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 6, 2018

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)

4925 Indiana Avenue
Lisle, IL	60532
(Address of principal executive offices)	(Zip Code)

Registrant's Telephone Number, Including Area Code: (630) 577-8800

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 6, 2018, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter ended December 31, 2017, 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

ExhibitDescription                            

99.1 Press Release dated February 6, 2018

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 6, 2018		CTS CORPORATION
	By:	/s/ Ashish Agrawal
		Ashish Agrawal
		Vice President and Chief Financial Officer

EX-99.1

	Press Release
February 6, 2018	FOR IMMEDIATE RELEASE

CTS Announces Fourth Quarter and Full Year 2017 Results

Robust growth in sales and total booked business

Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2017 results.

Fourth Quarter 2017 Results

• Sales were $110.9 million, up 9.2% year-over-year. Sales to automotive customers increased 7.3%, and sales of electronic components grew 12.7%. The Noliac acquisition, completed in May 2017, added $3.0 million of sales in the fourth quarter of 2017.

• Net loss was $13.6 million or $0.41 per share, which included a $18.0 million one-time, non-cash charge related to the Tax Cuts and Jobs Act and a $13.4 million one-time, non-cash pension settlement charge.

• Adjusted diluted EPS was $0.39 compared to $0.29 in the same quarter of 2016.

Full Year 2017 Results

• Sales were $423.0 million, up 6.6% compared to 2016. Sales to automotive customers increased 4.8%, and sales of electronic components grew 10.2%. The Noliac acquisition added $7.1 million of sales in 2017.

• Net earnings were $14.4 million or $0.43 per diluted share.

• Adjusted diluted EPS was $1.23 compared to $1.08 in 2016.

• Operating cash flow was $58.0 million, up 23% year-over-year.

• Total booked business grew $219 million in 2017, a 14.4% increase, to $1.737 billion.

“We made progress on several fronts in 2017, growing our total booked business substantially, building momentum in sales growth, improving earnings, and generating strong cash flows,” said Kieran O’Sullivan, CEO of CTS Corporation. “We will continue to focus on improving sales and gross margins in 2018.”

2018 Guidance

Full year 2018 sales are expected to be in the range of $435 to $455 million. Adjusted earnings per diluted share for 2018 are expected to be in the range of $1.32 to $1.44.

www.ctscorp.com

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 877-616-0061 (719-325-4757, if calling from outside the U.S.). The passcode is 497714. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Tuesday, February 20, 2018. The telephone number for the replay is 866-375-1919 (719-457-0820, if calling from outside the U.S.). The replay passcode is 2515838. 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.

About CTS

CTS (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect, and Move. The company manufactures sensors, actuators, and electronic components in North America, Europe, and Asia. CTS provides solutions to OEMs in the aerospace, communications, defense, industrial, information technology, medical, and transportation markets.

For more information, visit www.ctscorp.com.

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 CTS’ Annual

www.ctscorp.com

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

4925 Indiana Avenue

Lisle, IL 60532

USA

Telephone: +1 (630) 577-8800

E-mail: ashish.agrawal@ctscorp.com

###

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS (LOSS) - UNAUDITED

(In thousands of dollars, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31,			December 31,			December 31,			December 31,
	2017			2016			2017			2016
Net sales	$	110,910		$	101,584		$	422,993		$	396,679
Cost of goods sold	78,035			65,723			282,562			256,251
Gross Margin	32,875			35,861			140,431			140,428
Selling, general and administrative expenses	24,973			15,165			71,943			61,624
Research and development expenses	6,714			5,626			25,146			24,040
Restructuring and impairment charges	1,197			873			4,139			3,048
Loss (gain) on sale of assets	10			51			708			(11,450		)
Operating earnings	(19		)	14,146			38,495			63,166
Other (expense) income:
Interest expense	(1,134		)	(956		)	(3,343		)	(3,702		)
Interest income	370			223			1,284			1,305
Other income (expense)	928			(2,042		)	3,817			(3,524		)
Total other income (expense), net	164			(2,775		)	1,758			(5,921		)
Earnings before taxes	145			11,371			40,253			57,245
Income tax expense	13,766			3,061			25,805			22,865
Net (loss) earnings	$	(13,621	)	$	8,310		$	14,448		$	34,380
Net (loss) earnings per share:
Basic	$	(0.41	)	$	0.25		$	0.44		$	1.05
Diluted	$	(0.41	)	$	0.25		$	0.43		$	1.03
Basic weighted-average common shares outstanding	32,938			32,760			32,892			32,728
Effect of dilutive securities	—			582			528			523
Diluted weighted-average common shares outstanding	32,938			33,342			33,420			33,251
Cash dividends declared per share	$	0.04		$	0.04		$	0.16		$	0.16

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	(Unaudited)
	December 31,			December 31,
	2017			2016
ASSETS
Current Assets
Cash and cash equivalents	$	113,572		$	113,805
Accounts receivable, net	70,584			62,612
Inventories, net	36,596			28,652
Other current assets	12,857			10,638
Total current assets	233,609			215,707
Property, plant and equipment, net	88,247			82,111
Other Assets
Prepaid pension asset	57,050			46,183
Goodwill	69,046			61,744
Other intangible assets, net	66,943			64,370
Deferred income taxes	20,694			45,839
Other assets	2,096			1,743
Total other assets	215,829			219,879
Total Assets	$	537,685		$	517,697
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term notes payable	$	—		$	1,006
Accounts payable	49,201			40,046
Accrued payroll and benefits	11,867			11,369
Accrued expenses and other liabilities	41,344			45,708
Total current liabilities	102,412			98,129
Long-term debt	76,300			89,100
Long-term pension obligations	7,201			7,006
Deferred income taxes	1,791			2,367
Other long-term obligations	6,176			3,213
Total Liabilities	193,880			199,815
Commitments and Contingencies
Shareholders' Equity
Common stock	304,777			302,832
Additional contributed capital	41,084			40,521
Retained earnings	420,160			410,979
Accumulated other comprehensive loss	(78,960		)	(93,194		)
Total shareholders' equity before treasury stock	687,061			661,138
Treasury stock	(343,256		)	(343,256		)
Total shareholders' equity	343,805			317,882
Total Liabilities and Shareholders' Equity	$	537,685		$	517,697

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

Earnings Per Share

The following table reconciles GAAP diluted earnings per share to adjusted diluted earnings per share for the Company:

Additional Information

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

	Three Months Ended						Twelve Months Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
GAAP diluted earnings per share	$	(0.41	)	$	0.25		$	0.43		$	1.03
Tax affected charges to reported diluted earnings per share:
Restructuring charges	0.02			0.02			0.08			0.06
Increase in valuation allowance and revaluation of deferred taxes as a result of restructuring activities	—			—			—			0.07
Tax impact of valuation allowances, credits, and other foreign charges	(0.01		)	(0.01		)	(0.02		)	0.03
Loss (gain) on sale of facilities, net of expenses	—			—			0.01			(0.22		)
Transaction costs	—			—			—			0.02
Lease termination charge	—			—			—			0.02
Pension settlement charge	0.26			—			0.26			—
Foreign currency (gain) loss	(0.01		)	0.05			(0.07		)	0.09
Tax impact related to Tax Cuts and Job Acts	0.54			—			0.54			—
Tax impact of non-recurring stock compensation change	—			(0.02		)	—			(0.02		)
Adjusted diluted earnings per share	$	0.39		$	0.29		$	1.23		$	1.08

Additional Information

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

	Three Months Ended				Twelve Months Ended
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Depreciation and amortization expense	$	5,613	$	4,982	$	20,674	$	18,992
Stock-based compensation expense	$	1,670	$	979	$	4,184	$	2,738

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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.

www.ctscorp.com