EX-99.1 2 q12020exhibit991.htm EXHIBIT 99.1 Exhibit


ctslogoa25.jpg
 

Press Release
 
 
 
April 23, 2020
 
FOR IMMEDIATE RELEASE

CTS Announces First Quarter 2020 Results

Adjusting Our Cost Structure To Adverse Market Conditions
Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced first quarter 2020 results.
•
Sales were $103.1 million, down 12.4% year-over-year. Sales to transportation customers declined 22.0%, and sales to other end markets grew 7.1%. The QTI acquisition added $5.6 million of sales in the first quarter of 2020.
•
Net earnings were $3.8 million or $0.12 per diluted share versus $11.4 million or $0.34 last year.
•
Adjusted diluted EPS was $0.19 compared to $0.39 in the first quarter of 2019.
•
Free cash flow was $7.4 million, up from $4.3 million in 2019.
•
New business wins were $105 million.
•
At quarter-end, we had zero net debt.
“It has been a challenging quarter as we navigate through a continuing uncertain and unprecedented environment. Our priorities are the safety of our employees and supporting our customers,” said Kieran O’Sullivan, CEO of CTS Corporation. “We had a solid quarter of new business wins despite several weeks of disruptions due to Covid-19. We have adjusted our cost structure to reduce operating expenses. Our strong balance sheet and liquidity position should help us work through these difficult circumstances, and we aim to emerge a stronger company.”
2020 Guidance
Due to ongoing market uncertainties, management has withdrawn its guidance for 2020, and is not providing updated guidance at this time.




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Conference Call
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EST) today to discuss the first quarter financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 225597. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Thursday, May 7, 2020. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 5206162. 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.
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
###

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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,

2020
 
2019
Net sales
$
103,075

 
$
117,625

Cost of goods sold
70,176

 
77,010

Gross Margin
32,899

 
40,615

Selling, general and administrative expenses
16,759

 
17,522

Research and development expenses
7,408

 
6,791

Restructuring charges
240

 
2,084

Operating earnings
8,492

 
14,218

Other (expense) income:


 


Interest expense
(851
)
 
(466
)
Interest income
331

 
432

Other (expense) income, net
(1,982
)
 
96

Total other (expense) income, net
(2,502
)
 
62

Earnings before income taxes
5,990

 
14,280

Income tax expense
2,182

 
2,861

Net earnings
$
3,808

 
$
11,419

Earnings per share:


 


Basic
$
0.12

 
$
0.35

Diluted
$
0.12

 
$
0.34




 


Basic weighted – average common shares outstanding:
32,466

 
32,807

Effect of dilutive securities
327

 
463

Diluted weighted – average common shares outstanding:
32,793

 
33,270



 

Cash dividends declared per share
$
0.04

 
$
0.04




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

 
March 31,
 
December 31,

2020
 
2019
ASSETS
 

 
 

Current Assets
 

 
 

Cash and cash equivalents
$
150,955

 
$
100,241

Accounts receivable, net
71,250

 
78,008

Inventories, net
45,679

 
42,237

Other current assets
15,094

 
16,992

Total current assets
282,978

 
237,478

Property, plant and equipment, net
101,755

 
105,038

Operating lease assets, net
25,117

 
24,644

Other Assets
 

 
 

Prepaid pension asset
63,093

 
62,082

Goodwill
106,056

 
106,056

Other intangible assets, net
82,919

 
85,215

Deferred income taxes
20,296

 
19,795

Other
2,951

 
3,046

Total other assets
275,315

 
276,194

Total Assets
$
685,165

 
$
643,354

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current Liabilities
 

 
 

Accounts payable
$
46,766

 
$
48,219

Operating lease obligations
3,178

 
2,787

Accrued payroll and benefits
8,818

 
9,564

Accrued expenses and other liabilities
34,476

 
36,378

Total current liabilities
93,238

 
96,948

Long-term debt
151,200

 
99,700

Long-term operating lease obligations
25,078

 
24,926

Long-term pension obligations
6,548

 
6,632

Deferred income taxes
5,576

 
5,637

Other long-term obligations
6,059

 
4,292

Total Liabilities
287,699

 
238,135

Commitments and Contingencies


 


Shareholders’ Equity
 

 
 

Common stock
310,098

 
307,932

Additional contributed capital
39,832

 
43,689

Retained earnings
512,276

 
509,766

Accumulated other comprehensive loss
(94,994
)
 
(91,726
)
Total shareholders’ equity before treasury stock
767,212

 
769,661

Treasury stock
(369,746
)
 
(364,442
)
Total shareholders’ equity
397,466

 
405,219

Total Liabilities and Shareholders’ Equity
$
685,165

 
$
643,354


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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, 2020
 
March 31, 2019
GAAP diluted earnings per share
$
0.12

 
$
0.34

 
 
 
 
Tax affected charges to reported diluted earnings per share:
 
 
 
Restructuring charges
—

 
0.05

Foreign currency loss (gain)
0.04

 
(0.01
)
Non-cash pension expense
0.01

 
0.01

Discrete tax items
0.02

 
—

Adjusted diluted earnings per share
$
0.19

 
$
0.39




Additional Information

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

 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Depreciation and amortization expense
$
6,532

 
$
5,924

Stock-based compensation expense
$
228

 
$
1,214



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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.


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