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Cummins_07/03/01_cs

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  • 1. Sustainable Performance in Global On-Highway Markets Tina Vujovich, VP – Marketing & Environmental Policy Credit Suisse’s 5th Annual Truck Builders Conference March 1, 2007
  • 2. Disclosure Regarding Forward-Looking Statements & non-GAAP Financial Measures This presentation contains certain forward-looking information. Any forward-looking statement involves risk and uncertainty. The Company’s future results may be affected by changes in general economic conditions and by the actions of customers and competitors. Actual outcomes may differ materially from what is expressed in any forward-looking statement. A more complete disclosure about forward- looking statements begins on page 61 of our 2006 Form 10-K, and it applies to this presentation. This presentation contains certain non-GAAP financial measures such as earnings before interest and taxes (EBIT). Please refer to our website (www.cummins.com) for the reconciliation of EBIT to GAAP financial measures. 2
  • 3. Diversified Global Power Leader Four Complementary Businesses Engines Power Components Distribution Generation 3
  • 4. Creating Greater Shareholder Value 550 l nu a r n n ge A Retu 500 vera older A 450 rs 46% hareh yea 4 400 tal S er last Stock Price Index To Ov 350 300 250 200 150 100 50 03 04 05 06 2 3 4 5 6 3 3 4 4 5 5 6 6 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 n- n- n- n- ep ep ep ep ar ar ar ar ec ec ec ec ec Ju Ju Ju Ju M M M M D S D S D S D S D CMI S&P 500 Peer Avg. 4
  • 5. Confident in Our Ability to Perform in 2007 and Beyond We have fundamentally changed our business model Our customers recognize Cummins for our technology leadership We are investing in the next generation of profitable growth opportunities 5
  • 6. 6
  • 7. Cummins is a Long-Term Player in Global On-Highway Markets We have fundamentally changed our business model Customers recognize Cummins for our technology leadership and dependability We are investing in the next generation of profitable growth opportunities in global automotive markets 7
  • 8. Aggressively Pursuing Cost Leadership Engine Segment Six Sigma $8,000 $800 $7,511 $6,657 $7,000 $700 Technical productivity Segment Net Sales ($M) Segment EBIT ($M) $6,000 $600 $5,424 $5,000 $500 Global sourcing $3,582 $4,000 $400 $3,435 $3,000 $300 Lean manufacturing $2,000 $200 $1,000 $100 $0 $0 2002 2003 2004 2005 2006 Segment Net Sales Segment EBIT 8
  • 9. Virtual Integration with OEM Partners 9
  • 10. Growing Share with OEM Partners 10
  • 11. Delivering Great End-Customer Value 11
  • 12. System Integration is Critical Controls Integration Vehicle, engine and aftertreatment . . . a single system designed to optimize performance, reliability, cost and emissions 12
  • 13. The Right Technology Matters Active Particulate Filter NOx Adsorber Periodic Fuel Injection NOx Adsorber Catalyst NOx Control Using Urea SCR Soot Urea (NH3) Ash Ash Soot 13
  • 14. Investing in ‘Emissionized’ Markets Europe 63,000 China 104,000 North America 428,000 Japan India 69,000 100,000 South America 69,000 2006 Global Production 833,000 Engines 14
  • 15. Investing in Global Light Duty Diesel <6000 lb GVW 6000 – 8500 lb GVW >8500 lb GVW Light Truck (includes PU trucks, SUVs and Vans) North America 2.9 M 6.6 M 0.85 M 0% Diesel 67% Diesel Worldwide 11.7 M 0.85 M 10% Diesel 67% Diesel 15
  • 16. Investing in Emerging On-highway Markets 16
  • 17. Investing in Distribution Channel Company-owned Joint Venture Independent 17
  • 18. 18
  • 19. Appendix
  • 20. Cummins Inc. 2006 Revenue by Segment 2006 – Outstanding Components Segment 17% Year Record revenue and Engine Segment 55% EBIT for the company Distribution and each operating Segment 10% segment Record net income Record cash flow from operations for the year Power Gen Segment 18% 2006 Data Sales: $11.4 billion EBIT: $1,179 million EBIT Margin: 10.4% (Target: 7-10%) 20
  • 21. Cummins Inc. 2006 Revenue by Marketing Territory International revenue Africa/Middle East Canada 5% is 50% of consolidated 7% revenue Mexico/Latin Pre-emission demand America 8% has accelerated US growth rate Most international United States 50% areas growing at Asia/Australia double digit rate 16% Europe/CIS 14% 21
  • 22. Cummins – Historical Performance Sales EBIT $12,000 1400 $11,362 $1,179 $9,918 1200 $10,000 $8,438 1000 $907 $8,000 $ Millons $ Millons 800 $6,296 $5,853 $6,000 $543 600 $4,000 400 $181 $2,000 200 $139 $0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 22
  • 23. Engine Segment 2006 Revenue by Product Emission regulations Parts and create opportunities Service 20% Midrange Aftermarket revenue (3-9L) 37% creates stable earnings Emerging markets Strategic OEM partnerships High Horsepower (19-91L) 14% 2006 Segment Data Heavy-Duty Sales: $7.5 billion (10-15L) 29% EBIT: $733 million EBIT Margin: 9.8% (Target: 7-10%) 23
  • 24. Engine Segment 2006 Revenue by Market Application Heavy-duty Truck Stationary demand remains strong Power 10% Mining/Rail Heavy-duty Share gains in Medium- Govt/O&G truck 33% Marine 12% duty Truck & Bus Off-highway markets supported by non- residential construction Construction & Ag 15% and commodity markets Medium-duty Light-duty Truck & bus 13% 2006 Segment Data Automotive Sales: $7.5 billion & RV 17% EBIT: $733 million EBIT Margin: 9.8% (Target: 7-10%) 24
  • 25. Engines – Historical Performance Sales Segment EBIT 8000 800 $7,511 $733 7000 700 $6,657 $582 6000 600 $5,424 5000 500 $M $M 4000 400 $3,435 $3,582 $328 3000 300 2000 200 1000 100 $62 $37 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 25
  • 26. Power Generation Segment 2006 Revenue by Product Turnaround complete Alternators Commercial Strengthening markets 19% 56% Expanding market share Rental Consumer growth 2% opportunities Growing project business Consumer capability 13% Power Electronics 6% 2006 Segment Data Energy Sales: $2.4 billion Solutions 4% EBIT: $220 million EBIT Margin: 9.1% (Target: 7-9%) 26
  • 27. Power Generation – Historical Performance Sales Segment EBIT 3000 250 $220 $2,416 2500 200 $1,999 $145 2000 150 $1,842 $M $M 1500 100 $1,329 $1,226 $60 1000 50 500 0 ($19) ($25) 0 -50 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 27
  • 28. Components Segment 2006 Revenue by Product Specialty Strategic advantage in Filtration 6% emissions compliance Air Intake Systems Significant future growth Turbocharger 11% in revenue and earnings 27% Multiple new product introductions Acoustic Exhaust Winning non-CMI 12% business Fuel Systems 17% Engine Filtration 2006 Segment Data Catalytic 21% Sales: $2.3 billion Exhaust EBIT: $107 million 6% EBIT Margin: 4.7% (Target: 7-9%) 28
  • 29. Components – Historical Performance Sales Segment EBIT 120 2500 $2,281 $107 $2,000 100 $94 2000 $89 $86 $1,783 $84 80 1500 $1,292 $M $M 60 $951 1000 40 500 20 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 29
  • 30. Distribution Segment 2006 Revenue by Product Broadening product Service offering 18% Engines Expanding global 20% coverage Increasing equity ownership Excelling in customer support Parts, Filters, & Consumables Power 38% Generation 2006 Segment Data 24% Sales: $1.4 billion EBIT: $144 million EBIT Margin: 10.4% (Target: 8-10%) 30
  • 31. Distribution – Historical Performance Sales Segment EBIT 1600 160 $144 $1,385 1400 140 $1,191 1200 120 $107 $973 1000 100 $79 $M $M 800 80 $669 $574 600 60 $51 400 40 $33 200 20 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 31