In a note headlined, "You're Not Going to Believe This, But ..." Peter Nesvold, an analyst at Bear Stearns, called the earnings report a "blowout." On average, he and his colleagues who watch Cummins expected it to report earnings of 86 cents a share on revenue of about $2.62 billion, according to Thomson Financial.
"Strength was across the board," Nesvold wrote, "with very minor exceptions."
As expected, sales of heavy- and medium-duty truck diesel engines tumbled during the quarter as a result of a change in U.S. emissions standards that took effect Jan. 1. In the run-up to the implementation of those rules, fleet owners in North America, worried about the cost and reliability of the engines designed to comply, rushed to buy trucks and engines with the proven old technology. As a result, many vehicle purchases were essentially pulled forward in 2006.
But Cummins said it was able to shrug off those steep declines in a key business thanks to strong sales of industrial power generation and distribution equipment.
In addition, like other U.S. truck and engine makers affected by the new rules that reported in recent days, including Caterpillar and Paccar , Cummins also said its results had been lifted by what it characterized as "significant strength" in international on-highway engine markets during the quarter.
Looking forward, Cummins said it expected to earn in the range of $6 to $6.50 a share, up from a previous forecast range of $5.50 to $5.75 a share.