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CST: 18/01/2020 08:58:31   

CTS Announces Third Quarter 2019 Results

86 Days ago

Despite challenging market, stronger new business wins and progress on end market diversification

LISLE, Ill., Oct. 24, 2019 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced third quarter 2019 results.

  • Sales were $115.7 million, down 2.7% year-over-year. Sales to the transportation end market decreased 4.8%, and sales to other end markets increased 1.0%. The QTI acquisition, completed at the end of July, added $3.7 million of sales in the third quarter of 2019.
  • Net earnings were $2.7 million or $0.08 per diluted share, compared to $10.2 million or $0.30 in the third quarter of 2018.
  • Adjusted EPS was $0.29 per diluted share, compared to $0.39 in the third quarter of 2018. QTI impacted adjusted EPS unfavorably by $0.03.
  • Total Booked Business was $1.86 billion, up 2% compared to the third quarter of 2018. Included in Total Booked Business are new business wins of $147 million and a $55 million reduction for market softness.

“We are disappointed with our results in the quarter and are taking measures designed to improve our performance in this challenging economic environment,” said Kieran O’Sullivan, CEO of CTS Corporation. “We are pleased with the QTI acquisition, which complements our strategic direction to further diversify our end market profile, and we expect it to be accretive in 2020.”

2019 Guidance
Management is updating its 2019 guidance for sales from $470 - $490 million to $460 - $470 million, and for adjusted earnings per diluted share from $1.55 - $1.65 to $1.40 - $1.50.

Conference Call
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the third quarter financial results.  The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.).  The passcode is 399515. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EST) on Thursday, November 7, 2019.  The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.).  The replay passcode is 6374325.  A live audio webcast of the conference call will be available and can be accessed directly from the Investors section of the website of CTS Corporation at www.ctscorp.com.

About CTS
CTS (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect, and Move.  The company manufactures sensors, actuators, and electronic components in North America, Europe, and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical, telecommunications/IT, and transportation markets.

For more information, visit www.ctscorp.com.

Safe Harbor
This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact.  Forward-looking statements are based on management's expectations, certain assumptions and currently available information.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties.  These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ Annual Report on Form 10-K.  We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact

Ashish Agrawal
Vice President and Chief Financial Officer

CTS Corporation
4925 Indiana Avenue
Lisle, IL 60532
USA

Telephone: +1 (630) 577-8800
E-mail: ashish.agrawal@ctscorp.com



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands of dollars, except per share amounts)

  Three Months Ended   Nine Months Ended
  September 30,   September 30,   September 30,   September 30,
  2019   2018   2019   2018
Net sales $ 115,651     $ 118,859     $ 353,959     $ 350,410  
Cost of goods sold 78,594     76,777     235,084     228,082  
Gross Margin 37,057     42,082     118,875     122,328  
Selling, general and administrative expenses 17,774     18,450     52,371     55,441  
Research and development expenses 6,806     6,517     19,854     19,500  
Restructuring charges 2,342     997     5,337     3,364  
Loss (gain) on sale of assets 11         (111 )   2  
Operating earnings 10,124     16,118     41,424     44,021  
Other income (expense):              
Interest expense (812 )   (489 )   (1,745 )   (1,601 )
Interest income 524     413     1,396     1,367  
Other expense, net (2,636 )   (1,687 )   (3,646 )   (2,557 )
Total other expense, net (2,924 )   (1,763 )   (3,995 )   (2,791 )
Earnings before income taxes 7,200     14,355     37,429     41,230  
Income tax expense 4,478     4,144     11,345     12,262  
Net earnings $ 2,722     $ 10,211     $ 26,084     $ 28,968  
Earnings per share:              
Basic $ 0.08     $ 0.31     $ 0.80     $ 0.88  
Diluted $ 0.08     $ 0.30     $ 0.79     $ 0.86  
               
Basic weighted – average common shares outstanding: 32,642     33,087     32,748     33,038  
Effect of dilutive securities 425     562     417     542  
Diluted weighted – average common shares outstanding: 33,067     33,649     33,165     33,580  
               
Cash dividends declared per share $ 0.04     $ 0.04     $ 0.12     $ 0.12  
                               



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

  (Unaudited)    
  September 30,   December 31,
  2019   2018
ASSETS      
Current Assets      
Cash and cash equivalents $ 101,199     $ 100,933  
Accounts receivable, net 80,789     79,518  
Inventories, net 45,425     43,486  
Other current assets 17,616     15,422  
Total current assets 245,029     239,359  
Property, plant and equipment, net 102,636     99,401  
Operating lease assets, net 24,520      
Other Assets      
Prepaid pension asset 57,447     54,100  
Goodwill 108,142     71,057  
Other intangible assets, net 86,506     60,180  
Deferred income taxes 20,990     22,201  
Other 2,731     2,043  
Total other assets 275,816     209,581  
Total Assets $ 648,001     $ 548,341  
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current Liabilities      
Accounts payable $ 48,434     $ 51,975  
Operating lease obligations 2,677      
Accrued payroll and benefits 11,218     14,671  
Accrued liabilities 38,222     37,347  
Total current liabilities 100,551     103,993  
Long-term debt 112,700     50,000  
Long-term operating lease obligations 24,879      
Long-term pension and other post-retirement obligations 6,294     6,510  
Deferred income taxes 3,745     3,990  
Other long-term obligations 4,638     5,919  
Total Liabilities 252,807     170,412  
Commitments and Contingencies      
Shareholders’ Equity      
Common stock 307,801     306,697  
Additional contributed capital 42,849     42,820  
Retained earnings 501,003     478,847  
Accumulated other comprehensive loss (95,718 )   (97,739 )
Total shareholders’ equity before treasury stock 755,935     730,625  
Treasury stock (360,741 )   (352,696 )
Total shareholders’ equity 395,194     377,929  
Total Liabilities and Shareholders’ Equity $ 648,001     $ 548,341  
               



CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

Earnings Per Share

The following table reconciles GAAP diluted earnings per share to adjusted diluted earnings per share for the Company:

  Three Months Ended   Nine Months Ended
  September 30, 2019   September 30, 2018   September 30, 2019   September 30, 2018
GAAP diluted earnings per share $ 0.08     $ 0.30     $ 0.79     $ 0.86  
               
Tax affected charges to reported diluted earnings per share:              
Restructuring charges 0.06     0.02     0.13     0.08  
Foreign currency loss 0.08     0.04     0.08     0.06  
Non-recurring costs of tax improvement initiatives     0.01         0.03  
Non-recurring environmental charge             0.02  
Non-cash pension expense         0.01      
Transaction Costs 0.01         0.01      
Discrete tax items 0.06     0.02     0.06     0.07  
Adjusted diluted earnings per share $ 0.29     $ 0.39     $ 1.08     $ 1.12  


Additional Information

The following table includes other financial information not presented in the preceding financial statements.

  Three Months Ended   Nine Months Ended
  September 30, 2019   September 30, 2018   September 30, 2019   September 30, 2018
Depreciation and amortization expense $ 6,119     $ 5,388     $ 18,038     $ 16,349  
Stock-based compensation expense $ 1,157     $ 1,918     $ 3,950     $ 4,104  


Non-GAAP Financial Measures

Adjusted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted earnings per share.

CTS adjusts for these items because they are discrete events, which have a significant impact on comparable GAAP financial measures and could distort an evaluation of our normal operating performance.

CTS uses an adjusted earnings per share measure to evaluate overall performance, establish plans and perform strategic analysis. Using this measure avoids distortion in the evaluation of operating results by eliminating the impact of events which are not related to normal operating performance. Because this measure is based on the exclusion or inclusion of specific items, they may not be comparable to measures used by other companies which have similar titles. CTS' management compensates for this limitation when performing peer comparisons by evaluating both GAAP and non-GAAP financial measures reported by peer companies. CTS believes that this measure is useful to its management, investors and stakeholders in that it:

  • provides a meaningful measure of CTS' operating performance,
  • reflects the results used by management in making decisions about the business, and
  • helps review and project CTS' performance over time.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

 

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