March 6, 2001
FOR RELEASE: Immediately
Elkhart, IN…The severe economic downturn has caused CTS Corporation to revise its short-term outlook. CTS' current outlook is below the consensus estimates for revenue and earnings. CTS' businesses rely primarily on three markets: communications (infrastructure and handheld devices), automotive and computers. These markets are directly dependent on consumer and capital spending, which has slowed significantly.
Mr. Joseph P. Walker, Chairman and Chief Executive Officer, stated "We are taking the necessary actions to mitigate the economic slowdown's impact, aggressively attacking the issues within our control, such as costs and expenses. We have initiated a number of actions to counteract the impact of the current negative market conditions. In addition to aggressively pursuing new business opportunities, we are taking steps necessary to size our business to current customer demand. The slowdown in demand affords us the opportunity to review and identify potential location and product family consolidations. Capital spending, expenses and costs are under tight control and will be reduced wherever possible. We have also begun to focus on global sourcing initiatives that will allow us to leverage our purchases as a Corporation, rather than by independent locations. These initiatives will begin to yield benefits in the second half of this year."
"As a result of current conditions, however, we expect that revenues for first quarter will be down 7% to 12% compared to first quarter 2000, driven by slowdown in demand and inventory corrections by our customer base. The decline in manufacturing revenues will more than offset the increase in our interconnect assemblies business. This shift in product mix will reduce our profit margins. Earnings will be significantly lower than first quarter 2000, in a range of $0.04 to $0.08 diluted earnings per share, " said Mr. Walker.
Mr. Walker further added, "Even if current market and economic conditions prevail, neither improving nor deteriorating, we expect subsequent quarters to improve in revenue generation and profitability from the first quarter levels. We anticipate these improvements as our interconnect assemblies business growth continues to accelerate; excess customer inventories are worked down; and our cost and expense initiatives begin to produce benefits. For the full-year 2001, our outlook is that revenues are expected to be about flat with the year 2000 and diluted earnings per share are expected to be in the range of $2.10 to $2.40. While we are disappointed with the 2001 outlook, it reflects the existing economic and market conditions. The initiatives we have taken will further improve the fundamental strength of CTS. Thus, while our short-term outlook has been negatively impacted by current market conditions, we remain optimistic over the longer term."
A conference call to discuss this announcement is scheduled for Wednesday, March 7, 2001, at 4:00 p.m. Eastern Standard Time. To participate in this conference call, dial the reservation line at 800-553-0349 (calling from the U.S.) or 612-288-0318 (calling from outside the U.S.) and ask for the CTS Corporation conference call.
The Company plans to report its first quarter 2001 results on April 19, 2001.
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The Company's plans, estimates and beliefs concerning the future contained in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those reflected herein due to a variety of factors that could affect the Company's operating results, liquidity and financial condition. We have based these forward-looking statements on our current expectations and projections about future events. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could impact future results include the Company's ability to successfully integrate acquired operations; results of our investments in technology, including our ability to timely develop and achieve market acceptance of new products, and to protect our intellectual property; the Company's ability to attract and retain talented employees, including senior management; our ability to manage administrative, technical and operational issues presented by our expansion, consolidation and cost cutting plans; the loss and inability to replace the revenues generated by one or more of our large OEM customers; the Company's sensitivity to general economic conditions and events that affect the automotive, computer equipment and communications industries; continued growth of the wireless communications market and the Company's participation in that growth; the impact of changes in commodity, including precious metals, prices; the pace at which competitors enter the Company's markets and competitive responses of other companies, including the Company's customers, in such markets; product pricing pressures and demand for the Company's products, especially if economic conditions continue to worsen and do not recover in the automotive, computer equipment and communications markets; and risks associated with our international operations and expansion into developing and new markets, including trade and tariff barriers, exchange rates and political risks. Investors are directed to examine the Company's SEC filings, which more fully describe the risks and uncertainties associated with the Company's business.
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CTS Corporation is a leading manufacturer of electronic components and assemblies for the communications, computer and automotive markets. The Company employs over 9,000 people at 19 facilities in North America, Europe and Asia. The Company's stock is traded on the NYSE under the ticker symbol "CTS."
Released by: CTS Corporation
905 West Boulevard North
Elkhart, In 46514
Telephone (219) 293-7511 FAX (219) 293-6146
Contact: George T. Newhart, Vice President Investor Relations