• CTS Announces Third Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 27 Oct 2021 07:45:00   America/New_York

    LISLE, Ill., Oct. 27, 2021 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced third quarter 2021 results.

    • Sales were $122.4 million, up 8% year-over-year. Sales to non-transportation end markets increased 24%, and sales to transportation end market decreased 5%. The Sensor Scientific acquisition added $1.8 million of sales in the third quarter of 2021.
    • Net loss was $63.9 million, or $(1.97) per diluted share, versus $11.1 million, or $0.34 per diluted share, in the third quarter of last year. The third quarter net earnings were impacted by a non-cash charge of $76 million, net of taxes related to the previously disclosed termination of the U.S. pension plan.
    • Adjusted diluted EPS was $0.46, up from $0.34 in the third quarter of 2020.
    • Free cash flow was $17.2 million, down from $22.4 million in the third quarter of 2020.
    • New business wins were $179 million.

    “We continued to advance our diversification strategy during the third quarter, with non-transportation related revenue closer to 50% of total revenue for the quarter. Further, our third quarter results demonstrated the differentiation of our product portfolio, as well as the richness of our customer base, which allowed us to deliver growth ahead of the industry, despite a challenging supply chain environment. As we look forward, we believe the strong execution of our team, coupled with a robust pipeline will allow us to continue to capitalize on the opportunities in the industrial, medical, aerospace and defense end markets,” said Kieran O’Sullivan, CEO of CTS Corporation.

    2021 Guidance

    While management remains mindful of supply chain uncertainties, CTS has raised and narrowed its 2021 guidance for sales to $495 – $505 million from $480 – $500 million and for adjusted diluted EPS to $1.85 – $1.95 from $1.70 – $1.90.

    Conference Call

    As previously announced, the Company has scheduled a conference call at 10:00 a.m. (EST) today to discuss the third quarter financial results. The dial-in number is 800-309-1256 (323-347-3622, if calling from outside the U.S.). The passcode is 572446. A replay of the conference call will be available from 1:00 p.m. (EST) on Wednesday, October 27, 2021 through 1:00 p.m. (EST) on Wednesday, November 10, 2021. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 6028607. 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,
    Net sales $122,382  $113,777  $380,394  $301,049 
    Cost of goods sold  76,720   76,871   244,446   204,677 
    Gross margin  45,662   36,906   135,948   96,372 
    Selling, general and administrative expenses  19,922   16,883   59,184   48,310 
    Research and development expenses  6,454   5,723   18,170   18,653 
    Restructuring charges  319   1,041   551   1,416 
    Operating earnings  18,967   13,259   58,043   27,993 
    Other (expense) income:                
    Interest expense  (514)  (857)  (1,577)  (2,617)
    Interest income 230  217  689  852 
    Other (expense) income, net  (108,502)  1,617   (132,786)  (109)
    Total other expense, net  (108,786) 977   (133,674)  (1,874)
    (Loss) earnings before income taxes  (89,819)  14,236   (75,631)  26,119 
    Income tax expense  (25,923)  3,163   (24,600)  6,381 
    Net (loss) earnings  (63,896)  11,073   (51,031) $19,738 
    Earnings per share:                
    Basic $(1.97) $0.34  $(1.58) $0.61 
    Diluted $(1.97) $0.34  $(1.58) $0.61 
    Basic weighted – average common shares outstanding:  32,379   32,268   32,365   32,331 
    Effect of dilutive securities    241     270 
    Diluted weighted – average common shares outstanding:  32,379   32,509   32,365   32,601 
    Cash dividends declared per share $0.04  $0.04  $0.12  $0.12 

    (In thousands of dollars)

      September 30, 2021  December 31, 2020 
    Current Assets        
    Cash and cash equivalents $128,527  $91,773 
    Accounts receivable, net  78,210   80,981 
    Inventories, net  50,867   45,870 
    Other current assets  19,845   14,607 
    Total current assets  277,449   233,231 
    Property, plant and equipment, net  92,533   97,437 
    Operating lease assets, net  22,456   23,281 
    Other Assets        
    Prepaid pension asset  50,638   56,642 
    Goodwill  109,798   109,497 
    Other intangible assets, net  72,236   79,121 
    Deferred income taxes  24,663   24,250 
    Other  2,200   2,590 
    Total other assets  259,535   272,100 
    Total Assets $651,973  $626,049 
    Current Liabilities        
    Accounts payable $48,976  $50,489 
    Operating lease obligations  3,354   3,294 
    Accrued payroll and benefits  17,069   12,978 
    Accrued expenses and other liabilities  35,673   38,171 
    Total current liabilities  105,072   104,932 
    Long-term debt  50,000   54,600 
    Long-term operating lease obligations  22,262   23,163 
    Long-term pension obligations  7,114   7,466 
    Deferred income taxes  6,907   7,010 
    Other long-term obligations  3,244   5,196 
    Total Liabilities  194,599   202,367 
    Commitments and Contingencies        
    Shareholders’ Equity        
    Common stock  314,351   311,190 
    Additional contributed capital  40,958   41,654 
    Retained earnings  484,368   539,281 
    Accumulated other comprehensive loss  (4,842)  (95,921)
    Total shareholders’ equity before treasury stock  834,835   796,204 
    Treasury stock  (377,461)  (372,522)
    Total shareholders’ equity  457,374   423,682 
    Total Liabilities and Shareholders’ Equity $651,973  $626,049 


    Earnings Per Share

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

      Three Months Ended  Nine Months Ended 
      September 30,
      September 30,
      September 30,
      September 30,
    GAAP diluted (loss) earnings per share $(1.97) $0.34  $(1.58) $0.61 
    Tax affected charges to reported diluted (loss) earnings per share:                
    Restructuring charges  0.01   0.03   0.02   0.04 
    Foreign currency (gain) loss  0.03   (0.07)  0.04   (0.06)
    Non-cash pension expense  2.54   0.01   3.10   0.04 
    Environmental charges  0.01   0.01   0.02   0.03 
    Discrete tax items  (0.16)  0.02   (0.16)  0.03 
    Adjusted diluted earnings per share $0.46  $0.34  $1.44  $0.69 

    Free Cash Flow

    The following table reconciles GAAP operating cash flow to free cash flow for the Company:

      Three Months Ended  Nine Months Ended 
      September 30,
      September 30,
      September 30,
      September 30,
    Net cash provided by operating activities $21,332  $25,573  $60,117  $49,297 
    Capital expenditures  (4,170)  (3,196)  (8,140)  (10,441)
    Free cash flow $17,162  $22,377  $51,977  $38,856 

    Additional Information

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

      Three Months Ended  Nine Months Ended 
      September 30,
      September 30,
      September 30,
      September 30,
    Depreciation and amortization expense $6,719  $6,676  $20,231  $19,819 
    Stock-based compensation expense $987  $1,119  $4,106  $2,164 

    Non-GAAP Financial Measures

    From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with GAAP. CTS’ management believes that non-GAAP financial measures can be useful to investors in analyzing CTS’ financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

    Adjusted Diluted Earnings Per Share

    Adjusted diluted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted (loss) earnings per share.

    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.

    Free Cash Flow

    Free cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net cash provided by operating activities. CTS believes free cash flow is a useful measure of its ability to generate cash.

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