Cummins Q3 Results Beat Estimates; Lifts Full-year Revenue Growth View - Update

(RTTNews) - Engine maker Cummins Inc. (CMI) Tuesday reported higher third-quarter profit, as earnings improved in all four of its businesses. Earnings per share, as well as revenues topped analysts' expectations. The firm lifted its revenue growth outlook due to stronger demand in North America.

For the quarter, net income attributable to the company increased to $423 million or $2.32 per share from $355 million or $1.90 per share in the previous year.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $2.28 per share for the quarter. Analysts' estimates typically exclude special items.

Earnings before interest and taxes or EBIT were $684 million, compared to $536 million in the preceding year.

The tax rate in the third quarter of 2014 was 34.4 percent and included a non-cash discrete tax expense of $19 million or $0.10 per share.

Net sales for the quarter grew 15 percent to $4.89 billion from $4.27 billion in the same quarter in 2013. Wall Street expected revenues of $4.72 billion for the quarter.

The company said the increase in revenue was driven by stronger demand in on-highway markets and distributor acquisitions in North America, additional content growth for the Components business in Europe and China and higher engine sales to commercial marine customers.

Revenues in North America increased 19 percent and international sales were up 10 percent compared to the third quarter a year ago.

Engine segment sales were $2.8 billion, up 13 percent from last year. Sales from Components segment climbed 20 percent to $1.3 billion. Power Generation segment sales totaled $754 million, up 6 percent from the prior year, and Distribution segment generated sales of $1.3 billion, an increase of 37 percent from the year-ago quarter.

The company noted that although results in Power Generation business improved in the third quarter, global demand for power generation equipment remains weak. As a result, the firm is considering certain actions to reduce cost structure starting in the fourth quarter, which could range from $15 million to $40 million.

For full year 2014, Cummins now expects revenues to grow between 10 percent and 12 percent, up from its previous forecast of growth of between 8 percent and 11 percent. Analysts expect annual revenues of $19.00 billion.

EBIT is expected to be in the range of 13 to 13.5 percent of sales, excluding the impact of cost reduction activities within the Power Generation business that will commence in the fourth quarter.

CMI closed Monday's trading at $135.37, down 1.37 percent. In the pre-market activity on Tuesday, the shares rose 4.16 percent.