GlobeNewswire Inc | Oct 29, 2020 07:30AM EDT

October 29, 2020

LISLE, Ill., Oct. 29, 2020 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced third quarter 2020 results.

-- Sales were $113.8 million, down 2% year-over-year. Sales to transportation customers declined 9%, and sales to other end markets grew 10%. Excluding the QTI acquisition, sales to other end markets grew 4%. Sales rebounded strongly, up 35% from the second quarter of 2020. -- Net earnings were $11.1 million or $0.34 per diluted share versus $2.7 million or $0.08 last year. -- Adjusted diluted EPS was $0.34, compared to $0.29 last year. -- Free cash flow was $22.4 million. Balance sheet and liquidity remain robust. -- New business wins were $127 million.

Our teams delivered strong operational results and improved new business wins, while striving to maintain a safe work environment, said Kieran OSullivan, CEO of CTS Corporation. We saw a significant third quarter rebound. Market uncertainty may persist for several quarters; however, we are cautiously optimistic. While we are implementing cost structure improvements, our primary focus is on enhancing our front-end capabilities to drive profitable growth.

2020 GuidanceDue to ongoing market uncertainties, management is not providing revenue or earnings guidance.

Conference CallAs previously announced, the Company has scheduled a conference call at 10:00 a.m. (EDT) today to discuss the third quarter financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 544640. There will be a replay of the conference call from 1:00 p.m. (EDT) today through 1:00 p.m. (EST) on Thursday, November 12, 2020. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 9449979. 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 CTSCTS (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 HarborThis 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 AgrawalVice President and Chief Financial Officer

CTS Corporation4925 Indiana AvenueLisle, IL 60532USA

Telephone: +1 (630) 577-8800E-mail: ashish.agrawal@ctscorp.com

CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OFEARNINGS - UNAUDITED(In thousands of dollars, except per share amounts)

Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2020 2019 2020 2019Net sales $ 113,777 $ 115,651 $ 301,049 $ 353,959 Cost of goods sold 76,871 78,594 204,677 235,084 Gross Margin 36,906 37,057 96,372 118,875 Selling, general and 16,883 17,774 48,310 52,371 administrative expensesResearch and development 5,723 6,806 18,653 19,854 expensesRestructuring charges 1,041 2,342 1,416 5,337 Loss (gain) on sale of ? 11 ? (111 )assetsOperating earnings 13,259 10,124 27,993 41,424 Other (expense) income: Interest expense (857 ) (812 ) (2,617 ) (1,745 )Interest income 217 524 852 1,396 Other income (expense), 1,617 (2,636 ) (109 ) (3,646 )netTotal other income 977 (2,924 ) (1,874 ) (3,995 )(expense), netEarnings before income 14,236 7,200 26,119 37,429 taxesIncome tax expense 3,163 4,478 6,381 11,345 Net earnings $ 11,073 $ 2,722 $ 19,738 $ 26,084 Earnings per share: Basic $ 0.34 $ 0.08 $ 0.61 $ 0.80 Diluted $ 0.34 $ 0.08 $ 0.61 $ 0.79 Basic weighted ? average 32,268 32,642 32,331 32,748 common shares outstanding:Effect of dilutive 241 425 270 417 securitiesDiluted weighted ? average 32,509 33,067 32,601 33,165 common shares outstanding:Cash dividends declared $ 0.04 $ 0.04 $ 0.12 $ 0.12 per share

CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands of dollars)

(Unaudited) September December 30, 31, 2020 2019ASSETS Current Assets Cash and cash equivalents $ 131,740 $ 100,241 Accounts receivable, net 76,431 78,008 Inventories, net 41,492 42,237 Other current assets 14,020 16,992 Total current assets 263,683 237,478 Property, plant and equipment, net 97,777 105,038 Operating lease assets, net 23,727 24,644 Other Assets Prepaid pension asset 65,115 62,082 Goodwill 106,056 106,056 Other intangible assets, net 76,126 85,215 Deferred income taxes 20,595 19,795 Other 2,774 3,046 Total other assets 270,666 276,194 Total Assets $ 655,853 $ 643,354 LIABILITIES AND SHAREHOLDERS? EQUITY Current Liabilities Accounts payable $ 46,739 $ 48,219 Operating lease obligations 3,149 2,787 Accrued payroll and benefits 12,437 9,564 Accrued expenses and other liabilities 32,794 36,378 Total current liabilities 95,119 96,948 Long-term debt 106,300 99,700 Long-term operating lease obligations 23,747 24,926 Long-term pension obligations 6,446 6,632 Deferred income taxes 6,223 5,637 Other long-term obligations 4,052 4,292 Total Liabilities 241,887 238,135 Commitments and Contingencies Shareholders? Equity Common stock 310,976 307,932 Additional contributed capital 40,796 43,689 Retained earnings 525,624 509,766 Accumulated other comprehensive loss (90,908 ) (91,726 )Total shareholders? equity before treasury 786,488 769,661 stockTreasury stock (372,522 ) (364,442 )Total shareholders? equity 413,966 405,219 Total Liabilities and Shareholders? Equity $ 655,853 $ 643,354

CTS CORPORATION AND SUBSIDIARIESOTHER SUPPLEMENTAL INFORMATION - UNAUDITED

Earnings Per Share

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

Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2020 2019 2020 2019GAAP diluted earnings $ 0.34 $ 0.08 $ 0.61 $ 0.79 per shareTax affected charges toreported diluted earnings per share:Restructuring charges 0.03 0.06 0.04 0.13 Foreign currency (gain) (0.07 ) 0.08 (0.06 ) 0.08 lossNon-cash pension 0.01 ? 0.04 0.01 expenseEnvironmental charges 0.01 ? 0.03 ? Transaction charges ? 0.01 ? 0.01 Discrete tax items 0.02 0.06 0.03 0.06 Adjusted diluted $ 0.34 $ 0.29 $ 0.69 $ 1.08 earnings per share

Additional Information

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

Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2020 2019 2020 2019Depreciationand $ 6,676 $ 6,119 $ 19,819 $ 18,038 amortizationexpenseStock-basedcompensation $ 1,119 $ 1,157 $ 2,164 $ 3,950 expense

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.