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CTS Announces Fourth Quarter and Full Year 2018 Results

Strong sales and earnings growth

LISLE, Ill., Feb. 05, 2019 (GLOBE NEWSWIRE) -- CTS Corporation (CTS) today announced fourth quarter and full year 2018 results.

Fourth Quarter 2018 Results

  • Sales were $120.1 million, up 8.3% year-over-year. Sales to transportation customers increased 7.2%, and sales to other end markets grew 10.2%.
  • Net earnings were $17.6 million or $0.52 per diluted share.
  • Adjusted diluted EPS was $0.41 compared to $0.39 in the fourth quarter of 2017.

Full Year 2018 Results

  • Sales were $470.5 million, up 11.2% compared to 2017. Sales to transportation customers increased 9.0%, and sales to other end markets grew 15.3%.
  • Net earnings were $46.5 million or $1.39 per diluted share.
  • Adjusted diluted EPS was $1.53 compared to $1.23 in 2017.
  • Operating cash flow was $58.2 million.
  • Total booked business grew $129 million in 2018, a 7.4% increase, to $1.87 billion.

“We are pleased with our progress in several areas as we transition our business and systems,” said Kieran O’Sullivan, CEO of CTS Corporation. “We are focused on carrying our momentum to continue elevating our performance in the years ahead. We expect growth in medical, telecom, and defense end markets, and remain cautious on industrial and transportation end markets.”

2019 Guidance

Full year 2019 sales are expected to be in the range of $460 to $500 million. 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. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 855-719-5008 (334-323-0517, if calling from outside the U.S.). The passcode is 670352. 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 19, 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 6970679. 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 (LOSS) - UNAUDITED
(In thousands of dollars, except per share amounts)

  Three Months Ended   Twelve Months Ended
  December 31,   December 31,   December 31,   December 31,
  2018   2017   2018   2017
Net sales $ 120,073     $ 110,910     $ 470,483     $ 422,993  
Cost of goods sold 77,428     78,035     305,510     282,562  
Gross Margin 42,645     32,875     164,973     140,431  
Selling, general and administrative expenses 18,128     24,973     73,569     71,943  
Research and development expenses 5,804     6,714     25,304     25,146  
Restructuring and impairment charges 1,698     1,197     5,062     4,139  
(Gain) loss on sale of assets (2 )   10         708  
Operating earnings (loss) 17,017     (19 )   61,038     38,495  
Other (expense) income:              
Interest expense (484 )   (1,134 )   (2,085 )   (3,343 )
Interest income 459     370     1,826     1,284  
Other (expense) income (119 )   928     (2,676 )   3,817  
Total other (expense) income, net (144 )   164     (2,935 )   1,758  
Earnings before taxes 16,873     145     58,103     40,253  
Income tax (benefit) expense (691 )   13,766     11,571     25,805  
Net earnings (loss) $ 17,564     $ (13,621 )   $ 46,532     $ 14,448  
Net earnings (loss) per share:              
Basic $ 0.53     $ (0.41 )   $ 1.41     $ 0.44  
Diluted $ 0.52     $ (0.41 )   $ 1.39     $ 0.43  
                               
Basic weighted-average common shares outstanding 32,983     32,938     33,024     32,892  
Effect of dilutive securities 562         545     528  
Diluted weighted-average common shares outstanding 33,545     32,938     33,569     33,420  
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,
  2018   2017
ASSETS      
Current Assets      
Cash and cash equivalents $ 100,933     $ 113,572  
Accounts receivable, net 79,518     70,584  
Inventories, net 43,486     36,596  
Other current assets 15,422     12,857  
Total current assets 239,359     233,609  
Property, plant and equipment, net 99,401     88,247  
Other Assets      
Prepaid pension asset 54,100     57,050  
Goodwill 71,057     71,057  
Other intangible assets, net 60,180     66,943  
Deferred income taxes 22,201     20,694  
Other assets 2,043     2,096  
Total other assets 209,581     217,840  
Total Assets $ 548,341     $ 539,696  
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current Liabilities      
Accounts payable $ 51,975     $ 49,201  
Accrued payroll and benefits 14,671     11,867  
Accrued expenses and other liabilities 37,347     41,344  
Total current liabilities 103,993     102,412  
Long-term debt 50,000     76,300  
Long-term pension obligations 6,510     7,201  
Deferred income taxes 3,990     3,802  
Other long-term obligations 5,919     6,176  
Total Liabilities 170,412     195,891  
Commitments and Contingencies      
Shareholders' Equity      
Common stock 306,697     304,777  
Additional contributed capital 42,820     41,084  
Retained earnings 478,847     420,160  
Accumulated other comprehensive loss (97,739 )   (78,960 )
Total shareholders' equity before treasury stock 730,625     687,061  
Treasury stock (352,696 )   (343,256 )
Total shareholders' equity 377,929     343,805  
Total Liabilities and Shareholders' Equity $ 548,341     $ 539,696  



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:

Additional Information

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

  Three Months Ended   Twelve Months Ended
  December 31,
2018
  December 31,
2017
  December 31,
2018
  December 31,
2017
GAAP diluted earnings per share $ 0.52     $ (0.41 )   $ 1.39     $ 0.43  
               
Tax affected charges to reported diluted earnings per share:              
Restructuring charges 0.04     0.02     0.12     0.08  
Foreign currency (gain) loss     (0.01 )   0.06     (0.07 )
Non-recurring costs of tax improvement initiatives         0.03      
Non-recurring environmental charge         0.02      
Loss on sale of facilities, net of expenses             0.01  
Decrease in the recognition of foreign valuation allowance (0.03 )   (0.01 )   (0.03 )   (0.02 )
Pension settlement charge     0.26         0.26  
Discrete tax items (0.10 )       (0.04 )    
Tax impact related to Tax Cuts and Job Acts (0.02 )   0.54     (0.02 )   0.54  
Adjusted diluted earnings per share $ 0.41     $ 0.39     $ 1.53     $ 1.23  

Additional Information

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

  Three Months Ended   Twelve Months Ended
  December 31,
2018
  December 31,
2017
  December 31,
2018
  December 31,
2017
Depreciation and amortization expense $ 6,165     $ 5,613     $ 22,514     $ 20,674  
Stock-based compensation expense $ 1,152     $ 1,670     $ 5,256     $ 4,184  

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.