SEC Filings


10-Q
CUMMINS INC filed this Form 10-Q on 10/31/2017
Entire Document
 

RESULTS OF OPERATIONS
 
 
Three months ended
 
Favorable/
 
Nine months ended
 
Favorable/
 
 
October 1,
2017
 
October 2,
2016
 
(Unfavorable)
 
October 1,
2017
 
October 2,
2016
 
(Unfavorable)
In millions, except per share amounts
 
 
Amount
 
Percent
 
 
 
Amount
 
Percent
NET SALES
$
5,285

 
$
4,187

 
$
1,098

 
26
 %
 
$
14,952

 
$
13,006

 
$
1,946

 
15
 %
Cost of sales
3,946

 
3,108

 
(838
)
 
(27
)%
 
11,236

 
9,674

 
(1,562
)
 
(16
)%
GROSS MARGIN
1,339

 
1,079

 
260

 
24
 %
 
3,716

 
3,332

 
384

 
12
 %
OPERATING EXPENSES AND INCOME
 

 
 

 
 

 


 
 

 
 

 
 

 


Selling, general and administrative expenses
624

 
513

 
(111
)
 
(22
)%
 
1,757

 
1,527

 
(230
)
 
(15
)%
Research, development and engineering expenses
213

 
157

 
(56
)
 
(36
)%
 
545

 
478

 
(67
)
 
(14
)%
Equity, royalty and interest income from investees
95

 
74

 
21

 
28
 %
 
301

 
234

 
67

 
29
 %
Loss contingency

 
99

 
99

 
100
 %
 

 
138

 
138

 
100
 %
Other operating income (expense), net
32

 

 
32

 
NM

 
55

 
(2
)
 
57

 
NM

OPERATING INCOME
629

 
384

 
245

 
64
 %
 
1,770

 
1,421

 
349

 
25
 %
Interest income
4

 
6

 
(2
)
 
(33
)%
 
11

 
18

 
(7
)
 
(39
)%
Interest expense
18

 
16

 
(2
)
 
(13
)%
 
57

 
51

 
(6
)
 
(12
)%
Other income (expense), net
7

 
8

 
(1
)
 
(13
)%
 
45

 
34

 
11

 
32
 %
INCOME BEFORE INCOME TAXES
622

 
382

 
240

 
63
 %
 
1,769

 
1,422

 
347

 
24
 %
Income tax expense
165

 
82

 
(83
)
 
NM

 
466

 
362

 
(104
)
 
(29
)%
CONSOLIDATED NET INCOME
457

 
300

 
157

 
52
 %
 
1,303

 
1,060

 
243

 
23
 %
Less: Net income attributable to noncontrolling interests
4

 
11

 
7

 
64
 %
 
30

 
44

 
14

 
32
 %
NET INCOME ATTRIBUTABLE TO CUMMINS INC.
$
453

 
$
289

 
$
164

 
57
 %
 
$
1,273

 
$
1,016

 
$
257

 
25
 %
Diluted Earnings Per Common Share Attributable to Cummins Inc.
$
2.71

 
$
1.72

 
$
0.99

 
58
 %
 
$
7.60

 
$
5.99

 
$
1.61

 
27
 %
______________________________________
"NM" - not meaningful information
 
 
Three months ended
 
Favorable/
(Unfavorable)
 
Nine months ended
 
Favorable/
(Unfavorable)
 
 
October 1,
2017
 
October 2,
2016
 
 
October 1,
2017
 
October 2,
2016
 
Percent of sales
 
 
 
Percentage Points
 
 
 
Percentage Points
Gross margin
 
25.3
%
 
25.8
%
 
(0.5
)
 
24.9
%
 
25.6
%
 
(0.7
)
Selling, general and administrative expenses
 
11.8
%
 
12.3
%
 
0.5

 
11.8
%
 
11.7
%
 
(0.1
)
Research, development and engineering expenses
 
4.0
%
 
3.7
%
 
(0.3
)
 
3.6
%
 
3.7
%
 
0.1

Net Sales
Net sales for the three months ended October 1, 2017, increased by $1.1 billion versus the comparable period in 2016. The primary drivers were as follows:
Engine segment sales increased 26 percent primarily due to higher demand in most North American on-highway markets and improved demand in global construction markets.
Components segment sales increased 34 percent due to higher demand across all businesses, especially the emission solutions business, due to strong on-highway sales in North America, India and China and sales related to the acquisition of the automated transmissions business.
Distribution segment sales increased 17 percent primarily due to an increase in organic sales and higher sales related to the acquisition of North American distributors since December 31, 2015.
Power Systems segment sales increased 23 percent due to higher demand for all product lines, especially in industrial markets, due to higher demand in North America oil and gas markets and international mining markets.


31