2016 annual shareholder meeting - cts...targeting mid single digit organic growth for 2016 expanded...
TRANSCRIPT
2016 Annual Shareholder Meeting
May 19, 2016
Safe Harbor Statement
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This presentation contains statements that are, or may bedeemed to be, forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. Theseforward-looking statements are subject to various risks anduncertainties, and as a result, actual results may differ materiallyfrom those expressed in the forward-looking statements. Theserisks and uncertainties are discussed in further detail in thequarterly and annual SEC filings of the company.
Executing on our Strategy: 2015 Highlights
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Booked $560 million in new business awards, an increase of 16% from 2014
Revenue growth was a challenge in 2015 Targeting mid single digit organic growth for 2016
Expanded gross margins to 33.2%, the highest reported for our company
Returned $23 million to shareholders through dividends and share repurchases
Increased operating cash flow from $32.4 million in 2014 to $38.6 million in 2015
Our Vision
We aim to be a leading provider of sensing and motiondevices as well as connectivity components, enabling
an intelligent and seamless world.
Positioning for Growth with Fundamental Market Trends
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Smart
Products Applications Vehicles with added intelligence, safety
and connectivity
Improved medical diagnostics and drug delivery
Smart Home sensing and new technology for human machine interface
Powertrain, transmission and exhaust sensing to enable fuel efficiency
Energy harvesting for devices and self powered sensors
Market Trends
RF sensing for efficient use of diesel particulate filters
Wireless charging
Powering of medical implants
Vehicle smart lighting
4D and intravascular ultrasound
Smart appliances
Small Cells
100GB Wired Networks
NYSE Transactions
Efficient
Connected
Single Crystal Piezo
RF Sensor
Internet of Things: 50 Billion connected devices by 2020
Densification of networks for higher resolution video and faster data transfer
Ride Height Sensor
Appliance Sensor
RF Filters
Timing Components
Turbo Actuator
Piezo Sensor
CTS making organic and inorganic investments to expand SAM in growth markets
Product Applications in Light and Commercial Vehicles
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Engine Efficiency Accelerator Pedal Module Current Sensor Gear Position Sensor Throttle Position Sensor Turbo Actuator Turbo Position Sensor Variable Valve Lift Sensor
Exhaust Management / Aftertreatment EGR Position Sensor DPF RF Sensor
Occupant Safety Seat Belt Buckle Switch Seat Belt Tension Sensor Seat Track Position Sensor
Chassis / Driveline Air Grill Shutter Actuator Brake Pedal Sensor Chassis Height Sensor Transmission Speed
Sensor Transmission Range
Sensor Wheel Speed Sensor
Fuel Handling Contacting Fuel Level Card
Key Customers
New European
Customer #1
New European
Customer #2
Product Applications in Medical Imaging and Devices
Key Customers
Ultrasound / IVUS Single Crystal Piezo Bulk Piezo Encoders Frequency Control
Infusion Pumps, CPAPs and other medical devices Piezo micro-valves Encoders Switches Joysticks
Key Customers
Industrial Printers, HVAC, Automation and Safety Products Piezo micro-actuators Switches Encoders Frequency Control EMI Filters
Military Sonar and Communication Products Piezo hydrophones Piezo sonar arrays Frequency Control EMI Filters
Product Applications in Industrial and Military
Single Crystal Technology Acquisition
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Current Applications – 3D & 4D Ultrasound, IVUS Future Applications – Hearing Aid, Pacemaker
Founded in 1997 and located in Bolingbrook, IL
The industry leader for the design and manufacture of piezoelectric single crystals for use in the medical and defense industries with existing long-term relationships with blue chip OEM customers
The leading large scale, vertically integrated manufacturer of single crystals, having invested heavily in refining proprietary production processes and equipment
Total Addressable Market of $100M in the next 5-7 years
Wireless powering of pacemakers
Implantable hearing aids to replace cochlear implants
Advanced imaging with Intravascular Ultrasound (IVUS) used to detect plaques that cause heart disease
Single crystals create higher quality imaging compared to current solutions
Traditional Technology Single Crystal Technology
RF Sensor Technology Acquisition
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Disruptive Sensing Technology for Fuel Efficiency…. ….Boosted by Global Emissions Legislation
Start-up founded by two MIT Ph. D. graduates located in the Boston area
Innovative sensing technology that uses a low power RF signal to measure soot and ash loading on Diesel Particulate Filters (DPF) or Gasoline Particulate Filters (GPF)
Suitable for aftertreatment systems in Passenger or Commercial Vehicles, diesel or gasoline.
Total Addressable Market of $100M in the next 5 years
Diesel Particulate Filter (DPF)
CTS RF Sensor Benefits Include: Up to 4% better fuel economy Reduced CO2 emissions Lower risk of DPF damage Direct Measurement
Historical fleet CO2 emissions performance and proposed commercial vehicle/light truck standards:
Source: International Council of Clean Transportation
LV
I
M
CV
C/ITAD
LV/CVI
CAD
MIT/O
LV
IM
CV
C/IT
AD30-50%20-30%10-20%10-20%10-20%
5-15%
Targeted End Markets
Light VehiclesIndustrialMedicalComm. / ITCommercial VehiclesAviation/Defense
EMS DivestitureFront End Refocus
New CustomersRegional ExpansionOrganic ProjectsM&A
Legend:AD: Aviation/DefenseC: CommunicationsCV: Commercial VehiclesI: IndustrialIT: Information TechnologyLV: Light VehiclesM: MedicalO: Others
Organic GrowthInnovationM&A
Diversifying End Markets Organically and with Acquisitions
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LV/CV
IC
DA
M O
Single Crystal acquisition doubles current CTS sales to medical market
RF Sensing acquisition further diversifies CTS in commercial vehicles
Targeting 10% Revenue Growth (Organic + Inorganic)
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I Simplified and Focused the Business
ii Profitability Improvement
i Footprint Optimization
II Positioning for Growth around Sense, Connect and Move
ii Invest in Innovation for new product development
i Execute on organic growth
ii Complement portfolio with targeted M&A