SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
Entire Document
 

RESULTS OF OPERATIONS
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
Years ended December 31,
 
2018 vs. 2017
 
2017 vs. 2016
In millions (except per share amounts)
 
2018
 
2017
 
2016
 
Amount
 
Percent
 
Amount
 
Percent
NET SALES
 
$
23,771

 
$
20,428

 
$
17,509

 
$
3,343

 
16
 %
 
$
2,919

 
17
 %
Cost of sales
 
18,034

 
15,328

 
13,051

 
(2,706
)
 
(18
)%
 
(2,277
)
 
(17
)%
GROSS MARGIN
 
5,737

 
5,100

 
4,458

 
637

 
12
 %
 
642

 
14
 %
OPERATING EXPENSES AND INCOME
 
 
 
 
 
 
 
 
 
 

 
 
 


Selling, general and administrative expenses
 
2,437

 
2,429

 
2,099

 
(8
)
 
 %
 
(330
)
 
(16
)%
Research, development and engineering expenses
 
902

 
754

 
637

 
(148
)
 
(20
)%
 
(117
)
 
(18
)%
Equity, royalty and interest income from investees
 
394

 
357

 
301

 
37

 
10
 %
 
56

 
19
 %
Loss contingency
 

 
5

 
138

 
5

 
100
 %
 
133

 
96
 %
Other operating income (expense), net
 
(6
)
 
65

 
(5
)
 
(71
)
 
NM

 
70

 
NM

OPERATING INCOME
 
2,786

 
2,334

 
1,880

 
452

 
19
 %
 
454

 
24
 %
Interest income
 
35

 
18

 
23

 
17

 
94
 %
 
(5
)
 
(22
)%
Interest expense
 
114

 
81

 
69

 
(33
)
 
(41
)%
 
(12
)
 
(17
)%
Other income, net
 
46

 
94

 
96

 
(48
)
 
(51
)%
 
(2
)
 
(2
)%
INCOME BEFORE INCOME TAXES
 
2,753

 
2,365

 
1,930

 
388

 
16
 %
 
435

 
23
 %
Income tax expense
 
566

 
1,371

 
474

 
805

 
59
 %
 
(897
)
 
NM

CONSOLIDATED NET INCOME
 
2,187

 
994

 
1,456

 
1,193

 
NM

 
(462
)
 
(32
)%
Less: Net income (loss) attributable to noncontrolling interests
 
46

 
(5
)
 
62

 
(51
)
 
NM

 
67

 
NM

NET INCOME ATTRIBUTABLE TO CUMMINS INC
 
$
2,141

 
$
999

 
$
1,394

 
$
1,142

 
NM

 
$
(395
)
 
(28
)%
Diluted earnings per common share attributable to Cummins Inc.
 
$
13.15

 
$
5.97

 
$
8.23

 
$
7.18

 
NM

 
$
(2.26
)
 
(27
)%
______________________________________
"NM" - not meaningful information
 
 
 
 
 
 
 
 
Favorable/(Unfavorable) Percentage Points
Percent of sales
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Gross margin
 
24.1
%
 
25.0
%
 
25.5
%
 
(0.9
)
 
(0.5
)
Selling, general and administrative expenses
 
10.3
%
 
11.9
%
 
12.0
%
 
1.6

 
0.1

Research, development and engineering expenses
 
3.8
%
 
3.7
%
 
3.6
%
 
(0.1
)
 
(0.1
)
2018 vs. 2017
Net Sales
Net sales increased $3.3 billion, primarily driven by the following:
Engine segment sales increased 18 percent, primarily due to higher demand across all markets, especially in North American heavy-duty truck, global construction markets and medium-duty truck markets.
Components segment sales increased 22 percent, due to higher demand across all businesses, especially the emission solutions business, stronger market demand for trucks in North America and Western Europe, sales from the automated transmission business acquired in the third quarter of 2017 and the turbo technologies business due to higher demand in North America and Western Europe.
Distribution segment sales increased 11 percent, primarily due to higher demand in most geographic regions, especially in North America, and increased demand in all product lines.
Power Systems segment sales increased 14 percent, due to higher demand for all product lines, especially in power generation due to stronger demand in North America, Middle East and Australia, and industrial sales driven by higher demand in global mining markets and oil and gas markets in North America.

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