CTS Corporation (NYSE: CTS), a leading global designer and
manufacturer of custom engineered solutions that “Sense, Connect
and Move,” today announced third quarter 2022 results.
“We delivered strong results in the third
quarter, increasing revenue by 24% while expanding Adjusted EBITDA
margin by 60-basis points. Our advanced materials expertise,
coupled with the strength of our commercial teams, are helping to
accelerate our diversification into non-transportation end markets,
enabling CTS’ performance in an uncertain macroeconomic
environment,” said Kieran O’Sullivan, CEO. “We look forward to
continued execution of our strategic priorities to further
strengthen our financial profile, positioning CTS for long-term
profitable growth.”
Third Quarter 2022 Results
- Sales were $151.9
million, up 24% year-over-year. Sales to non-transportation end
markets increased 22.5%, and sales to the transportation end market
increased 25.7% over the same period.
- Net income was
$11.8 million, or $0.37 per diluted share, compared to a $63.9
million net loss, or $(1.97) per share, in the third quarter of
2021.
- Adjusted diluted
EPS was $0.62, up from $0.46 in the third quarter of 2021.
- Adjusted EBITDA
margin was 22.3% compared to 21.7% in the third quarter of
2021.
- Operating cash flow
was $60.4 million compared to $21.3 million in the third quarter of
2021, which includes $34 million from termination of the US pension
plan.
2022 Guidance
Including the recent Ferroperm acquisition, CTS
now expects full year 2022 sales to be in the range of $585 – $595
million, updated from the previous guidance of $570 – $600 million,
and adjusted diluted EPS in the range of $2.40 – $2.55, unchanged
from the prior guidance. Management continues to monitor the
potential impact of the challenging supply situation,
macro-economic environment, and geopolitical events on this
guidance.
Conference Call and Supplemental Materials
As previously announced, the Company has scheduled a conference
call for 10:00 a.m. (EDT) 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 336733. 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/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 disruption; 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 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 gross margin, adjusted
operating earnings, adjusted EBITDA margin, adjusted net earnings,
adjusted diluted earnings per share, debt to capitalization ratio,
controllable working capital ratio, and free cash flow. Many of
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 gross margin,
adjusted operating earnings, adjusted EBITDA margin, adjusted net
earnings 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 debt to capitalization ratio
is a measurement of financial leverage and provides an insight into
the financial structure of CTS and its financial strength. CTS
believes the controllable working capital ratio provides an
objective measure of the efficiency with which CTS manages its
short-term capital needs. CTS believes that free cash flow is a
useful measure of its ability to generate cash.
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. Note that CTS’ definitions of these
non-GAAP financial measures may differ from those terms as defined
or used by other companies.
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.
Contact
Ashish AgrawalVice President and Chief Financial OfficerCTS
Corporation4925 Indiana AvenueLisle, IL 60532 USA+1 (630)
577-8800ashish.agrawal@ctscorp.com
CTS CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS -
UNAUDITED(In thousands of dollars, except per share
amounts)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30,2022 |
|
|
September 30,2021 |
|
|
September 30,2022 |
|
|
September 30,2021 |
|
Net sales |
|
$ |
151,911 |
|
|
$ |
122,382 |
|
|
$ |
444,588 |
|
|
$ |
380,394 |
|
Cost of goods sold |
|
|
98,565 |
|
|
|
76,720 |
|
|
|
285,054 |
|
|
|
244,446 |
|
Gross margin |
|
|
53,346 |
|
|
|
45,662 |
|
|
|
159,534 |
|
|
|
135,948 |
|
Selling, general and administrative expenses |
|
|
24,003 |
|
|
|
19,922 |
|
|
|
68,029 |
|
|
|
59,184 |
|
Research and development expenses |
|
|
6,207 |
|
|
|
6,454 |
|
|
|
18,695 |
|
|
|
18,170 |
|
Restructuring charges |
|
|
492 |
|
|
|
319 |
|
|
|
1,434 |
|
|
|
551 |
|
Operating earnings |
|
|
22,644 |
|
|
|
18,967 |
|
|
|
71,376 |
|
|
|
58,043 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(342 |
) |
|
|
(514 |
) |
|
|
(1,490 |
) |
|
|
(1,577 |
) |
Interest income |
|
|
167 |
|
|
|
230 |
|
|
|
610 |
|
|
|
689 |
|
Other (expense), net |
|
|
(5,171 |
) |
|
|
(108,502 |
) |
|
|
(10,530 |
) |
|
|
(132,786 |
) |
Total other (expense), net |
|
|
(5,346 |
) |
|
|
(108,786 |
) |
|
|
(11,410 |
) |
|
|
(133,674 |
) |
Earnings (loss) before income taxes |
|
|
17,298 |
|
|
|
(89,819 |
) |
|
|
59,966 |
|
|
|
(75,631 |
) |
Income tax expense (benefit) |
|
|
5,500 |
|
|
|
(25,923 |
) |
|
|
15,331 |
|
|
|
(24,600 |
) |
Net earnings
(loss) |
|
|
11,798 |
|
|
|
(63,896 |
) |
|
|
44,635 |
|
|
|
(51,031 |
) |
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.37 |
|
|
$ |
(1.97 |
) |
|
$ |
1.39 |
|
|
$ |
(1.58 |
) |
Diluted |
|
$ |
0.37 |
|
|
$ |
(1.97 |
) |
|
$ |
1.38 |
|
|
$ |
(1.58 |
) |
Basic weighted – average
common shares outstanding: |
|
|
31,865 |
|
|
|
32,379 |
|
|
|
32,018 |
|
|
|
32,365 |
|
Effect of dilutive securities |
|
|
225 |
|
|
|
— |
|
|
|
220 |
|
|
|
— |
|
Diluted weighted –
average common shares outstanding: |
|
|
32,090 |
|
|
|
32,379 |
|
|
|
32,238 |
|
|
|
32,365 |
|
Cash dividends declared
per share |
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
CTS CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands of dollars)
|
|
(Unaudited) |
|
|
|
|
|
|
September 30,2022 |
|
|
December 31,2021 |
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
147,908 |
|
|
$ |
141,465 |
|
Accounts receivable, net |
|
|
97,004 |
|
|
|
82,191 |
|
Inventories, net |
|
|
63,465 |
|
|
|
49,506 |
|
Other current assets |
|
|
18,020 |
|
|
|
15,927 |
|
Total current assets |
|
|
326,397 |
|
|
|
289,089 |
|
Property, plant and equipment,
net |
|
|
95,906 |
|
|
|
96,876 |
|
Operating lease assets, net |
|
|
22,630 |
|
|
|
21,594 |
|
Other Assets |
|
|
|
|
|
|
Prepaid pension asset |
|
|
5 |
|
|
|
49,382 |
|
Goodwill |
|
|
138,945 |
|
|
|
109,798 |
|
Other intangible assets, net |
|
|
106,207 |
|
|
|
69,888 |
|
Deferred income taxes |
|
|
22,992 |
|
|
|
25,415 |
|
Other |
|
|
21,597 |
|
|
|
2,420 |
|
Total other assets |
|
|
289,746 |
|
|
|
256,903 |
|
Total
Assets |
|
$ |
734,679 |
|
|
$ |
664,462 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
65,687 |
|
|
$ |
55,537 |
|
Operating lease obligations |
|
|
3,532 |
|
|
|
3,393 |
|
Accrued payroll and benefits |
|
|
16,979 |
|
|
|
18,418 |
|
Accrued expenses and other liabilities |
|
|
35,741 |
|
|
|
36,718 |
|
Total current liabilities |
|
|
121,939 |
|
|
|
114,066 |
|
Long-term debt |
|
|
85,478 |
|
|
|
50,000 |
|
Long-term operating lease obligations |
|
|
22,097 |
|
|
|
21,354 |
|
Long-term pension obligations |
|
|
6,248 |
|
|
|
6,886 |
|
Deferred income taxes |
|
|
5,515 |
|
|
|
5,894 |
|
Other long-term obligations |
|
|
2,790 |
|
|
|
2,684 |
|
Total
Liabilities |
|
|
244,067 |
|
|
|
200,884 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
Shareholders’ Equity |
|
|
|
|
|
|
Common stock |
|
|
316,520 |
|
|
|
314,620 |
|
Additional contributed capital |
|
|
44,659 |
|
|
|
42,549 |
|
Retained earnings |
|
|
533,036 |
|
|
|
492,242 |
|
Accumulated other comprehensive loss |
|
|
(8,849 |
) |
|
|
(4,525 |
) |
Total shareholders’ equity before treasury stock |
|
|
885,366 |
|
|
|
844,886 |
|
Treasury stock |
|
|
(394,754 |
) |
|
|
(381,308 |
) |
Total shareholders’ equity |
|
|
490,612 |
|
|
|
463,578 |
|
Total Liabilities and
Shareholders’ Equity |
|
$ |
734,679 |
|
|
$ |
664,462 |
|
CTS CORPORATION AND
SUBSIDIARIESOTHER SUPPLEMENTAL INFORMATION -
UNAUDITED(In millions of dollars, except per share
amounts)
Adjusted Gross Margin
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Gross margin |
|
$ |
53.3 |
|
|
$ |
45.7 |
|
|
$ |
159.5 |
|
|
$ |
135.9 |
|
|
$ |
184.6 |
|
|
$ |
139.1 |
|
|
$ |
157.6 |
|
Adjustments to reported gross
margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory fair value step-up |
|
$ |
2.2 |
|
|
$ |
— |
|
|
$ |
3.3 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin |
|
$ |
55.6 |
|
|
$ |
45.7 |
|
|
$ |
162.9 |
|
|
$ |
135.9 |
|
|
$ |
184.6 |
|
|
$ |
139.1 |
|
|
$ |
157.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
151.9 |
|
|
$ |
122.4 |
|
|
$ |
444.6 |
|
|
$ |
380.4 |
|
|
$ |
512.9 |
|
|
$ |
424.1 |
|
|
$ |
469.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin as
a % of net sales |
|
|
36.6 |
% |
|
|
37.3 |
% |
|
|
36.6 |
% |
|
|
35.7 |
% |
|
|
36.0 |
% |
|
|
32.8 |
% |
|
|
33.6 |
% |
Adjusted Operating Earnings
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Operating earnings |
|
$ |
22.6 |
|
|
$ |
19.0 |
|
|
$ |
71.4 |
|
|
$ |
58.0 |
|
|
$ |
76.5 |
|
|
$ |
45.1 |
|
|
$ |
53.8 |
|
Adjustments to reported
operating earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.4 |
|
|
|
0.6 |
|
|
|
1.7 |
|
|
|
1.8 |
|
|
|
7.4 |
|
Environmental charges |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
1.8 |
|
|
|
0.9 |
|
|
|
2.3 |
|
|
|
2.8 |
|
|
|
2.3 |
|
Legal settlement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
(0.5 |
) |
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
— |
|
|
|
0.3 |
|
|
|
0.7 |
|
Inventory fair value step-up |
|
|
2.2 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Costs of tax improvement initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Total adjustments to reported
operating earnings |
|
$ |
3.0 |
|
|
$ |
0.7 |
|
|
$ |
7.3 |
|
|
$ |
1.4 |
|
|
$ |
3.9 |
|
|
$ |
4.9 |
|
|
$ |
10.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
earnings |
|
$ |
25.7 |
|
|
$ |
19.7 |
|
|
$ |
78.7 |
|
|
$ |
59.4 |
|
|
$ |
80.4 |
|
|
$ |
50.0 |
|
|
$ |
63.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
151.9 |
|
|
$ |
122.4 |
|
|
$ |
444.6 |
|
|
$ |
380.4 |
|
|
$ |
512.9 |
|
|
$ |
424.1 |
|
|
$ |
469.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
earnings as a % of net sales |
|
|
16.9 |
% |
|
|
16.1 |
% |
|
|
17.7 |
% |
|
|
15.6 |
% |
|
|
15.7 |
% |
|
|
11.8 |
% |
|
|
13.6 |
% |
Adjusted EBITDA
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net earnings (loss) |
|
$ |
11.8 |
|
|
$ |
(63.9 |
) |
|
$ |
44.6 |
|
|
$ |
(51.0 |
) |
|
$ |
(41.9 |
) |
|
$ |
34.7 |
|
|
$ |
36.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
expense |
|
|
8.0 |
|
|
|
6.7 |
|
|
|
21.7 |
|
|
|
20.2 |
|
|
|
26.9 |
|
|
|
26.7 |
|
|
|
24.6 |
|
Interest expense |
|
|
0.3 |
|
|
|
0.5 |
|
|
|
1.5 |
|
|
|
1.6 |
|
|
|
2.1 |
|
|
|
3.3 |
|
|
|
2.6 |
|
Tax expense (benefit) |
|
|
5.5 |
|
|
|
(25.9 |
) |
|
|
15.3 |
|
|
|
(24.6 |
) |
|
|
(19.0 |
) |
|
|
10.8 |
|
|
|
14.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
25.6 |
|
|
|
(82.6 |
) |
|
|
83.2 |
|
|
|
(53.8 |
) |
|
|
(31.8 |
) |
|
|
75.4 |
|
|
|
77.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.4 |
|
|
|
0.6 |
|
|
|
1.7 |
|
|
|
1.8 |
|
|
|
6.9 |
|
Environmental charges |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
1.8 |
|
|
|
0.9 |
|
|
|
2.3 |
|
|
|
2.8 |
|
|
|
2.3 |
|
Legal settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
2.5 |
|
|
|
— |
|
|
|
— |
|
|
|
0.3 |
|
|
|
0.7 |
|
Inventory fair value step-up |
|
|
2.2 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Costs of tax improvement initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Non-cash pension expense |
|
|
4.7 |
|
|
|
107.4 |
|
|
|
4.8 |
|
|
|
131.1 |
|
|
|
132.4 |
|
|
|
2.5 |
|
|
|
0.8 |
|
Foreign currency loss (gain) |
|
|
0.5 |
|
|
|
1.0 |
|
|
|
4.0 |
|
|
|
1.4 |
|
|
|
3.3 |
|
|
|
(5.3 |
) |
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments to
EBITDA |
|
|
8.2 |
|
|
|
109.2 |
|
|
|
17.8 |
|
|
|
134.0 |
|
|
|
139.7 |
|
|
|
2.1 |
|
|
|
12.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
33.8 |
|
|
$ |
26.6 |
|
|
$ |
101.0 |
|
|
$ |
80.2 |
|
|
$ |
107.8 |
|
|
$ |
77.5 |
|
|
$ |
89.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
151.9 |
|
|
$ |
122.4 |
|
|
$ |
444.6 |
|
|
$ |
380.4 |
|
|
$ |
512.9 |
|
|
$ |
424.1 |
|
|
$ |
469.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin |
|
|
22.3 |
% |
|
|
21.7 |
% |
|
|
22.7 |
% |
|
|
21.1 |
% |
|
|
21.0 |
% |
|
|
18.3 |
% |
|
|
19.1 |
% |
Adjusted Net Earnings
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net earnings (loss) (A) |
|
|
11.8 |
|
|
$ |
(63.9 |
) |
|
$ |
44.6 |
|
|
$ |
(51.0 |
) |
|
$ |
(41.9 |
) |
|
$ |
34.7 |
|
|
$ |
36.1 |
|
Adjustments to reported net
earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.4 |
|
|
|
0.6 |
|
|
|
1.7 |
|
|
|
1.8 |
|
|
|
7.4 |
|
Environmental charges |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
1.8 |
|
|
|
0.9 |
|
|
|
2.3 |
|
|
|
2.8 |
|
|
|
2.3 |
|
Legal settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
(0.5 |
) |
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
2.5 |
|
|
|
— |
|
|
— |
|
|
|
0.3 |
|
|
|
0.7 |
|
Inventory fair value step-up |
|
|
2.2 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Costs of tax improvement initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
0.1 |
|
Non-cash pension expense |
|
|
4.7 |
|
|
|
107.4 |
|
|
|
4.8 |
|
|
|
131.1 |
|
|
|
132.4 |
|
|
|
2.5 |
|
|
|
0.8 |
|
Foreign currency loss (gain) |
|
|
0.5 |
|
|
|
1.0 |
|
|
|
4.0 |
|
|
|
1.4 |
|
|
|
3.3 |
|
|
|
(5.3 |
) |
|
|
1.8 |
|
Total adjustments to reported
net earnings (loss) |
|
$ |
8.2 |
|
|
$ |
109.2 |
|
|
$ |
17.8 |
|
|
$ |
134.0 |
|
|
$ |
139.7 |
|
|
$ |
2.1 |
|
|
$ |
12.6 |
|
Total adjustments, tax
affected (B) |
|
$ |
8.0 |
|
|
$ |
84.3 |
|
|
$ |
16.6 |
|
|
$ |
103.5 |
|
|
$ |
108.6 |
|
|
$ |
0.4 |
|
|
$ |
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in valuation allowances |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
0.2 |
|
|
— |
|
Other discrete tax items |
|
|
— |
|
|
|
(5.4 |
) |
|
|
— |
|
|
|
(5.4 |
) |
|
|
(4.7 |
) |
|
|
1.2 |
|
|
|
1.8 |
|
Total tax
adjustments (C) |
|
$ |
— |
|
|
$ |
(5.4 |
) |
|
$ |
— |
|
|
$ |
(5.4 |
) |
|
$ |
(3.8 |
) |
|
$ |
1.4 |
|
|
$ |
1.8 |
|
Adjusted net earnings
(A+B+C) |
|
$ |
19.8 |
|
|
$ |
15.0 |
|
|
$ |
61.3 |
|
|
$ |
47.1 |
|
|
$ |
63.0 |
|
|
$ |
36.5 |
|
|
$ |
48.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
151.9 |
|
|
$ |
122.4 |
|
|
$ |
444.6 |
|
|
$ |
380.4 |
|
|
$ |
512.9 |
|
|
$ |
424.1 |
|
|
$ |
469.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings
as a % of net sales |
|
|
13.0 |
% |
|
|
12.3 |
% |
|
|
13.8 |
% |
|
|
12.4 |
% |
|
|
12.3 |
% |
|
|
8.6 |
% |
|
|
10.3 |
% |
Adjusted Diluted Earnings Per Share
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
GAAP diluted earnings (loss) per share |
|
$ |
0.37 |
|
|
$ |
(1.97 |
) |
|
$ |
1.38 |
|
|
$ |
(1.58 |
) |
|
$ |
(1.30 |
) |
|
$ |
1.06 |
|
|
$ |
1.09 |
|
Tax affected charges to reported
diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.04 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.04 |
|
|
|
0.18 |
|
Foreign currency loss (gain) |
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.12 |
|
|
|
0.04 |
|
|
|
0.10 |
|
|
|
(0.16 |
) |
|
|
0.05 |
|
Non-cash pension expense |
|
|
0.16 |
|
|
|
2.54 |
|
|
|
0.16 |
|
|
|
3.10 |
|
|
|
3.13 |
|
|
|
0.06 |
|
|
|
0.02 |
|
Environmental charges |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.04 |
|
|
|
0.02 |
|
|
|
0.05 |
|
|
|
0.07 |
|
|
|
0.05 |
|
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
0.07 |
|
|
|
— |
|
|
— |
|
|
|
0.01 |
|
|
|
0.02 |
|
Inventory fair value step-up |
|
|
0.06 |
|
|
|
— |
|
|
|
0.09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Legal settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
(0.01 |
) |
Discrete tax items |
|
|
— |
|
|
|
(0.16 |
) |
|
|
— |
|
|
|
(0.16 |
) |
|
|
(0.11 |
) |
|
|
0.04 |
|
|
|
0.05 |
|
Adjusted diluted earnings
per share |
|
$ |
0.62 |
|
|
$ |
0.46 |
|
|
$ |
1.90 |
|
|
$ |
1.44 |
|
|
$ |
1.93 |
|
|
$ |
1.12 |
|
|
$ |
1.45 |
|
Debt to Capitalization
|
September 30, |
|
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Total debt
(A) |
$ |
85.5 |
|
|
$ |
50.0 |
|
|
$ |
50.0 |
|
|
$ |
54.6 |
|
|
$ |
99.7 |
|
Total shareholders' equity
(B) |
$ |
490.6 |
|
|
$ |
457.4 |
|
|
$ |
463.6 |
|
|
$ |
423.7 |
|
|
$ |
405.2 |
|
Total capitalization
(A+B) |
$ |
576.1 |
|
|
$ |
507.4 |
|
|
$ |
513.6 |
|
|
$ |
478.3 |
|
|
$ |
504.9 |
|
Total debt to
capitalization |
|
14.8 |
% |
|
|
9.9 |
% |
|
|
9.7 |
% |
|
|
11.4 |
% |
|
|
19.7 |
% |
Controllable Working Capital
|
September 30, |
|
|
December 31, |
|
|
2022 |
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net accounts receivable |
$ |
97.0 |
|
$ |
78.2 |
|
|
$ |
82.2 |
|
|
$ |
81.0 |
|
|
$ |
78.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net inventory |
$ |
63.5 |
|
$ |
50.9 |
|
|
$ |
49.5 |
|
|
$ |
45.9 |
|
|
$ |
42.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
(65.7 |
) |
$ |
(49.0 |
) |
|
$ |
(55.5 |
) |
|
$ |
(50.5 |
) |
|
$ |
(48.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controllable working
capital |
$ |
94.8 |
|
$ |
80.1 |
|
|
$ |
76.2 |
|
|
$ |
76.4 |
|
|
$ |
72.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter sales |
$ |
151.9 |
|
$ |
122.4 |
|
|
$ |
132.5 |
|
|
$ |
123.0 |
|
|
$ |
115.0 |
|
Multiplied by 4 |
|
4 |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
Annualized sales |
$ |
607.6 |
|
$ |
489.5 |
|
|
$ |
530.1 |
|
|
$ |
492.1 |
|
|
$ |
460.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controllable working
capital as a % of annualized net sales |
|
15.6 |
% |
|
16.4 |
% |
|
|
14.4 |
% |
|
|
15.5 |
% |
|
|
15.7 |
% |
Free Cash Flow
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net cash provided by operating activities |
|
$ |
60.4 |
|
|
$ |
21.3 |
|
|
$ |
95.7 |
|
|
$ |
60.1 |
|
|
$ |
86.1 |
|
|
$ |
76.8 |
|
|
$ |
64.4 |
|
Capital expenditures |
|
|
(2.3 |
) |
|
|
(4.2 |
) |
|
|
(9.3 |
) |
|
|
(8.1 |
) |
|
|
(15.6 |
) |
|
|
(14.9 |
) |
|
|
(21.7 |
) |
Free cash flow |
|
$ |
58.1 |
|
|
$ |
17.1 |
|
|
$ |
86.5 |
|
|
$ |
52.0 |
|
|
$ |
70.5 |
|
|
$ |
61.9 |
|
|
$ |
42.7 |
|
Capital Expenditures
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Capital expenditures |
|
$ |
2.3 |
|
|
$ |
4.2 |
|
|
$ |
9.3 |
|
|
$ |
8.1 |
|
|
$ |
15.6 |
|
|
$ |
14.9 |
|
|
$ |
21.7 |
|
Net sales |
|
$ |
151.9 |
|
|
$ |
122.4 |
|
|
$ |
444.6 |
|
|
$ |
380.4 |
|
|
$ |
512.9 |
|
|
$ |
424.1 |
|
|
$ |
469.0 |
|
Capex as % of net
sales |
|
|
1.5 |
% |
|
|
3.4 |
% |
|
|
2.1 |
% |
|
|
2.1 |
% |
|
|
3.0 |
% |
|
|
3.5 |
% |
|
|
4.6 |
% |
Additional Information
The following table includes other financial information not
presented in the preceding financial statements.
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
Twelve Months EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Depreciation and amortization expense |
|
$ |
8.0 |
|
|
$ |
6.7 |
|
|
$ |
21.7 |
|
|
$ |
20.2 |
|
|
$ |
26.9 |
|
|
$ |
26.7 |
|
|
$ |
24.6 |
|
Stock-based compensation
expense |
|
$ |
2.2 |
|
|
$ |
1.0 |
|
|
$ |
5.8 |
|
|
$ |
4.1 |
|
|
$ |
6.1 |
|
|
$ |
3.4 |
|
|
$ |
5.0 |
|
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