Slide 1: Investor Presentation May 2016
Investor Presentation May 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
Our Company 3 Ticker: CTS (NYSE) Founded: 1896 Business: CTS is a leading designer and manufacturer of sensors, actuators and electronic components. Locations: 12 manufacturing locations throughout North America, Asia and Europe. Number of Employees: ~3,000 Globally 2015 Sales: $382 Million Sales by
Slide 4: Our History - Years of Innovation
4 Our History - 120 Years of Innovation
Slide 5: Our New Identity
Our New Identity 5 CTS has been part of the future for 120 years. As technology has continued to move forward, we’ve been right alongside, engineering intelligent ways to meet people’s ever changing needs. Today is no different and we continue to reinvent ourselves by establishing a new identity. Ne
Slide 6: Our Products
Our Products 6 Accelerator Pedals Switches & Controls Timing Components RF Filters EMI/RFI Filters Smart Actuators Micro Actuators Torque Motor Actuator Sensors
Slide 7: Our Customers
Our Customers 7 Ind. / Defense New European OEM Transportation Medical Communications Industrial / IT Distribution Transportation Industrial / IT Other
Slide 8: Targeted End Markets and Growth Drivers
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 Commercial Vehicles Comm./IT Aviation/Defense EMS Divestiture Front End Refocus New Customers Regional Expansion Organic Projects M&A Le
Slide 9: New Products, New Applications, New Customers
New Products, New Applications, New Customers Develop next generation sensor products Expanded pedal applications Expanded switch and control product line Expanded piezo-ceramic applications and new technologies: Naval sonar buoys Naval hydrophones Miniature medical ultrasound Organic Growth -
Slide 10: Inorganic Growth - Targeted Acquisitions
Inorganic Growth - Targeted Acquisitions 10 Disciplined approach to acquisitions: Returns in excess of cost of capital Accretive to earnings Maintain balance sheet strength Synergy opportunities Strengthen Customer Relationships Expand Product Range Broaden Geographic Reach Enhance Technolog
Slide 11: Channel Technologies Group, Advanced Materials Division (CTG-AM) Acquisition
Channel Technologies Group, Advanced Materials Division (CTG-AM) Acquisition 11 CTG-AM Overview Founded in 1997 and located in Bolingbrook, IL Is the industry leader for the design and manufacture of piezoelectric single crystals for use in the medical and defense industries Is the leading lar
Slide 12: Filter Sensing Technologies (FST) Acquisition
FST Overview 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 Diesel Particulate Filters (DPF) or Gasoline Particulate Filters (GPF) Suitable for aftertreatment systems in Pa
Slide 13: 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 $410 $390 $1.06 $0.95 +2% to 14% 13 Note 1: Sales are from continuing operations. Adjusted EPS is as reported. +2% to 7% Note 2: 2016E represents guidance provided on May
Slide 14: New Business Awards
New Business Awards 14 $299 2Q-4Q $484 $560 2013 2014 2015 1Q Not Reported ($ Millions) 16% Growth $118 1Q 2016
Slide 15: Improved Cost Structure
Improved Cost Structure Manufacturing locations Reduced from 15 to 11, added 1 with March 2016 single crystal acquisition Utilization of best cost manufacturing locations up from ~50% in 2013 to >80% by 2017 – ~70% at the end of 2015 Shift SG&A spend – Increase Sales & Marketing, Optimize G&
Slide 16: Capital Structure
Equity 67% Bank Debt 33% $124 $135 $157 $131 $75 $75 $91 $141 2013 2014 2015 1Q 2016 Change in Cash/Debt in 1Q 2016 due to Single Crystal Acquisition Capital Structure 16 Total Debt to Capitalization Net Debt $(49) $(60) Current Capital Structure ($200M Facility) Debt Cash $(66) ($ Millions except p
Slide 17: Target Capital Deployment - Disciplined Approach
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 17 Growth Acquisitions Investment Dividends & Buybacks
Slide 18: Appendix
Appendix
Slide 19: CTS Competitors
19 CTS Competitors Controls Alps, BI Tech, Bourns, C&K, Diptronics, ECE, Elma, Grayhill, Tocos EMI/RFI Filters API Technologies, AVX, Corry Micronics, Ferroperm, Spectrum Conrols, Stelco Frequency Control Products Epson, Mtron, NDK, Rakon, Si Labs, Tai Tien, TEW, Vectron Pedals Bosch, Denso, Hella,
Slide 20: CTS Core Values
CTS Core Values SC Play to Win Responsiveness Simplicity Solution Oriented
Slide 21: 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 21 ($ Millions, except percentages and Adju
Slide 22: Regulation G Schedules
Regulation G Schedules 22 ($ Millions, except percentages) Adjusted EBITDA 2016 2015 2015 2014 2013 2012 2011 Net earnings from continuing operations 7.9 $ 6.3 $ 7.0 $ 26.5 $ 2.0 $ 13.5 $ 11.3 $ Depreciation and amortization expense 4.0 $ 4.1 $ 16.3 $ 17.0 $ 17.3 $ 13.5 $ 12.1 $ Interest expense 0.8
Slide 23: Regulation G Schedules
Regulation G Schedules 23 Adjusted Diluted EPS ($ Millions, except percentages) Total Debt to Capitalization 2016 2015 2015 2014 2013 2012 2011 2013 2012 2011 Diluted earnings (loss) per share 0.24$ 0.19$ 0.21$ 0.78$ 0.06$ 0.39$ 0.32$ (0.12)$ 0.59$ 0.60$ Tax affected charges (credits) to reported di