CTS(US:CTS)2025-10-28 12:00Financial Performance - Sales for Q3 2025 were $143 million, an 8% increase year-over-year, with sales to diversified end markets rising 22%[6] - Net income for Q3 2025 was $14 million, representing 9.6% of sales, compared to $18 million or 13.7% of sales in Q3 2024[6] - Diluted EPS for Q3 2025 was $0.46, down from $0.59 in Q3 2024, while adjusted diluted EPS was $0.60, compared to $0.61 in the prior year[6] - Adjusted gross margin improved to 38.9% in Q3 2025 from 38.2% in Q3 2024, while adjusted EBITDA margin decreased to 23.8% from 24.4%[6] - Net earnings for the three months ended September 30, 2025, were $13.7 million, down from $18.1 million in the same period of 2024, indicating a decrease of 24.3%[23] - Adjusted net earnings for the nine months ended September 30, 2025, were $48.2 million, or $1.61 per share, compared to $49.7 million, or $1.62 per share for the same period in 2024, indicating a slight decrease of 3.0%[24] - The company reported net earnings as a percentage of net sales of 9.6% for the three months ended September 30, 2025, compared to 13.7% for the same period in 2024[24] Guidance and Projections - CTS updated its 2025 sales guidance to a range of $535-$545 million and adjusted diluted EPS guidance to $2.20-$2.25[4] Cash Flow and Working Capital - Operating cash flow for Q3 2025 was $29 million, down from $35 million in Q3 2024[6] - Free cash flow for the three months ended September 30, 2025, was $24.2 million, compared to $31.5 million for the same period in 2024, reflecting a decrease of 23.2%[34] - Operating cash flow as a percentage of net earnings was 212% for the three months ended September 30, 2025, up from 189% in the same period of 2024[34] - Controllable working capital as a percentage of annualized sales was 16.1% for the three months ended September 30, 2025, down from 18.4% in the same period of 2024[31] Assets and Liabilities - Cash and cash equivalents increased to $110.3 million as of September 30, 2025, up from $94.3 million at the end of 2024[17] - Total assets rose to $790.4 million as of September 30, 2025, compared to $765.4 million at the end of 2024[17] - Net accounts receivable as of September 30, 2025, was $85.9 million, a slight decrease from $86.4 million in 2024[31] - Net inventory as of September 30, 2025, was $54.2 million, down from $56.0 million in 2024[31] Expenses and Charges - The company incurred an extraordinary charge of $4.2 million related to an EPA past cost recovery claim in Q3 2025[6] - CTS incurred restructuring-related charges of $0.2 million for the three months ended September 30, 2025, and $0.7 million for the nine months ended September 30, 2025[21] - Depreciation and amortization expense for the three months ended September 30, 2025, was $8.8 million, compared to $8.0 million in the same period of 2024[37] - Stock-based compensation expense for the three months ended September 30, 2025, was $1.2 million, down from $1.4 million in the same period of 2024[37] Strategic Focus - CTS emphasized diversification as a strategic priority to drive growth and margin expansion[3] - The adjusted gross margin for the twelve months ended December 31, 2023, was 36.5%, compared to 35.9% for the previous year[21] Sales Performance - Net sales for the three months ended September 30, 2025, were $143.0 million, an increase from $132.4 million in the same period of 2024, representing a growth of 4.5%[22] - Net sales for the nine months ended September 30, 2025, reached $404.0 million, an increase from $388.3 million in the same period of 2024[35] - The company reported a net sales figure of $514.8 million for the twelve months ended December 31, 2023, down from $586.9 million in 2022, reflecting a decline of 12.3%[22] - Annualized sales for the three months ended September 30, 2025, were $571.9 million, an increase from $529.5 million in the same period of 2024[31] Adjustments and Corrections - Total adjustments to reported operating earnings for the nine months ended September 30, 2025, amounted to $3.5 million[22] - Total pretax adjustments to reported net earnings for the three months ended September 30, 2025, amounted to $4.4 million, or $0.15 per share[24] - The company updated certain previously furnished 2024 amounts due to immaterial errors identified[37]