• CTS Announces Third Quarter 2019 Results

    Source: Nasdaq GlobeNewswire / 24 Oct 2019 08:02:18   America/New_York

    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.


    Ashish Agrawal
    Vice President and Chief Financial Officer

    CTS Corporation
    4925 Indiana Avenue
    Lisle, IL 60532

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

    (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 sold78,594  76,777  235,084  228,082 
    Gross Margin37,057  42,082  118,875  122,328 
    Selling, general and administrative expenses17,774  18,450  52,371  55,441 
    Research and development expenses6,806  6,517  19,854  19,500 
    Restructuring charges2,342  997  5,337  3,364 
    Loss (gain) on sale of assets11    (111) 2 
    Operating earnings10,124  16,118  41,424  44,021 
    Other income (expense):       
    Interest expense(812) (489) (1,745) (1,601)
    Interest income524  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 taxes7,200  14,355  37,429  41,230 
    Income tax expense4,478  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 securities425  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 

    (In thousands of dollars)

     September 30, December 31,
     2019 2018
    Current Assets   
    Cash and cash equivalents$101,199  $100,933 
    Accounts receivable, net80,789  79,518 
    Inventories, net45,425  43,486 
    Other current assets17,616  15,422 
    Total current assets245,029  239,359 
    Property, plant and equipment, net102,636  99,401 
    Operating lease assets, net24,520   
    Other Assets   
    Prepaid pension asset57,447  54,100 
    Goodwill108,142  71,057 
    Other intangible assets, net86,506  60,180 
    Deferred income taxes20,990  22,201 
    Other2,731  2,043 
    Total other assets275,816  209,581 
    Total Assets$648,001  $548,341 
    Current Liabilities   
    Accounts payable$48,434  $51,975 
    Operating lease obligations2,677   
    Accrued payroll and benefits11,218  14,671 
    Accrued liabilities38,222  37,347 
    Total current liabilities100,551  103,993 
    Long-term debt112,700  50,000 
    Long-term operating lease obligations24,879   
    Long-term pension and other post-retirement obligations6,294  6,510 
    Deferred income taxes3,745  3,990 
    Other long-term obligations4,638  5,919 
    Total Liabilities252,807  170,412 
    Commitments and Contingencies   
    Shareholders’ Equity   
    Common stock307,801  306,697 
    Additional contributed capital42,849  42,820 
    Retained earnings501,003  478,847 
    Accumulated other comprehensive loss(95,718) (97,739)
    Total shareholders’ equity before treasury stock755,935  730,625 
    Treasury stock(360,741) (352,696)
    Total shareholders’ equity395,194  377,929 
    Total Liabilities and Shareholders’ Equity$648,001  $548,341 


    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 charges0.06  0.02  0.13  0.08 
    Foreign currency loss0.08  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 Costs0.01    0.01   
    Discrete tax items0.06  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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