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Cummins Inc. (CMI - Analyst Report) announced the sale of a part of its light duty filtration operations to Evanston, Illinois-based private equity firm Industrial Opportunity Partners LLC in order to streamline the business.

The move will help the company tap significant growth opportunities in the development and deployment of filtration products in the midst of tightening global emission standards.

The sale will affect the company’s Kuss Filtration businesses in Findlay, Ohio, Bloomer, Wisconsin, Sao Paulo, Brazil and Shanghai, China. The company’s Kuss operations manufacture light duty filtration products for smaller engines used in gasoline applications, including in-tank fuel filters.

Cummins did not disclose the terms of the deal. It has decided to operate the business during the transition period.

Cummins’ filtration business is a part of its Component segment that generates about 22% of its total revenue. In the second quarter of 2011, the Component segment sales surged 42% to $1.03 billion from $729 million in the same quarter of 2010.

Significant upside was also witnessed in Emission Solutions sales (up 88%), Fuel Systems sales (up 45%), Turbo Technologies sales (up 39%) and Filtration sales (up 15%). Segment earnings before interest and taxes (EBIT) were $120 million (11.6% of sales) versus last year’s $75 million (10.3% of sales).

The Zacks #2 Rank (Buy) company posted a profit of $505 million or $2.60 per share in the second quarter of 2011, which was significantly higher than the year-ago profit of $246 million or $1.25 per share.

However, excluding the after-tax gain of $37 million or 19 cents per share during the quarter, the company’s adjusted income stood at $468 million or $2.41 per share, well ahead of the Zacks Consensus Estimate of $2.01 per share.

Cummins reported an EBIT of $707 million (15.2% of sales), up from $401 million (12.5% of sales) in the second quarter of 2010. Reported EBIT in the second quarter excluded a gain of $68 million related to the sale of the exhaust business from the Components segment.

Revenues in the reported quarter amounted to $4.64 billion, up 45% from $3.21 billion in the year-ago quarter, mainly driven by strong performance across all the major markets. Revenues also surpassed the Zacks Consensus Estimate of $4.25 billion.

Columbus, Indiana-based Cummins is a leading worldwide designer, manufacturer and distributor of diesel and natural gas engines, electric power generation systems, and engine-related components, fuel systems, controls and air handling systems.

The company’s customer base comprises leading manufacturers, including Chrysler LLC, Daimler AG ((DDAIF)), Volvo AB, PACCAR Inc. ((PCAR - Analyst Report)), Navistar International Corporation ((NAV - Analyst Report)), CNH Global N.V., Komatsu, Scania AB, Ford Motor Company ((F - Analyst Report)) and Volkswagen ((VLKAY)).

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