LISLE, Ill., July 30, 2024 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE:CTS), a leading global designer and manufacturer of custom engineered solutions that "Sense, Connect and Move," today announced second quarter 2024 results. "We achieved earnings in line with our expectations, despite softness in the transportation end market. We made progress on operational improvements, which helped partially offset the unfavorable impact from lower volumes." said Kieran O'Sullivan, CEO of CTS Corporation. "Our team is energized on future growth through continued diversification of our customer base and building our pipeline of opportunities. We remain committed to a disciplined capital structure to support organic growth, strategic acquisitions and returning cash to shareholders." CTS completed the acquisition of SyQwest, LLC on July 29, 2024 for $125 million, net of cash and debt, and contingent consideration. SyQwest is a leading designer and manufacturer of a broad set of sonar and acoustic sensing solutions primarily for naval applications. "SyQwest adds strong technical capabilities and enhances our scale in underwater acoustic applications in the defense end market, further advancing our diversification strategy," said Kieran O'Sullivan. "We are excited about the growth momentum and welcome Bob Tarini and the SyQwest team to CTS." Second Quarter 2024 Results Sales were $130 million, up 4% sequentially compared to the first quarter of 2024, and down 10% year-over-year. Sales to non-transportation end markets increased 11% sequentially and 4% year-over-year. Sales to the transportation end market decreased 3% sequentially and 22% year-over-year. Net income was $15 million, or 11% of sales, up from $13 million, or 9% of sales, in the second quarter of 2023. Earnings per diluted share were $0.48, compared to $0.41 in the second quarter of 2023. Adjusted earnings per diluted share were $0.54, down from $0.59 in the second quarter of 2023. Adjusted EBITDA margin was 21.7%, compared to 21.3% in the second quarter of 2023. Operating cash flow was $20 million, down from $23 million in the second quarter of 2023. 2024 Guidance Given the more moderate growth expectations in the second half of 2024, CTS is updating its guidance for full year 2024 sales to be in the range of $525 - $540 million and adjusted diluted EPS to be in the range of $2.05 - $2.25, including the expected impact from the SyQwest acquisition. CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information. Conference Call and Supplemental MaterialsAs previously announced, the Company has scheduled a conference call for 10:00 a.m. (ET) today. The dial-in numbers for access from the U.S. are: +1-833-470-1428 (Toll-Free) and +1-404-975-4839 (Local), if calling from outside the U.S., please refer to Global Dial In Numbers to identify the applicable dial-in number for your location. The passcode is 325452. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS' website at https://investors.ctscorp.com/news-events/events-and-presentations/. Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible through the website noted above, has not been authorized by the Company and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents. About CTS CTS Corporation (NYSE:CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical and transportation markets. For more information, visit www.ctscorp.com.   Cautionary Statement Regarding Forward-Looking Statements Readers are cautioned that the statements contained in this document regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are, or may be deemed to be, "forward-looking statements" as defined by the "safe harbor" provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this document, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward-looking statements. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "continued," "project," "plan," "goals," "opportunity," "appeal," "estimate," "potential," "predict," "demonstrates," "may," "will," "might," "could," "intend," "shall," "possible," "would," "approximately," "likely," "outlook," "schedule," "on track," "poised," "pipeline," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are based on management's expectations, certain assumptions, and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties, and other factors, which could cause CTS' actual results, performance, or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions, including, without limitation, the integration of SyQwest, LLC; the results of actions to reposition CTS' business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS' intellectual property; pricing pressures and demand for CTS' products; risks associated with CTS' international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition); the amount and timing of any share repurchases; and the effect of any cybersecurity incidents on our business. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS' most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS' forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.  ContactAshish AgrawalVice President and Chief Financial OfficerCTS Corporation4925 Indiana AvenueLisle, IL 60532 USA+1 (630) CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OFEARNINGS- UNAUDITED(In thousands, except per share amounts)           Three Months Ended     Six Months Ended       June 30,2024     June 30,2023     June 30,2024     June 30,2023   Net sales   $ 130,162     $ 145,182     $ 255,912     $ 291,176   Cost of goods sold     83,790       94,440       164,450       188,782   Gross margin     46,372       50,742       91,462       102,394   Selling, general and administrative expenses     21,332       23,694       43,591       45,673   Research and development expenses     6,086       6,721       12,687       13,307   Restructuring charges     1,190       1,895       2,884       2,807   Operating earnings     17,764       18,432       32,300       40,607   Other (expense) income:                         Interest expense     (833 )     (818 )     (1,635 )     (1,512 ) Interest income     1,441       1,072       2,827       2,135   Other expense, net     (603 )     (2,606 )     (2,066 )     (2,441 ) Total other income (expense), net     5       (2,352 )     (874 )     (1,818 ) Earnings before income taxes     17,769       16,080       31,426       38,789   Income tax expense     3,062       3,183       5,600       7,548   Net earnings   $ 14,707     $ 12,897     $ 25,826     $ 31,241   Earnings per share:                         Basic   $ 0.48     $ 0.41     $ 0.84     $ 0.99   Diluted   $ 0.48     $ 0.41     $ 0.84     $ 0.98   Basic weighted – average common shares outstanding:     30,511       31,488       30,627       31,560   Effect of dilutive securities     219       197       224       224   Diluted weighted – average common shares outstanding:     30,730       31,685       30,851       31,784   Cash dividends declared per share   $ 0.04     $ 0.04     $ 0.08     $ 0.08   CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands of dollars)       (Unaudited)June 30,2024     December 31, 2023   ASSETS             Current Assets             Cash and cash equivalents   $ 161,246     $ 163,876   Accounts receivable, net     85,380       78,569   Inventories, net     51,670       60,031   Other current assets     16,566       16,873   Total current assets     314,862       319,349   Property, plant and equipment, net     91,759       92,592   Operating lease assets, net     24,181       26,425   Other Assets             Goodwill     156,061       157,638   Other intangible assets, net     96,827       103,957   Deferred income taxes     26,619       25,183   Other     15,313       16,023   Total other assets     294,820       302,801   Total Assets   $ 725,622     $ 741,167   LIABILITIES AND SHAREHOLDERS' EQUITY             Current Liabilities             Accounts payable   $ 40,864     $ 43,499   Accrued payroll and benefits     15,286       14,585   Operating lease obligations     4,371       4,394   Accrued expenses and other liabilities     31,926       34,561   Total current liabilities     92,447       97,039   Long-term debt     65,000       67,500   Long-term operating lease obligations     22,741       24,965   Long-term pension obligations     4,583       4,655   Deferred income taxes     14,314       14,729   Other long-term obligations     3,786       5,457   Total Liabilities     202,871       214,345   Commitments and Contingencies             Shareholders' Equity             Common stock     321,894       319,269   Additional contributed capital     41,586       45,097   Retained earnings     625,614       602,232   Accumulated other comprehensive loss     775       4,264   Total shareholders' equity before treasury stock     989,869       970,862   Treasury stock     (467,118 )     (444,040 ) Total shareholders' equity     522,751       526,822   Total Liabilities and Shareholders' Equity   $ 725,622     $ 741,167                     CTS CORPORATION AND SUBSIDIARIESOTHER SUPPLEMENTAL INFORMATION - UNAUDITED(In millions of dollars, except percentages and per share amounts) Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS' business. These measures are intended to supplement, not replace, CTS' presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS' definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items. CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) restructuring-related charges; (3) environmental charges; (4) acquisition-related costs; (5) inventory fair value step-up costs; (6) foreign exchange (gains) losses; (7) non-cash pension expenses (income); and (8) certain discrete tax items are useful and assist in comparing CTS' current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures. Restructuring charges – costs primarily related to workforce reductions, building and equipment relocations, asset impairment charges and other facility closure activities in connection with our continued optimization of our organization. Restructuring-related charges – costs related to restructuring actions that do not qualify as direct restructuring charges under U.S. GAAP. These include duplicative expenses arising from plant consolidation transition activities such as excess rent, utilities, and personnel-related and other costs incurred prior to the start of production at a new location. Environmental charges – costs associated with our non-operating facilities that are unrelated to ongoing operations. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company. Acquisition-related costs – diligence and transaction costs related to acquisitions including related contingent earnout adjustments. Inventory fair value step-up costs – purchase accounting-related inventory costs from acquisitions. Foreign exchange (gains) losses – remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency. Non-cash pension expenses (income) – pension income and expenses related to the non-operating U.S. pension and post-retirement life insurance plans, including historical plan settlement activities. Discrete tax items – non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items or due to tax law changes, etc.). At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum. Adjusted Gross Margin     Three Months EndedJune 30,     Six Months EndedJune 30,     Twelve Months EndedDecember 31,       2024     2023     2024     2023     2023     2022     2021   Gross margin   $ 46.4     $ 50.7     $ 91.5     $ 102.4     $ 190.9     $ 210.5     $ 184.6                                               Net sales   $ 130.2     $ 145.2     $ 255.9     $ 291.2     $ 550.4     $ 586.9     $ 512.9                                               Gross margin as a % of net sales     35.6 %     35.0 %     35.7 %     35.2 %     34.7 %     35.9 %     36.0 %                                             Adjustments to reported gross margin:                                           Restructuring-related charges (b)     0.2       —       0.7       —       0.6       —       —   Inventory fair value step-up (b)     —       —       —       —       —       4.0       —                                               Adjusted gross margin   $ 46.6     $ 50.7     $ 92.2     $ 102.4     $ 191.5     $ 214.5     $ 184.6                                               Adjusted gross margin as a % of net sales     35.8 %     35.0 %     36.0 %     35.2 %     34.8 %     36.5 %     36.0 % Adjusted Operating Earnings     Three Months EndedJune 30,     Six Months EndedJune 30,     Twelve Months EndedDecember 31,       2024     2023     2024     2023     2023     2022     2021   Operating earnings   $ 17.8     $ 18.4     $ 32.3     $ 40.6     $ 75.1     $ 93.0     $ 76.5                                               Net sales   $ 130.2     $ 145.2     $ 255.9     $ 291.2     $ 550.4     $ 586.9     $ 512.9                                               Operating earnings as a % of net sales     13.6 %     12.7 %     12.6 %     13.9 %     13.6 %