EX-99.1 2 q22018exhibit991.htm EXHIBIT 99.1 Exhibit


ctslogoa13.jpg
 

Press Release
 
 
 
July 26, 2018
 
FOR IMMEDIATE RELEASE

CTS Announces Second Quarter 2018 Results
Continued sales growth and improved operational performance
Lisle, Ill. - 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.


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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
###


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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



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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



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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



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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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