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CTS Corp. has announced plans to reduce its global manufacturing footprints by shuttering facilities in Singapore and Scotland in addition to other reorganization actions planned to help the supplier of sensors and contract manufacturer improve its operating performance.
The company said it expects to record charges of up to $20 million for the restructuring. Between $10 million and $15 million of the charges will be incurred in 2013. CTS expects cost-savings from the restructuring to be between $8 million and $10 million.
“The measures announced today are part of a larger strategic evaluation initiated by the management team earlier this year,” said Kieran O’Sullivan, CTS’ CEO in a statement. “These initial actions will improve our manufacturing utilization, increase overall efficiency and better position the Company for more profitable future growth.”
Elkhart, Indiana-based CTS has been implementing plans to boost sales lately in both its components and electronic manufacturing services divisions. The company’s revenue declined from nearly $700 million five years ago to approximately $576.9 million in 2012. Sales fell also from 2011 when the company reported revenue of $588.5 million. CTS’ sales appear to be rebounding, however, and have improved in recent quarters with analysts’ consensus revenue estimate 2013 rising to $628.5 million, an increase of approximately 9 Percent from 2012.
While CTS’ contract manufacturing operation remains under pressure it has seen a resurgence in demand for its components, especially sensors. The company also benefitted from the acquisition of D&R Technologies, a supplier of custom-designed automotive sensors. The acquisition added new automotive customers and helped widen CTS’ product offerings.
In addition to the planned reorganization, CTS said it will also repatriate about $30 million to the United States from south East Asia and use the funds to reduce debts and fund a stock buyback program. “While this transfer of funds will have a book tax cost of approximately $0.33 per diluted share, such cost is essentially cash-free due to the availability of net operating loss carryforward,” CTS said in the statement.
