CTS Announces Third Quarter 2017 Results

Robust sales and earnings growth

LISLE, Ill.--()--CTS Corporation (NYSE:CTS) today announced third quarter 2017 results.

  • Sales were $106.2 million, up 6.6% year-over-year. Sales to automotive customers increased 5.8%, and sales of electronic components increased 7.9%. The Noliac acquisition, completed in May 2017, added $2.6 million of sales in the third quarter of 2017.
  • Net earnings were $9.6 million or $0.29 per diluted share compared to $3.7 million or $0.11 per diluted share in the third quarter of 2016.
  • Adjusted EPS was $0.31 per diluted share, up 11% from $0.28 in the third quarter of 2016.
  • Total Booked Business was $1.698 billion at the end of the third quarter of 2017, an increase of $156 million from the second quarter of 2017.

“We made significant progress in the third quarter,” said Kieran O’Sullivan, CEO of CTS Corporation. “We delivered strong sales growth, increased our total booked business substantially, and continued to improve gross margins.”

2017 Guidance

Management narrowed its guidance range for full year 2017. Sales are expected to be in the range of $415 to $420 million. Adjusted earnings per diluted share are expected to be in the range of $1.13 to $1.18.

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 866-564-7440 (719-955-9038, if calling from outside the U.S.). The passcode is 984237. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Thursday, November 9, 2017. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 6723795. 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 - UNAUDITED

(In thousands of dollars, except per share amounts)

 
Three Months Ended Nine Months Ended
September 30,     September 30, September 30,     September 30,
      2017 2016 2017 2016
Net sales $ 106,243 $ 99,697 $ 312,083 $ 295,095
Cost of goods sold     68,705   63,056   204,527   190,528  
Gross Margin 37,538 36,641 107,556 104,567
Selling, general and administrative expenses 15,915 16,048 46,970 46,459
Research and development expenses 6,380 6,284 18,432 18,414
Restructuring charges 1,435 1,969 2,942 2,175
Loss (gain) on sale of assets     697   (150 ) 698   (11,501 )
Operating earnings 13,111 12,490 38,514 49,020
Other income (expense):
Interest expense (773 ) (917 ) (2,209 ) (2,746 )
Interest income 363 203 914 1,082
Other income (expense)     1,258   (46 ) 2,889   (1,482 )
Total other income (expense)     848   (760 ) 1,594   (3,146 )
Earnings before income taxes 13,959 11,730 40,108 45,874
Income tax expense     4,340   8,010   12,039   19,804  
Net earnings     $ 9,619   $ 3,720   $ 28,069   $ 26,070  
Earnings per share:
Basic $ 0.29 $ 0.11 $ 0.85 $ 0.80
Diluted     $ 0.29   $ 0.11   $ 0.84   $ 0.79  
 
Basic weighted – average common shares outstanding: 32,935 32,759 32,876 32,716
Effect of dilutive securities     456   495   475   494  
Diluted weighted – average common shares outstanding     33,391   33,254   33,351   33,210  
 
Cash dividends declared per share     $ 0.04   $ 0.04   $ 0.12   $ 0.12  
 

See notes to unaudited condensed consolidated financial statements.

       

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

 
(Unaudited)
September 30, December 31,
      2017 2016
ASSETS
Current Assets
Cash and cash equivalents $ 116,152 $ 113,805
Accounts receivable, net 64,861 62,612
Inventories, net 35,308 28,652
Other current assets     13,453   10,638  
Total current assets 229,774 215,707
Property, plant and equipment, net 84,291 82,111
Other Assets
Prepaid pension asset 52,100 46,183
Goodwill 68,933 61,744
Other intangible assets, net 68,652 64,370
Deferred income taxes 37,850 45,839
Other     1,683   1,743  
Total other assets     229,218   219,879  
Total Assets     $ 543,283   $ 517,697  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term notes payable $ $ 1,006
Accounts payable 45,479 40,046
Accrued payroll and benefits 11,372 11,369
Accrued liabilities     43,991   45,708  
Total current liabilities 100,842 98,129
Long-term debt 82,300 89,100
Post-retirement obligations 6,823 7,006
Other long-term obligations     6,709   5,580  
Total Liabilities 196,674 199,815
Commitments and Contingencies (Note 9)
Shareholders’ Equity
Common stock 304,726 302,832
Additional contributed capital 39,525 40,521
Retained earnings 435,099 410,979
Accumulated other comprehensive loss     (89,485 ) (93,194 )
Total shareholders’ equity before treasury stock 689,865 661,138
Treasury stock     (343,256 ) (343,256 )
Total shareholders’ equity     346,609   317,882  
Total Liabilities and Shareholders’ Equity     $ 543,283   $ 517,697  
 

See notes to unaudited condensed consolidated financial statements.

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:

Additional Information

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

       
Three Months Ended Nine Months Ended
     

September
30, 2017

   

September
30, 2016

 

September
30, 2017

   

September
30, 2016

GAAP diluted earnings per share $ 0.29 $ 0.11 $ 0.84   $ 0.79
 
Tax affected charges to reported diluted earnings per share:
Restructuring charges 0.03 0.04 0.05 0.04
Increase in valuation allowance and revaluation of deferred taxes as a result of restructuring activities 0.07 0.07
Increase (decrease) in the recognition of foreign valuation allowance 0.04 (0.01 ) 0.04
Loss (gain) on sale of facilities, net of expenses 0.01 0.01 (0.22 )
Transaction costs 0.01 0.01
Lease termination charge 0.02 0.02
Foreign currency (gain) loss     (0.02 )     (0.06 )   0.04  
Adjusted diluted earnings per share     $ 0.31   $ 0.28     $ 0.84     $ 0.79  
 

Additional Information

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

       
Three Months Ended Nine Months Ended
     

September
30, 2017

   

September
30, 2016

 

September
30, 2017

   

September
30, 2016

Depreciation and amortization expense $ 5,388 $ 5,085 $ 15,061   $ 14,010
Stock-based compensation expense     $ 827   $ 792     $ 2,514     $ 1,759
 

Contacts

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

Contacts

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