"CTS delivered another quarter of strong performance, with diversified end-market sales up 18% year over year and modest growth in transportation," said Kieran O'Sullivan, CEO of CTS Corporation. "Our teams executed well, driving profitable growth, margin expansion, and strong cash generation. Diversification remains central to our strategy as we continue to strengthen our growth and quality of earnings."
First Quarter 2026 Results
Sales were $139 million in the first quarter of 2026, up 11% year-over-year. Sales to diversified end-markets increased 18%. Sales to the transportation market increased 3%.
Net income was $17 million, or 12.4% of sales, compared to $13 million, or 10.6% of sales in the first quarter of 2025.
Diluted EPS was $0.59, up 15 cents from $0.44 in the first quarter of 2025.
Adjusted Gross margin was 39.5%, up 250 bps from 37.0% in the first quarter of 2025.
Adjusted EBITDA margin was 23.0%, up 250 bps from 20.5% in the first quarter of 2025.
Adjusted diluted EPS was $0.62, up 18 cents from $0.44 in the first quarter of 2025.
Operating cash flow was $17.3 million, up $1.8 million from $15.5 million in the first quarter of 2025.
2026 Guidance
Assuming the continuation of current market conditions, CTS is narrowing its previous guidance of 2026 sales from a range of $550-$580 million to $560-$580 million and adjusted diluted EPS from a range of $2.30-$2.45 to $2.35-$2.45.
CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.
Conference Call and Supplemental Materials
As previously announced, CTS has scheduled a conference call for 10:00 a.m. (ET) today. The conference call can be accessed by registering online at CTS Corporation Q1 2026 Earnings Call, at which time registrants will receive dial-in information as well as a conference ID. In addition, CTS will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS' website at https://investors.ctscorp.com/news-events/events-and-presentations/default.aspx
Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible through the website noted above, has not been authorized by CTS and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents.
About CTS CTS Corporation (NYSE:CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and provides engineered products to customers in the aerospace & defense, industrial, medical and transportation markets. For more information, visit www.ctscorp.com/.
Diversified end markets, previously referred as the "non-transportation" market, includes the industrial, aerospace & defense, and medical end markets.
Cautionary Statement Regarding Forward-Looking Statements
Readers are cautioned that the statements contained in this document regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are, or may be deemed to be, "forward-looking statements" as defined by the "safe harbor" provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this document, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward-looking statements. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "continued," "project," "plan," "goals," "opportunity," "appeal," "estimate," "potential," "predict," "demonstrates," "may," "will," "might," "could," "intend," "shall," "possible," "would," "approximately," "likely," "outlook," "schedule," "on track," "poised," "pipeline," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are based on management's expectations, certain assumptions, and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties, and other factors, which could cause CTS' actual results, performance, or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: supply chain disruptions (including, but not limited to, the availability and cost of rare earth elements, minerals and metals); changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the funding of contracts by the U.S. Government; the results of actions to reposition CTS' business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS' intellectual property; pricing pressures and demand for CTS' products; risks associated with CTS' international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the impact of tariffs on China, Canada and Mexico, and other nations, the potential impact of U.S./China relations and the impact of geopolitical conflicts may have on our business, results of operations and financial condition; write offs of goodwill on our balance sheet; the amount and timing of any share repurchases; and the effect of any cybersecurity incidents on our business. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS's most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS' forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.
Contact Ashish Agrawal Vice President and Chief Financial Officer CTS Corporation 4925 Indiana Avenue Lisle, IL 60532 USA +1 (630) 577-8800 [email protected]
CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED(In thousands, except per share amounts)
Three Months Ended
March 31,2026
March 31,2025
Net sales
$
139,230
$
125,769
Cost of goods sold
84,244
79,220
Gross margin
54,986
46,549
Selling, general and administrative expenses
25,984
23,623
Research and development expenses
6,634
6,190
Restructuring charges
386
451
Operating earnings
21,982
16,285
Other (expense) income:
Interest expense
(708
)
(1,167
)
Interest income
480
447
Other (expense) income, net
(81
)
557
Total other expense, net
(309
)
(163
)
Earnings before income taxes
21,673
16,122
Income tax expense
4,476
2,755
Net earnings
$
17,197
$
13,367
Earnings per share:
Basic
$
0.60
$
0.45
Diluted
$
0.59
$
0.44
Basic weighted, average common shares outstanding:
28,689
30,013
Effect of dilutive securities
313
313
Diluted weighted, average common shares outstanding:
29,002
30,326
Cash dividends declared per share
$
0.04
$
0.04
CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars)
(Unaudited)March 31, 2026
December 31, 2025
ASSETS
Current Assets
Cash and cash equivalents
$
90,851
$
82,295
Accounts receivable, net of allowances of $636 and $910, respectively
93,771
88,096
Inventories, net
57,270
52,854
Other current assets
24,123
29,461
Total current assets
266,015
252,706
Property, plant and equipment, net
89,404
89,741
Operating lease assets, net
29,726
22,542
Other Assets
Goodwill
208,665
209,611
Other intangible assets, net
148,627
153,562
Deferred income taxes
24,314
25,110
Other assets
10,404
11,039
Total other assets
392,010
399,322
Total Assets
$
777,155
$
764,311
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable
$
50,328
$
48,220
Accrued payroll and benefits
4,098
3,453
Operating lease obligations
14,722
20,732
Accrued expenses and other liabilities
36,261
37,283
Total current liabilities
105,409
109,688
Long-term debt
62,500
57,500
Long-term operating lease obligations
28,363
21,841
Long-term pension obligations
3,684
3,698
Deferred income taxes
12,631
12,800
Other long-term obligations
7,093
6,998
Total Liabilities
219,680
212,525
Commitments and Contingencies
Shareholders' Equity
Common stock
326,577
324,982
Additional contributed capital
41,791
43,303
Retained earnings
729,518
713,467
Accumulated other comprehensive income (loss)
11,919
13,748
Total shareholders' equity before treasury stock
1,109,805
1,095,500
Treasury stock
(552,330
)
(543,714
)
Total shareholders' equity
557,475
551,786
Total Liabilities and Shareholders' Equity
$
777,155
$
764,311
CTS CORPORATION AND SUBSIDIARIESOTHER SUPPLEMENTAL INFORMATION - UNAUDITED(In millions of dollars, except percentages and per share amounts)
Non-GAAP Financial Measures
From time to time, CTS may use non-GAAP financial measures in discussing CTS' business. These measures are intended to supplement, not replace, CTS' presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS' definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items.
CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) restructuring-related charges; (3) environmental charges; (4) acquisition-related adjustments; (5) inventory fair value step-up costs; (6) foreign exchange (gains) losses; (7) non-cash pension expenses (income); and (8) certain discrete tax items are useful and assist in comparing CTS' current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures.
Restructuring charges, costs primarily relating to workforce reduction costs, building and equipment relocation costs, asset impairment charges and other facility closure costs in connection with our continued optimization of our organization.
Restructuring-related charges, costs related to restructuring actions that do not qualify as direct restructuring charges under US GAAP. These include duplicative expenses incurred due to the plant consolidation related transition activities such as excess rent, utilities, personnel related and other costs prior to start of production at the new location.
Environmental charges, costs associated with our non-operating facilities that are unrelated to ongoing operations. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company.
Acquisition-related adjustments, diligence and transaction costs related to acquisitions including related contingent earnout and other adjustments.
Inventory fair value step-up costs, purchase accounting-related inventory costs from acquisitions.
Foreign exchange (gains) losses, remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency.
Non-cash pension expenses (income), pension income and expenses relating to the non-operating U.S. pension and post-retirement life insurance plans, including historical plan settlement activities.
Discrete tax items, non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items or due to tax law changes, etc.).
At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum.
Adjusted Gross Margin
Three Months EndedMarch 31,
Twelve Months EndedDecember 31,
2026
2025
2025
2024
2023
Gross margin
$
55.0
$
46.5
$
208.0
$
187.6
$
190.9
Net sales
$
139.2
$
125.8
$
541.3
$
514.8
$
550.4
Gross margin as a % of net sales
39.5
%
37.0
%
38.4
%
36.4
%
34.7
%
Adjustments to reported gross margin:
Restructuring-related charges (b)
—
—
0.2
0.7
0.6
Inventory fair value step-up (b)
—
—
—
2.1
—
Adjusted gross margin
$
55.0
$
46.5
$
208.2
$
190.4
$
191.4
Adjusted gross margin as a % of net sales
39.5
%
37.0
%
38.5
%
37.0
%
34.8
%
Adjusted Operating Earnings
Three Months EndedMarch 31,
Twelve Months EndedDecember 31,
2026
2025
2025
2024
2023
Operating earnings
$
22.0
$
16.3
$
82.6
$
71.2
$
75.1
Net sales
$
139.2
$
125.8
$
541.3
$
514.8
$
550.4
