CTS(US:CTS)2022-04-27 16:00Financial Performance - Net sales for Q1 2022 were $147,695, an increase of 15.0% from Q1 2021, with non-transportation markets up 30.4% and transportation markets up 4.3%[99] - Gross margin as a percentage of net sales improved to 36.8% in Q1 2022 from 33.2% in Q1 2021, driven by sales volume and mix despite ongoing supply chain challenges[100] - Operating earnings for Q1 2022 were $26,046, representing 17.6% of net sales, compared to $18,498 or 14.4% in Q1 2021, reflecting a 40.8% increase[104] Research and Development - Research and development expenses increased to $6,194, or 4.2% of net sales in Q1 2022, up from $5,687 or 4.4% in Q1 2021, indicating continued investment in product development[102] Acquisitions - The company completed the acquisition of TEWA in February 2022, contributing $1,439 to net sales for the quarter, with a total cash payment of $24,484 for the acquisition[99][112] - The company has entered into a Share Sale and Purchase Agreement to acquire Ferroperm for approximately $76,800, subject to governmental approvals[113][114] Debt and Cash Position - Total long-term debt remained stable at $50,000 as of March 31, 2022, with total debt as a percentage of total capitalization at 9.4%[106] - Cash and cash equivalents decreased to $126,118 at March 31, 2022, from $141,465 at December 31, 2021, with a significant portion held outside the United States[106] Tax and Earnings - The effective income tax rate increased to 21.4% in Q1 2022 from 18.9% in Q1 2021, primarily due to changes in the mix of earnings by jurisdiction[105] - Net cash provided by operating activities was $19,286 for the three months ended March 31, 2022, with net earnings of $20,239 contributing to this cash flow[107] Customer Concentration - The Company's net sales to Cummins Inc. accounted for 15.7% of total net sales for the three months ended March 31, 2022, consistent with the previous year[117] - Toyota Motor Corporation represented 11.5% of total net sales for the three months ended March 31, 2022, down from 13.4% in the prior year[117] - No other customer accounted for 10% or more of total net sales during these periods, indicating a focus on diversifying the customer base[118] Accounting Policies and Risks - There were no significant changes in the application of critical accounting policies or estimates during the three months ended March 31, 2022[116] - The Company cautions that forward-looking statements are subject to various risks and uncertainties, including the impact of the COVID-19 pandemic and geopolitical risks[119] - The Company has not reported any material changes in exposure to market risk during the three months ended March 31, 2022[120]