Cts Corporation · NYSE:CTS
Cts — Investor Presentation (October 2024)
29 slides from Cts's investor presentation, Oct 29, 2024
Slide 1: CTS Investor Presentation October 2024
CTS Investor Presentation October 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 $2.11 8% Diversified End Market Revenue CAGR LTM Revenue $513 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 September 2024 2 Diversi
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 –piezo formulations, medical applications, eBrakeTM Mid-Single
Slide 5: Secular Themes Drive Growth Across End Markets
Automation Healthcare Innovation Industry 4.0 Factory Automation Passenger Safety Autonomous Underwater Vehicles Improved Diagnostics Minimally Invasive Procedures Therapeutics Patient Experience Secular Themes Drive Growth Across End Markets Applying deep domain expertise to solve today’s most pres
Slide 6: Deep Technical Expertise Provides a Sustainable Advantage
ALTERNATE VERSION: Deep Technical Expertise Provides a Sustainable Advantage Signal Processing Bulk Tapecast Single Crystal Textured Ultrasonic Imaging: Traditional, IVUS and High Definition Medical Therapeutics Piezoelectric Ceramics Position Sensing Capabilities Key Technologies Applications Curre
Slide 7: Growing Revenue in Diversified End Markets
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% 10-20% 10-20% 20-30%
Slide 8: Enabling Efficiency and Automation in Industrial Markets
Addressable Market Size: $3.6B LTM Revenue:1 $119M -20% 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 Sus
Slide 9: 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 $69
Slide 10: Ensuring Performance and Reliability in Aerospace and Defense
Enhanced Performance Underwater Sonar Reliability Space Temperature Applications Vibration Monitoring Ordnance and Countermeasures AEROSPACE & DEFENSE Ensuring Performance and Reliability in Aerospace and Defense Higher Performance and Reliability in Mission Critical Harsh Environments Addressable M
Slide 11: Electrification Creating Growth Opportunity in Transportation
Electrification Creating Growth Opportunity in Transportation 11 TRANSPORTATION Light Vehicle Content Grows > 2x with Electrified Applications Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor 95% of existing
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 $229 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 15-18% 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 Acquisition – SyQwest, LLC
Strategic Acquisition – SyQwest, LLC Moving up the value chain, increasing value to Defense customers Surface Ships Submarines Torpedoes AUV/UUVs Enabling Sonar Systems for: Business Summary Accelerate CTS diversification strategy Deeper penetration into US defense Growth from continued military spe
Slide 16: FY 2024 Guidance
$2.25 3 $2.05 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. 3 Guid
Slide 17: Financial Framework
20121 LTM2 Long-Term Target Revenue $304M $513M +10% per year Adj Gross Margin %3 30.1% 36.3% 36-38% Adj SG&A Expense %3 19.4% 16.5% 13-15% R&D Expense % 6.9% 4.5% 5-6% CapEx % 4.4% 3.2% ~4% 2 Financial Framework 1 1 2012 Financials from Continuing Operations. 2 LTM through September 2024. 3 Adj. Gr
Slide 18: Appendix
Appendix
Slide 19: Focus 2025
01 02 03 Develop customer partnerships that are authentic and collaborative, resulting in mutually beneficial revenue growth Deeper Customer Relationships Build a culture of continuous improvement through the development of CTS Operation Systems and process improvement mindset Improved Operating Sys
Slide 20: CTS Core Values
Play to Win Responsiveness Simplicity Solution Oriented CTS Core Values
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures prese
Slide 22: Regulation G Schedules: Adjusted Gross Margin
Regulation G Schedules ($ Millions, except percentages) Adjusted Gross Margin Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, LTM Twelve Months Ended December 31, 2024 2023 2024 2023 2024 Q4-23 to Q3 -24 2023 2022 2021 2012 Gross margin $ 49.8 $ 46.4 $ 14
Slide 23: Regulation G Schedules: Adjusted SG&A Expenses
Regulation G Schedules ($ Millions, except percentages) Adjusted SG&A Expenses Three Months Ended September 30, Nine Months Ended September 30, LTM Twelve Months Ended December 31, 2024 2023 2024 2023 Q4-23 to Q3-24 2023 2022 2021 2012 SG&A Expense $ 22.5 $ 18.7 $ 66.1 $ 64.3 $ 85.6 $ 83.8 $ 91.5 $
Slide 24: Regulation G Schedules: Adjusted Operating Earnings
Regulation G Schedules ($ Millions, except percentages) Adjusted Operating Earnings Three Months Ended September 30, Nine Months Ended September 30, LTM Twelve Months Ended December 31, 2024 2023 2024 2023 Q4-23 to Q3-24 2023 2022 2021 Operating earnings $ 21.5 $ 18.2 $ 53.8 $ 58.8 $ 70.1 $ 75.1 $ 9
Slide 25: Regulation G Schedules: Adjusted EBITDA Margin
Regulation G Schedules ($ Millions, except percentages) Adjusted EBITDA Margin Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, LTM Twelve Months Ended December 31, 2024 2023 2024 2023 2024 Q4-23 to Q3-24 2023 2022 2021 Net earnings (loss) $ 18.7 $ 14.0 $
Slide 26: Regulation G Schedules: Adjusted Net Earnings and EPS
Regulation G Schedules ($ Millions, except percentages and per share amounts) Adjusted Net Earnings and Adjusted Diluted Earnings Per Share Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, 2024 2024 2023 2023 2024 2024 2023 2023 2024 2024 Per share Per sha
Slide 27: Regulation G Schedules: Adjusted Net Earnings and 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: Regulation G Schedules: Footnotes
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.