GlobeNewswire Inc | Feb 9, 2021 07:30AM EST

February 09, 2021

LISLE, Ill., Feb. 09, 2021 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2020 results.

Fourth Quarter 2020 Results

-- Sales were $123 million, up 7% year-over-year. Sales to transportation customers increased 12%, and sales to other end markets were essentially flat. -- Net earnings were $14.9 million or $0.46 per diluted share versus $10.1 million or $0.31 last year. -- Adjusted diluted EPS was $0.43, up 16% from $0.37 in the fourth quarter of 2019. -- Free cash flow was $22.0 million, up 28% from $17.2 million in 2019. -- New business wins were $104 million.

Full Year 2020 Results

-- Sales were $424 million, down 10% compared to 2019. Sales to transportation customers declined 19%, and sales to other end markets increased 7%. -- Net earnings were $34.7 million or $1.06 per diluted share versus $36.1 million or $1.09 last year. -- Adjusted diluted EPS was $1.12 compared to $1.45 in 2019. -- Free cash flow was $61.9 million, up 45% from $42.7 million last year. -- New business wins were $442 million.

We saw strength in most end markets and executed well to deliver solid financial results in the fourth quarter, said Kieran OSullivan, CEO of CTS Corporation. We are making progress on our Focus 2025 strategic initiative, including a target of 10% annualized revenue growth. The recent SSI acquisition strengthens our position with medical customers and advances our end market diversification.

2021 Guidance

Management remains mindful of market and supply chain uncertainties in this pandemic environment. Full year 2021 sales are expected to be in the range of $430 to $490 million. Adjusted earnings per diluted share for 2021 are expected to be in the range of $1.20 to $1.60. Management aims to narrow the guidance range as the year progresses.

Conference Call

As previously announced, the Company has scheduled a conference call at 10:00 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 886676. There will be a replay of the conference call from 1:00 p.m. (EST) today through 1:00 p.m. (EST) on Tuesday, February 23, 2021. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 8354721. 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 Twelve Months Ended December December December December 31, 31, 31, 31, 2020 2019 2020 2019Net sales $ 123,018 $ 115,040 $ 424,066 $ 468,999 Cost of goods sold 80,327 76,340 285,003 311,424 Gross margin 42,691 38,700 139,063 157,575 Selling, general and 19,476 18,037 67,787 70,408 administrative expensesResearch and development 5,664 6,113 24,317 25,967 expensesRestructuring charges 414 2,111 1,830 7,448 Loss (gain) on sale of ? 48 ? (63 )assetsOperating earnings 17,137 12,391 45,129 53,815 Other (expense) income: Interest expense (655 ) (903 ) (3,272 ) (2,648 )Interest income 195 341 1,047 1,737 Other income (expense), 2,682 1,008 2,575 (2,638 )netTotal other income 2,222 446 350 (3,549 )(expense), netEarnings before income 19,359 12,837 45,479 50,266 taxesIncome tax expense 4,412 2,775 10,793 14,120 Net earnings $ 14,947 $ 10,062 $ 34,686 $ 36,146 Earnings per share: Basic $ 0.46 $ 0.31 $ 1.07 $ 1.11 Diluted $ 0.46 $ 0.31 $ 1.06 $ 1.09 Basic weighted ? average 32,273 32,554 32,317 32,700 common shares outstanding:Effect of dilutive 289 416 267 405 securitiesDiluted weighted ? average 32,562 32,970 32,584 33,105 common shares outstanding:Cash dividends declared $ 0.04 $ 0.04 $ 0.16 $ 0.16 per share

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

(Unaudited) December 31, December 31, 2020 2019ASSETS Current Assets Cash and cash equivalents $ 91,773 $ 100,241 Accounts receivable, net 80,981 78,008 Inventories, net 45,870 42,237 Other current assets 14,607 16,992 Total current assets 233,231 237,478 Property, plant and equipment, net 97,437 105,038 Operating lease assets, net 23,281 24,644 Other Assets Prepaid pension asset 56,642 62,082 Goodwill 109,497 106,056 Other intangible assets, net 79,121 85,215 Deferred income taxes 24,250 19,795 Other 2,590 3,046 Total other assets 272,100 276,194 Total Assets $ 626,049 $ 643,354 LIABILITIES AND SHAREHOLDERS? EQUITY Current Liabilities Accounts payable $ 50,489 $ 48,219 Operating lease obligations 3,294 2,787 Accrued payroll and benefits 12,978 9,564 Accrued expenses and other liabilities 38,171 36,378 Total current liabilities 104,932 96,948 Long-term debt 54,600 99,700 Long-term operating lease obligations 23,163 24,926 Long-term pension obligations 7,466 6,632 Deferred income taxes 7,010 5,637 Other long-term obligations 5,196 4,292 Total Liabilities 202,367 238,135 Commitments and Contingencies Shareholders? Equity Common stock 311,190 307,932 Additional contributed capital 41,654 43,689 Retained earnings 539,281 509,766 Accumulated other comprehensive loss (95,921 ) (91,726 )Total shareholders? equity before 796,204 769,661 treasury stockTreasury stock (372,522 ) (364,442 )Total shareholders? equity 423,682 405,219 Total Liabilities and Shareholders? $ 626,049 $ 643,354 Equity

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 Twelve Months Ended December December December December 31, 31, 31, 31, 2020 2019 2020 2019GAAP diluted earnings per $ 0.46 $ 0.31 $ 1.06 $ 1.09 shareTax affected charges toreported diluted earnings per share:Restructuring charges 0.01 0.05 0.04 0.18 Foreign currency (gain) loss (0.10 ) (0.03 ) (0.16 ) 0.05 Non-cash pension expense 0.01 0.01 0.06 0.02 Environmental charges 0.03 0.05 0.07 0.05 Legal settlement ? (0.01 ) ? (0.01 )Transaction costs 0.01 ? 0.01 0.02 Discrete tax items 0.01 (0.01 ) 0.04 0.05 Adjusted diluted earnings per $ 0.43 $ 0.37 $ 1.12 $ 1.45 share

Free Cash Flow

The following table reconciles GAAP operating cash flow to free cash flow for the Company:

Three Months Ended Twelve Months Ended (in December December December Decemberthousands) 31, 31, 31, 31, 2020 2019 2020 2019Net cashprovided by $ 26,429 $ 23,670 $ 76,783 $ 64,405 operatingactivitiesCapital (4,417 ) (6,434 ) (14,858 ) (21,733 )expendituresFree cash $ 22,012 $ 17,236 $ 61,925 $ 42,672 flow

Additional Information

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

Three Months Ended Twelve Months Ended December December December December(in thousands) 31, 31, 31, 31, 2020 2019 2020 2019Depreciation andamortization $ 6,851 $ 6,581 $ 26,670 $ 24,619 expenseStock-basedcompensation $ 1,253 $ 1,065 $ 3,417 $ 5,015 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.

Free cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net cash provided by operating activities. CTS believes free cash flow is a useful measure of its ability to generate cash.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.