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CTS: Second quarter earnings were above expectations

07/31/2017
By Ian Gilson, PhD, CFA

NYSE:CTS

On July 27, 2017 the company (NYSE:CTS) reported its second quarter 2017 results, followed by a conference call.
 
Revenue of $105.7 million included $1.5 million of sales from Noliac, the recent acquisition. Organic growth was 5.3%, well ahead of the 3.6% in the first quarter 2017. Reported EPS of $0.30 was ahead of our projections of $0.28. Backlog of  $1,542 million was up slightly from the end of the first quarter. Earnings included about $1 million in costs from first quarter rework costs, which had a negative impact on margins.
 
Management reaffirmed its full year projections of revenue between $405 and $420 with adjusted earnings of between $1.12 and $1.22 a share. Total long term growth targets remain at 10%, including acquisitions.
 
CTS added 6 new customers in the quarter and received the largest order in its history, $2.7 million, which will be added to the third quarter backlog.
 
Most end markets showed continued growth with China the best, Europe had modest growth and the U.S.A. being impacted by the declining automotive markets. Some domestic auto companies are holding back on orders due to market uncertainties.

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