(Source: Business Wire)
CTS Corporation (NYSE: CTS) today announced third quarter 2009 revenues
of $126.6 million, 5% higher than second quarter 2009 revenues of $120.4
million. Third quarter 2009 net income of $4.5 million, or $0.13 per
diluted share, compares favorably to the second quarter 2009 net loss of
$7.0 million, or $0.21 per diluted share. The second quarter 2009
included an international cash repatriation related tax charge,
primarily non-cash, of $9.1 million, or $0.27 per diluted share.
Excluding this charge, second quarter adjusted net earnings were $2.1
million, or $0.06 per diluted share. Third quarter 2009 net earnings
compare favorably to adjusted second quarter net earnings, primarily due
to higher gross margins driven by improved cost structure, favorable
segment mix and higher volumes.
Cash flow from operations was $18.4 million in the third quarter 2009,
increasing $10.6 million over the same period last year. September
year-to-date cash flow from operations was $34.1 million, significantly
improved from the $20.1 million in the same period last year, primarily
due to improved working capital management and lower capital
expenditures. Total debt, as a percentage of total capitalization, was
17.0% at the end of the third quarter of 2009, compared to 22.5% at the
end of the third quarter 2008.
Commenting on third quarter 2009 results, Vinod M. Khilnani, CTS
Chairman and Chief Executive Officer, stated, "We are pleased to report
sequential improvements in both revenues and earnings, again in the
third quarter. In addition, our strategy for future growth through
diversification continues to be successful, as evidenced by a growing
pipeline of design wins and significant new business awards. We have now
booked the strongest level of business awards on a year-to-date basis,
approximating $220 million over a five to six year program life,
primarily starting 2011-2012 timeframe."
Third quarter 2009 Components and Sensors segment revenues increased 13%
from the second quarter 2009, driven by a 15% improvement in automotive
product shipments, as global markets began to modestly recover and
improved market share. Sales of electronic component products increased
8% from the second quarter 2009 from higher demand of piezoceramic and
resistor products. Total EMS segment sales were flat from the second
quarter 2009 as improved demand in medical, communications and defense
and aerospace markets were offset by lower industrial sales and
previously announced planned end-of-life sales reductions to
Hewlett-Packard (HP).
Third quarter 2009 revenues declined 26% from the same period last year.
Components and Sensors segment sales decreased 23% and EMS segment sales
decreased 27% due to the impact of the global recession on all of the
markets CTS serves. Gross margins improved year-over-year from cost
management actions combined with favorable product mix, despite the drop
in volumes. Third quarter 2009 diluted earnings per share of $0.13
compares to $0.21 in the same period last year, primarily reflecting
lower revenues from the impact of the global recession, partially offset
by cost management actions. Third quarter 2008 results included a net
benefit of $0.05 per share from a tax credit offset by restructuring and
related charges. Excluding these two items, third quarter 2008 adjusted
diluted earnings were $0.16 per share.
CTS' new business wins continued at a strong pace during the third
quarter 2009. Revenues from these wins are expected to exceed $60
million over their four to six year program lives, primarily beginning
in 2012. Within the Components and Sensors segment, new business awards
include a smart actuator for a turbocharger system on medium-duty diesel
engines and new piezoceramic business for industrial applications. In
the EMS segment, new business was won with Thales, one of the world's
largest defense and aerospace companies.
Based on the year-to-date performance and expecting gradual
improvements, primarily driven by automotive volumes, management
anticipates full-year 2009 adjusted diluted earnings per share in the
range of $0.27-$0.31. The consensus for the full-year 2009 adjusted
diluted earnings per share is $0.22.
SEGMENT INFORMATION
(Dollars in millions)
Third Quarter Third Quarter Second Quarter
2009 2008 2009
Segment Segment Segment
Net Operating Net Operating Net Operating
Sales Earnings Sales Earnings Sales Earnings
Components and Sensors $55.8 $4.1 $72.5 $5.7 $49.6 $2.1
Electronics Manufacturing Services (EMS) 70.8 2.2 97.5 2.7 70.8 1.1
Segment Operating Earnings 6.3 8.4 3.2
Expenses not allocated to business segments:
- Restructuring and related charges (3.5 )
Total $126.6 $6.3 $170.0 $4.9 $120.4 $3.2
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Components & Sensors: Components and Sensors third quarter
2009 sales increased $6.2 million, or 13%, from the second quarter of
2009 reflecting improved global automotive sensor product demand.
Electronic component product demand increased 8% primarily in
piezoceramic and resistor products. Segment operating earnings increased
$2.0 million from the second quarter, driven by improved gross margins
and higher sales volume.
Components and Sensors third quarter 2009 sales decreased $16.7 million,
or 23%, from the third quarter of 2008, reflecting the impact of the
global recession. Electronic component product sales declined $9.0
million, or 31%, and automotive sensor and actuator products declined
$7.7 million, or 18%. Segment operating earnings of $4.1 million were
unfavorable to the third quarter of 2008 due to lower volumes, partially
offset by reduced operating expenses.
EMS: EMS third quarter 2009 sales were unchanged from second
quarter 2009 levels, reflecting both improved demand in medical,
communications and defense and aerospace markets offset by lower demand
in industrial and HP sales. Segment operating earnings of $2.2 million
increased $1.1 million from the second quarter 2009, primarily due to
improved gross margins driven by favorable product mix.
EMS third quarter 2009 sales decreased $26.7 million, or 27%, from the
third quarter of 2008 reflecting lower sales in the computer, industrial
and communications markets, partially offset by increased sales in the
defense and aerospace markets. Segment operating earnings decreased $0.4
million from the third quarter of 2008 on lower volumes, partially
offset by reduced operating expenses.
Conference Call
As previously announced, the Company has scheduled a conference call on
Wednesday, October 28, 2009 at 11:00 a.m. EDT. Those interested in
participating may dial 800-288-8961 (612-234-9960, if calling from
outside the U.S.). No access code is needed. There will be a replay of
the conference call available from 1:30 p.m. EDT on Wednesday, October
28, 2009, through 11:59 p.m. EST on Wednesday, November 4, 2009. The
telephone number for the replay is 800-475-6701 (320-365-3844, if
calling from outside the U.S.). The access code is 118484. There will
also be a live audio webcast of the conference call which can be
accessed directly from the Web sites of CTS Corporation (www.ctscorp.com),
StreetEvents (www.StreetEvents.com),
Netscape (www.netscape.com),
Compuserve (www.compuserve.com)
and others. AOL subscribers will have access through the Personal
Finance section of AOL.
About CTS
CTS is a leading designer and manufacturer of electronic components and
sensors and a provider of electronics manufacturing services (EMS) to
OEMs in the automotive, computer, communications, medical, defense and
aerospace and industrial markets. CTS manufactures products in North
America, Europe and Asia. CTS' stock is traded on the NYSE under the
ticker symbol "CTS." To find out more, visit the CTS Web site at www.ctscorp.com.
Safe Harbor Statement
This press release 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.
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, including, without limitation: changes in
the economy generally and in respect to the businesses in which CTS
operates, including those resulting from the current global financial
and credit crisis; pricing pressures and reduction in demand for CTS'
products, especially if economic conditions do not recover or continue
to worsen in CTS' served markets, including but not limited to: the
automotive, computer equipment or communications markets; disruption,
uncertainty or volatility in the credit markets that could adversely
impact the availability of credit already arranged by CTS and the
availability and cost of credit in the future; the financial condition
of our customers, including the ability of customers (especially those
that may be highly leveraged and those with inadequate liquidity) to
maintain their credit availability or ongoing viability; risks
associated with CTS' international operations, including trade and
tariff barriers; currency fluctuations and their effects on our results
of operations and financial position; changes in performance of equity
and debt markets that could affect the valuation of the assets in CTS'
pension plans and the accounting for pension assets, liabilities and
expenses; political and geopolitical risks; rapid technological change
in the automotive, communications and computer industries; reliance on
key customers; and CTS' ability to protect its intellectual property.
For more detailed information on the risks and uncertainties associated
with CTS' business, see the reports CTS files with the SEC, available at http://www.ctscorp.com/investor_relations/investor.htm.
CTS undertakes no obligation to publicly update its forward-looking
statements to reflect new information or events or circumstances that
arise after the date hereof, including market or industry changes.
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept 27 Sept 28 Sept 27 Sept 28
2009 2008* 2009 2008*
Net sales $ 126,565 $ 170,034 $ 365,094 $ 528,880
Costs and expenses:
Cost of goods sold 100,380 136,684 297,202 421,553
Selling, general and administrative expenses 16,494 20,754 48,357 63,236
Research and development expenses 3,408 4,509 10,227 13,576
Restructuring and impairment charges - 3,202 2,243 3,465
Goodwill impairment - - 33,153 -
Operating earnings / (loss) 6,283 4,885 (26,088 ) 27,050
Other (expense) / income:
Interest expense (239 ) (1,275 ) (1,497 ) (3,802 )
Other (390 ) (307 ) (736 ) 98
Total other expense (629 ) (1,582 ) (2,233 ) (3,704 )
Earnings / (loss) before income taxes 5,654 3,303 (28,321 ) 23,346
Income tax expense / (benefit) 1,173 (3,912 ) 9,872 266
Net earnings / (loss) $ 4,481 $ 7,215 $ (38,193 ) $ 23,080
Net earnings / (loss) per share:
Basic $ 0.13 $ 0.21 $ (1.13 ) $ 0.68
Diluted $ 0.13 $ 0.21 $ (1.13 ) $ 0.65
Cash dividends declared per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Average common shares outstanding:
Basic 33,873 33,708 33,799 33,735
Diluted 34,513 38,199 33,799 38,206
*The Statement of Earnings for the three and nine months ended September 28, 2008 was adjusted from the previously filed 2008 10-Q to comply with the provisions of Accounting Standards Codification ("ASC") 470-20, "Debt with Conversion and Other Options."
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CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
(In thousands of dollars)
September 27, December 31,
2009 2008 *
Cash and cash equivalents $ 40,329 $ 44,628
Accounts receivable, net 75,942 94,175
Inventories, net 60,452 70,867
Other current assets 14,969 16,172
Total current assets 191,692 225,842
Property, plant & equipment, net 83,395 90,756
Other assets 131,593 171,844
Total Assets $ 406,680 $ 488,442
Notes payable and current portion
of long-term debt $ - $ -
Accounts payable 62,211 71,285
Other accrued liabilities 36,254 41,956
Total current liabilities 98,465 113,241
Long-term debt 49,500 79,988
Other obligations 16,820 17,740
Shareholders' equity 241,895 277,473
Total Liabilities and
Shareholders' Equity $ 406,680 $ 488,442
*The Balance Sheet at December 31, 2008 was adjusted from the previously filed 10-K to comply with the provisions of ASC 470-20, "Debt with Conversion and Other Options."
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CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept 27 Sept 28 Sept 27 Sept 28
2009 2008* 2009 2008*
GAAP Adjusted Adjusted Adjusted
Net sales $ 126,565 $ 170,034 $ 365,094 $ 528,880
Costs and expenses:
Cost of goods sold 100,380 136,407 297,202 421,002
Selling, general and administrative expenses 16,494 20,754 48,357 63,236
Research and development expenses 3,408 4,509 10,227 13,576
Adjusted operating earnings 6,283 8,364 9,308 31,066
Other (expense) / income:
Interest expense (239 ) (1,275 ) (1,497 ) (3,802 )
Other (390 ) (307 ) (736 ) 98
Total other expense (629 ) (1,582 ) (2,233 ) (3,704 )
Adjusted earnings before income taxes 5,654 6,782 7,075 27,362
Adjusted income tax expense 1,173 1,228 1,673 5,600
Adjusted net earnings $ 4,481 $ 5,554 $ 5,402 $ 21,762
Adjusted net earnings per share:
Diluted $ 0.13 $ 0.16 $ 0.16 $ 0.61
Cash dividends declared per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Average common shares outstanding:
Diluted 34,513 38,199 33,799 38,206
*The Statement of Earnings for the three and nine months ended September 28, 2008 was adjusted from the previously filed 2008 10-Q to comply with the provisions of Accounting Standards Codification 470-20, "Debt with Conversion and Other Options."
See reconciliation and explanation of net earnings / (loss) to adjusted net earnings attached.
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CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
September 27 June 28
2009 2009
GAAP Adjusted
Net sales $ 126,565 $ 120,398
Costs and expenses:
Cost of goods sold 100,380 98,520
Selling, general and administrative expenses 16,494 15,243
Research and development expenses 3,408 3,466
Adjusted operating earnings 6,283 3,169
Other (expense) / income:
Interest expense (239 ) (440 )
Other (390 ) (25 )
Total other expense (629 ) (465 )
Adjusted earnings before income taxes 5,654 2,704
Adjusted income tax expense 1,173 652
Adjusted net earnings $ 4,481 $ 2,052
Adjusted net earnings per share:
Diluted $ 0.13 $ 0.06
Cash dividends declared per share $ 0.03 $ 0.03
Average common shares outstanding:
Diluted 34,513 33,779
See reconciliation and explanation of net earnings to adjusted net earnings attached.
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CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION
Debt/Capitalization
The following table represents the calculation of total debt to shareholder's equity:
(in thousands) September 27 September 28
2009 2008*
A service of YellowBrix, Inc.
