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 rose to $0.63, up 17% year-over-year; reported EPS was $0.61.

• Adjusted gross margin expanded by 416 bps year-over-year to 38.6%, aided by FX and improved mix.

• 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 sales and margin accretion.

Financial highlights

• Net income for Q3 2024 was $18.7 million, up from $14 million in Q3 2023; adjusted net earnings were $19.4 million.

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

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

• Book-to-bill ratio was 1.0 in Q3 2024, with four new customers added.

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

Outlook and guidance

• Full-year 2024 sales guidance updated to $515–$525 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 softness expected to persist through 2024.

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