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CTS Announces Fourth Quarter and Full-Year 2022 Results
Source: Nasdaq GlobeNewswire / 07 Feb 2023 07:00:01 America/Chicago
LISLE, Ill., Feb. 07, 2023 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of custom engineered solutions that “Sense, Connect and Move,” today announced fourth quarter and full-year 2022 results.
“We delivered solid performance throughout 2022, closing the year with a double-digit increase in revenue along with strong adjusted EBITDA margin expansion. During the year, we advanced our diversification strategy through the completion of two acquisitions, while also gaining momentum with electric platform wins as we continue developing new products for hybrid and electric vehicles,” said Kieran O’Sullivan, CEO of CTS Corporation. “Looking ahead, we expect a softer first quarter, and an improving trend for the rest of 2023. We remain focused on executing our strategic priorities while driving operational improvements to deliver long-term value creation.”
Fourth Quarter 2022 Results
- Sales were $142.3 million, up 7% year-over-year. Sales to non-transportation end markets increased 22% and, as expected, sales to the transportation end market decreased 4 % over the fourth quarter of 2021.
- Reported net income was $14.9 million at 11% of sales, compared to $9.2 million at 7% of sales, in the fourth quarter of 2021.
- Earnings per share was $0.47 per diluted share, up from $0.28 per diluted share, in the fourth quarter of 2021.
- Adjusted diluted EPS was $0.56, up from $0.49 in the fourth quarter of 2021.
- Adjusted EBITDA margin was 22.9% compared to 20.9% in the fourth quarter of 2021.
- Operating cash flow was $25.5 million compared to $26.0 million in the fourth quarter of 2021.
Full-Year 2022 Results
- Sales were $586.9 million, up 14% year-over-year, driven by strength in non-transportation end markets. Non-transportation end markets grew 24%, while the transportation end market grew 7% compared to 2021.
- Net income was $59.6 million or 10% of sales, compared to a net loss of $41.9 million or (8)% of sales in 2021. Net income in 2021 was impacted by the non-cash pension charge of $96.6 million.
- Earnings per share was $1.85 per diluted share, compared to $(1.30) per diluted share, in 2021.
- Adjusted diluted EPS was $2.46, up from $1.93 in 2021.
- Adjusted EBITDA margin was 22.8%, up from 21.0% in 2021.
- Operating cash flow was $121.2 million, up from $86.1 million in 2021.
2023 Guidance
CTS expects full-year 2023 sales to be in the range of $580 - $640 million and adjusted diluted EPS to be in the range of $2.40 - $2.70.
CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.
Conference Call and Supplemental Materials
As previously announced, the Company has scheduled a conference call for 10:00 a.m. (EST) today. The dial-in number for the U.S. and Canada is 844-200-6205 (+1 929-526-1599, if calling from outside the U.S. and Canada). The passcode is 889906. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS’ website at https://www.ctscorp.com/investors/events-presentations/.
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 and defense, industrial, medical, 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 CTS’ actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: the ultimate impact of the COVID-19 pandemic on CTS’ business, results of operations or financial condition, including supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions, including our acquisitions of TEWA Temperature Sensors and Ferroperm Piezoceramics; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.
Non-GAAP Financial Measures
From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS’ management believes that non-GAAP financial measures can be useful to investors in analyzing CTS’ financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.
The information in this press release includes the non-GAAP financial measures of adjusted EBITDA and adjusted diluted earnings per share. These non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of CTS’ fundamental business operations.
CTS believes that adjusted EBITDA and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations or were not part of CTS’ business operations during a comparable period.
CTS believes that these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies.
Contact
Ashish Agrawal
Vice President and Chief Financial Officer
CTS Corporation
4925 Indiana Avenue
Lisle, IL 60532 USA
+1 (630) 577-8800
ashish.agrawal@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,
2022December 31,
2021December 31,
2022December 31,
2021Net sales $ 142,281 $ 132,531 $ 586,869 $ 512,925 Cost of goods sold 91,277 83,860 376,331 328,306 Gross margin 51,004 48,671 210,538 184,619 Selling, general and administrative expenses 23,491 23,413 91,520 82,597 Research and development expenses 5,405 5,686 24,100 23,856 Restructuring charges 478 1,136 1,912 1,687 Operating earnings 21,630 18,436 93,006 76,479 Other (expense) income: Interest expense (702 ) (534 ) (2,192 ) (2,111 ) Interest income 716 151 1326 840 Other (expense), net (873 ) (3,302 ) (11,403 ) (136,088 ) Total other (expense), net (859 ) (3,685 ) (12,269 ) (137,359 ) Earnings (loss) before income taxes 20,771 14,751 80,737 (60,880 ) Income tax expense (benefit) 5,831 5,586 21,162 (19,014 ) Net earnings (loss) 14,940 9,165 59,575 (41,866 ) Earnings (loss) per share: Basic 0.47 0.28 1.86 (1.30 ) Diluted 0.47 0.28 1.85 (1.30 ) Basic weighted – average common shares outstanding: 31,818 32,214 31,968 32,327 Effect of dilutive securities 224 218 270 — Diluted weighted – average common shares outstanding: 32,042 32,432 32,238 32,327 Cash dividends declared per share $ 0.04 $ 0.04 $ 0.16 $ 0.16 CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)(Unaudited) December 31, 2022 December 31, 2021 ASSETS Current Assets Cash and cash equivalents $ 156,910 $ 141,465 Accounts receivable, net 90,935 82,191 Inventories, net 62,260 49,506 Other current assets 15,655 15,927 Total current assets 325,760 289,089 Property, plant and equipment, net 97,300 96,876 Operating lease assets, net 22,702 21,594 Other Assets Prepaid pension asset — 49,382 Goodwill 152,361 109,798 Other intangible assets, net 108,053 69,888 Deferred income taxes 23,461 25,415 Other 18,850 2,420 Total other assets 302,725 256,903 Total Assets $ 748,487 $ 664,462 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 53,211 $ 55,537 Operating lease obligations 3,936 3,393 Accrued payroll and benefits 20,063 18,418 Accrued expenses and other liabilities 35,322 36,718 Total current liabilities 112,532 114,066 Long-term debt 83,670 50,000 Long-term operating lease obligations 21,754 21,354 Long-term pension obligations 5,048 6,886 Deferred income taxes 16,010 5,894 Other long-term obligations 3,249 2,684 Total Liabilities 242,263 200,884 Commitments and Contingencies Shareholders’ Equity Common stock 316,803 314,620 Additional contributed capital 46,144 42,549 Retained earnings 546,703 492,242 Accumulated other comprehensive loss (671 ) (4,525 ) Total shareholders’ equity before treasury stock 908,979 844,886 Treasury stock (402,755 ) (381,308 ) Total shareholders’ equity 506,224 463,578 Total Liabilities and Shareholders’ Equity $ 748,487 $ 664,462 CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION - UNAUDITED
(In millions of dollars, except per share amounts)Adjusted EBITDA Margin
Three Months Ended
December 31,Twelve Months Ended
December 31,2022 2021 2022 2021 2020 Net earnings (loss) $ 14.9 $ 9.2 $ 59.6 $ (41.9 ) $ 34.7 Depreciation and amortization expense 8.0 6.7 29.8 26.9 26.7 Interest expense 0.7 0.5 2.2 2.1 3.3 Tax expense (benefit) 5.8 5.6 21.2 (19.0 ) 10.8 EBITDA 29.5 22.0 112.7 (31.8 ) 75.4 Adjustments to EBITDA: Restructuring charges 0.5 1.1 1.9 1.7 1.8 Environmental charges 1.0 1.4 2.8 2.3 2.8 Acquisition-related costs — — 2.5 — 0.3 Inventory fair value step-up 0.7 — 4.0 — — Non-cash pension and related expense — 1.3 4.8 132.4 2.5 Foreign currency loss (gain) 0.9 1.9 4.9 3.3 (5.3 ) Total adjustments to EBITDA 3.1 5.7 20.9 139.7 2.1 Adjusted EBITDA $ 32.6 $ 27.7 $ 133.6 $ 107.9 $ 77.5 Net sales $ 142.3 $ 132.5 $ 586.9 $ 512.9 $ 424.1 Adjusted EBITDA Margin 22.9 % 20.9 % 22.8 % 21.0 % 18.3 % Adjusted Diluted Earnings Per Share
Three Months Ended
December 31,Twelve Months Ended
December 31,2022 2021 2022 2021 2020 GAAP diluted earnings (loss) per share $ 0.47 $ 0.28 $ 1.85 $ (1.30 ) $ 1.06 Tax affected charges to reported diluted earnings (loss) per share: Restructuring charges 0.01 0.04 0.05 0.06 0.04 Foreign currency loss (gain) 0.03 0.06 0.15 0.10 (0.16 ) Non-cash pension expense — 0.03 0.16 3.13 0.06 Environmental charges 0.02 0.03 0.07 0.05 0.07 Transaction costs — — 0.07 — 0.01 Inventory fair value step-up 0.02 — 0.10 — — Legal Settlement — — — — — Discrete tax items 0.01 0.05 0.01 (0.11 ) 0.04 Adjusted diluted earnings per share $ 0.56 $ 0.49 $ 2.46 $ 1.93 $ 1.12 Capital Expenditures
Three Months Ended
December 31,Twelve Months Ended
December 31,2022 2021 2022 2021 2020 Capital expenditures $ 5.1 $ 7.5 $ 14.3 $ 15.6 $ 14.9 Net sales $ 142.3 $ 132.5 $ 586.9 $ 512.9 $ 424.1 Capex as % of net sales 3.6 % 5.7 % 2.4 % 3.0 % 3.5 % Additional Information
The following table includes other financial information not presented in the preceding financial statements.
Three Months Ended
December 31,Twelve Months Ended
December 31,2022 2021 2022 2021 2020 Depreciation and amortization expense $ 8.0 $ 6.7 $ 29.8 $ 26.9 $ 26.7 Stock-based compensation expense $ 1.9 $ 2.0 $ 7.7 $ 6.1 $ 3.4