Electronics Production | October 25, 2006
CTS announces sales increase of 11%
CTS Corporation today announced third quarter 2006 revenues of $165.7 million, an 11% increase over the third quarter of 2005.
Diluted earnings per share were $0.15, which included a charge of approximately $0.02 per share for the previously announced consolidation of the Berne, Indiana operation and the further impairment of an idle facility lease. In the comparable period last year, third quarter 2005 diluted earnings per share were $0.16. The third quarter revenue increase from the prior year was driven by a 13% increase in EMS business segment sales, mainly in the defense, communications and medical markets. Components and Sensors segment sales increased 8% primarily from increased automotive component demand and higher sales into infrastructure applications. Partially offsetting the sales increases were reductions in component sales for handset applications and the fourth quarter 2005 divestiture of the Low Temperature Co-fired Ceramic (LTCC) product line. "Despite a challenging quarter from an operational perspective, relating to problems with a new automotive product launch, year-over-year sales trends remain positive, reflecting continued success with our growth initiatives. During the third quarter, we won two additional platforms for our accelerator pedal module and continued the strong pace of design wins for electronic components in infrastructure applications," said Donald Schwanz, CTS Chairman and Chief Executive Officer. Based on the nine-months results and the outlook for the balance of the year, we are maintaining our prior full-year 2006 guidance of 6% - 8% in sales growth over 2005. Additionally, we are revising our earnings per share guidance down from a range of $0.75 to $0.80 to a range of $0.74 to $0.77, excluding $0.08 per share for full-year restructuring and related charges. Capital expenditures of $5.3 million were 3.2% of sales in the third quarter of 2006. The full year capital expenditures are expected to be in the range of $16 - $19 million. Free cash flow of $5.8 million was generated in the third quarter 2006 compared to a negative $1.5 million in the same period last year. The Berne consolidation was completed in the third quarter of 2006, on schedule and slightly under budget.