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 5, 2019

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 5, 2019, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter ended December 31, 2018, 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 5, 2019

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 5, 2019		CTS CORPORATION
	By:	/s/ William M. Cahill
		William M. Cahill
		Chief Accounting Officer
		(Principal Accounting Officer)

EX-99.1

	Press Release
February 5, 2019	FOR IMMEDIATE RELEASE

CTS Announces Fourth Quarter and Full Year 2018 Results

Strong sales and earnings growth

Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2018 results.

Fourth Quarter 2018 Results

• Sales were $120.1 million, up 8.3% year-over-year. Sales to transportation customers increased 7.2%, and sales to other end markets grew 10.2%.

• Net earnings were $17.6 million or $0.52 per diluted share.

• Adjusted diluted EPS was $0.41 compared to $0.39 in the fourth quarter of 2017.

Full Year 2018 Results

• Sales were $470.5 million, up 11.2% compared to 2017. Sales to transportation customers increased 9.0%, and sales to other end markets grew 15.3%.

• Net earnings were $46.5 million or $1.39 per diluted share.

• Adjusted diluted EPS was $1.53 compared to $1.23 in 2017.

• Operating cash flow was $58.2 million.

• Total booked business grew $129 million in 2018, a 7.4% increase, to $1.87 billion.

“We are pleased with our progress in several areas as we transition our business and systems,” said Kieran O’Sullivan, CEO of CTS Corporation. “We are focused on carrying our momentum to continue elevating our performance in the years ahead. We expect growth in medical, telecom, and defense end markets, and remain cautious on industrial and transportation end markets.”

2019 Guidance

Full year 2019 sales are expected to be in the range of $460 to $500 million. Adjusted earnings per diluted share for 2019 are expected to be in the range of $1.50 to $1.70.

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 855-719-5008 (334-323-0517, if calling from outside the U.S.). The passcode is 670352. 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 19, 2019. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 6970679. 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, and provides engineered products to customers in the aerospace/defense, industrial, medical, telecommunications/IT, 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 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,
	2018			2017			2018			2017
Net sales	$	120,073		$	110,910		$	470,483		$	422,993
Cost of goods sold	77,428			78,035			305,510			282,562
Gross Margin	42,645			32,875			164,973			140,431
Selling, general and administrative expenses	18,128			24,973			73,569			71,943
Research and development expenses	5,804			6,714			25,304			25,146
Restructuring and impairment charges	1,698			1,197			5,062			4,139
(Gain) loss on sale of assets	(2		)	10			—			708
Operating earnings (loss)	17,017			(19		)	61,038			38,495
Other (expense) income:
Interest expense	(484		)	(1,134		)	(2,085		)	(3,343		)
Interest income	459			370			1,826			1,284
Other (expense) income	(119		)	928			(2,676		)	3,817
Total other (expense) income, net	(144		)	164			(2,935		)	1,758
Earnings before taxes	16,873			145			58,103			40,253
Income tax (benefit) expense	(691		)	13,766			11,571			25,805
Net earnings (loss)	$	17,564		$	(13,621	)	$	46,532		$	14,448
Net earnings (loss) per share:
Basic	$	0.53		$	(0.41	)	$	1.41		$	0.44
Diluted	$	0.52		$	(0.41	)	$	1.39		$	0.43
Basic weighted-average common shares outstanding	32,983			32,938			33,024			32,892
Effect of dilutive securities	562			—			545			528
Diluted weighted-average common shares outstanding	33,545			32,938			33,569			33,420
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,
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	100,933		$	113,572
Accounts receivable, net	79,518			70,584
Inventories, net	43,486			36,596
Other current assets	15,422			12,857
Total current assets	239,359			233,609
Property, plant and equipment, net	99,401			88,247
Other Assets
Prepaid pension asset	54,100			57,050
Goodwill	71,057			71,057
Other intangible assets, net	60,180			66,943
Deferred income taxes	22,201			20,694
Other assets	2,043			2,096
Total other assets	209,581			217,840
Total Assets	$	548,341		$	539,696
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	51,975		$	49,201
Accrued payroll and benefits	14,671			11,867
Accrued expenses and other liabilities	37,347			41,344
Total current liabilities	103,993			102,412
Long-term debt	50,000			76,300
Long-term pension obligations	6,510			7,201
Deferred income taxes	3,990			3,802
Other long-term obligations	5,919			6,176
Total Liabilities	170,412			195,891
Commitments and Contingencies
Shareholders' Equity
Common stock	306,697			304,777
Additional contributed capital	42,820			41,084
Retained earnings	478,847			420,160
Accumulated other comprehensive loss	(97,739		)	(78,960		)
Total shareholders' equity before treasury stock	730,625			687,061
Treasury stock	(352,696		)	(343,256		)
Total shareholders' equity	377,929			343,805
Total Liabilities and Shareholders' Equity	$	548,341		$	539,696

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, 2018			December 31, 2017			December 31, 2018			December 31, 2017
GAAP diluted earnings per share	$	0.52		$	(0.41	)	$	1.39		$	0.43
Tax affected charges to reported diluted earnings per share:
Restructuring charges	0.04			0.02			0.12			0.08
Foreign currency (gain) loss	—			(0.01		)	0.06			(0.07		)
Non-recurring costs of tax improvement initiatives	—			—			0.03			—
Non-recurring environmental charge	—			—			0.02			—
Loss on sale of facilities, net of expenses	—			—			—			0.01
Decrease in the recognition of foreign valuation allowance	(0.03		)	(0.01		)	(0.03		)	(0.02		)
Pension settlement charge	—			0.26			—			0.26
Discrete tax items	(0.10		)	—			(0.04		)	—
Tax impact related to Tax Cuts and Job Acts	(0.02		)	0.54			(0.02		)	0.54
Adjusted diluted earnings per share	$	0.41		$	0.39		$	1.53		$	1.23

Additional Information

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

	Three Months Ended				Twelve Months Ended
	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Depreciation and amortization expense	$	6,165	$	5,613	$	22,514	$	20,674
Stock-based compensation expense	$	1,152	$	1,670	$	5,256	$	4,184

www.ctscorp.com

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