Q2 2025 CTS Corp Earnings Call
Any portion of today's call human T cells by pressing star followed by one on your telephone keypad to into the queue.
Speaker Change: I will now hand, the Florida, Kieran I Sullivan, Chairman, President and CEO to begin securing please go ahead when you're ready.
Speaker Change: Good morning, and thank you for joining us today for our second quarter 2025 results.
Speaker Change: We delivered another quarter of double digit growth in our diversified end markets.
Operator: Good morning all, good afternoon all, and welcome to the CTS Corporation second quarter 2025 learning school.
Speaker Change: A diversified sales for the quarter were 55% of overall company revenue in.
Adam: My name is Adam and I'll be your operator for today.
Speaker Change: In the quarter, our adjusted EBITDA expanded 250 basis points sequentially, and 130 basis points compared to the second quarter of last year cash flow generation was also strong in the quarter. Our teams continued to execute on our diversification strategy to increase growth in diversified medical and industrial.
Adam: If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by 1 on your cell phone keypad to enter the queue.
Adam: I will now hand the floor to Kieran O'Sullivan, Chairman, President and CEO to begin. So Kieran, please go ahead when you are ready.
Good morning or good afternoon all, welcome to the CTS Corporation. Second quarter, 2025 earning School. My name is Adam, and I'll be your operator for today. If you'd like to ask a question during the Q&A portion of today's call you may do. So by pressing star, followed by 1, on your telephone keypad to enter the queue.
Speaker Change: Call now hand the floor to Kieran O Sullivan, chairman, president and CEO to begin securing. Please go ahead. When you are ready.
Kieran O'sullivan: Good morning and thank you for joining us today for our second quarter 2025 results. We delivered another quarter of double-digit growth in our diversified NMARC. diversified sales for the quarter, or 55% of overall company revenue.
Speaker Change: Real aerospace and defense markets.
Good morning, and thank you for joining us today for our second quarter 2025 results.
Speaker Change: In transportation, we launched the next generation Smart actuator for the commercial vehicle market Ashish will take us through the Safe Harbor statement Ashish.
Speaker Change: We delivered another quarter of double digit growth. In our Diversified end markets.
Kieran O'sullivan: In the quarter our adjusted EBITDA expanded 250 basis points sequentially and 130 basis points compared to the second quarter of last year. Cash flow generation was also strong in the quarter. Our teams continue to execute on our diversification strategy to increase growth in diversified medical, industrial, aerospace and defense markets.
Speaker Change: Diversified sales for the quarter were 55% of overall, company Revenue.
ashish: I would like to remind our listeners that this conference call contains forward looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements additional information regarding these risks and uncertainties is contained in the press.
Speaker Change: In the quarter. Our adjusted Eva expanded 250 basis points sequentially and 130 basis points compared to the second quarter of last year.
ashish: Release issued today and more information can be found in the company's SEC filings.
Kieran O'sullivan: In transportation, we launched the next generation smart actuator for the commercial vehicle market.
Speaker Change: Cash flow generation was also strong in the quarter. Our teams continue to execute on our diversification strategy to increase growth in Diversified medical industrial Aerospace and defense markets.
ashish: To the extent that today's discussion refers to any non-GAAP measures under regulation G. The required explanations and reconciliations are available in today's earnings press release, and supplemental slide presentation, which can be found in the investors section of the Cts website.
Ashish Agrawal: Ashish will take us through the safe harbor statement. Ashish. I would like to remind our listeners that this conference call contains forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause the actual results to differ materially from those expressed in the forward motion.
Speaker Change: In transportation, we launched the Next Generation smart actuator for the commercial vehicle. Market Ashish will take us through the Safe Harbor statement issues.
I would like to remind our listeners that, this entrance call contains forward-looking statements.
ashish: I will now turn the discussion back over to our CEO Kieran Osullivan.
Ashish Agrawal: additional information regarding these risks and uncertainties. is contained in the press release issued today and more information can be found in the company's SEC file.
Speaker Change: These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
Speaker Change: Ashish, we finished the second quarter with sales of $135 million up 4% from $130 million in the second quarter of 2025 for.
Ashish Agrawal: to the extent that today's discussion refers to any non-GAAP measures under regulation. The required explanations and reconciliations are available with today's earnings press release and supplemental slide presentation, which can be found in the investors section of the CTS.
Speaker Change: Additional information regarding these risks and uncertainties is contained in the press release issued today. And more information can be found in the company's SEC filings.
Speaker Change: For the quarter diversified end market sales, including sales to medical aerospace and defense and industrial end markets were up 13% driven by a mix of organic growth and the sequester acquisition.
Speaker Change: To the extent that today's discussion refers to any non-gaap measures under regulation. G.
Speaker Change: The required explanations and reconciliations are available with today's earnings press release.
Speaker Change: Transportation sales were down 6% from the same period last year.
Kieran O'sullivan: I will now turn the discussion back over to our CEO, Kiran Singh. Thank you, Ashish. We finished the second quarter with sales of $135 million, up 4% from $130 million in the second quarter of 2025. For the quarter, diversified end market sales, including sales to medical, aerospace and defense and industrial end markets, were up 13%, driven by a mix of organic growth and the CyQuest acquisition. Transportation sales were down 6% from the same period last year. Diversified end market sales were 55% of overall company revenue in the quarter. Our book-to-bill ratio for the second quarter was 1, essentially flat in comparison to the second quarter of 2024.
Speaker Change: And supplemental slide presentation, which can be found in the investors section of the CTS website.
Speaker Change: Diversified end market sales were 55% of overall company revenue in the quarter.
Sullivan: I will now turn the discussion back over to our CEO Sullivan.
Sullivan: Thank you. Is
Speaker Change: Our book to Bill ratio for the second quarter was one essentially flat in comparison to the second quarter of 2020 for bookings for our diversified end markets were down in medical due to larger bookings earlier this year.
We finished the second quarter with sales of 135 million of 4% from 130 million in the second quarter of 2025.
Speaker Change: Defense bookings were flat, while industrial bookings were up 22% second quarter adjusted diluted earnings were <unk> 57 per share up approximately 30% from the first quarter and up 7% from the prior year period, Ashish will add further color on our financial performance later in today's.
Sullivan: For the quarter Diversified and market sales, including sales to Medical Aerospace and defense and Industrial. Land markets were up 13% driven by a mix of organic growth and the sidequest acquisition
Sullivan: Transportation sales were down 6% from the same period last year.
Sullivan: Diversified and market sales were 55% of overall company Revenue in the quarter.
Speaker Change: Call.
Speaker Change: In the medical end market second quarter sales were up 8% compared to the same period in 2024.
Kieran O'sullivan: Bookings for our diversified end markets were down in medical due to larger bookings earlier this year. Defense bookings were flat while industrial bookings were up 22%. Second quarter adjusted diluted earnings were $0.57 per share, up approximately 30% from the first quarter, and up 7% from the prior year period.
Speaker Change: We are excited about the prospects for growth in minimally invasive applications, where our products help deliver enhanced ultrasound images, making it easier for medical professionals to detect artery restrictions and deliver treatment medications.
Sullivan: Our book to build ratio for the second quarter was 1. In comparison to the second quarter of 2024 bookings for our Diversified end markets were down in medical due to larger bookings earlier this year.
Sullivan: Defense. Bookings were flat violent. Industrial bookings were up 22%.
Speaker Change: Our teams are engaged on next generation development engineering to further enhance diagnostic capability with our customers.
Kieran O'sullivan: Ashish will add further color on our financial performance later in today's call. In the medical end market, second quarter sales were up 8% compared to the same period in 2024. We are excited about the prospects for growth in minimally invasive applications where our products help deliver enhanced ultrasound images, making it easier for medical professionals to detect artery restrictions and deliver treatment medications. Our teams are engaged on next generation development engineering to further enhance diagnostic capability with our customers. We are proud to highlight our product support solutions that help save lives. During the second quarter, we had wins for medical ultrasound across all regions and an award for a pacemaker application.
Sullivan: Second quarter, adjusted diluted. Earnings were 57 cents, per, share up, approximately 30% from the first quarter and up 7% from the prior year period.
Speaker Change: We are proud to highlight our product support solutions that help save lives.
A shish will add further color on our financial performance later. In today's call,
Speaker Change: During the second quarter, we had wins for medical ultrasound across all regions and an award for a pacemaker application.
Sullivan: In the medical and Market. Second quarter sales were up 8% compared to the same period in 2024.
Speaker Change: In addition, we added a new customer or an ultrasound application.
Speaker Change: Demand for therapeutic products were up approximately 60% year over year.
Sullivan: We are excited about the prospects for growth in minimally invasive applications where our products help deliver enhanced ultrasound images, making it easier for medical professionals to detect artery restrictions and deliver treatment medications.
Speaker Change: Bookings in the quarter were down 10% compared to the prior year period due to softness in diagnostic bookings.
Speaker Change: Over time, we expect the volume increases and portable ultrasound diagnostics and therapeutics will continue to enhance our growth profile.
Sullivan: Our teams are engaged on Next Generation development, engineering to further enhance diagnostic capability with our customers.
Sullivan: We are proud to highlight our product support solutions that help save lives.
Speaker Change: Aerospace and defense sales for the second quarter were up 34% from the second quarter of 2024.
Kieran O'sullivan: In addition, we added a new customer for an ultrasound application. Demand for therapeutic products were up approximately 60% year over year. Bookings in the quarter were down 10% compared to the prior year period due to softness in diagnostic bookings. Over time, we expect the volume increases in portable ultrasound diagnostics and therapeutics will continue to enhance our growth profile.
Sullivan: During the second quarter, we had winds for medical ultrasound across all regions and an award for a pacemaker application.
Speaker Change: Excluding sales from the <unk> acquisition sales were up 6%.
Sullivan: In addition, we added a new customer for an ultrasound application.
Speaker Change: <unk> revenues in the second quarter were $4 5 million and we expect stronger sales in the second half of this year.
Demand for therapeutic products were up. Approximately 60% year-over-year.
Speaker Change: Bookings in the second quarter were flat from the prior year period, as we maintain a healthy backlog.
Sullivan: In the quarter were down, 10% compared to the prior year period. Due to softness in diagnostic bookings.
Speaker Change: Our strategy is focused on moving from a component supplier to a supplier of sensors transducers and sub systems.
Kieran O'sullivan: Aerospace and defense sales for the second quarter were up 34% from the second quarter of 2024. Excluding sales from the SideQuest acquisition, sales were up 6%. SideQuest revenues in the second quarter were $4.5 million, and we expect stronger sales in the second half of this year. Bookings in the second quarter were flat from the prior year period as we maintain a healthy backlog. Our strategy is focused on moving from a component supplier to a supplier of sensors, transducers, and subsystems. We received multiple orders in the quarter for sonar transducers across North America and Europe. transducer refurbishments, and outboard electronic applications.
Sullivan: We'll continue to enhance our growth profile.
Speaker Change: We received multiple orders in the quarter for solar transducers across North America and Europe.
Sullivan: Aerospace and defense sales for the second quarter were up 34% from the second quarter of 2024
Speaker Change: Transducer, Refurbishments and outboard electronic applications.
Sullivan: excluding sales from the side quest. Acquisition sales were up 6%.
Speaker Change: The integration of the <unk> business is progressing and the business continued to drive a strong pipeline of opportunities.
Speaker Change: In the industrial market, we continue to see a gradual recovery with Oems as well as with distribution customers.
Sullivan: Side quest revenues in the second quarter were 4.5 million and we expect stronger sales in the second half of this year.
Sullivan: bookings in the second quarter were flat from the prior year period, And as we maintain a healthy backlog,
Speaker Change: Sales in the second quarter were up 5% sequentially and up 6% compared to the prior year period.
Sullivan: Our strategy is focused on moving from a component supplier to A supplier of sensors transducers and subsystems.
Speaker Change: Underscoring our expectation of a continued recovery.
Speaker Change: Bookings in the quarter were up 22% from the same period last year.
Sullivan: We received multiple orders in the quarter for sonar transducers across North America and Europe.
Speaker Change: We were successful with multiple wins in the quarter for EMC switches industrial printing and temperature sensing applications.
Sullivan: Transducer refurbishments and outboard electronic applications.
Kieran O'sullivan: The integration of the SideQuest business is progressing, and the business continues to drive a strong pipeline of opportunity.
Sullivan: The integration of the side quest business was progressing and the business continued to drive a strong pipeline of opportunities.
Kieran O'sullivan: In the industrial market, we continue to see a gradual recovery with OEMs as well as with distribution customers. Sales in the second quarter were up 5% sequentially and up 6% compared to the prior year period, underscoring our expectation of a continued recovery. Bookings in the quarter were up 22% from the same period last year. We were successful with multiple wins in the quarter for EMC, switches, industrial printing, and temperature sensing applications, where we won a new business award for EV charging stations in Europe. We added a new customer in the quarter for a millimeter wave small cell frequency application.
Speaker Change: We won a new business award for EV charging stations in Europe, we added a new customer in the quarter for a millimeter wave small cell frequency applications.
Sullivan: In the industrial Market. We continue to see a gradual recovery with oems as well as with distribution customers.
Speaker Change: Demand across the industrial market is expected to continue improving in the second half of 2025.
Sullivan: Sales in the second quarter were up 5% sequentially and up 6% compared to the prior year. Period underscoring, our expectation of a continued recovery,
Speaker Change: The mega trends of automation connectivity and efficiency enhance our longer term growth prospects.
Sullivan: Bookings in the quarter, were up 22% from the same period last year.
Speaker Change: Transportation sales were $61 million in the second quarter down approximately 6% from the same period last year due to the impacts of China market dynamics and softness for commercial vehicle products.
Sullivan: We were successful with multiple wins in the quarter.
Speaker Change: In the second quarter, we had awards across various product groups, including accelerator module wins with customers in North America, Europe and Asia.
Sullivan: For EMC, switches, industrial Printing, and temperature sensing applications where we won a new business award for EV charging stations in Europe. We added a new customer in the quarter.
Kieran O'sullivan: Demand across the industrial market is expected to continue improving in the second half of 2025. that make it friends of automation, connectivity and efficiency, enhance our longer term growth process.
Sullivan: For a millimeter wave, small cell frequency application.
Speaker Change: Additionally, we received a chassis right height sensing award from a North American OEM.
Sullivan: The man across the industrial Market is expected to continue, improving in the second half of 2025.
Speaker Change: More recently on the innovation front, we advanced our Cobra technology, which enables precise position sensing with high resolution for motor position sensing.
Sullivan: The mega trends of automation connectivity and efficiency enhance our longer term growth prospects.
Kieran O'sullivan: Transportation sales were 61 million in the second quarter, down approximately 6% from the same period last year due to the impacts of China market dynamics and softness for commercial vehicle products. In the second quarter, we had awards across various product groups, including accelerator module wins with customers in North America, Europe, and Asia. Additionally, we received a Chassis Ride Height Sensing Award from a North American OEM. More recently, on the innovation front, we advanced our COBRIS technology, which enables precise position sensing with high resolution for motor position sensing. The near-term growth rates for ICE versus EVs and hybrids are less of a concern for us, given our light vehicle products are mostly agnostic to the drive-frame technology.
Speaker Change: The near term growth rates for ice versus Evs and hybrids are less of a concern for us given our light vehicle products are mostly agnostic to the drivetrain technology.
Sullivan: Softness for Commercial Vehicle Products.
Speaker Change: Total booked business was approximately $1 billion at the end of the quarter.
Sullivan: In the second quarter, we had Awards across various product groups, including accelerator module wins with customers in North America, Europe and Asia.
Speaker Change: Interest in our E brake product offering weight and cost advantages continues across Oems at a slower pace as certain Oems recalibrate EV investments.
Sullivan: Additionally, we received a chassis ride height sensing award from a North American OEM.
Speaker Change: Our team is proceeding with samples and design customization for Oems and tier ones.
Sullivan: more recently on the Innovation front, we Advanced our Cobra technology which enables precise position, sensing with high resolution for motor position sensing
Speaker Change: We remain confident in the longer term growth prospects for this product line, given the cost and weight benefits for our customers as well as the sentiment in the market from Oems and tier one chassis system suppliers.
Kieran O'sullivan: Total book business was approximately $1 billion at the end of the quarter. Interest in our e-brake product, offering weight and cost advantages, continues across OEMs at a slower pace as certain OEMs recalibrate EV investments. Our team is proceeding with samples and design customizations for OEMs in Tier 1. We remain confident in the longer-term growth prospects for this product line given the cost and weight benefits for our customers as well as the sentiment in the market from OEMs and Tier 1 chassis system suppliers. We expect our e-brake, other footwell products, existing and new sensor applications will increase our ability to grow contact.
Sullivan: The new term growth rates for ice versus EVs and hybrids are less of a concern for us. Given our light Vehicle Products are mostly agnostic to the drivetrain technology.
Speaker Change: We expect our E brake utter footwell products existing in new sensor applications will increase our ability to grow content.
Sullivan: Total book business was approximately 1 billion at the end of the quarter.
Speaker Change: For our diversified end markets in line with our strategy, we aim to expand the customer base and range of applications.
Sullivan: Interest in our e bra product offering weight and cost advantages continues to cross oems at a slower Pace as certain oems re-calibrate EV Investments.
Speaker Change: Subject to evolving trade tariffs and associated economic uncertainty.
Sullivan: Our team is proceeding with samples and design customizations for oems in tier 1s.
Speaker Change: Demand in the medical end market is expected to be mixed with strength in therapeutics and some softness in diagnostic ultrasound.
Speaker Change: In aerospace and defense revenue is expected to grow given our backlog of orders and momentum from the site Quest acquisition industrial.
Sullivan: We remain confident in the longer term growth prospects, for this product line, given the cost and weight benefits for our customers, as well as the sentiment in the market from oems and Tier 1 chassis systems suppliers.
Speaker Change: Industrial and distribution sales are expected to improve.
Speaker Change: Longer term, we expect our material formulations supported by three leading technologies and their derivatives to continue to drive our growth in key high quality end markets in line with our diversification strategy.
Kieran O'sullivan: For our diversified end markets, in line with our strategy, we aim to expand the customer base and range of applications. Subject to evolving trade tariffs and associated economic uncertainty, demand in the medical end market is expected to be mixed with strengthened therapeutics and some softness in diagnostic ultrasound. In aerospace and defense, revenue is expected to grow given our backlog of orders and momentum from the SideQuest acquisition. Industrial and distribution sales are expected to improve. Longer term, we expect our material formulations, supported by three leading technologies and their derivatives, to continue to drive our growth in key, high-quality end markets in line with our diversification strategy.
Sullivan: We expect our ebrake other footwell products, existing and new sensor. Applications will increase our ability to grow content.
Sullivan: For our Diversified end markets in line with our strategy, we aim to expand the customer base and range of applications.
Sullivan: Subject to evolving trade, tariffs, and Associated economic uncertainty.
Speaker Change: Across transportation markets production volumes are expected to decrease in 2025.
Sullivan: Demand in the medical and Market is expected to be mixed with strength and Therapeutics and some softness in diagnostic ultrasound.
Speaker Change: Given the tariff impact and the supply of rare Earth for Oems and tier one suppliers.
Speaker Change: The North American light vehicle market is expected to be in the 15 million unit range.
Sullivan: In Aerospace. And defense revenue is expected to grow given our backlog of orders and momentum from the side quest acquisition.
Sullivan: Industrial and distribution sales are expected to improve.
Speaker Change: European production is forecasted in the 16 million unit range and showing some increased softness due to pressure from Chinese Oems.
Speaker Change: China volumes are expected to be in the 30 million unit range.
Speaker Change: Electric vehicle penetration rates have softened in some regions, while hybrid adoption continues to improve.
Sullivan: Longer term. We expect our materials formulations supported by 3 leading Technologies and their derivatives to continue to drive our growth in key high-quality and markets in line with our diversification strategy.
Kieran O'sullivan: Across transportation markets, production volumes are expected to decrease in 2025, given the tariff impact and the supply of rare earth for OEMs and Tier 1 suppliers. The North American light vehicle market is expected to be in the 15 million unit range. European production is forecasted in the 60-minute unit range and showing some increased softness due to pressure from Chinese OEMs. China volumes are expected to be in the 30 million unit range. Electric vehicle penetration rates have softened in some regions, while hybrid adoption continues to improve. More recently, our next generation commercial vehicle actuator commenced low-volume production during the quarter.
Speaker Change: More recently, our next generation commercial vehicle actuator commenced low volume production during the quarter.
Sullivan: Across Transportation markets production volumes are expected to decrease in 2025.
Sullivan: Given the Tariff impact and the supply of rare earth for oems and Tier 1 suppliers.
Speaker Change: Overall, we are monitoring the potential for headwinds in transportation revenue due to trade tariffs and the China market dynamics.
Sullivan: The North American light vehicle Market is expected to be in the 1500 unit range.
Speaker Change: We anticipate softness in commercial vehicle related revenue for the remainder of the year.
Sullivan: European production is forecasted in the 60 million unit range and showing some increased softness due to pressure from Chinese oems.
Speaker Change: As I mentioned in previous calls revenue from the <unk> acquisition will introduce some seasonality or the timing of revenue may be influenced by the approval of funding by the U S government.
Sullivan: China volumes are expected to be in the 30 million unit range.
Sullivan: electric vehicle, penetration rates have softened in some regions, while hybrid adoption continues to improve
Speaker Change: With the recent budget approval, we expect revenues for Cypress will improve in the second half of 2025.
Kieran O'sullivan: Overall, we are monitoring the potential for headwinds in transportation revenue due to trade tariffs and the China market dynamics. We anticipate softness in commercial vehicle-related revenue for the remainder of the year.
Sullivan: More recently, our next generation commercial vehicle, actuator commenced low volume production, during the quarter.
Speaker Change: The impact of tariffs and the geopolitical environment are creating uncertainty.
Speaker Change: We continue to closely monitor and evaluate the situation, while focusing on agility in adapting to constant price adjustments in close collaboration with our customers and suppliers.
Overall, we are monitoring the potential for headwinds in transportation Revenue, due to trade tariffs and the China market dynamics.
Sullivan: We anticipate softness in commercial vehicle, related revenue for the remainder of the year.
Kieran O'sullivan: As I mentioned in previous calls, revenue from the cyclist acquisition will introduce some seasonality where the timing of revenue may be influenced by the approval of funding by the U.S. government. With the recent budget approval, we expect revenues for SICOs to improve in the second half of 2020. The impact of tariffs and the geopolitical environment are creating uncertainty. We continue to closely monitor and evaluate the situation while focusing on agility and adapting to cost and price adjustments in close collaboration with our customers and suppliers. Assuming the continuation of current market conditions.
Speaker Change: Assuming the continuation of current market conditions, we are maintaining our guidance of sales in the range of $520 million to $550 million and adjusted diluted EPS to be in the range of $2 20 to $2 35.
Sullivan: As I mentioned in the previous calls revenue from the cyclist, acquisition will introduce some seasonality where the timing of Revenue may be influenced by the approval of funding by the US government.
Sullivan: With the recent budget approval, we expect revenues for psychos will improve in the second half of 2025.
Speaker Change: Now I'll turn it over to Ashish, who will walk us through the financial results in more detail Ashish. Thank you Kieran sale.
Sullivan: The impact of tariffs and the geopolitical environment are creating uncertainty.
Speaker Change: Sales in the second quarter were $135 million.
Speaker Change: 8% sequentially and up 4% from the last year.
Speaker Change: Sales to diversify the end markets increased 13% year over year cycle.
Sullivan: We continue to closely Monitor and evaluate the situation while focusing on agility and adapting to cost and price adjustments in close collaboration with our customers and suppliers.
Kieran O'sullivan: We are maintaining our guidance of sales in the range of $520 to $550 million, and adjusted diluted EPS to be in the range of $2.20 to $2.35.
Sullivan: Assuming the continuation of current market conditions.
Speaker Change: <unk> added $4 $5 million in revenue during the quarter as Karen has highlighted we are seeing seasonality in sales from SEAQUEST due to government funding patterns and expect a stronger second half.
Ashish Agrawal: Now I'll turn it over to Ashish who will walk us through the financial results in more details. Ashish. Thank you, Kiran. Sales in the second quarter were $135 million, up 8% sequentially, and up 4% from the last sales to diversified end markets increased 13% year-over-year. Syquest added $4.5 million in revenue during the quarter. As Kiran has highlighted, we are seeing seasonality in sales from Syquest due to government funding patterns and expect a stronger second half. sales to transportation customers were down 6% from the second quarter of last year due to softness in sales related to commercial vehicle products and reduced volumes due to China market dynamics.
Sullivan: We are maintaining our guidance of sales in the range of 520 to 550 million and adjusted diluted EPS to be in the range of 2.20 to 2.35.
Speaker Change: Sales to transportation customers were down 6% from the second quarter of last year due to softness in sales related to commercial vehicle products.
Now, I turn it over to Ashish who will walk us through the financial results in more details Ashish.
Thank you, Karen.
Speaker Change: And reduced volumes due to China market dynamics.
Speaker Change: Our adjusted gross margin was 38, 7% in the second quarter up 296 basis points compared to the second quarter of 2024, and up 174 basis points sequentially compared to the first quarter of 2025 as.
Sales in the second quarter were 135 million up, 8% sequentially, and up. 4% from the last year,
Sullivan: Sales to Diversified and markets, increased 13% year-over-year.
Speaker Change: As we continue to work on diversification as a strategic priority, we are seeing a favorable mix impact on our profitability.
Sullivan: And a half million dollars in Revenue during the quarter. As Kieran has highlighted, we are seeing seasonality in sales from side quest, due to Government funding patterns and expect a stronger second half,
Speaker Change: In addition, our global teams continue to focus on operational execution to deliver margin improvements.
Ashish Agrawal: Our adjusted growth margin was 38.7% in the second quarter, up 296 basis points compared to the second quarter of 2024, and up 174 basis points sequentially compared to the first quarter of 2025. As we continue to work on diversification as a strategic priority, we are seeing a favorable mixed impact on our profitability. In addition, our global teams continue to focus on operational execution to deliver margin improvement. We are working closely with customers and suppliers on tariffs and had a minimal impact on profitability in the second quarter. exchange rate changes had a favorable impact of $1 million on growth margins.
Speaker Change: We are working closely with customers and suppliers on tariffs and had a minimal impact on profitability in the second quarter.
Sullivan: sales to Transportation customers were down 6% from the second quarter of last year, due to softness, in sales related to Commercial Vehicle Products and reduced volumes due to China market dynamics,
Speaker Change: Exchange rate changes had a favorable impact of $1 million on gross margin.
Speaker Change: Achieved adjusted EBITDA of 23% in the quarter, an improvement of 250 basis points sequentially, and 130 basis points compared to the second quarter of 2024.
Sullivan: The gross margin was 38.7% in the second quarter up 296 basis points. Compared to the second quarter of 2024 and up 174 basis, point sequentially compared to the first quarter of 2025
As we continue to work on diversification as a strategic priority, we are seeing a favorable mix impact on our profitability.
Speaker Change: Earnings were <unk> 62 per diluted share for the second quarter.
Speaker Change: Adjusted earnings were <unk> 57 per diluted share compared to 44 in the first quarter of 2025 and 54 in the second quarter of 2024 move.
Speaker Change: Moving to cash generation and the balance sheet, we generated $28 million in operating cash flow in the second quarter compared to $20 million in the second quarter of 2024 year to date, we have generated $44 million in operating cash flow.
Ashish Agrawal: We achieved adjusted EBITDA of 23% in the quarter, an improvement of 250 basis points sequentially, and 130 basis points compared to the second quarter of 2020. Earnings were $0.62 per diluted share for the second quarter. Adjusted earnings were $0.57 per diluted share compared to $0.44 in the first quarter of 2025 and $0.54 in the second quarter of 2020. Moving to cash generation and the balance sheet, we generated $28 million in operating cash flow in the second quarter, compared to $20 million in the second quarter of 2020. Year-to-date, we have generated $44 million in operating cash.
Speaker Change: Our balance sheet remains strong with a cash balance of $99 million at the end of the quarter, our long term debt balance was $88 million.
Speaker Change: Leaving us good liquidity to support strategic acquisitions.
Speaker Change: During the quarter, we repurchased 412000 shares of Cts stock for approximately $17 million.
Speaker Change: In total.
Speaker Change: $26 million to shareholders through dividends and share buybacks so far in 2025.
Ashish Agrawal: Our balance sheet remained strong, with a cash balance of $99 million at the end of the quarter. Our long-term debt balance was $88 million, leaving us good liquidity to support strategic activities. During the quarter, we repurchased 412,000 shares of CTS stock for approximately $17 million. In total, we returned $26 million to shareholders through dividends and share buybacks so far in 2025. We have $38 million remaining under our current share repurchase program.
Speaker Change: We have $38 million remaining under our current share repurchase program.
Speaker Change: Our focus remains on strong cash generation and appropriate capital allocation and we continue to support organic growth strategic acquisitions and returning cash to shareholders. This concludes our prepared comments, we would like to open the line for questions at this time.
Speaker Change: Okay.
Speaker Change: As a reminder, if you'd like to ask a question on todays call. Please press star followed by one on your telephone keypad announcements to queue.
Speaker Change: Parents asked a question please ensure you're on mute locally.
Speaker Change: And our first question today comes from John <unk> from Sidoti Sean. Please go ahead. Your line is open.
Ashish Agrawal: Our focus remains on strong cash generation and appropriate capital allocation and we continue to support organic growth, strategic acquisitions, and returning cash to shareholders.
Speaker Change: Good morning, everyone and thanks for taking the questions.
Speaker Change: Sure I'd like to strongly.
Speaker Change: With the medical market soon.
Adam: This concludes our prepared comments. We would like to open the line for questions. As a reminder, if you'd like to ask a question on today's call, please press star followed by 1 on your telephone keypad now to enter the queue. When preparing to ask a question, please ensure you are unmuted locally.
Speaker Change: It seems like there is real.
Speaker Change: Due to some product line is going through some directions Therapeutics, which you said was up 60% and I believe you also I think.
Speaker Change: Issued a little bit of a warning about diagnostics.
Speaker Change: Can you talk a little bit about what's going on in the marketplace for Africa.
John: Yes, John.
John Franzreb: And our first question today comes from John Franzreb from Sidoti. John, please go ahead, your line is open. Good morning, everyone, and thanks for taking the question.
John: On the therapeutic side on the last earnings call, we talked about a larger order in.
John: That's obviously playing out here in the second quarter and for the balance of the year as well we've seen some softness in diagnostics.
Kieran O'sullivan: Kieran, I'd like to start with the with the medical market. Seems like there's maybe two different product lines going two different directions. Therapeutics, what you said, was up 60 percent, I believe. I think you issued a little bit of a warning about diagnostics. Can you talk a little bit about what's going on in the marketplace there for you? Yeah John, on the therapeutic side, on the last earnings call, we talked about a larger order and that's obviously playing out here in the second quarter and for the balance of the year as well. We've seen some softness in diagnostics on the ultrasound side of it, mostly coming from capital spend in Asia and maybe tariff related as well.
John: <unk> side of it mostly coming from.
John: Capital spend in Asia, and maybe tariff related as well.
John: So we.
John: We will see some softness there, but overall on medical for the year, we will see growth.
John: Good that's good to hear.
Speaker Change: And you just touched on the tariff situation and what was the impact if any of tariffs on you in the quarter.
Speaker Change: Well, it's pretty nominal John as we mentioned in the.
Speaker Change: Prepared remarks, we are working closely with customers as well as suppliers.
Speaker Change: Overall, the impact very very minimal in the quarter.
Speaker Change: Yeah.
Kieran O'sullivan: So we will see some softness there, but overall on medical for the year, we will see growth. What was the impact, if any, of tariffs on you in the quarter? It was pretty nominal, John, as we mentioned in the prepared remarks. We are working closely with customers as well as suppliers. Overall, the impact is very, very minimal in the quarter. You expect it to stay that way? Generally under the current conditions I would say yes, but there's a lot of changes happening as you know. So we are continuing to monitor the situation as we have talked about in the past.
Speaker Change: You expect it to stay that way.
Speaker Change: Generally under the current conditions I would say, yes, but there's a lot of changes happening as you know.
Speaker Change: So we are continuing to monitor the situation as we have talked about in the past.
Speaker Change: Our bigger impact happens with any potential changes in the U S MCA.
Speaker Change: Okay got it.
Speaker Change: And when you think about the transportation market share and you're also signaling continued weakness.
Speaker Change: Any thoughts about when that market might bottom out for you.
Speaker Change: And John obviously, yes weakness this year, it's mixed across the regions.
John: You've talked about softness in China.
John: Factor for us in the commercial vehicle, we think it's bottomed out in China, and but we're being a little bit is just cautious on that should we see the trend over a few quarters.
Kieran O'sullivan: Our bigger impact happens with any potential changes in the U.S. and world.
Kieran O'sullivan: Okay, got it.
Kieran O'sullivan: And when you think about the transportation market, Karen, you're also signaling continued weakness. Any thoughts about when that market might buy them out for you? John, obviously, yes, weakness this year. It's mixed across the regions. We've talked about softness in China being a factor for us in the commercial vehicle. We think it's bottomed out in China, but we're being a little bit just cautious on that. So we see the trend over a few quarters. On the light vehicle side, we did improve sequentially this quarter. And I would got a pipeline of both businesses really strong across multiple products that were working.
John: The light vehicle side, we did improve sequentially this quarter and I would tell you we've got.
John: Our pipeline of booked business is really strong across multiple products that we're working so.
John: So it's a little bit mixed.
John: John I would just say the tariff situation is the one we're watching there there was some pre buy in Q2 and in April and May and it just feels it feels a little tenuous for the next few quarters.
John: Makes sense makes sense and just on the cost side of the equation.
Speaker Change: Integrations sidequests going is that fully complete.
Speaker Change: Are there any other cost measures youre currently active on outside of that.
Speaker Change: And John the safest acquisition is moving along well and a lot of the integration work has been done and there is still a little bit more to do and we are still running on different ERP systems.
Kieran O'sullivan: So it's a little bit mixed. John, I would just say the tariff situation is the one we're watching there. There was some pre-buy in Q2 in April and May. It just feels a little tenuous for the next few quarters. Makes sense, makes sense.
Speaker Change: But the pipeline of opportunities is really strong at what I would tell you is the timing with the government on the getting the budget approval has been something we've been watching carefully and glad to see that approved because we think that's going to be a momentum builder going forward.
Kieran O'sullivan: And just on the cost side of the equation, how's the integration of SideQuest going? Is that fully complete? And are there any other cost measures you're currently active on outside of that? John, the SideQuest acquisition is moving along well. A lot of the integration work's been done, and there's still a little bit more to do. We're still running on different ERP systems, but the pipeline of opportunities is really strong. What I would tell you is the timing with the government and getting the budget approval has been something we've been watching carefully, and glad to see that approved because we think that's going to be a momentum builder going forward.
Speaker Change: Okay, and then the other internal cost saving actions that you're currently executing.
John: So on SEAQUEST, John we're really not looking to drive cost saving type of actions.
John: The business is working on a strong pipeline and we're shoring up capability from a production standpoint to make sure that we can.
John: Drive that growth and.
John: Do the revenue growth.
John: Part of it are strongly in that product.
ashish: Alright, understood Ashish I was actually referencing legacy Cts.
Kieran O'sullivan: Okay, and any of the internal cost-saving actions that you're currently executing? So on CyQuest, John, we are really not looking to drive cost-saving type of actions. The business is working on a strong pipeline, and we are shoring up capabilities from a production standpoint to make sure that we can drive that growth and do the revenue growth. part of it more strongly in that part of it.
ashish: Got it got it.
ashish: So in terms of we're continuing to look at operational efficiency on an ongoing basis like we always do Jon that was contributing.
ashish: Contributing to our gross margin expansion in the quarter that we talked about.
ashish: But in terms of big things that we have in the works there's not much that we have talked about publicly.
ashish: As we continue working on things if there are bigger changes we are making.
Ashish Agrawal: I understood, Ashish, I was actually referencing Legacy CTS. Got it, got it. So in terms of, you know, we are continuing to look at operational efficiency on an ongoing basis, like we always do, John. That was contributing to our gross margin expansion in the quarter that we talked about. But in terms of big things that we have in the works, there's not much that we've talked about publicly. You know, as we continue working on things, if there are bigger changes we are making, I'm sure we'll highlight those.
ashish: I'm sure we'll highlight those.
ashish: Great Okay, I'll get back in queue. Thanks for taking my questions.
Speaker Change: Thanks, John.
Speaker Change: The next question comes from Hendi <unk> from Gabelli funds.
Speaker Change: Please go ahead.
Speaker Change: Good morning, Kieran and Ashish.
Speaker Change: Good morning Hendi.
Speaker Change: Given that I would like to us too.
Speaker Change: US like similar questions, but hopefully deeper.
Speaker Change: The mixed dynamic in medical marketplace.
John Franzreb: For more information, visit www.FEMA.gov Great. Okay, I'll get back to you. Thanks for taking my questions. Thanks, John.
Speaker Change: In diagnostic and therapeutic.
Patrick: Hello, Patrick.
Patrick: Any guidepost on let's say how much the lots are girl.
Hendi Susanto: Next question comes from Hendi Susanto from Gabelli Funds, Hendi your line is open, please go ahead. Good morning, Kiran and Ashish. Good morning, Hendi. Hi, Hendi. Thank you, everyone. Thank you.
Patrick: Sustain or generate a nice revenue upside.
Patrick: In the next coming quarters and on the other hand, the softness softness in diagnostic hum, but how much for or should we expect.
Kieran O'sullivan: The Mixed Dynamics in Medical Marketplace Diagnostic and Therapeutic. Any guideposts on, let's say, how much the large order is right from the upside. next coming quarters, and on the other hand, the softness in diagnostic. How much further should we expect? Hendi, the softness in diagnostics, maybe for a quarter or two, we still feel very confident in the growth of that business in the mid to long term. On the therapeutic side, confident in the growth throughout the balance of this year and then we would expect new purchase orders as we go ahead. So overall, as I mentioned earlier, we'll see growth in medical this year and we're expecting growth as we go into the years ahead too.
Patrick: And hendi the softness in diagnostics may be for a quarter or two.
Patrick: We still feel very confident in the growth of that business.
Patrick: In the mid to long term.
Patrick: The therapeutic side.
Patrick: Confident in the growth throughout the balance of this year and then we would expect new purchase orders as we go ahead.
Patrick: So.
Patrick: Overall as I mentioned earlier, we'll see growth in medical this year and we're expecting growth as we go into the years ahead too.
Patrick: Okay got it and then as.
Patrick:
Patrick: How much revenues high quest generated in the same quarter a year ago, So that we know.
Patrick: On a year on a year over year comparison, what the numbers look like.
Patrick: Yes, Hendi, we closed on the acquisition towards the end of July last year.
Patrick: So the second quarter of 2025 was purely additive.
Speaker Change: Yes, but there can be no prior to acquisitions like how much the quarterly revenue in the second quarter of 2024.
Hendi Susanto: Got it.
Ashish Agrawal: And then, Ashish, may I ask how much revenues I question? a year ago. Yeah, Hendi, we closed on the acquisition towards the end of July last year. So the second quarter of 2025 was purely additive.
Speaker Change: We haven't talked about that in terms of pre acquisition revenues. So.
Speaker Change: That's something that.
Speaker Change: We haven't talked about publicly.
Speaker Change: Yeah.
Speaker Change: And then.
Speaker Change: Similar question in the past.
Speaker Change: In transportation.
Speaker Change: Is China.
Ashish Agrawal: Yes, but can we know prior? We haven't talked about that, Hendi, in terms of pre-acquisition revenues. You know, that's something that we haven't talked about publicly. And then, I think I... questions in the past. China transportation as a percent of our overall revenue will be similar to what we have for the overall transportation as a percent of total CTS. That'll get you close enough in terms of how much revenue we have in China.
Speaker Change: China transportation as a percent of our overall revenue will be similar to.
Speaker Change: What we have for.
Speaker Change: The overall transportation as a percent of total Cts that'll give you get you close enough in terms of how much revenue we have in China.
Speaker Change: When you look at overall China.
Speaker Change: We are last year's data that was published as part of the 10-K, we had revenues of about.
Speaker Change: 80 plus million.
Speaker Change: Total.
Speaker Change: Okay.
Speaker Change:
Speaker Change: And then can you just talk about a strong pipeline of opportunities.
Speaker Change: Okay.
Speaker Change: I think you you said that in transportation.
Speaker Change: Delek us.
Kieran O'sullivan: When you look at overall China, our last year's data that was published as part of the 10K, we had revenues of about 80 plus million dollars in 2020. And then, Kieran, you talk about a strong pipeline. sorry I think you said that in transportation. There are some solid... positive pipelines across products.
Speaker Change: Some solid.
Speaker Change: Pipelines across products that you are working on would you be able to mention which products.
Speaker Change:
Speaker Change: Can yes.
Speaker Change: Yes, Hendi, we would be working with them.
Speaker Change: Customers on accelerator modules.
Speaker Change: In passive safety sensors.
Speaker Change: <unk> combination sensors motor position sensing.
Speaker Change: To give you a few examples in transportation and we also have a strong pipeline in the diversified end markets as well.
Speaker Change: And then within the transportation those pipelines.
Kieran O'sullivan: be able to mention which product. and yeah. Yeah Hendi, we would be working with customers on accelerator modules, passive safety sensors, new combination sensors, motor position sensing, just to give you a few examples in transportation and we also have a strong pipeline in the diversified end markets as well. And then within the transportation, those pipes. are they more skewed toward Hendi, I would certainly say we've been winning business in all regions, and I would say the larger pipeline is in the North America region for sure, but some of these OEMs are operating globally too.
Speaker Change: Are they more skewed towards North America and Europe.
Speaker Change: And Hendi I would certainly we've been winning business in all regions.
Speaker Change: I would say the larger pipeline is in the North America region for sure, but some of these Oems are operating globally too.
Sullivan: New combination sensors motor position sensing and just to give you a few examples in transportation and we also have a strong pipeline in the diversified end markets as well.
Speaker Change: Okay got it.
Speaker Change: Okay. Thank you, let me get back to the to.
Henry: Thank you Henry classes.
Sullivan: And then within the transportation Bill.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yeah.
Sullivan: Pipelines out.
Speaker Change: As a reminder, that star one on your telephone keypad.
Sullivan: Are they more skewed towards North America and Europe.
Speaker Change: So the line from John from Sidoti. Please go ahead.
Sullivan: And Hendi I would certainly we've been winning business in all regions.
John Sidoti: Yes, just a follow up question can you talk a little bit about the acquisition market, what you're seeing out there or maybe the size of the opportunities that you're most focused on.
Sullivan: I would say the larger pipeline is in the North America region for sure, but some of these Oems are operating globally too.
John Sidoti: John We're most focused on advancing our diversified end markets that would be aerospace and defense industrial and medical.
Speaker Change: Okay got it yeah okay.
Sullivan: Okay.
Sullivan: Let me get back to the to.
Sullivan: Thank you Hendi.
Adam: Thank you Hendi. Thank you. As a reminder, that's star 1 on your telephone keypad.
John Sidoti: There as well.
Sullivan: Sure.
John Sidoti: Always working on a pipeline of opportunities there is nothing to report at this point in time, but we certainly see some uptick in activity out there.
Sullivan: Okay.
Sullivan: Yeah.
Sullivan: As a reminder, that star one on your telephone keypad.
John Franzreb: We return to the line from John from Sodoti. John, please go ahead. Yep, just a follow-up question. Can you talk a little bit about the acquisition market, what you're seeing out there, maybe the size of the opportunities that you're most focused on? John, we're most focused on advancing our diversified end markets, that be aerospace and defense, industrial and medical. We're always working on a pipeline of opportunities. There's nothing to report at this point in time, but we certainly see some uptick in activity out there. That's great. Something maybe within the next 12 months or am I thinking too far ahead?
Speaker Change: So the line from John from Sidoti. Please go ahead.
John Sidoti: Yes, just a follow up question can you talk a little bit about the acquisition market, what you're seeing out there maybe the size of the opportunities that you're most focused on.
John Sidoti: That's great something maybe within the next 12 months or maybe thinking too far ahead.
John Sidoti: Well, John if you look at how we talk about our growth, 5% organic 5% through acquisitions, we would definitely like to do something in the next 12 months.
John Sidoti: John We're most focused on advancing our diversified end markets that would be aerospace and defense industrial and medical.
John Sidoti: Okay, alright, good to hear thanks for taking my follow up.
John Sidoti: Thank you John Thank you.
John Sidoti: There's we're always working on a pipeline of opportunities. There is nothing to report at this point in time, but we certainly see some uptick in activity out there.
Speaker Change: I think further into Cuba presence with a final reminder, that star followed by one on your telephone keypad.
John Sidoti: That's great something maybe within the next 12 months or am I thinking too far ahead.
Speaker Change: Okay.
Kevin: We have no further questions. So I'll hand, the call back to Kevin for some closing comments.
Speaker Change: Well, Jonathan if you look at how we talk about our growth, 5% organic 5% through acquisitions, we would definitely like to do something in the next 12 months.
Kieran O'sullivan: Well John, if you look at how we talk about our growth, 5% organic, 5% through acquisitions, we would definitely like to do something in the next 12 months. Okay, all right, good to hear. Thanks for taking my follow-up. Thank you, John. Thank you.
Kevin: Thanks, Adam and thank you all for your time today, despite the challenges of tariffs geopolitical and economic pressures diversification remains a strategic priority, we launched our evolution 2030 strategic initiatives to enhance our emphasis on sales growth operational rigor and employee.
Speaker Change: Okay, alright, good to hear thanks for taking my follow up.
Speaker Change: Thank you John Thank you.
Speaker Change: I think further into Cuba presence for the final reminder, that star followed by one on your telephone keypad.
Adam: Nothing further in the queue at present, so as a final reminder, that's star followed by 1 on your telephone.
Kevin: <unk>, while also giving back to the communities, where we operate we look forward to updating you on our third quarter 2025 performance in October. This concludes our call. Thank you.
Speaker Change: Yeah.
Kieran O'sullivan: We have no further questions, so I'll hand the call back to Kieran for some closing Thanks, Adam, and thank you all for your time today. Despite the challenges of tariffs, geopolitical and economic pressures, diversification remains a strategic priority. We launched our Evolution 2030 strategic initiative to enhance our emphasis on sales growth, operational rigor and employee engagement, while also giving back to the communities where we operate.
Kevin: We have no further questions. So I'll hand, the call back to Kevin for some closing comments.
Kevin: Thanks, Adam and thank you all for your time to date, despite the challenges of tariffs geopolitical and economic pressures diversification remains a strategic priority, we launched our evolution 2030 strategic initiatives to enhance our emphasis on sales growth operational rigor and.
Kevin: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Kevin: Okay.
Kevin: Employee engagement, while also giving back to the communities, where we operate we look forward to updating you on our third quarter 2025 performance in October.
Kieran O'sullivan: We look forward to updating you on our third quarter 2025 performance in October.
Operator: This concludes our call. Thank you.
Kevin: This concludes our call. Thank you.
Kevin: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Operator: This concludes today's call. Thank you very much for your attendance.
Operator: You may now disconnect your line.
Kevin: [music].
Kevin: Yeah.
Kevin: [music].