Cts Corporation · NYSE:CTS
Cts — Investor Presentation (April 2020)
22 slides from Cts's investor presentation, Apr 24, 2020
Slide 1: Investor Presentation April 2020
Investor Presentation April 2020
Slide 2: Forward Looking Statements
Forward Looking Statements 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,
Slide 3: Solid Foundation With Opportunities For Growth
Solid Foundation With Opportunities For Growth We aim to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. Telecom Aero & & IT Europe Defense 14% 4% 7% Medical 9% North America 57% Asia $454 29% Million 18% Industrial
Slide 4: Broad Product Portfolio Around Targeted Strategy
Broad Product Portfolio Around Targeted Strategy ▪ Controls ▪ EMI/RFI Filters ▪ Piezoelectric ▪ Pedals ▪ Frequency Control Products ▪ Piezoelectric Products Products ▪ Rotary Actuators ▪ Position Sensors ▪ RF Filters ▪ Switches ▪ Specialty Capacitors ▪ Temperature Sensors ▪ Specialty Resistors ▪ Tra
Slide 5: Transportation Market
Transportation Market Sectors Electric/Hybrid Commercial Light Vehicles Motorcycles Relevant Products Vehicles Vehicles/Off-Road Key Customers ▪ Accelerator Pedals ▪ Position Sensors ▪ Temperature Sensors ▪ DPF RF Sensors ▪ Smart Actuator 5
Slide 6: Industrial Market
Industrial Market Sectors Inkjet Print Heads HVAC Systems Commercial Sonar Flow Metering Relevant Products Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ Sensors & Controls ▪ Switches ▪ EMI/RFI Filters 6
Slide 7: Medical Market
Medical Market Sectors Ultrasonic Imaging Therapeutic Ultrasound Dental Equipment Equipment Control Panel Relevant Products Key Customers ▪ Piezoelectric Components ▪ Sensors & Controls ▪ Switches ▪ Frequency Control Products ▪ EMI/RFI Filters 7
Slide 8: Aero & Defense Market
Aero & Defense Market Sectors Torpedo/Missile Airplane Sonobuoys Hydrophones Relevant Products Control Communications Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ RF Filters ▪ Temperature Sensors ▪ Frequency Control Products 8
Slide 9: Telecom & IT Market
Telecom & IT Market Sectors Macro Cell Small Cell Satellite Wireline/ Relevant Products Base Stations Base Stations Communication Network Switching Key Customers ▪ Piezoelectric Components ▪ RF Filters ▪ EMI/RFI Filters ▪ Frequency Control Products ▪ Temperature Sensors 9
Slide 10: End Markets Growing Mid-Single Digits
End Markets Growing Mid-Single Digits Transportation Industrial Medical Aero & Defense Telecom & IT 7% 4% 9% 18% 62% Goal LV 30-50% 20-30% 10-20% 5-15% 10-20% CV 10-20% SAM $3.4B $2.2B $0.4B $0.9B $1.9B ▪ Booked Business, Share Gains ▪ 3D and textile printing ▪ Medical 3D/4D ultrasound ▪ Hydrophones
Slide 11: Strategic M&A Approach
Strategic M&A Approach Expand Enhance Broaden Strengthen Product Technology Geographic Customer Range Portfolio Reach Relationships Case Study: Successfully Built Broad Piezoelectric Ceramic Growth Platform Pre 2016 2016 2017 2018+ Bulk Technology Single Crystal Technology Tape Cast Technology Robus
Slide 12: QTI Sensing Solutions Acquisition
QTI Sensing Solutions Acquisition Company Overview Acquisition Rationale ▪ Founded in 1977, facilities in Boise, ID and Tecate, Mexico ▪ Provides CTS a new core temperature sensing technology ▪ QTI Sensing Solutions is a leading designer and manufacturer ▪ Increases presence in growing industrial, a
Slide 13: Balanced Capital Deployment Approach
Balanced Capital Deployment Approach Operating Cash Flow 12-15% of Sales Growth Return Capital to Investment Acquisitions Shareholders ~4% of Sales* 60-80% of Dividends & Buybacks Free Cash Flow 20-40% of Free Cash Flow *4.6% in 2019 3-4% in 2020 Capital Structure Leverage = 1.0x - 2.5x EBITDA Not a
Slide 14: Financial Performance Trend
Financial Performance Trend Sales Adjusted Earnings Per Share ($ Millions) $470 $469 $1.53 $423 $1.45 $1.23 $1.08 Q3 YTD $103 Actual $0.19 2017 2018 2019 Q1 2020 2017 2018 2019 Q1 2020 Due to ongoing market uncertainties, management has withdrawn its guidance for 2020 14
Slide 15: Financial Framework
Financial Framework Long-Term 2012 2019 Target Range Gross Margin 30.0% 33.6% 34-37% SG&A Expense 20.7% 15.0% 13-15% R&D Expense 6.9% 5.5% 5-7% CapEx 2.6% 4.6% ~4%* *3-4% in 2020 Not adjusted for Covid-19 impact Targeting 10% Annual Growth (Organic + Inorganic) 15
Slide 16: Adjusting In Response To Impact Of COVID-19
Adjusting In Response To Impact Of COVID-19 Actions Adequate Liquidity ▪ Prioritize employee safety at operating sites ▪ Strong cash & debt availability ($ Millions) ▪ Strive to serve customer needs $300 Total Facility ▪ Cost actions to decrease cash burn ‐ Temporary pay reductions $151 ‐ Temporary
Slide 17: Appendix
cis Appendix
Slide 18: CTS Core Values
CTS Core Values Play to Win Simplicity cts Responsiveness Solution Oriented
Slide 19: Financial Summary
Financial Summary ($ Millions, except percentages and Adjusted Diluted EPS) Q1 2020 2019 2018 2017 Net Sales $103.1 $469.0 $470.5 $423.0 Adjusted Gross Margin $32.9 $157.6 $165.0 $145.2 Adjusted Gross Margin % of Sales 31.9% 33.6% 35.1% 34.3% Depreciation and Amortization $6.5 $24.6 $22.5 $20.7 Adju
Slide 20: Regulation G Schedules Adjusted Gross Margin
Regulation G Schedules Adjusted Gross Margin ($ Millions, except percentages) Q1 Full Year 2020 2019 2019 2018 2017 Gross margin $ 32.9 $ 40.6 $ 157.6 $ 165.0 $ 140.4 Adjustments to reported gross margin: Pension settlement charge - - - - 4.8 Adjusted gross margin $ 32.9 $ 40.6 $ 157.6 $ 165.0 $ 145
Slide 21: Regulation G Schedules Adjusted EBITDA
Regulation G Schedules Adjusted EBITDA Q1 Full Year ($ Millions, except percentages) 2020 2019 2019 2018 2017 Net earnings $ 3.8 $ 11.4 $ 36.1 $ 46.5 $ 14.4 Depreciation and amortization expense 6.5 5.9 24.6 22.5 20.7 Interest expense 0.9 0.5 2.6 2.1 3.3 Tax expense 2.2 2.9 14.1 11.6 25.8 EBITDA 13.
Slide 22: Regulation G Schedules Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS Q1 Full Year 2020 2019 2019 2018 2017 Diluted earnings per share $ 0.12 $ 0.34 $ 1.09 $ 1.39 $ 0.43 Tax affected adjustments to reported diluted earnings per share: Restructuring charges - 0.05 0.18 0.12 0.08 Loss on sale of facilities, net of expenses - -