Electronics Production | October 26, 2005
CTS reports strong third quarter
CTS reports Earnings up 60% on Revenue Increase of 16% for third quarter.
CTS Corporation announced third quarter 2005 revenues of $149.2 million, a 16% increase over the third quarter of 2004. Diluted earnings per share were $0.16, up 60% over the third quarter 2004, continuing the trend of year-over-year improved profitability. Third quarter revenues increased from the prior year, driven by 35% growth in EMS segment sales primarily as a result of the SMTEK acquisition. Total Components and Sensors segment sales declined 5% primarily due to lower handset application sales. However, within the Components and Sensors segment, there was nearly 17% growth in sales of automotive sensor products and electronic communication components. “We continue to see solid evidence that our business strategies and growth initiatives are working,” commented Donald Schwanz, Chairman and Chief Executive Officer. “Operating earnings improved in both the EMS and Components and Sensors business segments, helped by strong new product growth in Automotive, the SMTEK acquisition and continued tight cost controls,” added Schwanz. Based on the nine-months results and revised estimates for the balance of the year, the Company expects full-year 2005 revenues to be in the range of $620 million to $640 million which is 17% to 20% over 2004. Components and Sensors third quarter segment sales decreased by $3.1 million, or 5%, from the same period of 2004 driven primarily by lower handset component sales. Sales of Components and Sensors into automotive applications grew 16.7% year-over-year. Additionally, the Company saw strong growth in Component sales to the infrastructure equipment industries with 16.5% year-over-year growth. The Company has de-emphasized Component sales for handset applications and expects those sales to continue to decline over time. In the third quarter, remaining Component sales for handset applications were 2.7% of segment sales. Despite lower segment sales, total operating earnings at 11.8% of sales increased $2.5 million from the prior year driven by improved margins, product-mix and cost controls. The third quarter Components and Sensors sales decreased from the second quarter of 2005 by $6.4 million, or 10%, reflecting normal seasonal declines in automotive markets due to scheduled OEM factory shutdowns and lower component sales into handsets, as mentioned earlier. Segment operating earnings of 11.8% of sales increased by 0.6% points, despite lower sales, due to improved cost control. EMS third quarter 2005 sales increased by $23.3 million, or 35%, from the third quarter of 2004, primarily from the SMTEK acquisition. Segment operating earnings of 2.4% of sales improved primarily from strong performance of the former SMTEK business. Third quarter EMS revenues were 3% below second quarter 2005 sales. Slower sales to the computer and defense/aerospace industries were partially offset by increased volumes within the communications infrastructure equipment industry. EMS segment operating earnings decreased on lower volumes and higher costs related to new product launch activities.