Cts Corporation · NYSE:CTS
Cts — Investor Presentation (April 2022)
31 slides from Cts's investor presentation, Apr 28, 2022
Slide 1: CTS Investor Presentation April 2022
CTS Investor Presentation April 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
Global design with regional manufacturing capabilities Technical and application expertise applied across diverse end markets 1 Last 12 months Revenue as of Mar 2022 2 2017-2021 including acquisitions 3 Cash Returned since 2013 CTS is a Leading Designer and Manufacturer of Custom Engineered Solution
Slide 4: Why Invest in CTS
Why Invest in CTS =~ im © ° Strategically Positioned Successful to Grow & Diversify Business Model cts Strong Executional Capabilities
Slide 5: Multiple Drivers for Above Market Growth
Multiple Drivers for Above Market Growth 5 Capitalize on Secular Growth Themes Diversify into Non-Transportation End Markets Apply Domain Expertise in Premium, Niche End Markets Move Up Value Chain Sustainability Electrification Reduced Emissions Fluid Metering Automation Industry 4.0 Factory Automa
Slide 6: Diversifying Revenue to High Growth 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: The CTS Advantage – Your Partner in Smart Solutions
Technology and application expertise creates competitive advantage and long-term relationships with blue-chip customers The CTS Advantage – Your Partner in Smart Solutions Successful Business Model 7
Slide 8: Long Term Relationship with Blue-chip Customers
Long Term Relationship with Blue-chip Customers 8
Slide 9: Strong Execution Capabilities
Strong Execution Capabilities Improved Operational Efficiency Gross Margin +590 bps1 Streamlined SG&A (470) bps1 Adj. EBITDA +1160 bps1 Implemented SAP Strengthened Balance Sheet 112% free cash flow2 $123M returned to Shareholders3 Solid acquisition capacity Strategic Investments For Growth 9 1 Comp
Slide 10: Secular Themes Drive Growth Across End Markets
Secular Themes Drive Growth Across End Markets 10 Sustainability Automation Healthcare Innovation Electrification Reduced emissions Fluid metering Energy efficiency Industry 4.0 Factory automation Passenger safety Defense automation Improved diagnostics Non-invasive Patient experience
Slide 11: Materials and Application Expertise for Industrial End-Market
Materials and Application Expertise for Industrial End-Market 11 Market Trends and Customer Needs Key Applications CTS Differentiation Multiple material formulations and technologies for diverse applications High-volume, high-quality manufacturing capability Global locations and capabilities to meet
Slide 12: Domain Expertise Enables Next Generation Medical Applications
12 Market Trends and Customer Needs Key Applications CTS Differentiation Domain Expertise Enables Next Generation Medical Applications Ceramic material formulation expertise for diverse applications High-volume, high-quality manufacturing capability Depth of domain and application engineering expert
Slide 13: Cutting-Edge Technology Supports Aerospace and Defense End-Market
13 Market Trends and Customer Needs Key Applications CTS Differentiation Cutting-Edge Technology Supports Aerospace and Defense End-Market Manufacturing locations in US (ITAR registered) and EU Specialized material formulation, process expertise enable superior performance Next generation materials
Slide 14: Strategic acquisitions fuel growth: Ferroperm and TEWA
14 Founded in 1952, based in Kvistgaard, Denmark Closing subject to obtaining regulatory approvals and satisfaction of customary closing conditions High performance piezoelectric ceramic components for medical, industrial and defense applications Medical therapeutics products, complements CTS diagno
Slide 15: Leader in Discrete Position Sensing Solutions in Transportation
Global expertise, custom design and manufacturing capabilities close to our customers Leading position in accelerator pedals New EV/PHEV products – current sensors, electronic brake pedals, occupant passive safety sensors New Business Wins include 26 EV platforms Majority of product portfolio applic
Slide 16: >95% Light Vehicle portfolio carries over to Electric Vehicles
16 >95% Light Vehicle portfolio carries over to Electric Vehicles ~ 50% expansion in Available Market with EV-related new products Traditional light vehicle key product Portfolio Light vehicle key products For BEV/HEV/PHEV and ICE New products for Electrification AC Motor Current Sensor AC Motor Pos
Slide 17: Strong Execution Capabilities Driving Sustainable, Profitable Growth
Strong Execution Capabilities Driving Sustainable, Profitable Growth 2017-2021 CAGR 4.9% 2017-2021 CAGR 11.9% 17 Covid Impact Covid Impact $580 97% 58% 89% 170% 112% Revenue ($ Millions) Free Cash Flow Conversion ($ Millions) Adj. Diluted EPS Returned to Shareholders ($ Millions) Note: 1 $550 $2.45
Slide 18: Strategic Approach to M&A
Strategic Approach to M&A 18 Disciplined approach to acquisitions ROI in excess of cost of capital Maintain balance sheet strength Synergistic opportunities Accretive to earnings
Slide 19: Successfully developed Temperature Sensing Platform through M&A
19 Successfully developed Temperature Sensing Platform through M&A Industrial applications 2019 2020 Medical applications 2022 Industrial and Medical applications Robust growth platform with $1.1B+ SAM Neonatal applications Lab freezers Fluid warmers Analytical Instruments HVAC & Refrigeration Pool
Slide 20: Capital Allocation Framework
Capital Allocation Framework Cash Return to Shareholders Dividends & Buybacks 20-40% of FCF Capital Structure Leverage 1.0 – 2.5x EBITDA Operating Cash Flow 12-15% of Sales Financial and Capital Allocation Framework 20 Financial Framework 1 2012 financials from continuing operations (Excluding EMS b
Slide 21: Our Sustainability Journey
21 Cross-functional ESG Steering Committee Oversight of sustainability initiatives by Nominating, Governance and Sustainability Committee Board diversity >40% Ethical business practices and compliance training for all employees Supporting sustainable products Vehicle electrification Promoting health
Slide 22: Summary of investment case
22 Deep engineering capabilities and custom engineered products for OEMs Strong presence in position, ultrasonic and temperature sensing with domain expertise Deep and long-standing customer relationships Positioned to Grow at 10% CAGR through Organic and Inorganic strategies Clear strategy of growt
Slide 23: Appendix
Cts =: Appendix
Slide 24: Focus 2025
24 Focus 2025 01 02 03 04 10% Revenue CAGR with 23% EBITDA
Slide 25: CTS Core Values
CTS Core Values cts 4 Play to Win Oo) Responsiveness © Simplicity Solution Oriented
Slide 26: Financial Summary
($ Millions, except percentages and Adjusted Diluted EPS) Net Sales Adjusted Diluted EPS Operating Cash Flow Total Debt / Capitalization Depreciation and Amortization Adjusted EBITDA Adjusted EBITDA % of Sales Adjusted Gross Margin Adjusted Gross Margin % of Sales 2019 $469.0 $1.45 $64.4 19.7% $24.6
Slide 27: Adjusted Net Earnings Regulation G Schedules
($ Millions, except percentages) Adjusted Net Earnings 27 Regulation G Schedules
Slide 28: Adjusted Diluted EPS and Total Debt to Capitalization
Adjusted Diluted EPS ($ Millions, except percentages) Total Debt to Capitalization 28 Regulation G Schedules
Slide 29: Adjusted EBITDA Regulation G Schedules
($ Millions, except percentages) Adjusted EBITDA 29 Regulation G Schedules
Slide 30: Adjusted Gross Margin Regulation G Schedules
($ Millions) Adjusted Gross Margin 30 Regulation G Schedules
Slide 31: Free Cash Flow Regulation G Schedules
($ Millions) Free Cash Flow 31 Regulation G Schedules