CTS Corp (CTS) Q3 2024 Earnings Call Highlights: Strategic Diversification Drives EPS Growth ...

In This Article:

  • Revenue: $132 million for the third quarter, down 1.6% from the same period in 2023.

  • Adjusted Earnings Per Share (EPS): $0.63, up 17% year over year.

  • Adjusted Gross Margin: 38.6%, an improvement of over 400 basis points from the previous year.

  • Diversified Market Revenue: 52% of overall revenue, with sales up 18% year over year.

  • Transportation Sales: $63 million, down 17% from the same period last year.

  • Book to Bill Ratio: 1.0, compared to 0.92 in the third quarter of 2023.

  • Operating Cash Flow: $35 million, compared to $22 million in the third quarter of 2023.

  • SyQwest Inc Acquisition Contribution: $3.6 million in revenue during the quarter.

  • Cash Balance: $95 million at the end of the third quarter.

  • Long-term Debt Balance: $103 million at the end of the third quarter.

  • Share Repurchases: 245,000 shares totaling approximately $12 million during the quarter.

  • Full Year 2024 Sales Guidance: Updated to $515 million to $525 million.

  • Full Year 2024 Adjusted EPS Guidance: Reiterated at $2.05 to $2.25.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • CTS Corp (NYSE:CTS) reported third-quarter revenue of $132 million with adjusted earnings per share of $0.63, reflecting a 17% year-over-year increase in adjusted EPS.

  • The company successfully executed its diversification strategy, with revenue from diversified markets accounting for approximately 52% of overall revenue.

  • CTS Corp (NYSE:CTS) expanded its adjusted gross margin by 416 basis points, aided by foreign exchange favorability and improved plant efficiency.

  • The acquisition of SyQwest Inc has accelerated growth in the defense sector, contributing $3.6 million in revenue and enhancing the company's position in sensors, transducers, and subsystems.

  • The company achieved multiple wins in medical ultrasound, drug delivery, and a pacemaker application, indicating strong momentum in the medical market.

Negative Points

  • Overall sales were down 1.6% from the third quarter of 2023, with transportation sales declining by 17% year-over-year.

  • CTS Corp (NYSE:CTS) anticipates softness in the medical market for the fourth quarter due to customer inventory adjustments.

  • The transportation market, particularly in China, faces headwinds with softer demand and competition from local OEMs.

  • The company updated its full-year sales guidance to a lower range of $515 million to $525 million, down from the previous range of $525 million to $540 million.

  • Despite the positive impact of the SyQwest Inc acquisition on gross margin, the acquisition is slightly dilutive to EPS for the current year.