CTS Corporation

What they do

CTS designs, manufactures, and sells highly engineered electronic products organized into three categories: Sense (controls, pedals, piezo sensing products, sensors, switches, transducers), Connect (EMI/RFI filters, capacitors, frequency control products, resistors, RF filters), and Move (piezo microactuators, rotary actuators). It sells primarily to OEMs, tier one suppliers, distributors, and the U.S. Government, with manufacturing in North America, Asia, and Europe and sales offices in China, Czech Republic, Denmark, Germany, Japan, Singapore, Taiwan, and the United States. Sales are mostly made through its own sales engineers, who accounted for approximately 86% of 2025 net sales; distributors and independent manufacturers' representatives each accounted for about 7%.

Revenue drivers

• Transportation — The largest end market at 43% of 2025 net sales, down from 55% in 2023 and 49% in 2024, selling sensors, actuators, and connectivity components to commercial vehicle and other transportation customers.
• Industrial — 26% of 2025 net sales, up from 23% in 2024, with management citing continued recovery in this end market.
• Medical — 16% of 2025 net sales, up from 14% in 2024 and 12% in 2023, part of the diversified end markets the company is emphasizing.
• Aerospace and Defense — 15% of 2025 net sales, up from 14% in 2024 and 9% in 2023, including sales from the SyQwest acquisition, which added $22.3 million of net sales in 2025 and $13.4 million in 2024.

Recent performance

Second quarter 2026 sales were $144.8 million, up 7.0% from $135.3 million in the second quarter of 2025, with sales to diversified end markets up 15% and transportation down 2%. Net income was $19.2 million, or 13.2% of sales, versus $18.5 million, or 13.7% of sales, a year earlier, and diluted EPS was $0.66 versus $0.62. Adjusted gross margin was 41.5%, up 270 basis points from 38.7%, and adjusted EBITDA margin was 25.4%, up 240 basis points from 23.0%. Operating cash flow was $33.4 million, up $5.0 million year over year. For full year 2025, net sales rose 5.2% to $541.3 million and net earnings rose 17.7% to $65.3 million, or $2.19 diluted EPS.

Strategy

Management describes its priority as transforming the portfolio through continued growth in diversified end markets, which it defines as industrial, aerospace and defense, and medical; these reached 59% of second quarter 2026 revenue. The company invests in products, technologies, and talent within its Sense, Connect, and Move categories, and it has supplemented organic growth with acquisitions such as SyQwest. Sales and marketing focus on engineered, application-specific solutions designed with major customers. On June 25, 2026, CTS announced the promotion of Pratik Trivedi to President and CEO effective July 6, 2026, succeeding Kieran O'Sullivan, who remains on the Board as Executive Chair.

Risks

• Transportation concentration and decline — Transportation fell from 55% of 2023 net sales to 43% in 2025 and declined 6.6% in 2025, driven by lower commercial vehicle volumes and customers' loss of market share in China.
• Customer and market cyclicality — The company states it faces periodic market softness, competition from other suppliers, changes in technology, and general economic conditions including inflationary or recessionary conditions.
• Tariffs and trade policy — The latest 10-Q specifically lists increased tariffs among the challenges facing the business, alongside general economic conditions.
• Acquisition and integration dependence — Growth in aerospace and defense has been partly acquisition-driven, with SyQwest contributing $22.3 million of 2025 net sales, exposing results to integration and acquisition-related costs.

Outlook

Management raised 2026 guidance, increasing the sales range from $560-$580 million to $565-$585 million and adjusted diluted EPS from $2.35-$2.45 to $2.55-$2.70, assuming continuation of current market conditions. The company does not provide reconciliations of forward-looking non-GAAP measures such as estimated adjusted diluted EPS to the most comparable GAAP measures, citing the difficulty of forecasting items such as restructuring, environmental remediation, acquisition-related costs, and foreign exchange rates.