conexpo%20investor%20presentation%202008
TRANSCRIPT
Ric KleineVice President Industrial Business
Meeting Tier 4 Emissions
2
Engine Segment
$7.5
$13.3
2006 2011
Where We’re HeadedFuture Performance
$1.5
$3.7
2006 2011
13% CAGR
13% CAGR
20% CAGR
20% CAGR
Joint Venture Sales Unconsolidated ($B)Consolidated Sales ($B)
How We’re Getting There
Emission regulations
Emerging markets
Strategic OEM partnerships
New engine platforms
Steady aftermarket revenue growth
Construction& Ag 18%
Market Application Geographic
Mining/RailGovt/O&G
Marine 15%
Light-duty Automotive & RV 16%
US/Canada55%
Heavy-dutytruck 24%
Medium-dutyTruck & bus 16%
StationaryPower 11%
EMEA 14%
Latin America &
Mexico 12%
East Asia 5%
SE/NE Asia 5%
India 7% South Pacific 2%
Who We Are
2007 Sales: $8.2B
Where We’ve BeenHistorical Performance
$3.6
$5.4
$6.7
$7.5
$8.2
2003 2004 2005 2006 2007
$0.8
$1.2 $1.3
$1.5
$1.9
2003 2004 2005 2006 2007
Joint Venture Sales Unconsolidated ($B)Consolidated Sales ($B)
23% CAGR
23% CAGR
25% CAGR
25% CAGR
3
Stronger Industrial Engine Sales Mix
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2004 2005 2006 2007
$ M
US ROW
$1,380
$1,791
$2,063
$2,676
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2004 2005 2006 2007
$ M
CON/AG HHP markets
$1,380
$1,791
$2,063
$2,676
By GeographyBy Industrial Application
Engine Segment
4
Tougher Global Emission Standards
Mexico2008
Mexico2008
Australia2008
Australia2008
Brazil2009
Brazil2009
Europe2009
Europe2009US /
Canada2010
US / Canada
2010
India2010India2010
China2010
China2010
Off-highway2011-14
Off-highway2011-14
5
0 0.54PM g/kW-hr
NO
x g/
kW-h
r
0.2
9.2
6.4
4.0
Tier 1 / Stage 1 (1996)
Tier 2 / Stage II (2001)
Tier 3 / Stage IIIA (2005)
Tier 4 Interim / Stage IIIB (2011)
Tier 4 Final / Stage IV (2014)
2.0
0.4
0.02
Tier 4 Regulations Approaching Near Zero Emissions
90% lower
90% lower
174-751 hp Power Category
45% lower
6
0 0.5 2 3 4 50.00
0.04
0.08
0.12
0..16
Engine Engine -- out NOx [g/kWout NOx [g/kW--hr]hr]
Engi
ne
Engi
ne --
out
Part
icul
ate
[g/k
Wou
t Pa
rtic
ulat
e [g
/kW
-- hr]hr]
1 2.51.5 4.53.5 5.5 6
0.20Tier 2
Tier 3
Tier 4 InterimTier 4 Final
In-Cylinder Combustion Optimization
Cooled EGR, VG Turbo & Combustion Optimization
ParticulateFilter
Incremental Architecture
A Proven Technology Route
174-751 hp Technology Route
7
Direct Flow Air Intake
Crankcase Filtration
Particulate Filter
System Integration Advantage
HPCR
VG Turbo
Integrated control system from ECM
All core technologies for Tier 4 are available from within Cummins own resources
Better integrated & performance optimized
8
Equipment factors Many different types Wide variations in duty cycles & load factorsSpace restrictions
Operational factorsVibration & shock loadsDust & dirtAngularity No ram air cooling
+
Integration with OEM Chassis
9
Designed for the Customer
High UptimeLow Operating CostsLow MaintenanceInitial Machine Cost
Packaging / CoolingHigher PerformanceSafe OperationClean Engine Sociability
Lowest Cost of Ownership
10
Thank You for Your Interest in
For Additional Information Contact:Dean Cantrell, Director – Investor Relations
(812) 377-3121 [email protected]
www.Cummins.com
Appendix
12
Cummins Inc.
Macro growth trends play to Cummins’strengthsDisciplined investment for growthDemonstrated technology leadership
ComponentsSegment 19%
EngineSegment 52%
Power GenSegment 19%
DistributionSegment 10%
FYE 2007 DataSales: $13.0 billionEBIT: $1,227 millionEBIT Margin: 9.4%
2007 Revenue by Segment
13
Cummins Inc.
Mexico/Latin America
9%
Africa/Middle East5%Canada
3%
United States46%
Asia/Australia19%
Europe/CIS18%
2007 Revenue by Marketing TerritoryInternational revenue is 54% of consolidated revenue in 2007Most international areas growing at double digit rateDemonstrates our geographic diversity
14
Cummins – Historical Performance
$181
$543
$907
$1,179$1,227
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2003 2004 2005 2006 2007
$ M
illon
s
$6,296
$8,438
$9,918
$11,362
$13,048
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2003 2004 2005 2006 2007
$ M
illon
s
EBITSales
15
Engine Segment
Emission regulations create opportunitiesEmerging marketsStrategic OEM partnershipsNew engine platformsAftermarket revenue creates stable earnings
HighHorsepower
(19-91L) 17%
Midrange(3-9L) 40%
Heavy-Duty(10-15L) 22%
Parts andService 21%
2007 Revenue by Product
FYE 2007 DataSales: $8.2 billionEBIT: $589 millionEBIT Margin: 7.2%
16
Engine Segment
Gaining market share in on-highway marketsIndustrial markets supported by non-residential construction and commodity marketsExpanding capacity to meet growing demand
Light-duty Automotive & RV 16%
Heavy-dutytruck 24%
Medium-dutyTruck & bus 16%
StationaryPower 11%
2007 Revenue by Market Application
Construction& Ag 18%
Mining/RailGovt/O&G
Marine 15%
FYE 2007 DataSales: $8.2 billionEBIT: $589 millionEBIT Margin: 7.2%
17
Engines – Historical Performance
$62
$328
$582
$733
$589
$0
$100
$200
$300
$400
$500
$600
$700
$800
2003 2004 2005 2006 2007
$ M
$3,582
$5,424
$6,657
$7,511$8,182
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2003 2004 2005 2006 2007
$ M
Segment EBITSales
18
Power Generation Segment
Commercial58%
Alternators20%
Rental2%
Consumer11%
PowerElectronics
4%Energy
Solutions5%
2007 Revenue by ProductCapitalize on industry growthLeverage existing market leadershipEstablish leadership in all major marketsExpand into new and adjacent markets
FYE 2007 Segment DataSales: $3.1 billionEBIT: $334 millionEBIT Margin: 10.9%
19
Power Generation – Historical Performance
($19)
$60
$145
$220
$334
($50)
$0
$50
$100
$150
$200
$250
$300
$350
$400
2003 2004 2005 2006 2007
$ M
$1,329
$1,842$1,999
$2,416
$3,060
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2003 2004 2005 2006 2007
$ M
Segment EBITSales
20
Components Segment
New products launchedIndustry leading technologyCapacity expansionGrow with CMI and non-CMI engine volumesLeverage global distribution to grow aftermarket
SpecialtyFiltration
6%Air IntakeSystems
9% Turbocharger29%
FuelSystems
14%
EngineFiltration
17%
AcousticExhaust
10%
FYE 2007 Segment DataSales: $2.9 billionEBIT: $153 millionEBIT Margin: 5.2%
2007 Revenue by Product
CatalyticExhaust
15%
21
Components – Historical Performance
$86 $84 $89
$107
$153
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2003 2004 2005 2006 2007
$ M
$1,292
$1,783$2,000
$2,281
$2,932
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2003 2004 2005 2006 2007
$ M
Segment EBITSales
22
Distribution Segment
Continue acquisitions, consolidations and integrationsLeverage Cummins equipment growthWorld-class customer supportBuild capabilities – invest in growing regions
Parts,Filters, &
Consumables37%
Service17%
Engines21%
PowerGeneration
25%
2007 Revenue by Product
FYE 2007 Segment DataSales: $1.5 billionEBIT: $187 millionEBIT Margin: 12.1%
23
Distribution – Historical Performance
$51
$79
$107
$144
$187
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2003 2004 2005 2006 2007
$ M
$669
$973
$1,191
$1,385
$1,540
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2003 2004 2005 2006 2007
$ M
Segment EBITSales
24
Joint Venture Sales Unconsolidated
$529
$1,474
$1,285$1,232
$1,940
$0
$500
$1,000
$1,500
$2,000
$2,500
2003 2004 2005 2006 2007
$ M
illio
ns $1,316
$1,029$1,204
$1,715
$2,497
$3,435
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2003 2004 2005 2006 2007
$ M
illio
ns
Engines Distribution
In 2003, sales from certain JVs (colored red above) were treatedas unconsolidated; adoption of FIN 46R in 2004 required the company to consolidate the results of certain JVs.
25
$162
$72
$105
$130
$166
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2003 2004 2005 2006 2007
$ M
illio
ns
$72
$94
$110$123
$175
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2003 2004 2005 2006 2007
$ M
illio
ns
Joint Venture Sales Unconsolidated
Power Generation Components
Non-GAAP Reconciliations
27
Non-GAAP Reconciliation – EBIT
We define EBIT as earnings before interest expense, provision for income taxes and minority interests in earnings of consolidated subsidiaries. We use EBIT to assess and measure the performance of our operating segments and also as a component in measuring our variable compensation programs. The table above reconciles EBIT, a non-GAAP financial measure, to our consolidated earnings before income taxes and minority interests, for each of the applicable periods.
We believe EBIT is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to financing methods, capital structure or income taxes. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data.
$ 1,169
$ 58
$ 1,227
2007
$ 91
$ 90
$ 181
2003
$ 1,083$ 798$ 432Earnings before income taxes and minority interests
$ 96$ 109$ 111Less: Interest Expense
$ 1,179$ 907$ 543EBIT
200620052004Millions
Years Ended