CTS(US:CTS)2026-02-10 16:00Financial Data and Key Metrics Changes - For Q4 2025, the company reported sales of $137 million, a 9% increase year-over-year, with diversified end markets growing 16% [4][18] - The full year sales reached $541 million, up 5% from $515 million in 2024, with diversified end market sales accounting for 59% of overall revenue in Q4 [4][19] - The adjusted diluted earnings per share for Q4 were $0.62, up from $0.50 in Q4 2024, and for the full year, adjusted diluted earnings were $2.23, compared to $2.12 in 2024 [5][20] Business Line Data and Key Metrics Changes - Medical end market sales increased by 41% in Q4 2025, reaching $85 million for the full year, up 21% from $70 million in 2024 [6][7] - Aerospace and defense sales for 2025 were $83 million, a 20% increase from $69 million in 2024, although Q4 sales were down 4% due to program timing [9][10] - Industrial end market sales rose 16% in Q4 compared to the prior year, with full year sales at $140 million, up 12% from $125 million in 2024 [11][12] - Transportation sales were $234 million for 2025, down 7% from $250 million in 2024, with Q4 sales essentially flat at $56 million [13][14] Market Data and Key Metrics Changes - The company noted strong demand across diversified markets, with no significant concerns reported in any geographic areas [31] - The North American light vehicle market is expected to be in the $15-$16 million unit range, while European production is forecasted at $16-$17 million, and China volumes are expected to be around $32 million [16] Company Strategy and Development Direction - The company is focused on diversification as a strategic priority to drive growth and margin expansion, particularly in vehicle powertrain-agnostic solutions [34] - The Evolution 2030 strategic initiative emphasizes growth, operational rigor, and community engagement [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth momentum across diversified markets, with expectations for solid demand in medical and industrial sectors [15][17] - For 2026, the company anticipates sales in the range of $550-$580 million and adjusted diluted EPS between $2.30 and $2.45, assuming current market conditions persist [17] Other Important Information - The company generated $29 million in operating cash flow for Q4 and $102 million for the full year, maintaining a strong balance sheet with a cash balance of $82 million [20][21] - The company repurchased approximately 1.4 million shares totaling $57 million in 2025, returning $62 million to shareholders through dividends and buybacks [21] Q&A Session Summary Question: Insights on smart actuator customer preferences - Management confirmed ongoing development on both legacy and new platforms, enhancing cost-production efforts [22][23] Question: Revenue guidance and new product introductions - Management indicated that new products are contributing to revenue growth, with significant awards secured in Q4 [23][27] Question: Assessment of SyQwest revenue timing - Management noted that revenue was lighter than expected due to government funding timing but anticipates normalization in 2026 [25][26] Question: Visibility in industrial opportunities - Management expressed improved visibility and steady growth in industrial bookings, with a book-to-bill ratio of 1.11 [28] Question: Transportation market outlook - Management remains cautious but optimistic about potential improvements in the transportation sector, particularly in the second half of 2026 [29] Question: M&A market opportunities - Management is actively pursuing diversification and niche technologies but noted that valuations remain high [30] Question: Overall assessment of diversified markets - Management reported good momentum across diversified markets, with no significant concerns in any regions [31][32]