CTS Announces Fourth Quarter and Full Year 2016 Results

Continued growth in sales and earnings

Solid new business awards

LISLE, Ill.--()--CTS Corporation (NYSE:CTS) today announced fourth quarter and full year 2016 results.

Fourth Quarter 2016 Results

  • Sales were $101.6 million, up 8.9% compared to 2015. Sales to automotive customers increased 5.5%, and sales of electronic components grew 16.0%.
  • Net earnings were $8.3 million or $0.25 per diluted share.
  • Adjusted diluted EPS was $0.29 compared to $0.20 in 2015.
  • New business awards were $132 million.

Full Year 2016 Results

  • Sales were $396.7 million, up 3.8% compared to 2015. Sales to automotive customers increased 2.0%, and sales of electronic components grew 7.3%.
  • Net earnings were $34.4 million or $1.03 per diluted share.
  • Adjusted diluted EPS was $1.08 compared to $0.93 in 2015.
  • New business awards were $488 million.

“We achieved strong financial performance and solid new business awards,” said Kieran O’Sullivan, CEO of CTS Corporation. “Our teams continued to drive operational improvement. In 2016, we acquired and integrated the single crystal technology and improved adjusted earnings by 16%. We also delivered another quarter of sales growth in the fourth quarter. Our teams remain focused on driving profitable growth as we enter 2017.”

2017 Guidance

Management expects full year 2017 sales to be in the range of $405 to $420 million. Adjusted earnings per diluted share for 2017 are expected to be in the range of $1.12 to $1.22.

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 888-542-1137 (719-325-2296, if calling from outside the U.S.). The conference I.D. number is 6367372. 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 21, 2017. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 6367372. 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. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and supplies these products to OEMs in the aerospace, communications, defense, industrial, information technology, medical 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.

 

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – UNAUDITED

(In thousands, except per share amounts)

       
Three Months Ended Twelve Months Ended

December 31,
2016

   

December 31,
2015

December 31,
2016

   

December 31,
2015

Net sales $ 101,584 $ 93,282 $ 396,679 $ 382,310
Cost of goods sold 65,723   63,128   256,251   255,201  
Gross Margin 35,861 30,154 140,428 127,109
Selling, general and administrative expenses 15,165 15,917 61,624 59,586
Research and development expenses 5,626 6,083 24,040 22,461
Non-recurring environmental charge 14,541
Restructuring and impairment charges 873 9,335 3,048 14,564
Loss (gain) on sale of assets 51   (2,112 ) (11,450 ) (2,156 )
Operating earnings 14,146 931 63,166 18,113
Other (expense) income:
Interest expense (956 ) (673 ) (3,702 ) (2,628 )
Interest income 223 719 1,305 3,073
Other expense (2,042 ) (1,656 ) (3,524 ) (6,297 )
Total other expense (2,775 ) (1,610 ) (5,921 ) (5,852 )
Earnings (loss) before income taxes 11,371 (679 ) 57,245 12,261
Income tax expense 3,061   12,974   22,865   5,307  
Net earnings (loss) $ 8,310   $ (13,653 ) $ 34,380   $ 6,954  
 
Earnings (loss) per share:
Basic $ 0.25   $ (0.42 ) $ 1.05   $ 0.21  
Diluted $ 0.25   $ (0.42 ) $ 1.03   $ 0.21  
 
Cash dividends declared per share $ 0.04   $ 0.04   $ 0.16   $ 0.16  
 
Average common shares outstanding:
Basic 32,760 32,605 32,728 32,959
Diluted 33,342 32,605 33,251 33,484
 
 

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands of dollars)

 
   

December 31,
2016

   

December 31,
2015

ASSETS
Current Assets
Cash and cash equivalents $ 113,805 $ 156,928
Accounts receivable, net 62,612 54,563
Inventories, net 28,652 24,600
Other current assets 10,638 9,863
Total current assets 215,707 245,954
Property, plant and equipment, net 82,111 69,872
Other Assets
Prepaid pension asset 46,183 33,779
Goodwill 61,744 33,865
Other intangible assets, net 64,370 34,758
Deferred income taxes 45,839 63,809
Other assets 1,743 1,336
Total other assets 219,879 167,547
Total Assets $ 517,697 $ 483,373
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term notes payable $ 1,006 $
Accounts payable 40,046 40,299
Accrued payroll and benefits 11,369 7,147
Accrued expenses and other liabilities 45,708 47,174
Total current liabilities 98,129 94,620
Long-term debt 89,100 90,700
Long-term pension obligations 7,006 7,230
Other long-term obligations 5,580 9,169
Total Liabilities 199,815 201,719
Shareholders’ Equity
Common stock 302,832 300,909
Additional contributed capital 40,521 41,166
Retained earnings 410,979 381,840
Accumulated other comprehensive loss (93,194) (99,005)
Total shareholders’ equity before treasury stock 661,138 624,910
Treasury stock (343,256) (343,256)
Total shareholders’ equity 317,882 281,654
Total Liabilities and Shareholders’ Equity $ 517,697 $ 483,373
 

CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION

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,
2016

 

December 31,
2015

December 31,
2016

 

December 31,
2015

 
GAAP diluted earnings per share $ 0.25 $ (0.42 ) $ 1.03 $ 0.21
 
Tax affected charges to reported diluted earnings per share:
Restructuring, restructuring-related, and asset impairment charges 0.02 0.28 0.06 0.40
Increase in valuation allowance and revaluation of deferred taxes as a result of restructuring activities 0.07
Non-recurring environmental charge 0.27
(Decrease) increase in the recognition of foreign valuation allowance (0.01 ) 0.07 0.03 0.10
Increase in the recognition of uncertain tax benefits 0.01 0.17
Change in treatment of certain foreign taxes (0.01 ) (0.48 )
Gain on sale of facilities, net of expenses (0.22 )
Lease termination charge 0.02
Foreign currency loss 0.05 0.09
Acquisition-related costs 0.02
Tax impact of non-recurring stock compensation change (0.02 ) (0.02 )
Tax impact of cash repatriation   0.27     0.26  
Adjusted diluted earnings per share $ 0.29   $ 0.20   $ 1.08   $ 0.93  
 

Additional Information

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

       
Three Months Ended Twelve Months Ended
In thousands

December 31,
2016

   

December 31,
2015

December 31,
2016

   

December 31,
2015

 
Depreciation and amortization expense $ 4,982 $ 4,267 $ 18,992 $ 16,254
Equity-based compensation expense $ 979 $ 540 $ 2,738 $ 3,195
 

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.

Contacts

CTS Corporation
Ashish Agrawal, +1-630-577-8800
Vice President and Chief Financial Officer
Ashish.Agrawal@ctscorp.com

Contacts

CTS Corporation
Ashish Agrawal, +1-630-577-8800
Vice President and Chief Financial Officer
Ashish.Agrawal@ctscorp.com