Record third-quarter sales, profits for Cummins: Sales gain 12.5 percent; net income rises 53 percent

Cummins Inc. announced record third-quarter sales and profits, spurred by growth in most major markets, and another large repurchasing of stock shares.

The company said Tuesday it achieved revenues of more than $5.9 billion, an increase of 12.5 percent from the same July-through-September period in 2017.

Net income of $692 million ($4.28 per diluted share) increased nearly 53 percent from $453 million ($2.71 per diluted share) from last year. Positive tax impacts added $37 million to net income in the quarter, including $34 million due to changes in U.S. tax reform, Cummins said.

Demand for trucks, construction and power generation equipment improved. Sales in North America increased by 17 percent. International revenues grew 6 percent, led by India, China, Latin America and Europe, Cummins said.

“We delivered record earnings this quarter due to increased demand in a number of key markets, growth in our market share and the benefits of cost-reduction initiatives,” said Tom Linebarger, chairman and CEO of the Columbus-based global power company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $983 million, a nearly 25 percent increase from $788 million a year ago.

The company said it expects record, full-year 2018 revenues, up 15 to 17 percent from 2017, the same forecast it released with second-quarter results July 31.

The success, Linebarger noted, is despite the company taking a $30 million hit in the third quarter due to tariffs levied by the U.S. and other countries on products and materials it ships and receives. He said a $50 million hit is expected next quarter, and $250 million next year.

Share repurchases

A week after Cummins announced a company quarterly record for sales of $6.1 billion July 31, the company said it would repurchase $500 million of its common stock to return 75 percent operating cash flow to shareholders. Cummins said it returned $682 million through dividends and share repurchases in the third quarter.

The $500 million repurchase plan is complete, Linebarger said, so the company will begin a $2 billion share buyback, reflecting confidence in long-term performance.

Repurchasing shares reduces supply in the marketplace and increases demand for the stock, Roger Lee, senior research analyst with Columbus-based Kirr, Marbach & Co., said. Cummins will repurchase nearly 10 percent of its outstanding shares with the new buyback, he said.

Cummins stock reached a company-record closing price of $192.50 on Jan. 26. The stock closed at $134.43, up/down $3.05 (2.3 percent) from Monday’s close of $131.38.

Segment performances

Sales for all of the company’s business segments, except Electrified Power, which didn’t exist in the third quarter of 2017, increased compared to last year:

Engine: Revenues exceeded $2.7 billion. North American markets increased 18 percent, international markets 14 percent. On-highway revenues increased 17 percent primarily due to increased truck production in North America, Cummins said.

Distribution: Revenues topped $1.9 billion. North American sales increased 12 percent and international sales 6 percent. Strong demand for power generation equipment, oil and gas engines, and growth in parts and service drove the increase, the company said.

Components: Sales nearly reached $1.8 billion. The Eaton Cummins Automated Transmission joint venture achieved sales of $150 million. Revenues in North America increased by 25 percent, and international sales grew by 2 percent, Cummins said.

Power Systems: Sales topped $1.1 billion. Revenues in North America increased by 7 percent and international sales 3 percent. Increased demand in power generation and oil and gas markets was partially offset by lower demand in commercial marine markets, the company said.

Electrified Power: Recorded sales of $2 million. Cummins and Hyundai Construction Equipment announced Monday that they have jointly developed an electric-powered mini excavator.

The truck market remains good, said Rich Freeland, president and chief operating officer, with the company still working to fill a backlog of 286,000 ordered engines.

Analysts react

Cummins’ success despite tariffs and a slowing Chinese economy puts it in great position for whenever tariffs are lowered or eliminated, said Craig Kessler, chief investment officer for Columbus-based Kessler Investment group.

“Cummins will be a big beneficiary of any agreement reached by the U.S. and China,” he said.

Wall Street expected Cummins to report $3.73 per diluted share for the quarter, but it delivered $4.28. Adjusting for the tax benefit, Cummins would have delivered $4.05 per share, noted Scott DeDomenic, senior vice president and analyst with Hilliard Lyons’ Columbus office.

“This was their first clean quarter in a while with no miscellaneous charges,” DeDomenic said.

[sc:pullout-title pullout-title=”Stock price” ][sc:pullout-text-begin]

Cummins stock reached a company-record closing price of $192.50 on Jan. 26. The stock closed at $134.43, up/down $3.05 (2.3 percent) from Monday’s close of $131.38.

[sc:pullout-text-end][sc:pullout-title pullout-title=”Pull Quote” ][sc:pullout-text-begin]

“We delivered record earnings this quarter due to increased demand in a number of key markets, growth in our market share and the benefits of cost reduction initiatives.”

— Tom Linebarger, Cummins chairman and CEO

[sc:pullout-text-end][sc:pullout-title pullout-title=”Quarterly earnings” ][sc:pullout-text-begin]

Cummins Inc. released its 2018 third-quarter financial report on Tuesday. The results are compared to the Columbus-based company’s report for the second quarter of 2017. (Figures in millions, except earnings per share)


Net income;$453;$692;52.8%

Earnings per share;$2.71;$4.28;57.9%

Earnings before interest,taxes,depreciation,amortization;$788;$983;24.7%

Net sales;$5,285;$5,943;12.5%


Power Systems;$1,056;$1,107;4.8%



Electrified Power;NA;$2;NA

Intersegment eliminations;-$1,393;-$1,577;-13.2%

–Source: Cummins Inc.