Welcome
                          Cummins Investor Conference
                          Jamestown Engine Plant



        ...
Presenters
•   Tim Solso,
    Chairman and CEO
•   Joe Loughrey,
    President and COO
•   John Wall,
    Chief Technical ...
Disclosure Regarding Forward-Looking Statements
                          & non-GAAP Financial Measures

                 ...
Cummins Inc.
                          Joe Loughrey
                          Chief Operating Officer




                ...
Tougher Emission Standards
                                                     Off-
                                     ...
Emerging Markets
                                                                     CIS
                                ...
Well Positioned for Growth

                            Deep technology capability
                            Strong glob...
Strong Global Network
                          Technical Centers




                     9




                         ...
Strong Global Network
                           Distribution




                          Company-owned

               ...
New Products




                                                               XPI fuel system
                          ...
Global Market Leadership
                                               Turbos
                                           ...
Profitable Growth

                                                              Sales                                    ...
Technology Leadership

                         Dr. John Wall
                         Chief Technical Officer




       ...
Global Engineering Workforce

                                                      Brazil 37
                            ...
Darlington
                                                           Daventry
                                           ...
Technical Productivity
                                      $12,000                                                      ...
Technical Productivity

                         Common Processes
                           Product Line Architecture
   ...
Global Emission Requirements - 2010


                                                   2

                              ...
Product Line Architecture

                           Principles: Standardization, Modularity, Reuse
                     ...
2010 Products
                         Another Evolutionary Step

                                            Key Enablers...
OptiAir Filter
                                     Product Architecture




                         Patented features
  ...
Engineering Standard Work

                                                    “Current best practices uniformly applied.”...
Warranty Expense
                         Percent of Sales

                         5%



                         4%



...
Analysis Led Design
                           Use computer analysis and simulation to eliminate
                         ...
Analysis Led Design

                           Better Designs Faster at Lower Cost

                           2007 Heavy...
UK Darlington
                                                          Daventry
                                         ...
Our Products Must Meet
                             Customer Requirements




                    29
                    2...
Innovation

                           Emission technology best in world
                           Invested in right tech...
Innovation in Critical Component
                           Technologies




                    33
                    33...
Hybrid Powertrain
                                 100kW Cummins Power Module



                                         ...
Cummins Powered Dodge Ram video

                         This is how it all comes together:
                         Cumm...
39
                    39




Cummins Inc. - 2007 Investor Conference
John Wall
Engine Business

                              Jim Kelly, President




                              Who We Are
         ...
Where We’ve Been
                               Engine Business – Historical Performance

                                ...
Engine Business – Sales Volume Growth


                                                        EMEA
                     ...
How We’re Getting There
                          Emission Regulations

                           Competitive advantage
 ...
How We’re Getting There
                          Strategic OEM Partnerships




                     9




              ...
How We Are Getting There
                          Steady Aftermarket Revenue Growth

                                    ...
Growth in JV Income

                          Key Joint Ventures
                                                        ...
Power Generation

                            Tom Linebarger, President




                            Who We Are

      ...
Where We’ve Been
                          Power Generation – Historical Performance

                                    ...
How We’re Getting There

                           Capitalize on industry growth
                           Leverage exis...
How We’re Getting There
                               Leverage Existing Market Leadership

                              ...
How We’re Getting There
                          Expand Into New and Adjacent Markets




                     9




    ...
Distribution Business

                          Rich Freeland, President




                          Who We Are

      ...
Who We Are
                               Market Application                            Market Territory
                 ...
Where We’ve Been
                                         Distribution – Historical Performance

                         ...
Where We’re Headed

                                                                    2011
                             ...
Where We’re Headed
                                      Distribution – Future Performance
                               ...
How We’re Getting There
                          Build Capabilities

                          Common processes
         ...
Growth in JV Income
                                                                               Segment JV Income
     ...
Components

                          Rick Mills, President




                          Who We Are
                     ...
Who We Are

                                      Market Application                                               Marketi...
Where We’re Going
                          Components – Future Performance

                                             ...
How We’re Getting There
                          Emission Solutions
                                                     ...
How We’re Getting There
                          Fuel Systems

                           Critical to engine performance ...
How We’re Getting There
                          Leverage Cummins Strengths

                            Grow with Cummin...
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Cummins_Investor_Conference_SEP_18-07
Upcoming SlideShare
Loading in...5
×

Cummins_Investor_Conference_SEP_18-07

524

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
524
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Cummins_Investor_Conference_SEP_18-07"

  1. 1. Welcome Cummins Investor Conference Jamestown Engine Plant September 2007 Agenda Welcome 9:15 a.m. to 10:40 a.m. – Presentations 10:40 a.m. to 10:55 a.m. – Break 10:55 a.m. to noon – Presentations Noon to 1 p.m. – Q and A 1 p.m. to 3 p.m. – Lunch, plant tours, exhibits 2 Cummins Inc. - 2007 Investor Conference Tim Solso
  2. 2. Presenters • Tim Solso, Chairman and CEO • Joe Loughrey, President and COO • John Wall, Chief Technical Officer • Jim Kelly, President, Engine Business • Tom Linebarger, President, Power Generation • Rich Freeland, President, Distribution • Rick Mills, President, Components • Steve Chapman, Group Vice President, Emerging Markets • Anant Talaulicar, Vice President, Cummins India • Jean Blackwell, Chief Financial Officer
  3. 3. 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 those measures to GAAP financial measures. 3 Earnings Growth Strong balance sheet and cash flows Technical leadership Global presence 4 Cummins Inc. - 2007 Investor Conference Tim Solso
  4. 4. Cummins Inc. Joe Loughrey Chief Operating Officer Agenda Macro trends moving our way Well positioned to take advantage Sustained profitable growth 2 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  5. 5. Tougher Emission Standards Off- highway 2011-14 Europe 2009 China US / 2010 Canada 2010 Australia 2008 India Mexico Brazil 2010 2008 2009 3 Demand for Energy and Fuel Efficiency Higher fuel costs and electricity consumption Energy independence and fuel economy Dependence on reliable electric supply 4 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  6. 6. Emerging Markets CIS Turkey GDP 6-7% GDP 5% China GDP 9-11% Nigeria Vietnam GDP 7% GDP 7-8% India GDP 8% 5 Real Growth Opportunity Global diesel engine market growth 6 - 7% CAGR Gasoline engine markets shifting to diesel Clean diesel engine markets growing faster Global Use of Clean Diesel 2003 2014 6 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  7. 7. Well Positioned for Growth Deep technology capability Strong global network Major strategic partnerships New products Capacity expansion Global market leadership Continuous improvement and change 7 Deep Technology Capability Investing in the right technology Great partners World class methods and tools Reflected in results 8 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  8. 8. Strong Global Network Technical Centers 9 Strong Global Network Manufacturing 10 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  9. 9. Strong Global Network Distribution Company-owned Joint Venture Independent 11 Major Strategic Partnerships Daimler MerCruiser 12 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  10. 10. New Products XPI fuel system Tier 2 HHP Light-duty engines Comfort Guard Filtration 13 Capacity Expansion Engines Gensets Alternators Turbochargers Fuel systems Catalytic exhaust systems 14 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  11. 11. Global Market Leadership Turbos MD Truck Alternators Mining SCR Systems Excavators Bus HD Truck HD pick-up Bus, RV Power Gen Power Gen Marine Filtration Turbos Catalytic MD Truck Exhaust Power Gen Filtration Industrial Power Gen Filtration MD Truck Turbos 15 Continuous Improvement and Change Cummins Operating System Global sourcing Expansion of Six Sigma Partnering to ensure customer success Global recruiting and development 16 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  12. 12. Profitable Growth Sales EBIT $25 $2.5 GR GR $2.1 CA $20 CA $2.0 $20 % % 12 12 $1.5 $15 $ Billions $ Billions $1.2 $11 $1.0 $10 $0.5 $5 $0.0 $0 2006 2011 2006 2011 17 Cummins Inc. - 2007 Investor Conference Joe Loughrey
  13. 13. Technology Leadership Dr. John Wall Chief Technical Officer Darlington Daventry Ramsgate France UK Stamford Quimper Huddersfield USA Rocky Mount Jamestown Cookeville Japan Stoughton Oyama Fridley Charleston Seymour China Columbus Chongqing Xiangfan India Mexico Brazil Wuhan San Luis Potosi Sao Paulo Pune Beijing Indore Wuxi Jamshedpur Cummins Major Engineering Centers including Joint Ventures 2 2 Cummins Inc. - 2007 Investor Conference John Wall
  14. 14. Global Engineering Workforce Brazil 37 4000 Engineers worldwide Mexico 26 China 207 • 2500 US • Growth in India and China India 506 • Mechanical Eng • Materials Eng • Electrical Eng • Chemical Eng • Chemistry UK - 646 1200 Engineering Technicians US – 2,474 3 3 Technical Testing Laboratories UK USA Plant Engr USA 2 CVS Cells 2 CVS Cells 19 Test Cells CPG-Fridley 21Test Cells 1 Cold Cell 31 Gen Test Cells 27 Test Stands 6 Gen Set Cells 2 Cold Cell 24 End Gen Test Cells CES/CF-Stoughton 9 Test Cells 22 Test Stands 237 Test Cells Europe Quimper 21 Emission cells Columbus- 10 Test Stands 2 Chassis Rolls 63 Test stands 17 CVS Cells 81 Perf/End Test Cells 2 vehicle chassis cells 2 Altitude 2 Cold Cells India 3 Noise Cells China 11 Test Cells 3 Single Cylinder Cells 1 Gen Test Cell Test Cells 11 4 Gen Set Cells Brazil 4 Turbo Test Stands 6 Test Cells 4 4 Cummins Inc. - 2007 Investor Conference John Wall
  15. 15. Darlington Daventry Ramsgate France UK Stamford Quimper Huddersfield USA Rocky Mount Jamestown Cookeville Japan Stoughton Oyama Fridley Charleston Seymour China Columbus Chongqing Xiangfan India Mexico Brazil Wuhan San Luis Potosi Sao Paulo Pune Beijing Indore Wuxi Jamshedpur Global Integration 5 5 Common Technical Objectives Worldwide Innovation + Productivity 6 6 Cummins Inc. - 2007 Investor Conference John Wall
  16. 16. Technical Productivity $12,000 5.5% $11,000 R/E % $10,000 4.5% $9,000 $8,000 3.5% $7,000 $ Millions $6,000 2.5% $5,000 Sales $4,000 1.5% $3,000 $2,000 0.5% $1,000 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sales R&E % Sales 7 7 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 8 8 Cummins Inc. - 2007 Investor Conference John Wall
  17. 17. Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 9 9 Diversity - Applications 10 10 Cummins Inc. - 2007 Investor Conference John Wall
  18. 18. Global Emission Requirements - 2010 2 3 4 5 4 3 Stringency 2 2 Unregulated 3 Group 1 3 2 Group 2 Group 3 Group 4 Group 5 11 11 Diversity – Engine Technology 3500 hp 31 hp 12 12 Cummins Inc. - 2007 Investor Conference John Wall
  19. 19. Product Line Architecture Principles: Standardization, Modularity, Reuse Develop broad range of modular technical building blocks – Product hardware and software – Simulation tools Leverage capability to create integrated products tailored to meet customer needs worldwide – Low cost High feature content – On-highway Off-highway – North America India Match technology to application 13 13 Stable Emissions Architecture 2002 2007 + Particulate Filter R&D Since Late 1980’s Requires a Long Term View EGR R&D Since Early 1990’s 14 14 Cummins Inc. - 2007 Investor Conference John Wall
  20. 20. 2010 Products Another Evolutionary Step Key Enablers Advanced Combustion Technology Next-Generation Cooled EGR Flexible Common-Rail Fuel System Cummins Aftertreatment Cummins VG Turbocharger Electronic Controls Capable Base Engine Design 2010 15 15 Stable Emissions Architecture Tier 3 Tier 2 In-Cylinder. No EGR. No Aftertreatment 16 16 Cummins Inc. - 2007 Investor Conference John Wall
  21. 21. OptiAir Filter Product Architecture Patented features 17 17 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 18 18 Cummins Inc. - 2007 Investor Conference John Wall
  22. 22. Engineering Standard Work “Current best practices uniformly applied.” – Structured approach to product design – Critical for global collaboration 19 19 Base Engine Component Warranty $60 50% Reduction $50 Warranty Cost (Millions) $40 $30 $20 $10 $0 2002 2003 2004 2005 2006 20 20 Cummins Inc. - 2007 Investor Conference John Wall
  23. 23. Warranty Expense Percent of Sales 5% 4% 3% EGR 2% DPF 1% 0 2000 2001 2002 2003 2004 2005 2006 2007 21 21 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 22 22 Cummins Inc. - 2007 Investor Conference John Wall
  24. 24. Analysis Led Design Use computer analysis and simulation to eliminate expensive prototypes and testing More designs evaluated in shorter time Virtual product build Complex system optimization Implemented through Engineering Standard Work Added 2500 hours analysis Eliminated 5500 hours testing / prototypes Better Designs Faster at Lower Cost 23 23 Analysis Led Design Better Designs Faster at Lower Cost 24 24 Cummins Inc. - 2007 Investor Conference John Wall
  25. 25. Analysis Led Design Better Designs Faster at Lower Cost 2007 Heavy Duty Engine Program 100% more analysis hours 20% lower total program cost 2007 Midrange Engine Programs 200% analysis hours 29% lower total program cost 25 25 UK Darlington Daventry Ramsgate France Stamford Quimper Huddersfield Cummins Research & Technology India USA Rocky Mount Japan Jamestown Oyama Cookeville Stoughton Fridley Charleston China Columbus Chongqing Brazil India Xiangfan Mexico Sao Paulo Pune Wuhan San Luis Potosi Indore Beijing Wuxi 26 26 Cummins Inc. - 2007 Investor Conference John Wall
  26. 26. UK Darlington Daventry Ramsgate France Stamford Quimper Huddersfield Cummins Research & Technology India • CRTI opened January 2004 • Pure analysis and design USA Rocky Mount • CFD: #1 India, Top 2 CMI Japan Jamestown • Structural Analysis: Top 5 India, #1 CMI Oyama Cookeville Stoughton 160 engineers today • Fridley Charleston 250 engineers YE 2008 • Columbus $25/hr vs. $60/hr: $10 million savings 2007 • China Chongqing Brazil India Xiangfan Mexico Sao Paulo Pune Wuhan San Luis Potosi Indore Beijing Wuxi 27 27 Six Sigma in Technology and Product Development Higher Quality Products and Processes Technology Process Product Development Improvement Design Technology Process Design For Development Six Sigma Six Sigma For Six Sigma Six Sigma Tools and Methodologies 28 28 Cummins Inc. - 2007 Investor Conference John Wall
  27. 27. Our Products Must Meet Customer Requirements 29 29 Our Products Must Meet Customer Requirements Fuel Efficient High Performance Connected and Integrated Systems Reliable and Durable Low Highly Emissions Sociable Low Initial Cost High Quality Low Maintenance and Aesthetics 30 30 Cummins Inc. - 2007 Investor Conference John Wall
  28. 28. Innovation Emission technology best in world Invested in right technologies across all our businesses Match right technology to application Better quality through stable architecture System integration builds on Cummins synergies 31 31 Innovation in Critical Component Technologies 70% CMI 30% Other 20% CMI 80% Other 50% CMI 50% Other 70% CMI 30% Other 32 32 Cummins Inc. - 2007 Investor Conference John Wall
  29. 29. Innovation in Critical Component Technologies 33 33 Innovation in Critical Component Technologies #1 US CMI 70% DPF #1 Euro SCR 30% Other 20% CMI Closed Crankcase Ventilation 100% USOther Duty Diesel 2010 80% Light 50% CMI #1 US HD VGT 50% Other 70% CMI 30% Other 34 34 Cummins Inc. - 2007 Investor Conference John Wall
  30. 30. Hybrid Powertrain 100kW Cummins Power Module er pow iesel in d No. 1 today is mins hybrids Cum for 35 35 2007 And Beyond . . . Integrating Engine and Aftertreatment Active Particulate Filter NOx Adsorber Periodic Fuel Injection US on in ucti trod 1s in t NOx Adsorber Catalyst NOx Control Using Urea SCR Soot Urea (NH3) Ash Ash Soot 36 36 Cummins Inc. - 2007 Investor Conference John Wall
  31. 31. Cummins Powered Dodge Ram video This is how it all comes together: Cummins components Including the most complex and effective diesel exhaust aftertreatment system in production today Integrated into a power system with our OEM partner Chrysler to deliver - More power 50% less noise 2010 emission levels 37 37 Technical Capability and Global Presence Fuel Future Growth 4 New Engines: 2.8L, 3.8L, LDD, Mid-bore HD New Fuel System 3 New Turbocharger Platforms New Integrated Filter Modules New Aftertreatment 38 38 Cummins Inc. - 2007 Investor Conference John Wall
  32. 32. 39 39 Cummins Inc. - 2007 Investor Conference John Wall
  33. 33. Engine Business Jim Kelly, President Who We Are Marketing Territory Market Application India, 3% Power Generation 11% South Pacific,1% SE/NE Asia, 4% Heavy-duty truck 28% East Asia, 5% Mining/Rail Govt/O&G Marine 14% Latin America & Mexico, 13% EMEA, Medium-duty 12% Construction Truck & bus 14% & Ag 16% US/Canada 63% Light-duty Automotive & RV 17% Engine Sales – LTM $7.7B 2 Cummins Inc. - 2007 Investor Conference Jim Kelly
  34. 34. Where We’ve Been Engine Business – Historical Performance Consolidated Sales Joint Venture Sales Unconsolidated $9.0 $1.8 $1.6 $7.7 $8.0 $7.5 $1.6 $1.5 $6.7 $7.0 $1.4 $1.3 $1.2 $6.0 $5.4 $1.2 $ Billions $ Billions $5.0 $1.0 $0.8 $4.0 $3.6 $0.8 $3.0 $0.6 $2.0 $0.4 $1.0 $0.2 $0.0 $0.0 2003 2004 2005 2006 LTM 2003 2004 2005 2006 LTM 3 Where We’re Headed Engine Business – Future Performance Consolidated Sales Joint Venture Sales Unconsolidated R $3.7 $4.0 $13.3 $14.0 AG GR C $3.5 CA % $12.0 13 % $3.0 20 $10.0 $2.5 $ Billions $7.7 $ Billions $7.5 $8.0 $2.0 $1.6 $6.0 $1.5 $1.5 $4.0 $1.0 $2.0 $0.5 $0.0 $0.0 2006 LTM 2011 2006 LTM 2011 4 Cummins Inc. - 2007 Investor Conference Jim Kelly
  35. 35. Engine Business – Sales Volume Growth EMEA 2006: 63,000 China North America 2011: 110,000 2006: 122,000 2006: 397,000 2011: 423,000 2011: 708,000 India 2006: 97,000 2011: 201,000 Rest of World 2006: 154,000 2006 Total = 833,000 2011: 193,000 2011 Total = 1,635,000 How We’re Getting There Growth drivers Emission regulations Emerging markets Strategic OEM partnerships New engine platforms Steady aftermarket revenue growth 6 Cummins Inc. - 2007 Investor Conference Jim Kelly
  36. 36. How We’re Getting There Emission Regulations Competitive advantage Right technology Growing market share Expect regulatory changes to continue On board diagnostics Global emissions alignment Carbon regulations Industrial segments: global presence / partnerships 7 How We’re Getting There Emerging Markets China Russia Medium Duty Truck Medium Duty Truck Heavy Duty Truck Light Commercial Vehicle Construction India Brazil Medium Duty Truck Medium Duty Truck Light Commercial Vehicle Construction/Agriculture 8 Cummins Inc. - 2007 Investor Conference Jim Kelly
  37. 37. How We’re Getting There Strategic OEM Partnerships 9 How We’re Getting There New Engine Platforms 1,800 Engine Production (Thousands) 1,600 1,400 1,200 1,000 800 600 400 200 0 2006 Organic New 2011 Growth Platforms 10 Cummins Inc. - 2007 Investor Conference Jim Kelly
  38. 38. How We Are Getting There Steady Aftermarket Revenue Growth $2B sales by 2011 Strong margins create solid earnings platform Growth opportunities Increasing engine population in all platforms, territories Remanufactured product growth Leverage outstanding distribution 11 Growing Margin Dollars Engines $1,400 GR CA $1,200 % Segment EBIT ($ M) 12 $1,000 $800 $600 $400 $200 $0 2003 2006 2011 12 Cummins Inc. - 2007 Investor Conference Jim Kelly
  39. 39. Growth in JV Income Key Joint Ventures $160 Dong Feng Cummins $140 Foton Cummins Segment JV Income ($ M) $120 $100 Tata Cummins $80 Cummins Mercruiser $60 $40 $20 $0 2003 2006 2011 13 Earnings Growth Global Growth Opportunities Old New Targets Targets Positioned Well Technology Revenue Partners 8 – 10% 13% Growth Leveraging Revenue Growth To Earnings Segment 7 – 10% 8.5% EBIT % 14 Cummins Inc. - 2007 Investor Conference Jim Kelly
  40. 40. Power Generation Tom Linebarger, President Who We Are Market Application Marketing Territory EMEA 34% Distributed Standby Generation Power 32% Latin America 56% 8% North America India 36% 10% China Mobile Power 5% Asia Pacific 12% 7% Power Generation Sales – LTM $2.7B 2 Cummins Inc. - 2007 Investor Conference Tom Linebarger
  41. 41. Where We’ve Been Power Generation – Historical Performance Consolidated Sales Segment EBIT GR GR CA $3,000 $300 CA $284 $2.7 % % 1 23 41 $2.4 $2,500 $250 $220 $2.0 $2,000 $200 $1.8 $145 $ Millions $ Billions $150 $1,500 $1.3 $1,000 $100 $60 $50 $500 ($19) $0 $0 2003 2004 2005 2006 LTM 2004 2005 2006 LTM 2003 -$50 3 Where We’re Going Power Generation – Future Performance Consolidated Sales Segment EBIT $600 $6,000 GR GR CA CA 15% $480 $500 $4.8 $5,000 % 17 $400 $4,000 $284 $300 $3,000 $2.7 $ Billions $ Millions $2.4 $220 $200 $2,000 $100 $1,000 $0 $0 2006 LTM 2011 2006 LTM 2011 4 Cummins Inc. - 2007 Investor Conference Tom Linebarger
  42. 42. How We’re Getting There Capitalize on industry growth Leverage existing market leadership Establish leadership in all major markets Expand into new and adjacent markets 5 How We’re Getting There Capitalize on Industry Growth Electricity demand Dependence on electricity Developing economies Low investment in generation and distribution 6 Cummins Inc. - 2007 Investor Conference Tom Linebarger
  43. 43. How We’re Getting There Leverage Existing Market Leadership Standby Mobile Power Distributed Power Generation 30% 40% 85% Motorized RV Basic Power High-spec Standby 33% 40% Alternators 25% Recreational Marine Commercial Mobile 7 Source: Parkinson and company estimates How We’re Getting There Establish Leadership in All Major Markets Cummins Leadership Positions Top 8 regions 92% of total 35% Market leader (#1 or #2) 30% Leader in some segments 25% Not a market leader 20% 15% 10% 5% 0% North Western China Middle India Southeast Latin Africa America Europe East Asia America 8 Cummins Inc. - 2007 Investor Conference Tom Linebarger
  44. 44. How We’re Getting There Expand Into New and Adjacent Markets 9 Earnings Growth Strong growth opportunities Solid leadership team Old New Targets Targets Low cost producer Revenue Increased value-add 8 – 10% 15% Growth Segment 7 – 9% 10% EBIT % 10 Cummins Inc. - 2007 Investor Conference Tom Linebarger
  45. 45. Distribution Business Rich Freeland, President Who We Are Historical strength of Cummins Global reach Independent franchises Strategy changed in 2002 Consolidate into fewer, larger distributors Cummins takes equity stake • Favorable markets • Diversified / growing / profitable • Counter cyclical Outstanding customer support – consistent 1 Cummins Inc. - 2007 Investor Conference Rich Freeland
  46. 46. Who We Are Market Application Market Territory LA Africa 3% 5% Parts and North Consumables America Engine Europe 6% 6% 20% 30% China 6% India 8% M.E. Power Gen 13% 26% Service Asia Pacific 18% 29% Distribution – LTM Sales $1.4B 2 Where We’ve Been 2006 2001 Consolidated $5.4B Joint Venture $3.2B Independent Cummins participation $3.2B @ 28% = $0.9B Cummins participation $5.4B @ 67% = $3.6B CMI ownership increased from 28% to 67% of total revenues 3 Cummins Inc. - 2007 Investor Conference Rich Freeland
  47. 47. Where We’ve Been Distribution – Historical Performance Consolidated Sales Joint Venture Sales Unconsolidated $2.5 $2.5 $2.2 $2.0 $2.0 $1.4 $1.5 $1.5 $ Billions $ Billions $1.3 $1.2 $1.1 $1.0 $1.0 $1.0 $0.8 $0.7 $0.5 $0.5 $0.0 $0.0 2003 2004 2005 2006 2003 2004 2005 2006 4 Where We’ve Been Sales EBIT R $1.6 GR $160 G CA $144 CA $1.4 $1.4 % $140 27 % $1.2 41 $1.2 $120 $107 $1.0 $ Millions $ Billions $1.0 $100 $79 $0.8 $80 $0.7 $0.6 $60 $51 $0.4 $40 $0.2 $20 $0.0 $0 2003 2004 2005 2006 2003 2004 2005 2006 5 Cummins Inc. - 2007 Investor Conference Rich Freeland
  48. 48. Where We’re Headed 2011 2006 Consolidated Joint Venture $5.4B $8.9B Independent Cummins participation $5.4B @ 67% = $3.6B Cummins participation $8.9B @ 88% = $7.8B In 2011, 88% of revenue will flow through fully or partially owned distributors. 6 How We’re Getting There Acquisitions and Consolidations North America Equity in 14 of 16 Distributors Latin America Formation of new Joint Ventures Africa Grow/expand West Africa JV Asia Grow/expand Thailand/Vietnam JV 7 Cummins Inc. - 2007 Investor Conference Rich Freeland
  49. 49. Where We’re Headed Distribution – Future Performance Consolidated Sales Joint Venture Sales Unconsolidated GR CA $5.0 $5.0 $5.0 % 18 R $4.0 $4.0 AG C 15% $ Billios $ Billions $2.8 $3.0 $3.0 $2.2 $2.0 $2.0 $1.4 $1.0 $1.0 $0.0 $0.0 2006 2011 2006 2011 8 How We’re Getting There Grow Organically Parts and Service Growing engine population worldwide Complexity of products increasing Adding service outlets in emerging markets Power Generation: Building sales capabilities Engines: Small OEMs 9 Cummins Inc. - 2007 Investor Conference Rich Freeland
  50. 50. How We’re Getting There Build Capabilities Common processes Enterprise resource planning Distributor and BU synergies Customer Support Excellence Proactive and predictive services Re-engineer customer contact centers 10 New Targets Segment EBIT Consolidation and GR acquisitions $350 CA $310 All distributors/regions $300 % 17 to profit target $250 ($ Millions) Leveraging sales volume $200 $144 $150 Build capabilities – invest in growing regions $100 $51 $50 $0 2006 2003 2011 11 Cummins Inc. - 2007 Investor Conference Rich Freeland
  51. 51. Growth in JV Income Segment JV Income Almost half of profits GR by 2011 coming from $160 CA the JV Income line $134 $140 % 20 Leverage North America $120 JVs – act as one $100 ($ Millions) $80 Continue acquisitions and $54 $60 consolidations and expand markets in newly formed $40 $16 JVs around the globe $20 $0 2003 2006 2011 12 Earnings Growth Leverage Cummins Old New equipment growth Targets Targets Continue acquisitions, Revenue consolidations and 10% 15% Growth integrations World-class Segment customer support 8 – 10% 11% EBIT % Make best Distribution System even better Cannot be duplicated 13 Cummins Inc. - 2007 Investor Conference Rich Freeland
  52. 52. Components Rick Mills, President Who We Are Four distinct business units Emission Solutions Filtration Fuel Systems Turbo Technologies 2 Cummins Inc. - 2007 Investor Conference Rick Mills
  53. 53. Who We Are Market Application Marketing Territory AsiaPac Specialty 6% Engine 11% Filtration Air Intake LA 20% 11% 5% Catalytic Acoustic Exhaust Exhaust 11% 11% EMEA Fuel 23% Systems 14% N America 61% Turbos 28% Components Revenue – Q2 LTM $2.6B 3 Where We’ve Been Components – Historical Performance Consolidated Sales $3.0 $2.6 $2.5 $2.3 $2.0 $2.0 $1.8 $ Billions $1.5 $1.3 $1.0 $0.5 $0.0 2003 2004 2005 2006 LTM 4 Cummins Inc. - 2007 Investor Conference Rick Mills
  54. 54. Where We’re Going Components – Future Performance Consolidated Sales $6.5 GR 6.0 CA $5.5 % 20 $4.5 $3.5 $ Billions 2.6 2.3 $2.5 $1.5 $0.5 2006 LTM 2011 5 How We’re Getting There Growth Focus Emissions Fuel Economy Engine Performance 6 Cummins Inc. - 2007 Investor Conference Rick Mills
  55. 55. How We’re Getting There Emission Solutions Evolving Global Emission Standards Successful 2007 Accelerates Market Growth for Diesel product launches Catalytic Exhaust $6 Significant growth $5 Global Market Size ($B) opportunity $4 Capacity expansion $3 $1.5B Revenues We have 30% $2 of the market in 2011 today $1 $0 2006 2010 7 How We’re Getting There Filtration Most profitable business in the segment Profit margins improving Emissions creating new growth opportunities $2B Revenues in 2011 8 Cummins Inc. - 2007 Investor Conference Rick Mills
  56. 56. How We’re Getting There Fuel Systems Critical to engine performance and emissions Industry leading common rail fuel system Scania partnership Increasing demand $0.5B Revenues in 2011 9 How We’re Getting There Turbo Technologies Critical to emissions, Turbo Unit Volumes fuel economy and 4.5 engine performance 3.9 R 4 G CA 3.5 Cummins has the % 22 3 leading technology Millions 2.5 Demand driving significant 2 capacity expansion 1.5 1.5 1.2 $2B Revenues in 2011 1 0.5 0 2011 2005 2006 10 Cummins Inc. - 2007 Investor Conference Rick Mills
  57. 57. How We’re Getting There Leverage Cummins Strengths Grow with Cummins engines Grow with Cummins OEM partners Leverage global distribution to grow aftermarket 11 How We’re Getting There Growth With Cummins OEM Partners Aftertreatment Filtration Fuel Systems Turbos Navistar CNH Volvo Scania Paccar Daimler Komatsu 12 Cummins Inc. - 2007 Investor Conference Rick Mills

×