2016 annual shareholder meeting - cts...targeting mid single digit organic growth for 2016 expanded...

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2016 Annual Shareholder Meeting May 19, 2016

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Page 1: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

2016 Annual Shareholder Meeting

May 19, 2016

Page 2: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Safe Harbor Statement

2

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.

Page 3: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Executing on our Strategy: 2015 Highlights

3

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

Page 4: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Our Vision

We aim to be a leading provider of sensing and motiondevices as well as connectivity components, enabling

an intelligent and seamless world.

Page 5: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Positioning for Growth with Fundamental Market Trends

5

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

Page 6: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Product Applications in Light and Commercial Vehicles

6

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

Page 7: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

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

Page 8: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

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

Page 9: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

Single Crystal Technology Acquisition

9

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

Page 10: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

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

Page 11: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

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

11

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

Page 12: 2016 Annual Shareholder Meeting - CTS...Targeting mid single digit organic growth for 2016 Expanded gross margins to 33.2%, the highest ... Throttle Position Sensor Turbo Actuator

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