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CTS Announces Second Quarter 2018 Results

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LISLE, Ill., July 26, 2018 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE:CTS) today announced second quarter 2018 results.

  • Sales were $118.0 million, up 11.7% year-over-year, with organic growth at 10.9%. Sales to transportation customers increased 7.5%, and sales of electronic components increased 19.3%.
  • Net earnings were $7.2 million or $0.21 per diluted share, down from $10.0 million or $0.30 per diluted share in the second quarter of 2017, impacted by currency changes and certain discrete tax items.
  • Adjusted EPS was $0.39 per diluted share, up from $0.28 in the second quarter of 2017.
  • Total Booked Business was $1.8 billion at the end of the second quarter of 2018, an increase of $38 million from the first quarter of 2018.

"We delivered another quarter of strong sales growth and improved operational performance," said Kieran O'Sullivan, CEO of CTS Corporation. "Our sales to industrial, medical, and aerospace & defense customers grew by double digits, and we saw robust sales growth to our transportation customers. Our gross margins improved as we realized savings from our manufacturing transition. I am encouraged by our progress in the first half of the year."

2018 Guidance

Management is increasing its full year guidance. 2018 sales are expected to be in the range of $450 to $465 million, up from $435 to $455 million. Adjusted earnings per diluted share for 2018 are expected to be in the range of $1.40 to $1.55, increased from $1.32 to $1.44.

Conference Call

As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the second quarter financial results. The dial-in number is 855-719-5007 (334-323-0517, if calling from outside the U.S.).  The passcode is 628167. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Thursday, August 9, 2018.  The telephone number for the replay is 866-375-1919 (719-457-0820, if calling from outside the U.S.).  The replay passcode is 7032432. 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   Six Months Ended
  June 30,   June 30,   June 30,   June 30,
  2018   2017   2018   2017
Net sales $ 118,021     $ 105,686     $ 231,551     $ 205,840  
Cost of goods sold 76,208     69,892     151,305     135,822  
Gross Margin 41,813     35,794     80,246     70,018  
Selling, general and administrative expenses 19,621     15,808     36,993     31,056  
Research and development expenses 6,476     6,049     12,983     12,052  
Restructuring charges 1,172     729     2,367     1,507  
Operating earnings 14,544     13,208     27,903     25,403  
Other income (expense):              
Interest expense (571 )   (752 )   (1,112 )   (1,436 )
Interest income 472     298     954     551  
Other (expense) income, net (2,874 )   1,170     (870 )   1,631  
Total other (expense) income (2,973 )   716     (1,028 )   746  
Earnings before income taxes 11,571     13,924     26,875     26,149  
Income tax expense 4,362     3,958     8,118     7,699  
Net earnings $ 7,209     $ 9,966     $ 18,757     $ 18,450  
Earnings per share:              
Basic $ 0.22     $ 0.30     $ 0.57     $ 0.56  
Diluted $ 0.21     $ 0.30     $ 0.56     $ 0.55  
               
Basic weighted – average common shares outstanding: 33,051     32,890     33,014     32,846  
Effect of dilutive securities 513     461     513     493  
Diluted weighted – average common shares outstanding 33,564     33,351     33,527     33,339  
               
Cash dividends declared per share $ 0.04     $ 0.04     $ 0.08     $ 0.08  



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

  (Unaudited)    
  June 30,   December 31,
  2018   2017
ASSETS      
Current Assets      
Cash and cash equivalents $ 102,861     $ 113,572  
Accounts receivable, net 75,597     70,584  
Inventories, net 41,671     36,596  
Other current assets 11,931     12,857  
Total current assets 232,060     233,609  
Property, plant and equipment, net 93,630     88,247  
Other Assets      
Prepaid pension asset 59,938     57,050  
Goodwill 71,057     71,057  
Other intangible assets, net 63,557     66,943  
Deferred income taxes 20,188     20,694  
Other 2,123     2,096  
Total other assets 216,863     217,840  
Total Assets $ 542,553     $ 539,696  
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current Liabilities      
Accounts payable $ 51,652     $ 49,201  
Accrued payroll and benefits 9,689     11,867  
Accrued liabilities 43,805     41,344  
Total current liabilities 105,146     102,412  
Long-term debt 57,000     76,300  
Long-term pension obligations 6,998     7,201  
Deferred income taxes 3,572     3,802  
Other long-term obligations 6,077     6,176  
Total Liabilities 178,793     195,891  
Commitments and Contingencies      
Shareholders' Equity      
Common stock 306,570     304,777  
Additional contributed capital 40,034     41,084  
Retained earnings 436,274     420,160  
Accumulated other comprehensive loss (75,862 )   (78,960 )
Total shareholders' equity before treasury stock 707,016     687,061  
Treasury stock (343,256 )   (343,256 )
Total shareholders' equity 363,760     343,805  
Total Liabilities and Shareholders' Equity $ 542,553     $ 539,696  



CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION

Earnings Per Share

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

Additional Information

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

  Three Months Ended   Six Months Ended
  June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017
GAAP diluted earnings per share $ 0.21     $ 0.30     $ 0.56     $ 0.55  
               
Tax affected adjustments to reported diluted earnings per share:              
Restructuring charges 0.03     0.01     0.06     0.03  
Foreign currency loss (gain) 0.07     (0.03 )   0.02     (0.04 )
Transaction costs     0.01         0.01  
Non-recurring costs of tax improvement initiatives 0.01         0.02      
Non-recurring environmental charge 0.02         0.02      
Discrete tax items 0.05     (0.01 )   0.05     (0.01 )
Adjusted diluted earnings per share $ 0.39     $ 0.28     $ 0.73     $ 0.54  

Additional Information

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

  Three Months Ended   Six Months Ended
  June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017
Depreciation and amortization expense $ 5,478     $ 4,965     $ 10,961     $ 9,673  
Stock-based compensation expense $ 1,263     $ 808     $ 2,186     $ 1,687  

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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