CTS (CTS) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales reached $139 million, up 11% year-over-year, with diversified end markets up 18% and transportation up 3%, representing 57% of total revenue.

• Net income rose to $17.2 million, up 28.7% year-over-year, with diluted EPS increasing to $0.59 from $0.44; adjusted diluted EPS was $0.62, up $0.18 year-over-year.

• Adjusted gross margin expanded to 39.5%, up 250 basis points year-over-year, with operational execution and favorable sales mix driving gains.

• Book-to-bill ratio for Q1 was 1.1, indicating strong order intake and bookings momentum in industrial and medical markets.

• Adjusted EBITDA margin improved to 23.0%, up from 20.5% in Q1 2025.

Financial highlights

• Operating cash flow was $17.3 million, with free cash flow at $12 million and cash balance at $91 million; borrowings at $63 million.

• Net income for Q1 2026 was $17.2 million, up from $13.4 million in Q1 2025.

• Returned $10 million to shareholders via dividends and buybacks; 177,000 shares repurchased for $9 million.

• Capital expenditures were $5.0 million, representing 3.6% of net sales.

• Foreign currency changes favorably impacted sales by $3 million and gross margin by $700,000.

Outlook and guidance

• Full-year 2026 sales guidance narrowed to $560–$580 million; adjusted diluted EPS expected at $2.35–$2.45.

• Diversified end market demand expected to remain solid, with continued growth in medical and industrial; aerospace and defense revenue expected to grow in H2 as government funding normalizes.

• Transportation volumes expected to soften in H2 due to geopolitical and economic uncertainties; commercial vehicle demand to improve.

• Effective tax rate projected at 21–23% for the full year.

• Management expects operating cash flows and available borrowings to be sufficient for at least the next twelve months.