CTS
$27.50
Cts
($.55)
(1.96%)
Earnings Details
3rd Quarter September 2017
Thursday, October 26, 2017 8:00:05 AM
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Summary

CTS Narrows Guidance

Cts (CTS) reported 3rd Quarter September 2017 earnings of $0.31 per share on revenue of $106.2 million. The consensus earnings estimate was $0.29 per share on revenue of $105.0 million. Revenue grew 6.6% on a year-over-year basis.

The company said it expects 2017 earnings of $1.13 to $1.18 per share on revenue of $415.0 million to $420.0 million. The company's previous guidance was earnings of $1.12 to $1.22 per share on revenue of $405.0 million to $420.0 million and the current consensus earnings estimate is $1.13 per share on revenue of $419.9 million for the year ending December 31, 2017.

CTS Corp is a designer and manufacturer of electronic components and sensors to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. The Company manufactures products in North America, Europe and Asia.

Results
Reported Earnings
$0.31
Earnings Whisper
-
Consensus Estimate
$0.29
Reported Revenue
$106.2 Mil
Revenue Estimate
$105.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

CTS Announces Third Quarter 2017 Results

CTS Corporation (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 (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
September
September
September
30, 2017
30, 2016
30, 2017
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
--
0.07
--
0.07
a result of restructuring activities
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
September
September
September
30, 2017
30, 2016
30, 2017
30, 2016
Depreciation and amortization expense
$ 5,388
$ 5,085
$ 15,061
$
14,010
Stock-based compensation expense
$
827
$
792
$
2,514
$
1,759

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SOURCE: CTS Corporation

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