CTS Announces Fourth Quarter and Full Year 2020 Results

February 9, 2021 7:30 AM EST

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Continued market recovery, solid operational performance

LISLE, Ill., Feb. 09, 2021 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2020 results.

Fourth Quarter 2020 Results

  • Sales were $123 million, up 7% year-over-year. Sales to transportation customers increased 12%, and sales to other end markets were essentially flat.
  • Net earnings were $14.9 million or $0.46 per diluted share versus $10.1 million or $0.31 last year.
  • Adjusted diluted EPS was $0.43, up 16% from $0.37 in the fourth quarter of 2019.
  • Free cash flow was $22.0 million, up 28% from $17.2 million in 2019.
  • New business wins were $104 million.

Full Year 2020 Results

  • Sales were $424 million, down 10% compared to 2019. Sales to transportation customers declined 19%, and sales to other end markets increased 7%.
  • Net earnings were $34.7 million or $1.06 per diluted share versus $36.1 million or $1.09 last year.
  • Adjusted diluted EPS was $1.12 compared to $1.45 in 2019.
  • Free cash flow was $61.9 million, up 45% from $42.7 million last year.
  • New business wins were $442 million.

“We saw strength in most end markets and executed well to deliver solid financial results in the fourth quarter,” said Kieran O’Sullivan, CEO of CTS Corporation. “We are making progress on our Focus 2025 strategic initiative, including a target of 10% annualized revenue growth. The recent SSI acquisition strengthens our position with medical customers and advances our end market diversification.”

2021 Guidance

Management remains mindful of market and supply chain uncertainties in this pandemic environment. Full year 2021 sales are expected to be in the range of $430 to $490 million. Adjusted earnings per diluted share for 2021 are expected to be in the range of $1.20 to $1.60. Management aims to narrow the guidance range as the year progresses.

Conference Call

As previously announced, the Company has scheduled a conference call at 10:00 a.m. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 886676. There will be a replay of the conference call from 1:00 p.m. (EST) today through 1:00 p.m. (EST) on Tuesday, February 23, 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 8354721. 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  Twelve Months Ended 
  December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
 
Net sales $123,018  $115,040  $424,066  $468,999 
Cost of goods sold  80,327   76,340   285,003   311,424 
Gross margin  42,691   38,700   139,063   157,575 
Selling, general and administrative expenses  19,476   18,037   67,787   70,408 
Research and development expenses  5,664   6,113   24,317   25,967 
Restructuring charges  414   2,111   1,830   7,448 
Loss (gain) on sale of assets     48      (63)
Operating earnings  17,137   12,391   45,129   53,815 
Other (expense) income:                
Interest expense  (655)  (903)  (3,272)  (2,648)
Interest income  195   341   1,047   1,737 
Other income (expense), net  2,682   1,008   2,575   (2,638)
Total other income (expense), net  2,222   446   350   (3,549)
Earnings before income taxes  19,359   12,837   45,479   50,266 
Income tax expense  4,412   2,775   10,793   14,120 
Net earnings $14,947  $10,062  $34,686  $36,146 
Earnings per share:                
Basic $0.46  $0.31  $1.07  $1.11 
Diluted $0.46  $0.31  $1.06  $1.09 
Basic weighted – average common shares outstanding:  32,273   32,554   32,317   32,700 
Effect of dilutive securities  289   416   267   405 
Diluted weighted – average common shares outstanding:  32,562   32,970   32,584   33,105 
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, 2020  December 31, 2019 
ASSETS        
Current Assets        
Cash and cash equivalents $91,773  $100,241 
Accounts receivable, net  80,981   78,008 
Inventories, net  45,870   42,237 
Other current assets  14,607   16,992 
Total current assets  233,231   237,478 
Property, plant and equipment, net  97,437   105,038 
Operating lease assets, net  23,281   24,644 
Other Assets        
Prepaid pension asset  56,642   62,082 
Goodwill  109,497   106,056 
Other intangible assets, net  79,121   85,215 
Deferred income taxes  24,250   19,795 
Other  2,590   3,046 
Total other assets  272,100   276,194 
Total Assets $626,049  $643,354 
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current Liabilities        
Accounts payable $50,489  $48,219 
Operating lease obligations  3,294   2,787 
Accrued payroll and benefits  12,978   9,564 
Accrued expenses and other liabilities  38,171   36,378 
Total current liabilities  104,932   96,948 
Long-term debt  54,600   99,700 
Long-term operating lease obligations  23,163   24,926 
Long-term pension obligations  7,466   6,632 
Deferred income taxes  7,010   5,637 
Other long-term obligations  5,196   4,292 
Total Liabilities  202,367   238,135 
Commitments and Contingencies        
Shareholders’ Equity        
Common stock  311,190   307,932 
Additional contributed capital  41,654   43,689 
Retained earnings  539,281   509,766 
Accumulated other comprehensive loss  (95,921)  (91,726)
Total shareholders’ equity before treasury stock  796,204   769,661 
Treasury stock  (372,522)  (364,442)
Total shareholders’ equity  423,682   405,219 
Total Liabilities and Shareholders’ Equity $626,049  $643,354 

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  Twelve Months Ended 
  December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
 
GAAP diluted earnings per share $0.46  $0.31  $1.06  $1.09 
Tax affected charges to reported diluted earnings per share:                
Restructuring charges  0.01   0.05   0.04   0.18 
Foreign currency (gain) loss  (0.10)  (0.03)  (0.16)  0.05 
Non-cash pension expense  0.01   0.01   0.06   0.02 
Environmental charges  0.03   0.05   0.07   0.05 
Legal settlement     (0.01)     (0.01)
Transaction costs  0.01      0.01   0.02 
Discrete tax items  0.01   (0.01)  0.04   0.05 
Adjusted diluted earnings per share $0.43  $0.37  $1.12  $1.45 

Free Cash Flow

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

  Three Months Ended  Twelve Months Ended 
(in thousands) December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
 
Net cash provided by operating activities $26,429  $23,670  $76,783  $64,405 
Capital expenditures  (4,417)  (6,434)  (14,858)  (21,733)
Free cash flow $22,012  $17,236  $61,925  $42,672 

Additional Information

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

  Three Months Ended  Twelve Months Ended 
(in thousands) December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
 
Depreciation and amortization expense $6,851  $6,581  $26,670  $24,619 
Stock-based compensation expense $1,253  $1,065  $3,417  $5,015 

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.

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.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.




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