- Second quarter revenues of $6.1 billion; GAAP1 Net Income of
$600 million.
- Second quarter EBITDA of 15.9 percent; Diluted EPS of
$4.10.
- The company is maintaining its full year 2021 revenue
guidance to be up 20 to 24 percent.
- EBITDA is expected to be in the range of 15.5 to 16.0
percent; consistent with prior guidance.
- Cummins is also announcing the exploration of strategic
alternatives for its filtration business. Potential strategic
alternatives to be explored include the separation of the Cummins
Filtration business unit into a stand-alone company.
Cummins Inc. (NYSE: CMI) today reported results for the second
quarter of 2021.
Second quarter revenues of $6.1 billion increased 59 percent
from the same quarter in 2020. Sales in North America increased 74
percent while international revenues increased 42 percent driven by
strong demand across all global markets compared to the same
quarter in 2020, which was impacted significantly by the pandemic.
Currency positively impacted sales by 3 percent primarily due to a
weaker US dollar.
“Strong demand across many of our key markets drove continued
sales growth in the second quarter, particularly in North America,
and resulted in solid profitability,” said Chairman and CEO Tom
Linebarger. “The strength of the order board reflects robust
underlying demand in many of our markets which is remarkable
considering the challenges and uncertainty we faced during this
same period last year. I cannot thank our employees and the
employees of our supply base enough for their unwavering
contributions during these challenging times given the significant
supply chain constraints we continue to experience in our
industry.”
Earnings before interest, taxes, depreciation and amortization
(EBITDA) in the second quarter were $974 million (15.9 percent of
sales), compared to $549 million (14.3 percent of sales) a year
ago.
Net income attributable to Cummins in the second quarter was
$600 million ($4.10 per diluted share) compared to $276 million
($1.86 per diluted share) in 2020. The tax rate in the second
quarter was 21.4 percent including $7 million, or $0.05 per share,
of unfavorable discrete items.
Cummins is also announcing today its exploration of strategic
alternatives for its Filtration business unit. Potential strategic
alternatives to be explored include the separation of the business
into a stand-alone company.
Cummins Filtration, founded by Cummins in 1958, is a recognized
leader in the filtration space, with a strong technological base of
expertise and patents. Cummins Filtration has grown consistently,
and as an independent company, would have the opportunity to
accelerate growth as it further diversifies into new products and
end markets. Cummins Filtration is a premier filtration platform
with a broad portfolio of products for use in on-highway, heavy,
medium, and light-duty trucks, off -highway industrial equipment,
and power generation systems. The business benefits from a large
installed base with comprehensive aftermarket coverage driving
recurring revenue and cash flow visibility; and has a leading
global footprint across many key regions; including North America,
India, and China. Cummins Filtration is well-positioned for
continued growth, sustained margin performance, and strong free
cash flow generation. In 2020, the business had sales of
approximately $1.2 billion.
The Cummins Board, along with management, believes a separation
could realize value for Cummins and its stakeholders by, among
other things, unlocking value for shareholders, enabling further
enhanced focus on key strategic initiatives and empowering
continued innovation in core and new technologies to power a more
prosperous world. The Cummins Board and management also believe
that a separation could simultaneously result in material benefits
for Cummins Filtration, including:
- Sharpened strategic focus
- Increased operating flexibility and resources to capitalize on
growth opportunities
- Tailored capital allocation focused solely on Cummins
Filtration’s growth and value creation strategy
- Enhanced value for Cummins Filtration’s employees, customers,
and other stakeholders
Chairman and CEO Tom Linebarger stated, “Cummins Filtration is a
technology leader with global presence and significant runway for
continued growth. We expect that the strategic alternatives we are
considering will result in enhanced value for our stakeholders, and
position Cummins Filtration to take advantage of enhanced
opportunities to invest in organic and inorganic growth.”
The execution of this exploration process is dependent upon
business and market conditions, along with a number of other
factors and considerations.
2021 Outlook:
Based on the current forecast, Cummins maintains its full year
2021 revenue guidance of up 20 to 24 percent versus last year.
EBITDA is expected to be in the range of 15.5 to 16.0 percent and
the Company expects to return 75 percent of Operating Cash Flow to
shareholders in 2021 in the form of dividends and share
repurchases.
Any expenses outside of the normal course of business associated
with the evaluation of strategic alternatives for the Filtration
business have been excluded from the outlook provided.
Second Quarter 2021 Highlights:
- The company released the 18th annual Sustainability Progress
report, highlighting the performance versus Cummins’ 2020
environmental goals and continued pursuit of carbon neutrality
through the PLANET 2050 environmental sustainability strategy. For
the first time, the report includes the racial and ethnic makeup of
Cummins’ U.S. workforce. The company also posted its first report
aligned to the Taskforce on Climate-Related Financial
Disclosures.
- Cummins and Iberdrola announced an agreement to partner
together to accelerate the growth of business opportunities in the
electrolyzer market of Iberia, promoting the green hydrogen value
chain. The alliance helps to position Cummins as a leading supplier
of electrolyzer systems for large-scale projects in Iberia and
Iberdrola as a leading developer of electrolyzer projects and
hydrogen supplier to final industrial customers. In addition to the
commercial partnership, Cummins announced plans for one of the
world’s largest electrolyzer plants, which is scalable to more than
1GW per year, and will be located in Castilla-La Mancha,
Spain.
- Cummins has signed a Letter of Intent for Cummins to acquire a
50% equity interest in Momentum Fuel Technologies from Rush
Enterprises. The joint venture between Rush Enterprises and Cummins
will produce Cummins-branded natural gas fuel delivery systems for
the commercial vehicle market in North America, combining the
strengths of Momentum Fuel Technologies’ compressed natural gas
(CNG) fuel delivery systems, Cummins’ powertrain expertise, and the
engineering and support infrastructure of both companies.
- The Company began testing of a hydrogen-fuel internal
combustion engine, taking another step forward in advancing zero
carbon technology. The proof-of-concept test is building on
Cummins’ existing technology leadership in gaseous-fuel
applications and powertrain leadership to create new power
solutions that help customers meet the energy and environmental
needs of the future.
- Carla Harris was named to the Board of Directors, bringing over
30 years of experience in investment banking, equity capital
markets, equity private placements, and initial public offerings.
Ms. Harris brings both the current number of women and the current
number of ethnically diverse people on the board to five.
- In May, Cummins was named to the 2021 Best Corporate Citizen
list, which ranks companies on their performance in addressing
climate change, the environment, financial matters, governance,
human rights, stakeholders and society, workforce issues and
more.
1 Generally Accepted Accounting Principles in the U.S.
Second quarter 2021 detail (all comparisons to same period in
2020):
Engine Segment
- Sales - $2.5 billion, up 75 percent
- Segment EBITDA - $402 million, or 16.1 percent of sales,
compared to $150 million or 10.5 percent of sales
- On-highway revenues increased 104 percent driven by strong
demand in the North American truck and pickup markets and
off-highway revenues increased 10 percent driven by strong demand
in international construction markets
- Sales increased 104 percent in North America and 26 percent in
international markets
Distribution Segment
- Sales - $1.9 billion, up 20 percent
- Segment EBITDA - $201 million, or 10.5 percent of sales,
compared to $160 million or 10.0 percent of sales
- Revenues in North America increased 18 percent and
international sales increased by 22 percent
- Demand increased across the power generation and engine markets
in addition to parts and service compared to last year which was
impacted significantly by the pandemic.
Components Segment
- Sales - $2.0billion, up 73 percent
- Segment EBITDA - $301 million, or 15.1 percent of sales,
compared to $141 million or 12.3 percent of sales
- Revenues in North America increased by 108 percent and
international sales increased by 46 percent
Power Systems Segment
- Sales - $1.1 billion, up 47 percent
- Segment EBITDA - $139 million, or 12.2 percent of sales,
compared to $91 million, or 11.7 percent of sales
- Power generation revenues increased by 54 percent driven by
growth in recreational vehicle and datacenter markets while
industrial revenues increased 37 percent due to stronger demand in
mining markets
New Power Segment
- Sales - $24 million, up 140 percent
- Segment EBITDA loss - $60 million
- Revenues increased due to greater demand in transit and school
bus markets in addition to the shipments of fuel cell systems to
the rail market. Electrolyzer revenue decreased driven by timing of
commissioning of projects.
- Costs associated with the development of fuel cells and
electrolyzers as well as products to support battery electric
vehicles are contributing to EBITDA losses
About Cummins Inc.
Cummins Inc., a global power leader, is a corporation of
complementary business segments that design, manufacture,
distribute and service a broad portfolio of power solutions. The
company’s products range from diesel, natural gas, electric and
hybrid powertrains and powertrain-related components including
filtration, aftertreatment, turbochargers, fuel systems, controls
systems, air handling systems, automated transmissions, electric
power generation systems, batteries, electrified power systems,
hydrogen generation and fuel cell products. Headquartered in
Columbus, Indiana (U.S.), since its founding in 1919, Cummins
employs approximately 57,825 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 its customers online,
through a network of company-owned and independent distributor
locations, and through thousands of dealer locations worldwide and
earned about $1.8 billion on sales of $19.8 billion in 2020. To
learn more about Cummins visit cummins.com.
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. 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 emission standards;
increased scrutiny from regulatory agencies, as well as
unpredictability in the adoption, implementation and enforcement of
emission standards around the world; policy changes in
international trade; the U.K.'s exit from the European Union;
changes in taxation; global legal and ethical compliance costs and
risks; increasingly stringent environmental laws and regulations;
future bans or limitations on the use of diesel-powered products;
supply shortages and supplier financial risk, particularly from any
of our single-sourced suppliers, including suppliers that may be
impacted by the COVID-19 pandemic; market slowdown due to the
impacts from the COVID-19 pandemic, other public health crises,
epidemics or pandemics; impacts to manufacturing and supply chain
abilities from an extended shutdown or disruption of our operations
due to the COVID-19 pandemic; aligning our capacity and production
with our demand, including impacts of COVID-19; large truck
manufacturers and original equipment manufacturers customers
discontinuing outsourcing their engine supply needs or experiencing
financial distress, particularly related to the COVID-19 pandemic,
bankruptcy or change in control; a slowdown in infrastructure
development and/or depressed commodity prices; failure to realize
expected results from our investment in Eaton Cummins Automated
Transmission Technologies joint venture; the actions of, and income
from, joint ventures and other investees that we do not directly
control; product recalls; the development of new technologies that
reduce demand for our current products and services; lower than
expected acceptance of new or existing products or services;
variability in material and commodity costs; product liability
claims; our sales mix of products; protection and validity of our
patent and other intellectual property rights; disruptions in
global credit and financial markets as the result of the COVID-19
pandemic; labor relations or work stoppages; reliance on our
executive leadership team and other key personnel; climate change
and global warming; our plan to reposition our portfolio of product
offerings through exploration of strategic acquisitions and
divestitures and related uncertainties of entering such
transactions; exposure to potential security breaches or other
disruptions to our information technology systems and data
security; political, economic and other risks from operations in
numerous countries; competitor activity; increasing competition,
including increased global competition among our customers in
emerging markets; foreign currency exchange rate changes; the
performance of our pension plan assets and volatility of discount
rates, particularly those related to the sustained slowdown of the
global economy due to the COVID-19 pandemic; the price and
availability of energy; 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 2020 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. 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 NET INCOME
(Unaudited) (a)
Three months ended
In millions, except per share
amounts
July 4, 2021
June 28, 2020
NET SALES
$
6,111
$
3,852
Cost of sales
4,633
2,962
GROSS MARGIN
1,478
890
OPERATING EXPENSES AND INCOME
Selling, general and administrative
expenses
600
470
Research, development and engineering
expenses
276
189
Equity, royalty and interest income from
investees
137
115
Other operating expense, net
(4)
(10)
OPERATING INCOME
735
336
Interest expense
29
23
Other income, net
73
49
INCOME BEFORE INCOME TAXES
779
362
Income tax expense
167
93
CONSOLIDATED NET INCOME
612
269
Less: Net income (loss) attributable to
noncontrolling interests
12
(7)
NET INCOME ATTRIBUTABLE TO CUMMINS
INC.
$
600
$
276
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO CUMMINS INC.
Basic
$
4.14
$
1.87
Diluted
$
4.10
$
1.86
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING
Basic
145.1
147.6
Diluted
146.5
148.0
(a) Prepared on an unaudited basis in
accordance with accounting principles generally accepted in the
United States of America.
Six months ended
In millions, except per share
amounts
July 4, 2021
June 28, 2020
NET SALES
$
12,203
$
8,863
Cost of sales
9,239
6,679
GROSS MARGIN
2,964
2,184
OPERATING EXPENSES AND INCOME
Selling, general and administrative
expenses
1,174
1,016
Research, development and engineering
expenses
536
427
Equity, royalty and interest income from
investees
303
244
Other operating expense, net
(12)
(15)
OPERATING INCOME
1,545
970
Interest expense
57
46
Other income, net
74
93
INCOME BEFORE INCOME TAXES
1,562
1,017
Income tax expense
339
220
CONSOLIDATED NET INCOME
1,223
797
Less: Net income attributable to
noncontrolling interests
20
10
NET INCOME ATTRIBUTABLE TO CUMMINS
INC.
$
1,203
$
787
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO CUMMINS INC.
Basic
$
8.24
$
5.30
Diluted
$
8.16
$
5.29
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING
Basic
146.0
148.4
Diluted
147.4
148.8
(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
July 4, 2021
December 31, 2020
ASSETS
Current assets
Cash and cash equivalents
$
2,481
$
3,401
Marketable securities
438
461
Total cash, cash equivalents and
marketable securities
2,919
3,862
Accounts and notes receivable, net
4,132
3,820
Inventories
4,076
3,425
Prepaid expenses and other current
assets
804
790
Total current assets
11,931
11,897
Long-term assets
Property, plant and equipment, net
4,174
4,255
Investments and advances related to equity
method investees
1,494
1,441
Goodwill
1,291
1,293
Other intangible assets, net
942
963
Pension assets
1,096
1,042
Other assets
1,680
1,733
Total assets
$
22,608
$
22,624
LIABILITIES
Current liabilities
Accounts payable (principally trade)
$
3,172
$
2,820
Loans payable
54
169
Commercial paper
200
323
Accrued compensation, benefits and
retirement costs
569
484
Current portion of accrued product
warranty
661
674
Current portion of deferred revenue
805
691
Other accrued expenses
1,086
1,112
Current maturities of long-term debt
57
62
Total current liabilities
6,604
6,335
Long-term liabilities
Long-term debt
3,620
3,610
Pensions and other postretirement
benefits
617
630
Accrued product warranty
674
672
Deferred revenue
828
840
Other liabilities
1,472
1,548
Total liabilities
$
13,815
$
13,635
EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares
authorized, 222.5 and 222.4 shares issued
$
2,405
$
2,404
Retained earnings
16,228
15,419
Treasury stock, at cost, 78.8 and 74.8
shares
(8,838)
(7,779)
Accumulated other comprehensive loss
(1,929)
(1,982)
Total Cummins Inc. shareholders’
equity
7,866
8,062
Noncontrolling interests
927
927
Total equity
$
8,793
$
8,989
Total liabilities and equity
$
22,608
$
22,624
(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)
Three months ended
In millions
July 4, 2021
June 28, 2020
CASH FLOWS FROM OPERATING
ACTIVITIES
Consolidated net income
$
612
$
269
Adjustments to reconcile consolidated net
income to net cash provided by (used in) operating activities
Depreciation and amortization
167
165
Deferred income taxes
9
—
Equity in income of investees, net of
dividends
22
(46)
Pension and OPEB expense
21
27
Pension contributions and OPEB
payments
(17)
(22)
Share-based compensation expense
10
8
Restructuring payments
(1)
(33)
Gain on corporate owned life insurance
(20)
(21)
Foreign currency remeasurement and
transaction exposure
9
(5)
Changes in current assets and
liabilities
Accounts and notes receivable
43
63
Inventories
(292)
(53)
Other current assets
6
16
Accounts payable
(88)
(391)
Accrued expenses
193
(101)
Changes in other liabilities
(34)
171
Other, net
(24)
(69)
Net cash provided by (used in) operating
activities
616
(22)
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures
(125)
(77)
Investments in internal use software
(11)
(13)
Proceeds from sale of land
20
—
Investments in and advances to equity
investees
34
(10)
Investments in marketable
securities—acquisitions
(219)
(169)
Investments in marketable
securities—liquidations
174
159
Cash flows from derivatives not designated
as hedges
(2)
(28)
Other, net
8
3
Net cash used in investing activities
(121)
(135)
CASH FLOWS FROM FINANCING
ACTIVITIES
Net (payments) borrowings of commercial
paper
(117)
410
Payments on borrowings and finance lease
obligations
(17)
(15)
Net payments under short-term credit
agreements
—
(21)
Dividend payments on common stock
(197)
(193)
Repurchases of common stock
(672)
—
Proceeds from issuing common stock
8
19
Other, net
18
26
Net cash (used in) provided by financing
activities
(977)
226
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
5
(9)
Net (decrease) increase in cash and cash
equivalents
(477)
60
Cash and cash equivalents at beginning of
period
2,958
1,691
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
2,481
$
1,751
(a) Prepared on an unaudited basis in
accordance with accounting principles generally accepted in the
United States of America.
Six months ended
In millions
July 4, 2021
June 28, 2020
CASH FLOWS FROM OPERATING
ACTIVITIES
Consolidated net income
$
1,223
$
797
Adjustments to reconcile consolidated net
income to net cash provided by operating activities
Depreciation and amortization
337
333
Deferred income taxes
17
(11)
Equity in income of investees, net of
dividends
(114)
(124)
Pension and OPEB expense
41
54
Pension contributions and OPEB
payments
(68)
(82)
Share-based compensation expense
18
12
Restructuring payments
(1)
(81)
Loss (gain) on corporate owned life
insurance
12
(38)
Foreign currency remeasurement and
transaction exposure
10
(2)
Changes in current assets and
liabilities
Accounts and notes receivable
(331)
170
Inventories
(628)
(224)
Other current assets
(18)
95
Accounts payable
377
(220)
Accrued expenses
169
(422)
Changes in other liabilities
(34)
199
Other, net
(55)
(99)
Net cash provided by operating
activities
955
357
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures
(212)
(152)
Investments in internal use software
(22)
(21)
Proceeds from sale of land
20
—
Investments in and advances to equity
investees
10
(17)
Investments in marketable
securities—acquisitions
(362)
(285)
Investments in marketable
securities—liquidations
381
254
Cash flows from derivatives not designated
as hedges
12
(22)
Other, net
27
9
Net cash used in investing activities
(146)
(234)
CASH FLOWS FROM FINANCING
ACTIVITIES
Net (payments) borrowings of commercial
paper
(123)
1,367
Payments on borrowings and finance lease
obligations
(33)
(25)
Net (payments) borrowings under short-term
credit agreements
(102)
4
Distributions to noncontrolling
interests
(13)
(13)
Dividend payments on common stock
(394)
(388)
Repurchases of common stock
(1,090)
(550)
Proceeds from issuing common stock
26
32
Other, net
7
33
Net cash (used in) provided by financing
activities
(1,722)
460
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
(7)
39
Net (decrease) increase in cash and cash
equivalents
(920)
622
Cash and cash equivalents at beginning of
year
3,401
1,129
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
2,481
$
1,751
(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
New Power
Total Segments
Intersegment Eliminations
(1)
Total
Three months ended July 4, 2021
External sales
$
1,920
$
1,913
$
1,556
$
699
$
23
$
6,111
$
—
$
6,111
Intersegment sales
571
7
438
444
1
1,461
(1,461)
—
Total sales
2,491
1,920
1,994
1,143
24
7,572
(1,461)
6,111
Research, development and engineering
expenses
99
12
79
60
26
276
—
276
Equity, royalty and interest income (loss)
from investees
104
15
12
9
(3)
137
—
137
Interest income
1
2
1
1
—
5
—
5
EBITDA (2)
402
201
301
139
(60)
983
(9)
974
Depreciation and amortization (3)
50
30
46
33
7
166
—
166
EBITDA as a percentage of segment
sales
16.1
%
10.5
%
15.1
%
12.2
%
NM
13.0
%
15.9
%
Three months ended June 28,
2020
External sales
$
937
$
1,601
$
876
$
428
$
10
$
3,852
$
—
$
3,852
Intersegment sales
486
4
274
349
—
1,113
(1,113)
—
Total sales
1,423
1,605
1,150
777
10
4,965
(1,113)
3,852
Research, development and engineering
expenses
65
4
55
41
24
189
—
189
Equity, royalty and interest income (loss)
from investees
84
11
12
9
(1)
115
—
115
Interest income
1
1
1
1
—
4
—
4
EBITDA (2)
150
160
141
91
(38)
504
45
549
Depreciation and amortization (3)
51
30
47
32
4
164
—
164
EBITDA as a percentage of segment
sales
10.5
%
10.0
%
12.3
%
11.7
%
NM
10.2
%
14.3
%
"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 July 4, 2021 and June 28,
2020.
(2) EBITDA is defined as earnings or
losses before interest expense, income taxes, depreciation and
amortization and noncontrolling interests.
(3) 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 expenses."
In millions
Engine
Distribution
Components
Power Systems
New Power
Total Segments
Intersegment Eliminations
(1)
Total
Six months ended July 4, 2021
External sales
$
3,815
$
3,740
$
3,280
$
1,311
$
57
$
12,203
$
—
$
12,203
Intersegment sales
1,135
15
866
854
2
2,872
(2,872)
—
Total sales
4,950
3,755
4,146
2,165
59
15,075
(2,872)
12,203
Research, development and engineering
expenses
191
25
154
117
49
536
—
536
Equity, royalty and interest income from
investees
217
32
31
21
2
303
—
303
Interest income
4
3
2
2
—
11
—
11
EBITDA (2)
756
361
722
265
(111)
1,993
(39)
1,954
Depreciation and amortization (3)
101
60
94
68
12
335
—
335
EBITDA as a percentage of total sales
15.3
%
9.6
%
17.4
%
12.2
%
NM
13.2
%
16.0
%
Six months ended June 28, 2020
External sales
$
2,516
$
3,408
$
1,991
$
928
$
20
$
8,863
$
—
$
8,863
Intersegment sales
1,065
11
661
733
—
2,470
(2,470)
—
Total sales
3,581
3,419
2,652
1,661
20
11,333
(2,470)
8,863
Research, development and engineering
expenses
145
11
123
95
53
427
—
427
Equity, royalty and interest income (loss)
from investees
162
32
33
18
(1)
244
—
244
Interest income
5
2
2
2
—
11
—
11
EBITDA (2)
515
318
420
168
(81)
1,340
55
1,395
Depreciation and amortization (3)
104
61
95
64
8
332
—
332
EBITDA as a percentage of total sales
14.4
%
9.3
%
15.8
%
10.1
%
NM
11.8
%
15.7
%
"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 July 4, 2021 and June 28,
2020.
(2) EBITDA is defined as earnings or
losses before interest expense, income taxes, depreciation and
amortization and noncontrolling interests.
(3) 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 $2 million and $1 million for
the six months ended July 4, 2021 and June 28, 2020, respectively.
A portion of depreciation expense is included in "Research,
development and engineering expenses."
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
July 4, 2021
June 28, 2020
July 4, 2021
June 28, 2020
EBITDA
$
974
$
549
$
1,954
$
1,395
Less:
Interest expense
29
23
57
46
Depreciation and amortization
166
164
335
332
INCOME BEFORE INCOME TAXES
779
362
1,562
1,017
Less: Income tax expense
167
93
339
220
CONSOLIDATED NET INCOME
612
269
1,223
797
Less: Net income (loss) attributable to
noncontrolling interests
12
(7)
20
10
NET INCOME ATTRIBUTABLE TO CUMMINS
INC.
$
600
$
276
$
1,203
$
787
CUMMINS INC. AND SUBSIDIARIES SELECT
FOOTNOTE DATA (Unaudited)
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES
Equity, royalty and interest income from investees included in
our Condensed Consolidated Statements of Net Income for the
reporting periods was as follows:
Three months ended
Six months ended
In millions
July 4, 2021
June 28, 2020
July 4, 2021
June 28, 2020
Manufacturing entities
Beijing Foton Cummins Engine Co., Ltd.
$
46
$
34
$
85
$
51
Dongfeng Cummins Engine Company, Ltd.
21
26
52
34
Chongqing Cummins Engine Company, Ltd.
10
11
20
20
All other manufacturers
29
23
90
78
(1)
Distribution entities
Komatsu Cummins Chile, Ltda.
9
7
15
17
All other distributors
1
—
4
—
Cummins share of net income
116
101
266
200
Royalty and interest income
21
14
37
44
Equity, royalty and interest income from
investees
$
137
$
115
$
303
$
244
(1) Includes $37 million in favorable
adjustments related to tax changes within India's 2020-2021 Union
Budget of India (India Tax Law Changes) passed in March 2020.
INCOME TAXES
Our effective tax rate for 2021 is expected to approximate 21.5
percent (lowered one percentage point), excluding any discrete
items that may arise.
Our effective tax rates for the three and six months ended July
4, 2021, were 21.4 percent and 21.7 percent, respectively.
The three months ended July 4, 2021, contained unfavorable
discrete items of $7 million or $0.05 per share, primarily due to a
$10 million unfavorable statutory change in tax rates, mostly in
the UK, partially offset by $3 million of other favorable discrete
items.
The six months ended July 4, 2021, contained unfavorable
discrete items of $3 million or $0.02 per share, primarily due to a
$10 million unfavorable statutory change in tax rates, mostly in
the UK, partially offset by $7 million of other favorable discrete
items.
CUMMINS INC. AND SUBSIDIARIES FINANCIAL
MEASURES THAT SUPPLEMENT GAAP (Unaudited)
Reconciliation of Non GAAP measures - Earnings before
interest, income taxes, depreciation and amortization and
noncontrolling interests (EBITDA)
We believe EBITDA is a useful measure of our operating
performance as it assists investors and debt holders in comparing
our performance on a consistent basis without regard to financing
methods, capital structure, income taxes or depreciation and
amortization methods, which can vary significantly depending upon
many factors.
EBITDA is not in accordance with, or an alternative for,
accounting principles generally accepted in the United States
(GAAP) and may not be consistent with measures used by other
companies. It should be considered supplemental data; however, the
amounts included in the EBITDA calculation are derived from amounts
included in the Condensed Consolidated Statements of Net Income.
Below is a reconciliation of “Net income attributable to Cummins
Inc.” to EBITDA for each of the applicable periods:
Three months ended
Six months ended
In millions
July 4, 2021
June 28, 2020
July 4, 2021
June 28, 2020
Net income attributable to Cummins
Inc.
$
600
$
276
$
1,203
$
787
Net income attributable to Cummins Inc. as
a percentage of net sales
9.8
%
7.2
%
9.9
%
8.9
%
Add:
Net income (loss) attributable to
noncontrolling interests
12
(7)
20
10
Consolidated net income
612
269
1,223
797
Add:
Interest expense
29
23
57
46
Income tax expense
167
93
339
220
Depreciation and amortization
166
164
335
332
EBITDA
$
974
$
549
$
1,954
$
1,395
EBITDA as a percentage of net sales
15.9
%
14.3
%
16.0
%
15.7
%
CUMMINS INC. AND SUBSIDIARIES BUSINESS UNIT
SALES DATA (Unaudited)
Engine Segment Sales by Market and Unit Shipments by Engine
Classification
Sales for our Engine segment by market were as follows:
2021
In millions
Q1
Q2
Q3
Q4
YTD
Heavy-duty truck
$
827
$
839
$
—
$
—
$
1,666
Medium-duty truck and bus
674
688
—
—
1,362
Light-duty automotive
481
484
—
—
965
Off-highway
477
480
—
—
957
Total sales
$
2,459
$
2,491
$
—
$
—
$
4,950
2020
In millions
Q1
Q2
Q3
Q4
YTD
Heavy-duty truck
$
750
$
415
$
694
$
789
$
2,648
Medium-duty truck and bus
618
391
492
565
2,066
Light-duty automotive
353
180
522
492
1,547
Off-highway
437
437
404
483
1,761
Total sales
$
2,158
$
1,423
$
2,112
$
2,329
$
8,022
Unit shipments by engine classification (including unit
shipments to Power Systems and off-highway engine units included in
their respective classification) were as follows:
2021
Units
Q1
Q2
Q3
Q4
YTD
Heavy-duty
30,700
29,400
—
—
60,100
Medium-duty
73,100
67,500
—
—
140,600
Light-duty
68,500
68,100
—
—
136,600
Total units
172,300
165,000
—
—
337,300
2020
Units
Q1
Q2
Q3
Q4
YTD
Heavy-duty
25,800
15,900
23,300
27,500
92,500
Medium-duty
61,200
44,900
50,100
64,700
220,900
Light-duty
49,400
29,800
67,200
69,400
215,800
Total units
136,400
90,600
140,600
161,600
529,200
Distribution Segment Sales by Product Line
Sales for our Distribution segment by product line were as
follows:
2021
In millions
Q1
Q2
Q3
Q4
YTD
Parts
$
757
$
765
$
—
$
—
$
1,522
Power generation
418
454
—
—
872
Engines
334
351
—
—
685
Service
326
350
—
—
676
Total sales
$
1,835
$
1,920
$
—
$
—
$
3,755
2020
In millions
Q1
Q2
Q3
Q4
YTD
Parts
$
787
$
654
$
722
$
768
$
2,931
Power generation
376
377
416
523
1,692
Engines
323
277
279
371
1,250
Service
328
297
304
334
1,263
Total sales
$
1,814
$
1,605
$
1,721
$
1,996
$
7,136
Component Segment Sales by Business
Sales for our Components segment by business were as
follows:
2021
In millions
Q1
Q2
Q3
Q4
YTD
Emission solutions
$
1,035
$
882
$
—
$
—
$
1,917
Filtration
372
374
—
—
746
Turbo technologies
367
351
—
—
718
Electronics and fuel systems
263
241
—
—
504
Automated transmissions
115
146
—
—
261
Total sales
$
2,152
$
1,994
$
—
$
—
$
4,146
2020
In millions
Q1
Q2
Q3
Q4
YTD
Emission solutions
$
664
$
472
$
665
$
831
$
2,632
Filtration
312
255
314
351
1,232
Turbo technologies
270
216
281
331
1,098
Electronics and fuel systems
174
164
187
229
754
Automated transmissions
82
43
94
89
308
Total sales
$
1,502
$
1,150
$
1,541
$
1,831
$
6,024
Power Systems Segment Sales by Product Line and Unit
Shipments by Engine Classification
Sales for our Power Systems segment by product line were as
follows:
2021
In millions
Q1
Q2
Q3
Q4
YTD
Power generation
$
611
$
655
$
—
$
—
$
1,266
Industrial
324
399
—
—
723
Generator technologies
87
89
—
—
176
Total sales
$
1,022
$
1,143
$
—
$
—
$
2,165
2020
In millions
Q1
Q2
Q3
Q4
YTD
Power generation
$
519
$
424
$
601
$
623
$
2,167
Industrial
296
291
309
292
1,188
Generator technologies
69
62
71
74
276
Total sales
$
884
$
777
$
981
$
989
$
3,631
High-horsepower unit shipments by engine classification were as
follows:
2021
Units
Q1
Q2
Q3
Q4
YTD
Power generation
2,100
1,800
—
—
3,900
Industrial
1,000
1,200
—
—
2,200
Total units
3,100
3,000
—
—
6,100
2020
Units
Q1
Q2
Q3
Q4
YTD
Power generation
1,800
1,000
2,300
2,600
7,700
Industrial
1,000
1,000
1,200
1,100
4,300
Total units
2,800
2,000
3,500
3,700
12,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005118/en/
Cummins Inc. Jon Mills Phone: 317-658-4540 Email:
jon.mills@cummins.com
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