LISLE, Ill.--(BUSINESS WIRE)--CTS Corporation (NYSE: CTS) today announced third quarter 2016 results.
- Sales were $99.7 million. Excluding $3.2 million from the single crystal acquisition, sales grew 6.4% compared to the third quarter of 2015 and 0.9% sequentially. Sales to automotive customers increased 5.2% year-over-year and declined 0.4% sequentially. Organic sales growth for electronic components was 9.2% year-over-year and 3.9% sequentially.
- GAAP earnings were $3.7 million or $0.11 per diluted share, which included $0.11 for one-time unfavorable tax items, $0.04 for restructuring, and $0.02 for a one-time lease termination fee. A GAAP loss of $4.8 million or $0.15 per share was reported in the third quarter of 2015, which included $0.28 for a non-recurring environmental charge, $0.06 for restructuring, and $0.04 for one-time unfavorable tax items.
- Adjusted EPS was $0.28 per diluted share versus $0.26 in the second quarter of 2016 and $0.23 in the third quarter of 2015.
- New business awards were $103 million in the third quarter and $356 million year-to-date.
“We are pleased with the continued improvement in sales and profitability,” said Kieran O’Sullivan, CEO of CTS Corporation. “The team's hard work has resulted in four consecutive quarters of sales growth, and we remain focused on driving profitable growth around products that Sense, Connect and Move. The single crystal acquisition has been a solid strategic addition to our portfolio, and the integration is going well.”
2016 Guidance
Management expects full year 2016 sales to be in the range of $390 to $400 million, including sales from the single crystal acquisition. Adjusted earnings per diluted share for 2016 are expected to be in the range of $1.00 to $1.06.
Conference Call
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the third quarter financial results. The dial-in number is 877-548-7906 (719-325-4773, if calling from outside the U.S.). The conference I.D. number is 5139796. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Friday, November 11, 2016. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 5139796. 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. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and supplies these products to OEMs in the aerospace, communications, defense, industrial, information technology, medical 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.
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CTS CORPORATION AND SUBSIDIARIES |
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 27, | September 30, | September 27, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net sales | $ | 99,697 | $ | 90,646 | $ | 295,095 | $ | 289,028 | ||||||||
| Cost of goods sold | 63,056 | 59,200 | 190,528 | 192,073 | ||||||||||||
| Gross Margin | 36,641 | 31,446 | 104,567 | 96,955 | ||||||||||||
| Selling, general and administrative expenses | 16,048 | 12,689 | 46,459 | 43,623 | ||||||||||||
| Research and development expenses | 6,284 | 5,692 | 18,414 | 16,378 | ||||||||||||
| Non-recurring environmental charge | — | 14,541 | — | 14,541 | ||||||||||||
| Restructuring and impairment charges | 1,969 | 2,373 | 2,175 | 5,229 | ||||||||||||
| (Gain) loss on sale of assets | (150 | ) | 1 | (11,501 | ) | 2 | ||||||||||
| Operating earnings (loss) | 12,490 | (3,850 | ) | 49,020 | 17,182 | |||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (917 | ) | (714 | ) | (2,746 | ) | (1,955 | ) | ||||||||
| Interest income | 203 | 713 | 1,082 | 2,354 | ||||||||||||
| Other expense | (46 | ) | (3,072 | ) | (1,482 | ) | (4,641 | ) | ||||||||
| Total other expense | (760 | ) | (3,073 | ) | (3,146 | ) | (4,242 | ) | ||||||||
| Earnings (loss) before income taxes | 11,730 | (6,923 | ) | 45,874 | 12,940 | |||||||||||
| Income tax expense (benefit) | 8,010 | (2,163 | ) | 19,804 | (7,667 | ) | ||||||||||
| Net earnings (loss) | $ | 3,720 | $ | (4,760 | ) | $ | 26,070 | $ | 20,607 | |||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.11 | $ | (0.15 | ) | $ | 0.80 | $ | 0.62 | |||||||
| Diluted | $ | 0.11 | $ | (0.15 | ) | $ | 0.79 | $ | 0.61 | |||||||
| Basic weighted – average common shares outstanding: | 32,759 | 32,770 | 32,716 | 33,083 | ||||||||||||
| Effect of dilutive securities | 495 | — | 494 | 485 | ||||||||||||
| Diluted weighted – average common shares outstanding | 33,254 | 32,770 | 33,210 | 33,568 | ||||||||||||
| Cash dividends declared per share | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.12 | ||||||||
See notes to unaudited condensed consolidated financial statements.
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CTS CORPORATION AND SUBSIDIARIES |
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| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 114,433 | $ | 156,928 | ||||
| Accounts receivable, net | 62,380 | 54,563 | ||||||
| Inventories, net | 29,178 | 24,600 | ||||||
| Other current assets | 10,852 | 9,863 | ||||||
| Total current assets | 216,843 | 245,954 | ||||||
| Property, plant and equipment, net | 79,329 | 69,872 | ||||||
| Other Assets | ||||||||
| Prepaid pension asset | 39,678 | 33,779 | ||||||
| Goodwill | 61,744 | 33,865 | ||||||
| Other intangible assets, net | 65,930 | 34,758 | ||||||
| Deferred income taxes | 48,963 | 63,809 | ||||||
| Other | 1,084 | 1,336 | ||||||
| Total other assets | 217,399 | 167,547 | ||||||
| Total Assets | $ | 513,571 | $ | 483,373 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 43,290 | $ | 40,299 | ||||
| Accrued payroll and benefits | 11,876 | 7,147 | ||||||
| Accrued liabilities | 45,969 | 47,174 | ||||||
| Total current liabilities | 101,135 | 94,620 | ||||||
| Long-term debt | 96,000 | 90,700 | ||||||
| Post retirement obligations | 7,066 | 7,230 | ||||||
| Other long-term obligations | 3,102 | 9,169 | ||||||
| Total Liabilities | 207,303 | 201,719 | ||||||
| Shareholders’ Equity | ||||||||
| Common stock | 302,156 | 300,909 | ||||||
| Additional contributed capital | 40,567 | 41,166 | ||||||
| Retained earnings | 403,979 | 381,840 | ||||||
| Accumulated other comprehensive loss | (97,178 | ) | (99,005 | ) | ||||
| Total shareholders’ equity before treasury stock | 649,524 | 624,910 | ||||||
| Treasury stock | (343,256 | ) | (343,256 | ) | ||||
| Total shareholders’ equity | 306,268 | 281,654 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 513,571 | $ | 483,373 | ||||
See notes to unaudited condensed consolidated financial statements.
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:
Additional Information
The following table includes other financial information not presented in the preceding financial statements.
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
September 30, |
September 27, |
September 30, |
September 27, |
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| GAAP diluted earnings per share | $ | 0.11 | $ | (0.15 | ) | $ | 0.79 | $ | 0.61 | |||||||
| Tax affected charges to reported diluted earnings per share: | ||||||||||||||||
| Restructuring and related charges | 0.04 | 0.06 | 0.04 | 0.13 | ||||||||||||
| Increase in valuation allowance and revaluation of deferred taxes as a result of restructuring activities | 0.07 | — | 0.07 | |||||||||||||
| Non-recurring environmental charge | — | 0.28 | — | 0.28 | ||||||||||||
| Increase in the recognition of foreign valuation allowance | 0.04 | 0.03 | 0.04 | 0.03 | ||||||||||||
| Increase in the recognition of uncertain tax benefits | — | — | — | 0.15 | ||||||||||||
| Change in treatment of certain foreign taxes | — | 0.01 | — | (0.46 | ) | |||||||||||
| Gain on sale of facilities, net of expenses | — | — | (0.22 | ) | — | |||||||||||
| Lease termination charge | 0.02 | 0.02 | ||||||||||||||
| Foreign currency loss | — | — | 0.04 | — | ||||||||||||
| Transaction costs | — | — | 0.01 | — | ||||||||||||
| Adjusted diluted earnings per share | $ | 0.28 | $ | 0.23 | $ | 0.79 | $ | 0.74 | ||||||||
Additional Information
The following table includes other financial information not presented in the preceding financial statements.
| Three Months Ended | Nine Months Ended | ||||||||||||||
|
September 30, |
September 27, |
September 30, |
September 27, |
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| Depreciation and amortization expense | $ | 5,085 | $ | 3,894 | $ | 14,010 | $ | 11,987 | |||||||
| Equity-based compensation expense | $ | 791 | $ | 293 | $ | 1,759 | $ | 2,655 | |||||||
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.
