CTS Corporation Announces Record Quarter and Annual Results
ELKHART, Ind.--Jan. 23, 2001--CTS Corporation today announced record quarter and full-year results for sales, net earnings and earnings per share for the year ended December 31, 2000.
Sales increased 17% for the fourth quarter to $233.4 million compared to $198.7 million in the fourth quarter of last year, while net earnings increased 21% to $22.8 million from $18.9 million a year ago. On a fully diluted basis, earnings per share increased 20% to $0.79 per share from $0.66 last year.
For the full year, revenues increased 28% while net earnings and earnings per share on a fully diluted basis rose 39%. Full-year sales reached a record $866.5 million, compared to 1999 sales of $677.1 million. Net earnings of $83.8 million and earnings per share of $2.92 also established record highs, and compare favorably to the 1999 adjusted net earnings of $60.1 million and $2.10 earnings per share. The 1999 amounts for adjusted net earnings and adjusted earnings per share exclude a one-time, noncash write-off of $8.6 million after-tax, for acquired in-process research and development in the first quarter of 1999.
"Despite forecasted economic slowdown through the first half of 2001 due to sagging consumer confidence and general softness in several industries, we are confident in our ability to continue to grow CTS and build stockholder value long term. We are assuming that the automotive industry will have a soft first half and that the 2001 wireless handset production build will be more seasonal with a small sequential decline in the first quarter and then incremental growth each succeeding quarter. This contrasts to 2000, in which production levels were very high due to component shortages at the end of 1999. We expect the wireless handset market to grow by 25% in 2001. CTS will be introducing several new products in 2001 focused on applications in the wireless handset and data storage markets. These products will be smaller in size and provide more functionality at a cost-efficient price," said Joseph P. Walker, Chairman and Chief Executive Officer.
"As we look to 2001, and the uncertainties in the economy, we are planning on the assumption of top line annual growth in excess of 17% for the full year 2001. We expect the wireless handset and automotive markets will decline in the first quarter but show growth in the subsequent quarters. Based on these assumptions, earnings are expected to follow revenue patterns", commented Mr. Walker. Mr. Walker also stated that CTS remains comfortable with the analyst EPS estimate of $3.38 for 2001.
FINANCIAL SUMMARY
(Dollars in millions, except per share amounts)
Fourth Quarter Full Year
-------------- ---------
% %
2000 1999 Increase 2000 1999(a) Increase
------ ------ --- ------ ------ ---
Net sales $233.4 $198.7 17% $866.5 $677.1 28%
Operating earnings $35.4 $29.9 18% $128.6 $95.7 34%
Net earnings $22.8 $18.9 21% $83.8 $60.1 39%
Diluted earnings
per share $0.79 $0.66 20% $2.92 $2.10 39%
(a) Excludes the effect of a one-time, noncash charge from writing off
acquired in-process research and development in the first quarter
of 1999 ($12.9 million pre-tax, $8.6 million after-tax, or $0.30
per diluted share).
General Comments:
| -- | Due to lower than committed volumes from a major customer during 2000, the Company incurred a substantial under absorption of manufacturing and operating expenses within this component business. The 2000 matter was settled in December and the $4.1 million recovery was recorded in the fourth quarter. |
| -- | EBITDA was $46.2 million in the fourth quarter of 2000 (19.8% of sales) versus $38.6 million in the fourth quarter of 1999 (19.4% of sales). For the full year 2000, EBITDA was $172.4 million (19.9% of sales), compared to $129.6 million (19.1% of sales) last year, excluding the effect of the acquired in-process research and development write-off in 1999. |
| -- | Interest-bearing debt at December 31, 2000, was $188 million versus $167 million at December 31, 1999. This increase was driven by capital spending during 2000 of $112 million, which included $81 million for new products and technologies and capacity expansion. Significant expenditures ($31 million) were devoted to land/building projects in Asia and the U.S. |
FOURTH QUARTER AND ANNUAL RESULTS - SEGMENT DISCUSSION
(Dollars in millions)
Fourth Quarter 2000 Fourth Quarter 1999
------------------- -------------------
Net Operating Net Operating
Sales Earnings Sales Earnings
------ ------ ------ ------
Electronic Components $134.0 $24.8 $133.7 $21.8
Electronic Assemblies 99.4 10.6 65.0 8.1
------ ------ ------ ------
Total Reportable
Segments $233.4 $35.4 $198.7 $29.9
------ ------ ------ ------
------ ------ ------ ------
Twelve Months 2000 Twelve Months 1999
------------------- ------------------
Net Operating Net Operating
Sales Earnings Sales Earnings
------ ------ ------ ------
Electronic Components $536.7 $98.1 $507.4 $81.0
Electronic Assemblies 329.8 30.5 169.7 14.7
------ ------ ------ -----
Total Reportable
Segments $866.5 $128.6 $677.1 $95.7
------ ------ ------ -----
------ ------ ------ -----
One-time, noncash
write-off for acquired
In-process research
and development (12.9)
------
Operating earnings $82.8
------
------
Electronic Components: Segment revenue remained flat compared to last year's fourth quarter. Improvement in revenue ($6.2 million or 5%) was realized over the third quarter of 2000, primarily in the wireless handset products, driven by the improving ship schedules which began to materialize last September. This segment is expected to benefit in 2001 by the introduction of many new products targeted at the wireless handset, data storage, and automotive industries.
Electronic Assemblies: The electronic assemblies segment experienced record sales and earnings results with a fourth quarter 2000 sales increase of $34.4 million, or 53% over 1999. As has been the pattern in recent quarters, strong demand continued in the fourth quarter for electronic assemblies, particularly for interconnect boxbuild products. CTS launched a new interconnect boxbuild product line in China in the second quarter of 2000. This new capability in Asia is currently ramping up and contributing to the strong sales growth being experienced in this segment.
The Company's plans, estimates and beliefs concerning the future contained in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those reflected herein due to a variety of factors that could affect the Company's operating results, liquidity and financial condition. We have based these forward-looking statements on our current expectations and projections about future events. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could impact future results include the Company's ability to successfully integrate acquired operations; results of our investments in technology, including our ability to timely develop and achieve market acceptance of new products, and to protect our intellectual property; the Company's ability to attract and retain talented employees, including senior management; our ability to manage administrative, technical and operational issues presented by our expansion plans; the loss and inability to replace the revenues generated by one or more of our large OEM customers; the Company's sensitivity to general economic conditions and events that affect the automotive, computer equipment and communications industries; continuing growth of the wireless communications market and the Company's participation in that growth; the impact of changes in commodity, including precious metals, prices; the pace at which competitors enter the Company's markets and competitive responses of other companies, including the Company's customers, in such markets; product pricing pressures and demand for the Company's products, especially if economic conditions worsen in the automotive, computer equipment and/or communications markets; and risks associated with our international operations and expansion into developing and new markets, including trade and tariff barriers, exchange rates and political risks. Investors are directed to examine the Company's SEC filings, which more fully describe the risks and uncertainties associated with the Company's business.
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands except per share amounts)
Three Months Ended Twelve Months Ended
--------------------- ---------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999(b)
--------- --------- --------- ---------
Net sales $ 233,394 $ 198,709 $ 866,523 $ 677,076
Costs and expenses:
Cost of goods sold 162,568 138,016 605,598 471,543
Selling, general
and administrative
expenses 25,493 22,079 94,501 80,866
Research and
development expenses 8,524 7,544 32,583 25,348
Acquired in-process
research and
development -- -- -- 12,940
Amortization of
intangibles 1,408 1,135 5,211 3,583
--------- --------- --------- ---------
Operating earnings 35,401 29,935 128,630 82,796
Other expenses (income):
Interest expense 3,623 2,867 13,050 9,944
Other 141 (78) (1,547) (1,203)
--------- --------- --------- ---------
Total other expenses 3,764 2,789 11,503 8,741
--------- --------- --------- ---------
Earnings before
income taxes 31,637 27,146 117,127 74,055
Income tax expense 8,858 8,280 32,796 22,587
--------- --------- --------- ---------
Earnings from
continuing operations 22,779 18,866 84,331 51,468
Discontinued operations:
Net loss from
discontinued operations -- -- (529) --
--------- --------- --------- ---------
Net earnings $ 22,779 $ 18,866 $ 83,802 $ 51,468
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (loss) per share:
Basic:
Continuing operations $ 0.83 $ 0.68 $ 3.05 $ 1.87
Discontinued operations -- -- (0.02) --
--------- --------- --------- ---------
Net earnings $ 0.83 $ 0.68 $ 3.03 $ 1.87
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted:
Continuing operations $ 0.79 $ 0.66 $ 2.94 $ 1.80
Discontinued
operations -- -- (0.02) --
--------- --------- --------- ---------
Net earnings $ 0.79 $ 0.66 $ 2.92 $ 1.80
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash dividends
paid per share $ 0.03 $ 0.03 $ 0.12 $ 0.12
Average common
shares outstanding:
Basic 27,621 27,518 27,623 27,498
Diluted 28,781 28,384 28,675 28,589
(b) 1999 earnings include the effect of a one-time, noncash write-off
for acquired in-process research and development related to the
acquisition of CTS Wireless in the first quarter of 1999 ($12.9
million pre-tax, $8.6 million after-tax, or $0.30 per diluted
share).