CTS (CTS) Q3 2026 earnings summary

Executive summary

• Q3 net sales rose 4.6% YoY to $149.583M; net earnings increased 29.7% to $17.757M, with diluted EPS of $0.61 and adjusted diluted EPS of $0.77.

• Diversified end-market sales grew 6.6% YoY and represented 60% of Q3 sales.

• Adjusted gross margin reached a record 42.2%, adjusted EBITDA margin was 24.7%, and adjusted diluted EPS rose from $0.60 to $0.77.

• Millar was acquired on October 23, expanding medical and industrial exposure and adding sensing and catheter technologies.

Financial highlights

• Q3 net sales were $149.583M versus $143.0M a year earlier; operating earnings were $25.539M versus $20.9M.

• Adjusted operating earnings were $27.5M, or 18.4% of sales, versus $24.8M and 17.3% a year earlier.

• Adjusted diluted EPS was $0.77 versus $0.60; reported diluted EPS was $0.61 versus $0.46.

• Q3 operating cash flow was $43.5M and free cash flow was $41.1M, versus $29.0M and $24.2M, respectively, a year earlier.

• Q3 net earnings included a $12.5M insurance recovery and a $12.728M charge for an uncertain tax position.

Outlook and guidance

• FY2026 sales guidance rose to $580M–$590M from $565M–$585M; adjusted diluted EPS guidance rose to $2.78–$2.88 from $2.55–$2.70.

• Guidance includes the expected Millar acquisition impact and assumes current market conditions continue.

• Diversified demand is expected to remain solid; industrial OEM and distribution demand is healthy, with strong Q4 A&D revenue supported by backlog.

• Light-vehicle production is expected flat to modestly down; gross profitability is expected to normalize from Q3's unusually favorable mix.

• FY tax rate is expected at 20%–22%, excluding discrete items; Millar is expected to generate ~$30M in annual revenue and be EPS-accretive in H2 2027.