Document
false0000026058 0000026058 2020-07-31 2020-07-31


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):  July 31, 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 July 31, 2020, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter ended June 30, 2020, 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
Earnings Release dated July 31, 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: July 31, 2020
 
CTS CORPORATION
 
 
 
 
By:
/s/ William M. Cahill                                    
 
 
William M. Cahill
 
 
Chief Accounting Officer
 
 
(Principal Accounting Officer)





ctslogoa30.jpg
 

Press Release
 
 
 
July 31, 2020
 
FOR IMMEDIATE RELEASE

CTS Announces Second Quarter 2020 Results

Adapting to New Market Conditions
Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced second quarter 2020 results.
•
Sales were $84.2 million, down 30% year-over-year. Sales to transportation customers declined 53%, and sales to other end markets grew 14%. Excluding $5.4 million in sales from the QTI acquisition, sales to other end markets grew 1%.
•
Net earnings were $4.9 million or $0.15 per diluted share versus $11.9 million or $0.36 last year.
•
Adjusted diluted EPS was $0.16.
•
Free cash flow was $9.1 million, and at quarter-end, we were net cash positive.
•
New business wins were $105 million.
“I am grateful to our teams around the globe for their resilience and care for our customers and partners in this unprecedented downturn. We are adapting our cost structure due to the prolonged impact of COVID-19,” said Kieran O’Sullivan, CEO of CTS Corporation. “We received new business awards in some promising areas. Our focus remains on key strategic growth investments. We are making progress on our diversification into non-transportation markets and continue to position the business for the opportunities ahead of us.”
2020 Guidance
Due to ongoing market uncertainties, management is not providing revenue or earnings guidance at this time.
Conference Call
As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the second quarter financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 290044. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EST) on Friday, August 14, 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 7215300. 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.

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
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
June 30,

2020
 
2019
 
2020
 
2019
Net sales
$
84,197

 
$
120,684

 
$
187,272

 
$
238,308

Cost of goods sold
57,630

 
79,480

 
127,806

 
156,490

Gross Margin
26,567

 
41,204

 
59,466

 
81,818

Selling, general and administrative expenses
14,668

 
17,036

 
31,427

 
34,597

Research and development expenses
5,522

 
6,257

 
12,930

 
13,048

Restructuring charges
135

 
911

 
375

 
2,995

Gain on sale of assets
—

 
(83
)
 
—

 
(122
)
Operating earnings
6,242

 
17,083

 
14,734

 
31,300

Other (expense) income:


 


 


 


Interest expense
(909
)
 
(467
)
 
(1,760
)
 
(933
)
Interest income
304

 
440

 
635

 
872

Other income (expense), net
256

 
(1,107
)
 
(1,726
)
 
(1,010
)
Total other (expense), net
(349
)
 
(1,134
)
 
(2,851
)
 
(1,071
)
Earnings before income taxes
5,893

 
15,949

 
11,883

 
30,229

Income tax expense
1,036

 
4,006

 
3,218

 
6,867

Net earnings
$
4,857

 
$
11,943

 
$
8,665

 
$
23,362

Earnings per share:


 


 


 


Basic
$
0.15

 
$
0.36

 
$
0.27

 
$
0.71

Diluted
$
0.15

 
$
0.36

 
$
0.27

 
$
0.70




 


 


 


Basic weighted – average common shares outstanding:
32,262

 
32,799

 
32,364

 
32,803

Effect of dilutive securities
242

 
406

 
284

 
422

Diluted weighted – average common shares outstanding:
32,504

 
33,205

 
32,648

 
33,225



 

 

 

Cash dividends declared per share
$
0.04

 
$
0.04

 
$
0.08

 
$
0.08




www.ctscorp.com



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
 
 
(Unaudited)
 

 
June 30,
 
December 31,

2020
 
2019
ASSETS
 

 
 

Current Assets
 

 
 

Cash and cash equivalents
$
145,981

 
$
100,241

Accounts receivable, net
59,798

 
78,008

Inventories, net
44,266

 
42,237

Other current assets
14,750

 
16,992

Total current assets
264,795

 
237,478

Property, plant and equipment, net
99,349

 
105,038

Operating lease assets, net
24,369

 
24,644

Other Assets
 

 
 

Prepaid pension asset
64,104

 
62,082

Goodwill
106,056

 
106,056

Other intangible assets, net
80,622

 
85,215

Deferred income taxes
21,278

 
19,795

Other
2,816

 
3,046

Total other assets
274,876

 
276,194

Total Assets
$
663,389

 
$
643,354

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current Liabilities
 

 
 

Accounts payable
$
32,820

 
$
48,219

Operating lease obligations
3,051

 
2,787

Accrued payroll and benefits
8,725

 
9,564

Accrued expenses and other liabilities
33,175

 
36,378

Total current liabilities
77,771

 
96,948

Long-term debt
141,300

 
99,700

Long-term operating lease obligations
24,473

 
24,926

Long-term pension obligations
6,504

 
6,632

Deferred income taxes
6,303

 
5,637

Other long-term obligations
6,146

 
4,292

Total Liabilities
262,497

 
238,135

Commitments and Contingencies


 


Shareholders’ Equity
 

 
 

Common stock
310,953

 
307,932

Additional contributed capital
39,775

 
43,689

Retained earnings
515,841

 
509,766

Accumulated other comprehensive loss
(93,155
)
 
(91,726
)
Total shareholders’ equity before treasury stock
773,414

 
769,661

Treasury stock
(372,522
)
 
(364,442
)
Total shareholders’ equity
400,892

 
405,219

Total Liabilities and Shareholders’ Equity
$
663,389

 
$
643,354


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
 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
 
June 30, 2020
 
June 30, 2019
GAAP diluted earnings per share
$
0.15

 
$
0.36

 
$
0.27

 
$
0.70

 
 
 
 
 
 
 
 
Tax affected charges to reported diluted earnings per share:
 
 
 
 
 
 
 
Restructuring charges
0.01

 
0.02

 
0.01

 
0.07

Foreign currency (gain) loss
(0.03
)
 
0.02

 
0.01

 
0.01

Non-cash pension expense
0.01

 
—

 
0.02

 
0.01

Environmental charges
0.02

 
—

 
0.02

 
—

Discrete tax items
—

 
—

 
0.02

 
—

Adjusted diluted earnings per share
$
0.16

 
$
0.40

 
$
0.35

 
$
0.79




Additional Information

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

 
Three Months Ended
 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
 
June 30, 2020
 
June 30, 2019
Depreciation and amortization expense
$
6,611

 
$
5,995

 
$
13,143

 
$
11,919

Stock-based compensation expense
$
817

 
$
1,579

 
$
1,045

 
$
2,793



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