CTS Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Sales reached $149.6 million in Q3 2026, a 5% increase year-over-year from $143.0 million in Q3 2025; diversified end-market sales grew 7% while transportation sales increased 2%.
• Net income was $17.8 million (11.9% of sales) compared to $13.7 million (9.6% of sales) in Q3 2025.
• Diluted EPS was $0.61, an increase of 15 cents from $0.46 in Q3 2025.
• Adjusted diluted EPS was $0.77, up 17 cents from $0.60 in Q3 2025.
• Adjusted gross margin improved to 42.2%, up 330 basis points from 38.9% in Q3 2025.
• Adjusted EBITDA margin was 24.7%, up 90 basis points from 23.8% in Q3 2025.
• Operating cash flow was $43.5 million, an increase of $14.5 million from $29.0 million in Q3 2025.
• Free cash flow for the quarter was $41.1 million, compared to $24.2 million in Q3 2025.
• Capital expenditures were $2.4 million in Q3 2026, down from $4.8 million in Q3 2025.
• Cash and cash equivalents were $143.9 million as of September 30, 2026, compared to $82.3 million as of December 31, 2025.
• Long-term debt was $55.0 million as of September 30, 2026, compared to $57.5 million as of December 31, 2025.
• Controllable working capital was $104.8 million as of September 30, 2026, representing 17.5% of annualized sales.

Guidance and Future Outlook:

• CTS raised its 2026 sales guidance from a range of $565-$585 million to $580-$590 million.
• Adjusted diluted EPS guidance for 2026 was raised from a range of $2.55-$2.70 to $2.78-$2.88.
• The company stated that guidance assumes the continuation of current market conditions.

Business Segments and Product Lines:

• Diversified end-market sales (industrial, aerospace & defense, and medical) now represent 60% of total sales.
• The Millar acquisition is advancing the company's diversification strategy, specifically in the medical end market.
• Transportation sales posted modest growth of 2% in the quarter.

Market and Competitive Landscape:

• Diversified end-market sales grew 7% year-over-year.
• The company highlighted continued strength across its increasingly diversified portfolio.

Risks and Challenges:

• Forward-looking statements note potential risks including supply chain disruptions, availability and cost of rare earth elements, minerals, and metals.
• Risks include changes in the economy, inflationary/recessionary conditions, increased tariffs, and unanticipated issues in integrating acquisitions.
• Other risks include U.S. Government contract funding, rapid technological change, reliance on key customers, public health crises, environmental compliance, intellectual property protection, pricing pressures, and geopolitical risks including trade barriers and exchange rates.

Management Commentary and Tone:

• CEO Pratik Trivedi described the quarter as "strong," citing sales growth driven by a diversified portfolio.
• Management characterized execution as "disciplined," resulting in profitable growth, record margins, and strong cash generation.
• The CEO noted the Millar acquisition enhances the opportunity to create sustainable long-term value.

Other Key Points:

• A conference call was scheduled for 10:00 a.m. (ET) on October 27, 2026, with a supplemental slide presentation available on the investor website.
• Cash dividends declared per share were $0.04 for the quarter and $0.12 for the nine months ended September 30, 2026.
• CTS does not provide reconciliations of forward-looking non-GAAP financial measures to GAAP measures due to the difficulty in forecasting timing and amounts of certain items like restructuring, environmental, and acquisition-related costs.
• Nine-month 2026 net sales were $433.6 million, up from $404.0 million in the prior year period.
• Nine-month 2026 net income was $54.1 million, compared to $45.6 million in the prior year period.
• Nine-month 2026 operating cash flow was $94.3 million, up from $72.9 million in the prior year period.
• Nine-month 2026 free cash flow was $82.3 million, compared to $60.4 million in the prior year period.