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CTS Announces First Quarter 2019 Results

Steady performance in challenging market

LISLE, Ill., April 25, 2019 (GLOBE NEWSWIRE) -- CTS Corporation (CTS) today announced first quarter 2019 results.

  • Sales were $117.6 million, up 3.6% year-over-year. Sales to the transportation end market increased 6.1%, and sales to other end markets decreased 1.1%.
  • Net earnings were $11.4 million or $0.34 per diluted share, compared to $11.5 million or $0.34 in the first quarter of 2018.
  • Adjusted EPS was $0.39 per diluted share, up from $0.34 in the first quarter of 2018.
  • Total Booked Business was $1.865 billion at the end of the first quarter of 2019.

“We delivered steady performance in the first quarter,” said Kieran O’Sullivan, CEO of CTS Corporation. “We remain cautious on the industrial and transportation end markets. We continue to focus on driving profitable top line growth, expanding operating leverage, and advancing our strategic plans.”

2019 Guidance

Management reaffirms its full year guidance. 2019 sales are expected to be in the range of $460 to $500 million, and adjusted earnings per diluted share for 2019 are expected to be in the range of $1.50 to $1.70.

Conference Call
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the first quarter financial results.  The dial-in number is 888-205-6786 (720-543-0301, if calling from outside the U.S.).  The passcode is 239687. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Thursday, May 9, 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 4124584.  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 (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
  March 31,   March 31,
  2019   2018
Net sales $ 117,625     $ 113,530  
Cost of goods sold 77,010     75,097  
Gross Margin 40,615     38,433  
Selling, general and administrative expenses 17,522     17,372  
Research and development expenses 6,791     6,507  
Restructuring charges 2,084     1,195  
Operating earnings 14,218     13,359  
Other income (expense):      
Interest expense (466 )   (541 )
Interest income 432     482  
Other income, net 96     2,004  
Total other income (expense), net 62     1,945  
Earnings before income taxes 14,280     15,304  
Income tax expense 2,861     3,756  
Net earnings $ 11,419     $ 11,548  
Earnings per share:      
Basic $ 0.35     $ 0.35  
Diluted $ 0.34     $ 0.34  
       
Basic weighted – average common shares outstanding: 32,807     32,975  
Effect of dilutive securities 463     540  
Diluted weighted – average common shares outstanding 33,270     33,515  
       
Cash dividends declared per share $ 0.04     $ 0.04  



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

  (Unaudited)    
  March 31,   December 31,
  2019   2018
ASSETS      
Current Assets      
Cash and cash equivalents $ 100,708     $ 100,933  
Accounts receivable, net 82,326     79,518  
Inventories, net 42,521     43,486  
Other current assets 16,670     15,422  
Total current assets 242,225     239,359  
Property, plant and equipment, net 99,052     99,401  
Operating lease assets, net 24,438      
Other Assets      
Prepaid pension asset 55,216     54,100  
Goodwill 71,057     71,057  
Other intangible assets, net 58,494     60,180  
Deferred income taxes 20,901     22,201  
Other 2,625     2,043  
Total other assets 208,293     209,581  
Total Assets $ 574,008     $ 548,341  
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current Liabilities      
Accounts payable 52,884     51,975  
Operating lease obligations 2,076      
Accrued payroll and benefits 9,301     14,671  
Accrued liabilities 33,243     37,347  
Total current liabilities 97,504     103,993  
Long-term debt 50,000     50,000  
Long-term operating lease obligations 25,155      
Long-term pension and other post-retirement obligations 6,437     6,510  
Deferred income taxes 4,050     3,990  
Other long-term obligations 3,969     5,919  
Total Liabilities 187,115     170,412  
Commitments and Contingencies      
Shareholders’ Equity      
Common stock 307,664     306,697  
Additional contributed capital 40,371     42,820  
Retained earnings 488,951     478,847  
Accumulated other comprehensive loss (96,548 )   (97,739 )
Total shareholders’ equity before treasury stock 740,438     730,625  
Treasury stock (353,545 )   (352,696 )
Total shareholders’ equity $ 386,893     $ 377,929  
Total Liabilities and Shareholders’ Equity $ 574,008     $ 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
  March 31, 2019   March 31, 2018
GAAP diluted earnings per share $ 0.34     $ 0.34  
       
Tax affected charges to reported diluted earnings per share:      
Restructuring charges 0.05     0.03  
Foreign currency gain (0.01 )   (0.04 )
Non-recurring costs of tax improvement initiatives     0.01  
Non-cash pension expense 0.01      
Adjusted diluted earnings per share $ 0.39     $ 0.34  

Additional Information

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

  Three Months Ended
  March 31, 2019   March 31, 2018
Depreciation and amortization expense $ 5,924     $ 5,483  
Stock-based compensation expense $ 1,214     $ 923  

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.