Cummins Reports Record Sales and Operating Profit; $1.50 Per Share Net Earnings
15 July 1999
Cummins Reports Record Sales and Operating Profit; $1.50 Per Share Net Earnings
COLUMBUS, Ind.--July 15, 1999--
CUMMINS ENGINE COMPANY, INC.
----------------------------
(Millions, except per share amounts)
------------------------------------
FOR THE SECOND QUARTER ENDED June 27, 1999 June 28, 1998
---------------------------- ------------- -------------
Net sales $1,667 $1,635
Earnings before interest
and taxes 103 99
Net earnings 58 53
Basic earnings per share $ 1.51 $ 1.39
Diluted earnings per share 1.50 1.38
Weighted-average number of
shares for EPS:
Basic 38.5 38.5
Diluted 38.7 38.8
FOR THE FIRST HALF ENDED June 27, 1999 June 28, 1998
------------------------ ------------- -------------
Net sales $3,172 $3,135
Earnings before interest
and taxes 158 130 (a)
Net earnings 82 60 (a)
Basic earnings per share $ 2.14 $ 1.57 (a)
Diluted earnings per share 2.13 1.55 (a)
Weighted-average number of
shares for EPS:
Basic 38.5 38.5
Diluted 38.7 38.8
(a) Excluding a pre-tax special charge of $43 recorded in the first
quarter of 1998, first half 1998 earnings before interest and taxes
were $173, net earnings were $91, basic earnings per share were
$2.36 and diluted earnings per share were $2.34.
Cummins Engine Co. Inc. today reported record second-quarter earnings before interest and taxes of $103 million, on record sales of $1.67 billion. The company said that net earnings for the quarter rose to $58 million, or $1.50 per share, from $53 million or $1.38 per share, on sales of $1.64 billion a year ago. Results for the second quarter were up significantly from the first quarter of this year, when Cummins reported net earnings of $24 million or 63 cents per share, on sales of $1.51 billion.
"We are very pleased to report solid progress on all of our initiatives to improve our financial results," said Jim Henderson, Chairman and Chief Executive Officer of Cummins. "Gross margins increased 2.3 percentage points from first quarter, warranty costs declined, and selling, administrative and research and engineering costs remained well below our target of 16 percent. This raised the earnings before interest and taxes margin from 3.7 percent in the first quarter to 6.2 percent this quarter. Cash flow was also very strong this quarter."
Continued Henderson, "Our second-quarter results benefited from the strong North American automotive, construction and power generation markets. In addition, we are beginning to see early evidence of recovery in some of our Asian markets."
"Our successful new product introductions continue. This quarter we will begin to ship our new fully-electronic 310 to 350 horsepower ISL engine, specially designed for vocational and regional less-than-truckload customers," said Henderson. "This engine weighs less than any other engine in its class, which means more power for our customers. We also launched our new 60-85 horsepower 3.3 litre engine, designed for mobile industrial applications, and have just introduced our ISX engine, the fleet version of the Signature 600, for the heavy-duty truck market in North America."
Continued strong demand in the North American automotive and construction markets drove the engine business higher year over year. Sales of $466 million to the worldwide heavy-duty truck market were 17 percent higher compared to the second quarter of 1998. In the medium-duty truck market, sales of $135 million were 3 percent lower on higher unit volumes than the year-ago quarter, reflecting a shift in mix between engine families. Sales to the bus and light commercial vehicle market of $219 million were flat, due to strong sales in the North American bus market, offset by a reduction in demand for pickup truck engines in advance of the changeover to the new model year and plant shutdowns. In the industrial business, sales of $275 million were down 6 percent compared to the second quarter of 1998 as a result of continuing depressed agricultural markets worldwide. Construction markets worldwide were up.
Power generation sales of $305 million were 3 percent lower than the year-ago quarter, but up 22 percent from the seasonally low first quarter of this year as a result of strong demand for generator sets in North America, including the recreational vehicle market, and seasonal upturns in Asia.
Sales of filtration and other products of $267 million were 2 percent lower compared to the second quarter of 1998, primarily due to lower sales from international company-owned distributorships.
For the first six months of 1999, Cummins reported net earnings of $82 million or $ 2.13 per share, compared to net earnings of $60 million or $1.55 per share, for the same period in 1998. Revenues increased from $3.1 billion to $3.2 billion.
Cummins, headquartered in Columbus, Ind., is the world's largest producer of diesel engines above 200 horsepower. The company provides products for customers in its key markets: engines, including automotive and industrial, power generation, and filtration. Press releases by fax may be requested by calling News on Demand (toll free) at 888-329-2305. Cummins' home page on the Internet can be found at http://www.cummins.com.
Certain information included in this press release is forward-looking and involves risks and uncertainties, including general economic and competitive conditions that could significantly affect expected results.