CTS (CTS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $132 million, down up to 2% year-over-year, with diversified end markets up 18% and transportation down 17% due to commercial vehicle and China softness.

• Adjusted EPS was $0.63, up 17% year-over-year; net income rose to $19 million, and adjusted EBITDA margin expanded to 24.8%.

• Gross margin improved to 37.6%–38.6%, aided by end-market mix, operational improvements, and FX.

• Operating cash flow reached $35 million, up from $22 million in Q3 2023.

• SyQwest acquisition completed in July 2024, accelerating defense growth and contributing to new customer wins.

Financial highlights

• Net income for Q3 2024 was $18.7–$19 million, up from $14 million in Q3 2023.

• Adjusted EBITDA margin reached 24.8%, up from 22.5% in Q3 2023.

• Adjusted operating earnings for Q3 2024 were $23.9 million (18.1% of sales).

• Free cash flow for Q3 2024 was $31.5 million, up from $19.4 million year-over-year.

• Cash balance at quarter-end was $94.9–$95 million; long-term debt was $102.7–$103 million.

Outlook and guidance

• Full-year 2024 sales guidance revised to $513–$550 million, down from $525–$540 million.

• Adjusted diluted EPS guidance maintained at $2.05–$2.25.

• Medical market expected to soften in Q4 due to inventory adjustments; industrial and defense outlook remains solid.

• Transportation market expected to remain soft, with light vehicle production forecasted to decline.

• Management expects cash flows and borrowings to be adequate for at least the next twelve months.