0000026058false00000260582024-02-062024-02-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): February 06, 2024 |
CTS CORPORATION
(Exact name of Registrant as Specified in Its Charter)
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Indiana |
1-4639 |
35-0225010 |
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
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4925 Indiana Avenue |
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Lisle, Illinois |
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60532 |
(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s Telephone Number, Including Area Code: (630) 577-8800 |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
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Name of each exchange on which registered
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Common Stock, no par value |
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CTS |
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The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
The investor presentation included as Exhibit 99.1 to this Current Report on Form 8-K may be presented by CTS Corporation (the “Company”) at meetings with investors, analysts, and others, in whole or in part and possibly with modifications, during the fiscal year ended December 31, 2024.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.
The information contained in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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CTS CORPORATION |
Date: |
February 6, 2024 |
By: |
/s/ Thomas M. White |
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Thomas M. White
Corporate Controller |
CTS Investor Presentation February 2024
Forward-Looking Statements This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. Forward-looking statements are based on management’s expectations, certain assumptions, and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties, and other factors, which could cause CTS’ actual results, performance, or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition); the amount and timing of any share repurchases; and the effect of any cybersecurity incidents on our business. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.
LTM Adj. EBITDA Margin 22% LTM Adj. EPS $2.22 8% Non-Transportation Revenue CAGR LTM Revenue $550 million Global design and manufacturing capabilities Technical and application expertise applied across diverse and growing end markets Notes: 1 Last 12 months Revenue as of December 2023 2 Adj. EBITDA Margin and Adj. EPS are non-GAAP financial measures. Refer to the Appendix for reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. 3 2018-2023 including acquisitions Europe 22% North America 53% Asia 25% Sales/Technical Office Manufacturing Facility Aero & Defense Medical Industrial Transportation 3 2 1 CTS is a Leading Designer and Manufacturer of Custom Engineered Solutions that Sense, Connect and Move - Enabling an Intelligent and Seamless World 1 Non-Transportation 45% Revenue1 2
CTS Positioned to Deliver 10% Organic and Inorganic Growth Deep custom engineered capability and long-standing customer relationships Megatrend tailwinds – automation, healthcare innovation and electrification Strong new product pipeline – eBrakeTM, textured piezo, medical applications Organic Growth 300-600 bps > GDP Clear strategy of growth and diversification led by non-transportation end markets Transportation acquisition focus on EV technology capability Strong balance sheet and cash flow to support M&A strategy Strategic M&A focused on Value Creation Regional capabilities to serve customers reducing cross-border challenges Strong leadership team leveraging operational excellence to drive profitable growth Strengthening and aligning organizational capabilities through Focus 2025 initiative Global Footprint, Strong Execution Track Record
Automation Healthcare Innovation Industry 4.0 Factory Automation Passenger Safety Defense Automation Improved Diagnostics Minimally Invasive Therapeutics Patient Experience Secular Themes Drive Growth Across End Markets Applying deep domain expertise to solve today’s most pressing challenges Sustainability Electrification Reduced Emissions Energy Efficiency Fluid Metering
Deep Technical Expertise Provides a Sustainable Advantage Piezoelectric Ceramic Bulk Tapecast Single Crystal Textured Imaging: Medical, Defense Medical Therapeutics Micro-actuation Position Sensing Temperature Sensing Capabilities Key Technologies Applications Signal Processing Hall Effect Inductive Force NTC Thermistors RF Filters EMI/EMC Crystal Oscillators Vehicle Controls Pro Audio / Video Medical Devices HVAC-R Medical Devices Condition Monitoring Aerospace and Defense Communications Infrastructure Current Sensing Ferromagnetics Circuit Design Core and busbar Electric Vehicles Renewable Energy Industrial Magnetics Advanced Ceramics
2017 Revenues $423M Long-term target +10% CAGR Utilizing core capabilities and domain expertise in fast-growing end markets Investing in business development resources, process and technology capabilities Disciplined capital investments to support diversification strategy < 50% 5-15% 10-20% 20-30% 2023 Revenues $550M 1 Diversifying Revenue in Growing End Markets Outside of Transportation Notes: 1 Beginning in 2022, sales to Telecom & IT end-market are included in the Industrial end-market. Non-transportation revenue is up from 35% to 45% with a goal of >50%
Addressable Market Size: $2.9B LTM Revenue:1 $129M (24)% YOY Industrial Estimated Market Growth: Mid-single Digit Efficiency Material Expertise Up integration into sensors and transducers Drivers of Outperformance: INDUSTRIAL Enabling Efficiency and Automation in Industrial Markets Tailwinds from Sustainability and Efficiency-focused Macrotrends Sustainability Stratified Air (HVAC) Productivity Micro-positioning (Automation) Actuation (Industrial Printing) Accuracy (Metering) 1 LTM through December 2023.
Intravenous Ultrasound High Resolution Ultrasound Drug Delivery Cardiac Rhythm (Wireless Pacemaker) Highly Precise Minimally Invasive MEDICAL Unlocking Important Innovation in Medical Markets Utilizing Technology to Enhance Patient Care and Experience Addressable Market Size: $1.5B LTM Revenue:1 $68M +6% YOY Estimated Market Growth: Mid-single Digit Strong growth in ultrasound modality Superior material performance enables share gains Drivers of Outperformance: 1 LTM through December 2023.
Enhanced Performance Underwater Sonar Reliability Space Temperature Applications Vibration Monitoring Radar AEROSPACE & DEFENSE Ensuring Performance and Reliability in Aerospace and Defense Higher Performance and Reliability in Mission Critical Harsh Environments Addressable Market Size: $0.7B LTM Revenue:1 $51M +7% YOY Estimated Market Growth: Mid-single Digit Increase in defense spending EU market expansion opportunities Drivers of Outperformance: 1 LTM through December 2023.
Electrification Creating Growth Opportunity in Transportation 11 TRANSPORTATION Light Vehicle Content Grows > 2x with EV Applications Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor 95% of existing light vehicle portfolio transitions to EVs New products expand future content per vehicle1 AC Motor Current Sensor AC Motor Position Sensor eBrake™ Drive-Pad ™ First Award Secured Secured Awards Development Award Won In Development 1 Multiple patent applications pending on eBrake TM and Drive-Pad TM products Won first awards for eBrake™ and Accelerometer Won development award for Motor Position Sensor Addressable Market Size: $2.7B LTM Revenue:1 $301M (1)% YOY Estimated Market Growth: Mid-single Digit Increase in defense spending EU market expansion opportunities Drivers of Outperformance: 1 LTM through December 2023.
Improved Operational Efficiency Adj. Gross Margin +472 bps1 Adj. SG&A (488) bps1 Enhanced process improvement capability, business intelligence Strengthened Balance Sheet 74% operating cashflow2 106% free cash flow3 $190 million returned to shareholders4 Solid acquisition capacity Strategic Investments For Growth Enhanced front-end selling and marketing capabilities, tools Continued R&D investments for organic growth 8 acquisitions since 2013 Strong Execution Capabilities Notes: 1. Full Year 2023 compared to full year 2012 for Adjusted Gross Margin and Adjusted SG&A. 2 Full year 2023 operating cash flow as % of Adjusted EBITDA. 3 Full year 2023 free cash flow as % of Adjusted Net Earnings. Free Cash Flow is a non-GAAP financial measure. Refer to Appendix for the reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. 4 Cumulative from 2013 to Q4 2023 through dividends & share repurchases.
Cash Returned to Shareholders Dividend & Repurchases 20-40% of FCF Capital Structure Leverage 1.0 – 2.5x Operating Cash Flow 15-17% of Sales Growth Capex ~4% of Sales Acquisitions 60-80% of FCF Capital Allocation Priorities Maintain healthy Balance Sheet Disciplined organic investments Growth resources and tools IT systems – ERP, analytics capabilities CTS OS – Operational improvements Strategic M&A – a growth priority Return capital to shareholders Capital Allocation Framework $190 million in cash returned to shareholders since 2013
Strategic Approach to M&A Strengthen Customer Relationships Geographical Expansion Enhance Technology Portfolio Attractive Financials Expand End Markets Expand Product & Applications ~ 5% of Sales Growth From M&A Disciplined approach to acquisitions ROI in excess of cost of capital Maintain balance sheet strength Synergistic opportunities Accretive to earnings
Strategic Acquisitions Fueling Diversification – M&A as a Catalyst Single Crystal Technology 2016 2017 Tape Cast Technology Bulk Technology Pre 2016 2022 Medical Therapeutics Europe Defense Growing Piezoceramic Platform Current Enhancing Piezoceramic Technology and Geographic Reach Building a Strong Global Temperature Sensing Platform 2020 Medical Applications Industrial Applications 2019 Industrial + Medical Europe Expansion 2022 Growing Temperature Platform Current 45%1 of sales from Non-Transportation end markets … +1030 bps vs. 2017 1 Last 12 months Revenue as of December 2023
$2.35 $2.10 Notes: 1 CAGR based on mid point of 2024 guidance 2 Adjusted Diluted EPS is a non-GAAP financial measure. Refer to the Appendix for reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. FY 2024 Guidance Revenue ($ Millions) Adjusted Diluted EPS 2 $530 $570 2020-2024 CAGR 7% 1 Stable medical & aerospace/defense end markets Softness in industrial and distribution end market expected to continue into 1st half of 2024 Softness in commercial vehicle related sales in 2024 Light vehicle market 2024 forecasts - NA 15.5-16M, China 28M, Europe 17M units, predicted slightly below 2023 Tax rate expected in the range of 20-23% excluding discrete items Key Outlook Assumptions 2020-2024 CAGR 19% 1
20121 LTM2 Long-Term Target Revenue $304M $550M +10% per year Adj Gross Margin %3 30.1% 34.8% 35-38% Adj SG&A Expense %3 19.4% 14.5% 13-15% R&D Expense % 6.9% 4.5% 5-7% CapEx % 4.4% 2.7% ~4% 2 Financial Framework 1 1 2012 Financials from Continuing Operations. 2 LTM through December 2023. 3 Adj. Gross Margin and Adj. SG&A Expense are non-GAAP financial measures. Refer to the Appendix for reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Notes:
Published inaugural ESG Report highlighting ESG progress Continued advancing our goal of deriving more than 25% of sales of components for light vehicles from electrified platforms. 40 new wins for electrified vehicle platforms in 2023 Employees devoted over 5,539 hours to community service events and projects in 2023 through our CTS Cares Platform. Creating long-term value for stakeholders and communities eBrake™ AC Motor Current Sensor AC Motor Position Sensor Drive-Pad ™ ESG Initiatives Multiple patent applications pending on eBrakeTM and Drive-PadTM products
Appendix
01 02 03 Develop customer partnerships that are authentic and collaborative, resulting in mutually beneficial revenue growth Deeper Customer Relationships Build a culture of continuous improvement through the development of CTS Operation Systems and process improvement mindset Improved Operating Systems Improve revenue growth through strategic plan execution, M&A and active portfolio management Profitable Growth 04 Foster a culture aligned with our vision and values, Build leadership capabilities Organization Target 10% Revenue CAGR with 23% Adjusted EBITDA Focus 2025
Play to Win Responsiveness Simplicity Solution Oriented CTS Core Values
Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items. CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) restructuring-related charges; (3) environmental charges; (4) acquisition-related costs; (5) inventory fair value step-up costs; (6) foreign exchange (gains) losses; (7) non-cash pension expenses (income); and (8) certain discrete tax items are useful and assist in comparing CTS’ current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures. Restructuring charges – costs primarily relating to workforce reduction costs, building and equipment relocation costs, asset impairment charges and other facility closure costs in connection with our continued optimization of our organization. Restructuring-related charges – costs related to restructuring actions that do not qualify as direct restructuring charges under US GAAP. These include duplicative expenses incurred due to the plant consolidation related transition activities such as excess rent, utilities, personnel related and other costs prior to start of production at the new location. Environmental charges – costs associated with our non-operating facilities that are unrelated to ongoing operations. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company. Acquisition-related costs – diligence and transaction costs related to acquisitions including related contingent earnout adjustments. Inventory fair value step-up costs – purchase accounting-related inventory costs from acquisitions. Foreign exchange (gains) losses – remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency. Non-cash pension expenses (income) – pension income and expenses relating to the non-operating U.S. pension and post-retirement life insurance plans, including historical plan settlement activities. Discrete tax items – non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items or due to tax law changes, etc.). At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum. CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.
Regulation G Schedules ($ Millions, except percentages) Adjusted Gross Margin Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 2021 2012 Gross margin $ 42.1 $ 51.0 $ 190.9 $ 210.5 $ 184.6 $ 91.5 Net sales $ 124.7 $ 142.3 $ 550.4 $ 586.9 $ 512.9 $ 304.5 Gross margin as a % of net sales 33.7% 35.8% 34.7% 35.9% 36.0% 30.1% Adjustments to reported gross margin: Restructuring related charges (b) 0.6 — 0.6 — — — Inventory fair value step-up (b) — 0.7 — 4.0 — — Adjusted gross margin $ 42.6 $ 51.7 $ 191.4 $ 214.5 $ 184.6 $ 91.5 Adjusted gross margin as a % of net sales 34.2% 36.3% 34.8% 36.5% 36.0% 30.1%
Regulation G Schedules ($ Millions, except percentages) Adjusted SG&A Expenses Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 2021 2012 SG&A Expense $ 19.5 $ 23.5 $ 83.8 $ 91.5 $ 82.6 $ 63.1 Net sales $ 124.7 $ 142.3 $ 550.4 $ 586.9 $ 512.9 $ 304.5 SG&A expense as a % of net sales 15.6% 16.5% 15.2% 15.6% 16.1% 20.7% Adjustments to reported SG&A expense: Environmental charges (a) 0.4 1.0 3.5 2.8 2.3 — Acquisition-related costs (a) 0.2 — 0.4 0.8 — — Additional CEO search, legal costs and acquisition (a) — — — — — 2.5 Additional legal costs (a) — — — — — 1.5 Total adjustments to reported SG&A expense $ 0.6 $ 1.0 $ 3.9 $ 3.5 $ 2.3 $ 4.0 Adjusted SG&A expense $ 18.9 $ 22.5 $ 80.0 $ 88.0 $ 80.3 $ 59.1 Adjusted SG&A expense as a % of net sales 15.2% 15.8% 14.5% 15.0% 15.7% 19.4%
Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 2021 Operating earnings $ 16.3 $ 21.6 $ 75.1 $ 93.0 $ 76.5 Net sales $ 124.7 $ 142.3 $ 550.4 $ 586.9 $ 512.9 Operating earnings as a % of net sales 13.0% 15.2% 13.6% 15.8% 14.9% Adjustments to reported operating earnings: Restructuring charges (c) 1.0 0.5 7.1 1.9 1.7 Restructuring related charges (b) 0.6 — 0.6 — — Environmental charges (a) 0.4 1.0 3.5 2.8 2.3 Acquisition-related costs (a) 0.2 — 0.4 0.8 — Inventory fair value step-up (b) — 0.7 — 4.0 — Total adjustments to reported operating earnings $ 2.2 $ 2.2 $ 11.5 $ 9.5 $ 3.9 Adjusted operating earnings $ 18.4 $ 23.8 $ 86.6 $ 102.5 $ 80.4 Adjusted operating earnings as a % of net sales 14.8% 16.7% 15.7% 17.5% 15.7% Regulation G Schedules ($ Millions, except percentages) Adjusted Operating Earnings
Regulation G Schedules ($ Millions, except percentages) Adjusted EBITDA Margin Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 2021 Net earnings (loss) $ 15.3 $ 14.9 $ 60.5 $ 59.6 $ (41.9) Net sales $ 124.7 $ 142.3 $ 550.4 $ 586.9 $ 512.9 Net earnings (loss) margin 12.3% 10.5% 11.0% 10.2% -8.2% Depreciation and amortization expense 7.3 8.0 28.7 29.8 26.9 Interest expense 0.8 0.7 3.3 2.2 2.1 Tax expense (benefit) 2.3 5.8 14.6 21.2 (19.0) EBITDA 25.7 29.5 107.2 112.7 (31.8) Adjustments to EBITDA: Restructuring charges (c) 1.0 0.5 7.1 1.9 1.7 Restructuring related charges (b) 0.6 — 0.6 — — Environmental charges (a) 0.4 1.0 3.5 2.8 2.3 Acquisition-related costs (a) 0.2 — 0.4 2.5 — Inventory fair value step-up (b) — 0.7 — 4.0 — Non-cash pension and related expense (d) — — — 4.8 132.4 Foreign currency (gain) loss (d) (0.3) 0.9 2.0 4.9 3.3 Total adjustments to EBITDA 1.8 3.1 13.5 20.9 139.7 Adjusted EBITDA $ 27.6 $ 32.6 $ 120.7 $ 133.6 $ 107.9 Adjusted EBITDA Margin 22.1% 22.9% 21.9% 22.8% 21.0%
Regulation G Schedules ($ Millions, except percentages and per share amounts) Adjusted Net Earnings and Adjusted Diluted Earnings Per Share Three Months Ended December 31, 2023 2023 2022 2022 Per share Per share Net earnings (A) $ 15.3 $ 0.49 $ 14.9 $ 0.47 Adjustments to reported net earnings: Restructuring charges (c) 1.0 0.03 0.5 0.01 Restructuring related charges (a) 0.6 0.02 — — Environmental charges (a) 0.4 0.01 1.0 0.03 Acquisition-related costs (a) 0.2 0.01 — — Inventory fair value step-up (b) — — 0.7 0.02 Foreign currency (gain) loss (d) (0.3) (0.01) 0.9 0.03 Total pretax adjustments to reported net earnings $ 1.8 $ 0.06 $ 3.1 $ 0.10 Income tax effect of above adjustments (f) (0.8) (0.03) (0.4) (0.01) Total adjustments, tax affected (f) (B) $ 1.0 $ 0.03 $ 2.6 $ 0.08 Tax adjustments: Other discrete tax items (e) (1.6) (0.05) 0.2 0.01 Total tax adjustments (C) $ (1.6) $ (0.05) $ 0.2 $ 0.01 Adjusted net earnings (A+B+C) and Adjusted net earnings per share $ 14.7 0.47 $ 17.8 0.56 Net sales $ 124.7 $ 142.3 Net earnings as a % of net sales 12.3% 10.5% Adjusted net earnings as a % of net sales 11.8% 12.5%
Regulation G Schedules ($ Millions, except percentages and per share amounts) Adjusted Net Earnings and Adjusted Diluted Earnings Per Share NOTE: CTS believes that adjusted gross margin, adjusted operating earnings, adjusted EBITDA margin, adjusted net earnings and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations (such as those items noted above in the paragraph titled “Non-GAAP Financial Measures”) or were not part of CTS’ business operations during a comparable period. Twelve Months Ended December 31, 2023 2023 2022 2022 2021 2021 2020 2020 Per share Per share Per share Per share Net earnings (loss) (A) $ 60.5 $ 1.92 $ 59.6 $ 1.85 $ (41.9) $ (1.30) $ 34.7 $ 1.06 Adjustments to reported net earnings (loss): Restructuring charges (c) 7.1 0.22 1.9 0.06 1.7 0.06 1.8 0.06 Restructuring related charges (a) 0.6 0.02 — — — — — — Environmental charges (a) 3.5 0.11 2.8 0.09 2.3 0.07 2.8 0.08 Acquisition-related costs (a) 0.4 0.01 2.5 0.08 — — 0.3 0.01 Inventory fair value step-up (b) — — 4.0 0.12 — — — — Non-cash pension and related expense (d) — — 4.8 0.15 132.4 4.10 2.5 0.08 Foreign currency loss (d) 2.0 0.06 4.9 0.15 3.3 0.10 (5.3) (0.16) Total pretax adjustments to reported net earnings (loss) $ 13.5 $ 0.42 $ 20.9 $ 0.65 $ 139.7 $ 4.33 $ 2.1 $ 0.07 Income tax effect of above adjustments (f) (2.4) (0.07) (1.6) (0.05) (31.1) (0.99) (1.7) (0.05) Total adjustments, tax affected (f) (B) $ 11.1 $ 0.35 $ 19.3 $ 0.60 $ 108.6 $ 3.34 $ 0.4 $ 0.02 Tax adjustments: Increase in valuation allowances (e) — — — — 0.9 0.0 0.2 0.01 Other discrete tax items (e) (1.6) (0.05) 0.2 0.01 (4.7) (0.14) 1.2 0.03 Total tax adjustments (C) $ (1.6) $ (0.05) $ 0.2 $ 0.01 $ (3.8) $ (0.11) $ 1.4 $ 0.04 Adjusted net earnings (A+B+C) and Adjusted Net Earnings Per Share $ 70.0 2.22 $ 79.1 2.46 $ 63.0 1.93 $ 36.5 1.12 Net sales $ 550.4 $ 586.9 $ 512.9 $ 424.1 Net earnings (loss) as a % of net sales 11.0% 10.2% -8.2% 8.2% Adjusted net earnings as a % of net sales 12.7% 13.5% 12.3% 8.6%
Reflected in selling, general and administrative and other (expense) income, net. Reflected in cost of goods sold. Reflected in restructuring charges. Reflected in other (expense) income, net. Reflected in income tax expense (income). For 2020, the discrete tax items relate to items we deemed outside normal cash-generating operations including, $0.9 million from our change in permeant reinvestment of earnings associated with Taiwan, $0.8 million of restructuring related discrete tax impacts, partially offset by $0.5 million of discrete tax benefits from net FIN48 reserve adjustments. For 2021, the discrete tax items relate to items we deemed outside normal cash-generating operations including, $5.4 million of a stranded tax benefit from the U.S. Pension termination offset by $0.7 million of tax expense from tax costs associated with a one-time internal cash movement, and $0.9 million related to the addition of a valuation allowance for a foreign subsidiary. For 2022, the discrete tax items relate to the net impact to tax expense of expired R&D credits, including the release of associated reserves. For 2023, discrete tax items include adjusting for tax benefits resulting from $0.6 million for research and development tax credits from prior years, $0.8 million in foreign tax credits related to prior years from a 2023 tax law change, as well as $0.2 million from the release of uncertain tax benefits. We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments. For all periods presented, we applied the statutory income tax rates to the taxable portion of all of our adjustments. Our acquisition costs and foreign currency gains and losses included in our non-GAAP adjustments were not deductible for income tax purposes; therefore, no statutory income tax rate was applied to such costs. Regulation G Schedules
($ Millions, except percentages) Free Cash Flow Regulation G Schedules ($ Millions, except percentages) Controllable Working Capital NOTE: CTS believes that free cash flow is a useful measure because it demonstrates the company’s ability to generate cash. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity. Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 2021 Net cash provided by operating activities $ 32.1 $ 25.5 $ 88.8 $ 121.2 $ 86.1 Capital expenditures (3.5) (5.1) (14.7) (14.3) (15.6) Free cash flow $ 28.6 $ 20.4 $ 74.1 $ 106.9 $ 70.5 Operating cash flow as a percentage of net earnings 209% 170% 147% 203% -206% Free cash flow as a percentage of adjusted net earnings 195% 115% 106% 135% 112% December 31, 2023 2022 2021 Net accounts receivable $ 78.6 $ 90.9 $ 82.2 Net inventory $ 60.0 $ 62.3 $ 49.5 Accounts payable $ (43.5) $ (53.2) $ (55.5) Controllable working capital $ 95.1 $ 100.0 $ 76.2 Quarter sales $ 124.7 $ 142.3 $ 132.5 Multiplied by 4 4 4 4 Annualized sales $ 498.8 $ 569.1 $ 530.0 Controllable working capital as a % of annualized sales 19.1% 17.6% 14.4% NOTE: CTS believes the controllable working capital ratio is a useful measure because it provides an objective measure of the efficiency with which CTS manages its short-term capital needs.
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| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
dei_DocumentType |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
| Name: |
dei_EntityAddressAddressLine1 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
| Name: |
dei_Security12bTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Section 14a
-Number 240
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
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