Cts Corporation · NYSE:CTS
Cts — Investor Presentation (June 2017)
25 slides from Cts's investor presentation, Jun 16, 2017
Slide 1: Investor Presentation June 2017
Investor Presentation June 2017
Slide 2: Safe Harbor Statement
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, stat
Slide 3: Our Company
2016 Sales: $397 Million Sales by Market: Transportation – 66% Industrial – 17% Medical – 7% Defense / Aerospace – 4% Information Technology – 3% Communications – 3% Sales by Region: Americas – 58% Asia – 30% Europe – 12% Our Company Ticker: CTS (NYSE) Founded: 1896 Business: CTS i
Slide 4: Our History - Years of Innovation
Our History - 120 Years of Innovation 4
Slide 5: Our Vision and Value Proposition
Our Vision and Value Proposition We aim to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. 5
Slide 6: CTS Addressable Markets Growing to $6B by 2020
CTS Addressable Markets Growing to $6B by 2020 with Mid- Single Digit Growth Rates 6 Hydrophones for sonar applications Military communication Organic Growth Drivers 100GB & 400GB Wireline Networks Small Cell Deployment 3D and textile printing New products for industrial controls Actua
Slide 7: Product Applications in Passenger and Commercial Vehicles
Product Applications in Passenger and Commercial Vehicles Engine Efficiency Accelerator Pedal Module Current Sensor Gear Position Sensor Throttle Position Sensor Turbo Actuator Turbo Position Sensor Variable Valve Lift Sensor Key Customers New European Customer #1 New European Customer
Slide 8: Product Applications in Industrial
Key Customers Industrial Printers, HVAC, Automation and Safety Products Piezo micro-actuators Switches Encoders Frequency Control EMI Filters Product Applications in Industrial 8 Industrial Inkjet Printers Industrial HVAC
Slide 9: Product Applications in Defense / Aerospace
Key Customers Military Sonar and Communication Products Piezo hydrophones Piezo sonar arrays Frequency Control EMI Filters Product Applications in Defense / Aerospace 9 Unmanned Aerial Vehicles (UAV) Maritime Applications
Slide 10: Product Applications in Medical
Product Applications in Medical Key Customers Ultrasound / IVUS, Infusion Pumps, CPAPs and other medical devices Single Crystal Piezo Bulk Piezo Encoders Frequency Control Piezo micro-valves Switches Joysticks 10 Ultrasound Equipment Infusion Pumps CPAP Machines
Slide 11: Positioning for Growth with Fundamental Market Trends
Positioning for Growth with Fundamental Market Trends 11 Autonomous Vehicle SMART Smart Home/ Building Unmanned Aerial Vehicles (Drones) Improved Medical Diagnosis Fuel Efficiency/ Vehicle Electrification Miniaturization Energy Harvesting EFFICIENT Green Buildings Remote Monitoring Industry 4.0 Inte
Slide 12: Organic Growth
Organic Growth 12 $299 $484 $560 $488 2013 2014 2015 2016 New Business Awards Organic Growth around Sense, Connect and Move 1Q Not Reported Total Booked Business Note: Total Booked Business represents open purchase orders, contractual commitments, and the total expected lifetime revenue from busines
Slide 13: Targeted Acquisitions
Targeted Acquisitions 13 Disciplined approach to acquisitions: Returns in excess of cost of capital Accretive to earnings Maintain balance sheet strength Synergy opportunities Targeting 10% growth (both inorganic and organic) Expand Product Range Broaden Geographic Reach Enhance Technology
Slide 14: The Road Ahead of Us
The Road Ahead of Us LV I M CV C/IT AD LV/CV I C AD M IT/O LV I M CV C/IT AD 30-50% 20-30% 10-20% 10-20% 10-20% 5-15% Targeted End Markets Light Vehicles Industrial Medical Comm. / IT Commercial Vehicles Aviation/Defense EMS Divestiture Front End Refocus New Customers Regional Expansion Organic Proj
Slide 15: Single Crystal Technology Acquisition
Single Crystal Technology Acquisition Current Applications – 3D & 4D Ultrasound, IVUS Future Applications – Hearing Aid, Pacemaker Founded in 1997, located in Bolingbrook, IL The industry leader for the design and manufacture of piezoelectric single crystals for use in the medical and defense in
Slide 16: Noliac Acquisition
Noliac Acquisition Multilayer (Tape cast) Founded in 1997, facilities in Denmark and Czech Republic Designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical and defense industries Acquisition rationale:
Slide 17: Annual Financial Performance Trend
$409 $404 $382 $397 2013 2014 2015 2016 2017E Sales $0.82 $0.97 $0.93 $1.08 2013 2014 2015 2016 2017E Adjusted Earnings Per Share $420 Note 1: Sales are from continuing operations. Adjusted EPS is as reported. Note 2: 2017E represents guidance provided on April 27, 2017. Annual Financial Performance
Slide 18: Capital Structure, Cash and Debt
Equity 77% Bank Debt 23% $135 $157 $114 $122 $75 $91 $90 $95 2014 2015 2016 Q1 2017 Note 1: Change in Cash/Debt in 2016 due to Single Crystal Acquisition Note 2: Total available credit increased from $200M to $300M in 2Q 2016 Capital Structure Cash and Debt Net Debt $(60) $(66) Current Capital Struc
Slide 19: Capital Structure and Target Capital Deployment
Capital Structure Leverage = 1.0x - 2.5x EBITDA Operating Cash Flow Return Capital to Shareholders ~4% of Sales 20-40% of Free Cash Flow 12-14% of Sales 60-80% of Free Cash Flow Target Capital Deployment – Disciplined Approach Growth AcquisitionsInvestment Dividends & Buybacks 19
Slide 20: Financial Framework
Financial Framework 20 2012 2016 Long-Term Target Range Gross Margin 30.0% 35.4% 34-37% SG&A Expense 20.7% 15.5% 13-15% R&D Expense 6.9% 6.1% 5-7% CapEx 2.6% 5.2% ~4% Targeting 10% Annual Growth (Organic + Inorganic)
Slide 21: Appendix
Appendix 21
Slide 22: CTS Core Values
CTS Core Values a Play to Win Responsiveness Simplicity Solution Oriented
Slide 23: Financial Summary
Financial Summary Note 1: See Regulation G reconciliations from GAAP to Non-GAAP measures and adjustments. Note 2: All figures are from continuing operations except for Adjusted Diluted EPS (As Reported), Operating Cash Flow and Total Debt / Capitalization ($ Millions, except percentages and Adjuste
Slide 24: Regulation G Schedules: Adjusted EBITDA
Regulation G Schedules ($ Millions, except percentages) Adjusted EBITDA 24 2017 2016 2016 2015 2014 2013 2012 Net earnings from continuing operations 8.5$ 7.9$ 34.4$ 7.0$ 26.5$ 2.0$ 13.5$ Depreciation and amortization expense 4.7$ 4.0$ 19.0$ 16.3$ 17.0$ 17.3$ 13.5$ Interest expense 0.7$ 0.8$ 3.7$ 2.
Slide 25: Regulation G Schedules: Adjusted Diluted EPS and Debt to Capitalization
Regulation G Schedules Adjusted Diluted EPS ($ Millions, except percentages) Total Debt to Capitalization 25 2017 2016 2016 2015 2014 2013 2012 Total debt (A) 95.0$ 141.3$ 90.1$ 90.7$ 75.0$ 75.0$ 153.5$ Total shareholders' equity (B) 326.1$ 288.2$ 317.9$ 281.7$ 289.8$ 296.9$ 267.8$ Total capitalizat