• CTS Announces Fourth Quarter and Full Year 2019 Results

    Source: Nasdaq GlobeNewswire / 04 Feb 2020 08:00:12   America/New_York

    LISLE, Ill., Feb. 04, 2020 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2019 results.

    Fourth Quarter 2019 Results

    • Sales were $115.0 million, down 4.2% year-over-year. Sales to transportation customers declined 11.0%, and sales to other end markets grew 7.9%. The QTI acquisition added $5.6 million of sales in the fourth quarter of 2019.
    • Net earnings were $10.1 million or $0.31 per diluted share versus $17.6 million or $0.52 last year.
    • Adjusted diluted EPS was $0.37 compared to $0.41 in the fourth quarter of 2018.

    Full Year 2019 Results

    • Sales were $469.0 million, essentially flat to 2018. Sales to transportation customers declined 0.4%, and sales to other end markets decreased 0.2%. The QTI acquisition added $9.3 million of sales in 2019.
    • Net earnings were $36.1 million or $1.09 per diluted share versus $46.5 million or $1.39 last year.
    • Adjusted diluted EPS was $1.45 compared to $1.53 in 2018.
    • Free cash flow was $42.7 million, up 44% from $29.7 million in 2018.
    • Total booked business grew $16 million in 2019 to $1.88 billion.

    “2019 was a challenging year driven by market softness. We took actions to reduce operating expenses and improve our performance. We also delivered strong growth in cash flow,” said Kieran O’Sullivan, CEO of CTS Corporation. “We anticipate a soft first half of 2020, with improvement in market conditions in the second half of the year. Our strategic priorities remain the same, driving profitable growth, margin improvement and advancing our end market profile.”

    2020 Guidance

    Full year 2020 sales are expected to be in the range of $450 to $480 million. Adjusted earnings per diluted share for 2020 are expected to be in the range of $1.35 to $1.60.

    Conference Call

    As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 488435. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Tuesday, February 18, 2020. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 6906039. 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 Twelve Months Ended
     December 31, December 31, December 31, December 31,
     2019 2018 2019 2018
    Net sales$115,040  $120,073  $468,999  $470,483 
    Cost of goods sold76,340  77,428  311,424  305,100 
    Gross Margin38,700  42,645  157,575  164,973 
    Selling, general and administrative expenses18,037  18,128  70,408  73,569 
    Research and development expenses6,113  5,804  25,967  25,304 
    Restructuring charges2,111  1,698  7,448  5,062 
    Loss (gain) on sale of assets48  (2) (63)  
    Operating earnings12,391  17,017  53,815  61,038 
    Other (expense) income:       
    Interest expense(903) (484) (2,648) (2,085)
    Interest income341  459  1,737  1,826 
    Other income (expense), net1,008  (119) (2,638) (2,676)
    Total other income (expense), net446  (144) (3,549) (2,935)
    Earnings before income taxes12,837  16,873  50,266  58,103 
    Income tax expense (benefit)2,775  (691) 14,120  11,571 
    Net earnings$10,062  $17,564  $36,146  $46,532 
    Earnings per share:       
    Basic$0.31  $0.53  $1.11  $1.41 
    Diluted$0.31  $0.52  $1.09  $1.39 
            
    Basic weighted – average common shares outstanding:32,554  32,983  32,700  33,024 
    Effect of dilutive securities416  562  405  545 
    Diluted weighted – average common shares
    outstanding:
    32,970  33,545  33,105  33,569 
            
    Cash dividends declared per share$0.04  $0.04  $0.16  $0.16 


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

     (Unaudited)  
     December 31, December 31,
     2019 2018
    ASSETS   
    Current Assets   
    Cash and cash equivalents$100,241  $100,933 
    Accounts receivable, net78,008  79,518 
    Inventories, net42,237  43,486 
    Other current assets16,992  15,422 
    Total current assets237,478  239,359 
    Property, plant and equipment, net105,038  99,401 
    Operating lease assets, net24,644   
    Other Assets   
    Prepaid pension asset62,082  54,100 
    Goodwill106,056  71,057 
    Other intangible assets, net85,215  60,180 
    Deferred income taxes19,795  22,201 
    Other3,046  2,043 
    Total other assets276,194  209,581 
    Total Assets$643,354  $548,341 
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
    Current Liabilities   
    Accounts payable$48,219  $51,975 
    Operating lease obligations2,787   
    Accrued payroll and benefits9,564  14,671 
    Accrued expenses and other liabilities36,378  37,347 
    Total current liabilities96,948  103,993 
    Long-term debt99,700  50,000 
    Long-term operating lease obligations24,926   
    Long-term pension and other post-retirement obligations6,632  6,510 
    Deferred income taxes5,637  3,990 
    Other long-term obligations4,292  5,919 
    Total Liabilities238,135  170,412 
    Commitments and Contingencies   
    Shareholders’ Equity   
    Common stock307,932  306,697 
    Additional contributed capital43,689  42,820 
    Retained earnings509,766  478,847 
    Accumulated other comprehensive loss(91,726) (97,739)
    Total shareholders’ equity before treasury stock769,661  730,625 
    Treasury stock(364,442) (352,696)
    Total shareholders’ equity405,219  377,929 
    Total Liabilities and Shareholders’ Equity$643,354  $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 Twelve Months Ended
     December
    31, 2019
     December
    31, 2018
     December
    31, 2019
     December
    31, 2018
    GAAP diluted earnings per share$0.31  $0.52  $1.09  $1.39 
            
    Tax affected charges to reported diluted earnings per share:       
    Restructuring charges0.05  0.04  0.18  0.12 
    Foreign currency (gain) loss(0.03)   0.05  0.06 
    Costs of tax improvement initiatives      0.03 
    Environmental charges0.05    0.05  0.02 
    Non-cash pension expense0.01    0.02   
    Legal settlement(0.01)   (0.01)  
    Decrease in foreign valuation allowances  (0.03)   (0.03)
    Transaction costs    0.02   
    Discrete tax items(0.01) (0.10) 0.05  (0.04)
    Tax impact related to Tax Cuts and Job Acts  (0.02)   (0.02)
    Adjusted diluted earnings per share$0.37  $0.41  $1.45  $1.53 

    Additional Information

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

     Three Months Ended Twelve Months Ended
     December
    31,2019
     December
    31, 2018
     December
    31, 2019
     December
    31, 2018
    Depreciation and amortization expense$6,581  $6,165  $24,619  $22,514 
    Stock-based compensation expense$1,065  $1,152  $5,015  $5,256 

    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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