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 31, 2020

CTS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

IN	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 31, 2020, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter ended June 30, 2020, 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	Earnings Release dated July 31, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document)

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 31, 2020		CTS CORPORATION
	By:	/s/ William M. Cahill
		William M. Cahill
		Chief Accounting Officer
		(Principal Accounting Officer)

EX-99.1

	Press Release
July 31, 2020	FOR IMMEDIATE RELEASE

CTS Announces Second Quarter 2020 Results

Adapting to New Market Conditions

Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced second quarter 2020 results.

• Sales were $84.2 million, down 30% year-over-year. Sales to transportation customers declined 53%, and sales to other end markets grew 14%. Excluding $5.4 million in sales from the QTI acquisition, sales to other end markets grew 1%.

• Net earnings were $4.9 million or $0.15 per diluted share versus $11.9 million or $0.36 last year.

• Adjusted diluted EPS was $0.16.

• Free cash flow was $9.1 million, and at quarter-end, we were net cash positive.

• New business wins were $105 million.

“I am grateful to our teams around the globe for their resilience and care for our customers and partners in this unprecedented downturn. We are adapting our cost structure due to the prolonged impact of COVID-19,” said Kieran O’Sullivan, CEO of CTS Corporation. “We received new business awards in some promising areas. Our focus remains on key strategic growth investments. We are making progress on our diversification into non-transportation markets and continue to position the business for the opportunities ahead of us.”

2020 Guidance

Due to ongoing market uncertainties, management is not providing revenue or earnings guidance at this time.

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 290044. There will be a replay of the conference call from 2:00 p.m. (EDT) today through 2:00 p.m. (EST) on Friday, August 14, 2020. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 7215300. 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.

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,
	2020			2019			2020			2019
Net sales	$	84,197		$	120,684		$	187,272		$	238,308
Cost of goods sold	57,630			79,480			127,806			156,490
Gross Margin	26,567			41,204			59,466			81,818
Selling, general and administrative expenses	14,668			17,036			31,427			34,597
Research and development expenses	5,522			6,257			12,930			13,048
Restructuring charges	135			911			375			2,995
Gain on sale of assets	—			(83		)	—			(122		)
Operating earnings	6,242			17,083			14,734			31,300
Other (expense) income:
Interest expense	(909		)	(467		)	(1,760		)	(933		)
Interest income	304			440			635			872
Other income (expense), net	256			(1,107		)	(1,726		)	(1,010		)
Total other (expense), net	(349		)	(1,134		)	(2,851		)	(1,071		)
Earnings before income taxes	5,893			15,949			11,883			30,229
Income tax expense	1,036			4,006			3,218			6,867
Net earnings	$	4,857		$	11,943		$	8,665		$	23,362
Earnings per share:
Basic	$	0.15		$	0.36		$	0.27		$	0.71
Diluted	$	0.15		$	0.36		$	0.27		$	0.70
Basic weighted – average common shares outstanding:	32,262			32,799			32,364			32,803
Effect of dilutive securities	242			406			284			422
Diluted weighted – average common shares outstanding:	32,504			33,205			32,648			33,225
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,
	2020			2019
ASSETS
Current Assets
Cash and cash equivalents	$	145,981		$	100,241
Accounts receivable, net	59,798			78,008
Inventories, net	44,266			42,237
Other current assets	14,750			16,992
Total current assets	264,795			237,478
Property, plant and equipment, net	99,349			105,038
Operating lease assets, net	24,369			24,644
Other Assets
Prepaid pension asset	64,104			62,082
Goodwill	106,056			106,056
Other intangible assets, net	80,622			85,215
Deferred income taxes	21,278			19,795
Other	2,816			3,046
Total other assets	274,876			276,194
Total Assets	$	663,389		$	643,354
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	32,820		$	48,219
Operating lease obligations	3,051			2,787
Accrued payroll and benefits	8,725			9,564
Accrued expenses and other liabilities	33,175			36,378
Total current liabilities	77,771			96,948
Long-term debt	141,300			99,700
Long-term operating lease obligations	24,473			24,926
Long-term pension obligations	6,504			6,632
Deferred income taxes	6,303			5,637
Other long-term obligations	6,146			4,292
Total Liabilities	262,497			238,135
Commitments and Contingencies
Shareholders’ Equity
Common stock	310,953			307,932
Additional contributed capital	39,775			43,689
Retained earnings	515,841			509,766
Accumulated other comprehensive loss	(93,155		)	(91,726		)
Total shareholders’ equity before treasury stock	773,414			769,661
Treasury stock	(372,522		)	(364,442		)
Total shareholders’ equity	400,892			405,219
Total Liabilities and Shareholders’ Equity	$	663,389		$	643,354

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, 2020			June 30, 2019		June 30, 2020		June 30, 2019
GAAP diluted earnings per share	$	0.15		$	0.36	$	0.27	$	0.70
Tax affected charges to reported diluted earnings per share:
Restructuring charges	0.01			0.02		0.01		0.07
Foreign currency (gain) loss	(0.03		)	0.02		0.01		0.01
Non-cash pension expense	0.01			—		0.02		0.01
Environmental charges	0.02			—		0.02		—
Discrete tax items	—			—		0.02		—
Adjusted diluted earnings per share	$	0.16		$	0.40	$	0.35	$	0.79

Additional Information

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

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Depreciation and amortization expense	$	6,611	$	5,995	$	13,143	$	11,919
Stock-based compensation expense	$	817	$	1,579	$	1,045	$	2,793

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

XML

Cover Document	Jul. 31, 2020
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0000026058
Title of 12(b) Security	Common Stock, no par value
Entity Address, Address Line One	4925 Indiana Avenue
Entity Address, City or Town	Lisle
Entity Address, State or Province	IL
Entity Incorporation, State or Country Code	IN
Entity File Number	1-4639
Document Type	8-K
Document Period End Date	Jul. 31, 2020
Entity Registrant Name	CTS CORPORATION
City Area Code	630
Local Phone Number	577-8800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Tax Identification Number	35-0225010
Entity Address, Postal Zip Code	60532
Trading Symbol	CTS
Security Exchange Name	NYSE