Cts Corporation · NYSE:CTS
Cts — Investor Presentation (July 2020)
22 slides from Cts's investor presentation, Jul 31, 2020
Slide 1: Investor Presentation July 2020
Investor Presentation July 2020
Slide 2: Forward Looking Statements
Forward Looking Statements 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,
Slide 3: Solid Foundation With Opportunities For Growth
Solid Foundation With Opportunities For Growth We aim to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. Telecom & IT Aero & Europe Defense 14% 3% 9% Medical North 11% America 56% Asia $418 30% Million 57% 20% Indust
Slide 4: Broad Product Portfolio Around Targeted Strategy
Broad Product Portfolio Around Targeted Strategy ▪ Controls ▪ EMI/RFI Filters ▪ Piezoelectric ▪ Pedals ▪ Frequency Control Products ▪ Piezoelectric Products Products ▪ Rotary Actuators ▪ Position Sensors ▪ RF Filters ▪ Switches ▪ Specialty Capacitors ▪ Temperature Sensors ▪ Specialty Resistors ▪ Tra
Slide 5: Transportation Market
Transportation Market Sectors Electric/Hybrid Commercial Light Vehicles Motorcycles Relevant Products Vehicles Vehicles/Off-Road Key Customers ▪ Accelerator Pedals ▪ Position Sensors ▪ Temperature Sensors ▪ DPF RF Sensors ▪ Smart Actuator 5
Slide 6: Industrial Market
Industrial Market Sectors Inkjet Print Heads HVAC Systems Commercial Sonar Flow Metering Relevant Products Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ Sensors & Controls ▪ Switches ▪ EMI/RFI Filters 6
Slide 7: Medical Market
Medical Market Sectors Ultrasonic Imaging Therapeutic Ultrasound Dental Equipment Equipment Control Panel Relevant Products Key Customers ▪ Piezoelectric Components ▪ Sensors & Controls ▪ Switches ▪ Frequency Control Products ▪ EMI/RFI Filters 7
Slide 8: Aero & Defense Market
Aero & Defense Market Sectors Torpedo/Missile Airplane Sonobuoys Hydrophones Relevant Products Control Communications Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ RF Filters ▪ Temperature Sensors ▪ Frequency Control Products 8
Slide 9: Telecom & IT Market
Telecom & IT Market Sectors Macro Cell Small Cell Satellite Wireline/ Relevant Products Base Stations Base Stations Communication Network Switching Key Customers ▪ Piezoelectric Components ▪ RF Filters ▪ EMI/RFI Filters ▪ Frequency Control Products ▪ Temperature Sensors 9
Slide 10: End Markets Growing Mid-Single Digits
End Markets Growing Mid-Single Digits Transportation Industrial Medical Aero & Defense Telecom & IT 9% 3% 11% 57% 20% Goal LV 30-50% 20-30% 10-20% 5-15% 10-20% CV 10-20% SAM $3.4B $2.2B $0.4B $0.9B $1.9B ▪ Booked Business, Share Gains ▪ 3D and textile printing ▪ Medical 3D/4D ultrasound ▪ Hydrophone
Slide 11: Strategic M&A Approach
Strategic M&A Approach Expand Enhance Broaden Strengthen Product Technology Geographic Customer Range Portfolio Reach Relationships Case Study: Successfully Built Broad Piezoelectric Ceramic Growth Platform Pre 2016 2016 2017 2018+ Bulk Technology Single Crystal Technology Tape Cast Technology Robus
Slide 12: QTI Sensing Solutions Acquisition
QTI Sensing Solutions Acquisition Company Overview Acquisition Rationale ▪ Founded in 1977, facilities in Boise, ID and Tecate, Mexico ▪ Provides CTS a new core temperature sensing technology ▪ QTI Sensing Solutions is a leading designer and manufacturer ▪ Increases presence in growing industrial, a
Slide 13: Balanced Capital Deployment Approach
Balanced Capital Deployment Approach Operating Cash Flow 12-15% of Sales Growth Return Capital to Investment Acquisitions Shareholders ~4% of Sales* 60-80% of Dividends & Buybacks Free Cash Flow 20-40% of Free Cash Flow *4.6% in 2019 Capital Structure Leverage = 1.0x - 2.5x EBITDA Not adjusted for C
Slide 14: Financial Performance Trend
Financial Performance Trend Sales Adjusted Earnings Per Share ($ Millions) $470 $469 $1.53 $423 $1.45 $1.23 $187 $0.35 2017 2018 2019 Q2 YTD 2020 2017 2018 2019 Q2 YTD 2020 Due to ongoing market uncertainties, management has withdrawn its guidance for 2020 14
Slide 15: Financial Framework
Financial Framework Long-Term 2012 2019 Target Range Gross Margin 30.0% 33.6% 34-37% SG&A Expense 20.7% 15.0% 13-15% R&D Expense 6.9% 5.5% 5-7% CapEx 2.6% 4.6% ~4% Not adjusted for Covid-19 impact Targeting 10% Annual Growth (Organic + Inorganic) 15
Slide 16: Adjusting In Response To Impact Of COVID-19
Adjusting In Response To Impact Of COVID-19 Actions Adequate Liquidity ▪ Prioritize employee safety at operating sites ▪ Strong cash & debt availability ($ Millions) ▪ Strive to serve customer needs $300 Total Facility ▪ Cost actions to decrease cash burn ‐ Temporary pay reductions, furloughs ‐ Temp
Slide 17: Appendix
cis Appendix
Slide 18: CTS Core Values
CTS Core Values Play to Win Simplicity cts Responsiveness Solution Oriented
Slide 19: Financial Summary
Financial Summary ($ Millions, except percentages and Adjusted Diluted EPS) Q2 YTD 2020 2019 2018 2017 Net Sales $187.3 $469.0 $470.5 $423.0 Adjusted Gross Margin $59.5 $157.6 $165.0 $145.2 Adjusted Gross Margin % of Sales 31.8% 33.6% 35.1% 34.3% Depreciation and Amortization $13.1 $24.6 $22.5 $20.7
Slide 20: Regulation G Schedules: Adjusted Gross Margin
Regulation G Schedules Adjusted Gross Margin ($ Millions, except percentages) Q2 Year-to-Date Full Year 2020 2019 2020 2019 2019 2018 2017 Gross margin $ 26.6 $ 41.2 $ 59.5 $ 81.8 $ 157.6 $ 165.0 $ 140.4 Adjustments to reported gross margin: Pension settlement charge - - - - - - 4.8 Adjusted gross m
Slide 21: Regulation G Schedules: Adjusted EBITDA
Regulation G Schedules Adjusted EBITDA Q2 Year-to-Date Full Year ($ Millions, except percentages) 2020 2019 2020 2019 2019 2018 2017 Net earnings $ 4.9 $ 11.9 $ 8.7 $ 23.4 $ 36.1 $ 46.5 $ 14.4 Depreciation and amortization expense 6.6 6.0 13.1 11.9 24.6 22.5 20.7 Interest expense 0.9 0.5 1.8 0.9 2.6
Slide 22: Regulation G Schedules: Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS Q2 Year-to-Date Full Year 2020 2019 2020 2019 2019 2018 2017 Diluted earnings per share $ 0.15 $ 0.36 $ 0.27 $ 0.70 $ 1.09 $ 1.39 $ 0.43 Tax affected adjustments to reported diluted earnings per share: Restructuring charges 0.01 0.02 0.01 0.07 0.18 0.12 0.