CTS Announces Third Quarter 2024 Results
CTS reported Q3 2024 results with sales of $132 million, down 2% year-over-year but up 2% sequentially. Net income reached $19 million (14% of sales), improving from $14 million in Q3 2023. Sales to diversified markets grew 18% year-over-year, while transportation end market sales declined 17%. Earnings per diluted share increased to $0.61 from $0.44 year-over-year. Operating cash flow strengthened to $35 million from $22 million in Q3 2023. The company updated its 2024 sales guidance to $515-525 million, down from previous $525-540 million range, while maintaining adjusted EPS guidance of $2.05-2.25.
CTS ha riportato i risultati del terzo trimestre 2024 con vendite di 132 milioni di dollari, in calo del 2% rispetto all'anno precedente ma in crescita del 2% rispetto al trimestre precedente. L'utile netto ha raggiunto 19 milioni di dollari (14% delle vendite), con un miglioramento rispetto ai 14 milioni di dollari del Q3 2023. Le vendite verso mercati diversificati sono cresciute del 18% anno su anno, mentre le vendite nel mercato dei trasporti sono diminuite del 17%. Gli utili per azione diluiti sono aumentati a 0,61 dollari rispetto a 0,44 dollari dell’anno precedente. Il flusso di cassa operativo è migliorato a 35 milioni di dollari rispetto ai 22 milioni di dollari del Q3 2023. L'azienda ha aggiornato le previsioni di vendita per il 2024 a 515-525 milioni di dollari, in diminuzione rispetto all'intervallo precedente di 525-540 milioni di dollari, mantenendo le previsioni di utile per azione rettificato tra 2,05-2,25 dollari.
CTS reportó resultados del tercer trimestre de 2024 con ventas de 132 millones de dólares, una disminución del 2% en comparación con el año anterior, pero un aumento del 2% en comparación con el trimestre anterior. El ingreso neto alcanzó 19 millones de dólares (14% de las ventas), mejorando desde los 14 millones de dólares en el tercer trimestre de 2023. Las ventas a mercados diversificados crecieron un 18% interanual, mientras que las ventas en el mercado de transporte cayeron un 17%. Las ganancias por acción diluida aumentaron a 0,61 dólares desde 0,44 dólares en comparación con el año anterior. El flujo de efectivo operativo se fortaleció a 35 millones de dólares desde 22 millones de dólares en el tercer trimestre de 2023. La empresa actualizó su guía de ventas para 2024 a 515-525 millones de dólares, disminuyendo del rango anterior de 525-540 millones de dólares, mientras mantiene la guía de EPS ajustado de 2,05-2,25 dólares.
CTS는 2024년 3분기 실적을 발표하며 매출 1억 3200만 달러를 기록하였고, 이는 작년 대비 2% 감소하였지만 전분기 대비 2% 증가한 수치입니다. 순이익은 1900만 달러 (매출의 14%)에 도달하였으며, 이는 2023년 3분기 1400만 달러에서 개선된 결과입니다. 다양한 시장에 대한 매출은 지난해 대비 18% 증가했지만, 운송 필드 시장의 매출은 17% 감소했습니다. 희석 주당 순이익은 지난해 0.44달러에서 0.61달러로 증가했습니다. 운영 현금 흐름은 2023년 3분기의 2200만 달러에서 3500만 달러로 강화되었습니다. 회사는 2024년 매출 지침을 5억 1500만-5억 2500만 달러로 업데이트하였으며, 이전의 5억 2500만-5억 4000만 달러 범위에서 감소하였고, 조정 주당순이익 지침을 2.05-2.25달러로 유지하고 있습니다.
CTS a annoncé les résultats du troisième trimestre 2024 avec des ventes de 132 millions de dollars, en baisse de 2% par rapport à l'année précédente, mais en hausse de 2% par rapport au trimestre précédent. Le revenu net a atteint 19 millions de dollars (14% des ventes), améliorant par rapport à 14 millions de dollars au troisième trimestre 2023. Les ventes sur des marchés diversifiés ont augmenté de 18% d'une année sur l'autre, tandis que les ventes sur le marché des transports ont baissé de 17%. Le bénéfice par action diluée a augmenté à 0,61 dollar contre 0,44 dollar l'année précédente. Le flux de trésorerie d'exploitation s'est renforcé à 35 millions de dollars contre 22 millions de dollars au troisième trimestre 2023. L'entreprise a mis à jour ses prévisions de ventes pour 2024 à 515-525 millions de dollars, en baisse par rapport à l'ancienne fourchette de 525-540 millions de dollars, tout en maintenant les prévisions de BPA ajusté de 2,05-2,25 dollars.
CTS berichtete über die Ergebnisse des 3. Quartals 2024 mit einem Umsatz von 132 Millionen Dollar, was einem Rückgang von 2% im Vergleich zum Vorjahr entspricht, jedoch einem Anstieg von 2% im Vergleich zum vorherigen Quartal. Der Nettogewinn betrug 19 Millionen Dollar (14% des Umsatzes), was eine Verbesserung gegenüber 14 Millionen Dollar im 3. Quartal 2023 darstellt. Der Umsatz mit diversifizierten Märkten wuchs um 18% im Jahresvergleich, während der Umsatz im Transportsektor um 17% zurückging. Der Gewinn pro verwässerter Aktie stieg von 0,44 Dollar auf 0,61 Dollar im Jahresvergleich. Der operative Cashflow verbesserte sich auf 35 Millionen Dollar von 22 Millionen Dollar im 3. Quartal 2023. Das Unternehmen aktualisierte seine Umsatzprognose für 2024 auf 515-525 Millionen Dollar, was einen Rückgang gegenüber dem vorherigen Bereich von 525-540 Millionen Dollar darstellt, während die angepasste EPS-Prognose von 2,05-2,25 Dollar beibehalten wird.
- Net income increased to $19 million (14% of sales) from $14 million (10% of sales) YoY
- Diversified end markets sales grew 18% year-over-year
- Adjusted EBITDA margin improved to 24.8% from 22.5% YoY
- Operating cash flow increased to $35 million from $22 million YoY
- Overall sales declined 2% year-over-year to $132 million
- Transportation end market sales decreased 17% year-over-year
- Full-year 2024 sales guidance lowered to $515-525 million from $525-540 million
Insights
CTS delivered mixed Q3 2024 results with notable improvements in profitability despite revenue headwinds. Revenue declined
Key positives include
Strong cash flow generation of
Solid Operational Performance in a Challenging Environment
LISLE, Ill., Oct. 29, 2024 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of custom engineered solutions that “Sense, Connect and Move,” today announced third quarter 2024 results.
“We delivered improved earnings and generated stronger cash flow in the third quarter. Margins expanded as we made progress on operational improvements,” said Kieran O’Sullivan, CEO of CTS Corporation. “Near term market conditions remain challenging. We continue to advance our diversification strategy through the expansion of our customer base and end markets. We remain committed to a disciplined capital structure to drive organic growth, strategic acquisitions and returning cash to shareholders.”
Third Quarter 2024 Results
- Sales were
$132 million , down2% year-over-year, and up2% sequentially compared to the second quarter of 2024. Sales to diversified end markets* increased18% year-over-year and5% sequentially. Sales to the transportation end market decreased17% year-over-year and2% sequentially. - Net income was
$19 million , or14% of sales, up from$14 million , or10% of sales, in the third quarter of 2023. - Earnings per diluted share were
$0.61 , compared to$0.44 in the third quarter of 2023. - Adjusted earnings per diluted share were
$0.63 , up from$0.54 in the third quarter of 2023. - Adjusted EBITDA margin was
24.8% , compared to22.5% in the third quarter of 2023. - Operating cash flow was
$35 million up from$22 million in the third quarter of 2023.
2024 Guidance
CTS is updating its guidance for full year 2024 sales to be in the range of
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. (ET) today. The dial-in numbers for access from the U.S. are: +1-833-470-1428 (Toll-Free) and +1-404-975-4839 (Local), if calling from outside the U.S., please refer to Global Dial In Numbers to identify the applicable dial-in number for your location. The passcode is 230766. 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://investors.ctscorp.com/news-events/events-and-presentations/.
Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible through the website noted above, has not been authorized by the Company and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents.
About CTS
CTS Corporation (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical and transportation markets. For more information, visit www.ctscorp.com.
*Diversified end markets, previously referred as the “non-transportation” market, includes the industrial, aerospace & defense, and medical end markets.
Cautionary Statement Regarding Forward-Looking Statements
Readers are cautioned that the statements contained in this document regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are, or may be deemed to be, “forward-looking statements” as defined by the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this document, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward-looking statements. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “continued,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “demonstrates,” “may,” “will,” “might,” “could,” “intend,” “shall,” “possible,” “would,” “approximately,” “likely,” “outlook,” “schedule,” “on track,” “poised,” “pipeline,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. 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.
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, except per share amounts) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
Net sales | $ | 132,424 | $ | 134,552 | $ | 388,336 | $ | 425,728 | ||||||||
Cost of goods sold | 82,636 | 88,151 | 247,086 | 276,933 | ||||||||||||
Gross margin | 49,788 | 46,401 | 141,250 | 148,795 | ||||||||||||
Selling, general and administrative expenses | 22,509 | 18,666 | 66,100 | 64,339 | ||||||||||||
Research and development expenses | 5,031 | 6,321 | 17,718 | 19,628 | ||||||||||||
Restructuring charges | 773 | 3,226 | 3,657 | 6,033 | ||||||||||||
Operating earnings | 21,475 | 18,188 | 53,775 | 58,795 | ||||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (1,307 | ) | (997 | ) | (2,942 | ) | (2,509 | ) | ||||||||
Interest income | 973 | 952 | 3,800 | 3,087 | ||||||||||||
Other income (expense), net | 1,306 | 594 | (761 | ) | (1,847 | ) | ||||||||||
Total other income (expense), net | 972 | 549 | 97 | (1,269 | ) | |||||||||||
Earnings before income taxes | 22,447 | 18,737 | 53,872 | 57,526 | ||||||||||||
Income tax expense | 3,764 | 4,766 | 9,364 | 12,314 | ||||||||||||
Net earnings | $ | 18,683 | $ | 13,971 | $ | 44,508 | $ | 45,212 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.62 | $ | 0.45 | $ | 1.46 | $ | 1.44 | ||||||||
Diluted | $ | 0.61 | $ | 0.44 | $ | 1.45 | $ | 1.43 | ||||||||
Basic weighted – average common shares outstanding: | 30,300 | 31,302 | 30,517 | 31,474 | ||||||||||||
Effect of dilutive securities | 236 | 209 | 230 | 216 | ||||||||||||
Diluted weighted – average common shares outstanding: | 30,536 | 31,511 | 30,747 | 31,690 | ||||||||||||
Cash dividends declared per share | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.12 | ||||||||
CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) | ||||||||
(Unaudited) September 30, 2024 | December 31, 2023 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 94,875 | $ | 163,876 | ||||
Accounts receivable, net | 86,355 | 78,569 | ||||||
Inventories, net | 57,288 | 60,031 | ||||||
Other current assets | 17,043 | 16,873 | ||||||
Total current assets | 255,561 | 319,349 | ||||||
Property, plant and equipment, net | 93,465 | 92,592 | ||||||
Operating lease assets, net | 23,689 | 26,425 | ||||||
Other Assets | ||||||||
Goodwill | 194,821 | 157,638 | ||||||
Other intangible assets, net | 180,872 | 103,957 | ||||||
Deferred income taxes | 26,837 | 25,183 | ||||||
Other | 14,147 | 16,023 | ||||||
Total other assets | 416,677 | 302,801 | ||||||
Total Assets | $ | 789,392 | $ | 741,167 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 44,951 | $ | 43,499 | ||||
Accrued payroll and benefits | 17,008 | 14,585 | ||||||
Operating lease obligations | 4,591 | 4,394 | ||||||
Accrued expenses and other liabilities | 37,249 | 34,561 | ||||||
Total current liabilities | 103,799 | 97,039 | ||||||
Long-term debt | 102,700 | 67,500 | ||||||
Long-term operating lease obligations | 22,016 | 24,965 | ||||||
Long-term pension obligations | 4,561 | 4,655 | ||||||
Deferred income taxes | 13,784 | 14,729 | ||||||
Other long-term obligations | 11,726 | 5,457 | ||||||
Total Liabilities | 258,586 | 214,345 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock | 321,924 | 319,269 | ||||||
Additional contributed capital | 42,908 | 45,097 | ||||||
Retained earnings | 643,088 | 602,232 | ||||||
Accumulated other comprehensive income (loss) | 2,017 | 4,264 | ||||||
Total shareholders’ equity before treasury stock | 1,009,937 | 970,862 | ||||||
Treasury stock | (479,131 | ) | (444,040 | ) | ||||
Total shareholders’ equity | 530,806 | 526,822 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 789,392 | $ | 741,167 | ||||
CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION - UNAUDITED
(In millions of dollars, except percentages and per share amounts)
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 related to workforce reductions, building and equipment relocations, asset impairment charges and other facility closure activities 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 U.S. GAAP. These include duplicative expenses arising from plant consolidation transition activities such as excess rent, utilities, and personnel-related and other costs incurred prior to the start of production at a 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 related 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
Adjusted Gross Margin
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Gross margin | $ | 49.8 | $ | 46.4 | $ | 141.3 | $ | 148.8 | $ | 190.9 | $ | 210.5 | $ | 184.6 | ||||||||||||||
Net sales | $ | 132.4 | $ | 134.6 | $ | 388.3 | $ | 425.7 | $ | 550.4 | $ | 586.9 | $ | 512.9 | ||||||||||||||
Gross margin as a % of net sales | 37.6 | % | 34.5 | % | 36.4 | % | 35.0 | % | 34.7 | % | 35.9 | % | 36.0 | % | ||||||||||||||
Adjustments to reported gross margin: | ||||||||||||||||||||||||||||
Restructuring-related charges (b) | — | — | 0.7 | — | 0.6 | — | — | |||||||||||||||||||||
Inventory fair value step-up (b) | 1.4 | — | 1.4 | — | — | 4.0 | — | |||||||||||||||||||||
Adjusted gross margin | $ | 51.2 | $ | 46.4 | $ | 143.3 | $ | 148.8 | $ | 191.5 | $ | 214.5 | $ | 184.6 | ||||||||||||||
Adjusted gross margin as a % of net sales | 38.6 | % | 34.5 | % | 36.9 | % | 35.0 | % | 34.8 | % | 36.5 | % | 36.0 | % | ||||||||||||||
Adjusted Operating Earnings
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Operating earnings | $ | 21.5 | $ | 18.2 | $ | 53.8 | $ | 58.8 | $ | 75.1 | $ | 93.0 | $ | 76.5 | ||||||||||||||
Net sales | $ | 132.4 | $ | 134.6 | $ | 388.3 | $ | 425.7 | $ | 550.4 | $ | 586.9 | $ | 512.9 | ||||||||||||||
Operating earnings as a % of net sales | 16.2 | % | 13.5 | % | 13.8 | % | 13.8 | % | 13.6 | % | 15.8 | % | 14.9 | % | ||||||||||||||
Adjustments to reported operating earnings: | ||||||||||||||||||||||||||||
Restructuring charges (c) | 0.8 | 3.2 | 3.7 | 6.0 | 7.1 | 1.9 | 1.7 | |||||||||||||||||||||
Restructuring-related charges (b) | — | — | 0.7 | — | 0.6 | — | — | |||||||||||||||||||||
Environmental charges (a) | (1.0 | ) | 0.4 | (0.2 | ) | 3.1 | 3.5 | 2.8 | 2.3 | |||||||||||||||||||
Acquisition-related costs (a) | 1.3 | — | 0.7 | 0.2 | 0.4 | 0.8 | — | |||||||||||||||||||||
Inventory fair value step-up (b) | 1.4 | — | 1.4 | — | — | 4.0 | — | |||||||||||||||||||||
Total adjustments to reported operating earnings | $ | 2.5 | $ | 3.6 | $ | 6.2 | $ | 9.3 | $ | 11.5 | $ | 9.5 | $ | 3.9 | ||||||||||||||
Adjusted operating earnings | $ | 23.9 | $ | 21.8 | $ | 60.0 | $ | 68.1 | $ | 86.6 | $ | 102.5 | $ | 80.4 | ||||||||||||||
Adjusted operating earnings as a % of net sales | 18.1 | % | 16.2 | % | 15.4 | % | 16.0 | % | 15.7 | % | 17.5 | % | 15.7 | % | ||||||||||||||
Adjusted EBITDA Margin
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Net earnings (loss) | $ | 18.7 | $ | 14.0 | $ | 44.5 | $ | 45.2 | $ | 60.5 | $ | 59.6 | $ | (41.9 | ) | |||||||||||||
Net sales | $ | 132.4 | $ | 134.6 | $ | 388.3 | $ | 425.7 | $ | 550.4 | $ | 586.9 | $ | 512.9 | ||||||||||||||
Net earnings (loss) margin | 14.1 | % | 10.4 | % | 11.5 | % | 10.6 | % | 11.0 | % | 10.2 | % | -8.2 | % | ||||||||||||||
Depreciation and amortization expense | 8.0 | 7.3 | 22.6 | 21.4 | 28.7 | 29.8 | 26.9 | |||||||||||||||||||||
Interest expense | 1.3 | 1.0 | 2.9 | 2.5 | 3.3 | 2.2 | 2.1 | |||||||||||||||||||||
Tax expense (benefit) | 3.8 | 4.8 | 9.4 | 12.3 | 14.6 | 21.2 | (19.0 | ) | ||||||||||||||||||||
EBITDA | 31.7 | 27.0 | 79.5 | 81.5 | 107.2 | 112.7 | (31.8 | ) | ||||||||||||||||||||
Adjustments to EBITDA: | ||||||||||||||||||||||||||||
Restructuring charges (c) | 0.8 | 3.2 | 3.7 | 6.0 | 7.1 | 1.9 | 1.7 | |||||||||||||||||||||
Restructuring-related charges (b) | — | — | 0.7 | — | 0.6 | — | — | |||||||||||||||||||||
Environmental charges (a) | (1.0 | ) | 0.4 | (0.2 | ) | 3.1 | 3.5 | 2.8 | 2.3 | |||||||||||||||||||
Acquisition-related costs (a) | 1.3 | — | 0.7 | 0.2 | 0.4 | 2.5 | — | |||||||||||||||||||||
Inventory fair value step-up (b) | 1.4 | — | 1.4 | — | — | 4.0 | — | |||||||||||||||||||||
Non-cash pension and related expense (d) | — | — | 0.1 | — | — | 4.8 | 132.4 | |||||||||||||||||||||
Foreign currency loss (d) | (1.3 | ) | (0.3 | ) | 0.8 | 2.3 | 2.0 | 4.9 | 3.3 | |||||||||||||||||||
Total adjustments to EBITDA | 1.1 | 3.3 | 7.2 | 11.6 | 13.5 | 20.9 | 139.7 | |||||||||||||||||||||
Adjusted EBITDA | $ | 32.9 | $ | 30.2 | $ | 86.6 | $ | 93.1 | $ | 120.7 | $ | 133.6 | $ | 107.9 | ||||||||||||||
Adjusted EBITDA Margin | 24.8 | % | 22.5 | % | 22.3 | % | 21.9 | % | 21.9 | % | 22.8 | % | 21.0 | % | ||||||||||||||
Adjusted Net Earnings and Adjusted Diluted Earnings Per Share
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
2024 | 2024 | 2023 | 2023 | 2024 | 2024 | 2023 | 2023 | ||||||||||||||||||||||||||
Per share | Per share | Per share | Per share | ||||||||||||||||||||||||||||||
Net earnings (A) | $ | 18.7 | $ | 0.61 | $ | 14.0 | $ | 0.44 | $ | 44.5 | $ | 1.45 | $ | 45.2 | $ | 1.43 | |||||||||||||||||
Adjustments to reported net earnings: | |||||||||||||||||||||||||||||||||
Restructuring charges (c) | 0.8 | 0.03 | 3.2 | 0.10 | 3.7 | 0.12 | 6.0 | 0.19 | |||||||||||||||||||||||||
Restructuring-related charges (b) | — | — | — | — | 0.7 | 0.02 | — | — | |||||||||||||||||||||||||
Environmental charges (a) | (1.0 | ) | (0.03 | ) | 0.4 | 0.01 | (0.2 | ) | (0.01 | ) | 3.1 | 0.10 | |||||||||||||||||||||
Acquisition-related costs (a) | 1.3 | 0.04 | — | — | 0.7 | 0.02 | 0.2 | 0.01 | |||||||||||||||||||||||||
Inventory fair value step-up (b) | 1.4 | 0.05 | 1.4 | 0.05 | |||||||||||||||||||||||||||||
Non-cash pension and related expense (d) | — | — | — | — | 0.1 | — | — | — | |||||||||||||||||||||||||
Foreign currency loss (d) | (1.3 | ) | (0.04 | ) | (0.3 | ) | (0.01 | ) | 0.8 | 0.03 | 2.3 | 0.07 | |||||||||||||||||||||
Total pretax adjustments to reported net earnings | $ | 1.2 | $ | 0.04 | $ | 3.3 | $ | 0.10 | $ | 7.2 | $ | 0.23 | $ | 11.7 | $ | 0.37 | |||||||||||||||||
Income tax effect of above adjustments (f) | (0.5 | ) | (0.02 | ) | (0.3 | ) | (0.01 | ) | (1.7 | ) | (0.05 | ) | (1.5 | ) | (0.04 | ) | |||||||||||||||||
Total adjustments, tax affected (f) (B) | $ | 0.7 | $ | 0.02 | $ | 3.0 | $ | 0.10 | $ | 5.5 | $ | 0.18 | $ | 10.2 | $ | 0.32 | |||||||||||||||||
Tax adjustments: | |||||||||||||||||||||||||||||||||
Other discrete tax items (e) | — | — | — | — | 0.3 | 0.01 | — | — | |||||||||||||||||||||||||
Total tax adjustments (C) | $ | — | $ | — | $ | — | $ | — | $ | 0.3 | $ | 0.01 | $ | — | $ | — | |||||||||||||||||
Adjusted net earnings (A+B+C) and Adjusted net earnings per share | $ | 19.4 | $ | 0.63 | $ | 17.0 | $ | 0.54 | $ | 50.3 | $ | 1.64 | $ | 55.4 | $ | 1.75 | |||||||||||||||||
Net sales | $ | 132.4 | $ | 134.6 | $ | 388.3 | $ | 425.7 | |||||||||||||||||||||||||
Net earnings as a % of net sales | 14.1 | % | 10.4 | % | 11.5 | % | 10.6 | % | |||||||||||||||||||||||||
Adjusted net earnings as a % of net sales | 14.6 | % | 12.6 | % | 13.0 | % | 13.0 | % | |||||||||||||||||||||||||
Twelve Months Ended December 31, | ||||||||||||||||||||||||
2023 | 2023 | 2022 | 2022 | 2021 | 2021 | |||||||||||||||||||
Per share | Per share | Per share | ||||||||||||||||||||||
Net earnings (loss) (A) | $ | 60.5 | $ | 1.92 | $ | 59.6 | $ | 1.85 | $ | (41.9 | ) | $ | (1.30 | ) | ||||||||||
Adjustments to reported net earnings (loss): | ||||||||||||||||||||||||
Restructuring charges (c) | 7.1 | 0.22 | 1.9 | 0.06 | 1.7 | 0.06 | ||||||||||||||||||
Restructuring-related charges (b) | 0.6 | 0.02 | — | — | — | — | ||||||||||||||||||
Environmental charges (a) | 3.5 | 0.11 | 2.8 | 0.09 | 2.3 | 0.07 | ||||||||||||||||||
Acquisition-related costs (a) | 0.4 | 0.01 | 2.5 | 0.08 | — | — | ||||||||||||||||||
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 | ||||||||||||||||||
Foreign currency loss (d) | 2.0 | 0.06 | 4.9 | 0.15 | 3.3 | 0.10 | ||||||||||||||||||
Total pretax adjustments to reported net earnings (loss) | $ | 13.5 | $ | 0.42 | $ | 20.9 | $ | 0.65 | $ | 139.7 | $ | 4.33 | ||||||||||||
Income tax effect of above adjustments (f) | (2.4 | ) | (0.07 | ) | (1.6 | ) | (0.05 | ) | (31.1 | ) | (0.99 | ) | ||||||||||||
Total adjustments, tax affected (f) (B) | $ | 11.1 | $ | 0.35 | $ | 19.3 | $ | 0.60 | $ | 108.6 | $ | 3.34 | ||||||||||||
Tax adjustments: | ||||||||||||||||||||||||
Increase in valuation allowances (e) | — | — | — | — | 0.9 | 0.03 | ||||||||||||||||||
Other discrete tax items (e) | (1.6 | ) | (0.05 | ) | 0.2 | 0.01 | (4.7 | ) | (0.14 | ) | ||||||||||||||
Total tax adjustments (C) | $ | (1.6 | ) | $ | (0.05 | ) | $ | 0.2 | $ | 0.01 | $ | (3.8 | ) | $ | (0.11 | ) | ||||||||
Adjusted net earnings (A+B+C) and Adjusted net earnings per share | $ | 70.0 | $ | 2.22 | $ | 79.1 | $ | 2.46 | $ | 63.0 | $ | 1.93 | ||||||||||||
Net sales | $ | 550.4 | $ | 586.9 | $ | 512.9 | ||||||||||||||||||
Net earnings (loss) as a % of net sales | 11.0 | % | 10.2 | % | -8.2 | % | ||||||||||||||||||
Adjusted net earnings as a % of net sales | 12.7 | % | 13.5 | % | 12.3 | % | ||||||||||||||||||
(a) Reflected in selling, general and administrative and other (expense) income, net.
(b) Reflected in cost of goods sold.
(c) Reflected in restructuring charges.
(d) Reflected in other (expense) income, net.
(e) Reflected in income tax expense (income). For 2021, the discrete tax items relate to items we deemed outside normal cash-generating operations including,
(f) 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.
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.
Controllable Working Capital
September 30, | December 31, | |||||||||||||||||||
2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||
Net accounts receivable | $ | 86.4 | $ | 89.6 | $ | 78.6 | $ | 90.9 | $ | 82.2 | ||||||||||
Net inventory | $ | 57.3 | $ | 65.4 | $ | 60.0 | $ | 62.3 | $ | 49.5 | ||||||||||
Accounts payable | $ | (45.0 | ) | $ | (49.8 | ) | $ | (43.5 | ) | $ | (53.2 | ) | $ | (55.5 | ) | |||||
Controllable working capital | $ | 98.7 | $ | 105.1 | $ | 95.1 | $ | 100.0 | $ | 76.2 | ||||||||||
Quarter sales | $ | 132.4 | $ | 134.6 | $ | 124.7 | $ | 142.3 | $ | 132.5 | ||||||||||
Multiplied by 4 | 4 | 4 | 4 | 4 | 4 | |||||||||||||||
Annualized sales | $ | 529.7 | $ | 538.2 | $ | 498.8 | $ | 569.1 | $ | 530.0 | ||||||||||
Controllable working capital as a % of annualized sales | 18.6 | % | 19.5 | % | 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.
Free Cash Flow
Three Months Ended September 30, | Nine Months Ended June 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Net cash provided by operating activities | $ | 35.4 | $ | 22.1 | $ | 73.3 | $ | 56.7 | $ | 88.8 | $ | 121.2 | $ | 86.1 | ||||||||||||||
Capital expenditures | (3.9 | ) | (2.7 | ) | (12.5 | ) | (11.2 | ) | (14.7 | ) | (14.3 | ) | (15.6 | ) | ||||||||||||||
Free cash flow | $ | 31.5 | $ | 19.4 | $ | 60.8 | $ | 45.5 | $ | 74.1 | $ | 106.9 | $ | 70.5 | ||||||||||||||
Operating cash flow as a percentage of net earnings | 189 | % | 158 | % | 165 | % | 125 | % | 147 | % | 203 | % | -206 | % | ||||||||||||||
Free cash flow as a percentage of adjusted net earnings | 163 | % | 114 | % | 121 | % | 82 | % | 106 | % | 135 | % | 112 | % | ||||||||||||||
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.
Capital Expenditures
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Capital expenditures | $ | 3.9 | $ | 2.7 | $ | 12.5 | $ | 11.2 | $ | 14.7 | $ | 14.3 | $ | 15.6 | ||||||||||||||
Net sales | $ | 132.4 | $ | 134.6 | $ | 388.3 | $ | 425.7 | $ | 550.4 | $ | 586.9 | $ | 512.9 | ||||||||||||||
Capex as % of net sales | 2.9 | % | 2.0 | % | 3.2 | % | 2.6 | % | 2.7 | % | 2.4 | % | 3.0 | % | ||||||||||||||
Additional Information
The following table includes other financial information not presented in the preceding financial statements.
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Depreciation and amortization expense | $ | 8.0 | $ | 7.3 | $ | 22.6 | $ | 21.4 | $ | 28.7 | $ | 29.8 | $ | 26.9 | ||||||||||||||
Stock-based compensation expense | $ | 1.4 | $ | 1.4 | $ | 4.0 | $ | 4.6 | $ | 5.2 | $ | 7.7 | $ | 6.1 | ||||||||||||||
FAQ
What were CTS 's Q3 2024 earnings per share?
How much did CTS's transportation market sales decline in Q3 2024?