Commenting on second quarter 2012 results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “We were pleased with our second quarter performance, despite the global economic slowdown. We believe that continued progress on new product introductions and strong new business wins will allow the Company to drive double-digit growth in Components and Sensors going forward.”
CTS initiated a $5 million restructuring plan with expected annual savings of approximately $6 million. This plan will reduce approximately 260 positions, or 6% of CTS’ global headcount, throughout Asia, Europe and North America. CTS recognized $3.8 million, or $0.08 per share, of this $5 million plan in the second quarter; the remaining $1.2 million charge is expected to be recognized in the second half of 2012. The plan will further improve our cost structure and capacity utilization.
CTS’ EMS Thailand facility, which had been out of service since the October 2011 flood, is now fully operational with substantially all production having been transferred back to Thailand from the California EMS facilities. Second quarter 2012 earnings include insurance recoveries of $7.4 million and expenses and losses of approximately $5 million. Year-to-date, flood-related reimbursements have exceeded costs by $1.5 million, due to timing.
As a result of lower than expected global economic growth, including negative economic growth in Europe and a stronger dollar, management is lowering its full-year 2012 sales guidance from a range of a 10% to 13% increase over 2011, to 4% to 7%. However, as a result of expected restructuring savings, management is maintaining its 2012 adjusted earnings guidance of $0.75 to $0.80 per share.