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- **Diversified Growth Engine**: Diversified end markets (59% of revenue) led by medical (+22% YoY) and aerospace/defense (+23% YoY) offset transportation softness.
- **SyQwest Momentum**: $8.8M Q3 SyQwest sales with $5M+ defense contract and pipeline for 2026 platform awards.
- **Tax Headwind**: U.S. tax legislation reduces EPS by $0.03/share, expected to persist in 2026.
- **Technological Innovation**: Launch of COBROS motor control platform and e-brake technology for EVs/Hybrids.
- **2026 Outlook**: Medical therapeutics and portable diagnostics growth, with cautious optimism on 15M North American light vehicle production.

**【Management Opening Remarks】**
- Q3 2025 sales of $143 million (+8% YoY), with diversified end market sales up 22% YoY, accounting for 59% of total revenue.
- Gross margin expanded by 66 bps to 38.9%, driven by operational efficiency and cost control.
- Secured a $5 million sole-source naval defense contract with SyQwest and $130 million in transportation wins.
- Book-to-bill ratio slightly above 1, with strong bookings in industrial (+29% YoY) and aerospace/defense (+23% YoY).

**【CEO Commentary】**
- Medical sales grew 22% YoY, with 8% QoQ bookings increase, driven by therapeutic products and new ultrasound applications.
- Aerospace/defense sales up 23% YoY, with SyQwest contributing $8.8 million and 29% YoY bookings growth.
- Transportation sales down 7% YoY due to commercial vehicle softness, but wins in Europe/South America and new e-brake technology launch.
- Guidance: 2025 sales $535-545M, EPS $2.20-2.25, with 2026 light vehicle production expected at 15M units in North America.

**【CFO Financial Commentary】**
- Adjusted EPS $0.60 (-2% YoY) due to U.S. tax legislation impact of $0.03/share.
- Operating cash flow $29M, with $17M share repurchases and $110M cash balance.
- Tax rate expected 21-23%, with ongoing adverse impact from legislative changes.
- SG&A up due to $4.2M EPA-related reserve and equity compensation adjustments.

**【Q&A Highlights】**
- Tax impact on EPS to persist in 2026, but industrial recovery and medical bookings strength offset transportation headwinds.
- SyQwest expected to maintain momentum, with potential $5M+ platform awards over 12 months.
- Tariff mitigation strategies include regional production and customer cost-sharing.
- 2026 outlook: diversified end markets (medical, aerospace) to drive growth, while monitoring EV/hybrid adoption trends.

CTS Corporation (CTS) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CTS

CTS fundamentals

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