CTS Corporation Reports Mixed Q3 Results, Net Earnings Increase 33.7%

CTS Corporation reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the third quarter of 2024, net sales totaled $132.4 million, a decrease of 1.6% from $134.6 million in the same quarter of 2023. The decline was primarily attributed to a 17.1% drop in sales to the transportation market, which was partially offset by an 89.5% increase in revenue from the Aerospace & Defense segment. Gross margin improved to $49.8 million, up 7.3% from $46.4 million in Q3 2023, resulting in a gross margin percentage increase from 34.5% to 37.6%. Operating earnings for the quarter rose 18.1% to $21.5 million, while net earnings increased significantly by 33.7% to $18.7 million, leading to diluted earnings per share of $0.61, compared to $0.44 in the prior year.

For the nine months ended September 30, 2024, net sales decreased by 8.8% to $388.3 million from $425.7 million in the same period of 2023. This decline was driven by lower volumes in commercial vehicle-related products and decreased sales in the industrial end market. Despite the drop in sales, net earnings for the nine months were $44.5 million, a slight decrease of 1.6% from $45.2 million in 2023. Diluted earnings per share for the nine-month period increased to $1.45 from $1.43.

Strategically, CTS Corporation made significant acquisitions, including SyQwest, LLC on July 29, 2024, for $121.9 million, aimed at enhancing its position in the defense market. This acquisition contributed $3.6 million to net sales in Q3 2024. The company also reported a substantial increase in goodwill and intangible assets due to these acquisitions, with goodwill rising to $194.8 million as of September 30, 2024, from $157.6 million at the end of 2023.

Financially, total assets increased to $789.4 million, while total liabilities rose to $258.6 million, primarily due to an increase in long-term debt, which reached $102.7 million. Cash and cash equivalents decreased to $94.9 million from $160.1 million at the end of September 2023. The company generated $73.3 million in net cash from operating activities, an increase from $56.7 million in the prior year.

Overall, CTS Corporation's performance reflects a challenging market environment, particularly in the transportation sector, while strategic acquisitions and improved margins in certain segments contributed positively to its financial results.