CTS Corporation (NYSE:CTS) Q1 2022 Earnings Conference Call April 28, 2022 10:00 AM ET

Company Participants

Kieran O'Sullivan – Chairman, President and Chief Executive Officer

Ashish Agrawal – Vice President and Chief Financial Officer

Conference Call Participants

Justin Long – Stephen

Lannie Trieu – Cowen

Hendi Susanto – G. Research

Operator

Good morning. My name is Lauren and I will be your conference operator today. At this time I would like to welcome everyone to the CTS Corporation First Quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. The supplemental slides presentation to accompany the prepared remarks can be found on the company's website. After the speaker's remarks, there will be a question-and-answer session. [Operator instructions]. At this time, I would like to turn over the call to Mr. Kieran O’Sullivan, CEO of CTS Corporation. Mr. O'Sullivan, you may begin your conference.

Kieran O'Sullivan

Thank you, Lauren. Good morning and welcome everyone to our First Quarter 2022 Earnings Call. We reported solid financial results that were strengthened by our ongoing diversification efforts. Sales in the first quarter were $148 million, up 15% compared to the first quarter of 2021. First-quarter adjusted gross margin was 37%, up 400 basis points from 33% in the first quarter of last year. Adjusted EBITDA margin of 23.5% was up 350 basis points from 20% in the same period last year.

First quarter adjusted earnings per diluted share of $0.67 were up 46% from $0.46 in the first quarter of 2021. Operating cash flow was $19 million compared to $20 million in the first quarter of last year. During the quarter, we acquired TEWA Temperature Sensors, a temperature sensing company based in Lublin, Poland. We expect the TEWA acquisition to be accretive in 2022. In addition, we recently signed an agreement to acquire Ferroperm Piezoceramics, a developer of high-performance piezoelectric ceramic components for medical, industrial and defense applications based in Denmark.

Completion of the acquisition is subject to obtaining regulatory approvals, and the satisfaction of other customary closing conditions. Based on ordinary approval timetables and the nature of the closing conditions, we estimated closing to occur in the next few months. The Ferroperm acquisition is expected to be accretive in 2023. Ashish will take us through the Safe Harbor statement. Ashish.

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 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.