Slide 1: CTS Investor Presentation May 2024
CTS Investor Presentation May 2024
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
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-
Slide 3: CTS is a Leading Designer and Manufacturer of Custom Engineered Solutions
LTM Adj. EBITDA Margin 22% LTM Adj. EPS $2.07 8% Non-Transportation Revenue CAGR LTM Revenue $530 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 March 2024 2 Adj. EBITDA Mar
Slide 4: CTS Positioned to Deliver 10% Organic and Inorganic Growth
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, piezo formulations, medical applications Organic G
Slide 5: Secular Themes Drive Growth Across End Markets
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 Sustain
Slide 6: Deep Technical Expertise Provides a Sustainable Advantage
Deep Technical Expertise Provides a Sustainable Advantage Signal Processing Bulk Tapecast Single Crystal Textured Imaging: Medical, Defense Medical Therapeutics Micro-actuation Piezoelectric Ceramic Position Sensing Capabilities Key Technologies Applications Current Processing Hall Effect Inductive
Slide 7: Diversifying Revenue in Growing End Markets Outside of Transportation
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% L
Slide 8: Industrial: Enabling Efficiency and Automation in Industrial Markets
Addressable Market Size: $3.6B LTM Revenue:1 $120M (30)% 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 Su
Slide 9: Medical: Unlocking Important Innovation in Medical Markets
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 $68
Slide 10: Aerospace & Defense: Ensuring Performance and Reliability
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: $1.2B LTM R
Slide 11: Electrification Creating Growth Opportunity in Transportation
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 ve
Slide 12: Strong Execution Capabilities
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 $203 million returned to shareholders4 Solid acquisition capacity Strategic Investme
Slide 13: Capital Allocation Framework
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 resour
Slide 14: Strategic Approach to M&A
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
Slide 15: Strategic Acquisitions Fueling Diversification – M&A as a Catalyst
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
Slide 16: FY 2024 Guidance
$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
Slide 17: Financial Framework
20121 LTM2 Long-Term Target Revenue $304M $530M +10% per year Adj Gross Margin %3 30.1% 35.0% 35-38% Adj SG&A Expense %3 19.4% 15.3% 13-15% R&D Expense % 6.9% 4.7% 5-7% CapEx % 4.4% 2.7% ~4% 2 Financial Framework 1 1 2012 Financials from Continuing Operations. 2 LTM through March 2024. 3 Adj. Gross
Slide 18: Appendix
Appendix
Slide 19: Focus 2025
01 02 03 Develop customer partnerships that are authentic and collaborative, resulting in mutually beneficial revenue growth Deeper Customer Relationships Build a culture of continuous improvement through the development of CTS Operation Systems and process improvement mindset Improved Operating Sys
Slide 20: CTS Core Values
Play to Win Responsiveness Simplicity Solution Oriented CTS Core Values
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures prese
Slide 22: Regulation G Schedules: Adjusted Gross Margin
Regulation G Schedules ($ Millions, except percentages) Adjusted Gross Margin Three Months Ended March 31, LTM Twelve Months Ended December 31, 2024 2023 Q2-23 to Q1 -24 2023 2022 2021 2012 Gross margin $ 45.1 $ 51.7 $ 184.3 $ 190.9 $ 210.5 $ 184.6 $ 91.5 Net sales $ 125.7 $ 146.0 $ 530.2 $ 550.4 $
Slide 23: Regulation G Schedules: Adjusted SG&A Expenses
Regulation G Schedules ($ Millions, except percentages) Adjusted SG&A Expenses Three Months Ended March 31, LTM Twelve Months Ended December 31, 2024 2023 Q2-23 to Q1 -24 2023 2022 2021 2012 SG&A Expense $ 22.3 $ 22.0 $ 84.1 $ 83.8 $ 91.5 $ 82.6 $ 63.1 Net sales $ 125.7 $ 146.0 $ 530.2 $ 550.4 $ 586
Slide 24: Regulation G Schedules: Adjusted Operating Earnings
Regulation G Schedules ($ Millions, except percentages) Adjusted Operating Earnings Three Months Ended March 31, Twelve Months Ended December 31, 2024 2023 2023 2022 2021 Operating earnings $ 14.5 $ 22.2 $ 75.1 $ 93.0 $ 76.5 Net sales $ 125.7 $ 146.0 $ 550.4 $ 586.9 $ 512.9 Operating earnings as a %
Slide 25: Regulation G Schedules: Adjusted EBITDA Margin
Regulation G Schedules ($ Millions, except percentages) Adjusted EBITDA Margin Three Months Ended March 31, LTM Twelve Months Ended December 31, 2024 2023 Q2-23 to Q1 -24 2023 2022 2021 Net earnings (loss) $ 11.1 $ 18.3 $ 53.3 $ 60.5 $ 59.6 $ (41.9) Net sales $ 125.7 $ 146.0 $ 530.2 $ 550.4 $ 586.9
Slide 26: Regulation G Schedules: Adjusted Net Earnings and Adjusted Diluted EPS
Regulation G Schedules ($ Millions, except percentages and per share amounts) Adjusted Net Earnings and Adjusted Diluted Earnings Per Share Three Months Ended March 31, 2024 2024 2023 2023 Per share Per share Net earnings (A) $ 11.1 $ 0.36 $ 18.3 $ 0.58 Adjustments to reported net earnings: Restruct
Slide 27: Regulation G Schedules: Adjusted Net Earnings and Adjusted Diluted EPS
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 shar
Slide 28: Reflected in selling, general and administrative and other (expense) income, net. Reflected in cost
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 2021, the discrete tax items relate to items we deemed outsid
Slide 29: Free Cash Flow and Controllable Working Capital
($ Millions, except percentages) Free Cash Flow ($ Millions, except percentages) Controllable Working Capital 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.