727 | $ | 8,259 | ||||
Total liabilities and equity | $ | 19,846 | $ | 19,062 | ||||
(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. |
Three months ended | ||||||||
In millions | March 31, 2019 | April 1, 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Consolidated net income | $ | 669 | $ | 325 | ||||
Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities | ||||||||
Depreciation and amortization | 157 | 154 | ||||||
Deferred income taxes | 11 | (27 | ) | |||||
Equity in income of investees, net of dividends | (64 | ) | (95 | ) | ||||
Pension contributions (in excess of) under expense, net | (17 | ) | 13 | |||||
Other postretirement benefits payments in excess of expense, net | (12 | ) | (5 | ) | ||||
Stock-based compensation expense | 9 | 9 | ||||||
(Gain) loss on corporate owned life insurance | (37 | ) | 3 | |||||
Foreign currency remeasurement and transaction exposure | 79 | 38 | ||||||
Changes in current assets and liabilities | ||||||||
Accounts and notes receivable | (135 | ) | (217 | ) | ||||
Inventories | (107 | ) | (259 | ) | ||||
Other current assets | 67 | 56 | ||||||
Accounts payable | 166 | 246 | ||||||
Accrued expenses | (293 | ) | (337 | ) | ||||
Changes in other liabilities | 64 | 27 | ||||||
Other, net | (145 | ) | (48 | ) | ||||
Net cash provided by (used in) operating activities | 412 | (117 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | (109 | ) | (72 | ) | ||||
Investments in internal use software | (20 | ) | (15 | ) | ||||
Investments in and advances to equity investees | (10 | ) | (16 | ) | ||||
Investments in marketable securities—acquisitions | (121 | ) | (67 | ) | ||||
Investments in marketable securities—liquidations | 103 | 82 | ||||||
Cash flows from derivatives not designated as hedges | 55 | 27 | ||||||
Other, net | 31 | 25 | ||||||
Net cash used in investing activities | (71 | ) | (36 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net (payments) borrowings of commercial paper | (71 | ) | 295 | |||||
Payments on borrowings and finance lease obligations | (10 | ) | (16 | ) | ||||
Distributions to noncontrolling interests | (13 | ) | (11 | ) | ||||
Dividend payments on common stock | (179 | ) | (178 | ) | ||||
Repurchases of common stock | (100 | ) | (163 | ) | ||||
Other, net | 26 | 21 | ||||||
Net cash used in financing activities | (347 | ) | (52 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 31 | 43 | ||||||
Net increase (decrease) in cash and cash equivalents | 25 | (162 | ) | |||||
Cash and cash equivalents at beginning of year | 1,303 | 1,369 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,328 | $ | 1,207 | ||||
(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. |
In millions | Engine | Distribution | Components | Power Systems | Electrified Power | Total Segments | Intersegment Eliminations (1) | Total | ||||||||||||||||||||||||||
Three months ended March 31, 2019 | ||||||||||||||||||||||||||||||||||
External sales | $ | 1,984 | $ | 1,993 | $ | 1,401 | $ | 623 | $ | 3 | $ | 6,004 | $ | — | $ | 6,004 | ||||||||||||||||||
Intersegment sales | 669 | 8 | 460 | 454 | — | 1,591 | (1,591 | ) | — | |||||||||||||||||||||||||
Total sales | 2,653 | 2,001 | 1,861 | 1,077 | 3 | 7,595 | (1,591 | ) | 6,004 | |||||||||||||||||||||||||
Research, development and engineering expenses | 78 | 7 | 75 | 56 | 21 | 237 | — | 237 | ||||||||||||||||||||||||||
Equity, royalty and interest income from investees | 56 | 11 | 10 | 15 | — | 92 | — | 92 | ||||||||||||||||||||||||||
Interest income | 4 | 4 | 2 | 2 | — | 12 | — | 12 | ||||||||||||||||||||||||||
Segment EBITDA | 438 | 171 | 325 | 138 | (29 | ) | 1,043 | (10 | ) | 1,033 | ||||||||||||||||||||||||
Depreciation and amortization (2) | 50 | 29 | 46 | 29 | 2 | 156 | — | 156 | ||||||||||||||||||||||||||
EBITDA as a percentage of total sales | 16.5 | % | 8.5 | % | 17.5 | % | 12.8 | % | NM | 13.7 | % | 17.2 | % | |||||||||||||||||||||
Three months ended April 1, 2018 | ||||||||||||||||||||||||||||||||||
External sales | $ | 1,813 | $ | 1,847 | $ | 1,313 | $ | 595 | $ | 2 | $ | 5,570 | $ | — | $ | 5,570 | ||||||||||||||||||
Intersegment sales | 633 | 6 | 440 | 479 | — | 1,558 | (1,558 | ) | — | |||||||||||||||||||||||||
Total sales | 2,446 | 1,853 | 1,753 | 1,074 | 2 | 7,128 | (1,558 | ) | 5,570 | |||||||||||||||||||||||||
Research, development and engineering expenses | 79 | 5 | 62 | 57 | 7 | 210 | — | 210 | ||||||||||||||||||||||||||
Equity, royalty and interest income from investees | 67 | 13 | 16 | 19 | — | 115 | — | 115 | ||||||||||||||||||||||||||
Interest income | 2 | 2 | 1 | 2 | — | 7 | — | 7 | ||||||||||||||||||||||||||
Segment EBITDA | 286 | 123 | 227 | 142 | (10 | ) | 768 | (68 | ) | 700 | ||||||||||||||||||||||||
Depreciation and amortization (2) | 49 | 27 | 46 | 30 | 1 | 153 | — | 153 | ||||||||||||||||||||||||||
EBITDA as a percentage of total sales | 11.7 | % | 6.6 | % | 12.9 | % | 13.2 | % | NM | 10.8 | % | 12.6 | % | |||||||||||||||||||||
"NM" - not meaningful information | ||||||||||||||||||||||||||||||||||
(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 March 31, 2019 and April 1, 2018. | ||||||||||||||||||||||||||||||||
(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 Net Income as "Interest expense." The amortization of debt discount and deferred costs was $1 million and $1 million for the three month periods ended March 31, 2019 and April 1, 2018. A portion of depreciation expense is included in "Research, development and engineering expense." |
Three months ended | ||||||||
In millions | March 31, 2019 | April 1, 2018 | ||||||
Total EBITDA | $ | 1,033 | $ | 700 | ||||
Less: | ||||||||
Depreciation and amortization | 156 | 153 | ||||||
Interest expense | 32 | 24 | ||||||
Income before income taxes | $ | 845 | $ | 523 |
Three months ended | ||||||||
In millions | March 31, 2019 | April 1, 2018 | ||||||
Manufacturing entities | ||||||||
Beijing Foton Cummins Engine Co., Ltd. | $ | 21 | $ | 21 | ||||
Dongfeng Cummins Engine Company, Ltd. | 14 | 17 | ||||||
Chongqing Cummins Engine Company, Ltd. | 12 | 17 | ||||||
All other manufacturers | 27 | 36 | ||||||
Distribution entities | ||||||||
Komatsu Cummins Chile, Ltda. | 6 | 7 | ||||||
All other distributors | (1 | ) | — | |||||
Cummins share of net income | 79 | 98 | ||||||
Royalty and interest income | 13 | 17 | ||||||
Equity, royalty and interest income from investees | $ | 92 | $ | 115 |
Three months ended | ||||||||
In millions | March 31, 2019 | April 1, 2018 | ||||||
Net income attributable to Cummins Inc. | $ | 663 | $ | 325 | ||||
Net income attributable to Cummins Inc. as a percentage of net sales | 11.0 | % | 5.8 | % | ||||
Add: | ||||||||
Net income attributable to noncontrolling interests | 6 | — | ||||||
Consolidated net income | 669 | 325 | ||||||
Add: | ||||||||
Interest expense | 32 | 24 | ||||||
Income tax expense | 176 | 198 | ||||||
Depreciation and amortization | 156 | 153 | ||||||
EBITDA | $ | 1,033 | $ | 700 | ||||
EBITDA as a percentage of net sales | 17.2 | % | 12.6 | % |
Three months ended | ||||||||||||||||||
March 31, 2019 | April 1, 2018 | |||||||||||||||||
In millions, except per share amounts | Net Income | Diluted EPS | Net Income | Diluted EPS | ||||||||||||||
Net income and diluted EPS attributable to Cummins Inc. | $ | 663 | $ | 4.20 | $ | 325 | $ | 1.96 | ||||||||||
Special discrete tax items (1) | — | — | 78 | 0.47 | ||||||||||||||
Net income and diluted EPS attributable to Cummins Inc. excluding special discrete tax items | $ | 663 | $ | 4.20 | $ | 403 | $ | 2.43 | ||||||||||
(1) | Our effective tax rate for the three months ended April 1, 2018, was 37.9 percent and contained $78 million, or $0.47 per share, of unfavorable discrete tax items, primarily related to a Tax Legislation adjustment of $74 million. This included $39 million associated with changes related to the Tax Legislation measurement period adjustment and $35 million associated with the one-time recognition of deferred tax charges at historical tax rates on intercompany profit in inventory. |
2019 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Heavy-duty truck | $ | 979 | $ | — | $ | — | $ | — | $ | 979 | ||||||||||
Medium-duty truck and bus | 721 | — | — | — | 721 | |||||||||||||||
Light-duty automotive | 382 | — | — | — | 382 | |||||||||||||||
Off-highway | 571 | — | — | — | 571 | |||||||||||||||
Total sales | $ | 2,653 | $ | — | $ | — | $ | — | $ | 2,653 | ||||||||||
2018 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Heavy-duty truck | $ | 815 | $ | 920 | $ | 958 | $ | 959 | $ | 3,652 | ||||||||||
Medium-duty truck and bus | 692 | 777 | 699 | 687 | 2,855 | |||||||||||||||
Light-duty automotive | 402 | 444 | 517 | 456 | 1,819 | |||||||||||||||
Off-highway | 537 | 555 | 552 | 596 | 2,240 | |||||||||||||||
Total sales | $ | 2,446 | $ | 2,696 | $ | 2,726 | $ | 2,698 | $ | 10,566 |
2019 | |||||||||||||||
Units | Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||
Heavy-duty | 33,900 | — | — | — | 33,900 | ||||||||||
Medium-duty | 79,000 | — | — | — | 79,000 | ||||||||||
Light-duty | 56,400 | — | — | — | 56,400 | ||||||||||
Total units | 169,300 | — | — | — | 169,300 | ||||||||||
2018 | |||||||||||||||
Units | Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||
Heavy-duty | 26,600 | 32,000 | 34,600 | 35,300 | 128,500 | ||||||||||
Medium-duty | 74,000 | 83,500 | 76,000 | 77,600 | 311,100 | ||||||||||
Light-duty | 61,900 | 68,500 | 76,800 | 66,200 | 273,400 | ||||||||||
Total units | 162,500 | 184,000 | 187,400 | 179,100 | 713,000 |
2019 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Parts | $ | 844 | $ | — | $ | — | $ | — | $ | 844 | ||||||||||
Power generation | 403 | — | — | — | 403 | |||||||||||||||
Engines | 391 | — | — | — | 391 | |||||||||||||||
Service | 363 | — | — | — | 363 | |||||||||||||||
Total sales | $ | 2,001 | $ | — | $ | — | $ | — | $ | 2,001 | ||||||||||
2018 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Parts | $ | 808 | $ | 817 | $ | 800 | $ | 809 | $ | 3,234 | ||||||||||
Power generation | 326 | 346 | 359 | 455 | 1,486 | |||||||||||||||
Engines | 367 | 461 | 400 | 406 | 1,634 | |||||||||||||||
Service | 352 | 370 | 372 | 380 | 1,474 | |||||||||||||||
Total sales | $ | 1,853 | $ | 1,994 | $ | 1,931 | $ | 2,050 | $ | 7,828 |
2019 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Emission solutions | $ | 854 | $ | — | $ | — | $ | — | $ | 854 | ||||||||||
Turbo technologies | 335 | — | — | — | 335 | |||||||||||||||
Filtration | 325 | — | — | — | 325 | |||||||||||||||
Electronics and fuel systems | 198 | — | — | — | 198 | |||||||||||||||
Automated transmissions | 149 | — | — | — | 149 | |||||||||||||||
Total sales | $ | 1,861 | $ | — | $ | — | $ | — | $ | 1,861 | ||||||||||
2018 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Emission solutions | $ | 775 | $ | 841 | $ | 769 | $ | 792 | $ | 3,177 | ||||||||||
Turbo technologies | 340 | 355 | 317 | 331 | 1,343 | |||||||||||||||
Filtration | 320 | 324 | 308 | 313 | 1,265 | |||||||||||||||
Electronics and fuel systems | 201 | 226 | 210 | 201 | 838 | |||||||||||||||
Automated transmissions | 117 | 141 | 150 | 135 | 543 | |||||||||||||||
Total sales | $ | 1,753 | $ | 1,887 | $ | 1,754 | $ | 1,772 | $ | 7,166 |
2019 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Power generation | $ | 567 | $ | — | $ | — | $ | — | $ | 567 | ||||||||||
Industrial | 420 | — | — | — | 420 | |||||||||||||||
Generator technologies | 90 | — | — | — | 90 | |||||||||||||||
Total sales | $ | 1,077 | $ | — | $ | — | $ | — | $ | 1,077 | ||||||||||
2018 | ||||||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||
Power generation | $ | 571 | $ | 666 | $ | 636 | $ | 713 | $ | 2,586 | ||||||||||
Industrial | 414 | 483 | 380 | 386 | 1,663 | |||||||||||||||
Generator technologies | 89 | 97 | 91 | 100 | 377 | |||||||||||||||
Total sales | $ | 1,074 | $ | 1,246 | $ | 1,107 | $ | 1,199 | $ | 4,626 |
2019 | |||||||||||||||
Units | Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||
Power generation | 2,100 | — | — | — | 2,100 | ||||||||||
Industrial | 1,600 | — | — | — | 1,600 | ||||||||||
Total units | 3,700 | — | — | — | 3,700 | ||||||||||
2018 | |||||||||||||||
Units | Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||
Power generation | 2,100 | 2,300 | 2,400 | 2,300 | 9,100 | ||||||||||
Industrial | 1,700 | 2,100 | 1,900 | 1,900 | 7,600 | ||||||||||
Total units | 3,800 | 4,400 | 4,300 | 4,200 | 16,700 |