News Column

CTS Announces Second Quarter 2014 Results

July 28, 2014

Adjusted EPS of $0.25 despite sales softness

Continued progress on executing the strategic plan

ELKHART, Ind.--(BUSINESS WIRE)-- CTS Corporation (NYSE: CTS) today announced second quarter 2014 results:

  • Revenues were $103.0 million, up 2.3% versus the first quarter of 2014; down 2.3% compared to the second quarter of 2013.
  • GAAP earnings from continuing operations were $6.4 million, or $0.19 per diluted share, compared to a loss of $10.3 million, or $0.31 per diluted share, in second quarter of 2013.
  • Adjusted EPS from continuing operations was $0.25 compared to $0.22 in the second quarter of 2013.

    Sales of sensors and mechatronic products grew 3% year-over-year. Sales of electronic components declined 12% due mainly to softness in sales of frequency and HDD products. CTS received $89 million of new business wins in the second quarter. Year-to-date, CTS has won $225 million in new business.

    “We are pleased with the earnings delivered in the second quarter despite the pressure on sales. During our transition, we continue to fine tune our product portfolio in 2014 and are addressing execution issues related to our electronic components products,” said Kieran O’Sullivan, CEO of CTS Corporation. “We remain confident in and committed to our strategy. We are making progress on improving our cost structure and expect to achieve substantial earnings growth in 2014.”

    Management is adjusting its full-year 2014 guidance for sales due to the challenges with electronic components products. Sales for 2014 are expected to be in the range of $400 to $415 million. Adjusted earnings per diluted share are expected to be at the lower end of our guidance range of $0.96 and $1.02.

    Conference Call

    As previously announced, the Company has scheduled a conference call on Tuesday, July 29, 2014 at 11:00 a.m. (EDT). The dial-in number for the conference call is 888-359-3624 (719-325-2463, if calling from outside the U.S.). The conference I.D. number is 5350505. There will be a replay of the conference call from 2:00 p.m. (EDT) on Tuesday, July 29, 2014 through 2:00 p.m. (EDT) on Tuesday, August 5, 2014. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 5350505. Also, please note that a live audio webcast of the conference call will be available and can be accessed directly from the website of CTS Corporationwww.ctscorp.com.

    About CTS

    CTS is a leading designer and manufacturer of electronic components and sensors to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS.”

    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. Examples of factors that may affect future operating results and financial condition include, but are not limited to: changes in the economy generally and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition our businesses; rapid technological change; general market conditions in the automotive, communications, and computer industries, as well as conditions in the industrial, defense and aerospace, and medical markets; reliance on key customers; unanticipated natural disasters or other events; the ability to protect our intellectual property; pricing pressures and demand for our products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1A. of the 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 Six Months Ended
    June 29, June 30, June 29, June 30,
    2014 2013 2014 2013
     
    Net sales $ 102,980 $ 105,381 $ 203,686 $ 203,443
     
    Costs and expenses:
    Cost of goods sold 69,157 72,981 139,248 144,257
    Selling, general and administrative expenses 15,813 17,157 29,454 34,833
    Research and development expenses 5,332 5,771 10,958 12,023
    Restructuring charge   2,733     7,029     3,236     7,206  
     
    Operating earnings 9,945 2,443 20,790 5,124
     
    Other income (expense):
    Interest income (expense), net 106 (612 ) 57 (1,105 )
    Other income (expense)   (409 )   398     (2,180 )   (109 )
    Total other income (expense)   (303 )   (214 )   (2,123 )   (1,214 )
     
    Earnings from continuing operations before income taxes 9,642 2,229 18,667 3,910
     
    Income tax expense   3,281     12,482     7,226     11,176  
     
     
    Earnings (loss) from continuing operations   6,361     (10,253 )   11,441     (7,266 )
     
    Discontinued operations
    Loss from discontinued operations, net of tax   -     (1,082 )   -     (501 )
     
    Net earnings (loss) $ 6,361   $ (11,335 ) $ 11,441   $ (7,767 )
     
    Net earnings (loss) per share:
    Basic
    Continuing operations $ 0.19 $ (0.31 ) $ 0.34 $ (0.22 )
    Discontinued operations   -     (0.03 )   -     (0.01 )
    Net (loss) earnings attributable to CTS Corporation $ 0.19   $ (0.34 )   0.34   $ (0.23 )
     
    Diluted
    Continuing operations $ 0.19 $ (0.31 ) 0.33 $ (0.22 )
    Discontinued operations   -     (0.03 )   -     (0.01 )
    Net (loss) earnings attributable to CTS Corporation $ 0.19   $ (0.34 )   0.33   $ (0.23 )
     
    Cash dividends declared per share $ 0.040   $ 0.035   $ 0.080   $ 0.070  
     
    Average common shares outstanding:
    Basic 33,741 33,589 33,725 33,556
     
    Diluted 34,208 33,589 34,244 33,556
     
                   
    CTS CORPORATION AND SUBSIDIARIES
    OTHER SUPPLEMENTAL INFORMATION
     
     

    Earnings / (Loss) per Share

     
    The following table reconciles GAAP earnings per share to adjusted earnings per share for the Company:
     
    Three Months Ended Six Months Ended
    June 29June 30June 29June 30
    2014 2013 2014 2013
     
    GAAP diluted earnings per share $ 0.19 $ (0.34 ) $ 0.33 $ (0.23 )
    Discontinued operations   -     0.03     -   0.01  
    Earnings per share from continuing operations $ 0.19 $ (0.31 ) $ 0.33 $ (0.22 )
     
     
     
    Tax affected charges to reported diluted earnings / (loss) per share:
    Restructuring and related charges 0.07 0.16 0.10 0.17
    CEO transition costs - 0.02 - 0.03
    Tax impact of cash repatriation - 0.32 - 0.32
    Tax asset write-off related to restructuring   (0.01 )   0.03     0.01   0.03  
    Adjusted earnings per share $ 0.25   $ 0.22   $ 0.44 $ 0.33  
     
     

    Additional Information

     
    The following table includes other financial information not presented in the preceding financial statements.
     
    Three Months Ended Six Months Ended
    $ In thousandsJune 29June 30June 29June 30

    Expense

    2014 2013 2014 2013
    Depreciation and Amortization $ 4,153 $ 5,470 $ 8,401 $ 11,356
    Equity Based Compensation $ 400 $ 1,163 $ 1,179 $ 2,481
     
     

    OTHER SUPPLEMENTAL INFORMATION

    (continued)

    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 truer 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.

               
     
    CTS Corporation and Subsidiaries
    Condensed Consolidated Balance Sheets - Unaudited
    (In thousands of dollars)
     
    June 29, December 31,
    2014 2013
     
    Cash and cash equivalents $ 127,230 $ 124,368
    Accounts receivable, net 61,080 62,667
    Inventories 28,434 32,226
    Other current assets   18,828   17,008
    Total current assets   235,572   236,269
     
    Property, plant and equipment, net 74,430 74,869
    Other assets 169,629 169,127
       
    Total Assets $ 479,631 $ 480,265
     
     
    Accounts payable $ 43,724 $ 47,052
    Accrued liabilities   41,574   48,068
    Total current liabilities   85,298   95,120
     
    Long-term debt 76,200 75,000
    Other obligations 12,888 13,416
     
    Shareholders' equity 305,245 296,729

     

       

    Total Liabilities and Shareholders' Equity

    $ 479,631 $ 480,265
     





    CTS Corporation

    Ashish Agrawal, 574-523-3800

    Vice President and Chief Financial Officer

    Source: CTS Corporation


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