© alinoubigh dreamstime.com Electronics Production | July 24, 2013
CTS with net loss in 2Q
CTS reported on second quarter 2013 revenues of $151.6 million, an increase of 1% from the prior quarter and a decrease of 2% from the same period last year driven by softness in EMS markets.
Second quarter net loss was $11.3 million, compared to net earnings of $3.3 million for the same period last year. Included in the second quarter 2013 results was a non-cash tax expense of $0.32 per share related to the cash repatriation of $30 million and restructuring and other costs of $0.22 per share. Excluding these items, second quarter 2013 adjusted earnings were $0.20 per share compared to adjusted earnings of $0.14 per share in the first quarter 2013 and $0.18 per share in the same period last year. Second quarter 2013 Components and Sensors segment sales grew $7.3 million, or 7%, from the first quarter 2013. Within this segment, electronic components sales increased $4.8 million, or 15%, and automotive product sales increased $2.5 million, or 4%, from the prior quarter. Sales in EMS decreased $5.3 million, or 10%, primarily on lower demand in defense and aerospace and communications markets. Second quarter 2013 Components and Sensors segment sales grew $28.6 million, or 37%, from the second quarter 2012. Automotive sales increased $20.4 million, or 43%, year-over-year, primarily due to sales of $13.2 million from the D&R Technology acquisition. Sales of electronic components increased $8.2 million, or 28%. EMS segment sales decreased $31.3 million in the second quarter of 2013 from the same period last year primarily from our decision to exit certain customers last year and declines in defense and aerospace and communications markets. CTS announced a $16 to $20 million restructuring plan on June 11, with expected annual savings of approximately $8 to $10 million once fully implemented in 2014. The plan is designed to further improve the Company’s cost structure and capacity utilization. In the second quarter 2013, CTS recognized $8.1 million, or $0.17 per share, of restructuring and related charges associated with these actions. Anticipated 2013 pretax savings from these second quarter actions are estimated at approximately $1.5 to $2.0 million. CTS’ new order pipeline remains strong with business wins of $116 million in the second quarter, including a $40 million award to supply chassis ride height sensors for several Asian and North American vehicle programs of a major U.S. automotive manufacturer. Second quarter cash flow from operations improved to $13.7 million compared to a $3.5 million cash usage in the first quarter. Commenting on second quarter results, Kieran O’Sullivan, CTS CEO, stated, “We improved earnings and have taken steps to simplify our manufacturing footprint while improving operating margins. We are focused on the challenges in our EMS business where we have taken actions to strengthen our sales growth. The management team is progressing with the strategic analysis as we clarify the Company’s future identity and vision to maximize shareholder return.” Management is lowering its full-year 2013 sales guidance to a 6% to 8% increase over 2012; compared to our prior range of the low end of 12% to 15%, primarily due to softness at EMS. However we are maintaining 2013 adjusted earnings per share in the range of $0.78 to $0.83 per share, which excludes tax expense on cash repatriation, restructuring and related costs and CEO transition costs.