Cummins Sells Filtration Biz - Analyst Blog
September 12 2011 - 2:03PM
Zacks
Cummins Inc. (CMI) announced the sale of a part of
its light duty filtration operations to Evanston, Illinois-based
private equity firm Industrial Opportunity Partners LLC in order to
streamline the business.
The move
will help the company tap significant growth opportunities in the
development and deployment of filtration products in the midst of
tightening global emission standards.
The sale
will affect the company’s Kuss Filtration businesses in Findlay,
Ohio, Bloomer, Wisconsin, Sao Paulo, Brazil and Shanghai, China.
The company’s Kuss operations manufacture light duty filtration
products for smaller engines used in gasoline applications,
including in-tank fuel filters.
Cummins did
not disclose the terms of the deal. It has decided to operate the
business during the transition period.
Cummins’
filtration business is a part of its Component segment that
generates about 22% of its total revenue. In the second quarter of
2011, the Component segment sales surged 42% to $1.03 billion from
$729 million in the same quarter of 2010.
Significant
upside was also witnessed in Emission Solutions sales (up 88%),
Fuel Systems sales (up 45%), Turbo Technologies sales (up 39%) and
Filtration sales (up 15%). Segment earnings before interest and
taxes (EBIT) were $120 million (11.6% of sales) versus last year’s
$75 million (10.3% of sales).
The Zacks #2
Rank (Buy) company posted a profit of $505 million or $2.60 per
share in the second quarter of 2011, which was significantly higher
than the year-ago profit of $246 million or $1.25 per
share.
However,
excluding the after-tax gain of $37 million or 19 cents per share
during the quarter, the company’s adjusted income stood at $468
million or $2.41 per share, well ahead of the Zacks Consensus
Estimate of $2.01 per share.
Cummins
reported an EBIT of $707 million (15.2% of sales), up from $401
million (12.5% of sales) in the second quarter of 2010. Reported
EBIT in the second quarter excluded a gain of $68 million related
to the sale of the exhaust business from the Components
segment.
Revenues in
the reported quarter amounted to $4.64 billion, up 45% from $3.21
billion in the year-ago quarter, mainly driven by strong
performance across all the major markets. Revenues also surpassed
the Zacks Consensus Estimate of $4.25 billion.
Columbus,
Indiana-based Cummins is a leading worldwide designer, manufacturer
and distributor of diesel and natural gas engines, electric power
generation systems, and engine-related components, fuel systems,
controls and air handling systems.
The
company’s customer base comprises leading manufacturers, including
Chrysler LLC, Daimler AG
(DDAIF), Volvo AB,
PACCAR
Inc. (PCAR),
Navistar International
Corporation (NAV), CNH Global N.V., Komatsu,
Scania AB, Ford Motor
Company (F) and
Volkswagen
(VLKAY).
CUMMINS INC (CMI): Free Stock Analysis Report
DAIMLER AG (DDAIF): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
NAVISTAR INTL (NAV): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
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