Cts Corporation · NYSE:CTS
Cts — Investor Presentation (November 2016)
24 slides from Cts's investor presentation, Nov 2, 2016
Slide 1: Investor Presentation November 1, 2016
Investor Presentation November 1, 2016
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
2015 Sales: $382 Million Sales by Market: Transportation – 67% Industrial – 14% Defense / Aerospace – 5% Medical – 4% Information Technology – 4% Communications – 3% Other – 3% Sales by Region: Americas – 57% Asia – 31% Europe – 12% Our Company Ticker: CTS (NYSE) Founded: 1896 Busi
Slide 4: Our History - Years of Innovation
Our History - 120 Years of Innovation 4
Slide 5: Our Vision
Our Vision 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 LV Tu
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 Diagnos Remote Monitoring Industry
Slide 12: Targeting 10% Organic and Inorganic Growth
Targeting 10% Organic and Inorganic Growth Disciplined approach to acquisitions: Returns in excess of cost of capital Accretive to earnings Maintain balance sheet strength Synergy opportunities 12 Expand Product Range Broaden Geographic Reach Enhance Technology Portfolio Strengthen Customer
Slide 13: 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 14: RF Sensor Technology Acquisition
RF Sensor Technology Acquisition Disruptive Sensing Technology for Fuel Efficiency… …Boosted by Global Emissions Legislation Start-up founded by two MIT Ph. D. graduates, located in the Boston area Innovative sensing technology that uses a low power RF signal to measure soot and ash loading on d
Slide 15: The Road Ahead of Us
The Road Ahead of Us LV I M CV C/IT AD [CATE GORY NAME ] 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
Slide 16: Annual Financial Performance Trend
$305 $409 $404 $382 2012 2013 2014 2015 2016E Sales $0.64 $0.82 $0.97 $0.93 2012 2013 2014 2015 2016E Adjusted Earnings Per Share $400 Note 1: Sales are from continuing operations. Adjusted EPS is as reported. Note 2: 2016E represents guidance provided on October 28, 2016. Annual Financial Performan
Slide 17: Capital Structure
Equity 76% [CATEGORY NAME] $124 $135 $157 $114 $75 $75 $91 $96 2013 2014 2015 3Q 2016 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 $(49) $(60) Current Capital Str
Slide 18: Target Capital Deployment
Capital Structure Leverage = 1.0x - 2.5x EBITDA Operating Cash Flow Return Capital to Shareholders ~4% of Sales 20-40% of Free Cash Flow 12-14% of Sales 60-80% of Free Cash Flow Target Capital Deployment – Disciplined Approach Growth Acquisitions Investment Dividends & Buybacks 18
Slide 19: Financial Framework
Financial Framework 19 2012 YTD Q3 2016 Target Range Gross Margin 30.0% 35.4% 34-37% SG&A Expense 20.7% 15.8% 13-15% R&D Expense 6.9% 6.2% 5-7% CapEx 2.6% 4.9% ~4% Targeting 10% Annual Growth (Organic + Inorganic)
Slide 20: Appendix
Appendix 20
Slide 21: CTS Core Values
CTS Core Values SC Play to Win Responsiveness Simplicity Solution Oriented
Slide 22: Financial Summary
Financial Summary Note 1: See Regulation G reconciliations from GAAP to Non-GAAP measures and adjustments. Note 2: All figures are from continuing operations except for Adjusted Diluted EPS (As Reported), Operating Cash Flow and Total Debt / Capitalization ($ Millions, except percentages and Adjuste
Slide 23: Regulation G Schedules - Adjusted EBITDA
Regulation G Schedules ($ Millions, except percentages) Adjusted EBITDA 23 2016 2015 2016 2015 2015 2014 2013 2012 2011 Net earnings from continuing operations 3.7 $ (4.8) $ 26.1 $ 20.6 $ 7.0 $ 26.5 $ 2.0 $ 13.5 $ 11.3 $ Depreciation and amortization expense 5.1 $ 3.9 $ 14.0 $ 12.0 $ 16.3 $ 17.0 $ 1
Slide 24: Regulation G Schedules - Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS ($ Millions, except percentages) Total Debt to Capitalization 24 2016 2015 2015 2014 2013 2012 2011 Total debt (A) 96.0 $ 90.5 $ 90.7 $ 75.0 $ 75.0 $ 153.5 $ 74.4 $ Total shareholders' equity (B) 306.3 $ 295.6 $ 281.7 $ 289.8 $ 296.9 $ 267.8 $ 263.3 $ Tota