CTS (CTS) Q4 2024 earnings summary

Executive summary

• Q4 2024 sales grew 2% year-over-year to $127M, with diversified end markets now representing 56% of Q4 and 51% of FY2024 revenue, while transportation declined 18%.

• Full-year 2024 sales declined 6% to $516M, mainly due to transportation softness, but diversified end markets rose 7% and SyQwest contributed $14M.

• Adjusted gross margin improved to 38.1% in Q4 and 37.2% for FY2024, with adjusted diluted EPS at $0.53 for Q4 and $2.17 for the year.

• SyQwest acquisition expanded defense capabilities and is expected to drive further growth and seasonality in 2025.

• Transportation segment faced headwinds from lower commercial vehicle sales and China market softness.

Financial highlights

• Q4 2024 sales were $127M (+2% YoY); FY2024 sales were $516M (-6% YoY); diversified end-markets +28% YoY in Q4, transportation -18% YoY.

• Q4 net income was $14M (11% of sales), diluted EPS $0.45, adjusted EPS $0.53 (up 14% YoY); FY2024 net income $58M, diluted EPS $1.89, adjusted EPS $2.17.

• Adjusted EBITDA margin for FY2024 was 22.7%, with Q4 at 23.9%.

• Operating cash flow was $26M in Q4 and $99M for FY2024; free cash flow for FY2024 was $80.6M.

• $48M returned to shareholders in 2024 via dividends and buybacks; $61M remains under repurchase program.

Outlook and guidance

• FY2025 sales expected at $520M–$550M; adjusted diluted EPS guidance: $2.20–$2.35.

• Diversified end markets expected to see high single-digit growth; transportation to see single-digit declines.

• Medical market demand may be soft in Q1 2025, strengthening later in the year; aerospace and defense demand solid.

• Industrial sales expected to improve gradually as inventories normalize.

• Transportation revenue faces headwinds from China and regional factors; commercial vehicle revenue expected to be soft throughout 2025.