Electronics Production | October 24, 2007
CTS revenue increase in Q3
CTS has announced third quarter 2007 revenues of $174.8 million and net earnings of $7.8 million. Third quarter 2007 revenue increased 6% over the third quarter of 2006 driven by the Components and Sensors segment sales.
The Components and Sensors segment increased 6%, primarily from higher sales into infrastructure applications and automotive components. EMS segment sales improved 5% over the third quarter of 2006 on higher sales into the industrial and defense and aerospace markets. Third quarter 2007 net earnings of $7.8 million, improved from net earnings of $6.2 million, in the third quarter of 2006. Commenting on third quarter results, Vinod M. Khilnani, CTS President and Chief Executive Officer, stated, “Third quarter performance reflected solid year-over-year gains across both segments. Strong double-digit sales growth in two key areas, sensors in the Asia-Pacific region and EMS sales in the target markets of industrial and defense and aerospace helped achieve the 6% overall sales increase. New product growth initiatives are on track with three new Automotive product wins for pedal modules and 47 new design wins for electronic components in infrastructure applications in the third quarter of 2007.” “Improved operating performance, better product mix and excellent balance sheet management allowed us to record good earnings and even better operating cash flow in the quarter,” said Khilnani. “In the near term, some automotive OEMs have announced intentions to temporarily idle certain vehicle plants in North America and some wireless infrastructure programs are being delayed due to economic uncertainties. These events will, of course, affect us in the fourth quarter. As a result, we expect full-year 2007 sales to increase 4% to 5% over 2006, slightly less than our previous estimate of 5% to 6%. Combined with approximately $0.02 per share for CEO transition costs occurring in the fourth quarter, we now expect fourth quarter earnings to be similar to the third quarter, with full-year earnings per share to be in the range of $0.65 to $0.68,” stated Khilnani. “Looking forward, we continue to expect sales growth from new products, new customers and tuck-in acquisitions. Earnings in 2008 are further expected to benefit from the fact that certain unusual costs such as the Moorpark investigation, CEO transition and Czech Republic start-up, which adversely affected 2007 earnings by approximately $0.10, will be behind us,” added Khilnani. Components & Sensors: Components and Sensors sales increased $3.9 million, or 6%, from the third quarter of 2006 primarily due to a 30% increase of electronic component sales in infrastructure applications and an 8% increase in sales of automotive component products. Segment operating earnings increased $0.3 million from third quarter 2006 earnings primarily due to increased volumes, partially offset by a $0.7 million gain for the sale/leaseback of the Albuquerque, New Mexico building in the third quarter of 2006. Components and Sensors sales decreased $2.0 million, or 3%, from the second quarter of 2007 reflecting lower automotive component demand. Despite lower volumes, segment operating earnings increased $0.5 million due to lower SG&A expenses. EMS: EMS sales increased $5.2 million, or 5%, from the third quarter of 2006 driven by an increase in sales primarily into the industrial and defense and aerospace markets, partially offset by lower demand primarily in the computer market. Segment operating earnings increased $0.3 million from the third quarter of 2006 primarily due to higher volumes and favorable product mix. Compared to the second quarter of 2007, EMS segment sales increased $7.2 million, or 7%. Total segment operating earnings increased $1.5 million primarily from the impact of higher volumes, more favorable product mix and lower legal and accounting fees.
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