Electronics Production | April 28, 2011
17% revenue increase YoY for CTS
CTS reports first quarter 2011 revenues of USD 151.5 million, an increase of 17% from revenues of USD 129.4 million in the same period last year.
Net earnings increased to $5.1 million, or $0.15 per diluted share, in the first quarter 2011 compared to net earnings of $4.4 million, or $0.13 per diluted share, in the first quarter of 2010. Within the Components and Sensors segment, sales of electronic component products increased 5% year-over-year on improved distribution, electromagnetic filter product demand and new customers. Sales of sensor and actuator products decreased 6% year-over-year due to timing of certain customer program changeovers and delayed customer orders due to Japan. First quarter 2010 sales included both one-time service part shipments and post-recession replenishment of inventory. In total, Components and Sensors segment sales decreased 2% year-over-year. EMS segment sales increased across all markets served with sales up 42% from the same period last year. Growth in EMS sales resulted from new program launches with existing and new customers, contributing to sales increases of 55% in the defense and aerospace market, 39% in the industrial market, 31% in the communications market and 14% in the medical market. EMS sales were lower in the first quarter of 2010, negatively affected by certain program introduction delays. CTS continues to maintain a robust level of product introduction activities to develop and launch new products. Research and development expense in the first quarter 2011 was $5.0 million, or 7.0% of Components and Sensors segment sales, compared to $4.6 million, or 6.2% of sales, in the first quarter 2010. Capital expenditures are back to normal levels at $3.2 million, or 2.1% of total sales, in the first quarter of 2011, compared to $1.5 million, or 1.2% of total sales, in the same period last year. Commenting on first quarter results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “We are pleased with our first quarter performance, despite some order push outs due to the Japan earthquake and precious metal headwinds. We secured our second pedal module program for a global vehicle platform and have won new business with Chinese OEMs for our sensor and actuator products. In electronic components, we continue to increase our design wins for wireless infrastructure applications. These actions, together with our acquisition of Fordahl SA in January, continue to position CTS to grow and enhance shareholder value.” Based on first quarter results and the current outlook, management maintains its guidance of full-year 2011 sales increase in the range of 9% to 13% over 2010 and full-year 2011 diluted earnings per share in the range of $0.70 to $0.75. While management does not currently expect any material impact on 2011 full-year earnings related to the Japan disaster, some impact in the second quarter is expected due to production slow downs, with anticipated recapture as inventories are replenished later in the year. Components & Sensors Components and Sensors first quarter 2011 sales decreased USD 1.4 million, or 2%, from the first quarter of 2010. The reduction resulted from lower automotive sensor and actuator product sales, partially offset by higher electronic component product demand. Segment operating earnings of USD 5.8 million were USD 3.3 million unfavorable to the first quarter of 2010 due to the impact of lower sales, unfavorable product mix, higher commodity prices, launch related costs for new products that will ramp later this year and higher research and development expense. Components and Sensors sales increased USD 6.6 million, or 10%, from the fourth quarter of 2010 reflecting increased demand in both automotive sensor and actuator products and electronic components. Despite higher sales, segment operating earnings decreased USD 0.9 million due primarily to higher research and development expense for new growth initiatives. EMS: EMS sales increased USD 23.5 million, or 42%, from the first quarter of 2010 reflecting higher sales across all markets. New program launches with existing and new customers contributed to a 55% sales increase to the defense and aerospace market, a 39% sales increase to the industrial market, a 31% increase in sales to the communications market and a 14% increase to the medical market. Segment operating earnings were breakeven compared to an operating loss of USD 2.7 million in the first quarter of 2010, primarily resulting from higher sales. EMS sales were essentially unchanged from the fourth quarter 2010, primarily reflecting increases in the communications, computer and industrial markets, offset by decreases in the defense and aerospace market. Segment operating earnings in the first quarter were breakeven, compared to operating earnings of $1.0 million in the fourth quarter 2010, primarily as a result of unfavorable product mix.
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