SEC Filings


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

Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
Years ended December 31,
 
2018 vs. 2017
 
2017 vs. 2016
 
 
2018
 
2017
 
2016
 
Amount
 
Percent
 
Amount
 
Percent
Heavy-duty
 
128,500

 
95,900

 
79,000

 
32,600

 
34
%
 
16,900

 
21
%
Medium-duty
 
311,100

 
268,100

 
229,100

 
43,000

 
16
%
 
39,000

 
17
%
Light-duty
 
273,400

 
257,500

 
228,600

 
15,900

 
6
%
 
28,900

 
13
%
Total unit shipments
 
713,000


621,500


536,700

 
91,500

 
15
%
 
84,800

 
16
%
2018 vs. 2017
Sales
Engine segment sales increased $1.6 billion. The following were the primary drivers by market:
Heavy-duty truck engine sales increased $812 million, primarily due to higher demand in North American heavy-duty truck markets with increased shipments of 40 percent.
Off-highway sales increased $367 million, primarily due to improved demand in global construction markets with increased international unit shipments of 37 percent, mainly in China and Western Europe, and increased unit shipments of 30 percent in North America.
Medium-duty truck and bus sales increased $342 million, primarily due to higher demand in North American medium-duty truck markets with increased engine shipments of 14 percent.
Total on-highway-related sales for 2018 were 79 percent of total engine segment sales, compared to 79 percent in 2017.
Segment EBITDA
Engine segment EBITDA increased $303 million, primarily due to higher gross margin, decreased selling, general and administrative expenses and increased equity, royalty and interest income from investees, partially offset by increased research, development and engineering expenses and unfavorable foreign currency fluctuations primarily in the Brazilian real. The increase in gross margin was primarily due to higher volumes, improved pricing and favorable mix, partially offset by increased warranty costs (primarily $184 million for an Engine System Campaign) and higher compensation expense. See Note 9, "PRODUCT WARRANTY LIABILITY," to the Consolidated Financial Statements for additional information on the Engine System Campaign.

Gross margin as a percentage of sales declined primarily due to the increased warranty costs. The decrease in selling, general and administrative expenses was primarily due to lower variable compensation expense. An increase in research, development and engineering expenses was primarily due to lower expense recovery and higher compensation expense. The increase in equity, royalty and interest income from investees was primarily due to higher earnings at Tata Cummins, Ltd. and Cummins Westport, Inc. as the result of unfavorable Tax Legislation remeasurement adjustments of $15 million and $7 million in 2017, respectively, which did not repeat in 2018, partially offset by lower earnings at Beijing Foton Cummins Engine Co., Ltd.
 
2017 vs. 2016
Sales
Engine segment sales increased $1.1 billion. The following were the primary drivers by market:
Heavy-duty truck engine sales increased $397 million, primarily due to higher demand in North American heavy-duty truck markets with increased shipments of 20 percent.
Off-highway sales increased $365 million, primarily due to improved demand in global industrial markets, especially in international construction markets, with increased unit shipments of 54 percent primarily in China and Western Europe.
Medium-duty truck and bus sales increased $241 million, primarily due to higher demand in North American medium-duty truck markets with increased engine shipments of 20 percent.

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