Cummins Reports Most Profitable Quarter Ever

Cummins Inc., Columbus, Ind., powered to its most profitable quarter ever reporting third-quarter net income of $145 million, or $2.90 per diluted share, on sales of $2.47 billion.

Sales were strong across the entire business and the company's gross margins rose to their highest levels in more than eight years.
"We continued to deliver on our commitments to our customers and shareholders in the third quarter," said Cummins Chairman and Chief Executive Officer Tim Solso. "Our business outlook remains positive, and our focus on execution has significantly improved margins and strengthened the bottom line."
Net income in the third quarter rose 25 percent from $116 million in the same period in 2004, while sales increased 12 percent from the $2.19 billion reported in the third quarter of 2004.
For the first nine months of the year, Cummins has earned $383 million, or $7.70 per share, which is more than the company earned for all of 2004 – its most profitable full year ever.
Earnings before interest and taxes (EBIT) of $240 million also were a record and, at 9.7 percent of sales, were at the high end of the company's target range of 7 to 10 percent. The company's gross margin of 22.7 percent was the highest since the second quarter of 1997.
In addition to setting a record for net income and EBIT, the Company achieved a number of other quarterly financial records, including:
-- Engine segment revenues.
-- Engine shipment volumes to DaimlerChrysler for the Dodge Ram.
-- Segment EBIT for the Power Generation segment.
-- Segment EBIT for the Distribution segment.
Third-quarter sales were slightly below the record set in the second quarter of 2005, but improved margins contributed to a 3 percent quarter-to-quarter increase in net income.
"These results are another sign that we are building a "New Cummins" – a company that is less cyclical, more diversified and committed to turning a greater share of its sales into profits," Solso said. "Not only have we delivered higher year-over-year quarterly earnings for seven consecutive quarters, but we also are investing in future growth and focusing on prudent cash management.
"And, as good as 2004 and 2005 have been, I am confident 2006 will be an even better year for Cummins."