CTS Corporation (NYSE:CTS) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 11:00 am ET

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CTS Corporation (NYSE:CTS) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the CTS Corporation Second Quarter 2020 Earnings Call. [Operator Instructions]. At this time, I would like to turn the conference over to Kieran O'Sullivan. Please go ahead, sir.

Executive
Kieran O'Sullivan

Thank you. Good morning. Thank you for joining us today, and welcome to CTS' Second Quarter 2020 Conference Call. I'll begin by sharing a few thoughts on our Company and our business performance. As we mentioned on our last earnings call, we expected the second quarter to be our most challenging quarter this year due to the impact of COVID-19. Operationally, all of our plants are running, though, we continue to experience challenges at our Mexico locations.

The return to the appropriate production staffing levels has been impacted by state and local regulations. Our leadership in global teams are prioritizing the safety of our employees and adapting quickly to serve our customers' needs. Sales were $84 million, down 30% from the second quarter of 2019.

As expected, we saw significant challenges in the transportation end market, sales in the rest of our business were stable. Second quarter gross margins were 31.6% compared to 34.1% in the same period in 2019. We delivered an adjusted EBITDA margin of 16.7% despite a 30% drop in sales. Second quarter adjusted earnings per share were $0.16. We had a promising new sensor win in transportation for application in hybrid electric vehicles, and continue to make progress with RF product wins in defense.

We added 13 new customers in the quarter. We ended the quarter with $146 million in cash, and $141 million in debt. We expect a prolonged recovery from the COVID-19 impact. As a result, we are implementing a restructuring plan to realign our cost structure to the new demand environment.

This plan will be completed over the next 24 months. Ashish Agrawal, our CFO is with me for today's call and will take us through 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 several 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 under 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. The challenges of the COVID-19 pandemic have been unprecedented. I want to express our appreciation to all our employees, customers and partners for their support as we work to get our factories online this past quarter. Our people demonstrated remarkable flexibility in our operations and supply chain. Our first focus is the safety of our employees and compliance with state and local regulations while doing everything we can to meet our customers'