Post Earnings Coverage as Cummins' Q4 EPS Grew Y-o-Y; Beat Forecasts
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Upcoming AWS Coverage on Donaldson Co. Post-Earnings Results
LONDON, UK / ACCESSWIRE / March 1, 2017 / Active Wall St. announces its post-earnings coverage on Cummins Inc. (NYSE: CMI). The Company reported its financial results for the fourth quarter fiscal 2016 (Q4 FY16) and full year 2016 (FY16) on February 09, 2017. The Columbus, Indiana-based Company's quarterly diluted EPS grew on a year-over-year basis, beating market consensus estimates. Register with us now for your free membership at:
One of Cummins' competitors within the Diversified Machinery space, Donaldson Co., Inc. (NYSE: DCI), reported its Q2 FY17 earnings results on Wednesday, March 01, 2017. AWS will be initiating a research report on Donaldson in the coming days.
Today, AWS is promoting its earnings coverage on CMI; touching on DCI. Get our free coverage by signing up to:
In Q4 FY16, Cummins reported net sales of $4.50 billion, down 6% from $4.77 billion reported in Q4 FY15. However, net sales numbers for the reported quarter outperformed market expectations of $4.4 billion. The decline in net sales largely reflected lower commercial truck production in North America and weak global demand for industrial engines and power generation equipment.
The engine maker reported net income attributable to Cummins of $378 million, or $2.25 per diluted share, in Q4 FY16 compared to $161 million, or $0.92 per diluted share, in Q4 FY15. Excluding special items, the Company had reported net income of $355 million, or $2.02 per diluted share, in Q4 FY15. Wall Street had expected the Company to report Q4 FY16 net income of $2.02 per diluted share.
For full year FY16, Cummins' net sales stood at $17.51 billion, which was 8% lower than $19.11 billion reported in FY15. The Company reported net income attributable to Cummins of $1.39 billion, or $8.23 per diluted share, in FY16 compared to $1.40 billion, or $7.84 per diluted share, in FY15. Additionally, the Company's net income excluding special items was $1.59 billion, or $8.93 per diluted share, in FY15.
Operating Metrics
During Q4 FY16, Cummins' gross margin came in at $1.12 billion compared to $1.21 billion in the prior year's same quarter. The operating income increased during Q4 FY16 to $507 million from $229 million in the previous year's same period. The Company's total segment EBIT also rose to $526 million, or 11.7% of total sales in Q4 FY16, from $230 million, or 4.8% of total sales, in last year's comparable quarter.
Segment Performance
Cummins Engine segment's net sales fell 6% to $1.97 billion during Q4 FY16 from $2.10 billion in the prior year's same quarter. The segment's EBIT for the reported quarter stood at $194 million, or 9.9% of the segment's sales, against negative EBIT of $59 million, or 2.8% of the segment's sales, in Q4 FY15.
In the reported period, Distribution segment's net sales were down by 2% to $1.67 billion from $1.71 billion in Q4 FY15. The segment's EBIT rose to $122 million, or 7.3% of the segment's sales in Q4 FY16 from $88 million, or 5.2% of the segment's sales recorded in the year-ago comparable quarter.
During Q4 FY16, Components segment's net sales were down to $1.18 billion from $1.24 billion in last year's corresponding quarter. The segment's EBIT also fell during Q4 FY16 to $140 million, or 11.9% of the segment's sales, from $153 million, or 12.4% the segment's sales, in Q4 FY15.
Power Systems segment's net sales during Q4 FY16 stood at $932 million, down 5% from $986 million in the prior year's same quarter. However, the segment's EBIT rose to $68 million, or 7.3% of segment sales, in Q4 FY16 from $33 million, or 3.3% of the segment's sales in Q4 FY15.
Cash Flow & Balance Sheet
During the year ended on December 31, 2016, Cummins generated $1.94 billion in cash from operating activities, compared to $2.06 billion in the year ago same period. The Company had cash and cash equivalents balance of $1.12 billion as on December 31, 2016, compared to $1.71 billion, at the close of books on December 31, 2015. Furthermore, the Company had long-term debt amounting to $1.57 billion as on December 31, 2016, compared to $1.58 billion as on December 31, 2015.
Dividend
In a separate press release on February 14, 2017, Cummins' Board of Directors declared quarterly common stock cash dividend of $1.025 per share, payable on March 06, 2017, to shareholder of record at the close of business on February 24, 2017.
Outlook
In its guidance for full year FY17, Cummins' management anticipates revenues growth to be flat to down 5% y-o-y with EBIT to be in the range of 11.0% to 11.5% of sales. Additionally, the Company expects to return at least 50% of operating cash flow to shareholders in FY17 in the form of dividends and share repurchases.
Stock Performance
On Tuesday, February 28, 2017, the stock closed the trading session at $148.49, marginally slipping 0.95% from its previous closing price of $149.91. A total volume of 1.13 million shares have exchanged hands. Cummins' stock price surged 5.80% in the last three months, 20.96% in the past six months, and 56.96% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 9.37%. The stock is trading at a PE ratio of 18.03 and has a dividend yield of 2.76%.
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