CTS Reports Improved Second Quarter Results
ELKHART, Ind.--CTS Corporation today announced improved second quarter results, with revenue up from the first quarter.On revenues of $117.7 million, up 4.6% from the first quarter, the Company reported a loss per share of $0.08, including pretax $0.4 million of restructuring-related charges. This compares to first quarter revenue of $112.6 million and a $0.06 loss per share. First quarter results included a pretax $3.1 million customer reimbursement that had a favorable impact of $0.07 per share. The second quarter performance also compares favorably to last year's second quarter when the Company reported a loss per share of $0.09, excluding restructuring and related one-time charges, on revenue of $143.7 million.
"We are beginning to see the impact of our prior cost reduction and restructuring actions. Net earnings in the most recent second quarter improved by $0.2 million on 18% less revenue, compared to the second quarter of last year, after adjusting for the restructuring and one-time charges," commented Donald K. Schwanz, CTS Chairman and Chief Executive Officer. "Revenues also showed quarter-over-quarter growth for the first time since the end of 2000, a sign of increased stability in our markets. We continue to execute against our cost reduction and restructuring plans to drive further bottom line improvement going forward and expect to return to profitability by the end of the year," added Schwanz.
General Comments:
| -- | EBITDA excluding restructuring-related, one-time charges, was $10.5 million, or 9% of sales, for the second quarter. |
| -- | Gross margin, excluding restructuring-related, one-time charges and the $3.1 million first quarter 2002 customer reimbursement, sequentially improved by 0.2 percentage point in the second quarter, after improving by 0.9 percentage point in the first quarter. |
| -- | Total debt remained at the $120 million level, down $109.0 million from this time last year, and down $32.5 million from 2001 year end. |
| -- | The debt to capitalization ratio declined to 30% at the end of the second quarter, compared to 50% at the end of the second quarter of 2001, and 39% at year-end 2001. |
| -- | Accounts receivable decreased by $6.7 million on the higher sales during the quarter, |
| -- | Capital expenditures were $3.3 million during the second quarter, primarily for equipment needed for new products. This compares to $24.1 million in the second quarter of 2001, and $4.7 million in the first quarter of this year. |
SECOND QUARTER RESULTS - SEGMENT INFORMATION
(Dollars in millions)
Second Quarter 2002 Second Quarter 2001
----------------- ---------------------
Operating Operating
Net Earnings/ Net Earnings/
Sales (Loss)(a) Sales (Loss)(b)
----- ------------- ----- ----------
Electronic Components $65.9 $(3.9) $80.6 $(2.0)
Electronic Assemblies 51.8 2.8 63.1 1.7
---- --- ---- ---
Total $117.7 $(1.1) $143.7 $(0.3)
====== ====== ====== ======
(a) Excludes restructuring-related charges of $0.4 million
(b) Excludes restructuring-related charges of $19.4 million.
Electronic Components: The electronic components segment sales decreased by $14.7 million or 18% from the second quarter of 2001, primarily as a result of the lower demand for wireless handset and infrastructure components. The lower volume drove the lower earnings level. However, the second quarter sales improved from the first quarter of this year by $7.7 million across all product lines, bringing associated earnings improvement.
Electronic Assemblies: The electronic assemblies segment sales decreased $11.3 million from the second quarter of 2001, primarily as a result of lower demand for integrated interconnect systems products for the data storage systems equipment market. Overall profitability improved due to ongoing cost reduction efforts. Segment sales and earnings were slightly below the first quarter of 2002, primarily due to timing changes in customer ordering and shipping schedules.
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 LOSS - UNAUDITED
(In thousands except per share amounts)
Three Months Ended Six Months Ended
---------------------- ---------------------
June 30, July 1, June 30, July 1,
2002 2001 2002 2001
----------- ---------- ---------- ----------
Net sales $ 117,725 $ 143,723 $ 230,318 $ 320,711
Costs and expenses:
Cost of goods sold,
excluding one-time
charges 96,216 115,442 185,349 249,765
Cost of goods sold,
one-time charges 400 5,403 1,182 7,503
Selling, general and
administrative expenses 16,563 21,064 31,880 46,084
Research and development
expenses 6,021 7,488 13,154 17,268
Restructuring and
impairment charges -- 14,011 -- 14,011
--------- --------- --------- ---------
Operating loss (1,475) (19,685) (1,247) (13,920)
Other expenses (income):
Interest expense 2,882 3,233 5,552 6,599
Other (792) (20) (700) 116
--------- --------- --------- ---------
Total other expenses 2,090 3,213 4,852 6,715
--------- --------- --------- ---------
Loss before income taxes (3,565) (22,898) (6,099) (20,635)
Income tax benefit (892) (5,725) (1,525) (5,159)
--------- --------- --------- ---------
Net loss $ (2,673) $ (17,173) $ (4,574) $ (15,476)
--------- --------- --------- ---------
Net loss per share:
Basic $ (0.08) $ (0.62) $ (0.14) $ (0.56)
--------- --------- --------- ---------
Diluted $ (0.08) $ (0.62) $ (0.14) $ (0.56)
--------- --------- --------- ---------
Cash dividends paid
per share $ 0.03 $ 0.03 $ 0.06 $ 0.06
Average common shares outstanding:
Basic 33,300 27,697 32,556 27,684
Diluted 33,300 27,697 32,556 27,684
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
Excluding Restructuring and Related One-Time Charges
(In thousands except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
June 30, July 1, June 30, July 1,
2002 2001 2002 2001
----------- ---------- ---------- ----------
Net sales $ 117,725 $ 143,723 $ 230,318 $ 320,711
Costs and expenses:
Cost of goods sold,
excluding one-time
charges 96,216 115,442 185,349 249,765
Cost of goods sold, one
time charges -- -- -- --
Selling, general and
administrative expenses 16,563 21,064 31,880 46,084
Research and development
expenses 6,021 7,488 13,154 17,268
Restructuring and
impairment charges -- -- -- --
--------- --------- --------- ---------
Operating earnings (loss)
excluding restructuring
and related one-time
charges (1,075) (271) (65) 7,594
Other expenses (income):
Interest expense 2,882 3,233 5,552 6,599
Other (792) (20) (700) 116
--------- --------- --------- ---------
Total other expenses 2,090 3,213 4,852 6,715
--------- --------- --------- ---------
Earnings (loss) before
income taxes excluding
restructuring and
related one-time charges (3,165) (3,484) (4,917) 879
Income tax expense (benefit) (792) (871) (1,230) 220
--------- --------- --------- ---------
Net earnings (loss)
excluding restructuring
and related one-time charges$ (2,373) $ (2,613) $ (3,687) $ 659
--------- --------- --------- ---------
Net earning (loss) per share excluding
restructuring and related
one-time charges:
Basic $ (0.07) $ (0.09) $ (0.11) $ 0.02
--------- --------- --------- ---------
Diluted $ (0.07) $ (0.09) $ (0.11) $ 0.02
--------- --------- --------- ---------
Cash dividends paid per
share $ 0.03 $ 0.03 $ 0.06 $ 0.06
Average common shares outstanding:
Basic 33,300 27,697 32,556 27,684
Diluted 33,300 27,697 32,556 28,667
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Amounts in thousands)
June December
30, 2002 31,2001 (c)
------------- -------------
Current assets $ 189,225 $ 200,674
Property, plant & equipment, net 178,941 191,958
Other assets 178,825 175,299
-------------- -------------
Total assets $ 546,991 $ 567,931
============== =============
Current liabilities $ 104,279 $ 153,857
Long-term obligations 127,136 132,287
Deferred income taxes 39,606 38,914
Shareholders' equity 275,970 242,873
-------------- -------------
Total liabilities and
shareholders' equity $ 546,991 $ 567,931
============== =============
(c) The balance sheet at December 31, 2001 has been derived from
the audited financial statements at that date.