CTS Announces Second Quarter 2021 Results

·9 min read

Strong performance in a challenging supply chain environment

LISLE, Ill., July 27, 2021 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced second quarter 2021 results.

  • Sales were $129.6 million, up 54% year-over-year. Sales to transportation customers increased 88%, and sales to other end markets grew 26%. The Sensor Scientific acquisition added $1.6 million of sales in the second quarter of 2021.

  • Net earnings were $0.9 million or $0.03 per diluted share versus $4.9 million or $0.15 per diluted share in the second quarter of last year. The second quarter net earnings were impacted by a non-cash charge of $20.1 million related to the previously communicated termination of the U.S. pension plan.

  • Adjusted diluted EPS was $0.52, up from $0.16 in the second quarter of 2020.

  • Free cash flow was $16.3 million, up from $9.1 million in the second quarter of 2020.

  • New business wins were $174 million.

“We delivered another quarter of strong sales and earnings in a challenging supply chain environment. I am proud of the execution by our global teams to meet our customers’ needs,” said Kieran O’Sullivan, CEO of CTS Corporation. “We continue to advance our diversification strategy by growing in the industrial, medical, and aerospace and defense end markets, enhanced by stronger new business wins.”

2021 Guidance
While management remains mindful of supply chain uncertainties, CTS is updating its 2021 guidance for sales from $445 – $500 million to $480 – $500 million, and for adjusted diluted EPS from $1.35 – $1.70 to $1.70 – $1.90.

Conference Call

As previously announced, the Company has scheduled a conference call at 10:00 a.m. (EST) today to discuss the second quarter financial results. The dial-in number is 800-309-1256 (323-347-3622, if calling from outside the U.S.). The passcode is 960176. A replay of the conference call will be available from 1:00 p.m. (EST) on Tuesday, July 27, 2021 through 1:00 p.m. (EST) on Tuesday, August 10, 2021. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 6658189. 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,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Net sales

$

129,585

$

84,197

$

258,012

$

187,272

Cost of goods sold

81,889

57,630

167,725

127,806

Gross margin

47,696

26,567

90,287

59,466

Selling, general and administrative expenses

20,937

14,668

39,262

31,427

Research and development expenses

6,029

5,522

11,716

12,930

Restructuring charges

151

135

232

375

Operating earnings

20,579

6,242

39,077

14,734

Other (expense) income:

Interest expense

(508

)

(909

)

(1,063

)

(1,760

)

Interest income

257

304

459

635

Other (expense) income, net

(20,929

)

256

(24,285

)

(1,726

)

Total other expense, net

(21,180

)

(349

)

(24,889

)

(2,851

)

(Loss) earnings before income taxes

(601

)

5,893

14,188

11,883

Income tax expense

(1,476

)

1,036

1,323

3,218

Net earnings

$

875

$

4,857

$

12,865

$

8,665

Earnings per share:

Basic

$

0.03

$

0.15

$

0.40

$

0.27

Diluted

$

0.03

$

0.15

$

0.39

$

0.27

Basic weighted – average common shares outstanding:

32,397

32,262

32,358

32,364

Effect of dilutive securities

229

242

259

284

Diluted weighted – average common shares outstanding:

32,626

32,504

32,617

32,648

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,
2021

December 31,
2020

ASSETS

Current Assets

Cash and cash equivalents

$

117,397

$

91,773

Accounts receivable, net

80,795

80,981

Inventories, net

48,972

45,870

Other current assets

16,180

14,607

Total current assets

263,344

233,231

Property, plant and equipment, net

93,017

97,437

Operating lease assets, net

23,150

23,281

Other Assets

Prepaid pension asset

56,903

56,642

Goodwill

109,898

109,497

Other intangible assets, net

74,584

79,121

Deferred income taxes

23,949

24,250

Other

2,453

2,590

Total other assets

267,787

272,100

Total Assets

$

647,298

$

626,049

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Accounts payable

$

47,753

$

50,489

Operating lease obligations

3,360

3,294

Accrued payroll and benefits

14,433

12,978

Accrued expenses and other liabilities

36,765

38,171

Total current liabilities

102,311

104,932

Long-term debt

50,000

54,600

Long-term operating lease obligations

22,953

23,163

Long-term pension obligations

7,199

7,466

Deferred income taxes

6,924

7,010

Other long-term obligations

3,602

5,196

Total Liabilities

192,989

202,367

Commitments and Contingencies

Shareholders’ Equity

Common stock

314,341

311,190

Additional contributed capital

40,007

41,654

Retained earnings

549,553

539,281

Accumulated other comprehensive loss

(77,070

)

(95,921

)

Total shareholders’ equity before treasury stock

826,831

796,204

Treasury stock

(372,522

)

(372,522

)

Total shareholders’ equity

454,309

423,682

Total Liabilities and Shareholders’ Equity

$

647,298

$

626,049


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

Six Months Ended

June 30,
2021

June 30,
2020

June 30,
2021

June 30,
2020

GAAP diluted earnings per share

$

0.03

$

0.15

$

0.39

$

0.27

Tax affected charges to reported diluted earnings per share:

Restructuring charges

0.01

0.01

0.01

0.01

Foreign currency (gain) loss

(0.03

)

(0.03

)

0.01

0.01

Non-cash pension expense

0.51

0.01

0.56

0.02

Environmental charges

0.02

0.01

0.02

Discrete tax items

0.02

Adjusted diluted earnings per share

$

0.52

$

0.16

$

0.98

$

0.35

Free Cash Flow

The following table reconciles GAAP operating cash flow to free cash flow for the Company:

Three Months Ended

Six Months Ended

(in thousands)

June 30,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Net cash provided by operating activities

$

18,675

$

11,797

$

38,785

$

23,724

Capital expenditures

(2,332

)

(2,675

)

(3,970

)

(7,245

)

Free cash flow

$

16,343

$

9,122

$

34,815

$

16,479

Additional Information

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

Three Months Ended

Six Months Ended

(in thousands)

June 30,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Depreciation and amortization expense

$

6,712

$

6,611

$

13,512

$

13,143

Stock-based compensation expense

$

1,903

$

817

$

3,122

$

1,045


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 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.

Adjusted Diluted Earnings Per Share

Adjusted diluted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted earnings per share.

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.

Free Cash Flow

Free cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net cash provided by operating activities. CTS believes free cash flow is a useful measure of its ability to generate cash.


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