CTS Corporation (NYSE: CTS) today announced second quarter 2012 revenues of $154.3 million, an increase of 5% from the same period last year and from the first quarter 2012. Second quarter 2012 net earnings were $3.3 million, or $0.10 per diluted share, compared to $4.1 million, or $0.12 per diluted share, in the same period last year. Included in the second quarter 2012 earnings were $0.08 per share of restructuring and related charges and included in the second quarter of 2011 were restructuring and legal charges of $0.02 per share. Excluding these items, adjusted second quarter 2012 earnings per share were up 29% at $0.18 compared to $0.14 in the same period last year.
Second Quarter Highlights
- CTS initiated a $5 million restructuring plan with expected annual savings of approximately $6 million. This plan will reduce approximately 260 positions, or 6% of CTS’ global headcount, throughout Asia, Europe and North America. CTS recognized $3.8 million, or $0.08 per share, of this $5 million plan in the second quarter; the remaining $1.2 million charge is expected to be recognized in the second half of 2012. The plan will further improve our cost structure and capacity utilization.
- CTS’ EMS Thailand facility, which had been out of service since the October 2011 flood, is now fully operational with substantially all production having been transferred back to Thailand from the California EMS facilities. Second quarter 2012 earnings include insurance recoveries of $7.4 million and expenses and losses of approximately $5 million. Year-to-date, flood-related reimbursements have exceeded costs by $1.5 million, due to timing.
- CTS has incurred approximately $0.6 million of Takata patent litigation costs year-to-date, of which $0.2 million was incurred in the second quarter. In July, the courts sided with CTS’ interpretation of the patent claim. The Company is proceeding with the next stage of litigation.
- Non-cash pension expense was higher by approximately $1.2 million, or $0.02 per share, in the second quarter and $2.2 million, or $0.04 per share, year-to-date, compared to last year due to lower discount rates and asset returns.
- CTS’ second quarter debt balance decreased $11.7 million from the first quarter driven by strong cash flow.
- CTS’ new grill shutter actuator product was launched in May, one quarter earlier than originally planned.
- Production on CTS’ major smart actuator program is expected to begin as scheduled in late fourth quarter. This program is slated for a North American medium-duty diesel engine application and is expected to add approximately $20 million in new revenues in 2013.
- On June 4, CTS celebrated its 50 th anniversary of trading on the New York Stock Exchange by visiting the NYSE trading floor and ringing the closing bell. This significant milestone honored CTS’ rich tradition.
Second quarter 2012 Components and Sensors segment sales grew $8.8 million, or 13%, from the same period last year. This increase was driven primarily by higher automotive sensor and actuator sales of $7.0 million, or 17%, as Japanese automotive customers recovered from last year’s earthquake. Electronic component sales increased $1.8 million, or 7%, primarily from improved piezoceramic product demand, including HDD sales, and incremental sales from the Valpey-Fisher acquisition. EMS second quarter sales decreased $1.4 million, or 2%, year-over-year, primarily resulting from the continued impact of the Thailand flood, partially offset by new customer program ramps.