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CTS Reports Q4 and Full-Year 2006 Financial Results
Written by Tracy Heffner
Tuesday, 01 May 2007
ELKHART, IN – CTS Corp. announced fourth quarter and full-year 2006 financial results and the completion of its internal investigation and account reconciliations at the company's EMS Moorpark, CA manufacturing location. According to a news release, fourth quarter 2006 revenues were $173.5 million, a 12% increase over fourth quarter 2005 revenues. Fourth quarter net earnings were $7.7 million compared to net earnings of $7.5 million in the fourth quarter of 2005. Free cash flow was $14 million in the fourth quarter of 2006, compared to $12.3 million in the fourth quarter of 2005. The fourth quarter revenue increase from 2005 was driven by a 17% increase in EMS segment sales, reflecting increased penetration in the defense/aerospace, medical and communications markets. Components and Sensors segment sales increased 5%, mainly from strong automotive new product demand. Sales increases in these areas were partially offset by general weakness in electronic component demand, lower component sales for handset applications, which is a market the company has now exited, and lost sales stemming from the fourth quarter 2005 divestiture of the Low Temperature Co-fired Ceramic (LTCC) product line.
Full-year 2006 revenue of $655.6 million increased 6% over 2005. Components and Sensors segment sales increased 7% year-over-year with automotive product revenues growing 13% and sales into infrastructure applications growing over 20%. EMS segment sales increased 6% year-over-year, primarily due to stronger growth in defense/aerospace and medical markets and higher demand for communications infrastructure products.
"We continue to be very pleased with the success of our new business development initiatives," said Donald Schwanz, CTS Chairman and CEO. "Automotive product sales, which grew 18% in the quarter year-over-year, have grown at double-digit rates over the last three years. Design wins for electronic components in infrastructure applications are at record levels, up almost 40% over 2005. And we added more new EMS customers than any year in our history."
Additionally, CTS reported it has completed its internal investigation and account reconciliations at its EMS Moorpark, CA manufacturing location. The investigation utilized forensic accountants and legal advisers, and was conducted with the oversight of the Audit Committee of the board of directors of the company. The net after-tax impact of the correction of accounting entries negatively impacted the company's reported net earnings by approximately $3.4 million. Management determined that both full-year 2005 and nine months ended October 1, 2006 earnings were negatively impacted by $1.5 million and $1.9 million, respectively. The company expects 2007 to be another year of sales and earnings growth. Management currently expects full-year 2007 sales to increase 7% to 10% over 2006, with diluted earnings per share in the range of $0.76 to $0.80.
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