CTS Announces Second Quarter 2021 Results

July 27, 2021 7:45 AM EDT

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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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