CTS Announces First Quarter Results
ELKHART, Ind.--April 18, 2001--CTS Corporation today announced quarterly results for sales, net earnings and earnings per share for the first quarter 2001.First quarter sales were $177.0 million compared to $204.5 million in the first quarter of last year. Excluding severance expense of $1.6 million, adjusted net earnings were $3.3 million or $0.11 per share. This compares to reported net earnings of $19.2 million or $0.66 per share a year ago. Including the charge for severance, reported net earnings were $1.7 million and the reported diluted earnings per share were $0.06 in the first quarter of this year.
"As we reported several weeks ago, the slowdown in inventory build and capital and consumer spending adversely affected us," said Joseph P. Walker, Chairman and Chief Executive Officer. "While we expect the inventory adjustment process to generally balance out over the course of the second quarter, absent a sudden reversal, we don't expect significant year-over-year revenue growth in the short and intermediate terms."
"In this context, we will seek revenue growth through new product introductions, such as our ClearONE(TM) device (ball grid array resistor network for disk storage systems, workstations and servers), automotive seat occupancy sensors, our new temperature compensated crystal oscillators used in handset and PDA applications, and increased customer penetration. At the same time, we have taken and will continue to take steps to substantially reduce our cost structure, including a 19% headcount reduction implemented in the first quarter, which we expect to generate after-tax payroll savings of $24 million annually. We will also be taking other cost-saving measures going forward. As a result, we presently expect our results of operations to improve as the year progresses assuming no further erosion in our key markets. Based on our actions, and the inventory and market assumptions we have discussed, our revised outlook for earnings is achievable, most likely at the $2.10 EPS end of the range and before any one-time charges," Walker said.
"Despite the sudden downturn in the first part of this year, the positive fundamental factors in our key businesses, including demographics, relatively low capital costs, globalization and rapid technological evolution, remain unchanged. As such, we remain optimistic over the longer term," Walker added.
FINANCIAL SUMMARY
(Dollars in millions, except per share amounts)
First Quarter
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2001 2000
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Net sales $ 177.0 $ 204.5
Operating earnings before
severance expense $ 7.9 $ 30.7
Operating earnings $ 5.8 $ 30.7
Earnings before severance expense $ 3.3 $ 19.2
Net earnings $ 1.7 $ 19.2
Diluted earnings per share before
severance expense $ 0.11 $ 0.66
Diluted earnings per share $ 0.06 $ 0.66
General Comments:
| -- | The Company's results of operations for the first quarter of 2001 include a $1.6 million severance charge ($2.1 million pretax), or $0.05 per diluted share. |
| -- | Cash flow from operations was $3.8 million; EBITDA was $19.4 million in the first quarter (11% of sales). |
| -- | Long-term bank debt at April 1, 2001 was $209.5 million versus $188.0 million at December 31, 2000. The increase was primarily for capital spending for new products and Asian facilities. |
| -- | The effective tax rate was 25% versus the 28% in the prior year, reflecting a higher proportion of the Company's income being earned in low-tax jurisdictions. |
FIRST QUARTER RESULTS - SEGMENT DISCUSSION
(Dollars in millions)
First Quarter 2001 First Quarter 2000
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Net Operating Net Operating
Sales Earnings Sales Earnings
----- -------- ----- --------
Electronic Components $99.9 $4.4 $139.1 $24.2
Electronic Assemblies 77.1 1.4 65.4 6.5
---- --- ---- ---
Total $177.0 $5.8 $204.5 $30.7
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Electronic Components: The electronic components segment sales in the first quarter 2001 decreased $39.2 million, or 28%, from the first quarter 2000, primarily as a result of the softness in the demand for wireless and other components. Segment operating earnings were adversely affected by the sales declines.
Electronic Assemblies: The electronic assemblies segment sales increased $11.7 million or 18% from the first quarter 2000, primarily as a result of strong demand for integrated interconnect systems products, partially offset by a decline in the RF integrated modules used in wireless handsets. Operating earnings were unfavorably impacted by the lower sales volume in the RF integrated modules.
Statements about the Company's earnings outlook and its plans, estimates and beliefs concerning the future are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, based on the Company's current expectations. Actual results may differ materially from those stated in the forward-looking statements due to a variety of factors which could affect the Company's operating results, liquidity and financial condition. We undertake no obligations to publicly update or revise any forward-looking statements. Factors that could impact future results include among others: the impact of the ongoing slowdown in the overall economy; the Company's successful execution of its consolidation and cost reduction plans; pricing pressures and demand for the Company's products, especially if economic conditions worsen or do not recover in the key markets for the Company's products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political risks. Investors are encouraged 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
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April 1, April 2,
2001 2000
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Net sales $ 176,988 $ 204,466
Costs and expenses:
Cost of goods sold 136,423 141,640
Selling, general and administrative
expenses 23,374 23,232
Research and development expenses 9,780 7,867
Amortization of intangibles 1,646 1,045
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Operating earnings 5,765 30,682
Other expenses:
Interest expense 3,366 3,182
Other 136 33
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Total other expenses 3,502 3,215
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Earnings before income taxes 2,263 27,467
Income tax expense 566 7,691
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Earnings from continuing operations 1,697 19,776
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Discontinued Operations:
Net loss from discontinued
operations -- (529)
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Net earnings $ 1,697 $ 19,247
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Earnings (loss) per share:
Basic:
Continuing operations $ 0.06 $ 0.71
Discontinued operations -- (0.02)
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Net earnings $ 0.06 $ 0.69
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Diluted:
Continuing operations $ 0.06 $ 0.68
Discontinued operations -- (0.02)
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Net earnings $ 0.06 $ 0.66
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Cash dividends paid per share $ 0.03 $ 0.03
Average common shares outstanding:
Basic 27,671 27,730
Diluted 28,750 29,027