CTS Corporation revenue decline accelerated from 0.32% in 2019 to 9.6% in 2020
02/09/2021 • About CTS Corporation (
$CTS) • By InTwits
CTS Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- CTS Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $80m in 2020, $41m in 2019, $25m in 2018, $13m in 2017, $9m in 2016
- The company has business model with low profitability: ROIC is 9.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 9.6%. Annual revenue decline showed slowdown in 20Q4 - revenue increased on 6.9%. During the last 5 years Revenue growth topped in 2018 at 11.2% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.3 pp from -3.5% to 1.9% in 2020.
Gross Margin decreased slightly on 0.81 pp from 33.6% to 32.8% in 2020. SG&A as a % of Revenue increased slightly on 0.97 pp from 15.0% to 16.0% in 2020.
Net Income margin showed almost no change in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 CTS Corporation had CAPEX/Revenue of 3.5%. CAPEX/Revenue decreased slightly on 0.77 pp from 4.3% in 2017 to 3.5% in 2020. It's average CAPEX/Revenue for the last three years was 4.7%.
Return on investment
The company operates at low ROIC (9.2%) and ROE (8.4%). ROIC decreased on 2.6 pp from 11.8% to 9.2% in 2020. ROE decreased slightly on 0.86 pp from 9.2% to 8.4% in 2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 1.1x. Debt dropped on 36.4% while cash decreased on 8.4%.
CTS Corporation has no short term refinancing risk: cash is higher than short term debt (2,786.1%).
Valuation and dividends
CTS Corporation's trades at EV/EBITDA 13.4x and P/E 29.8x.
Management team
The company's CEO Kieran M O'Sullivan has spent 8 years with the company. CTS Corporation's CFO Ashish Agrawal has spent 7 years with the company.
Financial and operational results
FY ended 12/31/2020
CTS Corporation ($CTS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 396.7 | 423.0 | 470.5 | 469.0 | 424.1 | -9.6% |
| Gross Profit | 140.4 | 140.4 | 165.0 | 157.6 | 139.1 | -11.7% |
| SG&A | 61.6 | 71.9 | 73.6 | 70.4 | 67.8 | -3.7% |
| EBITDA | 82.2 | 59.2 | 83.6 | 82.8 | 76.6 | -7.5% |
| Net Income | 34.4 | 14.4 | 46.5 | 36.1 | 34.7 | -4.0% |
Balance Sheet
|
|---|
| Cash | 113.8 | 113.6 | 100.9 | 100.2 | 91.8 | -8.4% |
| Short Term Debt | 1.0 | 0.0 | 0.0 | 2.8 | 3.3 | 18.2% |
| Long Term Debt | 89.1 | 76.3 | 50.0 | 124.6 | 77.8 | -37.6% |
Cash flow
|
|---|
| Capex | 20.5 | 18.1 | 28.5 | 21.7 | 14.9 | -31.6% |
Ratios
|
|---|
| Revenue growth | 3.8% | 6.6% | 11.2% | -0.3% | -9.6% | |
| EBITDA growth | 139.1% | -28.0% | 41.2% | -0.9% | -7.5% | |
|
|---|
| Gross Margin | 35.4% | 33.2% | 35.1% | 33.6% | 32.8% | -0.8% |
| EBITDA Margin | 20.7% | 14.0% | 17.8% | 17.6% | 18.1% | 0.4% |
| SG&A, % of revenue | 15.5% | 17.0% | 15.6% | 15.0% | 16.0% | 1.0% |
| Net Income Margin | 8.7% | 3.4% | 9.9% | 7.7% | 8.2% | 0.5% |
| CAPEX, % of revenue | 5.2% | 4.3% | 6.1% | 4.6% | 3.5% | -1.1% |
|
|---|
| ROIC | 18.1% | 9.8% | 14.8% | 11.8% | 9.2% | -2.6% |
| ROE | 11.5% | 4.4% | 12.9% | 9.2% | 8.4% | -0.9% |
| Net Debt/EBITDA | -0.3x | -0.6x | -0.6x | 0.3x | -0.1x | -0.5x |
CTS Corporation ($CTS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 103 | 84 | 114 | 123 | | -12.4% | -30.2% | -1.6% | 6.9% |
| EBITDA | 16 | 14 | 21 | 25 | | -23.2% | -41.9% | 21.6% | 25.1% |
| Net Income | 4 | 5 | 11 | 15 | | -66.7% | -59.3% | 306.8% | 48.5% |
Balance Sheet
|
|---|
| Cash | 151 | 146 | 132 | 92 | | 49.9% | 38.3% | 30.2% | -8.4% |
| Short Term Debt | 3 | 3 | 3 | 3 | | 53.1% | 47.0% | 17.6% | 18.2% |
| Long Term Debt | 176 | 166 | 130 | 78 | | 134.6% | 121.9% | -5.5% | -37.6% |
Ratios
|
|---|
| Gross Margin | 31.9% | 31.6% | 32.4% | 34.7% | | -2.6% | -2.6% | 0.4% | 1.1% |
| EBITDA Margin | 15.7% | 16.7% | 18.6% | 20.5% | | -2.2% | -3.3% | 3.5% | 3.0% |
| Net Income Margin | 3.7% | 5.8% | 9.7% | 12.2% | | -6.0% | -4.1% | 7.4% | 3.4% |
Peers in Electronic Manufacturing Services
Below we provide CTS Corporation benchmarking against other companies in Electronic Manufacturing Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Netlist Inc ($NLST) | - | 95.0% | -12.5% | -22.1% | 81.0% |
| IEC Electronics Corp. ($IEC) | - | -24.1% | 21.2% | 34.3% | 16.4% |
| eMagin Corporation ($EMAN) | - | 3.0% | 19.1% | 1.9% | 10.1% |
| Jabil Inc. ($JBL) | - | 3.9% | 15.9% | 14.4% | 7.8% |
| Plexus Corp. ($PLXS) | - | -1.1% | 13.7% | 10.1% | 7.1% |
| |
|---|
| Median (13 companies) | 4.6% | 1.9% | 7.1% | 9.7% | -1.3% |
|---|
| CTS Corporation ($CTS) | - | 6.6% | 11.2% | -0.3% | -9.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Neonode Inc. ($NEON) | 86.9% | 77.1% | 89.2% | 89.7% | 82.0% |
| IPG Photonics Corporation ($IPGP) | 54.9% | 56.6% | 54.8% | 46.1% | 44.9% |
| TE Connectivity Ltd. ($TEL) | 33.7% | 34.3% | 33.9% | 32.7% | 30.7% |
| RF Industries, Ltd. ($RFIL) | 28.0% | 30.4% | 34.1% | 28.3% | 26.9% |
| eMagin Corporation ($EMAN) | 30.1% | 23.3% | 15.2% | 25.2% | 21.6% |
| |
|---|
| Median (13 companies) | 16.7% | 13.8% | 12.1% | 13.8% | 14.3% |
|---|
| CTS Corporation ($CTS) | 35.4% | 33.2% | 35.1% | 33.6% | 32.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.8% | 44.7% | 40.9% | 26.8% | 24.0% |
| TE Connectivity Ltd. ($TEL) | 20.9% | 20.4% | 21.4% | 19.8% | 11.1% |
| TTM Technologies, Inc. ($TTMI) | 14.0% | 14.6% | 13.5% | 15.8% | 9.7% |
| IEC Electronics Corp. ($IEC) | 7.4% | 3.8% | 4.3% | 6.6% | 7.5% |
| Plexus Corp. ($PLXS) | 5.7% | 6.9% | 5.8% | 6.1% | 6.5% |
| |
|---|
| Median (12 companies) | 4.8% | 4.5% | 4.7% | 5.8% | 5.3% |
|---|
| CTS Corporation ($CTS) | 20.7% | 14.0% | 17.8% | 17.6% | 18.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| eMagin Corporation ($EMAN) | 6.7% | 6.2% | 8.8% | 4.2% | 8.5% |
| IPG Photonics Corporation ($IPGP) | 12.6% | 9.0% | 11.0% | 10.2% | 7.3% |
| TTM Technologies, Inc. ($TTMI) | 3.4% | 5.7% | 5.3% | 6.7% | 4.9% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 5.6% | 6.7% | 5.6% | 4.6% |
| Jabil Inc. ($JBL) | 5.0% | 3.8% | 4.7% | 4.0% | 3.6% |
| |
|---|
| Median (12 companies) | 2.8% | 2.7% | 2.4% | 1.4% | 2.6% |
|---|
| CTS Corporation ($CTS) | 5.2% | 4.3% | 6.1% | 4.6% | 3.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| IEC Electronics Corp. ($IEC) | 16.9% | 3.1% | 6.4% | 12.7% | 14.8% |
| Sanmina Corporation ($SANM) | 14.2% | 13.9% | 7.0% | 16.2% | 13.0% |
| Plexus Corp. ($PLXS) | 8.7% | 10.3% | 9.6% | 12.6% | 12.4% |
| Jabil Inc. ($JBL) | 12.3% | 9.3% | 12.5% | 16.1% | 10.8% |
| SMTC Corporation ($SMTX) | 2.0% | -16.0% | 4.0% | 4.2% | 7.4% |
| |
|---|
| Median (13 companies) | 6.2% | 4.2% | 6.4% | 10.2% | 4.5% |
|---|
| CTS Corporation ($CTS) | 18.1% | 9.8% | 14.8% | 11.8% | 9.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SMTC Corporation ($SMTX) | 1.0x | - | 11.3x | 3.8x | 4.2x |
| TE Connectivity Ltd. ($TEL) | 1.4x | 1.3x | 1.1x | 1.1x | 2.7x |
| IEC Electronics Corp. ($IEC) | 2.0x | 5.6x | 4.9x | 3.6x | 2.1x |
| TTM Technologies, Inc. ($TTMI) | 2.2x | 1.5x | 3.2x | 3.3x | 2.0x |
| Jabil Inc. ($JBL) | 1.0x | 0.8x | 1.0x | 0.9x | 1.4x |
| |
|---|
| Median (10 companies) | 0.6x | 0.5x | 0.5x | 0.1x | 0.7x |
|---|
| CTS Corporation ($CTS) | -0.3x | -0.6x | -0.6x | 0.3x | -0.1x |
