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© andrzej thiel dreamstime.com Electronics Production | January 30, 2013

CTS with slight revenue decrease in 4Q

CTS Corporation reported fourth quarter 2012 revenues of $138.3 million, a 4% decrease from the same period last year.
Fourth quarter Components and Sensors segment revenues increased 7% year-over-year while EMS segment revenues decreased 15%. Fourth quarter 2012 net earnings were $8.8 million, or $0.26 per diluted share, compared to net earnings of $5.9 million, or $0.17 per diluted share, in the same period last year.

Included in the fourth quarter 2012 earnings were a $0.23 per share gain from the Singapore facility sale-leaseback transaction, a $0.09 per share restructuring charge and $0.06 per share of acquisition-related and other charges. Excluding these items, fourth quarter 2012 adjusted earnings per share were $0.18, compared to $0.22 in the same period last year.

The year-over-year decrease is primarily due to a higher effective tax rate in fourth quarter 2012, including a delayed U.S. research tax credit not signed into law as anticipated in 2012, but signed in early 2013, and a delay in the formal approval of a China high-technology incentive tax credit. These tax items combined represent approximately $0.06 per share of lower earnings in the fourth quarter, which we expect to record as a tax benefit in the first quarter 2013.

Components and Sensors segment sales increased 7% year-over-year, despite the continued negative impact of the Japan/China territory dispute and the weak European economy. Within the Components and Sensors segment, sales of electronic components increased 26% from higher piezoceramic product demand for HDD and incremental sales from the Valpey-Fisher acquisition.

Fourth quarter automotive product sales were adversely affected by approximately $5 million for the continued Japan/China dispute and lower sales into European markets. Despite these reductions, automotive product sales declined by only $1.4 million, as the quarter benefitted from sales of new products.

CTS’ new smart actuator product for commercial diesel applications and grill shutter actuator product are expected to add over $20 million of incremental sales in 2013. CTS’ fourth quarter EMS revenues decreased 15% primarily from lower government spending in the defense and aerospace markets and from closing a small, unprofitable operation in the U.K.

Commenting on fourth quarter 2012 results, Vinod M. Khilnani, CTS Executive Chairman, stated, “We are pleased with our improved gross margins and strong cash flows despite continued weakness in EMS sales. We completed several restructuring initiatives and further improved our global footprint and cost structure. Our new smart actuator for commercial diesel engines, which was launched late in the fourth quarter, will be transformational to CTS as this product alone will provide over $40 million in annual sales at full ramp, to a new customer in new markets. The recent growth from the new grill shutter actuator and piezo for HDD, and the acquisition of D&R, will position CTS as a high-growth global leader in Components and Sensors technology.”

Kieran O’Sullivan, CTS President and Chief Executive Officer, stated, “I am pleased to join CTS as the President and Chief Executive Officer. The strategic positioning, future growth and operational efficiency of our business are important for me while continuing to build on the progress made by Vinod and the leadership team.”

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