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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.”
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 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 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.
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
(In thousands, except per share amounts)
Three Months Ended
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
Interest income
Other expense
Total other expense
(Loss) earnings before income taxes
Income tax expense
Net (loss) earnings
December 31,
2015
December 31,
2014
December 31,
2015
December 31,
2014
$
$
$
$
93,282
63,128
30,154
13,805
6,083
—
9,335
931
$
(673)
719
(1,656)
(1,610)
(679)
12,974
(13,653) $
(Loss) earnings per share:
Basic
Diluted
$
$
(0.42) $
(0.42) $
Cash dividends declared per share
$
Average common shares outstanding:
Basic
Diluted
Twelve Months Ended
0.04
32,605
32,605
$
100,378
67,352
33,026
15,783
5,798
—
1,135
10,310
(563)
827
(1,817)
(1,553)
8,757
1,793
6,964 $
382,310
255,201
127,109
57,430
22,461
14,541
14,564
18,113
(2,628)
3,073
(6,297)
(5,852)
12,261
5,307
6,954 $
404,021
274,058
129,963
59,136
22,563
—
5,941
42,323
(2,326)
2,786
(3,435)
(2,975)
39,348
12,826
26,522
0.21
0.21
$
$
0.21
0.21
$
$
0.79
0.78
0.04
$
0.16
$
0.16
33,431
33,935
32,959
33,484
33,618
34,130
CTS Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands of dollars)
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Other current assets
Total current assets
Property, plant and equipment, net
Other Assets
Prepaid pension asset
Goodwill
Other intangible assets, net
Deferred income taxes
Other assets
Total other assets
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable
Accrued payroll and benefits
Accrued liabilities
Total current liabilities
Long-term debt
Post retirement obligations
Other long-term obligations
Total Liabilities
Shareholders’ Equity
Common stock
Additional contributed capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity before treasury stock
Treasury stock
Total shareholders’ equity
Total Liabilities and Shareholders’ Equity
December 31,
2015
December 31,
2014
$
$
$
$
$
156,928
54,563
24,600
15,888
251,979
69,872
33,779
33,865
34,758
58,544
1,336
162,282
484,133
40,299
7,147
53,905
101,351
90,700
2,703
7,725
202,479
300,909
41,166
381,840
(99,005)
624,910
(343,256)
281,654
484,133
$
$
$
134,508
56,894
27,887
21,112
240,401
71,414
32,099
32,047
36,592
43,120
1,253
145,111
456,926
43,343
11,283
25,356
79,982
75,000
3,049
9,106
167,137
299,892
39,153
380,145
(104,233)
614,957
(325,168)
289,789
456,926
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
GAAP diluted earnings per share
Twelve Months Ended
December
31, 2014
$
(0.42) $
0.21
Tax affected charges to reported diluted earnings per share:
Restructuring and related charges
Non-recurring environmental charge
Increase in the recognition of foreign valuation allowance
Increase in the recognition of uncertain tax benefits
Change in treatment of certain foreign taxes
Tax impact of cash repatriation
Tax asset write-off related to restructuring
Adjusted diluted earnings per share
$
0.28
—
0.07
0.01
(0.01)
0.27
—
0.20 $
0.03
—
—
—
—
—
—
0.24
December
31, 2015
$
$
December
31, 2014
0.21
$
0.78
0.40
0.27
0.10
0.17
(0.48)
0.26
—
0.93 $
0.18
—
—
—
—
—
0.01
0.97
Additional Information
The following table includes other financial information not presented in the preceding financial statements.
Three Months Ended
In thousands
Depreciation and amortization expense
Equity-based compensation expense
December
31, 2015
$
$
4,267
540
December
31, 2014
$
$
4,249
821
Twelve Months Ended
December
31, 2015
$
$
16,254
3,195
December
31, 2014
$
$
16,971
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
•
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.
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