Slide 1: March 2008 Investor Presentation
March 2008 Investor Presentation www.ctscorp.com
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement 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 3: Segment and Market Mix
3 Segment and Market Mix 2007 Revenue $686 Million 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.59 0.41 West North Components and Sensors 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.59 0.26 0.15 West North EMS Sensors & Actuators Electronic Components Focused on medical, industrial, defense and aerospace Desig
Slide 4: Key Customers
4 Key Customers EMS Components and Sensors All Other B A East 0.73 0.1 0.17 Top 2 Blue Chip Customers Globally Diversified Low Customer Concentration
Slide 5: Global Footprint
5 Global Footprint Components and Sensors EMS North America Asia E Low Cost Europe East 0.45 0.02 0.39 0.03 0.11 Based on origin of sales Sales By Region Low Cost Manufacturing 44%
Slide 6: Reposition Portfolio to Higher Margin Businesses
6 Reposition Portfolio to Higher Margin Businesses 2005-2007 2008 2012 EMS 0.59 0.56 0.4 Components & Sensors 0.41 0.44 0.6 Components and Sensors Sensors and Actuators Electronic Components Higher margin businesses Faster growth, organic and acquisition Higher margin new products EMS Lower margin b
Slide 7: Growth Drivers 2008-2012
7 Growth Drivers 2008-2012 Components and Sensors Segment Sensors and Actuators Increasing penetration of Asian customers (e.g. Toyota, Honda, Chery) New products and product extensions being introduced (e.g. Smart Actuators and Turbocharger sensors) Tighter emissions regulations will drive growth F
Slide 8: Sensors and Actuators
8 Sensors and Actuators Double-digit sales growth High technology, higher margin business Leveraging capabilities into new markets Growth Through New Technology, Customers and Penetration of New Markets Sales Sensors & Actuators Auto 0.74 0.26 Sensors/ Actuators Macro Trend Driving Growth "Green" in
Slide 9: Awarded Platforms
9 Awarded 66 Platforms CTS currently supplies 10 major customers in North America, Europe and Asia. Total Available Market (Including Pedal Sensors) Accelerator Pedal Module $150 $223 $266 $361 $381 $330 CTS Accelerator Pedal Modules Offer Performance, Quality and Cost Advantages 2003 2004 2005 2006
Slide 10: Extending Sensor and Actuator Capabilities
10 Small Engine Light Vehicle Commercial / Diesel Vehicles Smaller Vehicles Larger Vehicles Growth Growth Extending Sensor and Actuator Capabilities Creating A New Growth Engine in Commercial Markets 1st Qtr 2nd Qtr East 0.9 0.1 Total Commercial Market $1B Target $100M In Five Years 10% Received fir
Slide 11: Electronic Components
11 Electronic Components Double-digit sales growth (organic and acquisitions) High technology, high margin business Macro Trend Driving Growth Explosive communication growth in emerging markets Developed markets driving higher data traffic - - Social networking; YouTube, Facebook Demographics, defen
Slide 12: Electronic Components - Communications Infrastructure
12 Electronic Components - Communications Infrastructure OCXO RF Module Ceramic Filter WiMAX Optical Networking Cellular Repeaters Wireless Base Station Satellite Communications 2003 2004 2005 2006 2007 Design Wins 23 31 37 41 45 18% CAGR Infrastructure Sales $ Millions Major/New Customers Cisco, Hu
Slide 13: Electronic Components - Piezo Electronics
13 Electronic Components - Piezo Electronics 2005 2006 2007 2008 2009 2010 Sales 10.3 13.2 13.4 16 20 23 Alpha 2 3 4 10 Sales $ in Millions Medical Ultrasound Wide Format Inkjet Printer Head Undersea Energy Exploration 21% CAGR Aerospace Soft and Hard Piezo Ceramic Materials Newly acquired "hard" pi
Slide 14: Electronics Manufacturing Solutions
14 Electronics Manufacturing Solutions Target customers with complex needs. Target niche sectors - defense and aerospace, medical, industrial. Provide turnkey services, design to direct ship. Global capabilities. Strategy Sales EMS EMS 0.41 0.59 Mid single-digit sales growth Specialized Tier 2 globa
Slide 15: EMS Business
15 EMS Business Computer Comm Medical Industrial Aero/Def East 0.3 0.24 0.09 0.25 0.12 Communications Industrial Medical Computer 2007 Aerospace/ Defense Complexity, design capabilities, and higher service levels Stronger customer relationships Higher barriers to entry due to certifications, etc. Hi
Slide 16: Financial Summary
Financial Summary Definitions and reconciliation of non-GAAP financial terms are included in the Appendix of this presentation and on CTS' Web site at www.ctscorp.com
Slide 17: Sales and EPS
17 Sales and EPS 2003 2004 2005 2006 2007 2008 Guidance Adjusted 0.24 0.48 0.61 0.71 0.71 2003 - 2007 CAGR 31% Note: Excludes restructuring EPS (adjusted) 2003 2004 2005 2006 2007 2008 Guidance Sales 463 531.3 617.5 655.6 685.9 $ in Millions Sales 2003 - 2007 CAGR 10% $0.78 $0.83 $720 $741
Slide 18: Balance Sheet Management
18 Balance Sheet Management 1999 2000 2001 2002 2003 2004 2005 2006 2007 Adjusted Working Capital 0.049 0.138 0.134 0.028 0.02 0.024 0.024 0.024 0.025 Capital Expenditures Normal Level 3% '97 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Adjusted Working Capital 0.162 0.17 0.2 0.173 0.14 0.121 0
Slide 19: Net Earnings and Free Cash Flow
19 Net Earnings and Free Cash Flow 2003 2004 2005 2006 2007 Net Earnings 12.6 20 20.8 24.2 25.4 Free Cash Flow 16.7 1.3 29.5 31.4 32.5 Strong Free Cash Flow Indicates Quality of Earnings $ in Millions
Slide 20: Capital Structure
20 Capital Structure Strong Balance Sheet Supports Growth and Shareholder Value Initiatives Current Capital Structure Total Debt to Capitalization 2000 2001 2002 2003 2004 2005 2006 2007 Cash 20.6 13.3 9.2 25.3 61 12 39 53 Debt 174.8 139.2 86.2 50.6 36.5 70 27 20 % 0.442 0.386 0.265 0.205 0.238 0.2
Slide 21: Value Proposition
21 Value Proposition Positioned in high-growth markets. Positive cash flow. Leverageable capacity and operating structure. Strong balance sheet and conservative capital structure. Acquisitions and buybacks. Expect EPS Growth > Sales Growth
Slide 22: Appendix
22 APPENDIX
Slide 23: Sales By Market
23 C&S EMS East 0.26 0.06 0.01 0.09 0.59 Sales By Market Sensor and Actuator Communications Computer Industrial/Medical Defense & Aerospace Other East 0.26 0.19 0.2 0.2 0.08 0.07 Based on sales for the last four quarters through December 2007 Total CTS C&S EMS East 0.41 0.14 0.19 0.19 0.07 EMS 59% C
Slide 24: Sensors and Actuators Strategy
24 Sensors and Actuators Strategy Aggressively expand product base. Content growth > unit growth. Broaden customer base. Leverage product/market strength into Asian market. Penetrate adjacent / commercial markets. Targeting Double-Digit Growth Over 2008-2012 Sales Sensors & Actuators Auto 0.74 0.26
Slide 25: Sensors and Actuators Applications
25 Sensors and Actuators Applications Position Sensors: Throttle Valve Exhaust Gas Re-circulating Accelerator Pedal Modules: Pedal Position Sensors Fuel Level Sensing Seat Belt Tension Sensors Electronic Throttle Sensors Electric Actuators: Active Manifolds Turbochargers Diesel Systems
Slide 26: Electronic Components Strategy
26 Sales EC EC 0.85 0.15 Electronic Components Strategy Focus on higher margin engineered components. Launch innovative and differentiating new products. Expand into new customers and applications. Leverage our global footprint and Asian manufacturing. Acquisitions to expand technology and product r
Slide 27: Electronic Components Product Applications
27 Resistor & Frequency Products Frequency Filters and RF Modules for Infrastructure Variable Resistors, Encoders & Switches Router Storage Test System Game Controller Server Instrument Piezoelectric Medical Ultrasound Wide Format Inkjet Printer Head Undersea Energy Exploration Products Applications
Slide 28: Electronics Manufacturing Solutions Global Capability
28 Electronics Manufacturing Solutions Global Capability Target customers with complex needs. Target niche sectors - defense, aerospace, medical industrial. Provide turnkey services, design to direct ship. Leverage geographic footprint Local NPI and global volume assembly Global sourcing Strategy Sa
Slide 29: EMS Product Applications
29 EMS Product Applications Enterprise Virtual Array Systems Storage Infrastructure Communication Infrastructure GSM BTS Network Routers 3G Apps IP Infrastructure CDMA BTS Wireless LAN Arrays Medical Devices & Equipment Defense & Aerospace Pain Management Glucose Monitoring CO2 Cabinets Blood Analys
Slide 30: Major CTS Competitors
30 Major CTS Competitors PRODUCTS Sensors and Actuators Frequency Products - Infrastructure Ceramic Filters Resistor Networks Electronics Manufacturing Services COMPETITION AB Electronics, Alps, Bosch, Delphi, Denso, Hella, Mikuni, SiemensVDO C-MAC, M/A Com, Mtron, Raltron, Pericom, Sirenza, Vectron
Slide 31: Target Adjusted Return on Invested Capital (ROIC)
31 Target Adjusted Return on Invested Capital (ROIC) OPERATING MARGIN AFTER-TAX (NOPAT Margin) INVESTED CAPITAL TURNOVER Overall ROIC Improvement on Track 2003 2004 2005 4% 2% 6% 8% 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0% 6.3% 7.5% Shareholder Value ROIC 12% ROIC Curve 10% 12% 4.0 EMS Components & Sensors
Slide 32: Financial Summary
32 Financial Summary Note: Data shown excludes all restructuring and related one-time charges, asset impairments, customer reimbursement, income tax adjustment and material asset gains, except adjusted EBITDA, which includes the customer reimbursement only.
Slide 33: Other Financial Data - Income Statement
33 Other Financial Data - Income Statement Note: Data shown excludes restructuring costs, income tax adjustments related to repatriation and material asset gains.
Slide 34: Other Financial Data - Balance Sheet
34 Other Financial Data - Balance Sheet Metrics - Exhibit 99.1 CTS Corporation Appendix 1 CTS Corporation Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share 2007 2006 2005 Full Year Q4 Q3 Q2 Q1 Q4 Q2 2005 2004 2003 2002 Earnings per share $ 0.20 $ 0.16 $ 0.14 $ 0.13