CTS CORPORATION CTS Corporation (NYSE: CTS) today announced second quarter 2014 results:
- Revenues were $103.0 million, up 2.3% versus the first quarter of 2014; down 2.3% compared to the second quarter of 2013.
- GAAP earnings from continuing operations were $6.4 million, or $0.19 per diluted share, compared to a loss of $10.3 million, or $0.31 per diluted share, in second quarter of 2013.
- Adjusted EPS from continuing operations was $0.25 compared to $0.22 in the second quarter of 2013.
Sales of sensors and mechatronic products grew 3% year-over-year. Sales of electronic components declined 12% due mainly to softness in sales of frequency and HDD products. CTS received $89 million of new business wins in the second quarter. Year-to-date, CTS has won $225 million in new business.
“We are pleased with the earnings delivered in the second quarter despite the pressure on sales. During our transition, we continue to fine tune our product portfolio in 2014 and are addressing execution issues related to our electronic components products,” said Kieran O’Sullivan, CEO of CTS Corporation. “We remain confident in and committed to our strategy. We are making progress on improving our cost structure and expect to achieve substantial earnings growth in 2014.”
Management is adjusting its full-year 2014 guidance for sales due to the challenges with electronic components products. Sales for 2014 are expected to be in the range of $400 to $415 million. Adjusted earnings per diluted share are expected to be at the lower end of our guidance range of $0.96 and $1.02.
Conference Call
As previously announced, the Company has
scheduled a conference call on Tuesday, July 29, 2014 at 11:00 a.m.
(EDT). The dial-in number for the conference call is 888-359-3624
(719-325-2463, if calling from outside the U.S.). The conference I.D.
number is 5350505. There will be a replay of the conference call from
2:00 p.m. (EDT) on Tuesday, July 29, 2014 through 2:00 p.m. (EDT) on
Tuesday, August 5, 2014. The telephone number for the replay is
888-203-1112 (719-457-0820, if calling from outside the U.S.). The
access code is 5350505. 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; 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 (LOSS) - UNAUDITED | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net sales | $ | 102,980 | $ | 105,381 | $ | 203,686 | $ | 203,443 | ||||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Cost of goods sold | 69,157 | 72,981 | 139,248 | 144,257 | ||||||||||||||||
| Selling, general and administrative expenses | 15,813 | 17,157 | 29,454 | 34,833 | ||||||||||||||||
| Research and development expenses | 5,332 | 5,771 | 10,958 | 12,023 | ||||||||||||||||
| Restructuring charge | 2,733 | 7,029 | 3,236 | 7,206 | ||||||||||||||||
| Operating earnings | 9,945 | 2,443 | 20,790 | 5,124 | ||||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income (expense), net | 106 | (612 | ) | 57 | (1,105 | ) | ||||||||||||||
| Other income (expense) | (409 | ) | 398 | (2,180 | ) | (109 | ) | |||||||||||||
| Total other income (expense) | (303 | ) | (214 | ) | (2,123 | ) | (1,214 | ) | ||||||||||||
| Earnings from continuing operations before income taxes | 9,642 | 2,229 | 18,667 | 3,910 | ||||||||||||||||
| Income tax expense | 3,281 | 12,482 | 7,226 | 11,176 | ||||||||||||||||
| Earnings (loss) from continuing operations | 6,361 | (10,253 | ) | 11,441 | (7,266 | ) | ||||||||||||||
| Discontinued operations | ||||||||||||||||||||
| Loss from discontinued operations, net of tax | - | (1,082 | ) | - | (501 | ) | ||||||||||||||
| Net earnings (loss) | $ | 6,361 | $ | (11,335 | ) | $ | 11,441 | $ | (7,767 | ) | ||||||||||
| Net earnings (loss) per share: | ||||||||||||||||||||
| Basic | ||||||||||||||||||||
| Continuing operations | $ | 0.19 | $ | (0.31 | ) | $ | 0.34 | $ | (0.22 | ) | ||||||||||
| Discontinued operations | - | (0.03 | ) | - | (0.01 | ) | ||||||||||||||
| Net (loss) earnings attributable to CTS Corporation | $ | 0.19 | $ | (0.34 | ) | 0.34 | $ | (0.23 | ) | |||||||||||
| Diluted | ||||||||||||||||||||
| Continuing operations | $ | 0.19 | $ | (0.31 | ) | 0.33 | $ | (0.22 | ) | |||||||||||
| Discontinued operations | - | (0.03 | ) | - | (0.01 | ) | ||||||||||||||
| Net (loss) earnings attributable to CTS Corporation | $ | 0.19 | $ | (0.34 | ) | 0.33 | $ | (0.23 | ) | |||||||||||
| Cash dividends declared per share | $ | 0.040 | $ | 0.035 | $ | 0.080 | $ | 0.070 | ||||||||||||
| Average common shares outstanding: | ||||||||||||||||||||
| Basic | 33,741 | 33,589 | 33,725 | 33,556 | ||||||||||||||||
| Diluted | 34,208 | 33,589 | 34,244 | 33,556 | ||||||||||||||||
| CTS CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
| OTHER SUPPLEMENTAL INFORMATION | |||||||||||||||||||
Earnings / (Loss) per Share | |||||||||||||||||||
| The following table reconciles GAAP earnings per share to adjusted earnings per share for the Company: | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 29 | June 30 | June 29 | June 30 | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| GAAP diluted earnings per share | $ | 0.19 | $ | (0.34 | ) | $ | 0.33 | $ | (0.23 | ) | |||||||||
| Discontinued operations | - | 0.03 | - | 0.01 | |||||||||||||||
| Earnings per share from continuing operations | $ | 0.19 | $ | (0.31 | ) | $ | 0.33 | $ | (0.22 | ) | |||||||||
| Tax affected charges to reported diluted earnings / (loss) per share: | |||||||||||||||||||
| Restructuring and related charges | 0.07 | 0.16 | 0.10 | 0.17 | |||||||||||||||
| CEO transition costs | - | 0.02 | - | 0.03 | |||||||||||||||
| Tax impact of cash repatriation | - | 0.32 | - | 0.32 | |||||||||||||||
| Tax asset write-off related to restructuring | (0.01 | ) | 0.03 | 0.01 | 0.03 | ||||||||||||||
| Adjusted earnings per share | $ | 0.25 | $ | 0.22 | $ | 0.44 | $ | 0.33 | |||||||||||
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 29 | June 30 | June 29 | June 30 | |||||||||||||||
Expense | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Depreciation and Amortization | $ | 4,153 | $ | 5,470 | $ | 8,401 | $ | 11,356 | |||||||||||
| Equity Based Compensation | $ | 400 | $ | 1,163 | $ | 1,179 | $ | 2,481 | |||||||||||
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 truer 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 29, | December 31, | |||||||||
| 2014 | 2013 | |||||||||
| Cash and cash equivalents | $ | 127,230 | $ | 124,368 | ||||||
| Accounts receivable, net | 61,080 | 62,667 | ||||||||
| Inventories | 28,434 | 32,226 | ||||||||
| Other current assets | 18,828 | 17,008 | ||||||||
| Total current assets | 235,572 | 236,269 | ||||||||
| Property, plant and equipment, net | 74,430 | 74,869 | ||||||||
| Other assets | 169,629 | 169,127 | ||||||||
| Total Assets | $ | 479,631 | $ | 480,265 | ||||||
| Accounts payable | $ | 43,724 | $ | 47,052 | ||||||
| Accrued liabilities | 41,574 | 48,068 | ||||||||
| Total current liabilities | 85,298 | 95,120 | ||||||||
| Long-term debt | 76,200 | 75,000 | ||||||||
| Other obligations | 12,888 | 13,416 | ||||||||
| Shareholders' equity | 305,245 | 296,729 | ||||||||
| ||||||||||
Total Liabilities and Shareholders' Equity | $ | 479,631 | $ | 480,265 | ||||||
