Cts Corporation · NYSE:CTS
Cts — Investor Presentation (November 2010)
32 slides from Cts's investor presentation, Nov 10, 2010
Slide 1: Investor Presentation – November 2010
Investor Presentation ? November 2010
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: Global Footprint
Global Footprint San Jose Moorpark Matamoros, Mexico Nogales, Mexico Elkhart Lisle Londonderry Toronto, Canada Albuquerque Tucson Scotland Czech Republic Thailand Singapore Taiwan China China India Auburn Hills Japan China Taiwan Sales Office Manufacturing Headquarters Established 1896 Publicly trad
Slide 4: Sales By Market and Geographic Regions
Sales By Market and Geographic Regions Comunications Automotive Computer Medical Industrial Defense & Aerospace Other East 0.22 0.31 0.04 0.07 0.16 0.16 0.04 Sales by Market North America Asia E Low Cost Europe East 0.41 0.1 0.36 0.06 0.07 Sales By Region Low Cost Manufacturing 52% Diversified marke
Slide 5: Customer Diversification
Customer Diversification High Quality Customers Globally Diversified Low Customer Concentration No one customer over 10% of total company sales No single automotive customer is more than 4% of total company year-to-date sales
Slide 6: Segment and Market Mix
Segment and Market Mix 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.49 0.51 West North Components and Sensors - 51% 1st Qtr EC Auto East 0.49 0.2 0.31 West North EMS - 49% Sensors & Actuators Electronic Components Serving customers with attractive growth opportunities Focused on medical, industrial, defen
Slide 7: Sensors and Actuators
Sensors and Actuators Expect double-digit sales growth over the next 3-5 years. Leveraging capabilities into new markets On and off highway diesel engine applications Small turbocharger applications Growth through new technology, customers and penetration of new markets Sales Sensors & Actuators Aut
Slide 8: Growth Initiatives - Smart Actuators
Growth Initiatives - Smart Actuators Creating a new growth platform: Commercial Markets Target Market Share Creating a new family of high margin products to penetrate new customers and markets. Investing approximately $3M in R&D each year to develop a $50 million-a-year in sales business. Penetrated
Slide 9: Electronic Components
Electronic Components Double-digit sales growth over the next 3-5 years Macro Trend Driving Growth Strong communication growth in emerging markets Developed markets driving higher data traffic - - Smart phones - - Social networking; YouTube, Facebook Demographics, defense/other CTS Products Communic
Slide 10: Electronic Components - Communications Infrastructure
Electronic Components - Communications Infrastructure OCXO Ceramic Duplexer Defense Communications Wireless Base Station 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Design Wins 31 37 41 45 48 33 44 50 56 63 Sales $ in Millions Key Customers Alcatel - Lucent, Cisco, ZTE, Nokia Siemens Networks,
Slide 11: Electronic Components - Piezoceramic Products
Electronic Components - Piezoceramic Products 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sales 10 13 13 18 10 19 21 24 26 New HDD Business 0 5 10 13 Sales $ in Millions Medical Ultrasound Wide Format Inkjet Printer Head Undersea Energy Exploration Aerospace Soft And Hard Piezo Ceramic Materials Ne
Slide 12: Electronics Manufacturing Solutions
Electronics Manufacturing Solutions Mid single-digit sales growth business over the next 3-5 years Specialized Tier 2 global EMS provider Sales EMS EC 0.51 0.49 Macro Trend Driving Growth Target customers with complex needs Target niche sectors - defense & aerospace, medical, industrial Provide turn
Slide 13: EMS Business
EMS Business Computer Comm Medical Industrial Aero/Def East 0.06 0.31 0.11 0.23 0.29 Communications Industrial Medical Computer/ Other 2010 Third Quarter Defense/ Aerospace Higher complexity and design capabilities Stronger customer relationships Higher barriers to entry due to certifications, etc.
Slide 14: Growth Drivers
Growth Drivers Sensor & Actuator Electronic Components EMS East 0.67 0.12 0.21 Sensor & Actuator 67% Electronic Components 12% EMS Segment 21% Healthy pipeline of new diversified business drives growth Components & Sensors Segment 79% 2007 2008 2009 2010P Excludes Smart Actuator/Commercial 98 66 203
Slide 15: Summary Growth Initiatives
Summary Growth Initiatives Diversification driven business model has reduced volatility and risk Penetrated new global customers e.g. Honda, Honeywell, ZTE, Thales Expanding into diesel engines, electric and hybrid cars Expanded products/technology e.g. smart actuators, electromagnetic filters, hard
Slide 16: Financial Summary
Financial Summary Definitions and reconciliation of non-GAAP financial terms are included on CTS' Web site at www.ctscorp.com
Slide 17: Financial Performance - Sales & Gross Margins
Financial Performance - Sales & Gross Margins Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Components & Sensors Sales 78 84 72 58 42 50 56 65 73 72 72 Sales 95 102 98 105 76 70 71 69 56 67 67 Gross Margin % 0.197 0.216 0.198 0.182 0.168 0.182 0.207 0.231 0.236 0.219 0.215 2008 2009 2010 Recessionary Impact 2008
Slide 18: Earnings Per Share - Adjusted
Earnings Per Share - Adjusted Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 East 0.18 0.27 0.16 0.14 -0.03 0.06 0.13 0.19 0.13 0.17 0.2 Recessionary Impact 2008 2009 2010 Note: Adjusted data excludes restructuring and related charges, certain asset impairments and income tax adjustments. $ in Millions 2008 $ 0.7
Slide 19: Balance Sheet Trends
Balance Sheet Trends 1999 2000 2001 2002 1st Half 2nd Half 1st Half 2nd Half 1st Half Q3 Target Capital Expenditures 0.049 0.138 0.134 0.028 0.027 0.024 0.012 0.014 0.023 0.031 Capital Expenditures 1st Half 2nd Half 1st Half 2nd Half 1st Half Q3 Target Controllable Working Capital* 0.15 0.14 0.17 0.
Slide 20: Capital Structure
Capital Structure Strong balance sheet supports growth and shareholder value initiatives Current Capital Structure Total Debt to Capitalization 1st Half 2nd Half 1st Half 2nd Half 1st Half Q3 Cash 45 45 27 51 65 73 Debt 90 80 51 50 66 77 % 0.212 0.224 0.177 0.169 0.204 0.225 $ in Millions Total Debt
Slide 21: Positioned For Growth
Positioned For Growth Winning new business and new customers Effectively managing costs and reinvesting for future growth Diversified business model means reduced risk and volatility Global footprint / customer advantage Conservative balance sheet and positive cash flow Opportunistic acquisitions
Slide 22: Appendix
Appendix
Slide 23: Sensors and Actuators: Sample Applications and Products
Sample Applications: Products: Sensors and Actuators Technologies: Thick Film Resistive Ink Systems Hall-effect Non-contacting Systems BLDC High-Torque Electromagnetics Capabilities: Research, Design & Engineering Custom Molding Highly Automated Manufacturing Global Footprint: N. America, Asia, Euro
Slide 24: Total Available Market (Including Pedal Sensors)
Total Available Market (Including Pedal Sensors) Pedal Modules 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Target 9 13 16 30 49 72 66.8 91.9 103.5 114 Captured 9 13 91.9 102.5 104.7 CTS Pedal Modules offer performance, quality and cost advantages CTS Pedal Sales $M CTS currently supplies over
Slide 25: Supplying the 'Green' Energy Market
Supplying the 'Green' Energy Market Sensors And Actuators EMS Battery - Electric All-Electric Vehicles Electric Vehicle Charging Systems 2008 2009 2010 2011 2012 Design Wins 0 1 5 8 13 'Green' Energy Sales $ in Millions New Electric Vehicle Market Strengthening; Providing Opportunities in Fast Growi
Slide 26: Electronic Components: Sample Applications and Products
Sample Applications: Products: Technologies: Thick Film Resistive Ink Systems Quartz, Hard & Soft Piezoceramics Electronic-grade Ceramics Precision Coatings Capabilities: Research, Design & Engineering Custom Packaging ISO 13485, 9001, 14001 Certifications North America and Asia Footprint Communicat
Slide 27: Electronic Manufacturing Solutions: Sample Applications
Sample Applications: Major Markets: Quality / Regulatory: ISO 13485, 9001 CFR 820 FDA Class I to III IPC Class III Capabilities: Complex PCB's and Boxbuilds Custom Design & Engineering Secure Manufacturing Turnkey Services - Design thru Direct Ship High Technology Environment Global Footprint: N. Am
Slide 28: Major CTS Competitors
Major CTS Competitors PRODUCTS Sensors and Actuators COMPETITION AB Electronics, Alps, Bosch, Delphi, Denso, Continental, CST, Hella, Mikuni Electronic Components Electronics Manufacturing Services Axiom, Celestica, Flextronics, Jabil, Keytronic, LaBarge, Plexus, Sanmina-SCI, Sparton, STI Ltd., Sypr
Slide 29: Target Adjusted Return on Invested Capital (ROIC)
Target Adjusted Return on Invested Capital (ROIC) OPERATING MARGIN AFTER-TAX (NOPAT Margin) INVESTED CAPITAL TURNOVER Overall ROIC improvement on track 2005 4% 2% 6% 8% 0.5 1.0 1.5 2.0 2.5 3.0 3.5 6.2% Shareholder Value ROIC 12% ROIC Curve 10% 12% 4.0 EMS Components & Sensors 8.0% 2006 8.1% 2007 200
Slide 30: Financial Summary
Financial Summary Note: Adjusted data excludes restructuring and related charges, certain asset impairments and income tax adjustments.
Slide 31: Other Financial Data - Income Statement
Other Financial Data - Income Statement Note: Adjusted data excludes restructuring and related charges, certain asset impairments and income tax adjustments.
Slide 32: Other Financial Data - Balance Sheet Metrics
Other Financial Data - Balance Sheet Metrics CTS Corporation Reconciliation of Projected Full Year Earnings Per Share to Adjusted Projected Full Year Earnings Per Share Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, 2010(5) 200