Cts Corporation · NYSE:CTS
Cts — Investor Presentation (April 2019)
21 slides from Cts's investor presentation, Apr 29, 2019
Slide 1: Investor Presentation April 2019
Investor Presentation April 2019 1
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 15% Medical 4% 5% 9% North America $475 55% Asia 30% 18% Million Industrial
Slide 4: Shareholder return, sales growth and business expansion
156% Shareholder Return from 2012 to 2018 vs. 76% for S&P 500 $1.87 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 5: Transportation
Transportation Market Sectors Non-Road Mobile Light Vehicles Commercial Vehicles Motorcycles Relevant Products Machinery Key Customers ▪ Accelerator Pedal ▪ Chassis Height Sensor ▪ DPF RF Sensor ▪ Throttle Sensor ▪ Turbo Actuator 5
Slide 6: Industrial
Industrial Market Sectors Inkjet Print Heads HVAC Systems Commercial Sonar Security Systems Relevant Products Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ Sensors & Controls ▪ Switches ▪ EMI/RFI Filters 6
Slide 7: Medical
Medical Market Sectors Ultrasonic Imaging Therapeutic Ultrasound Dental Equipment Equipment Control Panel Relevant Products Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ Sensors & Controls ▪ Switches ▪ EMI/RFI Filters 7
Slide 8: Aero & Defense
Aero & Defense Market Sectors Torpedo Target Missile Control Sonobuoys Hydrophones Relevant Products Acquisition Communications Key Customers ▪ Piezoelectric Components ▪ Transducers ▪ RF Filters ▪ EMI/RFI Filters ▪ Frequency Control 8
Slide 9: Telecom & IT
Telecom & IT Market Sectors Macro Cell Small Cell Satellite Wireline Relevant Products Base Stations Base Stations Communication Infrastructure Key Customers ▪ Piezoelectric Components ▪ RF Filters ▪ EMI/RFI Filters ▪ Frequency Control 9
Slide 10: Strong Growth Drivers by End Market
Strong Growth Drivers by End Market Transportation Industrial Medical Aero & Defense Telecom & IT 5% 4% 9% 18% 64% Goal 30-50% 20-30% 10-20% 5-15% 10-20% SAM $3.3B $1.7B $0.2B $0.7B $1.8B Expected 8% 7% 7% 10% 15% Growth* ▪ Booked Business, Share Gains ▪ 3D and textile printing ▪ Medical 3D/4D ultra
Slide 11: Strategic M&A Approach
Strategic M&A Approach Expand Enhance Broaden Strengthen Product Technology Geographic Customer Range Portfolio Reach Relationships Case Study: Successfully Built Broad Piezoelectric Ceramic Growth Platform Pre 2016 2016 2017 2018+ Traditional Growth Bulk technology Platform Robust double-digit Bulk
Slide 12: Balanced Capital Deployment Approach
Balanced Capital Deployment Approach Operating Cash Flow 12-15% of Sales Growth Return Capital to Investment Acquisitions Shareholders ~4% of Sales* 60-80% of Dividends & Buybacks Free Cash Flow 20-40% of Free Cash Flow *6.1% in 2018 6-8% in 2019 Capital Structure Leverage = 1.0x - 2.5x EBITDA 12
Slide 13: Financial Performance Trend and 2019 Guidance
Financial Performance Trend and 2019 Guidance SalesSales Adjusted EarningsAdjusted Per EPS Share ($ Millions) $500 $1.70 $460 $470 $323 $1.50 $423 $1.53 $397 Booked $1.23 Business $1.08 $118 Q1 Actual 2016 2107 2018 2019E 2016 2017 2018 2019E Note: 2019E represents guidance provided on April 25, 201
Slide 14: Financial Framework
Financial Framework Long-Term 2012 2018 Target Range Gross Margin 30.0% 35.1% 34-37% SG&A Expense 20.7% 15.6% 13-15% R&D Expense 6.9% 5.4% 5-7% CapEx 2.6% 6.1% ~4%* *6-8% in 2019 Targeting 10% Annual Growth (Organic + Inorganic) 14
Slide 15: Well Positioned For Growth
Well Positioned For Growth Organic Inorganic Healthy Booked Business Strong Cash & Debt Availability ($ Millions) ($ Millions) $1,865 +23% $300 Total Facility $1,518 $101 $50 Borrowed Dec 2016 Mar 2019 Cash Debt ▪ Enhance Customer Intimacy ▪ Low leverage, debt-to-equity ratio ▪ Enhance Sales Force C
Slide 16: Appendix
Appendix cis
Slide 17: CTS Core Values
CTS Core Values Play to Win Simplicity cis Responsiveness Solution Oriented
Slide 18: Financial Summary
Financial Summary ($ Millions, except percentages and Adjusted Diluted EPS) Q1 2019 2018 2017 2016 Net Sales $117.6 $470.5 $423.0 $396.7 Adjusted Gross Margin $40.6 $165.0 $145.2 $140.4 Adjusted Gross Margin % of Sales 34.5% 35.1% 34.3% 35.4% Depreciation and Amortization $5.9 $22.5 $20.7 $19.0 Adju
Slide 19: Regulation G Schedules Adjusted Gross Margin
Regulation G Schedules Adjusted Gross Margin ($ Millions, except percentages) Q1 Full Year 2019 2018 2018 2017 2016 Gross margin $ 40.6 $ 38.4 $ 165.0 $ 140.4 $ 140.4 Adjustments to reported gross margin: Pension settlement charge - - - 4.8 - Adjusted gross margin $ 40.6 $ 38.4 $ 165.0 $ 145.2 $ 140
Slide 20: Regulation G Schedules Adjusted EBITDA
Regulation G Schedules Adjusted EBITDA ($ Millions, except percentages) Q1 Full Year 2019 2018 2018 2017 2016 Net earnings $ 11.4 $ 11.5 $ 46.5 $ 14.4 $ 34.4 Depreciation and amortization expense 5.9 5.5 22.5 20.7 19.0 Interest expense 0.5 0.5 2.1 3.3 3.7 Tax expense 2.9 3.8 11.6 25.8 22.9 EBITDA 20
Slide 21: Regulation G Schedules Adjusted Diluted EPS
Regulation G Schedules Adjusted Diluted EPS Q1 Full Year 2019 2018 2018 2017 2016 Diluted earnings per share $ 0.34 $ 0.34 $ 1.39 $ 0.43 $ 1.03 Tax affected adjustments to reported diluted earnings per share: Restructuring charges 0.05 0.03 0.12 0.08 0.06 Increase in valuation allowance and revaluat