CTS Corp. Q4 FY2024 earnings call

• Diversification strategy: Diversified markets accounted for 56% of Q4 revenue and 51% full year 2024. Expect further progress in 2025 with SyQwest acquisition revenue contribution. - SyQwest: Integration tracking to plan, driving opportunity funnel. Revenue from SyQwest expected stronger in H2 2025. - Medical: Excited about growth in minimally invasive applications, added new customers and had wins in medical ultrasound and laboratory. - Aerospace and Defense: Focused on moving from component supplier to sensor/transducer/subsystem supplier, received orders for solar and RF filters. - Industrial: Gradual recovery in distribution and OEMs, with normalized inventory levels. - Transportation: Mixed production volumes in 2025, softness in commercial vehicle revenue, eBrake product expected to go into production Q2 2025.

Medical: Full year 2024 sales were $70 million, up 3% from 2023 ($68 million). Fourth quarter sales down sequentially as customers adjusted inventory levels, with a book-to-bill ratio of 1.22 in Q4 2024 vs. 0.86 in Q4 2023. Added new customers and had wins in medical ultrasound and laboratory applications. Aerospace and Defense: Full year 2024 sales $70M, up 37% from 2023 ($51M). Excluding SyQwest, up 8% full year. Bookings in Q4 down 6% but backlog healthy. Received orders for solar, RF filters, and temperature sensing. Industrial: Q4 sales up 2% sequentially and 26% YOY. Full year 2024 sales $125M (down from 2023 $129M). Saw gradual recovery in distribution and OEMs, with wins in EMC, industrial printing, etc. Transportation: Q4 sales $57M (down 18% YOY), full year $250M (down from 2023 $301M) due to China market softness and commercial vehicle competition. Had wins in sensor and accelerator modules, and 6 EV platform wins for accelerator modules.

• Full year 2025 sales expected in range of $520 million to $550 million. - Adjusted diluted EPS expected in range of $2.20 to $2.35. - SyQwest revenue contribution stronger in second half of 2025. - Transportation revenue expected to face headwinds due to China market dynamics and other regional factors.

• Tariffs impact: Working with customers and suppliers to mitigate impact, proactively adapting supply chain. - Supply chain risks: Uncertainties in tariff outlook and potential impact on factories; monitoring global footprint and China impact. - Macroeconomic challenges: Challenging backdrop affecting revenue growth, need to drive organic initiatives and acquisitions. - China market dynamics: Softness in EV penetration rates and impact on transportation revenue.

Q: Can you talk about the tariffs potential impact and how CTS could react?

A: Working with customers and suppliers to mitigate impact, proactively adapting supply chain. Feels well positioned to manage.

Q: Is any one of your factories or facilities at risk?

A: Mexico was prepared for but walked back, impact from China already addressed, keeping an eye on Europe.

Q: About gradual recovery in industrials, what are the puts and takes compared to other companies?

A: Overstocking to burn down inventories took longer than expected. Saw 26% YOY growth in Q4 industrials, expecting gradual improvement going forward.

Q: About eBrake timing of ramp up sales and unit shipment?

A: Varies, could be 6 months to a year. Trend is real, driven by powertrain shift, watching for OEM decisions.