CTS(US:CTS)2021-02-09 19:55Financial Data and Key Metrics Changes - Fourth quarter sales were $123 million, up 7% compared to the same period in 2019 and up 8% sequentially [3][27] - Full year sales were $424 million, down 10% from $469 million in 2019 due to the pandemic [4][28] - Fourth quarter gross margin increased by 110 basis points to 34.7% from the same period last year [4][27] - EBITDA margin for the fourth quarter was 21.4%, up from 20.3% in Q4 2019 [4] - Adjusted earnings per share for the fourth quarter were $0.43, up 16% from $0.37 in Q4 2019 [4][28] - Full year adjusted earnings per share were $1.12, down from $1.45 last year [4][31] Business Line Data and Key Metrics Changes - Sales to transportation customers increased by 12% year-over-year in Q4 [27] - Sales to other end markets were flat year-over-year, with industrial and defense markets showing double-digit growth [27][29] - Medical end market sales were down 7% for the full year, continuing to show softness [29] Market Data and Key Metrics Changes - U.S. light-vehicle transportation market volume is expected to improve in the 14 million to 16 million unit range [21] - European sales are forecasted in the 18 million to 19 million unit level, with some uncertainty due to recent lockdowns [22] - The Chinese market is expected to remain solid, with volumes in the 24 million to 26 million unit range [22] Company Strategy and Development Direction - The company is focused on returning to growth and leveraging the recent acquisition of Sensor Scientific [8][10] - The 2025 Initiative emphasizes annualized profitable growth, stronger customer relationships, and enhancing operational capabilities [26] - The company aims to build a robust M&A pipeline despite challenges posed by COVID-19 [18] Management's Comments on Operating Environment and Future Outlook - Management remains cautious entering 2021 due to potential pandemic disruptions and semiconductor shortages [7][20] - The company expects sales for 2021 to be in the range of $430 million to $490 million, with adjusted earnings expected between $1.20 and $1.60 [24] - Management is monitoring the impact of COVID-19 and supply chain disruptions closely [25] Other Important Information - The acquisition of Sensor Scientific is expected to add approximately $6 million in annualized revenue [10] - The company reduced its long-term debt balance to $55 million from $106 million at the end of Q3 2020 [34] - The company finished 2020 with a healthy balance sheet and strong liquidity position [33] Q&A Session Summary Question: Can you provide guidance on 2021 revenue and earnings cadence? - Management indicated that while they cannot provide quarterly specifics, they are concerned about potential pandemic disruptions and semiconductor shortages impacting the automotive market [38][39] Question: What is the order momentum heading into the March quarter? - Management noted that new business wins were softer than usual, with several OEMs delaying decisions, but they are optimistic about a good start in January [44][45] Question: How are pricing and volume commitments being affected by supply chain dynamics? - Management stated that they have not seen significant ASP erosion and have raised prices in response to supply chain tightness [50][51] Question: What is the expected impact of commodity pricing and currency on gross margins? - Management expects a 100 basis point unfavorable impact from currency and is working to manage commodity pricing effects [52][54] Question: What is the company's exposure to electric vehicles (EV)? - Management indicated that their exposure to products affected by the transition to EVs is very low, with expectations of compensation by 2021/2022 [63] Question: What is the outlook for the medical market in the second half of 2021? - Management anticipates a gradual flattening of softness in the medical market in the second half of the year [65]