CTS Announces Second Quarter 2015 Results

July 27, 2015 | By Business Wire News

ELKHART, Ind.

CTS Corporation (NYSE: CTS) today announced second quarter 2015 results.

Sales were $100.1 million, down 2.8% compared to the second quarter of 2014, driven primarily by an unfavorable currency impact of $2.1 million as the US Dollar appreciated against the Euro.
GAAP earnings were $19.1 million, or $0.57 per diluted share, compared to $6.4 million, or $0.19 per diluted share from continuing operations in the second quarter of 2014.
GAAP earnings include one-time favorable tax items of $0.32 and restructuring-related charges of $0.05 per diluted share.
Adjusted EPS was $0.30, compared to $0.25 in the second quarter of 2014.

Second quarter sales to automotive customers declined $2.8 million year-over-year primarily due to unfavorable currency impact of $2.1 million. Sales of electronic components were essentially flat year-over-year. CTS received $169 million in new business awards in the second quarter, bringing the year-to-date new business awards to $361 million.

“We delivered solid earnings even though sales remain soft,” said Kieran O’Sullivan, CEO of CTS Corporation. “We continue to make progress with our strategy to simplify, focus and drive growth in products that sense, connect and move. We achieved strong new business awards again in the second quarter. We expect to complete our transition from Canada as planned during the second half. After this transition, we will have eleven global manufacturing locations, down from twenty at the end of 2012.”

2015 Guidance

Management is revising its guidance for full year 2015 sales to the range of $390 to $405 million, which includes the unfavorable currency impact at current rates. Adjusted earnings per diluted share are expected to be in the range of $0.95 to $1.05.

Conference Call

As previously announced, the Company has scheduled a conference call on Tuesday, July 28 2015 at 11:00 a.m. (EDT). The dial-in number for the conference call is 888-505-4375 (719-785-1765, if calling from outside the U.S.). The conference I.D. number is 6768906. There will be a replay of the conference call from 2:00 p.m. (EDT) on Tuesday, July 28, 2015 through 2:00 p.m. (EDT) on Tuesday, August 11, 2015. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 6768906. Also, please note that a live audio webcast of the conference call will be available and can be accessed directly from the website of CTS Corporation www.ctscorp.com.

About CTS

CTS is a leading designer and manufacturer of electronic components and sensors to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. CTS manufactures products in North America, Europe and Asia. CTS’ stock is traded on the NYSE under the ticker symbol “CTS.”

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. Examples of factors that may affect future operating results and financial condition include, but are not limited to: changes in the economy generally and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition our businesses; rapid technological change; general market conditions in the automotive, communications, and computer industries, as well as conditions in the industrial, defense and aerospace, and medical markets; reliance on key customers; unanticipated natural disasters or other events; the ability to protect our intellectual property; pricing pressures and demand for our products; unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters as well as any product liability claims; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1A. of the 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.

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

				Three Months Ended						Six Months Ended
				June 28,			June 29,			June 28,			June 29,
				2015			2014			2015			2014

	Net sales			$	100,071		$	102,980		$	198,382		$	203,686

	Costs and expenses:
		Cost of goods sold			66,698			69,157			132,873			139,248
		Selling, general and administrative expenses			15,224			15,813			30,935			29,454
		Research and development expenses			5,487			5,332			10,686			10,958
		Restructuring and impairment charges			2,118			2,733			2,856			3,236

	Operating earnings				10,544			9,945			21,032			20,790

	Other (expense) income :
		Interest expense			(653	)		(582	)		(1,241	)		(1,195	)
		Interest income			853			688			1,641			1,252
		Other			115			(409	)		(1,569	)		(2,180	)
			Total other (expense) income		315			(303	)		(1,169	)		(2,123	)

			Earnings before income taxes		10,859			9,642			19,863			18,667

	Income tax expense (benefit)				(8,221	)		3,281			(5,504	)		7,226


	Net earnings			$	19,080		$	6,361		$	25,367		$	11,441

	Net earnings per share:
	Basic			$	0.58		$	0.19		$	0.76		$	0.34

	Diluted			$	0.57		$	0.19		$	0.75		$	0.33

	Cash dividends declared per share			$	0.040		$	0.040		$	0.080		$	0.080

	Average common shares outstanding:
	Basic				33,080			33,741			33,243			33,725

	Diluted				33,551			34,208			33,740			34,244

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:

	Three Months Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2015			2014			2015			2014

GAAP diluted earnings per share	$	0.57		$	0.19		$	0.75		$	0.33

Tax affected charges to reported diluted earnings per share:
Restructuring and related charges		0.05			0.07			0.07			0.10
Increase in the recognition of uncertain tax benefits		0.15			–			0.15			–
Change in treatment of certain foreign taxes		(0.47	)		–			(0.47	)		–
Tax asset write-off related to restructuring		–			(0.01	)		–			0.01
Adjusted diluted earnings per share	$	0.30		$	0.25		$	0.50		$	0.44


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 28,			June 29,			June 28,			June 29,
Expense	2015			2014			2015			2014
Depreciation and Amortization	$	4,028		$	4,153		$	8,093		$	8,401
Equity Based Compensation	$	842		$	400		$	2,362		$	1,179

OTHER SUPPLEMENTAL INFORMATION
(continued)

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.

CTS Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS – UNAUDITED
(In thousands of dollars)

				June 28,			December 31,
				2015			2014

Cash and cash equivalents				$	146,791		$	134,508
Accounts receivable, net					63,046			56,894
Inventories					30,424			27,887
Other current assets					21,400			21,112
	Total current assets				261,661			240,401

Property, plant and equipment, net					70,166			71,414
Other Assets
	Prepaid pension asset				36,563			32,099
	Goodwill				32,047			32,047
	Indefinite-lived intangible asset				690			690
	Other intangible assets, net				33,945			35,902
	Deferred income taxes				53,088			43,120
	Other				1,110			1,253
		Total other assets			157,443			145,111
			Total Assets	$	489,270		$	456,926




Accounts payable				$	45,724		$	43,343
Accrued payroll and benefits					10,364			11,283
Accrued liabilities					27,395			25,356
	Total current liabilities				83,483			79,982

Long-term debt					88,700			75,000
Post retirement obligations					2,908			3,049
Other long-term obligations					8,647			9,106
Shareholders’ equity
	Common stock				300,869			299,892
	Additional contributed capital				40,237			39,153
	Retained earnings				402,863			380,145
	Accumulated other comprehensive loss				(101,900	)		(104,233	)
			Total shareholders’ equity before treasury stock		642,069			614,957
	Treasury stock				(336,537	)		(325,168	)
		Total shareholders’ equity			305,532			289,789
			Total Liabilities and Shareholders’ Equity	$	489,270		$	456,926