CTS
$43.37
Cts
$.58
1.36%
Earnings Details
4th Quarter December 2022
Tuesday, February 7, 2023 8:00:00 AM
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Summary

CTS Guides In-line

Cts (CTS) reported 4th Quarter December 2022 earnings of $0.56 per share on revenue of $142.3 million. The consensus earnings estimate was $0.56 per share on revenue of $147.6 million. Revenue grew 7.4% on a year-over-year basis.

The company said it expects 2023 earnings of $2.40 to $2.70 per share on revenue of $580.0 million to $640.0 million. The current consensus earnings estimate is $2.50 per share on revenue of $619.54 million for the year ending December 31, 2023.

CTS is a leading designer and manufacturer of products that Sense, Connect, and Move.

Results
Reported Earnings
$0.56
Earnings Whisper
-
Consensus Estimate
$0.56
Reported Revenue
$142.3 Mil
Revenue Estimate
$147.6 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

CTS Announces Fourth Quarter and Full-Year 2022 Results

LISLE, Ill., Feb. 07, 2023 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of custom engineered solutions that “Sense, Connect and Move,” today announced fourth quarter and full-year 2022 results.

“We delivered solid performance throughout 2022, closing the year with a double-digit increase in revenue along with strong adjusted EBITDA margin expansion. During the year, we advanced our diversification strategy through the completion of two acquisitions, while also gaining momentum with electric platform wins as we continue developing new products for hybrid and electric vehicles,” said Kieran O’Sullivan, CEO of CTS Corporation. “Looking ahead, we expect a softer first quarter, and an improving trend for the rest of 2023. We remain focused on executing our strategic priorities while driving operational improvements to deliver long-term value creation.”

Fourth Quarter 2022 Results

  • Sales were $142.3 million, up 7% year-over-year. Sales to non-transportation end markets increased 22% and, as expected, sales to the transportation end market decreased 4 % over the fourth quarter of 2021.
  • Reported net income was $14.9 million at 11% of sales, compared to $9.2 million at 7% of sales, in the fourth quarter of 2021.
  • Earnings per share was $0.47 per diluted share, up from $0.28 per diluted share, in the fourth quarter of 2021.
  • Adjusted diluted EPS was $0.56, up from $0.49 in the fourth quarter of 2021.
  • Adjusted EBITDA margin was 22.9% compared to 20.9% in the fourth quarter of 2021.
  • Operating cash flow was $25.5 million compared to $26.0 million in the fourth quarter of 2021.

Full-Year 2022 Results

  • Sales were $586.9 million, up 14% year-over-year, driven by strength in non-transportation end markets. Non-transportation end markets grew 24%, while the transportation end market grew 7% compared to 2021.
  • Net income was $59.6 million or 10% of sales, compared to a net loss of $41.9 million or (8)% of sales in 2021. Net income in 2021 was impacted by the non-cash pension charge of $96.6 million.
  • Earnings per share was $1.85 per diluted share, compared to $(1.30) per diluted share, in 2021.
  • Adjusted diluted EPS was $2.46, up from $1.93 in 2021.
  • Adjusted EBITDA margin was 22.8%, up from 21.0% in 2021.
  • Operating cash flow was $121.2 million, up from $86.1 million in 2021.

2023 Guidance

CTS expects full-year 2023 sales to be in the range of $580 - $640 million and adjusted diluted EPS to be in the range of $2.40 - $2.70.

CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.

Conference Call and Supplemental Materials

As previously announced, the Company has scheduled a conference call for 10:00 a.m. (EST) today. The dial-in number for the U.S. and Canada is 844-200-6205 (+1 929-526-1599, if calling from outside the U.S. and Canada). The passcode is 889906. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS’ website at https://www.ctscorp.com/investors/events-presentations/.

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 and defense, industrial, 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 CTS’ 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: the ultimate impact of the COVID-19 pandemic on CTS’ business, results of operations or financial condition, including supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions, including our acquisitions of TEWA Temperature Sensors and Ferroperm Piezoceramics; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Non-GAAP Financial Measures

From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business.    These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS’ management believes that non-GAAP financial measures can be useful to investors in analyzing CTS’ financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

The information in this press release includes the non-GAAP financial measures of adjusted EBITDA and adjusted diluted earnings per share. These non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of CTS’ fundamental business operations.

CTS believes that adjusted EBITDA and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations or were not part of CTS’ business operations during a comparable period.

CTS believes that these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies.

Contact

Ashish Agrawal
Vice President and Chief Financial Officer
CTS Corporation
4925 Indiana Avenue
Lisle, IL 60532 USA
+1 (630) 577-8800
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  Twelve Months Ended
  December 31,
2022
  December 31,
2021
  December 31,
2022
  December 31,
2021
Net sales $142,281  $132,531  $586,869  $512,925 
Cost of goods sold  91,277   83,860   376,331   328,306 
Gross margin  51,004   48,671   210,538   184,619 
Selling, general and administrative expenses  23,491   23,413   91,520   82,597 
Research and development expenses  5,405   5,686   24,100   23,856 
Restructuring charges  478   1,136   1,912   1,687 
Operating earnings  21,630   18,436   93,006   76,479 
Other (expense) income:           
Interest expense  (702)  (534)  (2,192)  (2,111
Interest income  716   151   1326   840 
Other (expense), net  (873)  (3,302)  (11,403)  (136,088)
Total other (expense), net  (859)  (3,685)  (12,269)  (137,359)
Earnings (loss) before income taxes  20,771   14,751   80,737   (60,880)
Income tax expense (benefit)  5,831   5,586   21,162   (19,014
Net earnings (loss)  14,940   9,165   59,575   (41,866)
Earnings (loss) per share:           
Basic  0.47   0.28   1.86                  (1.30)
Diluted  0.47   0.28   1.85                   (1.30)
Basic weighted – average common shares outstanding:  31,818   32,214   31,968   32,327 
Effect of dilutive securities  224   218   270    
Diluted weighted – average common shares outstanding:  32,042   32,432   32,238   32,327 
Cash dividends declared per share $0.04  $0.04  $0.16  $0.16 



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

  (Unaudited)    
  December 31, 2022  December 31, 2021 
ASSETS      
Current Assets      
Cash and cash equivalents $156,910  $141,465 
Accounts receivable, net  90,935   82,191 
Inventories, net  62,260   49,506 
Other current assets  15,655   15,927 
Total current assets  325,760   289,089 
Property, plant and equipment, net  97,300   96,876 
Operating lease assets, net  22,702   21,594 
Other Assets      
Prepaid pension asset    49,382 
Goodwill  152,361   109,798 
Other intangible assets, net  108,053   69,888 
Deferred income taxes  23,461   25,415 
Other  18,850   2,420 
Total other assets  302,725   256,903 
Total Assets $748,487  $664,462 
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current Liabilities      
Accounts payable $53,211  $55,537 
Operating lease obligations  3,936   3,393 
Accrued payroll and benefits  20,063   18,418 
Accrued expenses and other liabilities  35,322   36,718 
Total current liabilities  112,532   114,066 
Long-term debt  83,670   50,000 
Long-term operating lease obligations  21,754   21,354 
Long-term pension obligations  5,048   6,886 
Deferred income taxes  16,010   5,894 
Other long-term obligations  3,249   2,684 
Total Liabilities  242,263   200,884 
Commitments and Contingencies      
Shareholders’ Equity      
Common stock  316,803   314,620 
Additional contributed capital  46,144   42,549 
Retained earnings  546,703   492,242 
Accumulated other comprehensive loss  (671)  (4,525)
Total shareholders’ equity before treasury stock  908,979   844,886 
Treasury stock  (402,755)  (381,308)
Total shareholders’ equity  506,224   463,578 
Total Liabilities and Shareholders’ Equity $748,487  $664,462 



CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION - UNAUDITED
(In millions of dollars, except per share amounts)

Adjusted EBITDA Margin

  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
 
  2022  2021  2022  2021  2020 
Net earnings (loss) $14.9  $9.2  $59.6  $(41.9) $34.7 
                
Depreciation and amortization expense  8.0   6.7   29.8   26.9   26.7 
Interest expense  0.7   0.5   2.2   2.1   3.3 
Tax expense (benefit)  5.8   5.6   21.2   (19.0)  10.8 
                
EBITDA  29.5   22.0   112.7   (31.8)  75.4 
                
Adjustments to EBITDA:               
Restructuring charges  0.5   1.1   1.9   1.7   1.8 
Environmental charges  1.0   1.4   2.8   2.3   2.8 
Acquisition-related costs        2.5      0.3 
Inventory fair value step-up  0.7      4.0       
Non-cash pension and related expense     1.3   4.8   132.4   2.5 
Foreign currency loss (gain)  0.9   1.9   4.9   3.3   (5.3)
                
Total adjustments to EBITDA  3.1   5.7   20.9   139.7   2.1 
                
Adjusted EBITDA $32.6  $27.7  $133.6  $107.9  $77.5 
                
Net sales $142.3  $132.5  $586.9  $512.9  $424.1 
                
Adjusted EBITDA Margin   22.9%  20.9%  22.8%  21.0%  18.3%


Adjusted Diluted Earnings Per Share

  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
 
  2022  2021  2022  2021  2020 
GAAP diluted earnings (loss) per share $0.47  $0.28  $1.85  $(1.30) $1.06 
Tax affected charges to reported diluted earnings (loss) per share:               
Restructuring charges  0.01   0.04   0.05   0.06   0.04 
Foreign currency loss (gain)  0.03   0.06   0.15   0.10   (0.16)
Non-cash pension expense     0.03   0.16   3.13   0.06 
Environmental charges  0.02   0.03   0.07   0.05   0.07 
Transaction costs        0.07      0.01 
Inventory fair value step-up  0.02      0.10       
Legal Settlement               
Discrete tax items  0.01   0.05   0.01   (0.11)  0.04 
Adjusted diluted earnings per share $0.56  $0.49  $2.46  $1.93  $1.12 


Capital Expenditures

  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
 
  2022  2021  2022  2021  2020 
Capital expenditures $5.1  $7.5  $14.3  $15.6  $14.9 
Net sales $142.3  $132.5  $586.9  $512.9  $424.1 
Capex as % of net sales  3.6%  5.7%  2.4%  3.0%  3.5%


Additional Information

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

  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
 
  2022  2021  2022  2021  2020 
Depreciation and amortization expense $8.0  $6.7  $29.8  $26.9  $26.7 
Stock-based compensation expense $1.9  $2.0  $7.7  $6.1  $3.4 

 


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Source: CTS Corporation