Cts Corporation · NYSE:CTS
Cts — Investor Presentation (July 2022)
25 slides from Cts's investor presentation, Jul 26, 2022
Slide 1: CTS Investor Presentation July 2022
CTS Investor Presentation July 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements This document 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, sta
Slide 3: CTS is a Leading Designer and Manufacturer of Custom Engineered Solutions
11.5% Non-Transportation Revenue CAGR LTM Revenue $548 Million Global design and manufacturing capabilities Technical and application expertise applied across diverse and growing end markets 1 Last 12 months Revenue as of Jun 2022 2 2017-2021 including acquisitions Europe 13% North America 57% Asia
Slide 4: Why Invest in CTS
Deep engineering capabilities and custom engineered products for OEMs Strong presence in position, ultrasonic and temperature sensing with domain expertise Deep and long-standing customer relationships Positioned to grow at 10% CAGR through execution of Organic and Inorganic strategies Clear strateg
Slide 5: Leveraging Domain Expertise to Expand into Premium End Markets
Addressable Market Size: Key Applications: Revenue CAGR: Leveraging Domain Expertise to Expand into Premium End Markets $2.9B 9.2% Industrial Printing Flow Rate Meters Material Handling HVAC Food Service Industrial $1.5B 8.1% High-Resolution Ultrasound Intravascular Ultrasound Instruments, Neonatal
Slide 6: Diversifying Revenue in Growing End Markets Outside of Transportation
2017 Revenues $423M Long term target +10% CAGR Beginning in 2022, sales to Telecom & IT end-market are included in the Industrial end-market Utilizing core capabilities and domain expertise in fast-growing end markets Investing in business development resources, process and technology capabilities D
Slide 7: Secular Themes Drive Growth Across End Markets
Sustainability Automation Healthcare Innovation Electrification Reduced Emissions Fluid Metering Energy Efficiency Industry 4.0 Factory Automation Passenger Safety Defense Automation Improved Diagnostics Therapeutics Non-Invasive Patient Experience Applying Deep Domain Expertise to Solve Today’s Mos
Slide 8: Light Vehicle portfolio carries over to Electric Vehicles
>95% Light Vehicle portfolio carries over to Electric Vehicles >$1Bn expansion in Available Market with EV-related new products Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor Chassis Height Sensor Accelera
Slide 9: The CTS Advantage – Your Partner in Smart Solutions
Technology and application expertise creates competitive advantage and long-term relationships with blue-chip customers Technology Leadership Recognized leader with global design and engineering capabilities The CTS Advantage – Your Partner in Smart Solutions Domain Expertise Deep experience solving
Slide 10: Long-Term Relationship with Blue-chip Customers
Long-Term Relationship with Blue-chip Customers
Slide 11: Strong Execution Capabilities
1 Comparison of 2021 vs. 2012 from continuing operations 2 As of December 2021 as % of Adj Net Earnings 3 Cumulative from 2013 to Q2 2022 YTD thru dividends & share repurchases Improved Operational Efficiency Gross Margin +590 bps1 Streamlined SG&A (370) bps1 Adj. EBITDA +1160 bps1 Improved process
Slide 12: Capital Allocation Framework
Cash Return to Shareholders Dividends & Buybacks 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 1 $127 Million1 in capital returned to shareholders since 2013 Capital Allocation Priorities Maintain healthy
Slide 13: 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 14: Case Study: Broad Piezoelectric Ceramic Growth Platform
Ferroperm complements existing CTS piezoceramic capabilities Expand Product Range Broaden Geographic Reach Enhance Technology Portfolio Strengthen Customer Relationships Case Study: Successfully Built Broad Piezoelectric Ceramic Growth Platform Single Crystal Technology 2016 2017 Tape Cast Technolog
Slide 15: Temperature Sensing Platform Developed through M&A
Robust growth platform with $1.1B+ SAM 2020 Medical applications Neonatal applications Lab freezers Fluid warmers Analytical Instruments Industrial applications 2019 HVAC & Refrigeration Pool & Spa Food Service Boilers, Water Heating Industrial + Medical 2022 Europe Expansion Successfully developed
Slide 16: Financial Performance and FY 2022 Outlook
Non-transportation markets robust in 1H, monitoring 2H demand Light vehicle market – US 13-14.5M, China ~24-25M, Europe 15-16M units, forecasts lowered from earlier this year Robust commercial vehicle market through end of 2022 Monitoring additional risks from interest rates, supply challenges, infl
Slide 17: Financial Framework
2012 LTM Long-Term Target Revenue $304M $548M +10% /yr Gross Margin3 30.1% 36.8% 35-38% SG&A Expense3 19.4% 15.2% 13-15% R&D Expense 6.9% 4.5% 5-7% CapEx 4.4% 3.4% ~4% 2 Financial Framework 1 2012 Financials from Continuing Operations 2 LTM through Q2 2022 3 Adjusted Gross Margin and SG&A Expenses 1
Slide 18: Our Sustainability Journey
Cross-functional ESG Steering Committee Oversight of sustainability initiatives by Nominating, Governance and Sustainability Committee Board diversity >40% Ethical business practices and compliance training for all employees Supporting sustainable products Vehicle electrification Promoting health an
Slide 19: Appendix
cts Siar Soueons Appendix
Slide 20: Focus 2025
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 Op
Slide 21: CTS Core Values
CTS Core Values Play to Win Responsiveness Simplicity Solution Oriented
Slide 22: Adjusted Diluted EPS Regulation G Schedules
Adjusted Diluted EPS Regulation G Schedules LTM 2022 Q3'21-Q2'22 2021 2020 Diluted earnings (loss) per share 1.02 $ (0.68) $ (1.30) $ 1.06 $ Tax affected adjustments to reported diluted earnings (loss) per share: Restructuring charges 0.03 0.08 0.06 0.04 Foreign currency loss (gain) 0.11 0.20 0.10 (
Slide 23: Adjusted EBITDA Regulation G Schedules
($ Millions, except percentages) Adjusted EBITDA Regulation G Schedules LTM Full Year Q3'21-Q2'22 2021 2012 Net earnings (loss) (21.9) $ (41.9) $ 13.5 $ Depreciation and amortization expense 27.2 26.9 13.5 Interest expense 2.2 2.1 2.6 Tax expense (benefit) (10.5) (19.0) 1.0 EBITDA (3.1) (31.8) 30.5
Slide 24: Adjusted Gross Margin Regulation G Schedules
($ Millions) Adjusted Gross Margin Regulation G Schedules LTM Full Year Q3'21-Q2'22 2012 Gross margin 200.5 $ 91.5 $ Adjustment to reported gross margin: Inventory fair value step-up 1.1 - Adjusted gross margin 201.6 $ 91.5 $ Net sales 547.6 $ 304.5 $ Adjusted gross margin as a % of net sales 36.8%
Slide 25: Adjusted SG&A Expenses Regulation G Schedules
($ Millions) Adjusted SG&A Expenses Regulation G Schedules LTM Q3'21-Q2'22 2021 2012 SG&A Expense 87.4 $ 82.6 $ 63.1 $ Adjustments to reported SG&A expense: Environmental charges 3.3 2.3 - Acquisition-related costs 0.8 - - Additional CEO search, legal costs and acquisition - - 2.5 Additional legal c