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http://investor.cummins.com/phoenix.zhtml?c=112916&p=iro...

Cummins Announces First Quarter Results; Raises Outlook for 2018
First quarter revenues of $5.6 billion and EBITDA of 12.6 percent of sales
GAAP1 Net Income of $325 million and Diluted EPS of $1.96
Full year revenues expected to increase 10 to 14 percent
EBITDA is expected to be in the range of 15.4 to 15.8 percent of sales
First quarter Diluted EPS negatively impacted by $0.87 reflecting the cost of a product campaign
First quarter Diluted EPS negatively impacted by $0.47 as a result of discrete tax charges


A big miss on EPS outright (which explains the stock reaction), but if you take adjusted, it's a big beat of $3.30 vs expected $2.91, which I assume explains the raised outlook. Here are some details summarized:

-North America revs up 22%; International up 20%.
-$187M charge for a 'product campaign', which sounds like what they now think the quality issues previously reported on will be. This is likely what's hitting the stock, but this shouldn't come as a big surprise to anyone watching the last year of reports.
-Business fundamentals sound strong. It's a little wonky with the charge and previous guidance must have been very conservative because of the unknowns related to it. Based on the current forecast, Cummins expects full year 2018 revenues to be up 10 to 14 percent, compared to prior guidance of up 4 to 8 percent. EBITDA is projected to be in the range of 15.4 to 15.8 percent of sales, down from 15.8 to 16.2 percent of sales. Excluding the impact of the first quarter charge for the product campaign, full year EBITDA is expected to be in the range of 16.2 to 16.6 percent, reflecting strong incremental EBITDA of 28 percent at the midpoint, compared to 2017.

-Engine segment sales up 21%
-Distribution segment sales up 13%
-Components segment sales up 30%
-Power Systems sales up 22%
-New Electrified Power segment sales at $2M

I will listen to the cc and report back with any more info.

Howard
CMI Coverage Fool. See profile for holdings
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