) revealed a 21.9% fall in earnings per share to $2.00 in the
fourth quarter of 2012 from $2.56 per share in the fourth quarter
of 2011 owing to lower revenues (all excluding special items).
Net income dipped 23.2% to $377 million from $491 million a year
ago. However, EPS exceeded the Zacks Consensus Estimate by a
considerable margin of 26 cents.
Revenues in the quarter ebbed 13% to $4.3 billion driven by
weaker demand in truck, construction, and oil and gas markets in
North America as well as in international markets for power
generation equipments, and construction, truck and mining
engines. Revenues were higher than the Zacks Consensus Estimate
of $4.1 billion.
Earnings before interest and taxes (EBIT) (excluding special
items) were $552 million, down 18.5% from $677 million in the
fourth quarter of 2011. EBIT margin was 12.9% versus 13.8% a year
Sales in the Engine segment shrank 18% to $2.5 billion as strong
demand for bus and light-duty engines in North America was more
than offset by weaker demand in the truck market in Brazil, the
North American heavy-duty truck, global construction, as well as
in North American oil and gas and international mining markets.
Segment EBIT was $272 million, or 10.9% of sales, versus $368
million, or 12.0%, a year ago.
Sales in the Components segment sagged 14% to $939 million driven
by lower demand in the North American heavy-duty truck market as
well as in Europe, which was partially offset by higher demand
for aftertreatment systems in Brazil. Segment EBIT was $84
million, or 8.9% of sales, compared with $132 million, or 12.1%
Sales in the Power Generation segment abated 17% to $765 million.
The decline was driven by lower revenues in several international
markets including Europe, Middle East, Latin America and China,
partially offset by strong demand in North America. Segment EBIT
was $54 million, or 7.1% of sales, versus $87 million or 9.5% in
the fourth quarter of 2011.
Sales in the Distribution segment scaled up 9% to $907 million.
The improvement was attributable to increased demand for power
generation equipment in the U.S. and Africa, partially offset by
weaker demand in North American oil and gas markets and in
Europe. Segment EBIT was $98 million, or 10.8% of sales, compared
with $87 million or 10.4% in the 2011 quarter.
For full-year 2012, Cummins reported a 6.9% fall in net income to
$1.6 billion or a 5.1% decrease to $8.61 per share, beating the
Zacks Consensus Estimate of $8.43 (excluding special items).
Revenues in the year slid 4% to $17.3 billion as increased
revenues in North America (9%) were offset by decrease in
international sales (15%), with significant declines in Brazil,
China and Europe. It was higher than the Zacks Consensus Estimate
of $17.1 billion. EBIT for the year was $2.4 billion or 13.7% of
sales, compared with $2.6 billion or 14.2% in 2011, all excluding
Cummins had cash and cash equivalents of $1.4 billion as of Dec
31, 2012, down from $1.5 billion as of Dec 31, 2011. Long-term
debt at the end of 2012 was almost flat at $698 million compared
with $658 million at the end of 2011.
Cash flow from operating activities deteriorated to $1.5 billion
in 2012 from $2.1 billion in the prior year, primarily due to
lower profits. Capital expenditures were almost flat at $690
million compared with $622 million in 2011.
Cummins anticipates revenues in full-year 2013 to be flat to down
5%. EBIT margin is expected between 13% and 14% for the year.
Cummins is well positioned to benefit from several trends, such
as new emission standards, fuel economy improvement and favorable
trends for its Power Generation business. New emission
regulations provide lucrative opportunities for the company. The
company currently retains a Zacks Rank #3 (Hold).
Cummins, which is a leading engine manufacturer along with
Power Solutions International, Inc.
Weichai Power Co. Ltd
Westport Innovations Inc.
), is well positioned to benefit from several trends, such as new
emission standards, fuel economy improvement and favorable trends
for its Power Generation business. New emission regulations
provide lucrative opportunities for the company. The company
currently retains a Zacks Rank #3 (Hold).
CUMMINS INC (CMI): Free Stock Analysis Report
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