Core Viewpoint - CTS Corporation is set to release its earnings for the first quarter of 2025 on April 30, 2025, at 8:00 a.m. (ET) [1] Earnings Release Details - The conference call to discuss the first quarter 2025 results is scheduled for April 30, 2025, at 10:00 a.m. (ET) [2] - Dial-in numbers for the conference call include +1-833-470-1428 (Toll-Free) and +1-404-975-4839 (Local) for U.S. callers, with additional global dial-in numbers available for international participants [2] Webcast Information - A live audio webcast of the conference call will be accessible from the Investors section of CTS Corporation's website and will be archived for one year [3] Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move, producing sensors, actuators, and electronic components across North America, Europe, and Asia [4] - The company serves various markets, including aerospace/defense, industrial, medical, and transportation [4]

Core Viewpoint - CTS Corporation is set to release its earnings for the first quarter of 2025 on April 30, 2025, at 8:00 a.m. (ET) [1] Earnings Release Details - The conference call to discuss the first quarter 2025 results is scheduled for April 30, 2025, at 10:00 a.m. (ET) [2] - Dial-in numbers for the conference call include +1-833-470-1428 (Toll-Free) and +1-404-975-4839 (Local) for U.S. callers, with additional global dial-in numbers available for international participants [2] Webcast Information - A live audio webcast of the conference call will be accessible from the Investors section of CTS Corporation's website and will be archived for one year [3] Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move, producing sensors, actuators, and electronic components across North America, Europe, and Asia [4] - The company serves various markets, including aerospace/defense, industrial, medical, and transportation [4]

Sales and Market Performance - In 2024, net sales from non-U.S. operations accounted for 42.0% of total net sales, down from 45.0% in 2023 and 44.4% in 2022[39]. - The breakdown of net sales by end market in 2024 shows Transportation at 49%, Industrial at 23%, Medical at 14%, and Aerospace and Defense at 14%[21]. - Major customers include Toyota Motor Corporation at 12.2% and Cummins, Inc. at 11.7% of total net sales in 2024[33]. - Approximately 90% of 2024 net sales were attributable to sales engineers, with independent distributors accounting for about 6%[25]. - The SyQwest acquisition contributed $14,448 in net sales for 2024, enhancing the company's position in the defense market[169]. - Net sales for the year ended December 31, 2024, were $515,771, a decrease of $34,651 or 6.3% from 2023, primarily due to a 16.9% decline in transportation products[169]. Financial Performance - Gross margin for 2024 was $189,150, a decrease of $1,709 or 0.9% from 2023, influenced by lower sales volumes and partially offset by operational improvements[170]. - Selling, general and administrative expenses increased to $88,285, or 17.1% of sales in 2024, compared to $83,816, or 15.2% in 2023, driven by higher incentive compensation and the SyQwest acquisition[171]. - Cash and cash equivalents decreased to $94,334 at December 31, 2024, from $163,876 at December 31, 2023, with total debt rising to $91,253 from $67,500[177]. - Net cash provided by operating activities was $99,289 for 2024, compared to $88,811 in 2023, with net earnings of $58,114 contributing significantly[178]. - Net cash used in investing activities for 2024 was $140,556, primarily due to $121,912 for the SyQwest acquisition[182]. - The effective income tax rate decreased to 18.4% in 2024 from 19.5% in 2023, attributed to a change in the mix of earnings taxed at lower rates[175]. - Restructuring charges were $4,697 in 2024, down 33.6% from $7,074 in 2023, related to plant closure and consolidation activities[172]. Operational Risks and Challenges - In 2024, the company faced competitive risks typical in its end markets, including technical obsolescence and customer demands for lower costs and higher quality[37]. - Supply chain constraints, particularly shortages of semiconductor chips and resin, have impacted the company's ability to make scheduled shipments, potentially leading to revenue shortfalls[76]. - The ongoing Russia-Ukraine conflict has adversely affected the global economy and may continue to impact the company's operations and financial results[75]. - Inflationary pressures and increased costs of raw materials could negatively affect the company's gross margin and overall profitability[79]. - The company operates in cyclical industries, which may experience downturns that could materially affect its financial condition and operating results[80]. - A portion of the company's revenue is derived from defense-related products, which are subject to contract cancellations and delays, impacting revenue stability[81]. - The company faces risks from geopolitical tensions that could disrupt operations and supply chains, affecting financial performance[75]. - Fluctuations in operating results are common, influenced by demand changes, manufacturing efficiency, and component availability[83]. - The company may experience increased borrowing costs and limited access to capital markets due to economic downturns, impacting growth strategies[74]. - The company must navigate various risks, including labor disruptions and regulatory changes, that could adversely affect its business operations[82]. Strategic Initiatives and Acquisitions - The company has pursued acquisitions to complement its business, including TEWA, Meggitt, Maglab, and SyQwest, but may face challenges in completing these transactions and integrating new operations[84]. - Future acquisitions may lead to increased expenses and working capital requirements, potentially reducing return on invested capital and profitability[86]. - The company may consider divesting certain operations, which could involve risks such as management distraction and loss of customer relationships[87]. - Restructuring plans and capital projects have been initiated to improve cost structure and operational efficiency, but failure to execute these plans may lead to disruptions and higher costs[88]. Competitive Environment and Technology - The company operates in a highly competitive environment, facing risks of price erosion and technological change, which could adversely affect market share and profit margins[89]. - Rapid technological changes may render existing products obsolete, impacting the company's ability to recover research and development costs[90]. - Difficulties in developing and marketing new products could adversely affect the company's financial condition and operating results[91]. Regulatory and Compliance Issues - The company is subject to environmental regulations and potential liabilities, including a demand for reimbursement of $9.955 million related to environmental contamination[95]. - Changes in tax laws could materially affect the company's effective tax rate and future tax liabilities, impacting financial performance[97]. - The company is subject to the ongoing internal control provisions of the Sarbanes-Oxley Act, and any material weaknesses in internal control could affect financial reporting[132]. - The company may face adverse effects on its business and financial condition due to increasing scrutiny related to environmental, social, and governance (ESG) issues[133]. Cybersecurity and Technology Risks - Cybersecurity threats pose risks to the company's operations, potentially leading to financial losses and operational disruptions[103]. - The company has a multi-layered cybersecurity risk management strategy to mitigate threats and incidents[139]. - The company has experienced past cybersecurity incidents that have not materially impacted its business, but it anticipates facing additional threats in the future[143]. - Third-party cybersecurity incidents could harm the company's reputation and financial performance, as reliance on external service providers increases vulnerability[107]. - The integration of artificial intelligence technologies presents new risks, including regulatory scrutiny and potential reputational damage due to inaccuracies in AI outputs[108]. - The company faces risks related to maintaining and upgrading technology, which may require significant investment and could disrupt operations if not managed effectively[106]. Shareholder and Financial Management - The company has approved a share repurchase program authorizing the repurchase of up to $100 million of its common stock[136]. - Future dividends on the company's common stock may be restricted or eliminated based on earnings and cash flow[135]. - The company has a total credit facility availability of $400,000, with a balance outstanding of $91,253 as of December 31, 2024[186]. - The company was in compliance with all debt covenants as of December 31, 2024[188]. - The company will monitor future results for goodwill impairment and perform tests if indicators trigger a review[199]. Workforce and Employee Relations - The workforce consists of 3,549 employees, with 57% female and 43% male representation[43]. - The company faces challenges in attracting and retaining key personnel due to a competitive labor market, which may increase operating expenses and negatively impact growth[131]. International Operations and Risks - The company operates manufacturing facilities in North America, Asia, and Europe, with significant sales offices in multiple countries[18]. - The company faces risks associated with international operations, including political instability and currency fluctuations, which could adversely affect financial results[120]. - The company has $92,944 in foreign cash balances, with potential restrictions on timely and tax-efficient repatriation[189]. Inventory and Warranty Management - Over the last three years, product warranty reserves have ranged from 0.3% to 0.4% of net sales, indicating a stable reserve level[209]. - The company’s reserves for excess and obsolete inventories have ranged from 14.8% to 20.7% of gross inventory over the last three years[211]. Debt and Financial Obligations - The company uses interest rate swaps to convert a portion of its revolving credit facility's outstanding balance from a variable rate to a fixed rate, with contractual rates ranging from 1.49% to 2.49%[187]. - The commitment fee on the unused portion of the Revolving Credit Facility ranges from 0.175% to 0.25% based on the net leverage ratio[188]. - The company had minimum contractual future interest payments on hedged borrowings estimated to be $10,150 through maturity, with approximately $5,190 payable within 12 months[194]. - As of December 31, 2024, the outstanding principal on the Revolving Credit Facility was $91,253, with no amounts payable within 12 months[194].

Financial Data and Key Metrics Changes - Fourth quarter sales were $127 million, up 2% from Q4 2023, while full year sales were $516 million, down 6% from 2023 [8][35] - Adjusted gross margin for the full year 2024 was 37.2%, up 243 basis points from 2023 [10][36] - Adjusted diluted earnings per share for Q4 2024 were $0.53, up 14% year-over-year, while for the full year, it was $2.17, down from $2.22 in 2023 [10][36] Business Line Data and Key Metrics Changes - Diversified end market sales were up 28% in Q4 2024, accounting for 56% of overall revenue, while transportation sales were down 18% [8][9] - Medical market sales for the full year 2024 were $70 million, up 3% from 2023, with a book-to-bill ratio of 1.22 in Q4 [11][12] - Aerospace and defense sales increased 37% to $70 million for the full year, while industrial market sales were $125 million, down from $129 million in 2023 [14][17] - Transportation sales for the full year were $250 million, down from $301 million in 2023, primarily due to demand softness in China [20][35] Market Data and Key Metrics Changes - The book-to-bill ratio for the full year 2024 was 1.01%, compared to 0.97% in 2023 [9] - Demand in the medical market is expected to be soft in Q1 2025 but strengthen later in the year [26] - North American light vehicle market is expected to be around 50 million units in 2025, down from last year [27] Company Strategy and Development Direction - The company continues to execute on a diversification strategy, focusing on growth in medical, industrial, aerospace, and defense markets [3][4] - The integration of the SyQwest acquisition is on track, with expectations for revenue contribution to strengthen in the second half of 2025 [4][30] - The company aims to expand its customer base and application range in diversified end markets [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in handling potential tariff impacts through proactive supply chain management [43][44] - The company anticipates a gradual recovery in the industrial market, with normalized inventory levels [17][56] - For 2025, the company expects sales in the range of $520 million to $550 million, with adjusted diluted EPS between $2.20 and $2.35 [30] Other Important Information - The company generated $99 million in operating cash flow for the full year, up from $89 million in 2023 [38] - A total of $48 million was returned to shareholders through dividends and share buybacks in 2024 [40] Q&A Session Summary Question: Impact of tariffs on operations - Management is working with customers and suppliers to mitigate tariff impacts and feels well-positioned to manage potential changes [43][44] Question: SyQwest revenue contribution and Class 8 truck market outlook - Expected solid growth from SyQwest, with transportation market facing single-digit declines and high single-digit growth in other markets [48][49] Question: Recovery in industrial markets compared to peers - Management noted a gradual improvement in industrial markets, with normalized inventory levels and improved book-to-bill ratios [56] Question: eBrake product ramp-up and market adoption - eBrake is expected to see steady growth, primarily in the light vehicle market, with initial revenues projected between $5 million to $10 million in the first year [62][68]

Sales Performance - Fourth quarter 2024 sales were $127 million, up 2% year-over-year, with diversified end-markets sales increasing by 28%[5] - Full-year 2024 sales totaled $516 million, a decrease of 6% year-over-year, primarily due to a 17% decline in transportation end-market sales[5] - Net sales for Q4 2024 were $127.4 million, a slight increase from $124.7 million in Q4 2023, while total net sales for the twelve months were $515.8 million, down from $550.4 million[21] - Net sales for 2024 totaled $515.8 million, a decrease from $550.4 million in 2023, with net earnings as a percentage of net sales at 11.3%[25] Profitability Metrics - Net income for Q4 2024 was $14 million, or 11% of sales, compared to $15 million, or 12% of sales in Q4 2023[5] - Adjusted earnings per diluted share for Q4 2024 were $0.53, up from $0.47 in Q4 2023[5] - Adjusted net earnings for Q4 2024 were $16.3 million, or $0.53 per share, compared to $14.7 million, or $0.47 per share in Q4 2023, reflecting an adjusted net earnings percentage of 12.8%[24] - The company reported a net earnings margin of 10.7% for Q4 2024, down from 12.3% in Q4 2023[24] - Adjusted net earnings for 2024 were $66.9 million, or $2.17 per share, down from $70.0 million, or $2.22 per share in 2023[25] Cash Flow and Capital Expenditures - Operating cash flow for Q4 2024 was $26 million, down from $32 million in Q4 2023[5] - Free cash flow for the twelve months ended December 31, 2024, was $80.6 million, representing 122% of adjusted net earnings[32] - Capital expenditures for 2024 were $18.6 million, or 3.6% of net sales, compared to $14.7 million, or 2.7% of net sales in 2023[33] Adjusted Earnings and Margins - Adjusted EBITDA margin for Q4 2024 was 24%, an increase from 22% in Q4 2023[5] - Adjusted operating earnings for Q4 2024 were $21.6 million, an increase from $18.4 million in Q4 2023, with an operating earnings percentage of 17.0% compared to 14.8%[22] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $117.1 million, slightly down from $120.7 million in 2023, with an adjusted EBITDA margin of 22.7%[23] - Adjusted gross margin for Q4 2024 was $48.6 million, with an adjusted gross margin percentage of 38.1%, compared to 34.2% in Q4 2023[21] Assets and Liabilities - The company reported a total asset value of $766 million as of December 31, 2024, compared to $741 million in 2023[17] - Controllable working capital as of December 31, 2024, was $88.6 million, representing 17.4% of annualized sales[31] - The company reported a decrease in net accounts receivable to $77.6 million in 2024 from $78.6 million in 2023[31] Environmental and Restructuring Charges - Environmental charges for Q4 2024 were $1.9 million, up from $0.4 million in Q4 2023, indicating increased costs associated with non-operating facilities[22] - Environmental charges for 2024 were $1.6 million, down from $3.5 million in 2023[25] - The company incurred restructuring charges of $1.0 million in Q4 2024, consistent with the previous quarter, and total adjustments to reported operating earnings amounted to $2.6 million[22] Future Outlook - CTS expects full-year 2025 sales to be in the range of $520-$550 million and adjusted diluted EPS to be between $2.20-$2.35[5] - CTS is focusing on innovative products like eBrake™ and sensing applications to drive future growth despite challenging market conditions in transportation[2]

Core Insights - CTS Corporation has made significant progress in diversifying its business, with over 50% of revenue now coming from medical, industrial, and aerospace and defense markets [2][11] - The company reported solid profitability improvements and strong cash flow despite challenging market conditions, particularly in transportation [2] - CTS anticipates further growth in diversified markets in 2025, driven by new programs and improving market conditions [2] Fourth Quarter 2024 Results - Sales for Q4 2024 were $127 million, a 2% increase year-over-year, with diversified end-markets sales rising by 28% [7] - Transportation end-market sales decreased by 18% year-over-year [7] - Net income for Q4 2024 was $14 million, or 11% of sales, compared to $15 million, or 12% of sales in Q4 2023 [7] - Adjusted earnings per diluted share increased to $0.53 from $0.47 in Q4 2023 [7] Full-Year 2024 Results - Total sales for 2024 were $516 million, down 6% year-over-year, primarily due to a decline in the transportation end-market [7] - Net income for 2024 was $58 million, or 11% of sales, compared to $61 million in 2023 [7] - Adjusted earnings per diluted share decreased to $2.17 from $2.22 in 2023 [7] 2025 Guidance - CTS expects full-year 2025 sales to be in the range of $520-$550 million and adjusted diluted EPS to be between $2.20 and $2.35 [5] Cash Flow and Profitability - Operating cash flow for Q4 2024 was $26 million, down from $32 million in Q4 2023 [7] - Free cash flow for 2024 was $80.6 million, compared to $74.1 million in 2023 [35] Acquisition Impact - The SyQwest acquisition contributed $11 million in revenue for Q4 2024 and $14 million for the full year [7]

Core Viewpoint - CTS Corporation is set to release its earnings for the fourth quarter and full-year 2024 on February 4, 2025, at 8:00 a.m. (ET) [1] Group 1: Earnings Release Details - The earnings release will cover both the fourth quarter and the full-year 2024 results [1] - A conference call to discuss these results is scheduled for the same day at 10:00 a.m. (ET) [2] - Dial-in numbers for the conference call are provided for both U.S. and international participants, with a specific passcode required for access [2] Group 2: Webcast Information - A live audio webcast of the conference call will be available on the Investors section of the CTS Corporation website [3] - The webcast will be archived for one year for future access [3] Group 3: Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move, serving various markets including aerospace/defense, industrial, medical, and transportation [4] - The company operates manufacturing facilities in North America, Europe, and Asia [4]

Core Viewpoint - CTS Corporation is set to release its earnings for the fourth quarter and full-year 2024 on February 4, 2025, at 8:00 a.m. (ET) [1] Group 1: Earnings Release Details - The earnings release will be followed by a conference call with management scheduled for the same day at 10:00 a.m. (ET) [2] - Dial-in numbers for the conference call include +1-833-470-1428 (Toll-Free) and +1-404-975-4839 (Local) for U.S. callers, with additional numbers available for international participants [2] - A passcode of 389682 will be required to access the call [2] Group 2: Webcast Information - A live audio webcast of the conference call will be available on the Investors section of the CTS Corporation website and will be archived for one year [3] Group 3: Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move, producing sensors, actuators, and electronic components across North America, Europe, and Asia [4] - The company serves various markets including aerospace/defense, industrial, medical, and transportation [4]

Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move [1] - The company manufactures sensors, actuators, and electronic components across North America, Europe, and Asia [1] - CTS provides engineered products to customers in various markets including aerospace/defense, industrial, medical, and transportation [1] Upcoming Events - Kieran O'Sullivan, President and CEO of CTS Corporation, will participate in the 27th Annual Needham Growth Conference on January 14, 2025, at 8:00 AM (EST) [3] - A live webcast of the event will be accessible through the CTS Corporation website and will be available for replay for 90 days following the presentation [3]

Company Overview - CTS Corporation is a leading designer and manufacturer of products that Sense, Connect, and Move [2] - The company manufactures sensors, actuators, and electronic components across North America, Europe, and Asia [2] - CTS provides engineered products to customers in various markets including aerospace/defense, industrial, medical, and transportation [2] Upcoming Event - Kieran O'Sullivan, President and CEO of CTS Corporation, will participate in the Baird 2024 Global Industrial Conference on November 12, 2024, at 8:20 a.m. (EST) [1] - The conference will take place at The Ritz-Carlton in Chicago [1] - Additional information about the event can be found on the Baird Conferences website [1]