CTS Corporation (NYSE:CTS) Q1 2022 Earnings Conference Call April 28, 2022 10:00 AM ET Company Participants Kieran O'Sullivan – Chairman, President and Chief Executive Officer Ashish Agrawal – Vice President and Chief Financial Officer Conference Call Participants Justin Long – Stephen Lannie Trieu – Cowen Hendi Susanto – G. Research Operator Good morning. My name is Lauren and I will be your conference operator today. At this time I would like to welcome everyone to the CTS Corporation First Quarter 2022 e ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Common stock, without par value CTS New York Stock Exchange FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------|-------|------------------- ...

Financial Performance & Growth - CTS's last twelve months (LTM) revenue as of December 2021 was $513 million[5,6] - CTS has a long-term target of +10% Compound Annual Growth Rate (CAGR)[9] - From 2017 to 2021, CTS achieved a revenue CAGR of 4.9%, increasing from $423 million to $513 million[9,25] - Adjusted EBITDA for 2021 was $107.8 million, representing 21% of net sales[45,49] - Adjusted Diluted EPS for 2021 was $1.93[45,47] - Free cash flow conversion in 2021 was 112%[15,29] Strategic Diversification - CTS aims to diversify its revenue, targeting non-transportation end markets to exceed 50% of total revenue[10] - Non-Transportation revenue increased from 35% to 45%[10] Capital Allocation - CTS returned $118 million to shareholders since 2013[5,15] - Capital expenditure is targeted at approximately 4% of sales[36,37] - Acquisitions are planned to utilize 60-80% of free cash flow[37]

PART I [Business](index=4&type=section&id=Item%201.%20Business) CTS Corporation is a global manufacturer of sensors, connectivity components, and actuators serving diverse end markets - CTS Corporation designs, manufactures, and sells a broad line of sensors, connectivity components, and actuators categorized by their ability to Sense, Connect, or Move[11](index=11&type=chunk) Net Sales by Industry (% of consolidated net sales) | Industry | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Transportation | 55% | 57% | 64% | | Industrial | 27% | 25% | 20% | | Medical | 9% | 9% | 9% | | Aerospace and Defense | 9% | 9% | 7% | | **Total** | **100%** | **100%** | **100%** | Significant Customers' Share of Net Sales | Customer | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Cummins Inc. | 15.0% | 13.1% | 16.1% | | Toyota Motor Corporation | 12.4% | 13.4% | 11.6% | - The company faces **supply chain disruptions and inflationary pressures**, particularly semiconductor shortages, which are expected to continue into fiscal 2022[25](index=25&type=chunk) - As of December 31, 2021, the company employed 3,820 people, with **86% located outside the U.S.**[43](index=43&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from customer concentration, industry cyclicality, supply chain disruptions, and international operations - A substantial portion of revenue is derived from a **small number of customers**, creating vulnerability to order decreases from key clients[62](index=62&type=chunk)[63](index=63&type=chunk) - The business is exposed to **cyclical industries like transportation**, which can experience significant downturns affecting demand[67](index=67&type=chunk)[68](index=68&type=chunk) - The COVID-19 pandemic has caused significant **supply chain disruptions**, including semiconductor shortages, leading to increased costs[73](index=73&type=chunk)[107](index=107&type=chunk) - The company faces risks from its **international operations**, including political instability, currency fluctuations, and trade restrictions[112](index=112&type=chunk) - The company is exposed to potential **security breaches and cybersecurity threats** targeting the manufacturing industry[127](index=127&type=chunk) [Properties](index=19&type=section&id=Item%202.%20Properties) The company operates over 1.6 million square feet of manufacturing and non-manufacturing facilities globally Summary of Facilities as of Dec 31, 2021 | Facility Type | Total Square Footage | | :--- | :--- | | Manufacturing | 1,050,724 | | Non-Manufacturing | 561,425 | - Manufacturing facilities are located across North America, Asia, and Europe, including Mexico, China, Taiwan, and the Czech Republic[131](index=131&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course litigation and believes it has established adequate accruals for potential liabilities - The company is periodically involved in litigation arising from the ordinary course of business[132](index=132&type=chunk) - Management believes **adequate accruals** have been established for expected liabilities from pending legal matters[132](index=132&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[134](index=134&type=chunk) PART II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, and a $50 million stock repurchase program was active in 2021 - The company's common stock trades on the **NYSE under the symbol "CTS"**[137](index=137&type=chunk) - A **$50 million stock repurchase program** was authorized in May 2021, with **$41.2 million remaining** available at year-end[138](index=138&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 1 - Oct 31, 2021 | 88,000 | $31.63 | | Nov 1 - Nov 30, 2021 | 2,942 | $35.00 | | Dec 1 - Dec 31, 2021 | 27,745 | $34.61 | | **Total** | **118,687** | **$32.41** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales grew 21.0% in 2021, but a large pension settlement charge resulted in a significant net loss Results of Operations (in millions, 2021 vs 2020) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $512.9 | $424.1 | 21.0% | | Gross margin | $184.6 | $139.1 | 32.8% | | Gross margin % | 36.0% | 32.8% | - | | Operating earnings | $76.5 | $45.1 | 69.5% | | Net (loss) earnings | ($41.9) | $34.7 | (220.7)% | | Diluted (loss) EPS | ($1.30) | $1.06 | - | - The significant 2021 net loss was driven by a **$126.3 million non-cash pension settlement charge**[152](index=152&type=chunk) - Net sales growth was driven by a **17.7% increase in the transportation market** and a **25.3% increase in other markets**[148](index=148&type=chunk) - The company ended 2021 with **$141.5 million in cash** and increased its revolving credit facility to **$400 million**[154](index=154&type=chunk)[161](index=161&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency, interest rates, and commodity prices, which it manages with derivatives - The company uses interest rate swaps to manage risk, fixing the interest cost on **$50 million of its long-term debt**[185](index=185&type=chunk) - **42% of 2021 net sales originated outside the U.S.**, creating foreign currency risk managed with forward contracts[186](index=186&type=chunk)[187](index=187&type=chunk) - The company faces commodity price risk and experienced **significant increases in freight costs** in 2021[188](index=188&type=chunk)[189](index=189&type=chunk) [Financial Statements and Supplementary Data](index=29&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and the independent auditor's report for fiscal year 2021 Consolidated Balance Sheet Data (in millions) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$664.5** | **$626.0** | | Total current assets | $289.1 | $233.2 | | Goodwill | $109.8 | $109.5 | | **Total Liabilities** | **$200.9** | **$202.4** | | Total current liabilities | $114.1 | $104.9 | | Long-term debt | $50.0 | $54.6 | | **Total Shareholders' Equity** | **$463.6** | **$423.7** | Consolidated Cash Flow Data (in millions) | Cash Flow | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $86.1 | $76.8 | | Net cash used in investing activities | ($15.9) | ($23.2) | | Net cash used in financing activities | ($20.7) | ($61.3) | | **Net increase (decrease) in cash** | **$49.7** | **($8.5)** | - The independent auditor identified the **quantitative goodwill impairment assessment** as a critical audit matter[193](index=193&type=chunk) - The company completed its U.S. pension plan termination, resulting in **settlement charges of $126.3 million**[277](index=277&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section is not applicable to the company - Not applicable[386](index=386&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2021[387](index=387&type=chunk) - The company's **internal control over financial reporting was deemed effective** based on the COSO framework[389](index=389&type=chunk) - **No material changes** were made to internal controls during the fourth quarter of 2021[390](index=390&type=chunk) [Other Information](index=72&type=section&id=Item%209B.%20Other%20Information) This section is not applicable to the company - Not applicable[398](index=398&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=72&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's **2022 proxy statement**[401](index=401&type=chunk) [Executive Compensation](index=72&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's **2022 proxy statement**[402](index=402&type=chunk) Equity Compensation Plan Information as of Dec 31, 2021 | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | 820,021 | 1,734,419 | | Not approved by security holders | 4,722 | 0 | | **Total** | **824,743** | **1,734,419** | [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=72&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information on security ownership is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's **2022 proxy statement**[404](index=404&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=73&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's **2022 proxy statement**[406](index=406&type=chunk) [Principal Accountant Fees and Services](index=73&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's **2022 proxy statement**[407](index=407&type=chunk) PART IV [Exhibits and Financial Statements Schedules](index=74&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statements%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the annual report - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K[410](index=410&type=chunk) - The included financial statement schedule is **Schedule II: Valuation and Qualifying Accounts and Reserves**[410](index=410&type=chunk)

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CTS Corporation (NYSE:CTS) Q3 2021 Earnings Conference Call October 27, 2021 10:00 AM ET Corporate Participants Kieran O’Sullivan - Chairman, President and Chief Executive Officer Ashish Agrawal - Vice President and Chief Financial Officer Conference Call Participants Justin Long - Stephens Inc. John Franzreb - Sidoti & Company Hendi Susanto - G. Research Operator Good day, and welcome to the CTS Corporation Third Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common stock, without par value CTS New York Stock Exchange FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to | --- | --- ...

CTS Corporation (NYSE:CTS) Q2 2021 Earnings Conference Call July 27, 2021 10:00 AM ET Company Participants Kieran O’Sullivan - Chairman, President & CEO Ashish Agrawal - VP & CFO Conference Call Participants Justin Long - Stephens Inc. John Franzreb - Sidoti & Company Hendi Susanto - G. Research Operator Good day, and welcome to the CTS Corporation Second Quarter 2021 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Kieran O’Sullivan. Please go ...

Investor Presentation July 2021 Forward Looking Statements This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. Forward-looking statement ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common stock, without par value CTS New York Stock Exchange FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to | --- | --- | |- ...