Cts Corporation · NYSE:CTS
Cts — Q4 2022 Earnings Presentation
23 slides from Cts's earnings presentation, Feb 7, 2023
Slide 1: CTS Corporation 4th Quarter 2022 Earnings Call
CTS Corporation 4th Quarter 2022 Earnings Call Feb 7, 2023
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: Q4 and Full-Year 2022 Highlights
Q4 and Full-Year 2022 Highlights Fourth Quarter • Non-transportation revenues +22% • Transportation revenues (4)% primarily due to $142M 36.3% $0.56 semiconductor shortages Revenue Adj Gross Margin Adj. Diluted EPS • New business wins $71M +7% (38) bps +14% • Book-to-bill ratio 0.9, added 10 new cus
Slide 4: Establishing leadership in Non-transportation end markets
Establishing leadership in Non-transportation end markets Industrial Medical Aerospace & Defense Revenue Revenue Revenue ($ Millions) ($ Millions) ($ Millions) $168 +26% $133 $65 +35% $50 +6% $47 $104 $48 $39 $39 2020 2021 2022 2020 2021 2022 2020 2021 2022 • Added new customers in • New awards in •
Slide 5: Strategic acquisitions fueling diversification – M&A as a catalyst
Strategic acquisitions fueling diversification – M&A as a catalyst Enhancing Piezoceramic Technology and Geographic Reach Pre 2016 2016 2017 2022 Current Bulk Single Crystal Tape Cast Medical Therapeutics Growing Technology Technology Technology Europe Defense Piezoceramic Platform Building a Strong
Slide 6: Continued progress in Transportation end market
Continued progress in Transportation end market Revenue 4 New EV Platform Wins ($ Millions) $304 +7% • Strong execution while $284 navigating supply challenges $241 • Q4 2022 smart actuator sales impacted unfavorably by the temporary IC supply 2 Platforms 2020 2021 2022 challenge Total Booked Busine
Slide 7: CTS Portfolio Available
Light Vehicle portfolio carries over to Electric Vehicles Accelerator Modules Chassis Height Sensor Accelerator Modules Chassis Height Sensor eBrake™ CTS a Portfolio Seat Belt Buckle Seat Track Position Seat Belt Buckle Seat Track Position AC Motor Switch Sensor Sensor Switch Sensor Sensor Current S
Slide 8: Capital Allocation Priorities
Capital Allocation Framework Operating Capital Capital Allocation Priorities Cash Flow Structure - Maintain healthy Balance Sheet 15-17% of Sales Leverage 1.0 – 2.5x - Disciplined organic investments - Growth resources and tools - IT systems – ERP, analytics capabilities - CTS OS – Operational impro
Slide 9: Our Sustainability Journey
Our Sustainability Journey Supporting sustainable products: • Vehicle electrification components to comprise >25% of light vehicle sales by 20251 • Continued development of lead-free piezoceramics to replace current lead-based systems Continued progress in 2022 : • Provided over 3,500 hours in emplo
Slide 10: FY 2023 Guidance
FY 2023 Guidance Revenue Adj. Diluted EPS ($ Millions) 2020-2023 2020-2023 CAGR 9.5% 1 $640 CAGR 22.8% 1 $2.70 $580 $2.40 $587 $2.46 $513 $1.93 $424 $1.12 2020 2021 2022 2023 Est 2020 2021 2022 2023 Est Key Outlook Assumptions - Stable demand from medical & aerospace/defense customers - Softer outlo
Slide 11: 4th Quarter and Full-Year 2022 Financial Results
4th Quarter and Full-Year 2022 Financial Results
Slide 12: Q4 2022 Financial Summary
Q4 2022 Financial Summary ($ Millions, except EPS) Revenue Highlights $152 • Revenue +7% vs. Q4 2021, (6)% vs. Q3 $142 2022 $133 • Non-transportation revenue +22% vs. Q4 2021, acquisitions added $9 million • Transportation revenue impacted primarily by IC supply issue – down 4% vs. Q4 2021, Q4 2021
Slide 13: Full Year 2022 Financial Summary
Full Year 2022 Financial Summary ($ Millions, except EPS) Revenue Highlights $587 • Revenue up 14% vs. 2021, organic +10% $513 • Transportation sales up 7% vs. 2021 • Non-transportation sales up 24%, organic $424 growth +14% • Foreign exchange impact on revenue 2020 2021 2022 unfavorable $11 million
Slide 14: Consistent strong cash flow generation
Consistent strong cash flow generation Operating Cash Flow Cash and Debt ($ Millions) ($ Millions) $121 $400 Total Facility $86 $77 $157 $84 Borrowed 2020 2021 2022 Cash Debt Note: 2022 results include $27m from US Note: Cash and Debt balance as of Dec 31, 2022 pension plan termination Q4 2022 – $20
Slide 15: Q&A
Q&A cts
Slide 16: Appendix
Appendix cts
Slide 17: Regulation G Schedules: Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS Q4 Q3 Full Year 2022 2021 2022 2022 2021 2020 Diluted earnings (loss) per share $ 0.47 $ 0.28 $ 0.37 $ 1.85 $ (1.30) $ 1.06 Tax affected adjustments to reported diluted earnings (loss) per share: Restructuring charges 0.01 0.04 0.01 0.05 0.06 0.04 Foreign
Slide 18: Regulation G Schedules: Adjusted EBITDA Margin
Regulation G Schedules Q4 Q3 Full Year Adjusted EBITDA Margin ($ Millions) 2022 2021 2022 2022 2021 2020 Net earnings (loss) $ 14.9 $ 9.2 $ 11.8 $ 59.6 $ (41.9) $ 34.7 Depreciation and amortization expense 8.0 6.7 8.0 29.8 26.9 26.7 Interest expense 0.7 0.5 0.3 2.2 2.1 3.3 Tax expense (benefit) 5.8
Slide 19: Regulation G Schedules: Adjusted Gross Margin
Regulation G Schedules Adjusted Gross Margin ($ Millions) Q4 Q3 Full Year 2022 2021 2022 2022 2021 2020 Gross margin $ 51.0 $ 48.7 $ 53.3 $ 210.5 $ 184.6 $ 139.1 Adjustment to reported gross margin: Inventory fair value step-up 0.7 - 2.2 4.0 - - Adjusted gross margin $ 51.7 $ 48.7 $ 55.6 $ 214.5 $ 1
Slide 20: Regulation G Schedules: Adjusted Net Earnings
Regulation G Schedules Adjusted Net Earnings ($ Millions) Q4 Q3 Full Year 2022 2021 2022 2022 2021 2020 Net earnings (loss) (A) $ 14.9 $ 9.2 $ 11.8 $ 59.6 $ (41.9) $ 34.7 Net earnings as a % of net sales 10.5% 6.9% 7.8% 10.2% -8.2% 8.2% Adjustments to reported net earnings (loss): Restructuring char
Slide 21: Regulation G Schedules: Free Cash Flow
Regulation G Schedules Free Cash Flow ($ Millions) Q4 Full Year 2022 2022 Net cash provided by operating activities $ 25.5 $ 121.2 Capital expenditures (5.1) (14.3) Free cash flow $ 20.4 $ 106.9 Free Cash Flow as % of Adjusted Net Earnings 115% 135% 21
Slide 22: Regulation G Schedules: Debt to Capitalization
Regulation G Schedules Debt to Capitalization ($ Millions) As of December 31 2022 2021 2020 Total debt (A) $ 83.7 $ 50.0 $ 54.6 Total shareholders' equity (B) $ 506.2 $ 463.6 $ 423.7 Total capitalization (A+B) $ 589.9 $ 513.6 $ 478.3 Total debt to capitalization 14.2% 9.7% 11.4% 22
Slide 23: Regulation G Schedules: Controllable Working Capital
Regulation G Schedules Controllable Working Capital ($ Millions) Full Year 2022 2021 2020 Net accounts receivable $ 90.9 $ 82.2 $ 81.0 Net inventory $ 62.3 $ 49.5 $ 45.9 Accounts payable $ (53.2) $ (55.5) $ (50.5) Controllable working capital $ 100.0 $ 76.2 $ 76.4 Quarter sales $ 142.3 $ 132.5 $ 123