Document
false0000026058 0000026058 2020-02-04 2020-02-04


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 4, 2020
 
CTS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
IN
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:
 

☐ 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))

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
 
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 4, 2020, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter and year ended December 31, 2019, 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
 
Exhibit
Description
Press Release dated February 4, 2020
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 4, 2020
 
CTS CORPORATION
 
 
 
 
By:
/s/ William M. Cahill                                    
 
 
William M. Cahill
 
 
Chief Accounting Officer
 
 
(Principal Accounting Officer)





ctslogoa21.jpg
 

Press Release
 
 
 
February 4, 2020
 
FOR IMMEDIATE RELEASE

CTS Announces Fourth Quarter and Full Year 2019 Results

Addressing performance in a challenging market
Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2019 results.
Fourth Quarter 2019 Results
•
Sales were $115.0 million, down 4.2% year-over-year. Sales to transportation customers declined 11.0%, and sales to other end markets grew 7.9%. The QTI acquisition added $5.6 million of sales in the fourth quarter of 2019.
•
Net earnings were $10.1 million or $0.31 per diluted share versus $17.6 million or $0.52 last year.
•
Adjusted diluted EPS was $0.37 compared to $0.41 in the fourth quarter of 2018.
Full Year 2019 Results
•
Sales were $469.0 million, essentially flat to 2018. Sales to transportation customers declined 0.4%, and sales to other end markets decreased 0.2%. The QTI acquisition added $9.3 million of sales in 2019.
•
Net earnings were $36.1 million or $1.09 per diluted share versus $46.5 million or $1.39 last year.
•
Adjusted diluted EPS was $1.45 compared to $1.53 in 2018.
•
Free cash flow was $42.7 million, up 44% from $29.7 million in 2018.
•
Total booked business grew $16 million in 2019 to $1.88 billion.
“2019 was a challenging year driven by market softness. We took actions to reduce operating expenses and improve our performance. We also delivered strong growth in cash flow,” said Kieran O’Sullivan, CEO of CTS Corporation. “We anticipate a soft first half of 2020, with improvement in market conditions in the second half of the year. Our strategic priorities remain the same, driving profitable growth, margin improvement and advancing our end market profile.”
2020 Guidance
Full year 2020 sales are expected to be in the range of $450 to $480 million. Adjusted earnings per diluted share for 2020 are expected to be in the range of $1.35 to $1.60.



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 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 488435. 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 18, 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 6906039. 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: [email protected]
###

www.ctscorp.com



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands of dollars, except per share amounts) 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Net sales
$
115,040

 
$
120,073

 
$
468,999

 
$
470,483

Cost of goods sold
76,340

 
77,428

 
311,424

 
305,100

Gross Margin
38,700

 
42,645

 
157,575

 
164,973

Selling, general and administrative expenses
18,037

 
18,128

 
70,408

 
73,569

Research and development expenses
6,113

 
5,804

 
25,967

 
25,304

Restructuring charges
2,111

 
1,698

 
7,448

 
5,062

Loss (gain) on sale of assets
48

 
(2
)
 
(63
)
 
—

Operating earnings
12,391

 
17,017

 
53,815

 
61,038

Other (expense) income:
 
 
 
 
 

 
 
Interest expense
(903
)
 
(484
)
 
(2,648
)
 
(2,085
)
Interest income
341

 
459

 
1,737

 
1,826

Other income (expense), net
1,008

 
(119
)
 
(2,638
)
 
(2,676
)
Total other income (expense), net
446

 
(144
)
 
(3,549
)
 
(2,935
)
Earnings before income taxes
12,837

 
16,873

 
50,266

 
58,103

Income tax expense (benefit)
2,775

 
(691
)
 
14,120

 
11,571

Net earnings
$
10,062

 
$
17,564

 
$
36,146

 
$
46,532

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.31

 
$
0.53

 
$
1.11

 
$
1.41

Diluted
$
0.31

 
$
0.52

 
$
1.09

 
$
1.39

 
 
 
 
 
 
 
 
Basic weighted – average common shares outstanding:
32,554

 
32,983

 
32,700

 
33,024

Effect of dilutive securities
416

 
562

 
405

 
545

Diluted weighted – average common shares outstanding:
32,970

 
33,545

 
33,105

 
33,569

 
 
 
 
 
 
 
 
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,
 
2019
 
2018
ASSETS
 

 
 

Current Assets
 

 
 

Cash and cash equivalents
$
100,241

 
$
100,933

Accounts receivable, net
78,008

 
79,518

Inventories, net
42,237

 
43,486

Other current assets
16,992

 
15,422

Total current assets
237,478

 
239,359

Property, plant and equipment, net
105,038

 
99,401

Operating lease assets, net
24,644

 
—

Other Assets
 

 
 

Prepaid pension asset
62,082

 
54,100

Goodwill
106,056

 
71,057

Other intangible assets, net
85,215

 
60,180

Deferred income taxes
19,795

 
22,201

Other
3,046

 
2,043

Total other assets
276,194

 
209,581

Total Assets
$
643,354

 
$
548,341

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current Liabilities
 

 
 

Accounts payable
$
48,219

 
$
51,975

Operating lease obligations
2,787

 
—

Accrued payroll and benefits
9,564

 
14,671

Accrued expenses and other liabilities
36,378

 
37,347

Total current liabilities
96,948

 
103,993

Long-term debt
99,700

 
50,000

Long-term operating lease obligations
24,926

 
—

Long-term pension and other post-retirement obligations
6,632

 
6,510

Deferred income taxes
5,637

 
3,990

Other long-term obligations
4,292

 
5,919

Total Liabilities
238,135

 
170,412

Commitments and Contingencies
 
 
 
Shareholders’ Equity
 
 
 

Common stock
307,932

 
306,697

Additional contributed capital
43,689

 
42,820

Retained earnings
509,766

 
478,847

Accumulated other comprehensive loss
(91,726
)
 
(97,739
)
Total shareholders’ equity before treasury stock
769,661

 
730,625

Treasury stock
(364,442
)
 
(352,696
)
Total shareholders’ equity
405,219

 
377,929

Total Liabilities and Shareholders’ Equity
$
643,354

 
$
548,341


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:

 
Three Months Ended
 
Twelve Months Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
GAAP diluted earnings per share
$
0.31

 
$
0.52

 
$
1.09

 
$
1.39

 
 
 
 
 
 
 
 
Tax affected charges to reported diluted earnings per share:
 
 
 
 
 
 
 
Restructuring charges
0.05

 
0.04

 
0.18

 
0.12

Foreign currency (gain) loss
(0.03
)
 
—

 
0.05

 
0.06

Costs of tax improvement initiatives
—

 
—

 
—

 
0.03

Environmental charges
0.05

 
—

 
0.05

 
0.02

Non-cash pension expense
0.01

 
—

 
0.02

 
—

Legal settlement
(0.01
)
 
—

 
(0.01
)
 
—

Decrease in foreign valuation allowances
—

 
(0.03
)
 
—

 
(0.03
)
Transaction costs
—

 
—

 
0.02

 
—

Discrete tax items
(0.01
)
 
(0.10
)
 
0.05

 
(0.04
)
Tax impact related to Tax Cuts and Job Acts
—

 
(0.02
)
 
—

 
(0.02
)
Adjusted diluted earnings per share
$
0.37

 
$
0.41

 
$
1.45

 
$
1.53



Additional Information

The following table includes other financial information not presented in the preceding financial statements.
 
Three Months Ended
 
Twelve Months Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Depreciation and amortization expense
$
6,581

 
$
6,165

 
$
24,619

 
$
22,514

Stock-based compensation expense
$
1,065

 
$
1,152

 
$
5,015

 
$
5,256





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