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Cummins/Westport Engine Gets EPA Certificate

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Cummins Westport, a joint venture between Cummins Inc. (CMI) and Westport Innovations Inc. (WPRT), revealed that its ISX12 G engine has received a certificate from the U.S. Environmental Protection Agency (:EPA). The engine met both the EPA 2013 regulations and the new greenhouse gas and fuel-efficiency rules that is about to take effect next year.

The ISX12 G natural gas engine is based on the Cummins ISX12 diesel engine platform and operates mainly on natural gas. The engine incorporates Cummins Westport’s proprietary spark-ignited, stoichiometric combustion with cooled exhaust gas recirculation (:SEGR) technology, which was introduced with the Cummins Westport ISL G engine.

Cummins Westport will begin limited production of the ISX12 G engine next month. Full production of the engine will start in Aug.

Cummins, which is a leading engine manufacturer along with Power Solutions International, Inc. (PSIX) and Weichai Power Co. Ltd (WEICY), is well positioned to benefit from several trends, such as new emission standards, fuel economy improvement and favorable trends for its Power Generation business.

Westport Innovations is a global leader in alternative fuel and low-emissions technologies. It brings technologies that help engines to operate on clean-burning fuels such as compressed natural gas (:CNG), liquefied natural gas (LNG), hydrogen and biofuels.

Cummins, a Zacks Rank #3 (Hold) company, posted a 21.9% fall in earnings per share to $2.00 in the fourth quarter of 2012 from $2.56 per share in the same quarter of 2011 owing to lower revenues (all excluding special items). However, EPS exceeded the Zacks Consensus Estimate by a considerable margin of 26 cents.

Revenues in the quarter ebbed 13% to $4.3 billion, driven by weaker demand in truck, construction, and oil and gas markets in North America as well as in international markets for power generation equipment, and construction, truck and mining engines. Revenues were higher than the Zacks Consensus Estimate of $4.1 billion.

Cummins anticipates revenues in full year 2013 to be flat to down 5%. EBIT margin is expected between 13% and 14% for the year.

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