CTS(US:CTS)2025-02-04 19:19Financial 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]