Slide 1: Safe Harbor Statement
Safe Harbor Statement 2 This presentation 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, st
Slide 2: The CTS Story
The CTS Story 1896 2015 1902 1922 1950 1962 1980’s 1999 2012 2013 Chicago Telephone Supply Company established (later to become CTS) Evolved from a manufacturer of finished products (telephones and switchboards) to a major supplier of radio receiver components Listed on the “Big Board” at the New Yo
Slide 3: CTS Today: Global Supplier of Sensors, Actuators and Electronic Components
Global Supplier of Sensors, Actuators and Electronic Components CTS Today Sales by Market Sales by Region Sales by Market and Geographic Regions 4 Transportation 67% Communications 3% Note: Based on trailing twelve months sales (Q4 2014 through Q3 2015). Americas 54% Europe 13% Asia 33% Computer/ Ot
Slide 4: Strategic Focus: Simplify, Focus, Drive Profitable Growth
Drive Profitable Growth Simplify Focus Strategic Focus 1 2 3 5 This image cannot currently be displayed.
Slide 5: Simplify – Improving Cost Structure
Grow manufacturing in best cost locations – ~50% in 2013 to >80% by 2017 – ~65% in 2014 Shift SG&A spend – Increase Sales & Marketing, Optimize G&A Improve presence in Europe and Asia Increase customer intimacy Lean corporate office G&A best cost optimization Continue to fund R&D for growth Closer t
Slide 6: Focus – Competitive Strengths
Providing innovative and customized solutions for our customers’ most challenging needs Highly Responsive and Flexible to Customers’ Individual Requirements Established Brand with Strong Reputation for Quality and Reliability Market-Driven New Product Development Enabled by Innovative Technologies +
Slide 7: Competitive Strengths
Competitive Strengths RESPONSIVE REPUTATION INNOVATION Market-Driven New Product Development Enabled by Innovative Technologies Highly Responsive Established Brand and Flexible to with Strong Customers’ Reputation for Individual Quality and Requirements Reliability Providing innovative and customiz
Slide 8: Focus – Diversified Portfolio: Move, Sense, Connect
Move Sense Connect 2 FOCUS – Diversified Portfolio – Sense Connect Move 9 Air Grill Shutter Actuator Smart Actuator Micro Actuators Inkjet Torque Motor Actuator EMI/RFI Filters Timing Components Switches & Resistors Sensors Accelerator Pedals RF Filters HDD
Slide 9: Focus – Broad Customer Base
2 FOCUS – Broad Customer Base 10 New European OEM Medical Light Vehicle Industrial, Defense Communications Industrial, Computer Distribution Light & Commercial Vehicle Computer Industrial Move Sense Connect
Slide 10: Drive Profitable Growth – New Business Awards
DRIVE PROFITABLE GROWTH – New Business Awards 3 11 ($ millions) $299 $484 $455 2012 2013 2014 2015 2Q - 4Q 3Q YTD Not Reported 1Q Not Reported New Customers in 2015:
Slide 11: Drive Profitable Growth – Targeted End Markets
SIMPLIFY FOCUS DRIVE PROFITABLE GROWTH 30-50% 20-30% 10-20% 10-20% 10-20% 5-15% Targeted End Markets Light Vehicles Industrial Medical Commercial Vehicles Comm./IT Aviation/Defense EMS Divestiture Front End Refocus New Customers Regional Expansion Organic Projects M&A Legend: AD: Aviation/Defense C:
Slide 12: Drive Profitable Growth – Organic Growth
3 DRIVE PROFITABLE GROWTH – Organic Growth Increase Europe, Asia presence Sales & Marketing, R&D closer to customers Create Partnerships with custom engineering Utilize CTS Brand Strength New Products Improve Customer Intimacy Leveraging Competitive Strengths REPUTATION INNOVATION RESPONSIVE Leverag
Slide 13: Organic Growth – New Products, Applications, Customers
3 DRIVE PROFITABLE GROWTH – Organic Growth New products, new applications, new customers Develop next generation sensor products Expanded pedal applications Expanded switch and control product line Expanded piezo-ceramic applications and new technologies: Naval sonar buoys Naval hydrophones Miniatur
Slide 14: Accelerate Through Targeted Acquisitions
DRIVE PROFITABLE GROWTH – Accelerate Through Targeted Acquisitions 3 Enhance Product Portfolio Broaden Geographic Reach Disciplined approach to acquisitions Returns in excess of cost of capital Accretive to earnings Maintain balance sheet strength Synergy opportunities Strengthen Customer Relationsh
Slide 15: FST Overview
FST Overview Start-up founded by two MIT Ph. D. graduates located in the Boston area Innovative sensing technology that uses a low power RF signal to measure soot and ash loading on Diesel Particulate Filters (DPF) or Gasoline Particulate Filters (GPF) Suitable for aftertreatment systems in Passenge
Slide 16: Target Capital Deployment
Disciplined capital deployment strategy DRIVE PROFITABLE GROWTH – Target Capital Deployment 3 Capital Structure Leverage = 1.0x - 2.5x EBITDA Operating Cash Flow Return Capital to Shareholders Dividends & Buybacks ~4% of Sales 20-40% of Free Cash Flow 12-14% of Sales 60-80% of Free Cash Flow 17 Grow
Slide 17: Annual Financial Performance Trend
Annual Financial Performance Trend Sales Adjusted Earnings Per Share $405 $390 $1.05 $0.95 -2% to +8% ($ in millions) 18 Note1: Sales are from continuing operations Adjusted EPS is as reported -3% to 0% Note2: 2015E represents guidance provided on October 27, 2015 $280 $305 $409 $404 2011 2012 2013
Slide 18: Free Cash Flow
Free Cash Flow Note: Free Cash Flow defined as net cash provided by operations less capital expenditures 2014 Free Cash Flow impacted by one-time cash outflows such as CEO transition costs & restructuring-related expenses Pre-Recession Average $20-25M Recession-Recovery Average $18M Normalized $20-3
Slide 19: Strong Balance Sheet and Conservative Capital Structure
Strong Balance Sheet and Conservative Capital Structure 20 Total Debt to Capitalization ($M) Net Debt $44 $(49) $(60) Current Capital Structure ($200M Facility) Debt Cash Valpey Acq. Singapore Facility Sale $(60) ($ Millions) D&R Acq. Capital Structure Equity 77% Bank Debt 23% $110 $124 $135 $151 $1
Slide 20: Strategic Focus
Strategic Focus 21 Drive Profitable Growth Simplify Focus 1 2 3 Exited EMS business Improved cost structure Right-sizing global footprint Renewed approach and reenergized culture Sharpening focus on core strengths Sense Connect Move Meeting the evolving needs of customers Refreshing brand and commun
Slide 21: Strategic Focus
Strategic Focus Simplify * Exited EMS business * Sharpening focus on core strengths * Improved cost structure Sensei [connect ore © Right-sizing global * Meeting the evolving needs footprint of customers. * Refreshing brand and * Renewed approach and communication approach reenergized culture - ; 8
Slide 22: Financial Summary
Financial Summary Note 1: Adjusted data excludes restructuring and related charges, certain asset impairments, income tax and other adjustments. Note 2: All figures are from continuing operations except for Adjusted EPS (As Reported), Free Cash Flow, Total Debt / Capitalization and Controllable Work
Slide 23: CTS Competitors
CTS Competitors 24 Electrocomponents (Potentiometers, DIP/Rotary switches, Encoders) Resistor Networks EMI/RFI Filters Ceramic Filters Piezo Electronics Frequency Products Mechatronics Sensors Pedals Bosch, Denso, Hella, KSR Alps, Bourns, Bosch, Continental, Delphi, Sensata, Stoneridge, TT (AB), Tyc
Slide 24: CTS Core Values
Responsive Play to Win Solutions Oriented CTS CORE VALUES 1 SIMPLIFY – Renewed Approach Simplicity 25 Integrity Respect Self Confidence
Slide 25: CTS Core Values
ne Ee CTS CTS CORE VALUES Solutions Play to Win Responsive Oriented Simplicity Integrity | Respect | Self Confidence ll Simplify, Focus and Drive Profitable Growth.