Cts Corporation · NYSE:CTS
Cts — Investor Presentation (June 2004)
37 slides from Cts's investor presentation, Jun 15, 2004
Slide 1: June 2004
June 2004 EXHIBIT 99.1 www.ctscorp.com
Slide 2: Forward-looking statements
CTS Corporation This presentation contains “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations, certain assumptions and currently available information. Actual results may differ materially
Slide 3: CTS Corporation
Automotive Sensors Electronic Components Global Operations EMS Operations CTS Corporation
Slide 4: Business Model
Business Model Profitability Growth Corporate Strategies Seek high-growth niche markets Focus on “design to purpose” products and services Leverage technology to create differentiated products Grow through product and market extensions Core Strengths Application engineering Materials technology Manu
Slide 5: Segments
Segments Automotive Communications Mobile Computer Communications Infrastructure Other Segments and Markets Electronic Components and Sensors Electronics Manufacturing Services Markets 55% 45% 8% 41% 10% 26% 15%
Slide 6: Five-Year Business Growth Targets
Five-Year Business Growth Targets Automotive Sensors Electronic Components Electronics Manufacturing Services 14 - 21% 3 - 6% 6 - 12% 7 - 10% 3 - 6% 6 - 12% 7 - 13% Market Growth Sales Growth Overall Product/Market Area $700 - $750 million in sales 8 - 10 % Operating Earnings as % of Sales Gross Mar
Slide 7: Automotive Sensors
Automotive Sensors Growth Strategy Aggressively expand product base. Leverage product/market strength into Asian market. Broaden customer base. $116 M $240+ M Double Sales in Five Years! Sales Growth Unit growth ( N.A. & Eur.) 1 - 3 % Content growth ($/vehicle) 10 - 12 % Asian expansion 3 - 6 % Tota
Slide 8: Accelerator Pedal Module
Accelerator Pedal Module CTS Accelerator Pedal Modules Offer Performance, Quality and Cost Advantages Served Available Market $83.3 $122.4 $159.3 $187.1 $212.7 $217.1 Won 22 Platforms. Trend to “integrated pedals”
Slide 9: Move up the Value Chain; Components to Modules
Move up the Value Chain; Components to Modules Extend the Component Portfolio Exploit Weakened Competitive Field Leverage Low-Cost Manufacturing Capability in Asia CAGR 33% CTS Sales Total Frequency Products Strategy Communications Components – Infrastructure Growth
Slide 10: Communications Components – Infrastructure Growth
Communications Components – Infrastructure Growth CTS Sales Custom Frequency Products New Design Wins Value-Added Modules Growing Share In Custom Frequency Products
Slide 11: New Products Drive Earnings Growth
New Products Drive Earnings Growth Forecast Actual Belt Tension Sensors Integrated Accelerator Pedals Manifold Actuators Small Engine Throttle Position Sensors Frequency Modules ClearONE™ Terminators Pointing Stick Modules (with Touchpads) Expected to Add $10+ Million in Operating Earnings by 2005 C
Slide 12: Electronic Manufacturing Services Strategy
Target high mix medium volume customers. Offer full-service flexibility. Leverage geographic footprint. Global sourcing. Local NPI global completion. Strategy Electronic Manufacturing Services Industry-leading Turns and Cash Cycle
Slide 13: EMS Growth
EMS Growth CTS Sales From Asia $ in Millions $13.8 $4.5 • Expanding into Singapore. • Broadening service offering. • Nine new customers added in 2003. • Expanding in medical, automotive and industrial markets.
Slide 14: Financial Summary
Financial Summary
Slide 15: Sales
Sales $ in Millions New Products Driving Sales Growth
Slide 16: Improving Financial Performance
Improving Financial Performance (3.6) (2.4) 0.0 0.5 0.6 2.0 1.6 3.9 * Excludes all restructuring and related one-time charges, asset impairments, and unusual gains. Continuing Earnings Improvement 2.5 Net Earnings/(Loss) (Adjusted*) $ in Millions
Slide 17: Cost Structure Management
EMS 45% EMS 48% Cost Structure Management Components & Sensors 55% Components & Sensors 52% Mfg. Cost SG&A/R&D Op Earnings * Excluding Restructuring Charge ($4.6M) and Income Tax Credit of $7.9M Target Cost Structure 1.7% 6.0% Net Earnings Key Drivers • Improved product mix within Components and Sen
Slide 18: Balance Sheet Management
Balance Sheet Management Controllable Working Capital* * Controllable Working Capital Defined as Accounts Receivable + Inventories - Accounts Payable. Target Range 13% 10% Controllable Working Capital Within Target Range of 10% - 13% of Sales Leverage Ratio Within Target Range of 20% - 30% Total Deb
Slide 19: Summary
Summary Improving economic outlook. Growth initiatives on track. Strong growth in new product sales. Broadening customer base. Improving bottom line performance. Driving Growth and Margin Enhancement
Slide 20: Appendix
APPENDIX
Slide 21: Revenue Mix By Major Markets
Revenue Mix By Major Markets
Slide 22: Historically Strong Financial Performer
Historically Strong Financial Performer Financial Summary 2003* 2002* 2001* ($ Millions, except adjusted EPS) Net Sales $463.0 $457.8 $577.7 $866.5 Adjusted Operating Earnings $18.4 $1.7 $2.2 $128.6 Adjusted Net Earnings / (Loss) $8.1 ($5.5) ($7.3) $83.8 Adjusted EPS $0.23 ($0.16) ($0.26) $2.92 Free
Slide 23: Other Financial Data - Income Statement
Other Financial Data* - Income Statement $ in Millions Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Sales $122.1 $132.0 $108.5 $116.7 $105.8 $116.5 $111.0 $117.7 $112.6 $125.8 Adjusted Gross Margin Percentage 20.1% 20.8% 21.8% 21.0% 19.9% 20.0% 21.6% 18.3% 18.1% 17.2% Adjusted Operating Earnings / (Loss) $4.9 $7.4
Slide 24: Other Financial Data - Balance Sheet Metrics
Other Financial Data - Balance Sheet Metrics $ in Millions Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q4 Sales $122.1 $132.0 $108.5 $116.7 $105.8 $116.5 $111.0 $117.7 $112.6 $125.8 $233.4 Accounts Receivable $83.7 $72.3 $62.8 $65.7 $59.8 $63.8 $64.9 $73.3 $80.1 $81.6 $145.9 Inventories $38.7 $31.9 $37.4 $35.1 $3
Slide 25: Cost Structure Overhaul
Salary/Fringes 50% Fixed Costs Reduced by $95M Per Year Other 28% Depreciation 12% Interest 10% Breakeven Revenue Point Reduced to $440M Per Year Q1 Q2 Q3 Q4 $ in Millions 34% 38% Fixed Costs Q2/Current Cost Structure Overhaul
Slide 26: Automotive Product Applications
Automotive Product Applications PPS Exhaust Gas Recirculation Actuators Seat Position Sensor Throttle Position Sensor & Electronic Throttle Control Pedal Assembly Pedal Position Sensor Belt Tension Sensor Fuel Sender
Slide 27: Won Platforms
Won 15 Platforms U.S. regulations require 100% of all new light vehicles to have enhanced occupancy sensing systems by 2006. CTS’ Belt Tension Sensor provides superior measurement accuracy Belt Tension Sensor $81.0 $81.0 $78.0 $47.0 $12.5 Served Available Market
Slide 28: Winning Positions on New Engines
Winning Positions on New Engines Trend toward active manifolds driven by: Lower emissions requirements. Improved vehicle performance. 30% of North American vehicles will have active manifolds by 2007. CTS’ innovative solution provides performance and reliability advantages. $41.0 $45.0 $64.0 $90.0 $
Slide 29: Fuel Level Sensors
Fuel Level Sensors Market Drivers & Opportunities Complete Fuel Sensor system management. Growth opportunities outside North America. Non-contacting and “floatless” Fuel Level Sensor. CTS will become a complete Fuel Level Sensor System provider in 2004. Market expansion into China and Europe will pr
Slide 30: Contacting Sensor Products
More than 300 million shipped since 1995 Throttle Position Sensors EGR Sensor World’s leading supplier of automotive position sensors - Over 25 million sensors per year Reliability leader in the industry Global manufacturing footprint 20 related patents Key customers: - Borg Warner - Delphi - Magnet
Slide 31: Non-Contacting Sensor Products
Throttle sensor (on engine) capability 20 related patents Proven semiconductor technology CTS designed and manufactured magnetic circuit Key customers: - Magneti Marelli - Pierburg More than 6 million shipped since 1995 Throttle Position Sensor Non-Contacting EGR Non-Contacting Sensor Products
Slide 32: EMS Industry Tiers
TIER 1 Large/Global > $1B. Optimized to Low Mix - High Volume. Leverage Scale/Purchasing Volume. TIER 2 Medium/ Regional/Global, $200M - $1B. Optimized to High Mix - Med. Volume. Leverage Flexibility. TIER 3/4 Small/Regional < $200M. Optimized to High Mix - Low Volume. Specialty Focus. Large OEMs. L
Slide 33: EMS Industry Tiers by Customer
TIER 1 Large/Global > $1B. Optimized to Low Mix - High Volume. Leverage Scale/ Purchasing Volume. TIER 2 Medium/ Regional/Global $200M - $1B. Optimized to High Mix - Med. Volume. Leverage Flexibility TIER 3/4 Small/Regional < $200M. Optimized to High Mix - Low Volume. Specialty Focus. Large OEMs Low
Slide 34: Communications - Infrastructure
Communications - Infrastructure CTS Major Applications Telecommunications Optical Switch Components Wireless BTS Product Development Backplane Design and Assembly Internet Access Platform Sub-Rack Integration Full System Integration and Test PCB Assembly Power, Cable and Fan Assembly Global Logistic
Slide 35: Frequency Control Products & Applications
Frequency Control Products & Applications Frequency Translators & Jitter Attenuator Modules Provides Timing Information for Telecom Networking Timing Module Provides Complete Timing Function for Wireless & Telecom Network Equipment VCO/PLL Module Base Station Radio Frequency Synthesizer Low Cost OCX
Slide 36: Resistor Networks Products
Leaded Leadless Resistor Networks Products Billions shipped in 30 years of production 50 related patents Thick film technology Molded ceramic reliability Key customers: - Alcatel - Cisco - Hewlett-Packard - Lucent - Teradyne Ball Grid Array
Slide 37: Major CTS Competitors
Major CTS Competitors PRODUCTS Automotive Sensors Frequency Products - Infrastructure Frequency Products - Mobile Ceramic Duplexer Filters Resistor Networks Electronics Manufacturing Services COMPETITION AEC, Alps, BEI, Bosch, Hella, Panasonic C-MAC, Oak, Raltron, SaRonix, Vectron KDS, KSS, Kyocera,