[10-Q] CTS Corporation Quarterly Earnings Report

Rhea-AI Filing Summary

L3Harris (LHX) posted solid year-on-year growth for its 13-week second quarter ended 27-Jun-2025. Revenue rose 2.4% to $5.43 billion, driven by all four segments, most notably Aerojet Rocketdyne (+10%). Operating income increased 20% to $571 million as the operating margin expanded 160 bp to 10.5%, reflecting lower G&A expense and a $75 million gain on asset monetisation in IMS. Net income climbed 25% to $458 million; diluted EPS improved to $2.44 from $1.92.

Year-to-date (25 weeks) sales were flat at $10.56 billion, while operating income rose 28% to $1.10 billion and EPS reached $4.48 (+32%). Free cash flow (operating cash less capex) was $451 million.

Balance sheet and cash: Net debt stood at $10.6 billion (long-term) plus $0.99 billion commercial paper. The company generated $598 million in operating cash flow, spent $147 million on capex, repurchased $822 million of stock and paid $453 million in dividends. Proceeds of $831 million were realised from the sale of the Commercial Aviation Solutions (CAS) business on 28-Mar-2025, which removed $977 million of assets and $252 million of liabilities.

Operational metrics: Backlog is $35.4 billion, with 45% expected to convert to revenue inside 12 months. The effective tax rate rose to 12.6% (Q2-24: 5.9%). Subsequent U.S. tax legislation (signed 4-Jul-2025) is expected to raise the 2025 ETR by 200-300 bp but improve cash taxes by ~$150 million.

Guidance: No new guidance was provided in the filing.

Positive

• Revenue up 2.4% YoY to $5.43 bn with growth in all four segments.
• Operating margin expanded 160 bp to 10.5%, boosting operating income 20%.
• Diluted EPS increased 27% to $2.44, aided by share repurchases.
• Backlog stands at $35.4 bn, providing strong revenue visibility.
• CAS divestiture generated $831 m in net cash and streamlined the portfolio.

Negative

• Operating cash flow fell 8% to $598 m; working-capital consumption rose.
• Net debt remains high at $11.1 bn with $0.99 bn commercial paper outstanding.
• Environmental liabilities total $648 m, requiring future cash outlays.
• Negative EAC adjustments of $20 m reduced quarterly operating income.
• Upcoming tax law changes will raise ETR by 200-300 bp in FY-25, pressuring net margin.

Insights

Equity Research Analyst

TL;DR: Margin expansion and EPS beat, but cash generation softer; overall modestly positive.

Quarterly revenue growth of 2.4% appears modest, yet the 20% jump in operating profit underscores successful cost control and the benefit of divesting lower-margin CAS. Segment mix was favourable: AR and SAS delivered high-single-digit revenue gains, while IMS absorbed the asset-sale headwind. Operating margin reached 10.5%, comfortably ahead of peers in diversified defense. Diluted EPS of $2.44 rose 27%, aided by share buybacks.

Cash conversion weakened (OCF down 8% YoY) as working-capital needs grew; contract assets increased $627 million YTD. Net leverage remains elevated at ~2.6× EBITDA, though the company refinanced short-term notes and retains $2.0 billion in unused revolver capacity. Backlog of $35.4 billion offers visibility, with almost half turning into sales within a year.

The enacted U.S. tax reform will improve near-term cash but lift the ETR, partially trimming 2025 EPS. Overall, the print supports a stable to slightly bullish view, contingent on cash-flow recovery.

Defense Industry Specialist

TL;DR: Portfolio realignment toward high-growth missile & space markets progressing; watch supply-chain inflation.

Divestiture of CAS and reallocation of the Fuzing & Ordnance unit to Aerojet Rocketdyne sharpen LHX’s focus on missiles, ISR and space — areas of increasing DoD funding. AR revenue grew 10% and backlog conversion appears healthy. The new five-year $2.5 billion revolver and $500 million 364-day line provide ample liquidity for further strategic moves.

However, the filing flags $648 million of environmental liabilities and a $1.2 billion pension annuity transfer, highlighting ongoing non-operational cash demands. Management noted $20 million of negative EAC adjustments this quarter, signalling lingering programme-execution risk, especially on fixed-price contracts.

Net-net, the strategic direction is sound and supported by U.S. and NATO spending trends, but investors should monitor working-capital build and potential cost overruns.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-4639

CTS CORPORATION

(Exact name of registrant as specified in its charter)

IN		35-0225010
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

4925 Indiana Avenue
Lisle IL		60532
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (630) 577-8800

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common stock, without par value		CTS		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 17, 2025: 29,476,637.

CTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

					Page
PART I. FINANCIAL INFORMATION
	Item 1.		Financial Statements		3
			Condensed Consolidated Statements of Earnings (Unaudited) For the Three and Six Months Ended June 30, 2025 and June 30, 2024		3
			Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) For the Three and Six Months Ended June 30, 2025 and June 30, 2024		4
			Condensed Consolidated Balance Sheets As of June 30, 2025 (Unaudited) and December 31, 2024		5
			Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2025 and June 30, 2024		6
			Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) For the Three and Six Months Ended June 30, 2025 and June 30, 2024		7
			Notes to Condensed Consolidated Financial Statements ‑ (Unaudited)		9
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk		35
	Item 4.		Controls and Procedures		36
PART II. OTHER INFORMATION
	Item 1.		Legal Proceedings		36
	Item 1A.		Risk Factors		36
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		37
	Item 5.		Other Information		37
	Item 6.		Exhibits		38
SIGNATURES					39

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

(In thousands, except per share amounts)

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Net sales		$	135,309			$	130,162			$	261,078			$	255,912
Cost of goods sold			82,878				83,790				162,099				164,450
Gross margin			52,431				46,372				98,979				91,462
Selling, general and administrative expenses			23,077				21,332				46,700				43,591
Research and development expenses			6,326				6,086				12,515				12,687
Restructuring charges			297				1,190				749				2,884
Operating earnings			22,731				17,764				39,015				32,300
Other income (expense):
Interest expense			(1,121	)			(833	)			(2,289	)			(1,635	)
Interest income			622				1,441				1,068				2,827
Other income (expense), net			750				(603	)			1,307				(2,066	)
Total other income (expense), net			251				5				86				(874	)
Earnings before income taxes			22,982				17,769				39,101				31,426
Income tax expense			4,455				3,062				7,210				5,600
Net earnings		$	18,527			$	14,707			$	31,891			$	25,826
Earnings per share:
Basic		$	0.62			$	0.48			$	1.07			$	0.84
Diluted		$	0.62			$	0.48			$	1.06			$	0.84
Basic weighted – average common shares outstanding:			29,739				30,511				29,875				30,627
Effect of dilutive securities			251				219				285				224
Diluted weighted – average common shares outstanding:			29,990				30,730				30,160				30,851
Cash dividends declared per share		$	0.04			$	0.04			$	0.08			$	0.08

See notes to unaudited condensed consolidated financial statements.

3

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS ‑ UNAUDITED

(In thousands)

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Net earnings		$	18,527			$	14,707			$	31,891			$	25,826
Other comprehensive earnings (loss):
Changes in fair market value of derivatives, net of tax			2,847				(1,675	)			3,723				(944	)
Changes in unrealized pension cost, net of tax			(123	)			35				(109	)			99
Cumulative translation adjustment, net of tax			8,024				(523	)			12,672				(2,644	)
Other comprehensive earnings (loss)		$	10,748			$	(2,163	)		$	16,286			$	(3,489	)
Comprehensive earnings		$	29,275			$	12,544			$	48,177			$	22,337

See notes to unaudited condensed consolidated financial statements.

4

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

		(Unaudited)
		June 30,				December 31,
		2025				2024
ASSETS
Current Assets
Cash and cash equivalents		$	99,440			$	94,334
Accounts receivable, net			85,578				77,649
Inventories, net			57,103				52,312
Other current assets			19,629				17,879
Total current assets			261,750				242,174
Property, plant and equipment, net			93,530				94,357
Operating lease assets, net			21,709				22,939
Other Assets
Goodwill			207,547				201,304
Other intangible assets, net			161,785				163,882
Deferred income taxes			26,714				27,591
Other			11,694				13,180
Total other assets			407,740				405,957
Total Assets		$	784,729			$	765,427
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	47,265			$	42,629
Operating lease obligations			4,557				4,719
Accrued payroll and benefits			17,444				15,754
Accrued expenses and other liabilities			31,200				35,361
Total current liabilities			100,466				98,463
Long-term debt			88,000				92,300
Long-term operating lease obligations			19,999				21,120
Long-term pension obligations			3,872				3,931
Deferred income taxes			14,233				12,743
Other long-term obligations			8,002				8,662
Total Liabilities			234,572				237,219
Commitments and Contingencies (Note 9)
Shareholders’ Equity
Common stock			324,682				321,979
Additional contributed capital			41,236				44,662
Retained earnings			682,360				652,851
Accumulated other comprehensive income (loss)			12,020				(4,266	)
Total shareholders’ equity before treasury stock			1,060,298				1,015,226
Treasury stock			(510,141	)			(487,018	)
Total shareholders’ equity			550,157				528,208
Total Liabilities and Shareholders’ Equity		$	784,729			$	765,427

See notes to unaudited condensed consolidated financial statements.

5

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ‑ UNAUDITED

(In thousands)

		Six Months Ended
		June 30,				June 30,
		2025				2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$	31,891			$	25,826
Adjustments to reconcile net earnings to net cash provided by operating    activities:
Depreciation and amortization			17,045				14,651
Pension and other post-retirement plan expense			117				171
Stock-based compensation			2,263				2,544
Deferred income taxes			(84	)			(1,236	)
Change in fair value of contingent consideration liability			(1,523	)			(572	)
Loss (gain) on foreign currency hedges, net of cash			65				(278	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable			(5,181	)			(7,884	)
Inventories			(2,960	)			7,665
Operating lease assets			1,230				2,244
Other assets			1,404				25
Accounts payable			3,017				(2,048	)
Accrued payroll and benefits			354				899
Operating lease liabilities			(1,282	)			(2,248	)
Accrued expenses and other liabilities			(2,402	)			(1,736	)
Pension and other post-retirement plans			(84	)			(83	)
Net cash provided by operating activities			43,870				37,940
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(7,745	)			(8,672	)
Net cash used in investing activities			(7,745	)			(8,672	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt			(541,700	)			(335,000	)
Proceeds from borrowings of long-term debt			537,400				332,500
Purchases of treasury stock			(22,995	)			(22,892	)
Dividends paid			(2,401	)			(2,460	)
Payment of contingent consideration			—				(1,076	)
Taxes paid on behalf of equity award participants			(2,655	)			(3,131	)
Net cash used in financing activities			(32,351	)			(32,059	)
Effect of exchange rate changes on cash and cash equivalents			1,332				161
Net increase (decrease) in cash and cash equivalents			5,106				(2,630	)
Cash and cash equivalents at beginning of period			94,334				163,876
Cash and cash equivalents at end of period		$	99,440			$	161,246
Supplemental cash flow information:
Cash paid for interest		$	2,169			$	1,554
Cash paid for income taxes, net		$	7,092			$	8,064
Non-cash financing and investing activities:
Capital expenditures incurred but not paid		$	1,700			$	1,943
Excise taxes on purchase of treasury stock incurred not paid		$	127			$	460

See notes to unaudited condensed consolidated financial statements.

6

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED

(in thousands, except shares and per share amounts)

The following summarizes the changes in total equity for the three and six months ended June 30, 2025:

		Common Stock				Additional Contributed Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total
Balances at December 31, 2024		$	321,979			$	44,662			$	652,851			$	(4,266	)		$	(487,018	)		$	528,208
Net earnings			—				—				13,367				—				—				13,367
Changes in fair market value of derivatives, net of tax			—				—				—				876				—				876
Changes in unrealized pension cost, net of tax			—				—				—				14				—				14
Cumulative translation adjustment, net of tax			—				—				—				4,648				—				4,648
Cash dividends of $0.04 per share			—				—				(1,201	)			—				—				(1,201	)
Acquired 143,541 shares of treasury stock			—				—				—				—				(6,472	)			(6,472	)
Issued shares on vesting of restricted stock units			2,656				(5,290	)			—				—				—				(2,634	)
Stock compensation			—				1,432				—				—				—				1,432
Balances at March 31, 2025		$	324,635			$	40,804			$	665,017			$	1,272			$	(493,490	)		$	538,238
Net earnings			—				—				18,527				—								18,527
Changes in fair market value of derivatives, net of tax			—				—				—				2,847				—				2,847
Changes in unrealized pension cost, net of tax			—				—				—				(123	)			—				(123	)
Cumulative translation adjustment, net of tax			—				—				—				8,024				—				8,024
Cash dividends of $0.04 per share			—				—				(1,184	)			—				—				(1,184	)
Acquired 411,650 shares of treasury stock			—				—				—				—				(16,651	)			(16,651	)
Issued shares on vesting of restricted stock units			47				(68	)			—				—				—				(21	)
Stock compensation			—				500				—				—				—				500
Balances at June 30, 2025		$	324,682			$	41,236			$	682,360			$	12,020			$	(510,141	)		$	550,157

See notes to unaudited condensed consolidated financial statements.

7

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED

(in thousands, except shares and per share amounts)

The following summarizes the changes in total equity for the three and six months ended June 30, 2024:

		Common Stock				Additional Contributed Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total
Balances at December 31, 2023		$	319,269			$	45,097			$	602,232			$	4,264			$	(444,040	)		$	526,822
Net earnings			—				—				11,119				—				—				11,119
Changes in fair market value of derivatives, net of tax			—				—				—				730				—				730
Changes in unrealized pension cost, net of tax			—				—				—				65				—				65
Cumulative translation adjustment, net of tax			—				—				—				(2,121	)			—				(2,121	)
Cash dividends of $0.04 per share			—				—				(1,227	)			—				—				(1,227	)
Acquired 271,939 shares of treasury stock			—				—				—				—				(12,035	)			(12,035	)
Issued shares on vesting of restricted stock units			2,589				(5,705	)			—				—				—				(3,116	)
Stock compensation			—				1,048				—				—				—				1,048
Balances at March 31, 2024		$	321,858			$	40,440			$	612,124			$	2,938			$	(456,075	)		$	521,285
Net earnings			—				—				14,707				—				—				14,707
Changes in fair market value of derivatives, net of tax			—				—				—				(1,675	)			—				(1,675	)
Changes in unrealized pension cost, net of tax			—				—				—				35				—				35
Cumulative translation adjustment, net of tax			—				—				—				(523	)			—				(523	)
Cash dividends of $0.04 per share			—				—				(1,217	)			—				—				(1,217	)
Acquired 228,000 shares of treasury stock			—				—				—				—				(11,043	)			(11,043	)
Issued shares on vesting of restricted stock units			36				(49	)			—				—				—				(13	)
Stock compensation			—				1,195				—				—				—				1,195
Balances at June 30, 2024		$	321,894			$	41,586			$	625,614			$	775			$	(467,118	)		$	522,751

See notes to unaudited condensed consolidated financial statements.

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

(in thousands, except for share and per share data)

June 30, 2025

NOTE 1 - Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS”, “we”, “our”, “us” or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Immaterial Correction of Prior Period Error

As reported in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, the Company identified immaterial prior period errors in the consolidated financial statements related to the acquisition of SyQwest, LLC (“SyQwest”) as well as the foreign currency impact on certain long-term debt payments. The errors related to the SyQwest acquisition were due to errors with the calculation of revenue and cost of goods sold both prior to and subsequent to the acquisition date of July 29, 2024. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections were material in the first quarter of 2025, but are not material to any previously presented consolidated financial statements. Accordingly, the Company corrected the previously reported immaterial errors for the year ended December 31, 2024 and the three and nine months ended September 30, 2024 in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025.

The financial reporting periods affected by this error include the Company’s previously reported audited consolidated financial statements for the fiscal year ended December 31, 2024 and the Company’s previously reported interim unaudited consolidated financial statements for the three and nine months ended September 30, 2024. In addition, the Company expects to present the corrected interim 2024 amounts in its 2025 consolidated interim financial statements upon the filing of each of its Quarterly Reports on Form 10-Q on a year-to-date basis as a correction to applicable 2024 periods. A summary of the immaterial corrections to the Company’s previously reported audited and unaudited consolidated financial statements follows.

9

Corrected Consolidated Statement of Earnings for the Year Ended December 31, 2024 (in thousands):

		Year Ended								Year Ended
		December 31, 2024								December 31, 2024
		Previously Reported				Corrections				As Corrected
Net sales		$	515,771			$	(1,015	)		$	514,756
Cost of goods sold			326,621				580				327,201
Gross margin			189,150				(1,595	)			187,555
Operating earnings			72,780				(1,595	)			71,185
Other income (expense):
Other income (expense), net			(1,603	)			(1,047	)			(2,650	)
Total other expense, net			(1,557	)			(1,047	)			(2,604	)
Earnings before income taxes			71,223				(2,642	)			68,581
Net earnings		$	58,114			$	(2,642	)		$	55,472
Earnings per share:
Basic		$	1.91							$	1.82
Diluted		$	1.89							$	1.81
Basic weighted – average common shares outstanding:			30,408								30,408
Effect of dilutive securities			309								309
Diluted weighted – average common shares outstanding:			30,717								30,717

Corrected Consolidated Balance Sheet as of December 31, 2024 (in thousands):

		December 31, 2024								December 31, 2024
		Previously Reported				Corrections				As Corrected
ASSETS
Current Assets
Inventories, net		$	53,578			$	(1,266	)		$	52,312
Other current assets			18,716				(837	)			17,879
Total current assets			244,277				(2,103	)			242,174
Other Assets
Goodwill			199,886				1,418				201,304
Total other assets			404,539				1,418				405,957
Total Assets		$	766,112			$	(685	)		$	765,427
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accrued expenses and other liabilities			34,451				910				35,361
Total current liabilities			97,553				910				98,463
Long-term debt			91,253				1,047				92,300
Total Liabilities			235,262				1,957				237,219
Shareholders’ Equity
Retained earnings			655,493				(2,642	)			652,851
Total shareholders’ equity before treasury stock			1,017,868				(2,642	)			1,015,226
Total shareholders’ equity			530,850				(2,642	)			528,208
Total Liabilities and Shareholders’ Equity		$	766,112			$	(685	)		$	765,427

10

Corrected Consolidated Statement of Cash Flows for the Year Ended December 31, 2024 (in thousands):

		Year Ended								Year Ended
		December 31, 2024								December 31, 2024
		Previously Reported				Corrections				As Corrected
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$	58,114			$	(2,642	)		$	55,472
Changes in assets and liabilities, net of acquisitions:
Inventories			11,893				580				12,473
Other assets			900				837				1,737
Accrued expenses and other liabilities			(5,255	)			178				(5,077	)
Net cash provided by operating activities			99,289				(1,047	)			98,242
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt			(891,847	)			1,047				(890,800	)
Net cash (used in) provided by financing activities		$	(27,935	)		$	1,047			$	(26,888	)

Corrected Consolidated Statement of Earnings for the Three and Nine Months Ended September 30, 2024 (in thousands):

		Three Months Ended								Three Months Ended				Nine Months Ended								Nine Months Ended
		September 30, 2024								September 30, 2024				September 30, 2024								September 30, 2024
		Previously Reported				Corrections				As Corrected				Previously Reported				Corrections				As Corrected
Net sales		$	132,424			$	(40	)		$	132,385			$	388,336			$	(40	)		$	388,296
Cost of goods sold			82,636				559				83,195				247,086				559				247,645
Gross margin			49,788				(599	)			49,189				141,250				(599	)			140,651
Operating earnings			21,475				(599	)			20,876				53,775				(599	)			53,176
Earnings before income taxes			22,447				(599	)			21,848				53,872				(599	)			53,273
Net earnings		$	18,683			$	(599	)		$	18,084			$	44,508			$	(599	)		$	43,909
Earnings per share:
Basic		$	0.62							$	0.60			$	1.46							$	1.44
Diluted		$	0.61							$	0.59			$	1.45							$	1.43
Basic weighted – average common shares outstanding:			30,300								30,300				30,517								30,517
Effect of dilutive securities			236								236				230								230
Diluted weighted – average common shares outstanding:			30,536								30,536				30,747								30,747

11

Corrected Consolidated Balance Sheet as of September 30, 2024 (in thousands):

		September 30, 2024								September 30, 2024
		Previously Reported				Corrections				As Corrected
ASSETS
Current Assets
Inventories, net		$	57,288			$	(1,246	)		$	56,042
Total current assets			255,561				(1,246	)			254,315
Other Assets
Goodwill			194,821				1,418				196,239
Total other assets			416,677				1,418				418,095
Total Assets		$	789,392			$	172			$	789,564
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accrued expenses and other liabilities			37,249				771				38,020
Total current liabilities			103,799				771				104,570
Total Liabilities			258,586				771				259,357
Shareholders’ Equity
Retained earnings			643,088				(599	)			642,489
Total shareholders’ equity before treasury stock			1,009,937				(599	)			1,009,338
Total shareholders’ equity			530,806				(599	)			530,207
Total Liabilities and Shareholders’ Equity		$	789,392			$	172			$	789,564

Corrected Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2024 (in thousands):

		Nine Months Ended								Nine Months Ended
		September 30, 2024								September 30, 2024
		Previously Reported				Corrections				As Corrected
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$	44,508			$	(599	)		$	43,909
Changes in assets and liabilities, net of acquisitions:
Inventories			11,346				559				11,905
Accrued expenses and other liabilities			(2,645	)			40				(2,605	)
Net cash provided by operating activities		$	73,335			$	-			$	73,335

Corrected Fair Value of SyQwest Assets Acquired and Liabilities Assumed:

		Fair Values at July 29, 2024
Accounts receivable		$	770
Inventory			7,939
Other current assets			1,475
Property, plant and equipment			985
Other assets			684
Goodwill			46,600
Intangible assets			76,100
Fair value of assets acquired			134,553
Less fair value of liabilities acquired			(6,536	)
Purchase price		$	128,017

12

Accounting Pronouncements Recently Adopted

ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure”

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation required under ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for the interim periods beginning after December 15, 2024, with early adoption permitted. We adopted the guidance in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 17, “Segment Information,” for further information.

Recently issued accounting pronouncements not yet adopted

ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09. We will adopt the guidance when it becomes effective on a prospective basis.

ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses”

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. We will adopt the guidance when it becomes effective on a prospective basis.

NOTE 2 – Revenue Recognition

CTS designs and manufactures sensors, actuators, and electronic components for original equipment manufacturers and the U.S. Government. For each contract with a customer, we determine the transaction price based on the consideration expected to be received by the Company in exchange for performing its obligations under the applicable contract. We allocate the transaction price to each distinct performance obligation to deliver a good or service, or a collection of goods and/or services, based on the relative standalone selling prices. We usually expect payment from our customers within 30 to 90 days from the shipping date or invoicing date, depending on our terms with the customer. None of our contracts as of June 30, 2025 contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely value method based on an analysis of historical experience and current facts and circumstances, which may require significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

The majority of our revenue is derived from contracts for sales of commercial products, which generally contain a single performance obligation. We generally recognize revenue at a point in time on the delivery date based on the shipping terms stipulated in the contract.

13

We also design, manufacture, and test products for certain customers under contracts that allow the customers to unilaterally terminate the contract for convenience, take control of any work in process, and pay us for costs incurred plus a reasonable profit. Revenue from these contracts is generally recognized over time as the work progresses, either as products are produced or services are rendered, because we generally do not have an alternative use for the completed assets produced and we have an enforceable right to payment for performance completed to date. These contracts may contain a single or multiple performance obligations. The accounting for these contracts involves applying significant judgment with respect to estimating total revenues, costs and profit for each performance obligation. We generally estimate revenue for these contracts using the costs incurred by the Company as we have determined it is most representative of the Company's cumulative efforts relative to the total expected efforts to satisfy the performance obligations.

See Note 9, “Commitments and Contingencies” for information about our product warranties.

Contract Assets and Liabilities

Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:

		As of
		June 30,				December 31,
		2025				2024
Contract Assets
Unbilled customer receivables included in Other current assets		$	2,590			$	4,104
Total Contract Assets		$	2,590			$	4,104
Contract Liabilities
Customer advance payments included in Accrued expenses and other liabilities		$	(810	)		$	(910	)
Total Contract Liabilities		$	(810	)		$	(910	)

During the six months ended June 30, 2025 the Company recognized $100 of revenue that was included in the contract liability balance at December 31, 2024.

Disaggregated Revenue

The following table presents revenues disaggregated by the major markets we serve:

		Three months ended								Six months ended
		June 30, 2025				June 30, 2024				June 30, 2025				June 30, 2024
Transportation		$	60,674			$	64,221			$	119,163			$	130,738
Industrial			34,110				32,175				66,558				63,238
Medical			19,177				17,832				38,308				34,733
Aerospace & Defense			21,348				15,934				37,049				27,203
Total		$	135,309			$	130,162			$	261,078			$	255,912

NOTE 3 – Accounts Receivable, net

The components of accounts receivable, net are as follows:

		As of
		June 30,				December 31,
		2025				2024
Accounts receivable, gross		$	86,558			$	78,379
Less: Allowance for credit losses			(980	)			(730	)
Accounts receivable, net		$	85,578			$	77,649

14

		As of
		June 30,				December 31,
		2024				2023
Accounts receivable, gross		$	86,092			$	79,500
Less: Allowance for credit losses			(712	)			(931	)
Accounts receivable, net		$	85,380			$	78,569

NOTE 4 – Inventories, net

Inventories, net consists of the following:

		As of
		June 30,				December 31,
		2025				2024
Finished goods		$	12,504			$	12,126
Work-in-process			27,521				22,331
Raw materials			30,928				31,818
Less: Inventory reserves			(13,850	)			(13,963	)
Inventories, net		$	57,103			$	52,312

NOTE 5 – Property, Plant and Equipment, net

Property, plant and equipment, net is comprised of the following:

		As of
		June 30,				December 31,
		2025				2024
Land and land improvements		$	399			$	399
Buildings and improvements			73,423				73,011
Machinery and equipment			272,284				265,950
Less: Accumulated depreciation			(252,576	)			(245,003	)
Property, plant and equipment, net		$	93,530			$	94,357

Depreciation expense for the three months ended June 30, 2025 and June 30, 2024 was $4,508 and $4,518, respectively. Depreciation expense for the six months ended June 30, 2025 and June 30, 2024 was $8,970 and $9,018, respectively.

NOTE 6 – Goodwill and Other Intangible Assets

Goodwill

Changes in the net carrying amount of goodwill were as follows:

		Total
Goodwill as of December 31, 2024		$	201,304
Foreign exchange impact			6,243
Goodwill as of June 30, 2025		$	207,547

Other Intangible Assets

Other intangible assets, net consist of the following components:

		As of
		June 30, 2025
		Gross Carrying Amount				Accumulated Amortization				Net Amount
Customer lists/relationships		$	217,035			$	(80,182	)		$	136,853
Technology and other intangibles			62,197				(37,265	)			24,932
Other intangible assets, net		$	279,232			$	(117,447	)		$	161,785

15

		As of
		December 31, 2024
		Gross Carrying Amount				Accumulated Amortization				Net Amount
Customer lists/relationships		$	210,354			$	(72,500	)		$	137,854
Technology and other intangibles			61,244				(35,216	)			26,028
Other intangible assets, net		$	271,598			$	(107,716	)		$	163,882

Amortization expense for the three months ended June 30, 2025 and June 30, 2024 was $4,044 and $2,807, respectively. Amortization expense for the six months ended June 30, 2025 and June 30, 2024 was $8,075 and $5,633, respectively.

Remaining amortization expense for other intangible assets as of June 30, 2025 is as follows:

		Amortization expense
Remaining 2025		$	8,100
2026			16,155
2027			16,094
2028			16,059
2029			14,892
Thereafter			90,485
Total amortization expense		$	161,785

NOTE 7 – Costs Associated with Exit and Restructuring Activities

Restructuring charges are reported as a separate line within operating earnings in the Condensed Consolidated Statements of Earnings.

Total restructuring charges are as follows:

		Three Months Ended
		June 30, 2025				June 30, 2024
Restructuring charges		$	297			$	1,190

		Six Months Ended
		June 30, 2025				June 30, 2024
Restructuring charges		$	749			$	2,884

During the three months ended June 30, 2025, we incurred total restructuring charges of $297, comprised of $293 and $4 in workforce reduction and building and equipment relocation costs, respectively. During the six months ended June 30, 2025, we incurred total restructuring charges of $749, comprised of $687, $25 and $37 in workforce reduction, building and equipment relocation costs, and asset impairment and other charges, respectively. The workforce reduction charges incurred are for restructuring activities used to adjust our business in response to reduced demand across certain locations and products. Restructuring charges incurred in relation to building and equipment relocation costs and other charges are for activities intended to consolidate operations across our site locations. The remaining liability associated with our other restructuring actions was $734 and $798 at June 30, 2025 and December 31, 2024, respectively.

The following table displays the restructuring liability activity included in accrued expenses and other liabilities for the six months ended June 30, 2025:

Restructuring liability at December 31, 2024		$	798
Restructuring charges			749
Costs paid			(813	)
Restructuring liability at June 30, 2025		$	734

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NOTE 8 – Accrued Expenses and Other Liabilities

The components of accrued expenses and other liabilities are as follows:

		As of
		June 30,				December 31,
		2025				2024
Accrued product-related costs		$	1,939			$	1,866
Accrued income taxes			5,422				5,418
Accrued property and other taxes			1,327				1,518
Accrued professional fees			1,775				1,625
Accrued customer-related liabilities			1,581				2,113
Dividends payable			1,182				1,201
Remediation reserves			11,891				12,192
Derivative liabilities			1,092				334
Other accrued liabilities			4,991				9,094
Total accrued expenses and other liabilities		$	31,200			$	35,361

NOTE 9 – Commitments and Contingencies

Certain processes in the manufacture of our current and past products may create by-products classified as hazardous waste. As a result, we have been notified by the U.S. Environmental Protection Agency (“EPA”), state environmental agencies and in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently or formerly owned or operated by us. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company. Two of those sites, Asheville, North Carolina (the “Asheville Site”) and Mountain View, California, are designated National Priorities List sites under the EPA’s Superfund program. We accrue a liability for probable remediation activities, claims, and proceedings against us with respect to environmental matters if the amount can be reasonably estimated, and provide disclosures including the nature of a loss whenever it is probable or reasonably possible that a potentially material loss may have occurred but cannot be estimated. We record contingent loss accruals on an undiscounted basis.

A roll-forward of remediation reserves included in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets is comprised of the following:

		As of
		June 30,				December 31,
		2025				2024
Balance at beginning of period		$	12,192			$	12,044
Remediation expense			438				1,701
Net remediation payments			(745	)			(1,554	)
Other activity(1)			6				1
Balance at end of the period		$	11,891			$	12,192

(1)Other activity includes currency translation adjustments not recorded to remediation expense.

The Company operates under and in accordance with a federal consent decree, dated March 7, 2017, with the EPA for the Asheville Site. On February 8, 2023, the Company received a pre-litigation letter from the EPA (the “EPA Letter”) seeking reimbursement of its past response costs and interest thereon relating to any release or threatened release of hazardous substances at the Asheville Site in the aggregate amount of $9,955 from the three potentially responsible parties associated with the Asheville Site, including the Company. The matter remains in the pre-litigation phase. The Company expects its potential exposure to be between $1,900 and $9,955. We have determined that no point within this range is more likely than another and, therefore, we have recorded a loss estimate of $1,900 as of June 30, 2025 and December 31, 2024 in the Consolidated Balance Sheets.

17

Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business.

We provide product warranties when we sell our products and accrue for estimated liabilities at the time of sale. Warranty estimates are forecasts based on the best available information and historical claims experience. We accrue for specific warranty claims if we believe that the facts of a specific claim make it probable that a liability in excess of our historical experience has been incurred, and provide disclosures for specific claims whenever it is reasonably possible that a material loss may be incurred which cannot be estimated.

We cannot provide assurance that the ultimate disposition of environmental, legal, and product warranty claims will not materially exceed the amount of our accrued losses and adversely impact our consolidated financial position, results of operations, or cash flows. Our accrued liabilities and disclosures will be adjusted accordingly if additional information becomes available in the future.

NOTE 10 - Debt

Long-term debt is comprised of the following:

		As of
		June 30,				December 31,
		2025				2024
Total credit facility		$	400,000			$	400,000
Balance outstanding			88,000				92,300
Standby letters of credit			1,640				1,640
Amount available, subject to covenant restrictions		$	310,360			$	306,060
Weighted-average interest rate			5.64	%			6.41	%

On December 15, 2021, we entered into a second amended and restated five-year credit agreement with a group of banks (the “Revolving Credit Facility”) to (i) increase the total credit facility to $400,000, which may be increased by $200,000 at the request of the Company, subject to the administrative agent's approval, (ii) extend the maturity of the Revolving Credit Facility from February 12, 2024 to December 15, 2026, (iii) replace LIBOR with SOFR as the primary reference rate used to calculate interest on the loans under the Revolving Credit Facility, (iv) increase available sub limits for letters of credit and swing line loans as well as providing for additional alternative currency borrowing capabilities, and (v) modify the financial and non-financial covenants to provide the Company additional flexibility. This unsecured credit facility replaced the prior $300,000 unsecured credit facility, which would have expired February 12, 2024.

Borrowings in U.S. dollars under the Revolving Credit Facility bear interest, at a per annum rate equal to the applicable Term SOFR rate (but not less than 0.0%), plus the Term SOFR adjustment, and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. Similarly, borrowings of alternative currencies under the Revolving Credit Facility bear interest equal to a defined risk-free reference rate, plus the applicable risk-free rate adjustment and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. We use interest rate swaps to convert a portion of our revolving credit facility’s outstanding balance from a variable rate of interest to a fixed rate. The contractual rate of these arrangements ranges from 1.49% to 2.45%. Refer to Note 11, “Derivative Financial Instruments,” for further discussion on the impact of interest rate swaps.

The Revolving Credit Facility includes a swing line sublimit of $20,000 and a letter of credit sublimit of $20,000. We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee ranges from 0.175% to 0.25% based on our net leverage ratio.

18

The Revolving Credit Facility requires, in addition to customary representations and warranties, that we comply with a maximum net leverage ratio and a minimum interest coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the Revolving Credit Facility. We were in compliance with all debt covenants at June 30, 2025. The Revolving Credit Facility requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the Revolving Credit Facility contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments.

We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt, which approximates the effective interest method. Amortization expense for three and six months ended June 30, 2025 was $48 and $97, respectively. Amortization expense for the three and six months ended June 30, 2024 was $48 and $97, respectively. These costs are included in interest expense in our Consolidated Statements of Earnings.

Note 11 - Derivative Financial Instruments

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts as well as interest rate and cross-currency swaps to manage our exposure to these risks.

The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements.

The effective portion of derivative gains and losses are recorded in accumulated other comprehensive income (loss) until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive income (loss) to other income (expense), net.

We assess hedge effectiveness qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Condensed Consolidated Statements of Earnings for the three and six months ended June 30, 2025.

Foreign Currency Hedges

We use forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheets at fair value.

We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At June 30, 2025, we had a net unrealized gain of $2,311 in accumulated other comprehensive income (loss), $1,225 of which is expected to be reclassified to earnings within the next 12 months. The notional amount of foreign currency forward contracts outstanding was $64,999 at June 30, 2025.

Interest Rate Swaps

We use interest rate swaps to convert a portion of our Revolving Credit Facility’s outstanding balance from a variable rate of interest to a fixed rate. As of June 30, 2025, we have agreements to fix interest rates on $50,000 of long-term debt until December 2026. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.

19

These swaps are treated as cash flow hedges and consequently, the changes in fair value are recorded in other comprehensive earnings (loss). The estimated net amount of the existing gains that are reported in accumulated other comprehensive income (loss) that are expected to be reclassified into earnings within the next twelve months is approximately $661.

Cross-Currency Swap

The Company has operations and investments in various international locations and is subject to risks associated with changing foreign exchange rates. In order to hedge the Krone-based purchase price for the acquisition of Ferroperm Piezoceramics, A.S. (“Ferroperm”), the Company entered into a cross-currency interest rate swap agreement on June 27, 2022 that synthetically swapped $25,000 of variable rate debt to Krone denominated variable rate debt. Upon completion of the Ferroperm acquisition on June 30, 2022, the transaction was designated as a net investment hedge for accounting purposes and will mature on June 30, 2027.

Accordingly, any gains or losses on this derivative instrument are included in the foreign currency translation component of other comprehensive earnings (loss) until the net investment is sold, diluted or liquidated. As of June 30, 2025, we had a net unrealized loss of $1,752 in accumulated other comprehensive income (loss). Interest payments received for the cross-currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense in the Condensed Consolidated Statements of Earnings. The assumptions used in measuring fair value of the cross-currency swap are considered level 2 inputs, which are based upon the Krone to U.S. Dollar exchange rate market.

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of June 30, 2025, are shown in the following table:

		As of
		June 30,				December 31,
		2025				2024
Interest rate swaps reported in Other current assets		$	661			$	792
Interest rate swaps reported in Other assets			165				711
Cross-currency swap reported in Other current assets			-				324
Cross-currency swap reported in Accrued expenses and other liabilities			(1,092	)			-
Foreign currency hedges reported in Other current assets			2,201				-
Foreign currency hedges reported in Accrued expenses and other liabilities			-				(2,992	)

The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were foreign currency derivative assets of $3,907 and foreign currency derivative liabilities of $1,706 at June 30, 2025.

20

The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Foreign Exchange Contracts:
Amounts reclassified from AOCI to earnings:
Net sales		$	(232	)		$	70			$	(272	)		$	96
Cost of goods sold			(315	)			384				(946	)			1,141
Total net gain (loss) reclassified from AOCI to earnings			(547	)			454				(1,218	)			1,237
Total derivative gain (loss) on foreign exchange contracts recognized in earnings		$	(547	)		$	454			$	(1,218	)		$	1,237
Interest Rate Swaps:
Income recorded in Interest expense		$	236			$	371			$	471			$	776
Cross-Currency Swap:
Income recorded in Interest expense		$	6			$	95			$	78			$	189
Total net (loss) gain on derivatives		$	(305	)		$	920			$	(669	)		$	2,202

NOTE 12 – Accumulated Other Comprehensive Income (Loss)

Shareholders’ equity includes certain items classified as accumulated other comprehensive income (loss) (“AOCI”) in the Condensed Consolidated Balance Sheets, including:

•Unrealized gains (losses) on hedges relate to interest rate swaps to convert a portion of our Revolving Credit Facility's outstanding balance from a variable rate of interest into a fixed rate, foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies, as well as a cross-currency swap that synthetically converts our U.S. Dollar variable rate debt to Krone denominated variable rate debt. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transactions occur, at which time amounts are reclassified into earnings. Further information related to our derivative financial instruments is included in Note 11 – “Derivative Financial Instruments” and Note 15 – “Fair Value Measurements”.

•Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized. Amounts reclassified to income from AOCI are included in net periodic pension income (expense).

•Cumulative translation adjustments relate to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive earnings (loss).

Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses. Transaction gains for the three and six months ended June 30, 2025 were $770 and $1,304, respectively. Transaction losses for the three and six months ended June 30, 2024 were $629 and $2,136, respectively. The impact of these changes are included in other income (expense) in the Condensed Consolidated Statements of Earnings.

21

The components of accumulated other comprehensive income (loss) for the three months ended June 30, 2025, are as follows:

										(Gain) Loss
		As of				Gain (Loss)				Reclassified				As of
		March 31,				Recognized				from AOCI				June 30,
		2025				in OCI				to Earnings				2025
Changes in fair market value of derivatives:
Gross		$	(585	)		$	3,410			$	311			$	3,136
Income tax benefit (expense)			128				(801	)			(73	)			(746	)
Net			(457	)			2,609				238				2,390
Changes in unrealized pension cost:
Gross			(395	)			—				(128	)			(523	)
Income tax benefit (expense)			300				—				5				305
Net			(95	)			—				(123	)			(218	)
Cumulative translation adjustment:
Gross			1,824				8,024				—				9,848
Income tax benefit (expense)			—				—				—				—
Net			1,824				8,024				—				9,848
Total accumulated other comprehensive (loss) income		$	1,272			$	10,633			$	115			$	12,020

The components of accumulated other comprehensive income (loss) for the three months ended June 30, 2024 are as follows:

										(Gain) Loss
		As of				Gain (Loss)				Reclassified				As of
		March 31,				Recognized				from AOCI				June 30,
		2024				in OCI				to Earnings				2024
Changes in fair market value of derivatives:
Gross		$	4,201			$	(1,350	)		$	(825	)		$	2,026
Income tax (expense) benefit			(967	)			310				190				(467	)
Net			3,234				(1,040	)			(635	)			1,559
Changes in unrealized pension cost:
Gross			(1,057	)			—				40				(1,017	)
Income tax benefit (expense)			437				—				(5	)			432
Net			(620	)			—				35				(585	)
Cumulative translation adjustment:
Gross			324				(523	)			—				(199	)
Income tax benefit (expense)			—				—				—				—
Net			324				(523	)			—				(199	)
Total accumulated other comprehensive income (loss)		$	2,938			$	(1,563	)		$	(600	)		$	775

22

The components of accumulated other comprehensive income (loss) for the six months ended June 30, 2025 are as follows:

										(Gain) Loss
		As of				Gain (Loss)				Reclassified				As of
		December 31,				Recognized				from AOCI				June 30,
		2024				in OCI				to Earnings				2025
Changes in fair market value of derivatives:
Gross		$	(1,730	)		$	4,118			$	748			$	3,136
Income tax benefit (expense)			397				(968	)			(175	)			(746	)
Net			(1,333	)			3,150				573				2,390
Changes in unrealized pension cost:
Gross			(409	)			—				(114	)			(523	)
Income tax benefit (expense)			300				—				5				305
Net			(109	)			—				(109	)			(218	)
Cumulative translation adjustment:
Gross			(2,824	)			12,672				—				9,848
Income tax benefit (expense)			—				—				—				—
Net			(2,824	)			12,672				—				9,848
Total accumulated other comprehensive (loss) income		$	(4,266	)		$	15,822			$	464			$	12,020

The components of accumulated other comprehensive income (loss) for the six months ended June 30, 2024 are as follows:

										(Gain) Loss
		As of				Gain (Loss)				Reclassified				As of
		December 31,				Recognized				from AOCI				June 30,
		2023				in OCI				to Earnings				2024
Changes in fair market value of derivatives:
Gross		$	3,252			$	788			$	(2,014	)		$	2,026
Income tax benefit (expense)			(749	)			(181	)			463				(467	)
Net			2,503				607				(1,551	)			1,559
Changes in unrealized pension cost:
Gross			(1,126	)			—				109				(1,017	)
Income tax benefit (expense)			442				—				(10	)			432
Net			(684	)			—				99				(585	)
Cumulative translation adjustment:
Gross			2,445				(2,644	)			—				(199	)
Income tax benefit (expense)			—				—				—				—
Net			2,445				(2,644	)			—				(199	)
Total accumulated other comprehensive (loss) income		$	4,264			$	(2,037	)		$	(1,452	)		$	775

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NOTE 13 – Shareholders’ Equity

Share count and par value data related to shareholders’ equity are as follows:

		As of
		June 30,				December 31,
		2025				2024
Preferred Stock
Par value per share		No par value				No par value
Shares authorized			25,000,000				25,000,000
Shares outstanding		—					—
Common Stock
Par value per share		No par value				No par value
Shares authorized			75,000,000				75,000,000
Shares issued			57,621,847				57,543,964
Shares outstanding			29,548,737				30,026,045
Treasury stock
Shares held			28,073,110				27,517,919

On February 2, 2024, our Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $100,000 of its common stock. The repurchase program has no set expiration date and supersedes and replaces the repurchase program approved by the Board of Directors in February 2023. The purchases may be made from time to time in the open market (including, without limitation, through the use of Rule 10b5-1 plans), depending on a number of factors, including our evaluation of general market and economic conditions, our financial condition and the trading price of our common stock. The repurchase program may be extended, modified, suspended or discontinued at any time.

During the three and six months ended June 30, 2025, 411,650 and 555,191 shares of common stock were repurchased for $16,694 and $23,345, respectively, across both share repurchase programs. During the three and six months ended June 30, 2024, 228,000 and 499,939 shares of common stock were repurchased for $11,129 and $23,207, respectively. As of June 30, 2025, approximately $38,078 remains available for future purchases.

We are subject to a 1% excise tax on stock repurchases under the United States Inflation Reduction Act of 2022 which we include in the cost of stock repurchases as a reduction of shareholders’ equity. As of June 30, 2025 and December 31, 2024, we had $127 and $741, respectively, recorded in Accrued expenses and other liabilities in the Consolidated Balance Sheet.

A roll-forward of common shares outstanding is as follows:

		Six Months Ended
		June 30,				June 30,
		2025				2024
Balance at the beginning of the year			30,026,045				30,824,248
Repurchases			(555,191	)			(499,939	)
Restricted share issuances			77,883				97,481
Balance at the end of the period			29,548,737				30,421,790

Certain potentially dilutive restricted stock units are excluded from diluted earnings per share because they are anti-dilutive. The number of outstanding awards that were anti-dilutive for the three and six months ended June 30, 2025 was 3,652 and 908. The number of outstanding awards that were anti-dilutive for the three and six months ended June 30, 2024 was 2,391 and 6,461.

NOTE 14 - Stock-Based Compensation

At June 30, 2025, we had five active stock-based compensation plans: the Non-Employee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance and Incentive Compensation Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan (“2018 Plan”). Future grants can only be made under the 2018 Plan.

24

The 2018 Plan allows for grants of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, and other stock awards subject to the terms of the 2018 Plan.

The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings related to stock-based compensation plans:

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Service-based RSUs		$	643			$	981			$	1,591			$	1,875
Performance and Market-based RSUs			(143	)			215				341				370
Cash-settled RSUs			116				136				331				299
Total		$	616			$	1,332			$	2,263			$	2,544
Income tax benefit			145				306				532				585
Net expense		$	471			$	1,026			$	1,731			$	1,959

The following table summarizes the unrecognized compensation expense related to unvested RSUs by type and the weighted-average period in which the expense is to be recognized:

		Unrecognized
		Compensation				Weighted-
		Expense at				Average
		June 30, 2025				Period (years)
Service-based RSUs		$	3,558				1.39
Performance and Market-based RSUs			3,890				2.15
Total		$	7,448				1.79

We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The following table summarizes the status of these plans as of June 30, 2025:

		2018 Plan				2014 Plan				2009 Plan				2004 Plan				Directors' Plan
Awards originally available			2,500,000				1,500,000				3,400,000				6,500,000			N/A
Maximum potential awards outstanding			639,753				39,400				34,100				14,545				4,722
RSUs and cash-settled awards vested and released			771,459				—				—				—				—
Awards available for grant			1,088,788				—				—				—				—

Service-Based Restricted Stock Units

The following table summarizes the service-based RSU activity for the six months ended June 30, 2025:

		Units				Weighted Average Grant Date Fair Value
Outstanding at December 31, 2024			322,847			$	34.06
Granted			61,908				46.24
Vested and released			(54,944	)			40.40
Forfeited			(20,691	)			44.78
Outstanding at June 30, 2025			309,120			$	34.70
Releasable at June 30, 2025			158,467			$	23.78

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Performance and Market-Based Restricted Stock Units

The following table summarizes the performance and market-based RSU activity for the six months ended June 30, 2025:

		Units				Weighted Average Grant Date Fair Value
Outstanding at December 31, 2024			222,344			$	40.15
Granted			75,010				46.46
Attained by performance			39,581				37.93
Released			(79,162	)			37.93
Forfeited			(71,864	)			35.95
Outstanding at June 30, 2025			185,909			$	44.64
Releasable at June 30, 2025			—			$	—

Cash-Settled Restricted Stock Units

Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At June 30, 2025 and December 31, 2024, we had 15,028 and 44,127 cash-settled RSUs outstanding, respectively. At June 30, 2025 and December 31, 2024 liabilities of $390 and $608, respectively, were included in Accrued expenses and other liabilities on our Condensed Consolidated Balance Sheets.

NOTE 15 - Fair Value Measurements

The table below summarizes our financial assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2025:

		Asset (Liability) Carrying Value at June 30, 2025				Quoted Prices in Active Markets for Identical (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Interest rate swaps		$	826			$	—			$	826			$	—
Foreign currency hedges		$	2,201			$	—			$	2,201			$	—
Cross-currency swap		$	(1,092	)		$	—			$	(1,092	)		$	—
Qualified replacement plan assets		$	10,172			$	10,172			$	—			$	—
Contingent consideration		$	(5,505	)		$	—			$	—			$	(5,505	)

The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2024:

		Asset (Liability) Carrying Value at December 31, 2024				Quoted Prices in Active Markets for Identical (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Interest rate swaps		$	1,503			$	—			$	1,503			$	—
Foreign currency hedges		$	(2,992	)		$	—			$	(2,992	)		$	—
Cross-currency swap		$	324			$	—			$	324			$	—
Qualified replacement plan assets		$	11,380			$	11,380			$	—			$	—
Contingent consideration		$	(7,028	)		$	—			$	—			$	(7,028	)

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We use interest rate swaps to convert a portion of our Revolving Credit Facility’s outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. The Company entered into a cross-currency swap agreement in order to manage its exposure to changes in interest rates related to foreign debt. These derivative financial instruments are measured at fair value on a recurring basis. The fair value of our interest rate swaps and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy.

The fair value of the contingent consideration requires significant judgment. The Company's fair value estimates used in the contingent consideration valuation are considered Level 3 fair value measurements. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and timing of events and activities that are expected to take place.

A roll-forward of the contingent consideration is as follows:

		Contingent Consideration
Balance at December 31, 2024		$	7,028
Change in fair value			(1,523	)
Balance at June 30, 2025		$	5,505

As of June 30, 2025, $623 in contingent consideration was recorded in Accrued expenses and other liabilities and $4,882 in Other long-term obligations on our Condensed Consolidated Balance Sheets.

Our long-term debt consists of the Revolving Credit Facility, which is recorded at its carrying value. There is a readily determinable market for our long-term debt and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt approximates its carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the Revolving Credit Facility.

The qualified replacement plan assets consist of investment funds maintained for future contributions to the Company’s U.S. 401(k) program. The investments are Level 1 marketable securities and are recorded in Other Assets on our Condensed Consolidated Balance Sheets.

NOTE 16 - Income Taxes

The effective income tax rates for the three and six months ended June 30, 2025 and 2024 are as follows:

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Effective tax rate			19.4	%			17.2	%			18.4	%			17.8	%

Our effective income tax rate was 19.4% and 17.2% in the second quarter of 2025 and 2024, respectively. The increase in the effective income tax rate is primarily attributable to a change in mix of earnings taxed at higher rates. The second quarter 2025 effective income tax rate was lower than the U.S. statutory federal tax rate primarily due to foreign earnings that are taxed at lower rates. The second quarter 2024 effective income tax rate was lower than the U.S. statutory federal tax rate primarily due to foreign earnings that are taxed at lower rates.

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Our effective income tax rate was 18.4% and 17.8% in the six months ended June 30, 2025 and 2024, respectively. The increase in the effective income tax rate is primarily attributable to a mix of earnings taxed at higher rates. The effective income tax rate in the first six months of 2025 was lower than the U.S. statutory federal income tax rate primarily due to foreign earnings that are taxed at lower rates and tax benefits recorded upon the vesting of restricted stock units. The effective income tax rate in the first six months of 2024 was lower than the U.S. statutory federal income tax rate primarily due to foreign earnings that are taxed at lower rates and tax benefits recorded upon the vesting of restricted stock units.

The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA contains significant tax law changes with various effective dates after its enactment date. The Company is currently evaluating the impacts that the tax law changes will have on its financial position and results of operation. An estimate cannot be made at this time.

NOTE 17 - Segment Information

The Company designs, manufactures, and sells a broad line of sensors, connectivity components, and actuators across multiple end markets in North America, Asia, and Europe. Our Chief Operating Decision Maker (“CODM”), who is our Chair, President and Chief Executive Officer, analyzes the results of our business through one reportable segment. Our CODM evaluates the operating results and performance through Net earnings, which are reported on the Consolidated Statements of Earnings. These financial metrics are used to view operating trends, perform analytical comparisons and benchmark performance between periods and to monitor budget-to-actual variances on a monthly basis. To manage operations and make decisions regarding resources, our CODM is regularly provided and reviews expense information at a consolidated level for our Cost of goods sold, Selling, general, and administrative expenses and Research and Development expenses, which are reported on the Consolidated Statements of Earnings. As part of our strategic planning and annual operating plan, a focus is on sales growth, diversification, and profitability. The measure of segment assets is reported on the Consolidated Balance Sheet as Total Assets, but the CODM does not use discrete balance sheet information in assessing performance and allocating resources.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

(in thousands, except percentages and per share amounts)

The following discussion should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and notes included under Item 1, as well as our Consolidated Financial Statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Overview

CTS is a global manufacturer of sensors, connectivity components, and actuators. CTS was established in 1896 as a provider of high-quality telephone products and was incorporated as an Indiana corporation in February 1929. Our principal executive offices are located in Lisle, Illinois.

We design, manufacture, and sell a broad line of sensors, connectivity components, and actuators primarily to original equipment manufacturers (“OEMs”), tier one suppliers for the aerospace and defense, industrial, medical, and transportation markets, and the U.S. Government. Our vision is to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. These devices are categorized by their ability to Sense, Connect or Move. Sense products provide vital inputs to electronic systems. Connect products allow systems to function in synchronization with other systems. Move products ensure required movements are effectively and accurately executed. We are committed to achieving our vision by continuing to invest in the development of products, technologies, and talent within these categories.

We operate manufacturing facilities in North America, Asia, and Europe. Sales and marketing are accomplished through our sales engineers. We also utilize independent manufacturers' representatives and distributors to extend our sales capability.

There is an increasing proliferation of sensing and motion applications within various markets we serve. In addition, the increasing connectivity of various devices to the internet results in greater demand for communication bandwidth and data storage, increasing the need for our connectivity products. Our success is dependent on the ability to execute our strategy to support these trends. We are subject to a number of challenges including, without limitation, periodic market softness, competition from other suppliers, changes in technology, changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, as well as the ability to add new customers, launch new products or penetrate new markets. Many of these, and other risks and uncertainties relating to the Company and our business, are discussed in further detail in Item 1A. of our Annual Report on Form 10-K and other filings made with the SEC.

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Results of Operations: Second Quarter 2025 versus Second Quarter 2024

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the quarters ended June 30, 2025 and June 30, 2024:

		Three Months Ended
		June 30, 2025				June 30, 2024				Percent Change				Percentage of Net Sales – 2025				Percentage of Net Sales – 2024
Net sales		$	135,309			$	130,162				4.0	%			100.0	%			100.0	%
Cost of goods sold			82,878				83,790				(1.1	)			61.3				64.4
Gross margin			52,431				46,372				13.1				38.7				35.6
Selling, general and administrative expenses			23,077				21,332				8.2				17.1				16.4
Research and development expenses			6,326				6,086				3.9				4.7				4.7
Restructuring charges			297				1,190				(75.0	)			0.2				0.9
Total operating expenses			29,700				28,608				3.8				21.9				22.0
Operating earnings			22,731				17,764				28.0				16.8				13.6
Total other income (expense), net			251				5				4,920.0				0.2				—
Earnings before income taxes			22,982				17,769				29.3				17.0				13.7
Income tax expense			4,455				3,062				45.5				3.3				2.4
Net earnings		$	18,527			$	14,707				26.0	%			13.7	%			11.3	%
Earnings per share:
Diluted net earnings per share		$	0.62			$	0.48

Net sales were $135,309 in the second quarter of 2025, an increase of $5,147 or 4.0% from the second quarter of 2024. Net sales to the diversified end markets increased $8,694 or 13.2%. SyQwest added $4,468 in sales during the quarter. We achieved growth in the medical end market and saw continued recovery in the industrial end market. Net sales to the transportation end market decreased $3,547 or 5.5%, primarily driven by lower volumes of our commercial vehicle related products and lower sales to customers in China. Net sales increased $952 year-over-year related to changes in foreign exchange rates, primarily due to the U.S. Dollar depreciating compared to the Euro.

Gross margin was $52,431 in the second quarter of 2025, an increase of $6,059 or 13.1% from the second quarter of 2024. Our gross margin percentage increased from 35.6% for the second quarter of 2024 to 38.7% for the second quarter of 2025 due to improved mix of sales by end market and operational improvements. Additionally, changes in foreign exchange rates had a net benefit on our gross margin of approximately $959 primarily due to rate changes between the U.S. Dollar and the Mexican Peso.

Selling, general and administrative (“SG&A”) expenses were $23,077 or 17.1% of net sales in the second quarter of 2025 versus $21,332 or 16.4% of net sales in the second quarter of 2024. The increase in SG&A expenses was primarily driven by higher depreciation and amortization expense in the second quarter of 2025 from the SyQwest acquisition.

Research and development (“R&D”) expenses were $6,326 or 4.7% of net sales in the second quarter of 2025 compared to $6,086 or 4.7% of net sales in the comparable quarter of 2024. Our R&D expenses are in line with our commitment to continue investing in research and product development to drive organic growth.

Restructuring charges were $297 or 0.2% of net sales in the second quarter of 2025 compared to $1,190 or 0.9% of net sales in the second quarter of 2024. The restructuring charges in the quarter ended June 30, 2025 were primarily related to headcount reductions in response to softening demand in the transportation end market. See Note 7 “Costs Associated with Exit and Restructuring Activities” in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information.

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Other income and expense items are summarized in the following table:

		Three Months Ended
		June 30,				June 30,
		2025				2024
Interest expense		$	(1,121	)		$	(833	)
Interest income			622				1,441
Other income (expense), net			750				(603	)
Total other expense, net		$	251			$	5

Interest income decreased due to lower investments of available cash as a result of the SyQwest acquisition in the third quarter of 2024. Interest expense increased due to higher borrowings to fund the SyQwest acquisition.

		Three Months Ended
		June 30,				June 30,
		2025				2024
Effective tax rate			19.4	%			17.2	%

Our effective income tax rate was 19.4% and 17.2% in the second quarters of 2025 and 2024, respectively. The increase in the effective income tax rate is primarily attributable to a mix of earnings taxed at higher rates.

Results of Operations: Six Months ended June 30, 2025 versus Six Months Ended June 30, 2024

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the six months ended June 30, 2025, and June 30, 2024:

		Six Months Ended
		June 30, 2025				June 30, 2024				Percent Change				Percentage of Net Sales – 2025				Percentage of Net Sales – 2024
Net sales		$	261,078			$	255,912				2.0	%			100.0	%			100.0	%
Cost of goods sold			162,099				164,450				(1.4	)			62.1				64.3
Gross margin			98,979				91,462				8.2				37.9				35.7
Selling, general and administrative expenses			46,700				43,591				7.1				17.9				17.0
Research and development expenses			12,515				12,687				(1.4	)			4.8				5.0
Restructuring charges			749				2,884				(74.0	)			0.3				1.1
Total operating expenses			59,964				59,162				1.4				23.0				23.1
Operating earnings			39,015				32,300				20.8				14.9				12.6
Total other income (expense), net			86				(874	)			(109.8	)			—				(0.3	)
Earnings before income taxes			39,101				31,426				24.4				15.0				12.3
Income tax expense			7,210				5,600				28.8				2.8				2.2
Net earnings		$	31,891			$	25,826				23.5	%			12.2	%			10.1	%
Earnings per share:
Diluted net earnings per share		$	1.06			$	0.84

Net sales were $261,078 in the six months ended June 30, 2025, an increase of $5,166 or 2.0% from the six months ended June 30, 2024. Net sales to the diversified end markets increased $16,741 or 13.4%. SyQwest added $7,878 in sales during the first half of the year. We have good growth momentum in the medical end market and the industrial end market continues to recover. Net sales to the transportation market decreased $11,575 or 8.9%, primarily driven by lower volumes of our commercial vehicle related products and lower sales to customers in China.

Gross margin was $98,979 for the six months ended June 30, 2025, an increase of $7,517 or 8.2% from the six months ended June 30, 2024. Our gross margin percentage was 37.9% for the first six months of 2025, an increase from 35.7% in the first six months of 2024 due to improved mix of sales by end market and operational improvements. Additionally, changes in foreign exchange rates had a net benefit on our gross margin of approximately $2,026 primarily due to rate changes between the U.S. Dollar and the Mexican Peso.

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SG&A expenses were $46,700 or 17.9% of net sales for the six months ended June 30, 2025 versus $43,591 or 17.0% of net sales for the six months ended June 30, 2024. The increase in SG&A expenses was primarily driven by higher depreciation and amortization expense in 2025 from the SyQwest acquisition.

R&D expenses were $12,515 or 4.8% of net sales for the six months ended June 30, 2025 compared to $12,687 or 5.0% of net sales for the six months ended June 30, 2024.

Restructuring charges were $749 or 0.3% of net sales for the six months ended June 30, 2025 compared to $2,884 or 1.1% of net sales for the six months ended June 30, 2024. The restructuring charges in the six months ended June 30, 2025 were primarily related to headcount reductions in response to softening demand in the transportation end market. See Note 7 “Costs Associated with Exit and Restructuring Activities” in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information.

Other income and expense items are summarized in the following table:

		Six Months Ended
		June 30,				June 30,
		2025				2024
Interest expense		$	(2,289	)		$	(1,635	)
Interest income			1,068				2,827
Other income (expense), net			1,307				(2,066	)
Total other (expense) income, net		$	86			$	(874	)

Interest income decreased due to lower investments of available cash into short-term, cash equivalent, high-yield deposit accounts as a result of the SyQwest acquisition in the third quarter of 2024. Interest expense increased due to higher borrowings to fund the SyQwest acquisition.

		Six Months Ended
		June 30,				June 30,
		2025				2024
Effective tax rate			18.4	%			17.8	%

Our effective income tax rate was 18.4% and 17.8% for the six months ended June 30, 2025 and 2024, respectively. The increase in the effective income tax rate is primarily attributable to a mix of earnings taxed at higher rates.

Liquidity and Capital Resources

We have historically funded our capital and operating needs primarily through cash flows from operating activities, supported by available credit under our Revolving Credit Facility (as defined below). We believe that cash flows from operating activities and available borrowings under our Revolving Credit Facility will be adequate to fund our working capital needs, capital expenditures, investments, and debt service requirements for at least the next twelve months and for the foreseeable future thereafter. However, we may choose to pursue additional equity and debt financing to provide additional liquidity or to fund acquisitions.

Cash and cash equivalents were $99,440 at June 30, 2025, and $94,334 at December 31, 2024, of which $98,785 and $92,944, respectively, were held outside the United States. Total long-term debt was $88,000 as of June 30, 2025 and $92,300 as of December 31, 2024.

Cash Flow Overview

Cash Flows from Operating Activities

Net cash provided by operating activities was $43,870 during the six months ended June 30, 2025. Components of net cash provided by operating activities included net earnings of $31,891, depreciation and amortization expense of $17,045, other net non-cash items of $838, and a net cash outflow from changes in assets and liabilities of $5,904.

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Net cash provided by operating activities was $37,940 during the six months ended June 30, 2024. Components of net cash provided by operating activities included net earnings of $25,826, depreciation and amortization expense of $14,651, other net non-cash items of $629, and a net cash outflow from changes in assets and liabilities of $3,166.

Cash Flows from Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025 was $7,745 for payments on capital expenditures.

Net cash used in investing activities for the six months ended June 30, 2024 was $8,672 for payments on capital expenditures.

Cash Flows from Financing Activities

Net cash used in financing activities for the six months ended June 30, 2025 was $32,351. The net cash outflow was the result of treasury stock purchases of $22,995, net cash payments of long-term debt of $4,300, taxes paid on behalf of equity award participants of $2,655, and dividends paid of $2,401.

Net cash used in financing activities for the six months ended June 30, 2024 was $32,059. The net cash outflow was the result of treasury stock purchases of $22,892, net cash used in the paydown of long-term debt of $2,500, taxes paid on behalf of equity award participants of $3,131, dividends paid of $2,460, and payments of contingent consideration of $1,076.

Capital Resources

Revolving Credit Facility

Long‑term debt is comprised of the following:

		As of
		June 30,				December 31,
		2025				2024
Total credit facility		$	400,000			$	400,000
Balance outstanding			88,000				92,300
Standby letters of credit			1,640				1,640
Amount available, subject to covenant restrictions		$	310,360			$	306,060

On December 15, 2021, we entered into a second amended and restated five-year credit agreement with a group of banks (the “Revolving Credit Facility”) to (i) increase the total credit facility availability to $400,000, which may be increased by $200,000 at the request of the Company, subject to the administrative agent's approval, (ii) extend the maturity of the Revolving Credit Facility from February 12, 2024 to December 15, 2026, (iii) replace LIBOR with SOFR as the primary reference rate used to calculate interest on the loans under the Revolving Credit Facility, (iv) increase available sub limits for letters of credit, and swingline loans as well as providing for additional alternative currency borrowing capabilities, and (v) modify the financial and non-financial covenants to provide the Company additional flexibility. This new unsecured credit facility replaced the prior $300,000 unsecured credit facility, which would have expired February 12, 2024.

Borrowings in U.S. Dollars under the Revolving Credit Facility bear interest, at a per annum rate equal to the applicable Term SOFR rate (but not less than 0.0%), plus the Term SOFR adjustment, and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. Similarly, borrowings of alternative currencies under the Revolving Credit Facility bear interest equal to a defined risk-free reference rate, plus the applicable risk-free rate adjustment and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. We use interest rate swaps to convert a portion of our revolving credit facility's outstanding balance from a variable rate of interest to a fixed rate. The contractual rate of these arrangements ranges from 1.49% to 2.45%.

The Revolving Credit Facility includes a swing-line sublimit of $20,000 and a letter of credit sublimit of $20,000. We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee ranges from 0.175% to 0.25% based on our net leverage ratio. We were in compliance with all debt covenants at June 30, 2025.

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Critical Accounting Policies and Estimates

The Company’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of the Condensed Consolidated Financial Statements, the Company uses estimates and makes judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. The assumptions, estimates, and judgments are based on historical experience, current trends, and other factors the Company believes are relevant at the time it prepares the Condensed Consolidated Financial Statements.

The critical accounting policies and estimates are consistent with those discussed in Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements and the MD&A section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. During and as of the three and six months ended June 30, 2025, there were no significant changes in the application of critical accounting policies or estimates.

Significant Customers

Our net sales to customers representing at least 10% of total net sales is as follows:

		Three Months Ended								Six Months Ended
		June 30, 2025				June 30, 2024				June 30, 2025				June 30, 2024
Toyota Motor Corporation			12.0	%			11.9	%			12.0	%			12.6	%
Cummins Inc.			9.5	%			13.1	%			9.9	%			13.4	%

No other customer accounted for 10% or more of total net sales during these periods. We continue to focus on broadening our customer base to diversify our non-transportation end market exposure.

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Forward‑Looking Statements

Readers are cautioned that the statements contained in this document regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are, or may be deemed to be, “forward-looking statements” as defined by the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this document, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward-looking statements. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “continued,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “demonstrates,” “may,” “will,” “might,” “could,” “intend,” “shall,” “possible,” “would,” “approximately,” “likely,” “outlook,” “schedule,” “on track,” “poised,” “pipeline,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are based on management’s expectations, certain assumptions, and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties, and other factors, which could cause CTS’ actual results, performance, or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: supply chain disruptions; changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions including, without limitation the integration of SyQwest; the funding of contracts by the US Government; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the impact of tariffs on China, Canada and Mexico, and other nations, the potential impact of U.S./China relations and the impact of the conflicts in Ukraine, and the Middle East may have on our business, results of operations and financial condition); the amount and timing of any share repurchases; and the effect of any cybersecurity incidents on our business. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS’ most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes. 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of our Annual Report on Form 10-K for the year ended December 31, 2024. During the six months ended June 30, 2025, there have been no material changes in our exposure to market risk.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within CTS have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting for the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in litigation with respect to matters arising from the ordinary conduct of our business, and currently certain claims are pending against us. In the opinion of management, we believe we have established adequate accruals pursuant to U.S. generally accepted accounting principles for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based on presently available information. However, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition, or cash flows.

See Note 9 "Commitments and Contingencies" in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

Uncertainty over global tariffs and trade policies, or the financial impact of tariffs and trade policies, may negatively affect our results.

In the first half of 2025, there were significant changes to tariffs by the U.S. and other countries. The tariff modifications are at various rates, with exemptions applicable to some categories of imports and exports. While we are attempting to mitigate tariff-related impacts with a focus on agility in adapting to cost and price adjustments, there can be no assurance our mitigation efforts will be successful. The Company’s management continues to monitor and evaluate the ongoing situation, with plans formulated to respond to a varied range of potential market scenarios. Additional tariffs or future changes to the U.S.’s or other countries’ trade relations could further impact our business and negatively affect our results of operations.

There have been no other changes to our risk factors from those contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 2, 2024, the Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $100 million of its common stock. The share repurchase program has no set expiration date and supersedes and replaces the repurchase program approved by the Board of Directors in February 2023.

										Total Number				Maximum Dollar
										of Shares				Value of Shares
										Purchased as				That May Yet Be
		Total Number								Part of Publicly				Purchased Under
		of Shares				Average Price				Announced				Publicly Announced
Period		Purchased				Paid per Share				Programs				Plans or Programs
April 1, 2025 - April 30, 2025			153,000			$	38.48				153,000			$	48,884,512
May 1 2025 - May 31, 2025			138,650			$	41.11				138,650			$	43,184,717
June 1 , 2025 - June 30, 2025			120,000			$	42.56				120,000			$	38,077,599
Total			411,650								411,650

Item 5. Other Information

From time to time, our directors and officers may purchase or sell shares of our common stock in the market, including pursuant to plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended (“Rule 10b5-1 Plans”).

During the quarter ended June 30, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).

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Item 6. Exhibits

(31)(a)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
(31)(b)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
101.1	The following information from CTS Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 formatted in Inline XBRL: (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Earnings; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Shareholders’ Equity; (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	The cover page from this Current Report on Form 10-Q formatted as inline XBRL

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CTS Corporation

/s/ Ashish Agrawal

Ashish Agrawal

Vice President and Chief Financial Officer

(Principal Financial Officer & Principal Accounting Officer)

Dated: July 24, 2025

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FAQ

How did LHX's Q2 2025 revenue compare with Q2 2024?

Revenue rose to $5.426 billion, a 2.4% increase from $5.299 billion in Q2 2024.

What was L3Harris's Q2 2025 diluted EPS?

Diluted EPS was $2.44, up 27% from $1.92 in the prior-year quarter.

How large is LHX's backlog as of 27-Jun-2025?

Backlog totaled $35.4 billion, with 45% expected to convert to revenue within 12 months.

What cash proceeds did LHX receive from the CAS divestiture?

The sale closed on 28-Mar-2025 and delivered $831 million in net cash proceeds.

How will the July 2025 tax law affect LHX?

Management expects $150 million of cash tax savings but a 200-300 bp rise in the 2025 effective tax rate.

What is LHX’s current net debt position?

Long-term debt (net) is $10.98 billion plus $985 million in short-term commercial paper.