• Fourth Quarter Revenue: $127 million, up 2% from Q4 2023.
• Full Year Revenue: $516 million, down 6% from 2023.
• Diversified End Market Sales: Up 28% in Q4; 56% of overall company revenue in Q4 and 51% for the full year.
• Transportation Sales: $57 million in Q4, down 18% from the same period last year.
• Adjusted Gross Margin: 38.1% in Q4, up 394 basis points from Q4 2023.
• Adjusted Diluted EPS: $0.53 in Q4, up 14% year over year; $2.17 for the full year, down from $2.22 in 2023.
• Book to Bill Ratio: 0.96 for Q4; 1.01 for the full year 2024.
• Operating Cash Flow: $26 million for Q4; $99 million for the full year, up from $89 million in 2023.
• Cash Balance: $94 million as of December 31, 2024.
• Long Term Debt: $91 million at the end of 2024.
• Share Repurchase: 154,000 shares repurchased in Q4 totaling $8 million; 898,000 shares for the full year totaling $43 million.
• 2025 Revenue Outlook: Expected range of $520 million to $550 million.
• 2025 Adjusted Diluted EPS Outlook: Expected range of $2.20 to $2.35.

• Warning! GuruFocus has detected 4 Warning Sign with ADM.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CTS Corp (NYSE:CTS) achieved a 28% increase in sales to diversified end markets, including medical, aerospace, defense, and industrial sectors, in the fourth quarter.
• The company reported a 394 basis point improvement in gross margin for the fourth quarter, driven by favorable market mix and operational improvements.
• CTS Corp (NYSE:CTS) secured multiple wins in electrification, including six E platform wins for accelerator modules, indicating progress in their diversification strategy.
• The SyQwest acquisition contributed $11 million in revenue during the fourth quarter, supporting CTS Corp (NYSE:CTS)'s growth strategy.
• CTS Corp (NYSE:CTS) maintained a strong balance sheet with a cash balance of $94 million and generated $99 million in operating cash flow for the full year 2024, up from $89 million in 2023.

Negative Points

• Full-year sales for 2024 were down 6% compared to 2023, with transportation sales declining by 17% due to softness in the China market and competition in the commercial vehicle sector.
• The book-to-bill ratio for the fourth quarter remained at 0.96, indicating potential challenges in future order intake.
• Adjusted diluted earnings per share for the full year 2024 were $2.17, down from $2.22 in 2023, reflecting a decrease in profitability.
• CTS Corp (NYSE:CTS) anticipates headwinds in transportation revenue in 2025 due to China market dynamics and other regional factors.
• The company expects softness in commercial vehicle revenue throughout 2025, which may impact overall growth prospects.

Q & A Highlights

Q: Can you discuss the potential impact of tariffs and how CTS plans to react to any changes in the tariff outlook? A: We are working with our customers and suppliers to mitigate the impact of tariffs. We have a good track record of adjusting our supply chain to handle such changes. We are prepared to manage any impact, particularly from China and are closely monitoring the situation in Europe.

Q: How much revenue contribution from SyQwest is expected for the full year, and what are your thoughts on the Class 8 truck market in 2025? A: We expect solid growth from SyQwest, contributing to our overall guidance of 1% to 7% growth. We anticipate single-digit declines in transportation and high single-digit growth in other markets. The commercial vehicle market may be stable in the first half but softer in the second half of 2025.

Q: Can you elaborate on the gradual recovery in the industrial market and how it compares to other companies? A: The overstocking and inventory burn-down took longer than expected, but we are now seeing a gradual improvement. Inventories are back to normal levels, and we expect a gradual recovery moving forward, with a 26% year-over-year improvement noted in Q4.

Q: Could you provide more details on the E-brake product, including timing, sales ramp-up, and regional adoption? A: We have a pre-development win with a European OEM, with expected revenues in the 2027-2028 timeframe. The trend for E-brake is positive, and we anticipate steady growth and customer additions. It is primarily targeted at the light vehicle market, driven by electrification.

Q: What is the expected impact of the SyQwest acquisition on revenue seasonality in 2025? A: The SyQwest acquisition will introduce some seasonality, with revenue expected to be stronger in the second half of 2025. We anticipate the first quarter to be flat or marginally up, with solid growth for the entire year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.