CTS Corporation (NYSE:CTS) today announced fourth quarter and full year 2015 results.

Fourth Quarter 2015 Results
  • Sales were $93.3 million, up 2.9% from the third quarter 2015. Fourth quarter sales to automotive customers increased 2.6%, and sales of electronic components were up 3.7% from the third quarter of 2015. Sales were down 7.1% compared to the fourth quarter of 2014.
  • GAAP loss was $13.7 million or $0.42 per share compared to earnings of $7.0 million or $0.21 per diluted share in the fourth quarter of 2014. Included in the fourth quarter 2015 GAAP loss were discrete tax charges of $0.34 and restructuring related charges of $0.28.
  • Adjusted EPS was $0.20 versus $0.24 in the fourth quarter of 2014. In the fourth quarter of 2015, balance sheet currency translation impacted earnings per share unfavorably by $0.04.

CTS received $105 million in new business awards in the fourth quarter, up 10% from $95 million in the third quarter of 2015.

Full Year 2015 Results
  • Sales were $382.3 million, down 5.4% compared to 2014. Currency impacted total year 2015 sales unfavorably by $7.8 million. 2015 sales to automotive customers declined 5.5%. Sales of electronic components declined 5.1%.
  • GAAP earnings were $7.0 million or $0.21 per diluted share compared to $26.5 million or $0.78 per diluted share in 2014.
  • Adjusted EPS was $0.93 versus $0.97 in 2014.
  • Cash flow from operations was $39 million in 2015, up 19% from $32 million in 2014.

CTS received $560 million in new business awards for 2015, up 16% from $484 million in 2014.

"CTS had a challenging 2015, and we were disappointed with our revenue performance. However, we achieved a number of significant accomplishments during the year. We improved our gross margin. We also successfully completed the transition of manufacturing from our plant in Canada, added several new customers, and acquired new technology and IP as part of our strategic plans," said Kieran O'Sullivan, CEO of CTS Corporation. "We had a record year for new business awards with an increase of 16% year-over-year. We are building backlog and staying on course towards our long-term strategic growth objectives."

2016 Guidance

Management expects full year 2016 sales in the range of $390 to $400 million. This represents growth of 2-5% from 2015. Adjusted earnings per diluted share for 2016 are expected to be in the range of $0.95 to $1.05.

Conference Call

As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 888-395-3227 (719-325-2362, if calling from outside the U.S.). The conference I.D. number is 5849497. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Monday, February 22, 2016. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 5849497. Also, please note that a live audio webcast of the conference call will be available and can be accessed directly from the website of CTS Corporation www.ctscorp.com.

About CTS

CTS (NYSE:CTS) is a leading designer and manufacturer of sensors, actuators and electronic components to OEMs in the aerospace, communications, defense, industrial, information technology, medical and transportation markets. CTS manufactures products in North America, Europe and Asia.

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 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 the 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.
 

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS - UNAUDITED

(In thousands, except per share amounts )
 
Three Months Ended

Twelve Months Ended
December 31, 2015   December 31, 2014 December 31, 2015   December 31, 2014
Net sales $ 93,282 $ 100,378 $ 382,310 $ 404,021
Cost of goods sold 63,128   67,352   255,201   274,058  
Gross Margin 30,154 33,026 127,109 129,963
Selling, general and administrative expenses 13,805 15,783 57,430 59,136
Research and development expenses 6,083 5,798 22,461 22,563
Non-recurring environmental charge 14,541
Restructuring and impairment charges 9,335   1,135   14,564   5,941  
Operating earnings 931 10,310 18,113 42,323
Other (expense) income:
Interest expense (673 ) (563 ) (2,628 ) (2,326 )
Interest income 719 827 3,073 2,786
Other expense (1,656 ) (1,817 ) (6,297 ) (3,435 )
Total other expense (1,610 ) (1,553 ) (5,852 ) (2,975 )
(Loss) earnings before income taxes (679 ) 8,757 12,261 39,348
Income tax expense 12,974   1,793   5,307   12,826  
Net (loss) earnings $ (13,653 ) $ 6,964   $ 6,954   $ 26,522  
 
(Loss) earnings per share:
Basic $ (0.42 ) $ 0.21   $ 0.21   $ 0.79  
Diluted $ (0.42 ) $ 0.21   $ 0.21   $ 0.78  
 
Cash dividends declared per share $ 0.04   $ 0.04   $ 0.16   $ 0.16  
 
Average common shares outstanding:
Basic 32,605 33,431 32,959 33,618
Diluted 32,605 33,935 33,484 34,130
 

CTS Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands of dollars )
 
 
December 31, 2015 December 31, 2014
ASSETS
Current Assets
Cash and cash equivalents $

156,928
$ 134,508
Accounts receivable, net 54,563 56,894
Inventories, net 24,600 27,887
Other current assets 15,888 21,112
Total current assets 251,979 240,401
Property, plant and equipment, net 69,872 71,414
Other Assets
Prepaid pension asset 33,779 32,099
Goodwill 33,865 32,047
Other intangible assets, net 34,758 36,592
Deferred income taxes 58,544 43,120
Other assets 1,336 1,253
Total other assets 162,282 145,111
Total Assets $ 484,133 $ 456,926
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 40,299 $ 43,343
Accrued payroll and benefits 7,147 11,283
Accrued liabilities 53,905 25,356
Total current liabilities 101,351 79,982
Long-term debt 90,700 75,000
Post retirement obligations 2,703 3,049
Other long-term obligations 7,725 9,106
Total Liabilities 202,479 167,137
Shareholders' Equity
Common stock 300,909 299,892
Additional contributed capital 41,166 39,153
Retained earnings 381,840 380,145
Accumulated other comprehensive loss (99,005) (104,233)
Total shareholders' equity before treasury stock 624,910 614,957
Treasury stock (343,256) (325,168)
Total shareholders' equity 281,654 289,789
Total Liabilities and Shareholders' Equity $ 484,133 $ 456,926
 

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION
 

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 31, 2015   December 31, 2014 December 31, 2015   December 31, 2014
 
GAAP diluted earnings per share $ (0.42 ) $ 0.21 $ 0.21 $ 0.78
 
Tax affected charges to reported diluted earnings per share:
Restructuring and related charges 0.28 0.03 0.40 0.18
Non-recurring environmental charge 0.27
Increase in the recognition of foreign valuation allowance 0.07 0.10
Increase in the recognition of uncertain tax benefits 0.01 0.17
Change in treatment of certain foreign taxes (0.01 ) (0.48 )
Tax impact of cash repatriation 0.27 0.26
Tax asset write-off related to restructuring       0.01
Adjusted diluted earnings per share $ 0.20   $ 0.24   $ 0.93   $ 0.97

Additional Information

The following table includes other financial information not presented in the preceding financial statements.
Three Months Ended   Twelve Months Ended
In thousands December 31, 2015   December 31, 2014 December 31, 2015   December 31, 2014
 
Depreciation and amortization expense $ 4,267 $ 4,249 $ 16,254 $ 16,971
Equity-based compensation expense $ 540 $ 821 $ 3,195 $ 2,660

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.

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

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