COLUMBUS, IN — Cummins Inc. recently saw 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 said its gross margins rose to its 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 CEO 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.
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 and that we are well-positioned for the future.”
Cummins increased its full-year earnings guidance to $10.70 to $10.80 per share from its previous guidance of $10.10 to $10.30 per share, resulting in fourth-quarter guidance of $3 to $3.10 per share. The company generated cash from operations of $230 million in the quarter, just off its record set in the fourth quarter of 2004, bringing its total to $385 million for the first nine months of 2005. In addition, the company has paid down debt by $278 million this year from operating cash.
To learn more about Cummins, visit: www.cummins.com.