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CTS: April auto and truck production data continue to show declines but CTS is doing better than the averages.

05/05/2017
By Ian Gilson, PhD, CFA

NYSE:CTS

April auto and truck production continue the decline apparent over the last three months. Cars were down the most but light trucks did better with a modest gain in production.
 
CTS has a significant exposure to the automobile and truck industry. In the 1Q17 Cummings [ CMI ] was the largest customer ($12.9 million, 12.9%); Toyota second ($10.8 million, 10.8%) and Honda was third ($9.8 million, 9.8%). On a Y/Y basis sales to Cummings increased by 27%, Toyota was up by nearly 5% and Honda declined by slightly more than 13%. Since we do not know the geographical dispersion, product mix or sales by vehicle we look at the trends across each vehicle manufacturer and adjust our forecasts accordingly.
 
Heavy duty, class 8 , trucks increased by 4% from February and over 70% Y/Y, classes 5 through 7 dropped by 25% Q/Q and 10% Y/Y. As a supplier to the class 8 truck segment CTS benefitted from the gains in this segment.
 
Auto and light trucks were a mixed bag, with light trucks doing much better than autos. Toyota outperformed the auto segment but sales declined 3.5%. The Camry was down 7.7% but the RAV4 (unit sales for these are very close to each other) was up 5.3%. Overall Toyota's truck sales increased by 2.1%.
 
Honda lagged the industry. Its two major products both fell by more than 10%. The Civic was down 11.7% and the Accord fell by 14.6%.

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