8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  July 25, 2019

CTS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Indiana	1-4639	35-0225010
(State or other jurisdiction of incorporation)	(Commission File Number)	(1.R.S. Employer Identification No)

4925 Indiana Avenue
Lisle, IL	60532
(Address of principal executive offices)	(Zip Code)

Registrant's Telephone Number, Including Area Code: (630) 577-8800

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240. l 4d2(b)) 

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4( c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, no par value	CTS	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).            

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02     Results of Operations and Financial Condition.

On July 25, 2019, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter ended June 30, 2019, as more fully described in the press release. A copy of the press release is attached hereto as Exhibit 99.l and is incorporated by reference herein.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.l hereto, is being "furnished" to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act" ) or otherwise subject to the liabilities of that section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
99.1	Press Release dated July 25, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on  its behalf by the undersigned hereunto duly authorized.

Date: July 25, 2019		CTS CORPORATION
	By:	/s/ William M. Cahill
		William M. Cahill
		Chief Accounting Officer
		(Principal Accounting Officer)

EX-99.1

	Press Release
July 25, 2019	FOR IMMEDIATE RELEASE

www.ctscorp.com

CTS Announces Second Quarter 2019 Results

Delivering growth in a challenging environment

Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced second quarter 2019 results.

• Sales were $120.7 million, up 2.3% year-over-year. Sales to the transportation end market increased 8.7%, and sales to other end markets decreased 8.6%.

• Net earnings were $11.9 million or $0.36 per diluted share, compared to $7.2 million or $0.21 in the second quarter of 2018.

• Adjusted EPS was $0.40 per diluted share, up from $0.39 in the second quarter of 2018.

• Total Booked Business was $1.875 billion, up 4.2% compared to the second quarter of 2018.

“Despite a challenging first half of the year, we delivered modest revenue and profit growth,” said Kieran O’Sullivan, CEO of CTS Corporation. “The fundamentals of the business remain sound. We are prioritizing our strategic initiatives and are focused on improving operational execution.”

2019 Guidance

Management is narrowing its 2019 guidance for sales from $460 - $500 million to $470 - $490 million, and for adjusted earnings per diluted share from $1.50 - $1.70 to $1.55 - $1.65.

Conference Call

As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EDT) today to discuss the second quarter financial results. The dial-in number is 800-309-1256 (720-543-0314, if calling from outside the U.S.). The passcode is 092198. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m.

www.ctscorp.com

(EDT) on Thursday, August 8, 2019. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 9390168. A live audio webcast of the conference call will be available and can be accessed directly from the Investors section of the website of CTS Corporation at www.ctscorp.com.

About CTS

CTS (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect, and Move. The company manufactures sensors, actuators, and electronic components in North America, Europe, and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical, telecommunications/IT, and transportation markets.

For more information, visit www.ctscorp.com.

Safe Harbor

This document 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, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. 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 our actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ Annual Report on Form 10-K. We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact

Ashish Agrawal

Vice President and Chief Financial Officer

CTS Corporation

4925 Indiana Avenue

Lisle, IL 60532

USA

Telephone: +1 (630) 577-8800

E-mail: ashish.agrawal@ctscorp.com

###

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS - UNAUDITED

(In thousands of dollars, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Net sales	$	120,684		$	118,021		$	238,308		$	231,551
Cost of goods sold	79,480			76,208			156,490			151,305
Gross Margin	41,204			41,813			81,818			80,246
Selling, general and administrative expenses	17,036			19,621			34,597			36,993
Research and development expenses	6,257			6,476			13,048			12,983
Restructuring charges	911			1,172			2,995			2,367
Gain on sale of assets	(83		)	—			(122		)	—
Operating earnings	17,083			14,544			31,300			27,903
Other income (expense):
Interest expense	(467		)	(571		)	(933		)	(1,112		)
Interest income	440			472			872			954
Other expense, net	(1,107		)	(2,874		)	(1,010		)	(870		)
Total other expense, net	(1,134		)	(2,973		)	(1,071		)	(1,028		)
Earnings before income taxes	15,949			11,571			30,229			26,875
Income tax expense	4,006			4,362			6,867			8,118
Net earnings	$	11,943		$	7,209		$	23,362		$	18,757
Earnings per share:
Basic	$	0.36		$	0.22		$	0.71		$	0.57
Diluted	$	0.36		$	0.21		$	0.70		$	0.56
Basic weighted – average common shares outstanding:	32,799			33,051			32,803			33,014
Effect of dilutive securities	406			513			422			513
Diluted weighted – average common shares outstanding:	33,205			33,564			33,225			33,527
Cash dividends declared per share	$	0.04		$	0.04		$	0.08		$	0.08

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	(Unaudited)
	June 30,			December 31,
	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	105,578		$	100,933
Accounts receivable, net	84,876			79,518
Inventories, net	43,154			43,486
Other current assets	16,811			15,422
Total current assets	250,419			239,359
Property, plant and equipment, net	99,878			99,401
Operating lease assets, net	23,846			—
Other Assets
Prepaid pension asset	56,331			54,100
Goodwill	71,057			71,057
Other intangible assets, net	56,805			60,180
Deferred income taxes	19,596			22,201
Other	2,769			2,043
Total other assets	206,558			209,581
Total Assets	$	580,701		$	548,341
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	50,942		$	51,975
Operating lease obligations	2,076			—
Accrued payroll and benefits	9,901			14,671
Accrued liabilities	33,396			37,347
Total current liabilities	96,315			103,993
Long-term debt	50,000			50,000
Long-term operating lease obligations	24,702			—
Long-term pension and other post-retirement obligations	6,363			6,510
Deferred income taxes	3,823			3,990
Other long-term obligations	3,953			5,919
Total Liabilities	185,156			170,412
Commitments and Contingencies
Shareholders’ Equity
Common stock	307,775			306,697
Additional contributed capital	41,786			42,820
Retained earnings	499,585			478,847
Accumulated other comprehensive loss	(95,903		)	(97,739		)
Total shareholders’ equity before treasury stock	753,243			730,625
Treasury stock	(357,698		)	(352,696		)
Total shareholders’ equity	395,545			377,929
Total Liabilities and Shareholders’ Equity	$	580,701		$	548,341

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

Earnings Per Share

The following table reconciles GAAP diluted earnings per share to adjusted diluted earnings per share for the Company:

	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
GAAP diluted earnings per share	$	0.36	$	0.21	$	0.70	$	0.56
Tax affected charges to reported diluted earnings per share:
Restructuring charges	0.02		0.03		0.07		0.06
Foreign currency loss	0.02		0.07		0.01		0.02
Non-recurring costs of tax improvement initiatives	—		0.01		—		0.02
Non-recurring environmental charge	—		0.02		—		0.02
Non-cash pension expense	—		—		0.01		—
Discrete tax items	—		0.05		—		0.05
Adjusted diluted earnings per share	$	0.40	$	0.39	$	0.79	$	0.73

Additional Information

The following table includes other financial information not presented in the preceding financial statements.

	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Depreciation and amortization expense	$	5,995	$	5,478	$	11,919	$	10,961
Stock-based compensation expense	$	1,579	$	1,263	$	2,793	$	2,186

www.ctscorp.com

Non-GAAP Financial Measures

Adjusted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted earnings per share.

CTS adjusts for these items because they are discrete events, which have a significant impact on comparable GAAP financial measures and could distort an evaluation of our normal operating performance.

CTS uses an adjusted earnings per share measure to evaluate overall performance, establish plans and perform strategic analysis. Using this measure avoids distortion in the evaluation of operating results by eliminating the impact of events which are not related to normal operating performance. Because this measure is based on the exclusion or inclusion of specific items, they may not be comparable to measures used by other companies which have similar titles. CTS' management compensates for this limitation when performing peer comparisons by evaluating both GAAP and non-GAAP financial measures reported by peer companies. CTS believes that this measure is useful to its management, investors and stakeholders in that it:

• provides a meaningful measure of CTS' operating performance,

• reflects the results used by management in making decisions about the business, and

• helps review and project CTS' performance over time.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.

www.ctscorp.com