CTS
$36.20
Cts
Earnings Details
2nd Quarter June 2018
Thursday, July 26, 2018 8:00:00 AM
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Summary

CTS Raises Guidance

Cts (CTS) reported 2nd Quarter June 2018 earnings of $0.39 per share on revenue of $118.0 million. The consensus earnings estimate was $0.32 per share on revenue of $115.0 million. Revenue grew 11.7% on a year-over-year basis.

The company said it expects 2018 earnings of $1.40 to $1.55 per share on revenue of $450.0 million to $465.0 million. The company's previous guidance was earnings of $1.32 to $1.44 per share on revenue of $435.0 million to $455.0 million and the current consensus earnings estimate is $1.34 per share on revenue of $457.3 million for the year ending December 31, 2018.

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
$0.39
Earnings Whisper
-
Consensus Estimate
$0.32
Reported Revenue
$118.0 Mil
Revenue Estimate
$115.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

CTS Announces Second Quarter 2018 Results

LISLE, Ill., July 26, 2018 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE:CTS) today announced second quarter 2018 results.

  • Sales were $118.0 million, up 11.7% year-over-year, with organic growth at 10.9%. Sales to transportation customers increased 7.5%, and sales of electronic components increased 19.3%.
  • Net earnings were $7.2 million or $0.21 per diluted share, down from $10.0 million or $0.30 per diluted share in the second quarter of 2017, impacted by currency changes and certain discrete tax items.
  • Adjusted EPS was $0.39 per diluted share, up from $0.28 in the second quarter of 2017.
  • Total Booked Business was $1.8 billion at the end of the second quarter of 2018, an increase of $38 million from the first quarter of 2018.

“We delivered another quarter of strong sales growth and improved operational performance,” said Kieran O’Sullivan, CEO of CTS Corporation. “Our sales to industrial, medical, and aerospace & defense customers grew by double digits, and we saw robust sales growth to our transportation customers. Our gross margins improved as we realized savings from our manufacturing transition. I am encouraged by our progress in the first half of the year.”

2018 Guidance

Management is increasing its full year guidance. 2018 sales are expected to be in the range of $450 to $465 million, up from $435 to $455 million. Adjusted earnings per diluted share for 2018 are expected to be in the range of $1.40 to $1.55, increased from $1.32 to $1.44.

Conference Call

As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the second quarter financial results. The dial-in number is 855-719-5007 (334-323-0517, if calling from outside the U.S.).  The passcode is 628167. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Thursday, August 9, 2018.  The telephone number for the replay is 866-375-1919 (719-457-0820, if calling from outside the U.S.).  The replay passcode is 7032432. 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


CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands of dollars, except per share amounts)

 Three Months Ended Six Months Ended
 June 30, June 30, June 30, June 30,
 2018 2017 2018 2017
Net sales$118,021  $105,686  $231,551  $205,840 
Cost of goods sold76,208  69,892  151,305  135,822 
Gross Margin41,813  35,794  80,246  70,018 
Selling, general and administrative expenses19,621  15,808  36,993  31,056 
Research and development expenses6,476  6,049  12,983  12,052 
Restructuring charges1,172  729  2,367  1,507 
Operating earnings14,544  13,208  27,903  25,403 
Other income (expense):       
Interest expense(571) (752) (1,112) (1,436)
Interest income472  298  954  551 
Other (expense) income, net(2,874) 1,170  (870) 1,631 
Total other (expense) income(2,973) 716  (1,028) 746 
Earnings before income taxes11,571  13,924  26,875  26,149 
Income tax expense4,362  3,958  8,118  7,699 
Net earnings$7,209  $9,966  $18,757  $18,450 
Earnings per share:       
Basic$0.22  $0.30  $0.57  $0.56 
Diluted$0.21  $0.30  $0.56  $0.55 
        
Basic weighted – average common shares outstanding:33,051  32,890  33,014  32,846 
Effect of dilutive securities513  461  513  493 
Diluted weighted – average common shares outstanding33,564  33,351  33,527  33,339 
        
Cash dividends declared per share$0.04  $0.04  $0.08  $0.08 



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

 (Unaudited)  
 June 30, December 31,
 2018 2017
ASSETS   
Current Assets   
Cash and cash equivalents$102,861  $113,572 
Accounts receivable, net75,597  70,584 
Inventories, net41,671  36,596 
Other current assets11,931  12,857 
Total current assets232,060  233,609 
Property, plant and equipment, net93,630  88,247 
Other Assets   
Prepaid pension asset59,938  57,050 
Goodwill71,057  71,057 
Other intangible assets, net63,557  66,943 
Deferred income taxes20,188  20,694 
Other2,123  2,096 
Total other assets216,863  217,840 
Total Assets$542,553  $539,696 
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current Liabilities   
Accounts payable$51,652  $49,201 
Accrued payroll and benefits9,689  11,867 
Accrued liabilities43,805  41,344 
Total current liabilities105,146  102,412 
Long-term debt57,000  76,300 
Long-term pension obligations6,998  7,201 
Deferred income taxes3,572  3,802 
Other long-term obligations6,077  6,176 
Total Liabilities178,793  195,891 
Commitments and Contingencies   
Shareholders’ Equity   
Common stock306,570  304,777 
Additional contributed capital40,034  41,084 
Retained earnings436,274  420,160 
Accumulated other comprehensive loss(75,862) (78,960)
Total shareholders’ equity before treasury stock707,016  687,061 
Treasury stock(343,256) (343,256)
Total shareholders’ equity363,760  343,805 
Total Liabilities and Shareholders’ Equity$542,553  $539,696 



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 Six Months Ended
 June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
GAAP diluted earnings per share$0.21  $0.30  $0.56  $0.55 
        
Tax affected adjustments to reported diluted earnings per share:       
Restructuring charges0.03  0.01  0.06  0.03 
Foreign currency loss (gain)0.07  (0.03) 0.02  (0.04)
Transaction costs  0.01    0.01 
Non-recurring costs of tax improvement initiatives0.01    0.02   
Non-recurring environmental charge0.02    0.02   
Discrete tax items0.05  (0.01) 0.05  (0.01)
Adjusted diluted earnings per share$0.39  $0.28  $0.73  $0.54 

Additional Information

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

 Three Months Ended Six Months Ended
 June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Depreciation and amortization expense$5,478  $4,965  $10,961  $9,673 
Stock-based compensation expense$1,263  $808  $2,186  $1,687 

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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Source: CTS Corporation