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 07, 2023

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)	(IRS Employer Identification No.)
4925 Indiana Avenue
Lisle, Illinois		60532
(Address of Principal Executive Offices)		(Zip Code)

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

(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:

☐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 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	CTS	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On February 7, 2023, CTS Corporation (the "Registrant") issued a press release providing certain results for the fourth quarter and full year ended December 31, 2022, 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, as amended (the “Exchange Act” ) or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

As disclosed in the press release furnished as Exhibit 99.1, the Registrant will hold a live web cast on February 7, 2023, relating to the Registrant’s financial results for the fourth quarter and full year ended December 31, 2022. A copy of the slides to be presented during the Registrant’s web cast and discussed in the conference call relating to such financial results is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.

By filing this Current Report on Form 8-K and furnishing the information contained herein, the Registrant makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

The information contained in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act 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	Earnings Release dated February 7, 2023
99.2	Slides of CTS Corporation, 4th Quarter and Full Year 2022, dated February 7, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document)

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 7, 2023		CTS CORPORATION
	By:	/s/ Thomas M. White
		Thomas M. White
		Corporate Controller

EX-99.1

Exhibit 99.1

 

February 7, 2023 FOR IMMEDIATE RELEASE

CTS Announces Fourth Quarter and Full-Year 2022 Results

Executing on diversification and electrification strategy to deliver profitable growth

Lisle, Ill. - CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of custom engineered solutions that “Sense, Connect and Move,” today announced fourth quarter and full-year 2022 results.

“We delivered solid performance throughout 2022, closing the year with a double-digit increase in revenue along with strong adjusted EBITDA margin expansion. During the year, we advanced our diversification strategy through the completion of two acquisitions, while also gaining momentum with electric platform wins as we continue developing new products for hybrid and electric vehicles.” said Kieran O’Sullivan, CEO of CTS Corporation. “Looking ahead, we expect a softer first quarter, and an improving trend for the rest of 2023. We remain focused on executing our strategic priorities while driving operational improvements to deliver long-term value creation.”

Fourth Quarter 2022 Results

•Sales were $142.3 million, up 7% year-over-year. Sales to non-transportation end markets increased 22% and, as expected, sales to the transportation end market decreased 4 % over the fourth quarter of 2021.

•Reported net income was $14.9 million at 11% of sales, compared to $9.2 million at 7% of sales, in the fourth quarter of 2021.

•Earnings per share was $0.47 per diluted share, up from $0.28 per diluted share, in the fourth quarter of 2021.

•Adjusted diluted EPS was $0.56, up from $0.49 in the fourth quarter of 2021.

•Adjusted EBITDA margin was 22.9% compared to 20.9% in the fourth quarter of 2021.

•Operating cash flow was $25.5 million compared to $26.0 million in the fourth quarter of 2021.

Full-Year 2022 Results

•Sales were $586.9 million, up 14% year-over-year, driven by strength in non-transportation end markets. Non-transportation end markets grew 24%, while the transportation end market grew 7% compared to 2021.

•Net income was $59.6 million or 10% of sales, compared to a net loss of $41.9 million or (8)% of sales in 2021. Net income in 2021 was impacted by the non-cash pension charge of $96.6 million.

•Earnings per share was $1.85 per diluted share, compared to $(1.30) per diluted share, in 2021.

•Adjusted diluted EPS was $2.46, up from $1.93 in 2021.

•Adjusted EBITDA margin was 22.8%, up from 21.0% in 2021.

•Operating cash flow was $121.2 million, up from $86.1 million in 2021.

www.ctscorp.com

2023 Guidance

CTS expects full-year 2023 sales to be in the range of $580 - $640 million and adjusted diluted EPS to be in the range of $2.40 - $2.70.

CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.

Conference Call and Supplemental Materials

As previously announced, the Company has scheduled a conference call for 10:00 a.m. (EST) today. The dial-in number for the U.S. and Canada is 844-200-6205 (+1 929-526-1599, if calling from outside the U.S. and Canada). The passcode is 889906. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS’ website at https://www.ctscorp.com/investors/events-presentations/.

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 and defense, industrial, 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 CTS’ actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: the ultimate impact of the COVID-19 pandemic on CTS’ business, results of operations or financial condition, including supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions, including our acquisitions of TEWA Temperature Sensors and Ferroperm Piezoceramics; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential

www.ctscorp.com

impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Non-GAAP Financial Measures

From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS’ management believes that non-GAAP financial measures can be useful to investors in analyzing CTS’ financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

The information in this press release includes the non-GAAP financial measures of adjusted EBITDA and adjusted diluted earnings per share. These non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of CTS’ fundamental business operations.

CTS believes that adjusted EBITDA and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations or were not part of CTS’ business operations during a comparable period.

CTS believes that these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies.

Contact

Ashish Agrawal

Vice President and Chief Financial Officer

CTS Corporation

4925 Indiana Avenue

Lisle, IL 60532 USA

+1 (630) 577-8800

ashish.agrawal@ctscorp.com

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS- UNAUDITED

(In thousands of dollars, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Net sales	$	142,281		$	132,531		$	586,869		$	512,925
Cost of goods sold		91,277			83,860			376,331			328,306
Gross margin		51,004			48,671			210,538			184,619
Selling, general and administrative expenses		23,491			23,413			91,520			82,597
Research and development expenses		5,405			5,686			24,100			23,856
Restructuring charges		478			1,136			1,912			1,687
Operating earnings		21,630			18,436			93,006			76,479
Other (expense) income:
Interest expense		(702	)		(534	)		(2,192	)		(2,111	)
Interest income		716			151			1326			840
Other (expense), net		(873	)		(3,302	)		(11,403	)		(136,088	)
Total other (expense), net		(859	)		(3,685	)		(12,269	)		(137,359	)
Earnings (loss) before income taxes		20,771			14,751			80,737			(60,880	)
Income tax expense (benefit)		5,831			5,586			21,162			(19,014	)
Net earnings (loss)		14,940			9,165			59,575			(41,866	)
Earnings (loss) per share:
Basic		0.47			0.28			1.86			(1.30	)
Diluted		0.47			0.28			1.85			(1.30	)
Basic weighted – average common shares outstanding:		31,818			32,214			31,968			32,327
Effect of dilutive securities		224			218			270			—
Diluted weighted – average common shares outstanding:		32,042			32,432			32,238			32,327
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, 2022			December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	156,910		$	141,465
Accounts receivable, net		90,935			82,191
Inventories, net		62,260			49,506
Other current assets		15,655			15,927
Total current assets		325,760			289,089
Property, plant and equipment, net		97,300			96,876
Operating lease assets, net		22,702			21,594
Other Assets
Prepaid pension asset	—				49,382
Goodwill		152,361			109,798
Other intangible assets, net		108,053			69,888
Deferred income taxes		23,461			25,415
Other		18,850			2,420
Total other assets		302,725			256,903
Total Assets	$	748,487		$	664,462
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	53,211		$	55,537
Operating lease obligations		3,936			3,393
Accrued payroll and benefits		20,063			18,418
Accrued expenses and other liabilities		35,322			36,718
Total current liabilities		112,532			114,066
Long-term debt		83,670			50,000
Long-term operating lease obligations		21,754			21,354
Long-term pension obligations		5,048			6,886
Deferred income taxes		16,010			5,894
Other long-term obligations		3,249			2,684
Total Liabilities		242,263			200,884
Commitments and Contingencies
Shareholders’ Equity
Common stock		316,803			314,620
Additional contributed capital		46,144			42,549
Retained earnings		546,703			492,242
Accumulated other comprehensive loss		(671	)		(4,525	)
Total shareholders’ equity before treasury stock		908,979			844,886
Treasury stock		(402,755	)		(381,308	)
Total shareholders’ equity		506,224			463,578
Total Liabilities and Shareholders’ Equity	$	748,487		$	664,462

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

(In millions of dollars, except per share amounts)

Adjusted EBITDA Margin

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021			2020
Net earnings (loss)	$	14.9		$	9.2		$	59.6		$	(41.9	)	$	34.7
Depreciation and amortization expense		8.0			6.7			29.8			26.9			26.7
Interest expense		0.7			0.5			2.2			2.1			3.3
Tax expense (benefit)		5.8			5.6			21.2			(19.0	)		10.8
EBITDA		29.5			22.0			112.7			(31.8	)		75.4
Adjustments to EBITDA:
Restructuring charges		0.5			1.1			1.9			1.7			1.8
Environmental charges		1.0			1.4			2.8			2.3			2.8
Acquisition-related costs		—			—			2.5			—			0.3
Inventory fair value step-up		0.7			—			4.0			—			—
Non-cash pension and related expense		—			1.3			4.8			132.4			2.5
Foreign currency loss (gain)		0.9			1.9			4.9			3.3			(5.3	)
Total adjustments to EBITDA		3.1			5.7			20.9			139.7			2.1
Adjusted EBITDA	$	32.6		$	27.7		$	133.6		$	107.9		$	77.5
Net sales	$	142.3		$	132.5		$	586.9		$	512.9		$	424.1
Adjusted EBITDA Margin		22.9	%		20.9	%		22.8	%		21.0	%		18.3	%

Adjusted Diluted Earnings Per Share

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021			2020
GAAP diluted earnings (loss) per share	$	0.47	$	0.28	$	1.85	$	(1.30	)	$	1.06
Tax affected charges to reported diluted earnings (loss) per share:
Restructuring charges		0.01		0.04		0.05		0.06			0.04
Foreign currency loss (gain)		0.03		0.06		0.15		0.10			(0.16	)
Non-cash pension expense		—		0.03		0.16		3.13			0.06
Environmental charges		0.02		0.03		0.07		0.05			0.07
Transaction costs		—		—		0.07		—			0.01
Inventory fair value step-up		0.02		—		0.10		—			—
Legal Settlement		—		—		—		—			—
Discrete tax items		0.01		0.05		0.01		(0.11	)		0.04
Adjusted diluted earnings per share	$	0.56	$	0.49	$	2.46	$	1.93		$	1.12

Capital Expenditures

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021			2020
Capital expenditures	$	5.1		$	7.5		$	14.3		$	15.6		$	14.9
Net sales	$	142.3		$	132.5		$	586.9		$	512.9		$	424.1
Capex as % of net sales		3.6	%		5.7	%		2.4	%		3.0	%		3.5	%

Additional Information

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

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021		2020
Depreciation and amortization expense	$	8.0	$	6.7	$	29.8	$	26.9	$	26.7
Stock-based compensation expense	$	1.9	$	2.0	$	7.7	$	6.1	$	3.4

EX-99.2

CTS Corporation 4th Quarter2022 Earnings Call Feb 7, 2023

Forward-Looking Statements 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 CTS’ actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: the ultimate impact of the COVID-19 pandemic on CTS’ business, results of operations or financial condition, including supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions, including our acquisitions of TEWA Temperature Sensors and Ferroperm Piezoceramics; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes. Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS’ management believes that non-GAAP financial measures can be useful to investors in analyzing CTS’ financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies. The information in this presentation includes the non-GAAP financial measures of adjusted gross margin, adjusted EBITDA margin, adjusted net earnings, adjusted diluted earnings per share, debt to capitalization ratio, controllable working capital ratio, and free cash flow. Many of these non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of CTS’ fundamental business operations. CTS believes that adjusted EBITDA margin and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations or were not part of CTS’ business operations during a comparable period. CTS believes that debt to capitalization ratio is a measurement of financial leverage and provides an insight into the financial structure of CTS and its financial strength. CTS believes the controllable working capital ratio provides an objective measure of the efficiency with which CTS manages its short-term capital needs.  CTS believes that free cash flow is a useful measure of its ability to generate cash. CTS believes that these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.

Q4 and Full-Year 2022 Highlights $142M Revenue +7%   Fourth Quarter 36.3% Adj Gross Margin (38) bps $587M Revenue +14% FY 2022 Non-transportation revenues +22% Transportation revenues (4)% primarily due to semiconductor shortages New business wins $71M Book-to-bill ratio 0.9, added 10 new customers Generated $26M operating cash flow Organic growth +10% Non-transportation revenues +24% Transportation revenues +7% New business wins $523M Book-to-bill ratio 1.03, compared to 1.14 in 2021 Generated $121M operating cash flow 36.5% Adj Gross Margin +50 bps Executing diversification & electrification strategy to support profitable growth $0.56 Adj. Diluted EPS +14% $2.46 Adj. Diluted EPS +27% All comparisons vs. same period in prior year unless otherwise noted

Capturing secular trends to expand into premium, growing markets Establishing leadership in Non-transportation end markets Industrial Aerospace & Defense Medical Added new customers in refrigeration and cooler display applications  Secured new design wins in industrial food preparation applications Added temperature sensor products to distribution portfolio across Europe and US markets New awards in medical ultrasound and ultrasonic dental cleaning applications Continue to make progress in unmanned underwater vehicle applications New wins for munition detonation and counter-measure applications Revenue ($ Millions) Revenue ($ Millions) Revenue ($ Millions) +26% +35% +6%

Strategic acquisitions fueling diversification – M&A as a catalyst 48% of sales from Non-Transportation end markets … +360 bps vs. 2021 Single Crystal Technology 2016 2017 Tape Cast Technology Bulk Technology Pre 2016 2022 Medical Therapeutics Europe Defense Growing Piezoceramic Platform Current Enhancing Piezoceramic Technology and Geographic Reach Building a Strong Global Temperature Sensing Platform 2020 Medical Applications Industrial Applications 2019 Industrial + Medical Europe Expansion 2022 Growing Temperature Platform Current

Continued progress in Transportation end market ($ Millions) Revenue Total Booked Business Strong execution while navigating supply challenges Q4 2022 smart actuator sales impacted unfavorably by the temporary IC supply challenge 2022 new business wins impacted by timing of OEM sourcing Removed non-Transportation booked business, adjusted for light vehicle volume forecast Targeting 25% of light vehicle revenue from electrified platforms by 2025 4 New EV Platform Wins 27 Platform Wins in 2022 +7% ($ Billions) 2 Platforms

Completed Maglab acquisition – strengthening Electrification portfolio Light Vehicle portfolio carries over to Electric Vehicles Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor Traditional light vehicle key product portfolio 2022: $2.4Bn Available Market (SAM) New products for Electrification >2030: $1Bn+ Light vehicle key products For BEV/HEV/PHEV and ICE 2030: $2.7Bn a + AC Motor Current Sensor AC Motor Position Sensor eBrake™ CTS Portfolio 7

Cash Returned to Shareholders Dividend & Buybacks 20-40% of FCF Capital Structure Leverage 1.0 – 2.5x Operating Cash Flow 15-17% of Sales Growth Capex ~4% of Sales Acquisitions 60-80% of FCF Capital Allocation Priorities Maintain healthy Balance Sheet Disciplined organic investments Growth resources and tools IT systems – ERP, analytics capabilities CTS OS – Operational improvements Strategic M&A – a growth priority Return capital to shareholders Capital Allocation Framework $142 million in cash returned to shareholders since 2013

Creating long-term sustainable value for stakeholders and communities Continued progress in 2022 : Established DE&I Committee Expanded Compensation & Talent Committee with greater visibility to talent and diversity initiatives Board diversity >40% Supporting sustainable products: Vehicle electrification components to comprise >25% of light vehicle sales by 20251 Continued development of lead-free piezoceramics to replace current lead-based systems Provided over 3,500 hours in employee training to further career development CTS CARES continues momentum across the globe FY 2022 activity 4,414 hours 156 events 21 locations Our Sustainability Journey Notes: 1Used in Electrified platforms

Notes: 1 CAGR based on mid point of 2023 guidance FY 2023 Guidance Revenue ($ Millions) Adj. Diluted EPS $580 $640 2020-2023 CAGR 9.5% 1 Stable demand from medical & aerospace/defense customers Softer outlook in industrial end market & distribution channel Commercial vehicle sales potentially impacted by semiconductor supply issues in Q1 2023 Light vehicle market forecasts - US 14-15M, China 26-27M, Europe 16-17M units Monitoring risks from interest rates, supply challenges, inflation, COVID-19, FX fluctuations & geopolitical landscape Tax rate in the range of 21-23% excluding discrete items Key Outlook Assumptions 2020-2023 CAGR 22.8% 1 $2.70 $2.40

4th Quarter and Full-Year 2022 Financial Results

Revenue +7% vs. Q4 2021, (6)% vs. Q3 2022 Non-transportation revenue +22% vs. Q4 2021, acquisitions added $9 million Transportation revenue impacted primarily by IC supply issue – down 4% vs. Q4 2021, down 9% vs. Q3 2022 Foreign exchange impact on revenue unfavorable $4.3 million Margin pressure from supply challenges, cost increases; partially mitigated by pricing and continuous improvement projects Foreign exchange impact on gross margin unfavorable $1.7 million Highlights Net Income $9.2 $11.8 $14.9 Net Income % of Sales 6.9% 7.8% 10.5% Diluted EPS $0.28 $0.37 $0.47 Adj. Diluted EPS $0.49 $0.62 $0.56 Adj. Gross Margin 36.7% 36.6% 36.3% Adj. EBITDA Margin 20.9% 22.3% 22.9% Revenue Q4 2022 Financial Summary ($ Millions, except EPS)

Revenue up 14% vs. 2021, organic +10% Transportation sales up 7% vs. 2021 Non-transportation sales up 24%, organic growth +14% Foreign exchange impact on revenue unfavorable $11 million Adj. Gross Margin improved 50 bps despite challenging conditions Foreign exchange impact on gross margin unfavorable $4 million Operating cash flow $121 Controllable working capital 17.6% 2021 results include $97 million non-cash charge for US pension plan termination Highlights Net Income $34.7 $(41.9) $59.6 Net Income % of Sales 8.2% (8.2)% 10.2% Diluted EPS $1.06 $(1.30) $1.85 Adj. Diluted EPS $1.12 $1.93 $2.46 Adj. Gross Margin 32.8% 36.0% 36.5% Adj. EBITDA Margin 18.3% 21.0% 22.8% Revenue Full Year 2022 Financial Summary ($ Millions, except EPS)

Cash and Debt Q4 2022 – $9M FY 2022 – $27M Returned to Shareholders Q4 2022 – $20M FY 2022 – $107M Free Cash Flow Strong Balance Sheet Net Cash Position Solid Foundation for Strategic M&A Q4 2022 – $5M FY 2022 – $14M Capital Expenditures Note: Cash and Debt balance as of Dec 31, 2022 Borrowed Total Facility Note: 2022 results include $27m from US pension plan termination Operating Cash Flow Consistent strong cash flow generation ($ Millions) ($ Millions)

Q & A

Appendix

Adjusted Diluted EPS Regulation G Schedules 2022 2021 2022 2022 2021 2020 Diluted earnings (loss) per share 0.47 $ 0.28 $ 0.37 $ 1.85 $ (1.30) $ 1.06 $ Tax affected adjustments to reported diluted earnings (loss) per share: Restructuring charges 0.01 0.04 0.01 0.05 0.06 0.04 Foreign currency loss (gain) 0.03 0.06 0.01 0.15 0.10 (0.16) Non-cash pension expense - 0.03 0.16 0.16 3.13 0.06 Environmental charges 0.02 0.03 0.01 0.07 0.05 0.07 Acquisition-related costs - - - 0.07 - 0.01 Inventory fair value step-up 0.02 - 0.06 0.10 - - Legal settlement - - - - - - Discrete tax items 0.01 0.05 - 0.01 (0.11) 0.04 Adjusted diluted earnings per share 0.56 $ 0.49 $ 0.62 $ 2.46 $ 1.93 $ 1.12 $ Full Year Q4 Q3

($ Millions) Adjusted EBITDA Margin Regulation G Schedules 2022 2021 2022 2022 2021 2020 Net earnings (loss) 14.9 $ 9.2 $ 11.8 $ 59.6 $ (41.9) $ 34.7 $ Depreciation and amortization expense 8.0 6.7 8.0 29.8 26.9 26.7 Interest expense 0.7 0.5 0.3 2.2 2.1 3.3 Tax expense (benefit) 5.8 5.6 5.5 21.2 (19.0) 10.8 EBITDA 29.5 22.0 25.6 112.7 (31.8) 75.4 Adjustments to EBITDA: Restructuring charges 0.5 1.1 0.5 1.9 1.7 1.8 Environmental charges 1.0 1.4 0.3 2.8 2.3 2.8 Legal settlement - - - - - - Acquisition-related costs - - - 2.5 - 0.3 Inventory fair value step-up 0.7 - 2.2 4.0 - - Costs of tax improvement initiatives - - - - - - Non-cash pension expense - 1.3 4.7 4.8 132.4 2.5 Foreign currency loss (gain) 0.9 1.9 0.5 4.9 3.3 (5.3) Total adjustments to EBITDA 3.1 5.7 8.2 20.9 139.7 2.1 Adjusted EBITDA 32.6 $ 27.7 $ 33.8 $ 133.6 $ 107.8 $ 77.5 $ Net sales 142.3 $ 132.5 $ 151.9 $ 586.9 $ 512.9 $ 424.1 $ Adjusted EBITDA margin 22.9% 20.9% 22.3% 22.8% 21.0% 18.3% Full Year Q4 Q3

Regulation G Schedules ($ Millions) Adjusted Gross Margin 2022 2021 2022 Gross margin Adjustment to reported gross margin: Inventory fair value step-up Adjusted gross margin Net sales Adjusted gross margin as a % of net sales 51.0 $ 0.7 51.7 $ 142.3 $ 36.3% 48.7 $ - 48.7 $ 132.5 $ 36.7% 53.3 $ 2.2 55.6 $ 151.9 $ 36.6% 2022 210.5 $ 4.0 214.5 $ 586.9 $ 36.5% 2021 184.6 $ - 184.6 $ 512.9 $ 36.0% 2020 139.1 $ - 139.1 $ 424.1 $ 32.8% Full Year Q4 Q3

Regulation G Schedules 2022 2021 2022 2022 2021 2020 Net earnings (loss) (A) 14.9 $ 9.2 $ 11.8 $ 59.6 $ (41.9) $ 34.7 $ Net earnings as a % of net sales 10.5% 6.9% 7.8% 10.2% -8.2% 8.2% Adjustments to reported net earnings (loss): Restructuring charges 0.5 1.1 0.5 1.9 1.7 1.8 Environmental charges 1.0 1.4 0.3 2.8 2.3 2.8 Legal settlement - - - - - - Acquisition-related costs - - - 2.5 - 0.3 Inventory fair value step-up 0.7 - 2.2 4.0 - - Non-cash pension expense - 1.3 4.7 4.8 132.4 2.5 Foreign currency loss (gain) 0.9 1.9 0.5 4.9 3.3 (5.3) Total adjustments to reported net earnings (loss) 3.1 $ 5.7 $ 8.2 $ 20.9 $ 139.7 $ 2.1 $ Total adjustments, tax affected (B) 2.6 $ 5.1 $ 8.0 $ 19.3 $ 108.6 $ 0.4 $ Tax adjustments: Tax impact of cash repatriation - - - Tax impact of U.K. deferred tax asset write-off - - - Increase in reserve on uncertain tax benefits - - - - Increase in valuation allowances - 0.9 - - 0.9 0.2 Other discrete tax items 0.2 0.7 - 0.2 (4.7) 1.2 Tax impact of U.S. tax reform - - - - Total tax adjustments (C) 0.2 $ 1.6 - $ 0.2 $ (3.8) $ 1.4 $ Adjusted net earnings (A+B+C) 17.8 $ 15.9 19.8 $ 79.1 $ 63.0 $ 36.5 $ Net sales 142.3 $ 132.5 $ 151.9 $ 586.9 $ 512.9 $ 424.1 $ Adjusted net earnings as a % of net sales 12.5% 12.0% 13.0% 13.5% 12.3% 8.6% Q3 Full Year Q4 ($ Millions) Adjusted Net Earnings

Regulation G Schedules Full Year Q4 2022 2022 Net cash provided by operating activities Capital expenditures Free cash flow Free Cash Flow as % of Adjusted Net Earnings 25.5 $ (5.1) 20.4 $ 115% 121.2 $ (14.3) 106.9 $ 135% ($ Millions) Free Cash Flow

($ Millions) Debt to Capitalization Regulation G Schedules 2022 2021 2020 Total debt (A) Total shareholders' equity (B) Total capitalization (A+B) Total debt to capitalization 83.7 $ 506.2 $ 589.9 $ 14.2% 50.0 $ 463.6 $ 513.6 $ 9.7% 54.6 $ 423.7 $ 478.3 $ 11.4% As of December 31

($ Millions) Controllable Working Capital Regulation G Schedules 2022 2021 2020 Net accounts receivable 90.9 $ 82.2 $ 81.0 $ Net inventory 62.3 $ 49.5 $ 45.9 $ Accounts payable (53.2) $ (55.5) $ (50.5) $ Controllable working capital 100.0 $ 76.2 $ 76.4 $ Quarter sales 142.3 $ 132.5 $ 123.0 $ Multiplied by 4 4 4 4 Annualized sales 569.1 $ 530.2 $ 492.1 $ Controllable working capital as a % of annualized sales 17.6% 14.4% 15.5% Full Year

XML

Document And Entity Information	Feb. 07, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 07, 2023
Entity Registrant Name	CTS CORPORATION
Entity Central Index Key	0000026058
Entity Emerging Growth Company	false
Securities Act File Number	1-4639
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-0225010
Entity Address, Address Line One	4925 Indiana Avenue
Entity Address, City or Town	Lisle
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60532
City Area Code	(630)
Local Phone Number	577-8800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CTS
Security Exchange Name	NYSE