Sustainable Performance in Global On-Highway Markets

Transcription

1 Sustainable Performance in Global On-Highway Markets Tina Vujovich, VP Marketing & Environmental Policy Credit Suisse s 5 th 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 forwardlooking 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 ( for the reconciliation of EBIT to GAAP financial measures. 2

3 Diversified Global Power Leader Four Complementary Businesses Engines Power Generation Components Distribution 3

4 Creating Greater Shareholder Value % Average Annual Total Shareholder Return Over last 4 years Stock Price Index Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 CMI S&P 500 Peer Avg.

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

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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 Six Sigma $8,000 Engine Segment $7,511 $800 Technical productivity Global sourcing Lean manufacturing Segment Net Sales ($M) $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $3,435 $3,582 $5,424 $6,657 $700 $600 $500 $400 $300 $200 $100 Segment EBIT ($M) $ $0 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 Control Using Urea SCR Urea (NH 3 ) Ash Ash NOx Adsorber Catalyst Soot Soot 13

14 Investing in Emissionized Markets North America 428,000 Europe 63,000 India 100,000 China 104,000 Japan 69,000 South America 69, Global Production 833,000 Engines 14

15 Investing in Global Light Duty Diesel North America <6000 lb GVW lb GVW >8500 lb GVW Light Truck (includes PU trucks, SUVs and Vans) 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

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19 Appendix

20 Cummins Inc Outstanding Year Record revenue and EBIT for the company and each operating segment Record net income Record cash flow from operations for the year 2006 Data Sales: $11.4 billion EBIT: $1,179 million EBIT Margin: 10.4% (Target: 7-10%) Distribution Segment 10% 2006 Revenue by Segment Power Gen Segment 18% Components Segment 17% Engine Segment 55% 20

21 Cummins Inc. International revenue is 50% of consolidated revenue Pre-emission demand has accelerated US growth rate Most international areas growing at double digit rate 2006 Revenue by Marketing Territory Mexico/Latin America 8% Asia/Australia 16% Canada 7% Africa/Middle East 5% United States 50% Europe/CIS 14% 21

22 Cummins Historical Performance $12,000 Sales $11, EBIT $10,000 $9, $1,179 $8,000 $8, $907 $ Millons $6,000 $5,853 $6,296 $ Millons $543 $4, $2, $139 $181 $

23 Engine Segment Emission regulations create opportunities Aftermarket revenue creates stable earnings Emerging markets Strategic OEM partnerships 2006 Revenue by Product High Horsepower (19-91L) 14% Parts and Service 20% Midrange (3-9L) 37% 2006 Segment Data Sales: $7.5 billion EBIT: $733 million EBIT Margin: 9.8% (Target: 7-10%) Heavy-Duty (10-15L) 29% 23

24 Engine Segment Heavy-duty Truck demand remains strong Share gains in Mediumduty Truck & Bus Off-highway markets supported by nonresidential construction and commodity markets 2006 Revenue by Market Application Mining/Rail Govt/O&G Marine 12% Construction & Ag 15% Stationary Power 10% Heavy-duty truck 33% 2006 Segment Data Sales: $7.5 billion EBIT: $733 million EBIT Margin: 9.8% (Target: 7-10%) Light-duty Automotive & RV 17% Medium-duty Truck & bus 13% 24

25 Engines Historical Performance 8000 Sales $7, Segment EBIT $ $6, $5, $ $ M 4000 $3,435 $3,582 $ M 400 $ $37 $

26 Power Generation Segment Turnaround complete Strengthening markets Expanding market share Consumer growth opportunities Growing project business capability 2006 Revenue by Product Commercial 56% Alternators 19% Rental 2% Consumer 13% 2006 Segment Data Sales: $2.4 billion EBIT: $220 million EBIT Margin: 9.1% (Target: 7-9%) Energy Solutions 4% Power Electronics 6% 26

27 Power Generation Historical Performance 3000 Sales 250 Segment EBIT $ $2, $1,842 $1, $145 $ M 1500 $1,226 $1,329 $ M 100 $ ($25) ($19)

28 Components Segment Strategic advantage in emissions compliance Significant future growth in revenue and earnings Multiple new product introductions Winning non-cmi business 2006 Segment Data Sales: $2.3 billion EBIT: $107 million EBIT Margin: 4.7% (Target: 7-9%) Acoustic Exhaust 12% 2006 Revenue by Product Specialty Filtration 6% Air Intake Systems 11% Turbocharger 27% Engine Filtration 21% Catalytic Exhaust 6% Fuel Systems 17% 28

29 Components Historical Performance 2500 Sales $2, Segment EBIT $ $1,783 $2, $94 $86 $84 $89 $ M 1500 $1,292 $ M $

30 Distribution Segment Broadening product offering Expanding global coverage Increasing equity ownership Excelling in customer support 2006 Segment Data Sales: $1.4 billion EBIT: $144 million EBIT Margin: 10.4% (Target: 8-10%) 2006 Revenue by Product Parts, Filters, & Consumables 38% Service 18% Engines 20% Power Generation 24% 30

31 Distribution Historical Performance Sales $1, Segment EBIT $ $973 $1, $107 $ M $574 $669 $ M $51 $ $