Download - Cummins_SIRAN teleconference
SIRAN TeleconferenceSeptember 5, 2007
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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.
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Agenda
Well positioned for sustained earnings growth – Dean Cantrell, Director Investor Relations
Creating cleaner and healthier environment– Tina Vujovich, Vice President, Marketing &
Environmental Policy
Living our Core Values at Cummins– Marya Rose, Vice President, General Counsel &
Corporate Secretary
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Our Vision/MissionVISIONVISION
Making people’s lives better by unleashing the Power of Cummins.
MISSIONMISSION• Motivating people to act like owners working
together.
• Exceeding customers expectations by always being the first to market with the best products.
• Partnering with our customers to make sure they succeed.
• Demanding that everything we do leads to a cleaner, healthier, safer environment.
• Creating wealth for all stakeholders.
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Diversified Global Power Leader
Four Complementary Businesses
Engines PowerGeneration
Components Distribution
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Creating Greater Shareholder Value
Doubled our revenue in 5 yearsHighest period of net earnings as a percent of sales in over 40 yearsGenerated $4.6 billion in EBITDA since 2003Improved debt to capital from 60% in 2003 to 17% todayActively repurchased 3.5 million shares in 2 yearsExceeded both ROANA and ROE targets for over three years
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Focused on Sustained Earnings Growth
Our customers recognize Cummins for our technology leadership
Cummins’ global presence is unmatched by others
Cummins is well positioned for long-term growth
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Global Adoption Emission Standards
Mexico2008
Australia2008
Brazil2009
Europe2009US /
Canada2010
India2010
China2010
Off-highway2011-14
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3500
Car
6000 – 8500 lb GVW >8500 lb GVW
Light Vehicles (<14,000 GVW)
Light Truck (includes PU trucks, SUVs and Vans)
<6000 lb GVW
9.9 M 6.6 M 0.85 M2.9 M
100% gasoline 100% Gasoline 67% Diesel, 33 % Gas
Dieselization of North America
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Profitable Growth – Engines
Light Duty Diesel in U.S. and China
13- and 11-liter Engines in China
Market Share Gains
Midrange Engine Capacity
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2006 OrganicGrowth
NewPlatforms
2010
Engi
ne P
rodu
ctio
n (M
illio
ns)
In 2010, 25% of our engine volume will come from new engine platforms.
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Profitable Growth – Components
$0
$1
$2
$3
$4
$5
$6
2006 2010
Glo
bal M
arke
t Siz
e ($
B)
Strategic advantage in emissions complianceSignificant future growth in revenue and earningsMultiple new product introductionsWinning non-Cummins business
Evolving Global Emission Standards Accelerates Market Growth for
Diesel Catalytic Exhaust
We have 30% of the market today
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Profitable Growth – Distribution
Revenues through our distribution channel are growing 10% CAGR.In 2011, nearly 90% of revenue will flow through fully or partially owned distributors.
20062011
Joint Venture Company Owned Independent
2001
$3.2B $5.4B $8.9B
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Profitable Growth – Power Generation
Pursuing market leadership in commercial generators
Expanding into adjacent consumer markets
Market Leader (# 1 or # 2)
Leader in some segments
Not a market leader
Global Generator Set Consumption (Total Output)Approximate $7 Billion Annual Global Market
Top 8 regions 92% of total
0%
5%
10%
15%
20%
25%
30%
35%
NorthAmerica
WesternEurope
China MiddleEast
India SoutheastAsia
LatinAmerica
Africa All Others
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Agenda
Well positioned for sustained earnings growth – Dean Cantrell, Director Investor Relations
Creating cleaner and healthier environment– Tina Vujovich, Vice President, Marketing &
Environmental Policy
Living our Core Values at Cummins– Marya Rose, Vice President, General Counsel &
Corporate Secretary
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Cummins’ Climate Change Initiative
Cummins joined the EPA’s Climate Leaders Program with aggressive target
For Cummins, reducing GHG emissions is fundamentally about improving energy efficiency.
Cummins pledged to reduce global GHG intensity emissions by 25% from 2005 to 2010
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Facilities GHG Improvement
Complete scope worldwide– Direct and indirect energy consumption– Facilities and processes
Assessing energy efficiency and opportunities at all major facilities
Tracking and reporting
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Product GHG Improvement
Customers worldwide demand energy efficiency from our products
Cummins clean diesels today deliver 30% lower net CO2 emissions than conventional gasoline engines
Additional product strategies will reduce fuel consumption of our products to even more competitive levels
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GHG Initiative to Sustainability
Cummins’ commitment to sustainability is good business
Providing products that help customers succeed is best way for us to compete successfully
We are engaging our most powerful resource –our employees
We are making progress toward goals
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Agenda
Well positioned for sustained earnings growth – Dean Cantrell, Director Investor Relations
Creating cleaner and healthier environment– Tina Vujovich, Vice President, Marketing &
Environmental Policy
Living our Core Values at Cummins– Marya Rose, Vice President, General Counsel &
Corporate Secretary
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Our Core Values
Corporate ResponsibilityDiversityIntegrityGlobal InvolvementInnovationDelivering Superior Results
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Corporate Social Responsibility
Cummins Foundation– Historically served North America, with affiliated
foundations in India and Mexico– Increased global focus – China, Brazil, Europe,
Australia– Emphasis on: health, education, economic
development, assisting people living at margins of society
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Corporate Social Responsibility
Corporate Charitable Donations in 2006– $4 million in Foundation grants– $4 million in direct corporate contributions
Employee Involvement– Community Involvement Teams– Every Employee/Every Community
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Corporate Social Responsibility
Top company for Asian Americans Top company for Asian Americans
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Cummins Export Policy – Basic Tenets
Cummins will:
Remain committed to compliance
Know which countries are subject to sanctions
Know our customers and business partners
Know our products
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Cummins Export Policy - Overview
Cummins scrupulously follows U.S. export laws.
Cummins has strengthened export policies and controls in past year.
Cummins has given export controls training to thousands of employees in the past year.
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Cummins Export Policy - Overview
Cummins has openly communicated export policies and practices to investment community
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Cummins Export Policy – SudanCummins responded decisively to concerns raised regarding JV sales to Sudan.
Cummins’ export policy bans all direct sales of its products to Sudan.
Training has raised awareness and resulted in potential sales to Sudan being halted.
Cummins has actively engaged its joint venture partners in China on this issue.
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Cummins Labor Relations - Overview
Cummins provides fair pay and consistent benefits to all employees.– Competitive wages– Quality, affordable health care– Secure pension benefits– Safe working conditions
Cummins teams with employees to create an inclusive workplace – in both union and non-union locations.
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Cummins Labor Relations – Overview
Cummins has been consistently recognized as an ‘employer of choice.’
Cummins has more than 5,000 unionized workers in the U.S. and works with unions around the world.
Allegations in recent Teamsters report are inaccurate and unfounded.
