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CTS Announces First Quarter 2012 Financial Results

Other Noteworthy Items

  • During the first quarter of 2012, the Company repurchased approximately 272,100 shares for $2.7 million, at an average price of $10.05. Approximately 302,000 shares remain in our one million share buyback authorization.
  • The first quarter debt balance increased by $34.3 million from year-end due primarily to higher working capital requirements, the Thailand flood and approximately $15 million for the Valpey-Fisher acquisition, net of cash acquired. Cash balances increased $8.0 million from year-end.
  • First quarter capital expenditures were $4.4 million, or 3% of sales, compared to $3.2 million, or 2.1% of sales, in the same period last year.

Commenting on first quarter 2012 results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “While our performance in the first quarter was lower than expected, many of the issues were timing-related or unique due to new product launch activities. We remain excited about our growth initiatives, which are on track to drive strong performance over the next several years.”

While the global macro economic environment remains cautious and we expect the unfavorable impact from a weak Euro to continue, sales from new programs, combined with the catch up reimbursements discussed earlier, will benefit the earnings in the coming quarters. As a result, management is maintaining its guidance, with full-year 2012 sales expected to increase in the range of 10% to 13% over 2011, and diluted earnings per share in 2012 to be in the range of $0.75 to $0.80.

SEGMENT INFORMATION ($ in thousands)
     

Components and
           

Sensors

EMS

Total

First Quarter of 2012
Net sales to external customers

$76,418

$70,551

$146,969
Segment operating earnings before corporate and shared services charges

$7,344

$455

$7,799
Corporate and shared services charges

(4,324)

(1,543)

(5,867)
Segment operating earnings/(loss) (1)

$3,020
$(1,088) $1,932

Fourth Quarter of 2011
Net sales to external customers

$70,699

$73,300

$143,999
Segment operating earnings before corporate and shared services charges

$10,207

$3,722

$13,929
Corporate and share services charges (3,638) (647) (4,285)
Segment operating earnings (2) $6,569 $3,075 $9,644
Expenses not allocated to business segments:
- Restructuring and related charges (2,444)
Total operating earnings $7,200

First Quarter of 2011
Net sales to external customers

$72,031

$79,487

$151,518
Segment operating earnings before corporate and shared services charges

$9,805

$1,830

$11,635
Corporate and shared services charges (4,049) (1,827) (5,876)
Segment operating earnings $5,756 $3 $5,759
 

(1) EMS segment’s operating loss of $(1,088) includes $1,769 of insurance recovery for property damage related to the flood at CTS’ Thailand manufacturing facility.

(2) EMS segment’s operating earnings of $3,075 includes $3,380 of insurance recovery for property damage related to the fire at CTS’ Scotland manufacturing facility.

Components & Sensors: Components and Sensors first quarter 2012 sales increased $4.4 million, or 6%, from the first quarter of 2011. Automotive sensor and actuator sales increased $1.8 million, or 4%, primarily from new pedal module program ramps. Sales of electronic components increased $2.6 million, or 10%, from the new piezoceramic HDD product launch and incremental sales from the Valpey-Fisher acquisition, partially reduced by lower demand from telecom equipment providers. Despite the higher sales, segment operating earnings contribution before corporate and shared services charges of $7.3 million decreased $2.5 million from the same period last year primarily due to increased research and development expenses and certain commodity costs of $1.8 million, however, approximately half of this is expected to be recovered in the second quarter. The quarter was also affected by higher pension expenses as discussed earlier. Normal start-up inefficiencies related to launching new products and consolidation of certain product lines in Asia also impacted first quarter results unfavorably.

Components and Sensors first quarter 2012 sales increased $5.7 million, or 8%, from the fourth quarter of 2011. Automotive sensor and actuator product sales grew $2.0 million, or 4%, primarily from the new pedal module program ramps. Sales of electronic component products increased $3.7 million, or 15%, primarily from new piezoceramic product sales for HDD applications and acquisition-related sales. Despite the higher sales, segment operating earnings contribution before corporate and shared services charges of $7.3 million decreased $2.9 million from the fourth quarter of 2011. Research and development expenses and certain commodity costs increased as discussed earlier. In addition, the first quarter was impacted by unfavorable foreign currency fluctuations and less favorable product mix. The quarter was affected by higher pension expenses as discussed earlier. Normal start-up inefficiencies related to launching new products and consolidation of certain product lines in Asia also impacted first quarter results unfavorably.

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