Cummins Announces Second Quarter Results

  • Second quarter revenues of $6.2 billion; GAAP1 Net Income of $675 million
  • Second quarter EBITDA of 17.0 percent of sales; Diluted EPS of $4.27
  • Expects full year 2019 revenues to be flat, at the low end of our previous guidance
  • The company is maintaining its full year 2019 EBITDA guidance of 16.25 to 16.75 percent

COLUMBUS, Ind.–(BUSINESS WIRE)–Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2019.

Second quarter revenues of $6.2 billion increased 1 percent from the same quarter in 2018. Increased truck production in North America and stronger demand in North American power generation markets was partially offset by lower demand in oil and gas and international truck markets. Currency negatively impacted revenues by 2 percent primarily due to a stronger US dollar.

Second quarter sales in North America set a new record and improved by 7 percent while international revenues decreased by 6 percent. Sales in North America increased in all segments except Power Systems, which was negatively impacted by lower demand in oil and gas markets. International revenues declined primarily due to lower truck demand in China, Europe, Brazil, and India.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were a record $1.1 billion, or 17.0 percent of sales, compared to $897 million or 14.6 percent of sales a year ago. Net income attributable to Cummins in the second quarter was $675 million ($4.27 per diluted share), compared to net income of $545 million ($3.32 per diluted share).

“We achieved record revenues, EBITDA, and operating cash flow in the first half of 2019, extending our track record of raising performance cycle over cycle,” said Chairman and CEO Tom Linebarger. “While we do expect to see a moderation in demand in the second half of the year, our financial strength combined with our diversified geographic and end market exposure will enable us to generate strong profits, continue to invest in future growth, and return cash to shareholders.”

2019 Outlook:

Cummins now expects 2019 revenue to be flat, which places the forecast at the low end of our previous guidance range of flat to 4 percent. This lower outlook is driven by reduced truck demand in international markets, moderating parts demand in North America, and the impact of a stronger US dollar. The company continues to expect EBITDA to be in the range of 16.25 to 16.75 percent of sales and plans to return 75 percent of Operating Cash Flow to shareholders in the form of dividends and share repurchases.

Our outlook does not include any potential impact of the company’s review of its emission certification process and compliance with emissions standards or acquisition of Hydrogenics.

Second Quarter 2019 Highlights:

  • The Board of Directors approved a 15 percent increase in the Company’s quarterly cash dividend from $1.14 per share to $1.311 per share
  • Cummins entered into a definitive agreement to acquire the majority of shares of fuel cell systems provider Hydrogenics Corporation. The agreement is subject to customary closing conditions and Hydrogenics’ shareholder approval
  • Cummins and Gillig announced that the GILLIG zero-emission battery electric bus, powered by Cummins, is now available for commercial orders by customers

1

Generally Accepted Accounting Principles

Second quarter 2019 detail (all comparisons to same period in 2018)

Engine Segment

  • Sales – $2.7 billion, flat versus prior year
  • Segment EBITDA – $416 million, or 15.4 percent of sales, compared to $362 million or 13.4 percent of sales
  • On-highway revenues increased 2 percent and off-highway revenues decreased by 7 percent
  • North America revenues increased by 7 percent due to higher demand in on-highway markets while international revenues declined 15 percent primarily due to lower demand in China

Distribution Segment

  • Sales – $2.0 billion, up 2 percent
  • Segment EBITDA – $172 million, or 8.5 percent of sales, compared to $145 million or 7.3 percent of sales
  • Revenues in North America increased by 2 percent and international sales were flat
  • Strong demand for power generation equipment in North America, especially data centers, was partially offset by lower demand in oil and gas markets and the unfavorable impact from a stronger US dollar, which impacted sales by 2 percent

Components Segment

  • Sales – $1.8 billion, down 2 percent
  • Segment EBITDA – $297 million, or 16.1 percent of sales, compared to $237 million or 12.6 percent of sales
  • Revenues in North America increased by 5 percent due to higher heavy and medium-duty truck production while international sales declined by 12 percent due to lower demand in Europe, China, and India

Power Systems Segment

  • Sales – $1.2 billion, down 3 percent
  • Segment EBITDA – $173 million, or 14.4 percent of sales, compared to $186 million or 14.9 percent of sales
  • Industrial revenues decreased 11 percent due to lower demand in North America oil and gas and global mining markets while power generation revenues were flat

Electrified Power Segment

  • Sales – $8 million
  • Segment EBITDA loss – $33 million

About Cummins

Cummins Inc., a global technology leader, is a corporation of complementary business segments designing, manufacturing, distributing and servicing a broad portfolio of power solutions. The company’s products range from diesel and natural gas engines to hybrid and electric platforms, as well as related technologies, including transmissions, battery systems, fuel systems, controls, air handling, filtration, emission solutions, and electrical power generation systems. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 62,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations, and over 7,600 dealer locations. In 2018, the company earned about $2.1 billion on sales of $23.8 billion. See how Cummins is powering a world that’s Always On by accessing news releases and more information at https://www.cummins.com/always-on. Follow Cummins on Twitter at www.twitter.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 and EBITDA percentage for the full year of 2019. 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: any adverse results of our internal review into our emissions certification process and compliance with emissions standards; a sustained slowdown or significant downturn in our markets; changes in the engine outsourcing practices of significant customers; the development of new technologies that reduce demand for our current products and services; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emissions standards around the world; product recalls; policy changes in international trade; the United Kingdom’s (U.K.) decision to end its membership in the European Union; lower than expected acceptance of new or existing products or services; a slowdown in infrastructure development and/or depressed commodity prices; supply shortages and supplier financial risk, particularly from any of our single-sourced suppliers; exposure to potential security breaches or other disruptions to our information technology systems and data security; a major customer experiencing financial distress; the actions of, and income from, joint ventures and other investees that we do not directly control; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; failure to realize expected results from our investment in Eaton Cummins Automated Transmission Technologies joint venture; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; foreign currency exchange rate changes; variability in material and commodity costs; political, economic and other risks from operations in numerous countries; changes in taxation; global legal and ethical compliance costs and risks; aligning our capacity and production with our demand; product liability claims; increasingly stringent environmental laws and regulations; future bans or limitations on the use of diesel-powered products; the price and availability of energy; the performance of our pension plan assets and volatility of discount rates; labor relations; changes in accounting standards; our sales mix of products; protection and validity of our patent and other intellectual property rights; the outcome of pending and future litigation and governmental proceedings; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2018 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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 SEC, 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

EBITDA 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 EBITDA 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. ET. 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 NET INCOME

 

(Unaudited) (a)

 

 

Three months ended

In millions, except per share amounts

 

June 30,

2019

 

July 1,

2018

NET SALES

 

$

6,221

 

 

$

6,132

 

Cost of sales

 

4,580

 

 

4,692

 

GROSS MARGIN

 

1,641

 

 

1,440

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

629

 

 

613

 

Research, development and engineering expenses

 

251

 

 

219

 

Equity, royalty and interest income from investees

 

96

 

 

110

 

Other operating income (expense), net

 

(9

)

 

4

 

OPERATING INCOME

 

848

 

 

722

 

Interest income

 

12

 

 

10

 

Interest expense

 

29

 

 

28

 

Other income, net

 

40

 

 

11

 

INCOME BEFORE INCOME TAXES

 

871

 

 

715

 

Income tax expense

 

186

 

 

161

 

CONSOLIDATED NET INCOME

 

685

 

 

554

 

Less: Net income attributable to noncontrolling interests

 

10

 

 

9

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

675

 

 

$

545

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

4.29

 

 

$

3.33

 

Diluted

 

$

4.27

 

 

$

3.32

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

157.4

 

 

163.8

 

Diluted

 

158.0

 

 

164.3

 

(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 NET INCOME

(Unaudited) (a)

 

 

Six months ended

In millions, except per share amounts

 

June 30,

2019

 

July 1,

2018

NET SALES

 

$

12,225

 

 

$

11,702

 

Cost of sales

 

9,052

 

 

9,062

 

GROSS MARGIN

 

3,173

 

 

2,640

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

1,222

 

 

1,190

 

Research, development and engineering expenses

 

488

 

 

429

 

Equity, royalty and interest income from investees

 

188

 

 

225

 

Other operating income (expense), net

 

(4

)

 

6

 

OPERATING INCOME

 

1,647

 

 

1,252

 

Interest income

 

24

 

 

17

 

Interest expense

 

61

 

 

52

 

Other income, net

 

106

 

 

21

 

INCOME BEFORE INCOME TAXES

 

1,716

 

 

1,238

 

Income tax expense

 

362

 

 

359

 

CONSOLIDATED NET INCOME

 

1,354

 

 

879

 

Less: Net income attributable to noncontrolling interests

 

16

 

 

9

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

1,338

 

 

$

870

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

8.51

 

 

$

5.30

 

Diluted

 

$

8.47

 

 

$

5.27

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

157.3

 

 

164.3

 

Diluted

 

157.9

 

 

165.0

 

(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

 

June 30,

2019

 

December 31,

2018

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

1,397

 

 

$

1,303

 

Marketable securities

 

335

 

 

222

 

Total cash, cash equivalents and marketable securities

 

1,732

 

 

1,525

 

Accounts and notes receivable, net

 

4,179

 

 

3,866

 

Inventories

 

3,896

 

 

3,759

 

Prepaid expenses and other current assets

 

643

 

 

668

 

Total current assets

 

10,450

 

 

9,818

 

Long-term assets

 

 

 

 

Property, plant and equipment, net

 

4,077

 

 

4,096

 

Investments and advances related to equity method investees

 

1,274

 

 

1,222

 

Goodwill

 

1,125

 

 

1,126

 

Other intangible assets, net

 

901

 

 

909

 

Pension assets

 

960

 

 

929

 

Other assets

 

1,467

 

 

962

 

Total assets

 

$

20,254

 

 

$

19,062

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable (principally trade)

 

$

2,991

 

 

$

2,822

 

Loans payable

 

119

 

 

54

 

Commercial paper

 

434

 

 

780

 

Accrued compensation, benefits and retirement costs

 

465

 

 

679

 

Current portion of accrued product warranty

 

809

 

 

654

 

Current portion of deferred revenue

 

505

 

 

498

 

Other accrued expenses

 

920

 

 

852

 

Current maturities of long-term debt

 

46

 

 

45

 

Total current liabilities

 

6,289

 

 

6,384

 

Long-term liabilities

 

 

 

 

Long-term debt

 

1,624

 

 

1,597

 

Pensions and other postretirement benefits

 

522

 

 

532

 

Accrued product warranty

 

663

 

 

740

 

Deferred revenue

 

726

 

 

658

 

Other liabilities

 

1,234

 

 

892

 

Total liabilities

 

$

11,058

 

 

$

10,803

 

 

 

 

 

 

EQUITY

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued

 

$

2,307

 

 

$

2,271

 

Retained earnings

 

13,897

 

 

12,917

 

Treasury stock, at cost, 64.6 and 64.4 shares

 

(6,082

)

 

(6,028

)

Common stock held by employee benefits trust, at cost, 0.3 and 0.4 shares

 

(4

)

 

(5

)

Accumulated other comprehensive loss

 

(1,840

)

 

(1,807

)

Total Cummins Inc. shareholders’ equity

 

8,278

 

 

7,348

 

Noncontrolling interests

 

918

 

 

911

 

Total equity

 

$

9,196

 

 

$

8,259

 

Total liabilities and equity

 

$

20,254

 

 

$

19,062

 

 

 

 

 

 

(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)

 

Six months ended

In millions

 

June 30,

2019

 

July 1,

2018

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Consolidated net income

 

$

1,354

 

 

$

879

 

Adjustments to reconcile consolidated net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

315

 

 

308

 

Deferred income taxes

 

17

 

 

(21

)

Equity in income of investees, net of dividends

 

(43

)

 

(163

)

Pension contributions (in excess of) under expense, net

 

(45

)

 

25

 

Other postretirement benefits payments in excess of expense, net

 

(10

)

 

 

Stock-based compensation expense

 

28

 

 

28

 

Gain on corporate owned life insurance

 

(55

)

 

 

Foreign currency remeasurement and transaction exposure

 

46

 

 

(21

)

Changes in current assets and liabilities

 

 

 

 

Accounts and notes receivable

 

(312

)

 

(555

)

Inventories

 

(125

)

 

(475

)

Other current assets

 

15

 

 

(42

)

Accounts payable

 

148

 

 

442

 

Accrued expenses

 

(194

)

 

94

 

Changes in other liabilities

 

120

 

 

5

 

Other, net

 

(39

)

 

(31

)

Net cash provided by operating activities

 

1,220

 

 

473

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital expenditures

 

(242

)

 

(186

)

Investments in internal use software

 

(34

)

 

(35

)

Investments in and advances to equity investees

 

(18

)

 

(15

)

Investments in marketable securities—acquisitions

 

(259

)

 

(143

)

Investments in marketable securities—liquidations

 

153

 

 

116

 

Cash flows from derivatives not designated as hedges

 

(26

)

 

(9

)

Other, net

 

15

 

 

36

 

Net cash used in investing activities

 

(411

)

 

(236

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net (payments) borrowings of commercial paper

 

(346

)

 

504

 

Payments on borrowings and finance lease obligations

 

(17

)

 

(33

)

Net borrowings (payments) under short-term credit agreements

 

57

 

 

(1

)

Distributions to noncontrolling interests

 

(13

)

 

(11

)

Dividend payments on common stock

 

(358

)

 

(355

)

Repurchases of common stock

 

(100

)

 

(379

)

Other, net

 

66

 

 

22

 

Net cash used in financing activities

 

(711

)

 

(253

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(4

)

 

(35

)

Net increase (decrease) in cash and cash equivalents

 

94

 

 

(51

)

Cash and cash equivalents at beginning of year

 

1,303

 

 

1,369

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

1,397

 

 

$

1,318

 

 

 

 

 

 

(a)

Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

In millions

 

Engine

 

Distribution

 

Components

 

Power Systems

 

Electrified

Power

 

Total Segments

 

Intersegment

Eliminations (1)

 

Total

 

Three months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

2,073

 

 

$

2,015

 

 

$

1,401

 

 

$

724

 

 

$

8

 

 

$

6,221

 

 

$

 

 

$

6,221

 

 

Intersegment sales

 

630

 

 

13

 

 

445

 

 

479

 

 

 

 

1,567

 

 

(1,567

)

 

 

 

Total sales

 

2,703

 

 

2,028

 

 

1,846

 

 

1,203

 

 

8

 

 

7,788

 

 

(1,567

)

 

6,221

 

 

Research, development and engineering expenses

 

88

 

 

7

 

 

75

 

 

57

 

 

24

 

 

251

 

 

 

 

251

 

 

Equity, royalty and interest income from investees

 

62

 

 

12

 

 

11

 

 

11

 

 

 

 

96

 

 

 

 

96

 

 

Interest income

 

4

 

 

4

 

 

2

 

 

2

 

 

 

 

12

 

 

 

 

12

 

 

Segment EBITDA

 

416

 

 

172

 

 

297

 

 

173

 

 

(33

)

 

1,025

 

 

33

 

 

1,058

 

 

Depreciation and amortization (2)

 

51

 

 

28

 

 

47

 

 

30

 

 

2

 

 

158

 

 

 

 

158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

15.4

%

 

8.5

%

 

16.1

%

 

14.4

%

 

NM

 

13.2

%

 

 

 

17.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended July 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

2,050

 

 

$

1,988

 

 

$

1,402

 

 

$

691

 

 

$

1

 

 

$

6,132

 

 

$

 

 

$

6,132

 

 

Intersegment sales

 

646

 

 

6

 

 

485

 

 

555

 

 

 

 

1,692

 

 

(1,692

)

 

 

 

Total sales

 

2,696

 

 

1,994

 

 

1,887

 

 

1,246

 

 

1

 

 

7,824

 

 

(1,692

)

 

6,132

 

 

Research, development and engineering expenses

 

76

 

 

5

 

 

62

 

 

60

 

 

16

 

 

219

 

 

 

 

219

 

 

Equity, royalty and interest income from investees

 

67

 

 

11

 

 

14

 

 

18

 

 

 

 

110

 

 

 

 

110

 

 

Interest income

 

3

 

 

3

 

 

2

 

 

2

 

 

 

 

10

 

 

 

 

10

 

 

Segment EBITDA

 

362

 

 

145

 

 

237

 

 

186

 

 

(21

)

 

909

 

 

(12

)

 

897

 

 

Depreciation and amortization (2)

 

47

 

 

27

 

 

47

 

 

32

 

 

1

 

 

154

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

13.4

%

 

7.3

%

 

12.6

%

 

14.9

%

 

NM

 

11.6

%

 

 

 

14.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“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 June 30, 2019 and July 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.” A portion of depreciation expense is included in “Research, development and engineering expense.”

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

 

Engine

 

Distribution

 

Components

 

Power Systems

 

Electrified

Power

 

Total Segments

 

Intersegment

Eliminations (1)

 

Total

 

Six months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

4,057

 

 

$

4,008

 

 

$

2,802

 

 

$

1,347

 

 

$

11

 

 

$

12,225

 

 

$

 

 

$

12,225

 

 

Intersegment sales

 

1,299

 

 

21

 

 

905

 

 

933

 

 

 

 

3,158

 

 

(3,158

)

 

 

 

Total sales

 

5,356

 

 

4,029

 

 

3,707

 

 

2,280

 

 

11

 

 

15,383

 

 

(3,158

)

 

12,225

 

 

Research, development and engineering expenses

 

166

 

 

14

 

 

150

 

 

113

 

 

45

 

 

488

 

 

 

 

488

 

 

Equity, royalty and interest income from investees

 

118

 

 

23

 

 

21

 

 

26

 

 

 

 

188

 

 

 

 

188

 

 

Interest income

 

8

 

 

8

 

 

4

 

 

4

 

 

 

 

24

 

 

 

 

24

 

 

Segment EBITDA

 

854

 

 

343

 

 

622

 

 

311

 

 

(62

)

 

2,068

 

 

23

 

 

2,091

 

 

Depreciation and amortization (2)

 

101

 

 

57

 

 

93

 

 

59

 

 

4

 

 

314

 

 

 

 

314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

15.9

%

 

8.5

%

 

16.8

%

 

13.6

%

 

NM

 

13.4

%

 

 

 

17.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended July 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

3,863

 

 

$

3,835

 

 

$

2,715

 

 

$

1,286

 

 

$

3

 

 

$

11,702

 

 

$

 

 

$

11,702

 

 

Intersegment sales

 

1,279

 

 

12

 

 

925

 

 

1,034

 

 

 

 

3,250

 

 

(3,250

)

 

 

 

Total sales

 

5,142

 

 

3,847

 

 

3,640

 

 

2,320

 

 

3

 

 

14,952

 

 

(3,250

)

 

11,702

 

 

Research, development and engineering expenses

 

155

 

 

10

 

 

124

 

 

117

 

 

23

 

 

429

 

 

 

 

429

 

 

Equity, royalty and interest income from investees

 

134

 

 

24

 

 

30

 

 

37

 

 

 

 

225

 

 

 

 

225

 

 

Interest income

 

5

 

 

5

 

 

3

 

 

4

 

 

 

 

17

 

 

 

 

17

 

 

Segment EBITDA

 

648

 

 

268

 

 

464

 

 

328

 

 

(31

)

 

1,677

 

 

(80

)

 

1,597

 

 

Depreciation and amortization (2)

 

96

 

 

54

 

 

93

 

 

62

 

 

2

 

 

307

 

 

 

 

307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of total sales

 

12.6

%

 

7.0

%

 

12.7

%

 

14.1

%

 

NM

 

11.2

%

 

 

 

13.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“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 six months ended June 30, 2019 and July 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 Income as “Interest expense.” The amortization of debt discount and deferred costs was $1 million and $1 million for the six months ended June 30, 2019 and July 1, 2018, respectively. A portion of depreciation expense is included in “Research, development and engineering expense.”

CUMMINS INC. AND SUBSIDIARIES

RECONCILIATION OF SEGMENT INFORMATION

(Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:

 

 

Three months ended

 

Six months ended

In millions

 

June 30,

2019

 

July 1,

2018

 

June 30,

2019

 

July 1,

2018

Total EBITDA

 

$

1,058

 

 

$

897

 

 

$

2,091

 

 

$

1,597

 

Less:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

158

 

 

154

 

 

314

 

 

307

 

Interest expense

 

29

 

 

28

 

 

61

 

 

52

 

Income before income taxes

 

$

871

 

 

$

715

 

 

$

1,716

 

 

$

1,238

 

Contacts

Jon Mills

Director – External Communications

(317) 658-4540

jon.mills@cummins.com

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