CTS Reports Better Than Expected First Quarter Results
ELKHART, Ind.--April 23, 2002--CTS Corporation today reported a net loss of $1.9 million, or $0.06 per share, in the first quarter of 2002, compared to net income of $1.7 million, or $0.06 per share, in the first quarter of 2001. The first quarter results were better than the analysts' consensus of $0.14 per share loss.First quarter sales were $112.6 million compared to $177.0 million in the first quarter of last year. The lower sales were primarily a result of the sharp downturn in overall demand for components and assemblies in the communications and computer markets. Operating earnings were $0.2 million for the first quarter, compared to $5.8 million in the same quarter last year.
"While sales for the quarter were slightly softer than we anticipated, order patterns showed some signs of strengthening by the end of the quarter. March bookings were the best in six months and backlog grew during the quarter," commented Donald K. Schwanz, CTS Chairman and Chief Executive Officer. "During the quarter, we continued our focus on improving operational efficiency and cash flow, and took specific steps to strengthen our balance sheet by substantially reducing our debt levels," added Schwanz.
General Comments:
| -- | Total debt decreased by $32.4 million during the quarter to $120.1 million, as a result of equity transactions totaling $31.6 million. |
| -- | New customer orders at $120.5 million generated a book-to-bill ratio of 1.07 for the first quarter, representing the best such statistic since the second quarter of 2000. |
| -- | EBITDA was $11.5 million in the first quarter (10% of sales). |
| -- | A customer reimbursement of $3.1 million for expenses substantially incurred in prior quarters was included as a reduction to cost of goods sold for the quarter. |
| -- | During the first quarter, inventories decreased by $6.4 million and cash flow from operations was a positive $0.7 million. Total working capital, as a percent of sales, was 13.4% versus 14.3% in the first quarter of 2001. |
| -- | Capital expenditures were $4.7 million, primarily for new product requirements, compared to $32.1 million in the 2001 first quarter. |
FIRST QUARTER RESULTS - SEGMENT INFORMATION (Dollars in millions)
First Quarter 2002 First Quarter 2001
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Net Operating Net Operating
Sales Earnings/(Loss)(a) Sales Earnings(a)
----- ------------------ ----- -----------
Electronic Components $58.2 $(3.3) $99.9 $4.4
Electronic Assemblies 54.4 3.5 77.1 1.4
---- --- ---- ---
Total $112.6 $0.2 $177.0 $5.8
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(a) Includes restructuring-related charges of $0.8 million and $2.1
million in 2002 and 2001, respectively.
Electronic Components: The electronic components segment sales in the first quarter 2002 decreased $41.7 million, or 42%, from the first quarter 2001, primarily as a result of the softness in the demand for wireless handset and infrastructure components. The lower volume offset the benefit of the ongoing cost reduction programs. Particular strength was realized during the quarter in the automotive sensor products, as sales and operating earnings increased from the fourth quarter of 2001.
Electronic Assemblies: The electronic assemblies segment sales decreased $22.7 million, or 29%, from the first quarter 2001, primarily as a result of lower demand for integrated interconnect systems products for the data storage systems equipment market. Operating earnings, in spite of the lower volume, were substantially improved by cost reduction programs.
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 general market conditions in the communications, computer and automotive markets, and in the overall economy; whether the Company is able to implement measures to improve its financial condition and flexibility; 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. Worldwide sales coverage is accomplished through a network of direct sales personnel, independent manufacturers' representatives and electronic distributors. 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.
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
(In thousands except per share amounts)
Three Months Ended
----------------------
March 31, April 1,
2002 2001
---------- ----------
Net sales $ 112,593 $ 176,988
Costs and expenses:
Cost of goods sold 89,915 136,423
Selling, general and administrative expenses 15,317 25,020
Research and development expenses 7,133 9,780
---------- ----------
Operating earnings 228 5,765
Other expenses:
Interest expense 2,670 3,366
Other 92 136
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Total other expenses 2,762 3,502
---------- ----------
Earnings (loss) before income taxes (2,534) 2,263
Income tax expense (benefit) (633) 566
---------- ----------
Net earnings (loss) $ (1,901) $ 1,697
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Earnings (loss) per share:
Basic $ (0.06) $ 0.06
========== ==========
Diluted $ (0.06) $ 0.06
========== ==========
Cash dividends paid per share $ 0.03 $ 0.03
Average common shares outstanding:
Basic 31,802 27,671
Diluted 31,802 28,750
CTS Corporation
Condensed Consolidated Balance Sheets - Unaudited
March 31, December 31,
2002 2001(b)
----------- -----------
(Unaudited)
Current Assets $ 187,409 $ 200,674
Property, Plant & Equipment, net 186,382 191,958
Other Assets 177,015 175,299
----------- -----------
Total Assets $ 550,806 $ 567,931
=========== ===========
Current Liabilities $ 126,953 $ 153,857
Long-term Obligations 113,364 132,287
Deferred Income Taxes 39,461 38,914
Shareholders' Equity 271,028 242,873
----------- -----------
Total Liabilities and
Shareholders' Equity $ 550,806 $ 567,931
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(b) The balance sheet at December 31, 2001 has been derived from the
audited financial statements at that date.