CTS Announces Second Quarter Results and Updated Outlook for 2001
ELKHART, Ind.--July 19, 2001--CTS Corporation today announced results for the second quarter of 2001.Second quarter sales were $143.7 million compared to $206.6 million for the second quarter of 2000. Sales for the first half of 2001 were $320.7 million compared to the $411.1 million for the first six months of 2000. Reported results for the second quarter of 2001, including restructuring and related one-time charges, were a net loss of $17.2 million ($0.62 per share) compared to net income of $20.5 million ($0.71 per share) for the second quarter of 2000. For the first half of 2001, a net loss of $15.5 million ($0.56 per share) was recorded compared to net income of $39.7 million ($1.37 per share) for the first six months of 2000.
Excluding restructuring and related one-time charges, a net loss of $2.6 million, or $0.09 per share, was recorded for the second quarter of 2001. The restructuring and related one-time charges amounted to $14.6 million after-tax, or $0.53 per share. Net earnings in the second quarter of 2000 were $20.5 million, or $0.71 per share. For the first six months of 2001, excluding restructuring and related one-time charges, net earnings were $0.7 million, or $0.02 per share. The restructuring and related one-time charges for the first six months were $16.1 million after-tax, or $0.58 per share. During the first six months of 2000, the Company reported net earnings of $39.7 million, or earnings per share of $1.37.
"As we have previously indicated, our approach under the current soft market conditions has been to size our operations appropriately to the current volume levels while at the same time positioning to operate more efficiently when our markets recover. In this regard, the restructuring, consolidation and cost reduction actions we announced in May are well along. The results of these programs are expected to positively affect our results of operations in the second half of the year, with the greatest impact in the fourth quarter," said Joseph P. Walker, Chairman and Chief Executive Officer.
"We do not yet, however, have solid evidence that the second half of the year will bring a substantial recovery in demand levels. While there are indications of a bottoming in market conditions in North America, we see a weakening in Europe and the strength of the dollar as negative influences going forward. As a result, we are planning for third quarter sales being only marginally better than second quarter with seasonal demand providing further improvement in the fourth quarter. On these assumptions, we are planning earnings for the year to be $0.10 to $0.15 per share, excluding restructuring and related one-time charges," added Walker.
"We are more encouraged as we look into 2002 by the continuing relative strength in consumer demand and the continued progress by our customers in reducing excess inventory positions. Although we are not planning for a significant recovery this year, as a result of the realignment of our operations, we expect improvements in market conditions to greatly enhance our profitability in 2002," Walker further added.
General Comments:
| -- | The Company's results of operations for the second quarter of 2001 include a $19.4 million pre-tax charge ($14.6 million after-tax), or $0.53 per share, for restructuring and related one-time charges. |
| -- | Cash flow from operations was $20.3 million in the second quarter and $24.1 million for the first six months; EBITDA, excluding restructuring and related one-time charges, was $12.1 million in the second quarter (8% of sales), and $33.6 million (10% of sales) for the first six months. |
SECOND QUARTER RESULTS - SEGMENT DISCUSSION
(Dollars in millions)
Second Quarter 2001 Second Quarter 2000
------------------- -------------------
Net Operating (a) Net Operating
--- ------------- --- ---------
Sales Earnings/(Loss) Sales Earnings
----- --------------- ----- --------
Electronic
Components $80.6 $(2.0) $135.9 $27.0
Electronic
Assemblies 63.1 1.7 70.7 4.3
Total $143.7 $(0.3) $206.6 $31.3
(a) Excluding restructuring and related one-time charges
Electronic Components: The electronic components segment sales in the second quarter of 2001 decreased $55.3 million, or 41%, from the second quarter of 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 decreased $7.6 million, or 11%, from the second quarter of 2000, primarily as a result of 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 restructuring, 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 is a leading designer and manufacturer of electronic components and assemblies for the communications, computer and automotive markets. The Company manufactures products in North America, Europe and Asia. The Company's stock is traded on the NYSE under the ticker symbol "CTS." To find out more, visit the Company's website at www.ctscorp.com.
Released by: CTS Corporation Telephone (219) 293-7511
905 West Boulevard North FAX (219) 293-6146
Elkhart, IN 46514 www.ctscorp.com
Contact: George T. Newhart, Vice President Investor Relations
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands except per share amounts)
Three Months Ended Six Months Ended
---------------------- ----------------------
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
---------- ---------- ---------- ---------
Net sales $ 143,723 $ 206,611 $ 320,711 $ 411,077
Costs and expenses:
Cost of goods sold 120,845 142,096 257,268 283,736
Selling, general
and administrative
expenses 19,340 24,060 42,714 47,292
Research and
development
expenses 7,488 7,955 17,268 15,822
Amortization of
intangibles 1,724 1,245 3,370 2,290
Restructuring and
impairment charge 14,011 - 14,011 -
---------- ---------- ---------- ---------
Operating earnings
(loss) (19,685) 31,255 (13,920) 61,937
Other expenses (income):
Interest expense 3,233 3,085 6,599 6,267
Other (20) (248) 116 (215)
---------- ---------- ---------- ---------
Total other
expenses 3,213 2,837 6,715 6,052
---------- ---------- ---------- ---------
Earnings (loss)
before income
taxes (22,898) 28,418 (20,635) 55,885
Income tax expense
(benefit) (5,725) 7,957 (5,159) 15,648
---------- ---------- ---------- ---------
Earnings (loss) from
continuing
operations (17,173) 20,461 (15,476) 40,237
Discontinued operations:
Net loss from
discontinued
operations - - - (529)
---------- ---------- ---------- ---------
Net earnings
(loss) $ (17,173) $20,461 $ (15,476) $39,708
---------- ---------- ---------- ---------
Earnings (loss) per share:
Basic:
Continuing
operations ($0.62) $0.74 ($0.56) $1.45
Discontinued
operations - - - (0.02)
--------- ---------- ---------- ---------
Net earnings
(loss) ($0.62) $0.74 ($0.56) $1.43
--------- ---------- ---------- ---------
Diluted:
Continuing
operations ($0.62) $0.71 ($0.56) $1.39
Discontinued
operations - - - (0.02)
--------- ---------- ---------- ---------
Net earnings
(loss) ($0.62) $0.71 ($0.56) $1.37
--------- ---------- ---------- ---------
Cash dividends paid
per share $0.03 $0.03 $0.06 $0.06
Average common shares
outstanding:
Basic 27,697 27,786 27,684 27,771
Diluted 27,697 28,725 27,684 28,888
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
Excluding Restructuring and Related One-Time Charges
(In thousands except per share amounts)
Three Months Ended Six Months Ended
--------------------- ----------------------
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
--------- --------- ---------- ----------
Net sales $ 143,723 $ 206,611 $ 320,711 $ 411,077
Costs and expenses:
Cost of goods sold 115,442 142,096 249,765 283,736
Selling, general
and administrative
expenses 19,340 24,060 42,714 47,292
Research and
development
expenses 7,488 7,955 17,268 15,822
Amortization of
intangibles 1,724 1,245 3,370 2,290
Restructuring and
impairment charge - - - -
--------- --------- --------- ---------
Operating earnings
(loss) excluding
restructuring and
related one-time
charges (271) 31,255 7,594 61,937
Other expenses (income):
Interest expense 3,233 3,085 6,599 6,267
Other (20) (248) 116 (215)
--------- --------- --------- ---------
Total other
expenses 3,213 2,837 6,715 6,052
--------- --------- --------- ---------
Earnings (loss)
before income
taxes excluding
restructuring
and related
one-time
charges (3,484) 28,418 879 55,885
Income tax expense
(benefit) (871) 7,957 220 15,648
--------- --------- --------- ---------
Earnings (loss) from
continuing operations
excluding
restructuring and
related one-time
charges (2,613) 20,461 659 40,237
Discontinued operations:
Net loss from
discontinued
operations - - - (529)
--------- --------- --------- ---------
Net earnings (loss)
excluding
restructuring and
related one-time
charges $ (2,613) $20,461 $ 659 $39,708
--------- --------- --------- ---------
Earnings (loss) per
share excluding
restructuring and
related one-time charges
Basic:
Continuing
operations ($0.09) $0.74 $0.02 $1.45
Discontinued
operations - - - (0.02)
--------- --------- --------- ---------
Net earnings
(loss) ($0.09) $0.74 $0.02 $1.43
--------- --------- --------- ---------
Diluted:
Continuing
operations ($0.09) $0.71 $0.02 $1.39
Discontinued
operations - - - (0.02)
--------- --------- --------- ---------
Net earnings
(loss) ($0.09) $0.71 $0.02 $1.37
--------- --------- --------- ---------
Cash dividends paid
per share $0.03 $0.03 $0.06 $0.06
Average common shares
outstanding:
Basic 27,697 27,786 27,684 27,771
Diluted 27,697 28,725 28,667 28,888