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About Cummins Inc.

Cummins makes diesel- and natural gas-powered engines for the heavy- and mid-duty truck, RV, automotive, and industrial markets, as well as for the marine, rail, mining, and construction industries. In addition to its flagship Engine segment, other business segments include Components (filtration products and fuel systems), Power Systems (vehicle and residential generators), Electrified Power (electric and hybrid powertrain systems), and Distribution (product distributors and servicing). Cummins' major customers include OEMs Chrysler, Daimler, Ford, Komatsu, PACCAR, Navistar, and Volvo. About 55% of the company's total sales come from the US. The company traces its historical roots back to 1919, when it was founded by Clessie Cummins.

Operations

Cummins' Engine segment is its largest, accounting for more than one-third of total sales. It makes a broad range of diesel- and natural gas-powered engines under the Cummins brand, as well as other brand names, for the heavy- and medium-duty truck, bus, recreational vehicle, and light-duty automotive markets.

The Distribution and Components segments each contribute about a quarter of total sales. Distribution comprises a network of approximately 600 company-owned and independent distributors that serve 190 countries worldwide. The Components segment manufactures products that are complementary to commercial diesel applications including more than 8,300 filtration products, some branded as Fleetguard. Other products within this segment include turbo technologies for air handling in engines and exhaust after-treatment technologies. It also offers new, used, and remanufactured fuel systems. 

Power Systems represents about 15% of revenue and sells power products such as alternators, transfer switches, and controls. It serves the commercial and consumer markets as well as military organizations. Brands include AVK, Markon and Stamford (alternators).

The newly-established Electrified Power segment does not yet contribute to overall revenue but designs and makes electrified power systems ranging from fully electric to hybrid.

Geographic Reach

Cummins' main domestic operating facilities are located in Columbus, IN (headquarters); Nashville and Memphis, TN; Walton, KY; and Washington, DC. Key international locations reside in Belgium, Brazil, China, India, Mexico, Russia, Singapore, South Africa, Turkey, the UK, and the UAE. The US generates about 55% of its total sales.

Sales and Marketing

Cummins has a large geographic reach and serves customers through a network of 600 wholly-owned and independent distributor locations and more than 7,600 dealer locations spanning about 190 countries and territories. Major customer PACCAR accounts for about 15% of the company's net sales.

Financial Performance

Cummins has seen a general upward trend in revenue over the last several years. Sales increased 16% for the second consecutive year reaching $23.8 billion in 2018 (2017 revenue was $20.4 billion). The jump in sales is attributed to increased demand in the North American on-highway markets and increased industrial demand in the oil and gas and construction markets. Internationally, sales were up in most markets, especially Europe, Asia Pacific, Latin American, China, and India.

Profits more than doubled in 2018 to $2.1 billion, driven primarily by significantly higher net sales and a tax benefit due to the 2017 Tax Cuts and Jobs Act. Other factors include higher gross margins and increased equity earnings from investments.

Cash at the end of fiscal 2018 was $1.3 billion, down slightly ($66 million) from the prior year. Cash from operations contributed $2.4 billion to the coffers, while investing activities used $974 million, mainly for capital expenditures. Investing activities were $78 million higher in 2017 due to the acquisition of Eaton Cummins Automated Transmission Technologies. Financing activities used another $1.4 billion for dividends to stockholders and the company's stock repurchase program.

Strategy

The company's fortunes are shaped in large part by the cyclical booms and busts of the on-highway, construction, and industrial markets. Cummins' customers are particularly sensitive to the general economic climate, interest rates, and access to credit, as well as regulatory issues (environmental and emissions standards) and political shifts.

In an effort to mitigate a slump in demand in any one market or region, Cummins is continuing to transform itself from a company concentrated in North America to one whose business is seizing opportunities in developing countries. Following the US, China, Brazil, Russia, and India are Cummins' largest markets.

Cummins considers the three main areas of emerging technology to be alternative power, autonomous driving, and connectivity. To capitalize on all three, the company relies on joint ventures that allow it to reduce capital spending, streamline its supply chain, and boost technology development. Some partnering companies include Dongfeng Automotive and Beijing Foton Motor in China, Tata Motors in India,  Japan's Komatsu, and most recently, Ireland-based Eaton Corporation.

Cummins had formed a partnership with transit bus manufacturer Gillig in 2017 to develop its electrified powertrain for the North American market. In 2019 and 2020, the company will launch Cummins Battery Electric System and Cummins Hybrid Power Plug-In system for urban buses. The company intends to remain a key player in the commercial truck sector, even if that business shifts away from its core diesel engine business. It aims to be well-positioned against competition from new players like Tesla, Proterra, and Nikola Motor Company.

Mergers and Acquisitions

Cummins acquired Hydrogenics, a provider of fuel cell technologies, in 2019. The addition of Hydrogenics boosts Cummins' clean fuel operations with both fuel cell and hydrogen generation capabilities and allows it to offer integrated fuel cell solutions to customers.

In mid-2018, Cummins acquired Silicon-Valley based Efficient Drivertrains, Inc. (EDI) for a total purchase price of $64 million. EDI designs and produces hybrid and fully-electric power solutions for commercial markets. The acquisition will broaden EDI's electrification capabilities and products.

Another 2018 acquisition was UK-based Johnson Matthey Battery Systems, a company specializing in high-voltage, automotive-grade batteries for electric and hybrid vehicles. The $9 million acquisition allows Cummins to expand its electrification and energy storage capabilities and collaborate with Johnson Matthey to develop high energy battery materials for commercial heavy-duty applications.

In 2017, the company acquired Brammo, which designs and develops battery packs for mobile and stationary applications. Adding Brammo's battery expertise and resources is an important milestone in Cummins' efforts to increase its market share in the global electrified power market. The deal was worth $68 million.

Also in 2017, Cummins paid $600 million to form a new 50/50 joint venture with Eaton Corporation named Eaton Cummins Automated Transmission Technologies. In addition, each partner contributed $20 million for working capital. Eaton Cummins will focus on developing new transmission technologies for the commercial vehicle market.

Company Background

Chauffeur Clessie Cummins believed that Rudolph Diesel's cumbersome and smoky engine could be improved for use in transportation. Borrowing money and work space from his employer, Columbus, Indiana banker W.G. Irwin, Cummins founded Cummins Engine in 1919. Irwin invested more than $2.5 million in the company and in the mid-1920s, Cummins produced a mobile diesel engine. Truck manufacturers were reluctant to switch from gas to diesel, so Cummins used publicity stunts, such as racing in the Indianapolis 500, to advertise his engine.

The company was profitable by 1937, the year Irwin's grandnephew, Irwin Miller, took over. During WWII the Cummins engine was used in cargo trucks. Sales jumped from $20 million in 1946 to more than $100 million by 1956. That year Cummins started its first overseas plant in Scotland. It bought crankshaft, camshaft, and piston and valve supplier Atlas Crankshafts in 1958. By 1967 it had 50% of the diesel engine market.

Cummins Inc.

500 JACKSON ST
Columbus, IN 47201-6258
Phone: 1 (812) 377-5000

Stats

Employer Type: Publicly Owned
Stock Symbol: CMI
Stock Exchange: , NYSE
President and COO: Richard J. Freeland
Chairman and CEO: N. Thomas Linebarger
VP and CFO: Patrick J. Ward
Employees (This Location): 277
Employees (All Locations): 62,610

Major Office Locations

Columbus, IN

Other Locations

Anchorage, AK
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Birmingham, AL
Mobile, AL
Springdale, AR
Avondale, AZ
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Arcata, CA
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Rock Island, IL
Columbus, IN
Elkhart, IN
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Colby, KS
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