8-K 8-K 1 form8kearningsrelease.htm 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 8, 2016 CTS CORPORATION (Exact Name of Registrant as Specified in its Charter) Indiana 1-4639 35-0225010 (State or other jurisdiction of incorporation) (Commission File Number) (1.R.S. Employer Identification No) 1142 W. Beardsley Ave. Elkhart, Indiana 46,514 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (574) 523-3800 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.): Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act ( 17 CFR 240. l 4d2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4( c)) Item 2.02 Results of Operations and Financial Condition. On February 8, 2016, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter and full year ended December 31, 2015 as more fully described in the press release. A copy of the press release is attached hereto as Exhibit 99.l and is incorporated by reference herein. The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99. l hereto, is being "furnished" to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act" ) or otherwise subject to the liabilities of that section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit Description 99.1 Press Release dated February 8, 2016 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 8, 2016 CTS CORPORATION By: /s/ Luis F. Machado Luis F. Machado http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/form8kearningsrelease.htm[2/9/2016 4:38:51 PM] Vice President, General Counsel & Secretary 8-K Item 2.02 Results of Operations and Financial Condition. On February 8, 2016, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter and full year ended December 31, 2015 as more fully described in the press release. A copy of the press release is attached hereto as Exhibit 99.l and is incorporated by reference herein. The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99. l hereto, is being "furnished" to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act" ) or otherwise subject to the liabilities of that section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit Description 99.1 Press Release dated February 8, 2016 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 8, 2016 CTS CORPORATION By: /s/ Luis F. Machado Luis F. Machado http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/form8kearningsrelease.htm[2/9/2016 4:38:51 PM] Vice President, General Counsel & Secretary Exhibit EX-99.1 2 exhibit991.htm EXHIBIT 99.1 Press Release February 8, 2016 FOR IMMEDIATE RELEASE CTS Announces Fourth Quarter and Full Year 2015 Results Significant growth in 2015 new business awards Strong gross margin performance on lower sales Elkhart, IN - CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2015 results. Fourth Quarter 2015 Results • Sales were $93.3 million, up 2.9% from the third quarter 2015. Fourth quarter sales to automotive customers increased 2.6%, and sales of electronic components were up 3.7% from the third quarter of 2015. Sales were down 7.1% compared to the fourth quarter of 2014. • GAAP loss was $13.7 million or $0.42 per share compared to earnings of $7.0 million or $0.21 per diluted share in the fourth quarter of 2014. Included in the fourth quarter 2015 GAAP loss were discrete tax charges of $0.34 and restructuring related charges of $0.28. • Adjusted EPS was $0.20 versus $0.24 in the fourth quarter of 2014. In the fourth quarter of 2015, balance sheet currency translation impacted earnings per share unfavorably by $0.04. CTS received $105 million in new business awards in the fourth quarter, up 10% from $95 million in the third quarter of 2015. Full Year 2015 Results • Sales were $382.3 million, down 5.4% compared to 2014. Currency impacted total year 2015 sales unfavorably by $7.8 million. 2015 sales to automotive customers declined 5.5%. Sales of electronic components declined 5.1%. • GAAP earnings were $7.0 million or $0.21 per diluted share compared to $26.5 million or $0.78 per diluted share in 2014. • Adjusted EPS was $0.93 versus $0.97 in 2014. • Cash flow from operations was $39 million in 2015, up 19% from $32 million in 2014. CTS received $560 million in new business awards for 2015, up 16% from $484 million in 2014. “CTS had a challenging 2015, and we were disappointed with our revenue performance. However, we achieved a number of significant accomplishments during the year. We improved our gross margin. We also successfully completed the transition of manufacturing from our plant in Canada, added several new customers, and acquired new technology and IP as part of our strategic plans,” said Kieran O’Sullivan, CEO of CTS Corporation. “We had a record year for new business awards with an increase of 16% year-over-year. We are building backlog and staying on course towards our long-term strategic growth objectives.” http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM] Exhibit had a record year for new business awards with an increase of 16% year-over-year. We are building backlog and staying on course towards our long-term strategic growth objectives.” 2016 Guidance Management expects full year 2016 sales in the range of $390 to $400 million. This represents growth of 2-5% from 2015. Adjusted earnings per diluted share for 2016 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 at 11:00 a.m. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 888-395-3227 (719-325-2362, if calling from outside the U.S.). The conference I.D. number is 5849497. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Monday, February 22, 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 5849497. 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 (NYSE: CTS) is a leading designer and manufacturer of sensors, actuators and electronic components to OEMs in the aerospace, communications, defense, industrial, information technology, medical and transportation markets. CTS manufactures products in North America, Europe and Asia. 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 forwardlooking 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 the Annual Report on Form 10-K. We undertake no obligation to publicly update our forwardlooking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes. Contact Ashish Agrawal Vice President and Chief Financial Officer CTS Corporation 2375 Cabot Drive Lisle, IL 60532 USA Telephone: +1 (574) 523-3800 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS – UNAUDITED http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM] Exhibit CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS – UNAUDITED (In thousands, except per share amounts) Three Months Ended December 31, 2015 Net sales $ Cost of goods sold Gross Margin Selling, general and administrative expenses Research and development expenses Non-recurring environmental charge Restructuring and impairment charges Operating earnings Other (expense) income: Interest expense 93,282 $ December 31, 2014 Other expense Total other expense (Loss) earnings before income taxes Income tax expense December 31, 2015 December 31, 2014 404,021 67,352 255,201 274,058 33,026 127,109 129,963 13,805 15,783 57,430 59,136 6,083 5,798 22,461 22,563 30,154 100,378 $ 382,310 $ 63,128 — — 14,541 — 9,335 1,135 14,564 5,941 931 10,310 18,113 42,323 (673) Interest income Twelve Months Ended (563) (2,628) (2,326) 719 827 3,073 2,786 (1,656) (1,817) (6,297) (3,435) (1,610) (1,553) (5,852) (2,975) (679) 8,757 12,261 39,348 12,974 1,793 5,307 12,826 26,522 Net (loss) earnings $ (13,653) $ 6,964 $ 6,954 $ (Loss) earnings per share: Basic $ (0.42) $ 0.21 $ 0.21 $ 0.79 Diluted $ (0.42) $ 0.21 $ 0.21 $ 0.78 Cash dividends declared per share $ 0.04 $ 0.04 $ 0.16 $ Average common shares outstanding: 0.16 Basic 32,605 33,431 32,959 33,618 Diluted 32,605 33,935 33,484 34,130 CTS Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (In thousands of dollars) December 31, 2015 December 31, 2014 ASSETS Current Assets Cash and cash equivalents 156,928 $ 134,508 Accounts receivable, net 54,563 56,894 Inventories, net 24,600 27,887 http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM] $ Exhibit CTS Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (In thousands of dollars) December 31, 2015 December 31, 2014 ASSETS Current Assets Cash and cash equivalents 156,928 $ 134,508 Accounts receivable, net $ 54,563 56,894 Inventories, net 24,600 27,887 Other current assets 15,888 21,112 251,979 240,401 69,872 71,414 Total current assets Property, plant and equipment, net Other Assets Prepaid pension asset 33,779 32,099 Goodwill 33,865 32,047 Other intangible assets, net 34,758 36,592 Deferred income taxes 58,544 43,120 1,336 1,253 162,282 145,111 484,133 $ 456,926 Other assets Total other assets Total Assets $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ Accrued payroll and benefits 40,299 $ 43,343 7,147 11,283 53,905 25,356 101,351 79,982 90,700 75,000 Post retirement obligations 2,703 3,049 Other long-term obligations 7,725 9,106 202,479 167,137 Accrued liabilities Total current liabilities Long-term debt Total Liabilities Shareholders’ Equity Common stock Additional contributed capital 300,909 299,892 41,166 39,153 Retained earnings 381,840 380,145 Accumulated other comprehensive loss (99,005) (104,233) 624,910 614,957 (343,256) (325,168) 281,654 289,789 484,133 $ 456,926 Total shareholders’ equity before treasury stock Treasury stock Total shareholders’ equity $ Total Liabilities and Shareholders’ Equity CTS CORPORATION AND SUBSIDIARIES OTHER SUPPLEMENTAL INFORMATION Earnings Per Share http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM] Exhibit 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 December 31, 2015 Twelve Months Ended December 31, December 31, December 31, 2014 2015 2014 GAAP diluted earnings per share $ Tax affected charges to reported diluted earnings per share: (0.42) $ Restructuring and related charges 0.21 $ 0.21 $ 0.78 0.28 0.03 0.40 0.18 Non-recurring environmental charge — — 0.27 — Increase in the recognition of foreign valuation allowance 0.07 — 0.10 — Increase in the recognition of uncertain tax benefits 0.01 — 0.17 — (0.01) — (0.48) — 0.27 — 0.26 — — — — 0.01 0.20 $ 0.24 $ 0.93 $ 0.97 Change in treatment of certain foreign taxes Tax impact of cash repatriation Tax asset write-off related to restructuring $ Adjusted diluted earnings per share Additional Information The following table includes other financial information not presented in the preceding financial statements. Three Months Ended December 31, 2015 In thousands December 31, 2014 Twelve Months Ended December 31, 2015 December 31, 2014 Depreciation and amortization expense $ 4,267 $ 4,249 $ 16,254 $ 16,971 Equity-based compensation expense $ 540 $ 821 $ 3,195 $ 2,660 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 nonGAAP 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 http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM] Exhibit 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 nonGAAP 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. http://www.sec.gov/Archives/edgar/data/26058/000002605816000027/exhibit991.htm[2/9/2016 4:39:13 PM]