Cts Corporation · NYSE:CTS
Cts — Investor Presentation (August 2019)
23 slides from Cts's investor presentation, Aug 1, 2019
Slide 1: Investor Presentation August 2019
Investor Presentation August 2019
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% Medical 6% 8% North America 56% Asia $477 30% 17% Million 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 ▪ Rotary Actuators Products ▪ RF Filters ▪ Sensors ▪ Specialty Capacitors ▪ Switches ▪ Specialty Resistors ▪ Transducers 4
Slide 5: Shareholder Return, Sales Growth and EBITDA Margin Expansion
156% Shareholder Return from 2012 to 2018 vs. 76% for S&P 500 $1.88 Billion 7.5% CAGR 9.4% to 19.6% Total Booked EBITDA Margin Sales Growth Business Expansion ▪ New business award tracking ▪ End market share gains ▪ Operational excellence ▪ Total booked business tracking ▪ New product introductions
Slide 6: Transportation Market
Transportation Market Sectors Electric/Hybrid Commercial Light Vehicles Motorcycles Relevant Products Vehicles Vehicles/Off-Road Key Customers ▪ Accelerator Pedal ▪ Chassis Height Sensor ▪ DPF RF Sensor ▪ Throttle Sensor ▪ Turbo Actuator 6
Slide 7: 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 7
Slide 8: 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 ▪ EMI/RFI Filters 8
Slide 9: Aero & Defense Market
Aero & Defense Market Sectors Torpedo/Missile Airplane Sonobuoys Hydrophones Relevant Products Control Communications Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ RF Filters ▪ EMI/RFI Filters ▪ Frequency Control 9
Slide 10: 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 10
Slide 11: End Markets Growing Mid-Single Digits
End Markets Growing Mid-Single Digits Transportation Industrial Medical Aero & Defense Telecom & IT 6% 4% 8% 17% 65% Goal 30-50% 20-30% 10-20% 5-15% 10-20% SAM $3.3B $1.7B $0.2B $0.7B $1.8B ▪ Booked Business, Share Gains ▪ 3D and textile printing ▪ Medical 3D/4D ultrasound ▪ Hydrophones for sonar ▪
Slide 12: Strategic M&A Approach
Strategic M&A Approach Expand Enhance Broaden Strengthen Product Technology Geographic Customer Range Portfolio Reach Relationships Case Study: Successfully Built Broad Piezoelectric Ceramic Growth Platform Pre 2016 2016 2017 2018+ Bulk Technology Single Crystal Technology Tape Cast Technology Robus
Slide 13: QTI Sensing Solutions Acquisition
QTI Sensing Solutions Acquisition Company Overview Acquisition Rationale ▪ Founded in 1977, facilities in Boise, ID and Tecate, Mexico ▪ Provides CTS a new core temperature sensing technology ▪ QTI Sensing Solutions is a leading designer and manufacturer ▪ Increases presence in growing industrial, a
Slide 14: Balanced Capital Deployment Approach
Balanced Capital Deployment Approach Operating Cash Flow 12-15% of Sales Growth Return Capital to Investment Acquisitions Shareholders ~4% of Sales* 60-80% of Dividends & Buybacks Free Cash Flow 20-40% of Free Cash Flow *6.1% in 2018 5-7% in 2019 Capital Structure Leverage = 1.0x - 2.5x EBITDA 14
Slide 15: Financial Performance Trend and 2019 Guidance
Financial Performance Trend and 2019 Guidance Sales Adjusted Earnings Per Share ($ Millions) $490 $1.65 $470 $470 $1.55 $423 $234 $1.53 $397 Booked Business $1.23 $1.08 $238 Q2 YTD Actual $0.79 Q2 YTD Actual 2016 2107 2018 2019E 2016 2017 2018 2019E Note: 2019E represents guidance provided on July 2
Slide 16: Financial Framework
Financial Framework Long-Term 2012 2018 Target Range Gross Margin 30.0% 35.1% 34-37% SG&A Expense 20.7% 15.6% 13-15% R&D Expense 6.9% 5.4% 5-7% CapEx 2.6% 6.1% ~4%* *5-7% in 2019 Targeting 10% Annual Growth (Organic + Inorganic) 16
Slide 17: Well Positioned For Growth
Well Positioned For Growth Organic Inorganic Healthy Booked Business Strong Cash & Debt Availability ($ Millions) ($ Millions in June 2019) $1,875 +24% $300 Total Facility $1,518 $106 $50 Borrowed Dec 2016 Jun 2019 Cash Debt ▪ Enhance Customer Intimacy ▪ Low leverage, debt-to-equity ratio ▪ Enhance
Slide 18: Appendix
cis Appendix
Slide 19: CTS Core Values
CTS Core Values Play to Win Simplicity cts Responsiveness Solution Oriented
Slide 20: Financial Summary
Financial Summary ($ Millions, except percentages and Adjusted Diluted EPS) Q2 YTD 2019 2018 2017 2016 Net Sales $238.3 $470.5 $423.0 $396.7 Adjusted Gross Margin $81.8 $165.0 $145.2 $140.4 Adjusted Gross Margin % of Sales 34.3% 35.1% 34.3% 35.4% Depreciation and Amortization $11.9 $22.5 $20.7 $19.0
Slide 21: Regulation G Schedules Adjusted Gross Margin
Regulation G Schedules Adjusted Gross Margin ($ Millions, except percentages) Q2 Year-to-Date Full Year 2019 2018 2019 2018 2018 2017 2016 Gross margin $ 41.2 $ 41.8 $ 81.8 $ 80.2 $ 165.0 $ 140.4 $ 140.4 Adjustments to reported gross margin: Pension settlement charge - - - - - 4.8 - Adjusted gross m
Slide 22: Regulation G Schedules Adjusted EBITDA
Regulation G Schedules Adjusted EBITDA ($ Millions, except percentages) Q2 Year-to-Date Full Year 2019 2018 2019 2018 2018 2017 2016 Net earnings $ 11.9 $ 7.2 $ 23.4 $ 18.8 $ 46.5 $ 14.4 $ 34.4 Depreciation and amortization expense 6.0 5.5 11.9 11.0 22.5 20.7 19.0 Interest expense 0.5 0.6 0.9 1.1 2.
Slide 23: Regulation G Schedules Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS Q2 Year-to-Date Full Year 2019 2018 2019 2018 2018 2017 2016 Diluted earnings per share $ 0.36 $ 0.21 $ 0.70 $ 0.56 $ 1.39 $ 0.43 $ 1.03 Tax affected adjustments to reported diluted earnings per share: Restructuring charges 0.02 0.03 0.07 0.06 0.12 0.08 0.