EX-99.1 2 q22019exhibit991.htm EXHIBIT 99.1 Exhibit


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Press Release
 
 
 
July 25, 2019
 
FOR IMMEDIATE RELEASE

www.ctscorp.com
CTS Announces Second Quarter 2019 Results
Delivering growth in a challenging environment
Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced second quarter 2019 results.
•
Sales were $120.7 million, up 2.3% year-over-year. Sales to the transportation end market increased 8.7%, and sales to other end markets decreased 8.6%.
•
Net earnings were $11.9 million or $0.36 per diluted share, compared to $7.2 million or $0.21 in the second quarter of 2018.
•
Adjusted EPS was $0.40 per diluted share, up from $0.39 in the second quarter of 2018.
•
Total Booked Business was $1.875 billion, up 4.2% compared to the second quarter of 2018.
“Despite a challenging first half of the year, we delivered modest revenue and profit growth,” said Kieran O’Sullivan, CEO of CTS Corporation. “The fundamentals of the business remain sound. We are prioritizing our strategic initiatives and are focused on improving operational execution.”
2019 Guidance
Management is narrowing its 2019 guidance for sales from $460 - $500 million to $470 - $490 million, and for adjusted earnings per diluted share from $1.50 - $1.70 to $1.55 - $1.65.
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 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 092198. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m.

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(EDT) on Thursday, August 8, 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 9390168. 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
###

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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,

2019
 
2018
 
2019
 
2018
Net sales
$
120,684

 
$
118,021

 
$
238,308

 
$
231,551

Cost of goods sold
79,480

 
76,208

 
156,490

 
151,305

Gross Margin
41,204

 
41,813

 
81,818

 
80,246

Selling, general and administrative expenses
17,036

 
19,621

 
34,597

 
36,993

Research and development expenses
6,257

 
6,476

 
13,048

 
12,983

Restructuring charges
911

 
1,172

 
2,995

 
2,367

Gain on sale of assets
(83
)
 
—

 
(122
)
 
—

Operating earnings
17,083

 
14,544

 
31,300

 
27,903

Other income (expense):


 


 
 
 
 
Interest expense
(467
)
 
(571
)
 
(933
)
 
(1,112
)
Interest income
440

 
472

 
872

 
954

Other expense, net
(1,107
)
 
(2,874
)
 
(1,010
)
 
(870
)
Total other expense, net
(1,134
)
 
(2,973
)
 
(1,071
)
 
(1,028
)
Earnings before income taxes
15,949

 
11,571

 
30,229

 
26,875

Income tax expense
4,006

 
4,362

 
6,867

 
8,118

Net earnings
$
11,943

 
$
7,209

 
$
23,362

 
$
18,757

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
0.22

 
$
0.71

 
$
0.57

Diluted
$
0.36

 
$
0.21

 
$
0.70

 
$
0.56

 
 
 
 
 
 
 
 
Basic weighted – average common shares outstanding:
32,799

 
33,051

 
32,803

 
33,014

Effect of dilutive securities
406

 
513

 
422

 
513

Diluted weighted – average common shares outstanding:
33,205

 
33,564

 
33,225

 
33,527

 
 
 
 
 
 
 
 
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,
 
2019
 
2018
ASSETS
 

 
 

Current Assets
 

 
 

Cash and cash equivalents
$
105,578

 
$
100,933

Accounts receivable, net
84,876

 
79,518

Inventories, net
43,154

 
43,486

Other current assets
16,811

 
15,422

Total current assets
250,419

 
239,359

Property, plant and equipment, net
99,878

 
99,401

Operating lease assets, net
23,846

 
—

Other Assets
 

 
 

Prepaid pension asset
56,331

 
54,100

Goodwill
71,057

 
71,057

Other intangible assets, net
56,805

 
60,180

Deferred income taxes
19,596

 
22,201

Other
2,769

 
2,043

Total other assets
206,558

 
209,581

Total Assets
$
580,701

 
$
548,341

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current Liabilities
 

 
 

Accounts payable
$
50,942

 
$
51,975

Operating lease obligations
2,076

 
—

Accrued payroll and benefits
9,901

 
14,671

Accrued liabilities
33,396

 
37,347

Total current liabilities
96,315

 
103,993

Long-term debt
50,000

 
50,000

Long-term operating lease obligations
24,702

 
—

Long-term pension and other post-retirement obligations
6,363

 
6,510

Deferred income taxes
3,823

 
3,990

Other long-term obligations
3,953

 
5,919

Total Liabilities
185,156

 
170,412

Commitments and Contingencies
 
 
 
Shareholders’ Equity
 
 
 

Common stock
307,775

 
306,697

Additional contributed capital
41,786

 
42,820

Retained earnings
499,585

 
478,847

Accumulated other comprehensive loss
(95,903
)
 
(97,739
)
Total shareholders’ equity before treasury stock
753,243

 
730,625

Treasury stock
(357,698
)
 
(352,696
)
Total shareholders’ equity
395,545

 
377,929

Total Liabilities and Shareholders’ Equity
$
580,701

 
$
548,341


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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
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
GAAP diluted earnings per share
$
0.36

 
$
0.21

 
$
0.70

 
$
0.56

 
 
 
 
 
 
 
 
Tax affected charges to reported diluted earnings per share:
 
 
 
 
 
 
 
Restructuring charges
0.02

 
0.03

 
0.07

 
0.06

Foreign currency loss
0.02

 
0.07

 
0.01

 
0.02

Non-recurring costs of tax improvement initiatives
—

 
0.01

 
—

 
0.02

Non-recurring environmental charge
—

 
0.02

 
—

 
0.02

Non-cash pension expense
—

 
—

 
0.01

 
—

Discrete tax items
—

 
0.05

 
—

 
0.05

Adjusted diluted earnings per share
$
0.40

 
$
0.39

 
$
0.79

 
$
0.73



Additional Information

The following table includes other financial information not presented in the preceding financial statements.
 
Three Months Ended
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Depreciation and amortization expense
$
5,995

 
$
5,478

 
$
11,919

 
$
10,961

Stock-based compensation expense
$
1,579

 
$
1,263

 
$
2,793

 
$
2,186





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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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