CTS Announces Second Quarter 2016 Results
Gross margin growth from continued operational improvement
Strong new business wins
Lisle, Ill. – CTS Corporation (NYSE: CTS) today announced second quarter 2016 results.
- Sales were $98.7 million, up 2.1% from the first quarter of 2016 and down 1.4% from the second quarter of 2015. Second quarter of 2016 sales to automotive customers decreased 1.6% from the first quarter of 2016. The company’s single crystal acquisition, completed on March 11, 2016, added $3.1 million of sales in the second quarter of 2016. Excluding sales from the single crystal acquisition, sales of electronic components increased 2.4% from the first quarter of 2016.
- Net earnings were $14.5 million or $0.44 per diluted share, which included a gain on the sale of the Company’s Canadian facility of $0.21 per diluted share, net of costs related to the sale. Net earnings were $19.1 million or $0.57 per diluted share in the second quarter of 2015, which included $0.32 of one-time net favorable tax items and $0.05 for restructuring.
- Adjusted EPS was $0.26 per diluted share versus $0.26 in the first quarter of 2016 and $0.30 in the second quarter of 2015. The year-over-year impact on adjusted EPS was driven by higher net interest expense and a higher tax rate.
- New business awards were $135 million in the second quarter.
“We are pleased with another strong quarter of new business awards as we make progress on our organic growth efforts,” said Kieran O’Sullivan, CEO of CTS Corporation. “On the operations front, gross margins improved both year-over-year and sequentially as we continue to focus on operational execution. The integration of our single crystal acquisition is progressing well. We also reduced our debt significantly from the first quarter when the acquisition was completed.”
Management continues to monitor trends in CTS’ end markets and reaffirms its prior guidance. Full year 2016 sales are expected to be in the range of $390 to $410 million, which includes sales related to the single crystal acquisition. Adjusted earnings per diluted share for 2016 are expected to be in the range of $0.95 to $1.06.
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the second quarter financial results. The dial-in number is 888-510-1786 (719-325-2402, if calling from outside the U.S.). The conference I.D. number is 8164150. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EDT) on Friday, August 12, 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 8164150. 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.
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.
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.
Vice President and Chief Financial Officer
2375 Cabot Drive
Lisle, IL 60532
Telephone: +1 (630) 577-8800
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.