LISLE, Ill., Feb. 07, 2023 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE:CTS), a leading global designer and manufacturer of custom engineered solutions that "Sense, Connect and Move," today announced fourth quarter and full-year 2022 results.

"We delivered solid performance throughout 2022, closing the year with a double-digit increase in revenue along with strong adjusted EBITDA margin expansion. During the year, we advanced our diversification strategy through the completion of two acquisitions, while also gaining momentum with electric platform wins as we continue developing new products for hybrid and electric vehicles," said Kieran O'Sullivan, CEO of CTS Corporation. "Looking ahead, we expect a softer first quarter, and an improving trend for the rest of 2023. We remain focused on executing our strategic priorities while driving operational improvements to deliver long-term value creation."

Fourth Quarter 2022 Results

Sales were $142.3 million, up 7% year-over-year. Sales to non-transportation end markets increased 22% and, as expected, sales to the transportation end market decreased 4 % over the fourth quarter of 2021.
Reported net income was $14.9 million at 11% of sales, compared to $9.2 million at 7% of sales, in the fourth quarter of 2021.
Earnings per share was $0.47 per diluted share, up from $0.28 per diluted share, in the fourth quarter of 2021.
Adjusted diluted EPS was $0.56, up from $0.49 in the fourth quarter of 2021.
Adjusted EBITDA margin was 22.9% compared to 20.9% in the fourth quarter of 2021.
Operating cash flow was $25.5 million compared to $26.0 million in the fourth quarter of 2021.

Full-Year 2022 Results

Sales were $586.9 million, up 14% year-over-year, driven by strength in non-transportation end markets. Non-transportation end markets grew 24%, while the transportation end market grew 7% compared to 2021.
Net income was $59.6 million or 10% of sales, compared to a net loss of $41.9 million or (8)% of sales in 2021. Net income in 2021 was impacted by the non-cash pension charge of $96.6 million.
Earnings per share was $1.85 per diluted share, compared to $(1.30) per diluted share, in 2021.
Adjusted diluted EPS was $2.46, up from $1.93 in 2021.
Adjusted EBITDA margin was 22.8%, up from 21.0% in 2021.
Operating cash flow was $121.2 million, up from $86.1 million in 2021.

2023 Guidance

CTS expects full-year 2023 sales to be in the range of $580 - $640 million and adjusted diluted EPS to be in the range of $2.40 - $2.70.

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.

Conference Call and Supplemental Materials

As previously announced, the Company has scheduled a conference call for 10:00 a.m. (EST) today. The dial-in number for the U.S. and Canada is 844-200-6205 (+1 929-526-1599, if calling from outside the U.S. and Canada). The passcode is 889906. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS' website at https://www.ctscorp.com/investors/events-presentations/.

About CTS

CTS (NYSE:CTS) is a leading designer and manufacturer of products that Sense, Connect, and Move. The company manufactures sensors, actuators, and electronic components in North America, Europe, and Asia, and provides engineered products to customers in the aerospace and defense, industrial, medical, and transportation markets. For more information, visit www.ctscorp.com.

Safe Harbor

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: the ultimate impact of the COVID-19 pandemic on CTS' business, results of operations or financial condition, including 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, including our acquisitions of TEWA Temperature Sensors and Ferroperm Piezoceramics; 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; and 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). 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.

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' management believes that non-GAAP financial measures can be useful to investors in analyzing CTS' financial performance and results of operations over time. CTS recommends that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

The information in this press release includes the non-GAAP financial measures of adjusted EBITDA and adjusted diluted earnings per share. These non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of CTS' fundamental business operations.

CTS believes that adjusted EBITDA 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 or were not part of CTS' business operations during a comparable period.

CTS believes that these non-GAAP financial measures 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.

Contact

Ashish Agrawal

Vice President and Chief Financial Officer

CTS Corporation

4925 Indiana Avenue

Lisle, IL 60532 USA

+1 (630) 577-8800

ashish.agrawal@ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

(In thousands of dollars, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Net sales	$	142,281		$	132,531		$	586,869		$	512,925
Cost of goods sold		91,277			83,860			376,331			328,306
Gross margin		51,004			48,671			210,538			184,619
Selling, general and administrative expenses		23,491			23,413			91,520			82,597
Research and development expenses		5,405			5,686			24,100			23,856
Restructuring charges		478			1,136			1,912			1,687
Operating earnings		21,630			18,436			93,006			76,479
Other (expense) income:
Interest expense		(702	)		(534	)		(2,192	)		(2,111	)
Interest income		716			151			1326			840
Other (expense), net		(873	)		(3,302	)		(11,403	)		(136,088	)
Total other (expense), net		(859	)		(3,685	)		(12,269	)		(137,359	)
Earnings (loss) before income taxes		20,771			14,751			80,737			(60,880	)
Income tax expense (benefit)		5,831			5,586			21,162			(19,014	)
Net earnings (loss)		14,940			9,165			59,575			(41,866	)
Earnings (loss) per share:
Basic		0.47			0.28			1.86			(1.30	)
Diluted		0.47			0.28			1.85			(1.30	)
Basic weighted – average common shares outstanding:		31,818			32,214			31,968			32,327
Effect of dilutive securities		224			218			270			—
Diluted weighted – average common shares outstanding:		32,042			32,432			32,238			32,327
Cash dividends declared per share	$	0.04		$	0.04		$	0.16		$	0.16

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	(Unaudited)
	December 31, 2022			December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	156,910		$	141,465
Accounts receivable, net		90,935			82,191
Inventories, net		62,260			49,506
Other current assets		15,655			15,927
Total current assets		325,760			289,089
Property, plant and equipment, net		97,300			96,876
Operating lease assets, net		22,702			21,594
Other Assets
Prepaid pension asset	—				49,382
Goodwill		152,361			109,798
Other intangible assets, net		108,053			69,888
Deferred income taxes		23,461			25,415
Other		18,850			2,420
Total other assets		302,725			256,903
Total Assets	$	748,487		$	664,462
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	53,211		$	55,537
Operating lease obligations		3,936			3,393
Accrued payroll and benefits		20,063			18,418
Accrued expenses and other liabilities		35,322			36,718
Total current liabilities		112,532			114,066
Long-term debt		83,670			50,000
Long-term operating lease obligations		21,754			21,354
Long-term pension obligations		5,048			6,886
Deferred income taxes		16,010			5,894
Other long-term obligations		3,249			2,684
Total Liabilities		242,263			200,884
Commitments and Contingencies
Shareholders' Equity
Common stock		316,803			314,620
Additional contributed capital		46,144			42,549
Retained earnings		546,703			492,242
Accumulated other comprehensive loss		(671	)		(4,525	)
Total shareholders' equity before treasury stock		908,979			844,886
Treasury stock		(402,755	)		(381,308	)
Total shareholders' equity		506,224			463,578
Total Liabilities and Shareholders' Equity	$	748,487		$	664,462

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

(In millions of dollars, except per share amounts)

Adjusted EBITDA Margin

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021			2020
Net earnings (loss)	$	14.9		$	9.2		$	59.6		$	(41.9	)	$	34.7

Depreciation and amortization expense		8.0			6.7			29.8			26.9			26.7
Interest expense		0.7			0.5			2.2			2.1			3.3
Tax expense (benefit)		5.8			5.6			21.2			(19.0	)		10.8

EBITDA		29.5			22.0			112.7			(31.8	)		75.4

Adjustments to EBITDA:
Restructuring charges		0.5			1.1			1.9			1.7			1.8
Environmental charges		1.0			1.4			2.8			2.3			2.8
Acquisition-related costs		—			—			2.5			—			0.3
Inventory fair value step-up		0.7			—			4.0			—			—
Non-cash pension and related expense		—			1.3			4.8			132.4			2.5
Foreign currency loss (gain)		0.9			1.9			4.9			3.3			(5.3	)

Total adjustments to EBITDA		3.1			5.7			20.9			139.7			2.1

Adjusted EBITDA	$	32.6		$	27.7		$	133.6		$	107.9		$	77.5

Net sales	$	142.3		$	132.5		$	586.9		$	512.9		$	424.1

Adjusted EBITDA Margin		22.9	%		20.9	%		22.8	%		21.0	%		18.3	%

Adjusted Diluted Earnings Per Share

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021			2020
GAAP diluted earnings (loss) per share	$	0.47	$	0.28	$	1.85	$	(1.30	)	$	1.06
Tax affected charges to reported diluted earnings (loss) per share:
Restructuring charges		0.01		0.04		0.05		0.06			0.04
Foreign currency loss (gain)		0.03		0.06		0.15		0.10			(0.16	)
Non-cash pension expense		—		0.03		0.16		3.13			0.06
Environmental charges		0.02		0.03		0.07		0.05			0.07
Transaction costs		—		—		0.07		—			0.01
Inventory fair value step-up		0.02		—		0.10		—			—
Legal Settlement		—		—		—		—			—
Discrete tax items		0.01		0.05		0.01		(0.11	)		0.04
Adjusted diluted earnings per share	$	0.56	$	0.49	$	2.46	$	1.93		$	1.12

Capital Expenditures

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021			2020
Capital expenditures	$	5.1		$	7.5		$	14.3		$	15.6		$	14.9
Net sales	$	142.3		$	132.5		$	586.9		$	512.9		$	424.1
Capex as % of net sales		3.6	%		5.7	%		2.4	%		3.0	%		3.5	%

Additional Information

The following table includes other financial information not presented in the preceding financial statements.

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021		2020
Depreciation and amortization expense	$	8.0	$	6.7	$	29.8	$	26.9	$	26.7
Stock-based compensation expense	$	1.9	$	2.0	$	7.7	$	6.1	$	3.4

CTS Announces Fourth Quarter and Full-Year 2022 Results