CTS Announces Second Quarter 2013 Financial Results

CTS Announces Second Quarter 2013 Financial Results

Maintains 2013 Full-Year Earnings Guidance
Simplification Plan Initiated to Improve Profitability

ELKHART, Ind.--(BUSINESS WIRE)-- CTS Corporation (NYS: CTS) today announced second quarter 2013 revenues of $151.6 million, an increase of 1% from the prior quarter and a decrease of 2% from the same period last year driven by softness in EMS markets. Second quarter net loss was $11.3 million, or $0.34 per share, compared to net earnings of $3.3 million, or $0.10 per diluted share, in the same period last year. Included in the second quarter 2013 results was a non-cash tax expense of $0.32 per share related to the cash repatriation of $30 million and restructuring and other costs of $0.22 per share. Excluding these items, second quarter 2013 adjusted earnings were $0.20 per share compared to adjusted earnings of $0.14 per share in the first quarter 2013 and $0.18 per share in the same period last year.

Second quarter 2013 Components and Sensors segment sales grew $7.3 million, or 7%, from the first quarter 2013. Within this segment, electronic components sales increased $4.8 million, or 15%, and automotive product sales increased $2.5 million, or 4%, from the prior quarter. Sales in EMS decreased $5.3 million, or 10%, primarily on lower demand in defense and aerospace and communications markets.

Second quarter 2013 Components and Sensors segment sales grew $28.6 million, or 37%, from the second quarter 2012. Automotive sales increased $20.4 million, or 43%, year-over-year, primarily due to sales of $13.2 million from the D&R Technology acquisition. Sales of electronic components increased $8.2 million, or 28%. EMS segment sales decreased $31.3 million in the second quarter of 2013 from the same period last year primarily from our decision to exit certain customers last year and declines in defense and aerospace and communications markets.

CTS announced a $16 to $20 million restructuring plan on June 11, with expected annual savings of approximately $8 to $10 million once fully implemented in 2014. The plan is designed to further improve the Company's cost structure and capacity utilization. In the second quarter 2013, CTS recognized $8.1 million, or $0.17 per share, of restructuring and related charges associated with these actions. Anticipated 2013 pretax savings from these second quarter actions are estimated at approximately $1.5 to $2.0 million.

CTS' new order pipeline remains strong with business wins of $116 million in the second quarter, including a $40 million award to supply chassis ride height sensors for several Asian and North American vehicle programs of a major U.S. automotive manufacturer.

Second quarter cash flow from operations improved to $13.7 million compared to a $3.5 million cash usage in the first quarter.

Commenting on second quarter results, Kieran O'Sullivan, CTS CEO, stated, "We improved earnings and have taken steps to simplify our manufacturing footprint while improving operating margins. We are focused on the challenges in our EMS business where we have taken actions to strengthen our sales growth. The management team is progressing with the strategic analysis as we clarify the Company's future identity and vision to maximize shareholder return."

Management is lowering its full-year 2013 sales guidance to a 6% to 8% increase over 2012; compared to our prior range of the low end of 12% to 15%, primarily due to softness at EMS. However we are maintaining 2013 adjusted earnings per share in the range of $0.78 to $0.83 per share, which excludes tax expense on cash repatriation, restructuring and related costs and CEO transition costs.

Conference Call
As previously announced, the Company has scheduled a conference call on Tuesday, July 23, 2013 at 11:00 a.m. EDT. Those interested in participating may dial 800-230-1092 (612-234-9960, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 1:30 p.m. EDT on Tuesday, July 23, 2013 through 11:59 p.m. EDT on Tuesday, July 30, 2013. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 297678. Also, please note that a live audio webcast of the conference call will be available and can be accessed directly from the Web sites of CTS Corporation www.ctscorp.com.

About CTS
CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS." To find out more, visit the CTS Web site at 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 our 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: changes in the economy generally and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition our businesses; rapid technological change; general market conditions in the automotive, communications, and computer industries, as well as conditions in the industrial, defense and aerospace, and medical markets; reliance on key customers; unanticipated natural disasters or other events; the ability to protect our intellectual property; pricing pressures and demand for our products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1.A 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.