CTS (CTS) 16th Annual East Coast IDEAS Conference summary

Business transformation and diversification

• Shifted from 70% automotive to 40%, with growth in medical, industrial, aerospace, and defense sectors.

• Focused on organic growth and acquisitions, targeting 10% overall growth (5% organic, 5% M&A).

• Most capital investment now directed to non-automotive sectors for higher quality, longer-life earnings.

• Regional capabilities expanded with factories in China, Taiwan, Denmark, Czech Republic, Poland, USA, and Mexico.

• North America and Europe are primary markets, with Asia operations focused on local demand.

Financial performance and guidance

• EBITDA margin improved from 10% to 23% over 10 years; gross margin rose from 30% to 39%.

• Revenue guidance for 2024 raised to $560–$580 million, EPS to $2.30–$2.45 after a strong Q1.

• CapEx at 4%, with 60–80% of capital allocated to acquisitions; $300 million returned to investors in recent years.

• Disciplined M&A approach, seeking accretive deals within 1–3 years, mainly in North America and Europe.

• Book-to-bill ratios strong in medical and industrial (1.2–1.3), with some lumpiness in aerospace/defense due to government funding delays.

Product and technology highlights

• Offers highly engineered, custom products aligned with automation, medical innovation, and sustainability megatrends.

• Unique in possessing all three advanced ceramics technologies, enabling tailored solutions at various price points.

• Major applications include medical ultrasound, intravascular imaging, skin tightening, industrial printing, HVAC, and defense sensors.

• Recent product innovations: eBrake, current sensing, Drive Pad for automotive, and advanced medical therapeutics.

• Medical therapeutics, especially skin tightening, has seen 30–40% growth, with consumable products driving recurring revenue.