CTS Corporation (NYSE:CTS) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 11:00 am ET

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CTS Corporation (NYSE:CTS) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, everyone. Welcome to the CTS Corporation First Quarter 2018 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kieran O'Sullivan. Please go ahead.

Executive
Kieran O'Sullivan

Good morning. Thank you for joining us today and welcome to CTS' first quarter 2018 conference call. The following are some notable items for the quarter. First quarter sales were 113.5 million, up 13.4% from the same period in 2017. Gross margins were 33.9%, compared to 34.2% in the same period of last year. Adjusted earnings per share were $0.34, compared to $0.26 in the first quarter of 2017. Total booked business increased to $1.76 billion. Operating cash flow was $20.2 million in the quarter, up from $9.8 million in the same period last year.

The transition of manufacturing operations continues with the consolidation of the Bolingbrook site to our Lisle location expected in the third quarter and the end of production in Elkhart in the second-half of 2018. Ashish Agrawal is with me for today's call and will take us to the Safe Harbor statement. Ashish?

Executive
Ashish Agrawal

I would like to remind our listeners that this conference call contains forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in the press release issued today and more information can be found in the company's SEC filings. To the extent that today's discussion refers to any non-GAAP measures relative to Regulation G, the required explanations and reconciliations are available in the Investors section of the CTS website.

I will now turn the discussion back over to our CEO, Kieran O'Sullivan.

Executive
Kieran O'Sullivan

Thanks, Ashish. First quarter sales were 113.5 million, up 13.4%, compared to the same quarter last year. Our organic growth rate was 10.8%. We are pleased with the sales improvement driven by our teams globally. Gross margins were 33.9%, which is below our expectation for the business. As you're aware, we are transferring products from our oldest location, which has been in production since 1902. Given the resident institutional knowledge, we have implemented extra controls and incurring additional costs to ensure we protect our customers and train our teams for longer periods at the receiving side.

And this has impacted our margins and we expect to see improvements as we complete the transfers. As always, we continue to focus on operational execution and quality, which are foundational for a manufacturing company. We have been patched to our sales growth. We shipped our products to five new customers with applications primarily in small cell wireless systems, revenue for new filters is expected to be in the range of $3 million to $5 million this year. We added a new customer for our EMC product line with an application in heavy transportation, where we expect revenue of 500 K this year. In accelerator pedals, we added two new customers in China