10-Q · April 29, 2026
CTS Corporation delivered a strong performance in Q1 2026, reporting revenue of $139 million, surpassing consensus estimates and reflecting a 10.7% year-over-year growth. EPS of $0.59 also exceeded expectations, with…
Earnings analysis · 10-Q
CTS earnings analysis
Filed July 28, 2026 · Our reading of the company's report
The latest report
CTS delivered Q2 revenue of $144.780 million, up 7.0% year over year and 4.0% sequentially, with diluted EPS of $0.66 versus $0.62 a year earlier. Gross margin expanded to 41.5% and operating margin to 18.5%, driven by…
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CTS delivered Q2 revenue of $144.780 million, up 7.0% year over year and 4.0% sequentially, with diluted EPS of $0.66 versus $0.62 a year earlier. Gross margin expanded to 41.5% and operating margin to 18.5%, driven by mix, operations and favorable foreign exchange. Diversified medical and industrial demand was the principal growth engine, while transportation sales declined 2.3% and aerospace and defense faced contract-timing pressure. Liquidity improved materially, with cash reaching $107.536 million and long-term debt declining to $55.000 million.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.66
What stood out
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Revenue and EPS grew sequentially and year over year
Q2 net sales were $144.780 million, up $9.471 million (7.0%) year over year and $5.550 million (4.0%) sequentially from implied Q1 sales of $139.230 million. Diluted EPS was $0.66, up from $0.62 a year earlier and $0.59 in Q1 2026.
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Material margin expansion
Gross margin expanded 280 basis points year over year to 41.5% from 38.7%, while operating margin increased 170 basis points to 18.5% from 16.8%. Improved end-market mix, operational improvements and approximately $0.961 million of favorable FX impact, net of hedges, supported gross margin.
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Diversified growth offsets transportation softness
Diversified-market sales rose $10.894 million (14.6%), led by medical and industrial demand. This more than offset a $1.423 million (2.3%) transportation-market decline.
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Strong operating cash generation
Six-month operating cash flow increased to $50.735 million from $43.870 million, while capital expenditures were $9.577 million, equivalent to 3.4% of six-month sales of $284.010 million. This implies $41.158 million of six-month cash flow after capex.
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Liquidity strengthened and debt declined
Cash and equivalents increased $25.241 million from year-end to $107.536 million, while long-term debt declined $2.500 million to $55.000 million. Available revolver capacity was $243.460 million at June 30.
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Continued shareholder returns
CTS repurchased 63,530 shares during Q2 for $3.450 million, leaving $78.266 million under its authorized repurchase program. The company also paid $2.296 million in dividends during the first six months.
What to watch
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Transportation and aerospace demand pressure
Transportation sales decreased $1.423 million, or 2.3%, year over year in Q2. In addition, aerospace and defense sales declined, which management attributed primarily to the timing of contract awards.
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Higher tax rate dampened earnings growth
The effective tax rate increased to 27.0% from 19.4% a year earlier, principally due to valuation allowances against certain tax credits. This limited net-earnings growth to 3.4% despite operating earnings rising 17.9% to $26.801 million.
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Cost pressure; no formal risk-factor update
SG&A rose 23.0% to $28.390 million, or 19.6% of sales versus 17.1%, driven by higher incentive compensation and a prior-year acquisition earnout-liability reduction. Item 1A states there were no changes to risk factors from the 2025 Form 10-K.
Management's outlook
The 10-Q MD&A does not provide numerical revenue or EPS guidance; quantitative outlook was deferred to the concurrent earnings release/call.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.