CTS Corp (CTS, Financial), a leading global designer and manufacturer of custom engineered solutions, announced its third quarter 2023 results on October 26, 2023. Despite facing a challenging operating environment with headwinds in industrial end markets and distribution, the company managed to secure several wins in both electrification and non-transportation markets during the quarter.
Financial Highlights
Sales for the third quarter were $135 million, marking an 11% decrease year-over-year. Sales to non-transportation end markets decreased 20%, and sales to the transportation end market decreased 3% over the same period. Despite the decrease in sales, net income rose to $14 million, or 10.4% of sales, compared to $12 million, or 7.8% of sales, in the third quarter of 2022. Diluted earnings per share were $0.44, up from $0.37 in Q3 2022. Adjusted diluted EPS was $0.54, down from $0.62 in the third quarter of 2022.
Operational Performance
CTS Corp (CTS, Financial) continues to focus on driving operational improvements to strengthen profitability. The company's adjusted EBITDA margin was 22.5% compared to 22.3% in the third quarter of 2022. Operating cash flow was $22 million compared to $60 million in the third quarter of 2022, which included a one-time cash inflow of $34 million relating to the US pension plan.
Updated 2023 Guidance
Due to continued headwinds in industrial and distribution end markets, recent softness in the commercial vehicle market, and the UAW strike, CTS Corp (CTS, Financial) has updated its 2023 guidance. The company now expects sales to range from $545 - $555 million, down from the previous guidance of $565 – $585 million. Adjusted diluted EPS is also expected to decrease from the range of $2.20 – $2.40 to $2.15 – $2.25.
Financial Tables Summary
The company's condensed consolidated statements of earnings show a decrease in net sales from $151,911 thousand in Q3 2022 to $134,552 thousand in Q3 2023. However, net earnings increased from $11,798 thousand in Q3 2022 to $13,971 thousand in Q3 2023. The condensed consolidated balance sheets show total assets of $753,962 thousand as of September 30, 2023, up from $748,487 thousand as of December 31, 2022.
Looking Ahead
Despite near-term challenges, CTS Corp (CTS, Financial) remains committed to its long-term strategy and continues to focus on operational improvements to strengthen profitability and generate sustained value for all stakeholders. The company's updated 2023 guidance reflects its realistic assessment of the current market conditions and its commitment to navigate these challenges effectively.
Explore the complete 8-K earnings release (here) from CTS Corp for further details.
