CTS Corp. Q3 FY2025 earnings call

• Sales for Q3 were $143 million, up 8% from Q3 2024. Diversified end market sales up 22%, transportation down 7%. Diversified end markets contributed 59% of revenue, up from 52% in Q3 2024. • Book-to-bill ratio slightly above 1 in Q3 vs marginally below 1 in Q3 2024. Bookings in diversified end markets up double digits in industrial and defense, high single digits in medical. • Medical end market sales up 22%, bookings up 8%, with growth in minimally invasive applications and product development for next-gen diagnostics. • Aerospace and defense sales up 23%, SyQwest revenues $8.8 million in Q3, with momentum expected to continue. • Transportation sales down 7% due to softness in commercial vehicle products, but had awards and released COBROS technology. • Adjusted diluted earnings per share $0.60 in Q3, down due to U.S. tax legislation. • Generated $29 million in operating cash flow in Q3, repurchased 400,000 shares for ~$17 million, returned $44 million to shareholders in 2025 quarters.

Sales for the third quarter were $143 million, up 8% from the prior year. Diversified end market sales, including medical, aerospace and defense, and industrial, were up 22%, contributing 59% of overall company revenue. Transportation sales were down 7% year-over-year. Medical end market sales were up 22% year-over-year, with bookings up 8%. Aerospace and defense sales were up 23% year-over-year, and SyQwest revenues in Q3 were $8.8 million.

• Narrowed sales guidance to $535 million to $545 million and adjusted diluted EPS to $2.20 to $2.25. • SyQwest revenue momentum expected to continue in Q4. • Tax impact from U.S. legislation expected to continue but be smaller in Q4.

• Uncertain tariff environment affecting profitability. • Supply chain issues related to rare earth, aluminum, and semiconductors. • Geopolitical uncertainties impacting business operations. • Adverse impact from U.S. tax legislation on earnings.

Q: How to explain raising revenue guidance but lowering EPS guidance?

A: Top line looks good with momentum in industrial, aerospace and defense, therapeutics; bottom line affected by tax impact, mix of earnings and tax legislation.

Q: View on transportation inventory and 2026 production rates?

A: Light vehicle days of supply around 50 days, normal; commercial vehicle market more closely watched.

Q: Tax impact in 2026?

A: Expected similar tax rate as 2025, around 21%-23%, but working on tax efficiency.

Q: Navigating tariffs?

A: Mitigate cross-border flows, work with suppliers and customers to pass on costs, manage USMCA exposure.

Q: Impact of Ford aluminum supplier fire?

A: No direct impact seen yet, but monitoring in Q4.