CTS CORP
For the period ended Sep 30, 2026. Filed Oct 27, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 27, 2026
CTS$57.87+1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-28.
0001193125-26-320492
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-27.
0001193125-26-433661
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 57 previous paragraphs and 59 current paragraphs.
30 unchanged; 25 reworded; 4 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Millar Acquisition
Current report
On October 23, 2026 we acquired Millar Holdings, Inc. (“Millar”) for $50,000, net of cash acquired and debt assumed, with up to $20,000 in additional contingent consideration payable subject to the achievement of specified financial performance targets. The acquisition was funded using cash on hand. Millar specializes in the design, development, and manufacturing of advanced pressure sensing technologies for medical devices, life sciences, and industrial applications. The acquisition strengthens CTS’s position in advanced sensing technologies and expands its presence in diversified end markets.
Current report
Results of Operations: Third Quarter 2026 versus Third Quarter 2025
Current report
Results of Operations: Nine Months ended September 30, 2026 versus Nine Months Ended September 30, 2025
Removed paragraphs (2)
Previous report
Results of Operations: Second Quarter 2026 versus Second Quarter 2025
Previous report
Results of Operations: Six Months ended June 30, 2026 versus Six Months Ended June 30, 2025
Reworded paragraphs (25)
Previous wording
We design, manufacture, and sell a broad line of sensors, connectivity components, and actuators primarily to original equipment manufacturers (“OEMs”), tier one suppliers and distributors 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.
Current wording
We design, manufacture, and sell a broad line of sensors, connectivity components, and actuators primarily to original equipment manufacturers (“OEMs”), tier one suppliers, distributors and the U.S. Government for the aerospace and defense, industrial, medical, and transportation markets. 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.
Previous wording
Net sales were $144,780 in the second quarter of 2026, an increase of $9,471, or 7.0%, from the second quarter of 2025. Net sales to the diversified end markets increased $10,894, or 14.6%. We achieved continued growth in the medical and industrial end markets, while the aerospace and defense end market declined primarily due to the timing of contract awards. Net sales to the transportation end market decreased $1,423 or 2.3%. Changes in foreign exchange rates increased net sales by $1,354, net of hedges.
Current wording
Net sales were $149,583 in the third quarter of 2026, an increase of $6,613, or 4.6%, from the third quarter of 2025. Net sales to the diversified end markets increased $5,601, or 6.6%. We achieved continued growth in the medical and industrial end markets, while the aerospace and defense end market declined primarily due to the timing of contract awards. Net sales to the transportation end market increased $1,012 or 1.7%.
Previous wording
Gross margin was $60,048 in the second quarter of 2026, an increase of $7,617, or 14.5%, from the second quarter of 2025. Our gross margin percentage increased from 38.7% for the second quarter of 2025 to 41.5% for the second quarter of 2026 due to improved mix of sales by end market, operational improvements and the favorable impact of changes in foreign exchange rates of approximately $961, net of hedges.
Current wording
Gross margin was $63,152 in the third quarter of 2026, an increase of $7,811, or 14.1%, from the third quarter of 2025. Our gross margin percentage increased from 38.7% for the third quarter of 2025 to 42.2% for the third quarter of 2026 due to improved mix of sales by end market, operational improvements and the favorable impact of changes in foreign exchange rates of approximately $1,404.
Previous wording
Selling, general and administrative (“SG&A”) expenses were $28,390, or 19.6% of net sales, in the second quarter of 2026 versus $23,077, or 17.1% of net sales, in the second quarter of 2025. The increase in SG&A expenses was primarily driven by higher incentive compensation expense in the second quarter of 2026 due to company performance and a reduction to an acquisition earnout liability in the second quarter of 2025.
Current wording
Selling, general and administrative (“SG&A”) expenses were $30,812, or 20.6% of Net sales, in the third quarter of 2026 versus $27,222, or 19.1% of Net sales, in the third quarter of 2025. The increase in SG&A expenses was primarily driven by higher incentive compensation expense in the third quarter of 2026 due to company performance.
Previous wording
Research and development (“R&D”) expenses were $4,763, or 3.3% of net sales, in the second quarter of 2026 compared to $6,326, or 4.7% of net sales, in the comparable quarter of 2025. R&D expenses were lower in the second quarter of 2026 due to a $1,634 one-time customer reimbursement.
Current wording
Research and development (“R&D”) expenses were $6,333, or 4.2% of Net sales, in the third quarter of 2026 compared to $6,901, or 4.8% of Net sales, in the comparable quarter of 2025. Our R&D expenses are in line with our commitment to continue investing in research and product development to drive organic growth.
Previous wording
Restructuring charges were $94 or 0.1% of net sales in the second quarter of 2026 compared to $297 or 0.2% of net sales in the second quarter of 2025. 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.
Current wording
Restructuring charges were $468 or 0.3% of Net sales in the third quarter of 2026 compared to $280 or 0.2% of Net sales in the third quarter of 2025. 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.
Previous wording
Other (expense) income, net is due to foreign currency losses, primarily related to the Euro. Interest expense decreased due to lower borrowings on our Revolving Credit Facility during the second quarter of 2026.
Current wording
During the three months ended September 30, 2026, Other income (expense), net is driven by the receipt of a $12,500 representations and warranties insurance claim related to a prior acquisition. Interest expense decreased due to lower borrowings on our Revolving Credit Facility during the third quarter of 2026.
Previous wording
Our effective income tax rate was 27.0% and 19.4% in the second quarters of 2026 and 2025, respectively. The increase in the effective income tax rate is primarily attributable to the establishment of valuation allowance against certain tax credits.
Current wording
Our effective income tax rate was 53.5% and 30.6% in the third quarters of 2026 and 2025, respectively. The increase in the effective income tax rate is primarily attributable to the establishment of reserves related to an uncertain tax position. See Note 16 “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information.
Previous wording
The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the six months ended June 30, 2026, and June 30, 2025:
Current wording
The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2026, and September 30, 2025:
Previous wording
Net sales were $284,010 in the six months ended June 30, 2026, an increase of $22,932 or 8.8% from the six months ended June 30, 2025. Net sales to the diversified end markets increased $22,686, or 16%. We achieved continued growth in the medical and industrial end markets, while the aerospace and defense end market declined primarily due to the timing of contract awards. Net sales to the transportation end market increased $246, or 0.2%. Changes in foreign exchange rates increased net sales by $4,252, net of hedges.
Current wording
Net sales were $433,593 in the nine months ended September 30, 2026, an increase of $29,546 or 7.3% from the nine months ended September 30, 2025. Net sales to the diversified end markets increased $28,288, or 12.5%. We achieved continued growth in the medical and industrial end markets, while the aerospace and defense end market declined primarily due to the timing of contract awards. Net sales to the transportation end market increased $1,258, or 0.7%. Changes in foreign exchange rates increased Net sales by $4,703.
Previous wording
Gross margin was $115,034 for the six months ended June 30, 2026, an increase of $16,055 or 16.2% from the six months ended June 30, 2025. Our gross margin percentage increased from 37.9% for the six months ended June 30, 2025 to 40.5% for the six months ended June 30, 2026 due to an improved mix of sales by end market, operational improvements, and a favorable impact of changes in foreign exchange rates had a net benefit on our gross margin of approximately $1,632 net of hedges.
Current wording
Gross margin was $178,186 for the nine months ended September 30, 2026, an increase of $23,866 or 15.5% from the nine months ended September 30, 2025. Our gross margin percentage increased from 38.2% for the nine months ended September 30, 2025 to 41.1% for the nine months ended September 30, 2026 due to an improved mix of sales by end market, operational improvements, and a favorable impact of changes in foreign exchange rates had a benefit on our gross margin of approximately $3,036.
Previous wording
SG&A expenses were $54,373 or 19.1% of net sales for the six months ended June 30, 2026 versus $46,700 or 17.9% of net sales for the six months ended June 30, 2025. The increase in SG&A expenses was primarily driven by higher employee incentive expense for the six months ended June 30, 2026 due to company performance and a reduction to an acquisition earnout liability in the six months ended June 30, 2025.
Current wording
SG&A expenses were $85,185 or 19.6% of Net sales for the nine months ended September 30, 2026 versus $73,922 or 18.3% of Net sales for the nine months ended September 30, 2025. The increase in SG&A expenses was primarily driven by higher employee incentive expense for the nine months ended September 30, 2026 due to company performance and a reduction to an acquisition earnout liability in the nine months ended September 30, 2025.
Previous wording
R&D expenses were $11,398 or 4.0% of net sales for the six months ended June 30, 2026 compared to $12,515 or 4.8% of net sales for the six months ended June 30, 2025. R&D expenses were lower in the six months ended June 30, 2026 due to a $1,634 one-time customer reimbursement.
Current wording
R&D expenses were $17,730 or 4.1% of Net sales for the nine months ended September 30, 2026 compared to $19,416 or 4.8% of Net sales for the nine months ended September 30, 2025. R&D expenses were lower in the nine months ended September 30, 2026 due to a $1,634 one-time customer reimbursement.
Previous wording
Restructuring charges were $480 or 0.2% of net sales for the six months ended June 30, 2026 compared to $749 or 0.3% of net sales for the six months ended June 30, 2025. The restructuring charges in the six months ended June 30, 2026 were primarily related to efficiency enhancements. 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.
Current wording
Restructuring charges were $948 or 0.2% of Net sales for the nine months ended September 30, 2026 compared to $1,028 or 0.3% of Net sales for the nine months ended September 30, 2025. 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.
Previous wording
Other (expense) income, net is due to foreign currency losses, primarily related to the Euro. Interest expense decreased due to lower borrowings on our Revolving Credit Facility during the second quarter of 2026.
Current wording
During the nine months ended September 30, 2026, Other income (expense), net is driven by the receipt of a $12,500 representations and warranties insurance claim related to a prior acquisition. Interest expense decreased due to lower borrowings on our Revolving Credit Facility during the nine months ended September 30, 2026.
Previous wording
Our effective income tax rate was 24.1% and 18.4% for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective income tax rate is primarily attributable to the establishment of valuation allowances against certain tax credits.
Current wording
Our effective income tax rate was 37.2% and 22.5% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the effective income tax rate is primarily attributable to the establishment of reserves related to an uncertain tax position. See Note 16 “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information.
Previous wording
Cash and cash equivalents were $107,536 at June 30, 2026, and $82,295 at December 31, 2025, of which $97,612 and $75,943, respectively, were held outside the United States. Total long-term debt was $55,000 as of June 30, 2026 and $57,500 as of December 31, 2025.
Current wording
Cash and cash equivalents were $143,880 at September 30, 2026, and $82,295 at December 31, 2025, of which $89,829 and $75,943, respectively, were held outside the United States. Total long-term debt was $55,000 as of September 30, 2026 and $57,500 as of December 31, 2025.
Previous wording
Net cash provided by operating activities was $50,735 during the six months ended June 30, 2026. Components of net cash provided by operating activities included net earnings of $36,361, depreciation and amortization expense of $17,589, other net non-cash items of $7,329, and a net cash outflow from changes in assets and liabilities of $10,544.
Current wording
Net cash provided by operating activities was $94,257 during the nine months ended September 30, 2026. Components of net cash provided by operating activities included net earnings of $54,118, depreciation and amortization expense of $26,330, other net non-cash items of $15,457, and a net cash outflow from changes in assets and liabilities of $1,648.
Previous wording
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 $5,094.
Current wording
Net cash provided by operating activities was $72,893 during the nine months ended September 30, 2025. Components of net cash provided by operating activities included net earnings of $45,581, depreciation and amortization expense of $25,880, other net non-cash items of $1,873, and a net cash outflow from changes in assets and liabilities of $441.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2026 was $6,689 for capital expenditures of $9,577 partially offset by the maturity of short term investments of $2,888.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2026 was $9,077 for capital expenditures of $11,965 partially offset by the maturity of short-term investments of $2,888.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2025 was $7,745.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2025 was $12,542 for payments on capital expenditures.
Previous wording
Net cash used in financing activities for the six months ended June 30, 2026 was $18,704. The net cash outflow was the result of treasury stock purchases of $11,967, net cash payments of long-term debt of $2,500, dividends paid of $2,296, and taxes paid on behalf of equity award participants of $1,941.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2026 was $23,177. The net cash outflow was the result of treasury stock purchases of $15,230, dividends paid of $3,439, net cash payments of long-term debt of $2,500, and taxes paid on behalf of equity award participants of $2,008.
Previous wording
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, dividends paid of $2,401.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2025 was $47,404. The net cash outflow was the result of treasury stock purchases of $39,546, taxes paid on behalf of equity award participants of $2,675, dividends paid of $3,583, and net cash payments of long-term debt of $1,600.
Previous wording
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, 2025. During and as of the three and six months ended June 30, 2026, there were no significant changes in the application of critical accounting policies or estimates.
Current wording
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, 2025. During and as of the three and nine months ended September 30, 2026, there were no significant changes in the application of critical accounting policies or estimates.
Previous wording
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 (including, but not limited to, the availability and cost of rare earth elements, minerals and metals); changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the funding of contracts by the U.S. 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 di…
Excerpt shortened here; the source contains the full paragraph.
Current wording
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 (including, but not limited to, the availability and cost of rare earth elements, minerals and metals); changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the funding of contracts by the U.S. 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 di…
Excerpt shortened here; the source contains the full paragraph.