EX-99.1 2 exhibit991.htm EXHIBIT 99.1 Exhibit

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
 
Twelve Months Ended
 
December 31, 2015
 
December 31, 2014
 
December 31, 2015
 
December 31, 2014
Net sales
$
93,282

 
$
100,378

 
$
382,310

 
$
404,021

Cost of goods sold
63,128

 
67,352

 
255,201

 
274,058

Gross Margin
30,154

 
33,026

 
127,109

 
129,963

Selling, general and administrative expenses
13,805

 
15,783

 
57,430

 
59,136

Research and development expenses
6,083

 
5,798

 
22,461

 
22,563

Non-recurring environmental charge
—

 
—

 
14,541

 
—

Restructuring and impairment charges
9,335

 
1,135

 
14,564

 
5,941

Operating earnings
931

 
10,310

 
18,113

 
42,323

Other (expense) income:
 
 
 
 
 
 
 
Interest expense
(673
)
 
(563
)
 
(2,628
)
 
(2,326
)
Interest income
719

 
827

 
3,073

 
2,786

Other expense
(1,656
)
 
(1,817
)
 
(6,297
)
 
(3,435
)
Total other expense
(1,610
)
 
(1,553
)
 
(5,852
)
 
(2,975
)
(Loss) earnings before income taxes
(679
)
 
8,757

 
12,261

 
39,348

Income tax expense
12,974

 
1,793

 
5,307

 
12,826

Net (loss) earnings
$
(13,653
)
 
$
6,964

 
$
6,954

 
$
26,522

 
 
 
 
 
 
 
 
(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

 
$
0.16

 
 
 
 
 
 
 
 
Average common shares outstanding:
 
 
 
 
 
 
 
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

Other current assets
15,888

 
21,112

Total current assets
251,979

 
240,401

Property, plant and equipment, net
69,872

 
71,414

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

Other assets
1,336

 
1,253

Total other assets
162,282

 
145,111

Total Assets
$
484,133

 
$
456,926

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
40,299

 
$
43,343

Accrued payroll and benefits
7,147

 
11,283

Accrued liabilities
53,905

 
25,356

Total current liabilities
101,351

 
79,982

Long-term debt
90,700

 
75,000

Post retirement obligations
2,703

 
3,049

Other long-term obligations
7,725

 
9,106

Total Liabilities
202,479

 
167,137

Shareholders’ Equity
 
 
 
Common stock
300,909

 
299,892

Additional contributed capital
41,166

 
39,153

Retained earnings
381,840

 
380,145

Accumulated other comprehensive loss
(99,005)

 
(104,233)

Total shareholders’ equity before treasury stock
624,910

 
614,957

Treasury stock
(343,256)

 
(325,168)

Total shareholders’ equity
281,654

 
289,789

Total Liabilities and Shareholders’ Equity
$
484,133

 
$
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
 
Twelve Months Ended
 
December 31, 2015
 
December 31, 2014
 
December 31, 2015
 
December 31, 2014
 
 
 
 
 
 
 
 
GAAP diluted earnings per share
$
(0.42
)
 
$
0.21

 
$
0.21

 
$
0.78

 
 
 
 
 
 
 
 
Tax affected charges to reported diluted earnings per share:
 
 
 
 
 
 
 
Restructuring and related charges
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

 
—

Change in treatment of certain foreign taxes
(0.01
)
 
—

 
(0.48
)
 
—

Tax impact of cash repatriation
0.27

 
—

 
0.26

 
—

Tax asset write-off related to restructuring
—

 
—

 
—

 
0.01

Adjusted diluted earnings per share
$
0.20

 
$
0.24

 
$
0.93

 
$
0.97


Additional Information

The following table includes other financial information not presented in the preceding financial statements.

 
Three Months Ended
 
Twelve Months Ended
In thousands
December 31, 2015
 
December 31, 2014
 
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 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.