Cts Corp 10-Q for FY2021 Q1

About this 10-Q

Headline figures

Cts Corp (CTS)

10-Q 2021-04-29 For: 2021-03-31

Added on April 07, 2026

Cts Corp filed this 10-Q on April 29, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $128.43M; up 24.6% from $103.08M a year earlier
Net income: $11.99M; up 214.9% from net income of $3.81M a year earlier
Diluted EPS: $0.37; up 208.3% from $0.12 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

4925 Indiana Avenue
Lisle IL		60532
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common stock, without par value		CTS		New York Stock Exchange

			Page

PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements	3

		Condensed Consolidated Statements of Earnings (Unaudited) For the Three Months Ended March 31, 2021 and March 31, 2020	3

		Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) For the Three Months Ended March 31, 2021 and March 31, 2020	4

		Condensed Consolidated Balance Sheets As of March 31, 2021 (Unaudited) and December 31, 2020	5

		Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2021 and March 31, 2020	6

		Condensed Consolidated Statements of Shareholder's Equity (Unaudited) For the Three Months Ended March 31, 2021 and March 31, 2020	7

		Notes to Condensed Consolidated Financial Statements ‑ (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

	Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

	Item 6.	Exhibits	34

SIGNATURES			35

	Three Months Ended
	March 31,			March 31,
	2021			2020
Net sales	$	128,427		$	103,075
Cost of goods sold		85,836			70,176
Gross margin		42,591			32,899
Selling, general and administrative expenses		18,325			16,759
Research and development expenses		5,687			7,408
Restructuring charges		81			240
Operating earnings		18,498			8,492
Other (expense) income:
Interest expense		(555	)		(851	)
Interest income		202			331
Other expense, net		(3,356	)		(1,982	)
Total other expense, net		(3,709	)		(2,502	)
Earnings before income taxes		14,789			5,990
Income tax expense		2,799			2,182
Net earnings	$	11,990		$	3,808
Earnings per share:
Basic	$	0.37		$	0.12
Diluted	$	0.37		$	0.12
Basic weighted – average common shares outstanding:		32,319			32,466
Effect of dilutive securities		301			327
Diluted weighted – average common shares outstanding:		32,620			32,793
Cash dividends declared per share	$	0.04		$	0.04

	(Unaudited)
	March 31,			December 31,
	2021			2020
ASSETS
Current Assets
Cash and cash equivalents	$	103,392		$	91,773
Accounts receivable, net		81,571			80,981
Inventories, net		47,558			45,870
Other current assets		14,115			14,607
Total current assets		246,636			233,231
Property, plant and equipment, net		94,848			97,437
Operating lease assets, net		23,620			23,281
Other Assets
Prepaid pension asset		56,502			56,642
Goodwill		109,468			109,497
Other intangible assets, net		76,931			79,121
Deferred income taxes		24,192			24,250
Other		2,468			2,590
Total other assets		269,561			272,100
Total Assets	$	634,665		$	626,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	53,315		$	50,489
Operating lease obligations		3,271			3,294
Accrued payroll and benefits		12,688			12,978
Accrued expenses and other liabilities		37,436			38,171
Total current liabilities		106,710			104,932
Long-term debt		50,000			54,600
Long-term operating lease obligations		23,510			23,163
Long-term pension obligations		7,290			7,466
Deferred income taxes		6,892			7,010
Other long-term obligations		4,547			5,196
Total Liabilities		198,949			202,367
Commitments and Contingencies (Note 11)
Shareholders’ Equity
Common stock		313,008			311,190
Additional contributed capital		39,616			41,654
Retained earnings		549,977			539,281
Accumulated other comprehensive loss		(94,363	)		(95,921	)
Total shareholders’ equity before treasury stock		808,238			796,204
Treasury stock		(372,522	)		(372,522	)
Total shareholders’ equity		435,716			423,682
Total Liabilities and Shareholders’ Equity	$	634,665		$	626,049

	Common Stock		Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2020	$	311,190	$	41,654		$	539,281		$	(95,921	)	$	(372,522	)	$	423,682
Net earnings		—		—			11,990			—			—			11,990
Changes in fair market value of derivatives, net of tax		—		—			—			124			—			124
Changes in unrealized pension cost, net of tax		—		—			—			1,422			—			1,422
Cumulative translation adjustment, net of tax		—		—			—			12			—			12
Cash dividends of $0.04 per share		—		—			(1,294	)		—			—			(1,294	)
Issued shares on vesting of restricted stock units		1,818		(3,218	)		—			—			—			(1,400	)
Stock compensation		—		1,180			—			—			—			1,180
Balances at March 31, 2021	$	313,008	$	39,616		$	549,977		$	(94,363	)	$	(372,522	)	$	435,716

	Three months ended
	March 31, 2021		March 31, 2020
Transportation	$	75,854	$	61,534
Industrial		26,625		20,843
Medical		11,276		9,370
Aerospace & Defense		11,670		9,005
Telecom & IT		3,002		2,323
Total	$	128,427	$	103,075

	Consideration Paid
Cash paid, net of cash acquired of $470	$	8,309
Contingent consideration		2,000
Purchase price	$	10,309

	Fair Values at December 30, 2020
Current assets	$	2,550
Property, plant and equipment		67
Other assets		12
Goodwill		3,412
Intangible assets		5,340
Fair value of assets acquired		11,381
Less fair value of liabilities acquired		(1,072	)
Purchase price	$	10,309

	Carrying Value		Weighted Average Amortization Period
Customer lists/relationships	$	5,200		11.0
Technology and other intangibles		140		3.0
Total	$	5,340

	As of
	March 31,			December 31,
	2021			2020
Accounts receivable, gross	$	82,334		$	81,745
Less: Allowance for credit losses		(763	)		(764	)
Accounts receivable, net	$	81,571		$	80,981

	Domestic Pension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	March 31,			March 31,			March 31,			March 31,
	2021			2020			2021			2020
Service cost	$	—		$	—		$	6		$	7
Interest cost		1,253			1,443			4			7
Expected return on plan assets⁽¹⁾		(1,113	)		(2,454	)		(3	)		(4	)
Amortization of loss		1,767			1,622			43			43
Total expense, net	$	1,907		$	611		$	50		$	53

	As of
	March 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	97,393	$	(45,447	)	$	51,946
Technology and other intangibles		47,441		(22,456	)		24,985
In process research and development		2,200		(2,200	)		—
Other intangible assets, net	$	147,034	$	(70,103	)	$	76,931
Amortization expense for the three months ended March 31, 2021			$	2,369

	As of
	December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	97,355	$	(44,002	)	$	53,353
Technology and other intangibles		47,301		(21,533	)		25,768
In process research and development		2,200		(2,200	)		—
Other intangible assets, net	$	146,856	$	(67,735	)	$	79,121
Amortization expense for the three months ended March 31, 2020			$	2,295

	Three Months Ended
	March 31,			March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	11,990		$	3,808
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		6,800			6,532
Pension and other post-retirement plan expense		1,980			673
Stock-based compensation		1,219			228
Asset impairment charges		—			1,016
Deferred income taxes		63			333
(Gain) on foreign currency hedges, net of cash		(42	)		(23	)
Changes in assets and liabilities, net of acquisition:
Accounts receivable		(1,121	)		6,176
Inventories		(2,052	)		(4,005	)
Operating lease assets		(340	)		(473	)
Other assets		168			799
Accounts payable		2,864			1,252
Accrued payroll and benefits		(210	)		(237	)
Operating lease liabilities		325			542
Accrued expenses and other liabilities		(1,398	)		(4,627	)
Pension and other post-retirement plans		(136	)		(67	)
Net cash provided by operating activities		20,110			11,927
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(1,638	)		(4,570	)
Net cash used in investing activities		(1,638	)		(4,570	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt		(241,600	)		(764,550	)
Proceeds from borrowings of long-term debt		237,000			816,050
Purchase of treasury stock		—			(5,304	)
Dividends paid		(1,291	)		(1,299	)
Taxes paid on behalf of equity award participants		(1,402	)		(1,903	)
Net cash (used in) provided by financing activities		(7,293	)		42,994
Effect of exchange rate changes on cash and cash equivalents		440			363
Net increase in cash and cash equivalents		11,619			50,714
Cash and cash equivalents at beginning of period		91,773			100,241
Cash and cash equivalents at end of period	$	103,392		$	150,955
Supplemental cash flow information:
Cash paid for interest	$	378		$	678
Cash paid for income taxes, net	$	3,510		$	1,183

	As of
	March 31,			December 31,
	2021			2020
Finished goods	$	10,222		$	10,647
Work-in-process		18,841			16,927
Raw materials		26,267			24,893
Less: Inventory reserves		(7,772	)		(6,597	)
Inventories, net	$	47,558		$	45,870

	Amortization expense
2021	$	7,170
2022		9,173
2023		7,167
2024		7,005
2025		6,783
Thereafter		39,633
Total amortization expense	$	76,931

	As of
	March 31,		December 31,
	2021		2020
Accrued product related costs	$	4,013	$	4,470
Accrued income taxes		6,461		7,320
Accrued property and other taxes		1,590		2,478
Accrued professional fees		1,199		1,663
Accrued customer related liabilities		4,536		3,815
Dividends payable		1,294		1,291
Remediation reserves		10,431		10,642
Derivative liabilities		673		671
Other accrued liabilities		7,239		5,821
Total accrued expenses and other liabilities	$	37,436	$	38,171

	Total
Goodwill as of December 31, 2020	$	109,497
Decrease from purchase accounting adjustments		(29	)
Goodwill as of March 31, 2021		109,468

Restructuring liability at January 1, 2021	$	1,363
Restructuring charges		81
Cost paid		(232	)
Other activity⁽¹⁾		(152	)
Restructuring liability at March 31, 2021	$	1,060

	Operating Leases⁽¹⁾
2021	$	3,653
2022		4,713
2023		4,423
2024		4,285
2025		3,731
Thereafter		14,297
Total	$	35,102
Less: interest		(8,321	)
Present value of lease liabilities	$	26,781

							(Gain) Loss
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			March 31,
	2020			in OCI			to Earnings			2021
Changes in fair market value of derivatives:
Gross	$	(1,038	)	$	206		$	(45	)	$	(877	)
Income tax benefit (expense)		240			(47	)		10			203
Net		(798	)		159			(35	)		(674	)
Changes in unrealized pension cost:
Gross		(128,004	)		—			1,847			(126,157	)
Income tax benefit (expense)		34,917			—			(425	)		34,492
Net		(93,087	)		—			1,422			(91,665	)
Cumulative translation adjustment:
Gross		(2,036	)		12			—			(2,024	)
Total accumulated other comprehensive (loss) income	$	(95,921	)	$	171		$	1,387		$	(94,363	)

							(Gain) Loss
	As of			(Loss) Gain			Reclassified			As of
	December 31,			Recognized			from AOCI			March 31,
	2019			in OCI			to Earnings			2020
Changes in fair market value of derivatives:
Gross	$	659		$	(5,422	)	$	(281	)	$	(5,044	)
Income tax (expense) benefit		(150	)		1,225			64			1,139
Net		509			(4,197	)		(217	)		(3,905	)
Changes in unrealized pension cost:
Gross		(124,140	)		—			1,660			(122,480	)
Income tax benefit (expense)		34,018			—			(375	)		33,643
Net		(90,122	)		—			1,285			(88,837	)
Cumulative translation adjustment:
Gross		(2,211	)		(41	)		—			(2,252	)
Income tax benefit (expense)		98			(98	)		—			—
Net		(2,113	)		(139	)		—			(2,252	)
Total accumulated other comprehensive (loss) income	$	(91,726	)	$	(4,336	)	$	1,068		$	(94,994	)

	Unrecognized
	Compensation		Weighted-
	Expense at		Average
	March 31, 2021		Period
Service-based RSUs	$	3,394		1.54
Performance-based RSUs		3,881		2.24
Total	$	7,275		1.91

	2018 Plan		2014 Plan		2009 Plan		2004 Plan		Directors' Plan
Awards originally available		2,500,000		1,500,000		3,400,000		6,500,000	N/A
Maximum potential RSU and cash settled awards outstanding		656,205		52,500		75,200		35,952		5,522
Maximum potential awards outstanding		656,205		52,500		75,200		35,952		5,522
RSUs and cash settled awards vested and released		96,136		—		—		—		—
Awards available for grant		1,747,659		—		—		—		—

	Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020		367,428		$	21.28
Granted		65,450			32.77
Vested and released		(61,342	)		28.48
Forfeited		(3,789	)		27.20
Outstanding at March 31, 2021		367,747		$	22.07
Releasable at March 31, 2021		194,974		$	15.22

Description	Grant Date	Vesting Year	Vesting Dependency	Target Units Outstanding		Maximum Number of Units to be Granted
2019 - 2021 Performance RSUs	February 7, 2019	2021	35% RTSR, 35% sales growth, 30% operating cash flow		50,456		100,912
2019 Supplemental Performance RSUs	February 7, 2019	2021	Succession Planning Targets		6,945		13,890
2020 - 2022 QTI Performance RSUs	September 24, 2019	2022	50% EBITDA growth, 50% Sales growth		1,750		3,500
2020 - 2022 Performance RSUs	February 6, 2020	2022	25% RTSR, 40% sales growth, 35% operating cash flow		63,006		126,012
2021 - 2023 Performance RSUs	February 11, 2021	2023	25% RTSR, 40% sales growth, 35% operating cash flow		69,872		139,744
Focus 2025 Performance RSUs	April 23, 2020	2024	Cumulative revenues of $750 million over a trailing four-quarter period		43,750		43,750
Total					235,779		427,808

				Quoted
				Prices
	Liability			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	March 31,			Instruments		Inputs			Inputs
	2021			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	(1,745	)	$	—	$	(1,745	)	$	—
Foreign currency hedges	$	856		$	—	$	856		$	—
Contingent consideration	$	1,850		$	—	$	—		$	1,850

				Quoted
				Prices
	Asset			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	December 31,			Instruments		Inputs			Inputs
	2020			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	(2,217	)	$	—	$	(2,217	)	$	—
Foreign currency hedges	$	1,125		$	—	$	1,125		$	—
Contingent consideration	$	2,000		$	—	$	—		$	2,000

	Three Months Ended									Percent of			Percent of
	March 31,			March 31,			Percent			Net Sales –			Net Sales –
	2021			2020			Change			2021			2020
Net sales	$	128,427		$	103,075			24.6	%		100.0	%		100.0	%
Cost of goods sold		85,836			70,176			22.3			66.8			68.1
Gross margin		42,591			32,899			29.5			33.2			31.9
Selling, general and administrative expenses		18,325			16,759			9.3			14.3			16.3
Research and development expenses		5,687			7,408			(23.2	)		4.4			7.2
Restructuring charges		81			240			(66.3	)		0.1			0.2
Total operating expenses		24,093			24,407			(1.3	)		18.8			23.7
Operating earnings		18,498			8,492			117.8			14.4			8.2
Total other expense, net		(3,709	)		(2,502	)		48.2			(2.9	)		(2.4	)
Earnings before income taxes		14,789			5,990			146.9			11.5			5.8
Income tax expense		2,799			2,182			28.3			2.2			2.1
Net earnings	$	11,990		$	3,808			214.9	%		9.3	%		3.7	%
Earnings per share:
Diluted net earnings per share	$	0.37		$	0.12



(31)(a)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

(31)(b)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.

(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.

101.1	The following information from CTS Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 formatted in Inline XBRL: (i) Condensed Consolidated Statements of Earnings for the three months ended March 31, 2021 and 2020; (ii) Condensed Consolidated Statements of Comprehensive Earnings for the three months ended March 31, 2021 and 2020; (iii) Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2020; (v) Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2021 and 2020; (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104	The cover page from this Current Report on Form 10-Q formatted as inline XBRL

CTS Corporation		CTS Corporation

/s/ Thomas M. White		/s/ Ashish Agrawal
Thomas M. White		Ashish Agrawal
Corporate Controller (Principal Accounting Officer)		Vice President and Chief Financial Officer (Principal Financial Officer)


Dated: April 29, 2021		Dated: April 29, 2021