Cummins Announces Fourth Quarter and Full Year 2016 Results
Fourth quarter revenues of $4.5 billion; GAAP1 Net Income of $378 million
EBIT of 11.7 percent of sales; Diluted EPS of $2.25
Full year revenues of $17.5 billion; GAAP1 Net Income of $1.39 billion EBIT of 11.4 percent of sales; Diluted EPS of$8.23
Company expects full year 2017 revenues to be flat to down 5 percent, EBIT expected to be in the range of 11.0 to 11.5 percent
Fourth quarter revenues of $4.5 billion decreased 6 percent from the same quarter in 2015, largely reflecting lower commercial truck production in North America and weak global demand for industrial engines and power generation equipment. Currency negatively impacted revenues by approximately 2 percent compared to the same period last year, primarily due to a stronger U.S. dollar. Revenues in North America decreased 13 percent while international sales improved by 6 percent primarily due to increased revenues in China.
Net income attributable to Cummins in the fourth quarter was $378 million ($2.25 per diluted share), compared to $161million ($0.92 per diluted share) a year ago. Net income for the fourth quarter of 2015 excluding impairment and restructuring charges was $355 million ($2.02 per diluted share). The tax rate in the fourth quarter of 2016 was 22 percent.
Earnings before interest and taxes (EBIT) in the fourth quarter was $526 million, or 11.7 percent of sales, compared to $230 million or 4.8 percent of sales a year ago. Excluding impairment and restructuring charges, EBIT for the fourth quarter of 2015 was $531 million or 11.1 percent of sales.
“Despite weak conditions in a number of our largest markets, Cummins delivered fourth quarter results that were a little better than expected due to our strong market share in on-highway markets in North America and the benefits of our cost reduction work,” said Tom Linebarger Chairman and CEO. “We made significant progress in a number of our key initiatives in 2016, including executing our restructuring actions, completing the acquisition of our distributors in North America and continuing to invest in new products, all of which help position the Company for profitable growth when markets improve. We also returned 75 percent of the Company’s Operating Cash Flow to shareholders, consistent with our plan for the year.”
Revenues for the full year 2016 were $17.5 billion, 8 percent lower than 2015. Revenues in North America decreased 12 percent and international sales decreased 2 percent mainly due to foreign currency movements. Excluding the impact of the currency movements, international revenues increased 2 percent with growth in China and India being offset by weaker demand in Latin America, the Middle East and Africa.
Net income attributable to Cummins for the full year was $1.39 billion ($8.23 per diluted share), compared to $1.4 billion ($7.84 per diluted share) in 2015. Excluding impairment and restructuring charges, net income was $1.59 billion ($8.93 per diluted share) in 2015. The full year tax rate was 24.6 percent in 2016.
EBIT for the year was $2.0 billion or 11.4 percent of sales, compared to $2.1 billion or 10.9 percent of sales in 2015. Excluding impairments and restructuring charges, EBIT for 2015 was $2.4 billion or 12 .5 percent of sales.