CTS Announces Record Quarterly Results
28 October 1999
CTS Announces Record Quarterly Results
ELKHART, Ind.--Oct. 27, 1999--CTS Corporation announced record quarter results for sales, earnings and earnings per share for the fiscal quarter ended October 3, 1999.CTS' net sales were $180.2 million for the third quarter of 1999, an increase of 115% over the comparable period last year. Third quarter net earnings increased 95% to $15.9 million, or $0.56 a diluted share, compared to $8.2 million, or $0.29 a diluted share, in 1998.
"We are very pleased with our performance this quarter," said Joseph P. Walker, Chairman of the Board, President and Chief Executive Officer of CTS. "Our third quarter results also compare favorably to the record results we posted in the second quarter of 1999, primarily due to wireless and interconnect products," Walker added.
Summaries of third quarter and year-to-date (YTD) financial results are as follows:
(Dollars in millions, except per share amounts)
(Per share amounts adjusted for 2:1 stock split)(a)
Third Quarter
--------------------------------
% Change
1999
1999 1998 from 1998
------- -------- ---------- ---- ---- ---------
Net sales $ 180.2 $ 83.8 115%
Operating earnings $ 25.9 $ 11.5 125%
Earnings from continuing operations $ 15.9 $ 7.8 104%
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Diluted earnings per share:
From continuing operations $ 0.56 $ 0.28 100%
---------------------
EBITDA $ 33.8 $ 15.8 114%
Nine Months YTD (b)
-----------------------------
% Change
1999
1999 1998 from 1998
------- -------- ----------
Net sales $ 478.4 $ 277.1 73%
Operating earnings $ 65.8 $ 35.2 87%
Earnings from continuing operations $ 41.3 $ 24.1 71%
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Diluted earnings per share:
From continuing operations $ 1.44 $ 0.82 76%
---------------------
EBITDA $ 91.0 $ 47.5 92%
(a) All data give effect for the two-for-one stock split on August
12, 1999.
(b) Excludes 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 a diluted share).
Third Quarter Financial and Segment Information
Net sales and operating earnings of CTS' business segments are as
follows:
Third Quarter 1999 Third Quarter 1998
------------------- ------------------
(Dollars in millions) Net Operating Net Operating
Sales Earnings Sales Earnings
------- -------- ------- --------
Electronic Components $ 135.1 $ 20.2 $ 55.5 $ 9.3
Electronic Assemblies 45.1 5.7 28.3 2.2
------- ------- ------- -------
$ 180.2 $ 25.9 $ 83.8 $ 11.5
------- ------- ------- -------
------- ------- ------- -------
Nine Months 1999 Nine Months 1998
------------------- ----------------
(Dollars in millions) Net Operating Net Operating
Sales Earnings Sales Earnings
-------- -------- ------- --------
Electronic Components $ 373.7 $ 59.2 $ 183.0 $ 28.9
Electronic Assemblies 104.7 6.6 94.1 6.3
------- ------- -------- --------
$ 478.4 65.8 $ 277.1 35.2
------- --------
------- --------
One-time, noncash write-off
for acquired in-process
research and development (12.9) --
------- --------
Operating earnings $ 52.9 $ 35.2
------- --------
------- --------
Electronic components' sales increased $79.6 million (144%) in the third quarter of 1999, primarily due to the addition of wireless components through the acquisition of CTS Wireless. Revenue increases were also experienced in automotive, electrocomponent and resistor components. Sales of thermal management components, used primarily in personal computers, decreased in the third quarter due to continued pressures from Asian manufacturers.
Electronic assemblies' sales increased $16.8 million (59%) in the third quarter of 1999, compared to the 1998 third quarter. Sales of interconnect and cursor control assemblies also increased by 59%. The introduction of RF (radio frequency) integrated modules in 1999 also contributed to the revenue increase. This increase more than offset the revenue loss of flex cable assemblies for the disk drive industry.
-- Compared to the second quarter of 1999, the electronic assemblies
segment had significant sales growth (47%) and improved operating
earnings (423%) in the third quarter, principally as a result of
increased sales of interconnect assemblies, as well as the
assembly of RF integrated modules for the wireless market.
Other financial information follows:
Interest bearing debt at October 3, 1999, was $148.8 million versus $56.0 million at December 31, 1998. The reason for the increase in debt is the February 1999 acquisition of CTS Wireless. Interest bearing debt was $168.0 million at the end of the second quarter.
For the nine months ended October 3, 1999, CTS had EBITDA of $91.0 million, almost twice as much as in the corresponding period last year.
Capital expenditures for the third quarter and nine months of 1999 were $7.4 million and $20.0 million, respectively.
CTS estimates that current industry demand for the products of CTS Wireless could add over $255 million of net sales to CTS' 1999 financial results.
"We intend to capitalize on CTS' worldwide manufacturing infrastructure and financial strength, as well as continue to invest in our business, to effectively respond to industry capacity constraints and new product and market opportunities, particularly for telecommunications products," said Joseph P. Walker. "While we cannot be sure that overall product demand will continue at last quarter's levels, we believe that CTS remains on a solid path of sustainable long-term, profitable growth," Walker said.
CTS Corporation designs, manufactures and sells a broad line of electronic components and custom electronic assemblies for OEM customers primarily in the communications equipment, automotive and computer equipment markets worldwide. CTS operates manufacturing facilities in the United States, Canada, Mexico, Scotland, Singapore, Taiwan and China. For additional information on CTS Corporation, visit our website at www.ctscorp.com.
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, such as risks associated with the integration of acquired operations, competitive factors and price pressures, shifts in market demand and general economic conditions, foreign operations and developments and other factors.
CTS Corporation and Subsidiaries
Consolidated Statements of Earnings - Unaudited
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------- --------------------
Oct. 3 Sept. 27 Oct. 3 Sept. 27
1999 1998 1999 (a) 1998
--------- -------- --------- ---------
Net Sales $ 180,203 $ 83,777 $ 478,367 $ 277,111
Costs and expenses:
Cost of goods sold 125,236 57,436 333,527 193,184
Selling, general and
administrative expenses 21,326 11,701 58,787 38,561
Research and development
expenses 6,566 3,022 17,804 9,895
Acquired in-process
research and development -- -- 12,940 --
Amortization of
intangibles 1,147 75 2,448 226
--------- -------- --------- ---------
Operating earnings 25,928 11,543 52,861 35,245
Other expenses (income):
Interest expense 2,856 545 7,077 1,652
Other 298 (167) (1,125) (1,917)
--------- -------- --------- ---------
Total other expenses
(income) 3,154 378 5,952 (265)
--------- -------- --------- ---------
Earnings before income
taxes 22,774 11,165 46,909 35,510
Income tax expense 6,825 3,361 14,307 11,428
--------- -------- --------- ---------
Earnings from continuing
operations 15,949 7,804 32,602 24,082
Discontinued Operations:
Net earnings from
discontinued operations -- 394 -- 2,494
--------- -------- --------- ---------
Net earnings $ 15,949 $ 8,198 $ 32,602 $ 26,576
--------- -------- --------- ---------
--------- -------- --------- ---------
Basic earnings per share:
Continuing operations $ 0.58 $ 0.28 $ 1.19 $ 0.85
Discontinued operations -- 0.02 -- 0.09
--------- -------- --------- ---------
Net earnings $ 0.58 $ 0.30 $ 1.19 $ 0.94
--------- -------- --------- ---------
--------- -------- --------- ---------
Diluted earnings per share:
Continuing operations $ 0.56 $ 0.28 $ 1.14 $ 0.82
Discontinued operations -- 0.01 -- 0.08
--------- -------- --------- ---------
Net earnings $ 0.56 $ 0.29 $ 1.14 $ 0.90
--------- -------- --------- ---------
--------- -------- --------- ---------
Cash dividends
paid per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
--------- -------- --------- ---------
--------- -------- --------- ---------
Average common shares
outstanding:
Basic 27,555 27,338 27,491 28,316
Diluted 28,573 28,404 28,582 29,558
(a) Includes 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 a diluted share).
Note: Per share amounts reflect the effect of the two-for-one stock
split, which was distributed on August 12, 1999.
CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
(In thousands of dollars)
Oct. 3 Dec. 31
1999 1998
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ASSETS
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Current Assets
Cash and marketable securities $ 9,063 $ 16,273
Accounts receivable - net 115,226 47,043
Inventories - net 68,946 33,322
Other current assets 22,141 21,945
---------- ----------
Total current assets 215,376 118,583
Property, Plant and Equipment,
Net 130,378 67,186
Other Assets 129,246 107,420
---------- ----------
Total Assets $ 475,000 $ 293,189
LIABILITIES AND SHAREHOLDERS'
EQUITY
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Current Liabilities
Current maturities of long-term
obligations $ 12,750 $ 14,000
Accounts payable 62,086 17,412
Accrued liabilities 69,858 50,965
---------- ----------
Total current liabilities 144,694 82,377
Long-term Debt 136,050 42,000
Deferred Income Taxes 27,145 27,145
Postretirement Benefits and Other 14,523 17,828
Shareholders' Equity 152,588 123,839
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Total liabilities and
Shareholders' Equity $ 475,000 $ 293,189
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