8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 26, 2023

CTS CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Indiana	1-4639	35-0225010
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
4925 Indiana Avenue
Lisle, Illinois		60532
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (630) 577-8800

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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, no par value	CTS	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition.

On October 26, 2023, CTS Corporation (the "Registrant") issued a press release providing certain results for the third quarter ended September 30, 2023, as more fully described in the press release. A copy of the press release is attached hereto as Exhibit 99.l and is incorporated by reference herein.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.l hereto, is being "furnished" to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act” ) or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

As disclosed in the press release furnished as Exhibit 99.1, the Registrant will hold a live web cast on October 26, 2023, relating to the Registrant’s financial results for the third quarter ended September 30, 2023. A copy of the slides to be presented during the Registrant’s web cast and discussed in the conference call relating to such financial results is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.

By filing this Current Report on Form 8-K and furnishing the information contained herein, the Registrant makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

The information contained in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
99.1	Earnings Release dated October 26, 2023
99.2	Slides of CTS Corporation, 3rd Quarter 2023, dated October 26, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 26, 2023		CTS CORPORATION
	By:	/s/ Thomas M. White
		Thomas M. White
		Corporate Controller

EX-99.1

Exhibit 99.1

October 26, 2023 FOR IMMEDIATE RELEASE

CTS Announces Third Quarter 2023 Results

Navigating Near-term Challenges while Maintaining Focus on Long-term Strategy

Lisle, Ill. - CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of custom engineered solutions that “Sense, Connect and Move,” today announced third quarter 2023 results.

“We managed through a challenging operating environment in the third quarter, with continued headwinds in industrial end markets and distribution weighing on our results,” said Kieran O’Sullivan, CEO of CTS Corporation. “We are continuing to advance our long-term strategy and secured several wins in both electrification and non-transportation markets during the quarter. Our teams remain focused on driving operational improvements to strengthen profitability as we manage near-term challenges and generate sustained value for all stakeholders.”

Third Quarter 2023 Results

•Sales were $135 million, down 11% year-over-year. Sales to non-transportation end markets decreased 20%, and sales to the transportation end market decreased 3% over the same period.

•Net income was $14 million, or 10.4% of sales, compared to $12 million, or 7.8% of sales, in the third quarter of 2022.

•Diluted earnings per share were $0.44, compared to $0.37 per share, in the third quarter of 2022.

•Adjusted diluted EPS was $0.54, down from $0.62 in the third quarter of 2022.

•Adjusted EBITDA margin was 22.5% compared to 22.3% in the third quarter of 2022.

•Operating cash flow was $22 million compared to $60 million in the third quarter of 2022. The third quarter of 2022 included a one-time cash inflow of $34 million relating to the US pension plan.

2023 Guidance

As a result of continued headwinds in industrial and distribution end markets, recent softness in the commercial vehicle market and the UAW strike, CTS is updating its guidance of sales from the range of $565 – $585 million to $545 - $555 million, and adjusted diluted EPS from the range of $2.20 – $2.40 to $2.15 – $2.25.

CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.

www.ctscorp.com

Conference Call and Supplemental Materials

As previously announced, the Company has scheduled a conference call for 10:00 a.m. (EDT) today. The dial-in number for the U.S. and Canada is 833-470-1428 (+1 929-526-1599, if calling from outside the U.S. and Canada). The passcode is 224664. In addition, the Company will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS’ website at https://www.ctscorp.com/investors/events-presentations/.

About CTS

CTS Corporation (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical and transportation markets. For more information, visit www.ctscorp.com.

Safe Harbor

This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. 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 in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions; 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 (including the effect of the COVID-19 pandemic on CTS’ business, results of operations or financial condition), natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). 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.

Contact

Ashish Agrawal

Vice President and Chief Financial Officer

CTS Corporation

4925 Indiana Avenue

Lisle, IL 60532 USA

+1 (630) 577-8800

ashish.agrawal@ctscorp.com

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS- UNAUDITED

(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Net sales	$	134,552		$	151,911		$	425,728		$	444,588
Cost of goods sold		88,151			98,565			276,933			285,054
Gross margin		46,401			53,346			148,795			159,534
Selling, general and administrative expenses		18,666			24,003			64,339			68,029
Research and development expenses		6,321			6,207			19,628			18,695
Restructuring charges		3,226			492			6,033			1,434
Operating earnings		18,188			22,644			58,795			71,376
Other (expense) income:
Interest expense		(997	)		(342	)		(2,509	)		(1,490	)
Interest income		952			167			3,087			610
Other income (expense), net		594			(5,171	)		(1,847	)		(10,530	)
Total other income (expense), net		549			(5,346	)		(1,269	)		(11,410	)
Earnings before income taxes		18,737			17,298			57,526			59,966
Income tax expense		4,766			5,500			12,314			15,331
Net earnings	$	13,971		$	11,798		$	45,212		$	44,635
Earnings per share:
Basic	$	0.45		$	0.37		$	1.44		$	1.39
Diluted	$	0.44		$	0.37		$	1.43		$	1.38
Basic weighted – average common shares outstanding:		31,302			31,865			31,474			32,018
Effect of dilutive securities		209			225			216			220
Diluted weighted – average common shares outstanding:		31,511			32,090			31,690			32,238
Cash dividends declared per share	$	0.04		$	0.04		$	0.12		$	0.12

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	(Unaudited) September 30, 2023			December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	160,112		$	156,910
Accounts receivable, net		89,556			90,935
Inventories, net		65,384			62,260
Other current assets		19,272			15,655
Total current assets		334,324			325,760
Property, plant and equipment, net		92,880			97,300
Operating lease assets, net		27,545			22,702
Other Assets
Goodwill		154,130			152,361
Other intangible assets, net		103,828			108,053
Deferred income taxes		23,725			23,461
Other		17,530			18,850
Total other assets		299,213			302,725
Total Assets	$	753,962		$	748,487
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	49,848		$	53,211
Accrued payroll and benefits		13,330			20,063
Operating lease obligations		4,444			3,936
Accrued expenses and other liabilities		35,804			35,322
Total current liabilities		103,426			112,532
Long-term debt		76,665			83,670
Long-term operating lease obligations		26,016			21,754
Long-term pension obligations		4,963			5,048
Deferred income taxes		15,288			16,010
Other long-term obligations		4,937			3,249
Total Liabilities		231,295			242,263
Commitments and Contingencies
Shareholders’ Equity
Common stock		319,125			316,803
Additional contributed capital		44,718			46,144
Retained earnings		588,144			546,703
Accumulated other comprehensive loss		(675	)		(671	)
Total shareholders’ equity before treasury stock		951,312			908,979
Treasury stock		(428,645	)		(402,755	)
Total shareholders’ equity		522,667			506,224
Total Liabilities and Shareholders’ Equity	$	753,962		$	748,487

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

(In millions of dollars, except percentages and per share amounts)

Non-GAAP Financial Measures

From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items.

CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) environmental charges; (3) acquisition-related costs; (4) inventory fair value step-up costs; (5) foreign exchange (gains) losses; (6) non-cash pension expenses (income); and (7) certain discrete tax items are useful and assist in comparing CTS’ current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures.

•Restructuring charges – costs primarily relating to workforce reduction costs, building and equipment relocation costs, asset impairment charges and other facility closure costs in connection with our continued optimization of our organization.

•Environmental charges – costs associated with our non-operating facilities that are unrelated to ongoing operations.

•Acquisition-related costs – diligence and transaction costs related to acquisitions.

•Inventory fair value step-up costs – purchase accounting-related inventory costs from acquisitions.

•Foreign exchange (gains) losses – remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency.

•Non-cash pension expenses (income) – pension income and expenses relating to the non-operating U.S. pension and post-retirement life insurance plans, including historical plan settlement activities.

•Discrete tax items – non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items, etc.).

At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum.

www.ctscorp.com

Adjusted Gross Margin

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Gross margin	$	46.4		$	53.3		$	148.8		$	159.5		$	210.5		$	184.6		$	139.1
Net sales	$	134.6		$	151.9		$	425.7		$	444.6		$	586.9		$	512.9		$	424.1
Gross margin as a % of net sales		34.5	%		35.1	%		35.0	%		35.9	%		35.9	%		36.0	%		32.8	%
Adjustments to reported gross margin:
Inventory fair value step-up (b)	$	—		$	2.2		$	—		$	3.3		$	4.0		$	—		$	—
Adjusted gross margin	$	46.4		$	55.6		$	148.8		$	162.9		$	214.5		$	184.6		$	139.1
Adjusted gross margin as a % of net sales		34.5	%		36.6	%		35.0	%		36.6	%		36.5	%		36.0	%		32.8	%

Adjusted Operating Earnings

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Operating earnings	$	18.2		$	22.6		$	58.8		$	71.4		$	93.0		$	76.5		$	45.1
Net sales	$	134.6		$	151.9		$	425.7		$	444.6		$	586.9		$	512.9		$	424.1
Operating earnings as a % of net sales		13.5	%		14.9	%		13.8	%		16.1	%		15.8	%		14.9	%		10.6	%
Adjustments to reported operating earnings:
Restructuring charges (c)		3.2			0.5			6.0			1.4			1.9			1.7			1.8
Environmental charges (a)		0.4			0.3			3.1			1.8			2.8			2.3			2.8
Acquisition-related costs (a)		—			—			0.2			0.8			0.8			—			0.3
Inventory fair value step-up (b)		—			2.2			—			3.3			4.0			—			—
Total adjustments to reported operating earnings	$	3.6		$	3.0		$	9.3		$	7.3		$	9.5		$	3.9		$	4.9
Adjusted operating earnings	$	21.8		$	25.7		$	68.1		$	78.7		$	102.5		$	80.4		$	50.0
Adjusted operating earnings as a % of net sales		16.2	%		16.9	%		16.0	%		17.7	%		17.5	%		15.7	%		11.8	%

Adjusted EBITDA Margin

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Net earnings (loss)	$	14.0		$	11.8		$	45.2		$	44.6		$	59.6		$	(41.9	)	$	34.7
Net sales	$	134.6		$	151.9		$	425.7		$	444.6		$	586.9		$	512.9		$	424.1
Net earnings (loss) margin		10.4	%		7.8	%		10.6	%		10.0	%		10.2	%		-8.2	%		8.2	%
Depreciation and amortization expense		7.3			8.0			21.4			21.7			29.8			26.9			26.7
Interest expense		1.0			0.3			2.5			1.5			2.2			2.1			3.3
Tax expense (benefit)		4.8			5.5			12.3			15.3			21.2			(19.0	)		10.8
EBITDA		27.0			25.6			81.5			83.2			112.7			(31.8	)		75.4
Adjustments to EBITDA:
Restructuring charges (c)		3.2			0.5			6.0			1.4			1.9			1.7			1.8
Environmental charges (a)		0.4			0.3			3.1			1.8			2.8			2.3			2.8
Acquisition-related costs (a)		—			—			0.2			2.5			2.5			—			0.3
Inventory fair value step-up (b)		—			2.2			—			3.3			4.0			—			—
Non-cash pension and related expense (d)		—			4.7			—			4.8			4.8			132.4			2.5
Foreign currency loss (gain) (d)		(0.3	)		0.5			2.3			4.0			4.9			3.3			(5.3	)
Total adjustments to EBITDA		3.3			8.2			11.7			17.8			20.9			139.7			2.1
Adjusted EBITDA	$	30.3		$	33.8		$	93.1		$	101.0		$	133.6		$	107.9		$	77.5
Adjusted EBITDA Margin		22.5	%		22.3	%		21.9	%		22.7	%		22.8	%		21.0	%		18.3	%

Adjusted Net Earnings

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Net earnings (loss) (A)	$	14.0		$	11.8		$	45.2		$	44.6		$	59.6		$	(41.9	)	$	34.7
Net sales	$	134.6		$	151.9		$	425.7		$	444.6		$	586.9		$	512.9		$	424.1
Net earnings (loss) as a % of net sales		10.4	%		7.8	%		10.6	%		10.0	%		10.2	%		-8.2	%		8.2	%
Adjustments to reported net earnings (loss):
Restructuring charges (c)		3.2			0.5			6.0			1.4			1.9			1.7			1.8
Environmental charges (a)		0.4			0.3			3.1			1.8			2.8			2.3			2.8
Acquisition-related costs (a)		—			—			0.2			2.5			2.5			—			0.3
Inventory fair value step-up (b)		—			2.2			—			3.3			4.0			—			—
Non-cash pension and related expense (d)		—			4.7			—			4.8			4.8			132.4			2.5
Foreign currency loss (gain) (d)		(0.3	)		0.5			2.3			4.0			4.9			3.3			(5.3	)
Total adjustments to reported net earnings (loss)	$	3.3		$	8.2		$	11.7		$	17.8		$	20.9		$	139.7		$	2.1
Total adjustments, tax affected (B)	$	3.0		$	8.0		$	10.2		$	16.6		$	19.3		$	108.6		$	0.4
Tax adjustments:
Increase in valuation allowances (e)		—			—			—			—			—			0.9			0.2
Other discrete tax items (e)		—			—			—			—			0.2			(4.7	)		1.2
Total tax adjustments (C)	$	—		$	—		$	—		$	—		$	0.2		$	(3.8	)	$	1.4
Adjusted net earnings (A+B+C)	$	17.0		$	19.8		$	55.4		$	61.3		$	79.1		$	63.0		$	36.5
Adjusted net earnings as a % of net sales		12.6	%		13.0	%		13.0	%		13.8	%		13.5	%		12.3	%		8.6	%

(a) reflected in selling, general and administrative and other (expense) income, net.
(b) reflected in cost of goods sold.
(c) reflected in restructuring charges.

(d) reflected in other (expense) income, net.

(e) reflected in income tax expense (income).

Adjusted Diluted Earnings Per Share

	Three Months Ended September 30,					Nine Months Ended September 30,				Twelve Months Ended December 31,
	2023			2022		2023		2022		2022		2021			2020
GAAP diluted earnings (loss) per share	$	0.44		$	0.37	$	1.43	$	1.38	$	1.85	$	(1.30	)	$	1.06
Tax affected charges to reported diluted earnings (loss) per share:
Restructuring charges		0.10			0.01		0.17		0.04		0.05		0.06			0.04
Foreign currency (gain) loss		(0.01	)		0.01		0.07		0.12		0.15		0.10			(0.16	)
Non-cash pension expense		—			0.16		—		0.16		0.16		3.13			0.06
Environmental charges		0.01			0.01		0.08		0.04		0.07		0.05			0.07
Acquisition-related costs		—		—			—		0.07		0.07		—			0.01
Inventory fair value step-up		—			0.06		—		0.09		0.10		—			—
Discrete tax items		—			—		—		—		0.01		(0.11	)		0.04
Adjusted diluted earnings per share	$	0.54		$	0.62	$	1.75	$	1.90	$	2.46	$	1.93		$	1.12

NOTE: CTS believes that adjusted gross margin, adjusted operating earnings, adjusted EBITDA margin, adjusted net earnings and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations (such as those items noted above in the paragraph titled “Non-GAAP Financial Measures”) or were not part of CTS’ business operations during a comparable period.

Controllable Working Capital

	September 30,						December 31,
	2023			2022			2022			2021			2020
Net accounts receivable	$	89.6		$	97.0		$	90.9		$	82.2		$	81.0
Net inventory	$	65.4		$	63.5		$	62.3		$	49.5		$	45.9
Accounts payable	$	(49.8	)	$	(65.7	)	$	(53.2	)	$	(55.5	)	$	(50.5	)
Controllable working capital	$	105.1		$	94.8		$	100.0		$	76.2		$	76.4
Quarter sales	$	134.6		$	151.9		$	142.3		$	132.5		$	123.0
Multiplied by 4		4			4			4			4			4
Annualized sales	$	538.2		$	607.6		$	569.1		$	530.0		$	492.1
Controllable working capital as a % of annualized sales		19.5	%		15.6	%		17.6	%		14.4	%		15.5	%

NOTE: CTS believes the controllable working capital ratio is a useful measure because it provides an objective measure of the efficiency with which CTS manages its short-term capital needs.

Free Cash Flow

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Net cash provided by operating activities	$	22.1		$	60.4		$	56.7		$	95.7		$	121.2		$	86.1		$	76.8
Capital expenditures		(2.7	)		(2.3	)		(11.2	)		(9.3	)		(14.3	)		(15.6	)		(14.9	)
Free cash flow	$	19.4		$	58.1		$	45.5		$	86.5		$	106.9		$	70.5		$	61.9

NOTE: CTS believes that free cash flow is a useful measure because it demonstrates the company’s ability to generate cash. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity.

Capital Expenditures

	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended December 31,
	2023			2022			2023			2022			2022			2021			2020
Capital expenditures	$	2.7		$	2.3		$	11.2		$	9.3		$	14.3		$	15.6		$	14.9
Net sales	$	134.6		$	151.9		$	425.7		$	444.6		$	586.9		$	512.9		$	424.1
Capex as % of net sales		2.0	%		1.5	%		2.6	%		2.1	%		2.4	%		3.0	%		3.5	%

Additional Information

The following table includes other financial information not presented in the preceding financial statements.

	Three Months Ended September 30,				Nine Months Ended September 30,				Twelve Months Ended December 31,
	2023		2022		2023		2022		2022		2021		2020
Depreciation and amortization expense	$	7.3	$	8.0	$	21.4	$	21.7	$	29.8	$	26.9	$	26.7
Stock-based compensation expense	$	1.4	$	2.2	$	4.6	$	5.8	$	7.7	$	6.1	$	3.4

EX-99.2

CTS Corporation 3rd Quarter2023 Earnings Call October 26, 2023

Forward-Looking Statements This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. 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 in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions; 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 (including the effect of the COVID-19 pandemic on CTS’ business, results of operations or financial condition), natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks (including, without limitation, the potential impact U.S./China relations and the conflict between Russia and Ukraine may have on our business, results of operations and financial condition). 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.

Advancing Strategic Priorities While Navigating Operating Challenges 7 new non-Transportation customers Won first motor position development award 11 new EV platform wins $134.6M Revenue -11% YoY 34.5% Adjusted Gross Margin1 (210) bps YoY $0.54 Adj. Earnings Per Share1 $(0.08) YoY Q3 2023 Financials Highlights Notes: All comparisons vs. same period in prior year unless otherwise noted. 1 Adj. Gross Margin and Adj. Earnings per Share are non-GAAP financial measures. Refer to Appendix for reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Q3 2023 Quarterly Update

Diversifying into Attractive Non-transportation End Markets Industrial Aerospace & Defense Medical Revenue ($ Millions) Revenue ($ Millions) Revenue ($ Millions) Near-Term Softness as Customer Inventories Stabilize; Tailwinds from Megatrends Support Long-Term Strategy Key New Wins HVAC Tunable Lenses Professional Audio Durable Goods: Controls Medical Therapeutics Medical Diagnostics Minimally Invasive Surgery Health Monitoring Sonar Satellite Thrusters Communications Aircraft Emergency Beacons

Continued Progress in Transportation – Won Motor Position Sensing Development Award ($ Millions) Revenue Total Booked Business1 ($ Billions) Chassis Height Sensor Accelerator Modules Brake Position Sensor Belt Tension Sensor Seat Track Position Sensor Seat Belt Buckle Switch Sensor 95% of existing light vehicle portfolio transitions to EVs New products expand future content per vehicle2 Significant Growth Opportunity from Electrification 11 New EV Platform Wins in Q3 2023 Content Per Vehicle Grows to >2x With EV-Focused New Products AC Motor Current Sensor AC Motor Position Sensor eBrake™ Drive-Pad ™ First Award Secured Secured Awards In Development In Development 1 Total booked business for Transportation at the end of Q2 2023 was adjusted down to $1.41 billion after taking into account program exits, expected volumes based on market conditions and other adjustments. 2 Multiple patent applications pending on eBrake & Drive-Pad products

$2.25 $2.15 Notes: 1 CAGR based on mid-point of 2023 guidance 2 Adjusted Diluted EPS is a non-GAAP financial measure. Refer to Appendix for reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. FY 2023 Guidance Revenue ($ Millions) Adjusted Diluted EPS 2 $545 $555 2020-2023 CAGR 9% 1 Stable medical & aerospace/defense end markets Softness in industrial end market and distribution channel expected to continue into early 2024 Softer smart actuator demand for commercial vehicles in the 4th quarter and into 2024 Light vehicle market forecasts - NA 15M, China 26M, Europe 16-17M units; UAW strike risk Tax rate in the range of 20-23% excluding discrete items Key Outlook Assumptions 2020-2023 CAGR 25% 1

3rd Quarter Financial Results

Notes: All comparisons vs. same period in prior year unless otherwise noted. 1 Adj. Diluted EPS, Adj. Gross Margin and Adj. EBITDA Margin are non-GAAP financial measures. Refer to Appendix for reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Revenue down 11% vs. Q3 2022 Transportation revenue down 3% Softening commercial vehicle demand Non-transportation revenue down 20% Continued softness in industrial, distribution Adjusted Gross Margin down 210 bps Unfavorable end-market mix FX impact $1.8 million unfavorable Focus on operating expenses Cost measures in light of current market conditions One-time Q3 benefit from incentive compensation reserve release Net Income $11.8 $14.0 Diluted EPS $0.37 $0.44 Adj. Diluted EPS1 $0.62 $0.54 Adj. Gross Margin1 36.6% 34.5% Adj. EBITDA Margin1 22.3% 22.5% Revenue Q3 2023 Financial Summary Results ($ Millions, except EPS) Highlights

Cash and Debt2 $30M Returned to Shareholders YTD Q3 20234 $46M YTD Q3 2023 Free Cash Flow3 Strong Balance Sheet Solid Foundation for Strategic M&A $11M YTD Q3 2023 Capital Expenditures Borrowed Total Facility Operating Cash Flow1 Prioritizing strong cash flow generation ($ Millions) ($ Millions) Notes: 1 2022 results include $34m related to the US pension plan 2 Cash and Debt balance as of September 30, 2023 3 Free Cash Flow is a non-GAAP financial measure. Refer to Appendix for reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. 4 Returned to shareholders consists of buy back & dividends

Q & A

Appendix

Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non-GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items. CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) environmental charges; (3) acquisition-related costs; (4) inventory fair value step-up costs; (5) foreign exchange (gains) losses; (6) non-cash pension expenses (income); and (7) certain discrete tax items are useful and assist in comparing CTS’ current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures. • Restructuring charges - costs primarily relating to workforce reduction costs, building and equipment relocation costs, asset impairment charges and other facility closure costs in connection with our continued optimization of our organization. • Environmental charges - costs associated with our non-operating facilities that are unrelated to ongoing operations. • Acquisition-related costs - diligence and transaction costs related to acquisitions. • Inventory fair value step-up costs - purchase accounting-related inventory costs from acquisitions. • Foreign exchange (gains) losses - remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency. • Non-cash pension expenses (income) - pension income and expenses relating to the non-operating U.S. pension and post-retirement life insurance plans, including historical plan settlement activities. • Discrete tax items - non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items, etc.). At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum. CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non-routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information.

Adjusted Diluted EPS Regulation G Schedules 2023 2022 2023 2022 2022 2021 2020 Diluted earnings (loss) per share 0.44 $ 0.37 $ 1.43 $ 1.38 $ 1.85 $ (1.30) $ $1.06 Restructuring charges 0.10 0.01 0.17 0.04 0.05 0.06 0.04 Foreign currency (gain) loss (0.01) 0.01 0.07 0.12 0.15 0.10 (0.16) Non-cash pension expense - 0.16 - 0.16 0.16 3.13 0.06 Environmental charges 0.01 0.01 0.08 0.04 0.07 0.05 0.07 Acquisition-related costs - - - 0.07 0.07 - 0.01 Inventory fair value step-up - 0.06 - 0.09 0.10 - - Discrete tax items - - - - 0.01 (0.11) 0.04 Adjusted diluted earnings per share 0.54 $ 0.62 $ 1.75 $ 1.90 $ 2.46 $ 1.93 $ $1.12 Tax affected adjustments to reported diluted earnings (loss) per share: Full Year Year-to-Date Q3

Regulation G Schedules ($ Millions) Adjusted EBITDA Margin 2023 2022 2023 2022 2022 2021 2020 Net earnings (loss) 14.0 $ 11.8 $ 45.2 $ 44.6 $ 59.6 $ (41.9) $ 34.7 $ Net sales 134.6 $ 151.9 $ 425.7 $ 444.6 $ 586.9 $ 512.9 $ 424.1 $ Net earnings (loss) margin 10.4% 7.8% 10.6% 10.0% 10.2% -8.2% 8.2% Depreciation and amortization expense 7.3 8.0 21.4 21.7 29.8 26.9 26.7 Interest expense 1.0 0.3 2.5 1.5 2.2 2.1 3.3 Tax expense (benefit) 4.8 5.5 12.3 15.3 21.2 (19.0) 10.8 EBITDA 27.0 25.6 81.5 83.2 112.7 (31.8) 75.4 Adjustments to EBITDA: Restructuring charges 3.2 0.5 6.0 1.4 1.9 1.7 1.8 Environmental charges 0.4 0.3 3.1 1.8 2.8 2.3 2.8 Acquisition-related costs - - 0.2 2.5 2.5 - 0.3 Inventory fair value step-up - 2.2 - 3.3 4.0 - - Non-cash pension and related expense - 4.7 - 4.8 4.8 132.4 2.5 Foreign currency (gain) loss (0.3) 0.5 2.3 4.0 4.9 3.3 (5.3) Total adjustments to EBITDA 3.3 8.2 11.7 17.9 20.9 139.7 2.1 Adjusted EBITDA 30.3 $ 33.8 $ 93.1 $ 101.1 $ 133.6 $ 107.9 $ 77.5 $ Adjusted EBITDA margin 22.5% 22.3% 21.9% 22.7% 22.8% 21.0% 18.3% Full Year Q3 Year-to-Date

Regulation G Schedules ($ Millions) Adjusted Gross Margin 2023 2022 2023 2022 2022 2021 2020 Gross margin 46.4 $ 53.3 $ 148.8 $ 159.5 $ 210.5 $ 184.6 $ 139.1 $ Net sales 134.6 $ 151.9 $ 425.7 $ 444.6 $ 586.9 $ 512.9 $ 424.1 $ Gross margin as a % of net sales 34.5% 35.1% 35.0% 35.9% 35.9% 36.0% 32.8% Adjustment to reported gross margin: Inventory fair value step-up - 2.2 - 3.3 4.0 - - Adjusted gross margin 46.4 $ 55.6 $ 148.8 $ 162.9 $ 214.5 $ 184.6 $ 139.1 $ Adjusted gross margin as a % of net sales 34.5% 36.6% 35.0% 36.6% 36.5% 36.0% 32.8% Full Year Q3 Year-to-Date

Regulation G Schedules ($ Millions) Adjusted Net Earnings 2023 2022 2023 2022 2022 2021 2020 Net earnings (loss) (A) 14.0 $ 11.8 $ 45.2 $ 44.6 $ 59.6 $ (41.9) $ 34.7 $ Net sales 134.6 $ 151.9 $ 425.7 $ 444.6 $ 586.9 $ 512.9 $ 424.1 $ Net earnings (loss) as a % of net sales 10.4% 7.8% 10.6% 10.0% 10.2% -8.2% 8.2% Adjustments to reported net earnings (loss): Restructuring charges 3.2 0.5 6.0 1.4 1.9 1.7 1.8 Environmental charges 0.4 0.3 3.1 1.8 2.8 2.3 2.8 Acquisition-related costs - - 0.2 2.5 2.5 - 0.3 Inventory fair value step-up - 2.2 - 3.3 4.0 - - Non-cash pension and related (income) expense - 4.7 - 4.8 4.8 132.4 2.5 Foreign currency loss (gain) (0.3) 0.5 2.3 4.0 4.9 3.3 (5.3) Total adjustments to reported net earnings (loss) 3.3 $ 8.2 $ 11.7 $ 17.8 $ 20.9 $ 139.7 $ 2.1 $ Total adjustments, tax affected (B) 3.0 $ 8.0 $ 10.2 $ 16.6 $ 19.3 $ 108.6 $ 0.4 $ Tax adjustments: Increase in valuation allowances - - - - - 0.9 0.2 Other discrete tax items - - - - 0.2 (4.7) 1.2 Total tax adjustments (C) - $ - $ - $ - $ 0.2 $ (3.8) $ 1.4 $ Adjusted net earnings (A+B+C) 17.0 $ 19.8 $ 55.5 $ 61.3 $ 79.1 $ 63.0 $ 36.5 $ Adjusted net earnings as a % of net sales 12.6% 13.0% 13.0% 13.8% 13.5% 12.3% 8.6% Full Year Q3 Year-to-Date NOTE: CTS believes that adjusted gross margin, adjusted EBITDA margin, adjusted net earnings and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations (such as those items noted above in the paragraph titled “Non-GAAP Financial Measures”) or were not part of CTS’ business operations during a comparable period.

($ Millions) Free Cash Flow Regulation G Schedules ($ Millions) Controllable Working Capital 2023 2022 2023 2022 2022 2021 2020 Net cash provided by operating activities 22.1 $ 60.4 $ 56.7 $ 60.1 $ 121.2 $ 86.1 $ 76.8 $ Capital expenditures (2.7) (2.3) (11.2) (8.1) (14.3) (15.6) (14.9) Free cash flow 19.4 $ 58.1 $ 45.5 $ 52.0 $ 106.9 $ 70.5 $ 61.9 $ Full Year Q3 Year-to-Date 2023 2022 2022 2021 2020 Net accounts receivable 89.6 $ 97.0 $ 90.9 $ 82.2 $ 81.0 $ Net inventory 65.4 $ 63.5 $ 62.3 $ 49.5 $ 45.9 $ Accounts payable (49.8) $ (65.7) $ (53.2) $ (55.5) $ (50.5) $ Controllable working capital 105.1 $ 94.8 $ 100.0 $ 76.2 $ 76.4 $ Quarter sales 134.6 $ 151.9 $ 142.3 $ 132.5 $ 123.0 $ Multiplied by 4 4 4 4 4 4 Annualized sales 538.2 $ 607.6 $ 569.1 $ 530.0 $ 492.1 $ 19.5% 15.6% 17.6% 14.4% 15.5% Controllable working capital as a % of annualized sales Full Year Q3 NOTE: CTS believes that free cash flow is a useful measure because it demonstrates the company’s ability to generate cash. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity.

XML

Document And Entity Information	Oct. 26, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 26, 2023
Entity Registrant Name	CTS CORPORATION
Entity Central Index Key	0000026058
Entity Emerging Growth Company	false
Securities Act File Number	1-4639
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-0225010
Entity Address, Address Line One	4925 Indiana Avenue
Entity Address, City or Town	Lisle
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60532
City Area Code	(630)
Local Phone Number	577-8800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CTS
Security Exchange Name	NYSE