SEC Filings


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

Segment EBITDA
Distribution segment EBITDA decreased $8 million, primarily due to higher selling, general and administrative expenses, lower equity, royalty and interest income from investees, partially offset by higher gross margin. The increase in gross margin was primarily due to higher organic volumes and the acquisition of a North American distributor in the fourth quarter of 2016, partially offset by increased variable compensation expense. Gross margin as a percentage of sales declined primarily due to the increase in variable compensation expense. The increase in selling, general and administrative expenses was primarily due to higher variable compensation expense, increased compensation expense related to the acquisition of a North American distributor and higher consulting expense. The decrease in equity, royalty and interest income from investees was the result of the acquisition of a North American distributor in 2016 and unfavorable impacts from Tax Legislation related to withholding taxes on foreign earnings of $4 million.
 
Components Segment Results
Financial data for the Components segment was as follows:
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
Years ended December 31,
 
2018 vs. 2017
 
2017 vs. 2016
In millions
 
2018
 
2017
 
2016
 
Amount
 
Percent
 
Amount
 
Percent
External sales
 
$
5,331

 
$
4,363

 
$
3,514

 
$
968

 
22
 %
 
$
849

 
24
 %
Intersegment sales
 
1,835

 
1,526

 
1,322

 
309

 
20
 %
 
204

 
15
 %
Total sales
 
7,166

 
5,889

 
4,836

 
1,277

 
22
 %
 
1,053

 
22
 %
Research, development and engineering expenses
 
272

 
241

 
208

 
(31
)
 
(13
)%
 
(33
)
 
(16
)%
Equity, royalty and interest income from investees
 
54

 
40

 
41

 
14

 
35
 %
 
(1
)
 
(2
)%
Interest income
 
5

 
3

 
4

 
2

 
67
 %
 
(1
)
 
(25
)%
Segment EBITDA
 
1,030

 
917

 
774

 
113

 
12
 %
 
143

 
18
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage Points
 
Percentage Points
Segment EBITDA as a percentage of total sales
 
14.4
%
 
15.6
%
 
16.0
%
 
 

 
(1.2
)
 
 
 
(0.4
)
Sales for our Components segment by business were as follows:
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
Years ended December 31,
 
2018 vs. 2017
 
2017 vs. 2016
In millions
 
2018
 
2017
 
2016
 
Amount
 
Percent
 
Amount
 
Percent
Emission solutions
 
$
3,177

 
$
2,675

 
$
2,238

 
$
502

 
19
%
 
$
437

 
20
%
Turbo technologies
 
1,343

 
1,179

 
1,036

 
164

 
14
%
 
143

 
14
%
Filtration
 
1,265

 
1,153

 
1,010

 
112

 
10
%
 
143

 
14
%
Electronics and fuel systems
 
838

 
718

 
552

 
120

 
17
%
 
166

 
30
%
Automated transmissions
 
543

 
164

 

 
379

 
NM

 
164

 
NM

Total sales
 
$
7,166


$
5,889


$
4,836

 
$
1,277

 
22
%
 
$
1,053

 
22
%
____________________________________
"NM" - not meaningful information

2018 vs. 2017
Sales
Components segment sales increased $1.3 billion across all lines of business. The following were the primary drivers by business:
Emission solutions sales increased $502 million, primarily due to stronger market demand for trucks in North America and Western Europe.
Automated transmissions which was consolidated during the third quarter of 2017, delivered higher sales of $379 million in North America.

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